SB 189

03-03 10:06  4th Sub. (Pumpkin) S.B. 189
                           Emily Buss proposes the following substitute bill:
1School District Funding Amendments
                                      2026 GENERAL SESSION
                                            STATE OF UTAH
                                      Chief Sponsor: Emily Buss
                                    House Sponsor: Tracy J. Miller
2
3   LONG TITLE
4   General Description:
5This bill establishes a framework for addressing enrollment growth disparities when school
6   districts reorganize.
7   Highlighted Provisions:
8This bill:
9▸ authorizes successor districts to create voluntary high growth transition loan
10   arrangements;
11▸ establishes criteria for identifying high growth successor districts;
12▸ requires high growth transition planning during asset allocation;
13▸ directs the State Board of Education to track and report on growth patterns in
14   reorganizations; and
15▸ authorizes the State Board to develop model policies and guidance.
16   Money Appropriated in this Bill:
17None
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18   Other Special Clauses:
19None
20   Utah Code Sections Affected:
21   AMENDS:
2253G-3-302, as last amended by Laws of Utah 2025, Chapter 33
23   ENACTS:
2453F-10-501, Utah Code Annotated 1953
2553F-10-502, Utah Code Annotated 1953
2653F-10-503, Utah Code Annotated 1953
2753F-10-504, Utah Code Annotated 1953
28
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29   Be it enacted by the Legislature of the state of Utah:
30Section 1. Section 53F-10-501 is enacted to read:
31Part 5. High Growth Framework for School District Reorganizations
3253F-10-501 . General provisions -- Definitions.
33   (1) "ADM" means average daily membership, as defined in Section 53F-2-102.
34   (2) "Allocation date" means the same as that term is defined in Section 53G-3-102.
35   (3) "Creation date" means the same as that term is defined in Section 53G-3-102.
36   (4) "Divided school district" means the same as that term is defined in Section 53G-3-102.
37   (5) "High growth successor district" means a successor district that meets the criteria
38described in Section 53F-10-502.
39   (6) "New school district" means the same as that term is defined in Section 53G-3-102.
40   (7) "Reorganization" means the creation of a new school district under Section
4153G-3-301.1, 53G-3-301.3, or 53G-3-301.4.
42   (8) "Reorganized new school district" means the same as that term is defined in Section
4353G-3-102.
44   (9) "Successor district" means a new school district or reorganized new school district.
45Section 2. Section 53F-10-502 is enacted to read:
4653F-10-502 . High growth successor district criteria -- State Board identification
47   and reporting.
48   (1) For purposes of this part, a successor district is a high growth successor district if:
49(a) the successor district has been in operation for at least two full fiscal years since the
50allocation date and has had an average annual enrollment increase of at least 3%; or
51(b) for a successor district that has been in operation for less than two full fiscal years
52since the allocation date, the successor district demonstrates projected enrollment
53growth of at least 5% annually based on:
54(i) residential construction permits issued within the successor district's boundaries;
55(ii) population growth projections from the Utah Population Committee created in
56Section 63C-20-103;
57(iii) new housing development plans;
58(iv) historical enrollment trends from the geographic area; and
59(v) other relevant demographic data.
60   (2) The State Board of Education shall, using existing enrollment data collection processes:
61(a) identify which successor districts meet the high growth criteria annually;
62(b) calculate each successor district's proportional share of the divided school district
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63based on the methodology established in Section 53G-3-302; and
64(c) notify successor districts of their high growth status.
65   (3) The State Board shall report annually to the Public Education Appropriations
66Subcommittee regarding:
67(a) the number of reorganizations that have occurred;
68(b) which successor districts qualify as high growth successor districts;
69(c) enrollment growth patterns and trends in successor districts;
70(d) facility capacity challenges identified in high growth transition plans submitted
71under Subsection 53G-3-302(13);
72(e) strategies successor districts have used to address high growth, including any
73voluntary loan arrangements; and
74(f) recommendations for supporting equitable transitions during reorganizations.
75Section 3. Section 53F-10-503 is enacted to read:
7653F-10-503 . Voluntary high growth transition loan arrangements authorized --
77   Proportional repayment methodology.
78   (1) Successor districts from the same divided school district may enter into interlocal
79agreements under Title 11, Chapter 13, Interlocal Cooperation Act, to create voluntary
80transition loan arrangements to address enrollment growth disparities.
81   (2) An interlocal agreement under this section may provide for:
82(a) pooling of discretionary assets, as that term is defined in Section 53G-3-302, from
83the divided school district;
84(b) loans to high growth successor districts for:
85(i) acquiring land and facilities;
86(ii) constructing, expanding, or renovating facilities; or
87(iii) expanding transportation infrastructure;
88(c) enhanced borrowing authority for high growth successor districts up to:
89(i) 150% of the high growth district's proportional share of pooled assets; or
90(ii) up to 200% of the proportional share with approval of all participating successor
91districts;
92(d) proportional repayment, calculated as:
93(i) each loan payment multiplied by the borrowing district's proportional share
94represents that district's repayment obligation; and
95(ii) the remainder of each payment is credited back to the pool or distributed to other
96successor districts;
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97(e) loan terms not exceeding twelve years from the allocation date;
98(f) acceleration of repayment if the borrowing district issues bonds for school
99construction; and
100(g) loan application periods limited to before the borrowing district has authority to issue
101bonds.
102   (3) Successor districts are not required to enter into interlocal agreements under this section.
103   (4) Participation in an interlocal agreement under this section does not affect:
104(a) the transition funding provided under Subsection 53G-3-301(6);
105(b) the asset allocation process under Section 53G-3-302;
106(c) assistance from municipalities under Subsection 53G-3-301.3(9); or
107(d) assistance from interlocal agreement participants under Subsection 53G-3-301.4(11).
108Section 4. Section 53F-10-504 is enacted to read:
10953F-10-504 . State Board guidance and technical assistance.
110   (1) The State Board of Education may, using existing staff and resources, develop and
111make available to school districts:
112(a) model interlocal agreement templates for voluntary high growth transition loan
113arrangements;
114(b) guidance on calculating proportional shares;
115(c) sample high growth determination methodologies;
116(d) best practices for addressing enrollment growth disparities during reorganizations;
117(e) examples of proportional repayment structures; and
118(f) sample loan agreement provisions, including acceleration clauses.
119   (2) The State Board may, upon request and using existing resources, provide technical
120assistance to successor districts developing high growth transition plans under
121Subsection 53G-3-302(12) or considering voluntary loan arrangements under Section
12253F-10-503.
123   (3) Nothing in this section requires the State Board to develop any specific materials or
124provide any specific technical assistance.
125Section 5. Section 53G-3-302 is amended to read:
12653G-3-302 . Election of local school board members -- Allocation of assets and
127   liabilities -- Startup costs -- Transfer of title.
128   (1) As used in this section:
129(a) "Associated property" means furniture, equipment, or supplies located in or
130specifically associated with a physical asset.
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131(b)(i) "Discretionary asset or liability" means an asset or liability that is not tied to a
132specific project, school, student, or employee by law or school district accounting
133practice.
134(ii) "Discretionary asset or liability" does not include a physical asset, associated
135property, a vehicle, an employee, or bonded indebtedness.
136(c)(i) "Nondiscretionary asset or liability" means an asset or liability that is tied to a
137specific project, school, student, or employee by law or school district accounting
138practice.
139(ii) "Nondiscretionary asset or liability" does not include a physical asset, associated
140property, a vehicle, or bonded indebtedness.
141(d) "Physical asset" means a building, land, or water right together with revenue derived
142from the lease or use of the building, land, or water right.
143(e)(i) "Physical liability" means a liability associated with a physical asset, including:
144(A) a seismic safety evaluation or mitigation; or
145(B) deferred maintenance.
146(ii) "Physical liability" does not include a liability associated with any debt, including
147a general obligation or lease revenue bond.
148   (2)(a) If voters approve a proposal to create a new school district under this part:
149(i) the legislative body of each county where all or a part of the new school district
150and the reorganized new school district are located shall hold elections, during the
151year immediately following the year in which the voters approve the proposal or
152municipal legislative bodies or interlocal agreement participants create a new
153school district, to elect members to the local school board of the new school
154district and to the local school board of the reorganized new school district, as
155follows:
156(A) the filing period for a declaration of candidacy is the same as the filing period
157for the next regular or municipal general election for the given year;
158(B) the primary election is held on the same day as the primary election for the
159next regular or municipal general election for the given year; and
160(C) the general election is held on the same day as the next regular or municipal
161general election for the given year;
162(ii) any new school district and reorganized new school district shall divide the assets
163and liabilities of the divided school district between the school districts in
164accordance with Subsection (4) and Section 53G-3-307;
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165(iii) any new school district and reorganized new school district shall treat the
166employment of transferred employees from the divided school district in
167accordance with Sections 53G-3-205 and 53G-3-308;
168(iv) an individual residing within the boundaries of a new school district or
169reorganized new school district at the time the new school district is created may,
170for six school years following the creation of the new school district, elect to
171enroll in a secondary school located outside the boundaries of the school district if:
172(A) the individual resides within the boundaries of the secondary school on the
173day before the creation of the new school district; and
174(B) the individual would have been eligible to enroll in the secondary school if not
175for the creation of the new school district;
176(C) the new school district shall provide educational services, including, if
177provided before the creation of the new school district, busing to each
178individual making an election under Subsection (2)(a)(iv) for each school year
179for which the individual makes the election; and
180(v) within one year following the date on which the new school district begins
181providing educational services, the superintendent of each affected school district
182shall meet, together with the state superintendent, to determine if further boundary
183changes should take place in accordance with Section 53G-3-501.
184      (b)(i) The county or municipal legislative bodies that conduct redistricting for the
185new school district and the reorganized new school district shall, at the meeting
186where the county or municipal legislative bodies adopt the final redistricting
187maps, adjust the initial terms of the board members for the new school district and
188the reorganized new school district, by lot, so that approximately half of the board
189members on each board will have an initial term of three years with the other
190members having an initial term of five years.
191(ii) Notwithstanding the existence of the new school district local school board and
192the reorganized new school district local school board under Subsection (2)(a)(i),
193the divided school district local school board shall continue to function and
194exercise authority as a local school board until the allocation date to the extent
195necessary to continue to provide educational services to the entire divided school
196district.
197(iii) An individual may simultaneously serve as or be elected to be a member of the
198local school board of a divided school district and a member of the local school
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199board of:
200(A) a new school district; or
201(B) a reorganized new school district.
202(iv) On the allocation date, the divided school district and the associated local school
203board cease to exist.
204(c)(i) On the Tuesday immediately following certification of the election results for
205the first election for the members of the local school board described in
206Subsection (2)(a)(i), the newly elected members of the local school board for the
207new school district or reorganized new school district shall take the oath of office
208and begin serving.
209(ii) If the term of a member of the local school board of the divided school district
210ends within one year of the allocation date, the member's term shall extend to the
211allocation date.
212   (3)(a) The divided school district local school board shall:
213(i) within 60 days after the creation date prepare an initial inventory of the divided
214school district's:
215(A) assets, both tangible and intangible, real and personal; and
216(B) liabilities;
217(ii) on or before December 1 of the year following the creation date:
218(A) prepare an asset inventory, with records, of the divided school district's assets
219and the location of each associated property, discretionary asset,
220nondiscretionary asset, and physical asset; and
221(B) prepare an inventory of the divided school district's liabilities, with records,
222that includes a description of any liability, including an estimated cost to
223resolve the liability, for each associated property, discretionary asset,
224nondiscretionary asset, physical asset, and unresolved demands, claims, or suits
225with an estimated cost to resolve each liability;
226(iii) mutually agree with the local school board of each relevant district to establish a
227regular schedule for the divided school district local school board to, between the
228creation date and the allocation date, prepare regular updates including any change
229in the information required in the inventory and liability reports described in this
230Subsection (3)(a); and
231(iv) deliver the reports described in this Subsection (3)(a) to:
232(A) the Office of the Legislative Auditor General; and
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233(B) the local school board of each relevant new school district and reorganized
234new school district.
235(b) Following the local school board election date described in Subsection (2)(a), the
236new school district and reorganized new school district local school boards shall:
237(i) in cooperation with the local school board of each new school district and
238reorganized new school district, determine the allocation of the divided school
239district's assets and, except for indebtedness under Section 53G-3-307, liabilities
240of the new school district and reorganized new school district in accordance with
241Subsection (4);
242(ii) prepare a written report detailing the allocation under Subsection (3)(b)(i);
243(iii) prepare a written report of the disposition of assets and liabilities upon which the
244local school boards could not agree; and
245(iv) deliver a copy of the written report to the Office of the Legislative Auditor
246General and the local school board of the divided school district.
247(c) The new school district and reorganized new school district local boards shall
248determine the allocation under Subsection (3)(b) and deliver the report required under
249Subsection (3)(b) on or before December 15 of the year following the school board
250election date described in Subsection (2)(a), unless that deadline is extended by
251mutual agreement of the local school boards of the new school district and
252reorganized new school district.
253   (4)(a) Except as provided under Subsection (4)(c), the new school district and
254reorganized new school district local school boards shall allocate all assets and
255liabilities the divided school district owns on the allocation date, both tangible and
256intangible, real and personal, allocating:
257(i) a physical asset, physical liability, and associated property asset to the school
258district in which the physical asset is located;
259(ii) a discretionary asset or liability between the new school district and reorganized
260new school district in proportion to the student population of the school districts;
261(iii) vehicles used for pupil transportation:
262(A) according to the transportation needs of schools, as measured by the number
263and assortment of vehicles used to serve eligible state supported transportation
264routes serving schools within the new school district and the reorganized new
265school district; and
266(B) in a manner that gives each school district a fleet of vehicles for pupil
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267transportation that is equivalent in terms of age, condition, and variety of
268carrying capacities; and
269(iv) other vehicles:
270(A) in proportion to the student population of the school districts; and
271(B) in a manner that gives each district a fleet of vehicles that is similar in terms
272of age, condition, and carrying capacities.
273(b) Each new and reorganized new school district retains the buildings, land, and water
274rights of the divided district within the boundaries of the relevant new or reorganized
275new school district.
276(c) By mutual agreement, the new school district and reorganized new school district
277local school boards may allocate an asset or liability in a manner different than the
278allocation method specified in Subsection (4)(a).
279   (5)(a)(i) After the creation date, the local school board of the divided district may
280issue a lease revenue bond, in accordance with Section 11-14-103:
281(A) that records the date, terms, and amount of the lease revenue bond the divided
282school district provides;
283(B) that designates the new and reorganized new school districts that are the joint
284recipients of the bond proceeds, in proportion to the property tax values within
285each district, as the local political subdivisions receiving the bond proceeds;
286(C) that obligates the new and reorganized new school districts receiving the bond
287proceeds to proportionally repay the remainder of the bond debt after the
288allocation date, in proportion to the portion of the bond proceeds each new or
289reorganized new school district receives;
290(D) that prohibits the bond from inclusion in the outstanding bond indebtedness of
291the divided school district, in accordance with Section 53G-3-307;
292(E) to which, if the relevant local school board has been seated, the local school
293board of the new school district or reorganized new school district consents in
294writing; and
295(F) that provides that the divided school district is responsible for the bond
296payments until the allocation date and that each new and reorganized new
297school district receiving the bond proceeds under this section is responsible for
298a proportional share of the bond payments after the allocation date.
299(ii) This Subsection (5)(a) applies retrospectively to a lease revenue bond that a
300divided school district issued after November 4, 2024.
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301      (b)(i) After the creation date, the local school board of the divided school district may
302issue a general obligation bond for the interlocal agreement participants on behalf
303of the relevant new and reorganized new school district within the divided school
304district, in accordance with Section 11-14-103.
305(ii) The local school board shall ensure that the resolution submitting the question of
306the issuance of the bond by the divided school district, in accordance with Section
30711-14-201:
308(A) designates the new and reorganized new school districts that are the joint
309recipients of the bond proceeds, in proportion to the property tax values within
310each district, as the local political subdivisions receiving the bond proceeds;
311(B) obligates the new and reorganized new school districts receiving the bond
312proceeds to proportionally repay the remainder of the bond debt after the
313allocation date, in proportion to the portion of the bond proceeds each new or
314reorganized new school district receives;
315(C) prohibits the bond from inclusion in the outstanding bonded indebtedness of
316the divided school district, in accordance with Section 53G-3-307;
317(D) provides that the divided school district may not issue the bond unless the
318majority of the qualified voters of the divided school district who vote on the
319bond proposition approve the issuance of the bond; and
320(E) provides that the divided school district is responsible for the bond payments
321until the allocation date and that each new and reorganized new school district
322receiving the bond proceeds under this section is responsible for a proportional
323share of the bond payments after the allocation date.
324(iii) This Subsection (5)(b) applies retrospectively to a general obligation bond that a
325divided school district issued after November 4, 2024.
326      (c)(i) If, within the preceding three years, voters within the divided school district
327rejected a general obligation bond for which a majority of voters within the area
328now included in a new or reorganized new school district voted in favor of the
329general obligation bond, the local school board of the divided district shall issue a
330lease revenue bond in accordance with Subsection (5)(a)(i) for the relevant new or
331reorganized new school district.
332(ii) A lease revenue bond described in Subsection (5)(c)(i) is not subject to the
333combined total limitation described in Subsection 11-14-103(6)(b)(i) due to the
334prior approval of voters within the new or reorganized new school district for the
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335general obligation bond.
336(d) The local school board of each new and reorganized new school district may access
337and spend funds made available under Subsections 53G-3-301.3(9) and
33853G-3-301.4(11) and under this Subsection (5).
339   (6)(a) The divided school district shall transfer title or, if applicable, partial title of
340property to the new school district and the reorganized new school district in
341accordance with the allocation of property as stated in the report under Subsection
342(3)(b)(ii).
343(b) The divided school district shall complete each transfer of title or, if applicable,
344partial title to real property and vehicles on the allocation date, except as that date is
345changed by the mutual agreement of:
346(i) the local school board of the divided school district;
347(ii) the local school board of the reorganized new school district; and
348(iii) the local school board of the new school district.
349(c) The divided school district shall complete the transfer of all property not included in
350Subsection (6)(b) on the allocation date.
351(d) Except as provided in this Subsection (6), a divided school district may not transfer
352or agree to transfer title to district property beginning on the creation date, without
353the prior consent of:
354(i) before the election of local school boards for the new or reorganized new school
355district:
356(A) the legislative body of the municipality in which the boundaries for the new
357school district or reorganized new school district are entirely located; or
358(B) the legislative bodies of all interlocal agreement participants in which the
359boundaries of the new school district or reorganized new school district are
360located; or
361(ii) after the election of local school boards for the new or reorganized new school
362district, the local school board of the school district where the physical property is
363located.
364(e)(i) A divided district may:
365(A) sell property associated with a career and technical education program; and
366(B) use proceeds from a sale described in this Subsection (6)(e) to fund the
367following year's career and technical education program project.
368(ii) A divided district shall distribute any proceeds from a sale described in this
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369Subsection (6)(e) two years after the inaugural election of local school board
370members for the new and reorganized new school districts based on student
371population.
372   (7)(a) On July 1 of the second year following the local school board election date
373described in Subsection (2)(a), the new school district or the reorganized new school
374district that receives title to the physical asset of the divided school district main
375office that existed at the creation date shall become the successor district to the
376records of the divided school district, unless the local school boards of any relevant
377new school district and reorganized new school district agree to a chosen successor
378district.
379(b) As described in Subsection 63G-2-206(1)(a), the successor district shall serve as a
380repository of archives for purposes of historical preservation, administrative
381maintenance, or destruction of all the divided school district's books, accounts, and
382records.
383(c) For one year after the allocation date, each new school district or reorganized new
384school district within the divided school district may access the records of the divided
385school district through an interlocal agreement and without cost.
386   (8)(a) Upon the creation date, a divided school district may not, except by mutual
387agreement of the local school boards of the new and reorganized new school districts:
388(i) destroy a school district record;
389(ii) enter into any employment agreement without including a statement providing
390that the contract does not bind any new school district or reorganized new school
391district;
392(iii) pay any severance or bonuses, issue a retirement package, or provide buy-out
393compensation to any employee unless under a written agreement or policy that
394was executed before the creation date; or
395(iv) increase compensation for any school district employee, other than:
396(A) a yearly cost-of-living adjustment; or
397(B) any pay structure increases the divided district established before the creation
398date for longevity, years of experience, or additional education and
399professional development.
400(b) Notwithstanding Subsection 53G-4-402(24), upon the creation of a new school
401district or a reorganized new school district, a divided school district may not close a
402school, except with the consent of the relevant local school board of the new school
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403district or relevant reorganized new school district once the members of the local
404school board take the oath of office.
405(c) Any agreement or policy contrary to this Subsection (8) is void, including
406retrospective operation to any agreement or policy that a divided school district
407created after November 4, 2024.
408   (9) The newly elected local school boards of any new school district and any reorganized
409new school district, by December 15 in the year following the local school board
410election for the new and reorganized new school districts, shall establish a transition
411plan with the local school board of the divided school district.
412   (10) Unless otherwise specified in this section, the following bear all costs and expenses to
413create a new school district or a reorganized new school district and to comply with this
414section:
415(a) for costs that a new school district incurs, the new school district;
416(b) for costs that a reorganized new school district incurs, the reorganized new school
417district; and
418(c) for costs that a divided school district incurs, the divided school district.
419   (11)(a) A mutually agreed upon arbiter shall resolve any disagreements between local
420school boards of the divided school district, any new school district, and any
421reorganized new school district.
422(b) If the local school boards do not agree on an arbiter, the state board shall appoint an
423arbiter.
424(c) The Office of the Legislative Auditor General shall provide information the office
425receives under this part to local school boards and the arbiter described in this
426Subsection (11) during the dispute resolution process.
427   (12)(a) As part of the asset allocation process under this section, the local school boards
428of the new school district and reorganized new school district shall develop a high
429growth transition plan that addresses enrollment growth disparities among successor
430districts.
431(b) The plan shall include:
432(i) projected enrollment for each successor district for the first five fiscal years after
433the allocation date, including documentation supporting the projections;
434(ii) identification of any successor districts projected to have average annual
435enrollment growth of 5% or more;
436(iii) assessment of facility capacity in each successor district relative to projected
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437enrollment;
438(iv) identification of facility or transportation infrastructure needs in high growth
439areas; and
440(v) potential strategies for addressing high growth needs, which may include
441voluntary loan arrangements using discretionary assets.
442(c) The high growth transition plan shall be:
443(i) completed before the allocation date;
444(ii) provided to the State Board of Education within 30 days after the allocation date;
445and
446(iii) made available to the public upon request.
447(d) Development of the plan does not create any obligation for successor districts to
448implement any particular strategy identified in the plan.
449Section 6. Effective Date.
450   This bill takes effect on May 6, 2026.
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