HB3427

Transcript

1 80th OREGON LEGISLATIVE ASSEMBLY--2019 Regular Session A-Engrossed House Bill 3427 Ordered by the House April 29 Including House Amendments dated April 29 Sponsored by COMMITTEE ON RULES (at the request of Representative Barbara Smith Warner) SUMMARY The following summary is not prepared by the sponsors of the measure and is not a part of the body thereof subject the Legislative Assembly. It is an editor’s brief statement of the essential features of the to consideration by measure. [ Directs Department of Education to conduct study to examine best methods for funding state’s system of kindergarten through grade 12 public education. ] [ Directs department to submit report to interim committee of Legislative Assembly no later than September 15, 2020. ] including transfers to State Establishes Fund for Student Success. Specifies uses of fund, School Fund, Student Investment Account, Statewide Education Initiatives Account and Early Learning Account. Directs moneys to be transferred to State School Fund from Fund for Student Success. Increases fiscal year limit for transfers from State School Fund to High Cost Disabilities Account. Establishes Student Investment Account for purpose of distributing grants to school districts and certain public charter schools. Prescribes allowed uses for grant moneys, grant application requirements, inclusion of performance growth targets into grant agreements, calculation of grant amounts and accountability measures. Directs Department of Education to provide technical assistance related to grants, including coaching programs for grant re- cipients that did not meet performance growth targets and intensive program for high needs school districts. Directs department to make annual report to committees of Legislative Assembly related to education. Account. Prescribes allowed uses of account. Establishes Statewide Education Initiatives operation of youth reen- Provides for expansion of school breakfast and lunch programs, gagement system, establishment of Statewide School Safety and Prevention System, devel- opment and provision of statewide equity initiatives, provision of summer learning program for certain schools and funding for early warning system for high school graduation and di- rects Department of Education to fund those programs through account. Directs department plan funded by account that would provide and Educator Advancement Council to develop effective combination of programs and initiatives for professional development of educators. Establishes Early Learning Account. Prescribes allowed uses of account. Establishes Early Childhood Equity Fund. Provides for early childhood support grant program, to be funded by account. Decreases personal income tax rates. Imposes corporate activity tax, to be measured by commercial activity, defined as total amount arising from person’s transactions and activity in regular course of business. Exempts persons with taxable commercial activity of $1 million or less. Defines additional excluded persons exempt from corporate activity tax. Allows sub- traction for percentage of taxpayer’s cost inputs or labor costs. Includes provision for sourcing of commercial activity to state. Requires persons and unitary groups with com- mercial activity above threshold to register with Department of Revenue. Preempts local government imposition of taxes upon commercial activity or receipts from grocery sales, other than existing taxes. Transfers net revenues from corporate activity tax to Fund for Student Success. Defines terms. Applies to tax years beginning on or after January 1, 2020. Takes effect on 91st day following adjournment sine die. 1 A BILL FOR AN ACT 2 Relating to education funding; creating new provisions; amending ORS 316.037, 327.008, 327.527, 3 327.535, 329.095, 417.790 and 417.847; prescribing an effective date; and providing for revenue 4 raising that requires approval by a three-fifths majority. 5 Be It Enacted by the People of the State of Oregon: NOTE: Matter in boldfaced type in an amended section is new; matter [ italic and bracketed ] is existing law to be omitted. New sections are in boldfaced type. LC 4380

2 A-Eng. HB 3427 FUND FOR STUDENT SUCCESS 1 2 Section 2 of this 2019 Act is added to and made a part of ORS chapter 327. 3 SECTION 1. Fund for 4 SECTION 2. (1) The Fund for Student Student Success; transfers to accounts. Success is established in the State Treasury, separate and distinct from the General Fund. 5 6 Student Success shall consist of moneys appropriated by the Legislative (2) The Fund for 76 of this 2019 Act and moneys re- 7 Assembly, moneys transferred to the fund under section ceived as provided in subsection (3) of this section. 8 State of Oregon, may solicit and ac- (3) The Department of Education, on behalf of the 9 private sources for the Fund cept gifts, grants, donations and other moneys from public and 10 in this subsection shall be deposited into for Student Success. Moneys received as provided 11 12 the Fund for Student Success. 13 (4) Moneys in the Fund for Student Success are continuously appropriated to the de- for: partment 14 (a) Transfer to the State School Fund in the amount calculated by the Legislative Fiscal 15 Officer and the Legislative Revenue Officer to be the sum of: 16 327.008 (11) to the High (A) At least $40 million, for the purpose of a transfer under ORS 17 18 Cost Disabilities Account established in ORS 327.348; and The 19 (B) amount of change in General Fund revenue to be collected in the biennium due 2019 Act and the operation of to the amendments to ORS 316.037 by section 56 of this 20 21 sections 58 to 76 of this 2019 Act. 22 (b) Of the amount remaining in the Fund for Student Success after the transfer pre- scribed by paragraph (a) of this subsection, transfer to other education accounts as follows: 23 24 50 percent to the Student Investment Account established in section 8 of this (A) At least 2019 25 Act. 26 (B) Up to 30 percent to the Statewide Education Initiatives Account established in section 27 24 of this 2019 Act. (C) At least 20 percent to 28 the Early Learning Account established in section 51 of this Act. 2019 29 this 2019 (1) In addition to and not in lieu of the transfer under section 2 of SECTION 3. 30 shall transfer Act, for the biennium beginning July 1, 2019, the Department of Education 31 to the State School Fund an amount that equals $200 from the Fund for Student Success 32 million. 33 this 2019 Act, for the biennium beginning July 1, (2) Notwithstanding section 2 (4)(a) of 34 2019, the amount the Department of Education shall transfer from the Fund for Student 35 State School Fund for the purpose of a transfer under ORS 327.008 (11) to the Success to the 36 High Cost Disabilities Account established in ORS 327.348 shall be $20 million. 37 38 STATE SCHOOL FUND 39 40 amended by section 22, chapter 639, Oregon Laws 2017, and sec- ORS 327.008, as SECTION 4. 41 tion 5, chapter 700, Oregon Laws 2017, is amended to read: 42 327.008. (1)(a) There is established a State School Fund in the General Fund. 43 (b) The Department of Education, on behalf of the State of Oregon, may solicit and accept gifts, 44 grants, donations and other moneys from public and private sources for the State School Fund. 45 [2]

3 A-Eng. HB 3427 Moneys received as provided in this paragraph shall be deposited into the State School Fund. 1 2 (c) The State School Fund shall consist of moneys appropriated by the Legislative Assembly, 3 moneys transferred from the Education moneys transferred from the Fund for Student Success, Stability Fund and the Oregon Marijuana Account and moneys received as provided in paragraph 4 5 (b) of this subsection. 6 the (d) The State School Fund is continuously appropriated to the Department of Education for 7 327.095, 327.099, 327.101, 327.125, 327.137, 327.348, 336.575, purposes of ORS 327.006 to 327.077, 336.580, 336.635, 343.243, 343.533, 343.941 and 343.961 and sections 1 to 3, chapter 735, Oregon Laws 8 2013. 9 district a State School (2) There shall be apportioned from the State School Fund to each school 10 facility grant Fund grant, consisting of the positive amount equal to a general purpose grant and a 11 and a transportation grant and a high cost disabilities grant minus local revenue, computed as pro- 12 13 vided in ORS 327.011 and 327.013. 14 (3) For the first school year after a public charter school ceases to operate because of dissol- ution or closure or because of 15 termination or nonrenewal of a charter, there shall be apportioned each school district that had sponsored a public charter school that 16 from the State School Fund to general purpose grant per extended 17 ceased to operate an amount equal to the school district’s 18 ADMw multiplied by five percent of the ADM of the public charter school for the previous school 19 year. apportioned from the State School Fund to each education service district a (4) There shall be 20 State School Fund grant as calculated under ORS 327.019. 21 22 (5) All figures used in the determination of the distribution of the State School Fund shall be 23 estimates for the same year as the distribution occurs, unless otherwise specified. (6) Numbers of students in average daily membership used in 24 the distribution formula shall be 25 the numbers as of June of the year of distribution. (7) A school district may not use the portion of the State School Fund grant that is attributable 26 to the facility grant for capital construction costs. 27 (8) The total amount of the State School Fund that is distributed as facility grants may not ex- 28 ceed $7 million in any biennium. If the total amount to be distributed as facility grants exceeds this 29 30 Department of Education shall prorate the amount of funds available for facility the limitation, among those school districts that qualified for a facility grant. If the total amount to be dis- 31 grants 32 exceed this limitation, any remaining amounts shall be expended tributed as facility grants does not 33 for expenses incurred by the Office of School Facilities as provided in ORS 326.125 (1). (9) Each biennium, the Department of Education may expend from the State School Fund no 34 35 more than $6 million for expenses incurred by the Office of School Facilities under ORS 326.125 (2) 36 to (6). 37 shall transfer to the Pediatric Nursing Fa- (10) Each fiscal year, the Department of Education 38 cility Account established in ORS 327.022 the amount necessary to pay the costs of educational 39 services provided to students admitted to pediatric nursing facilities as provided in ORS 343.941. 40 $35 million from (11) Each fiscal year, the Department of Education shall transfer the amount of 41 the State School Fund to the High Cost Disabilities Account established in ORS 327.348. 42 (12)(a) Each biennium, the Department of Education shall transfer $39.5 million from the State 43 School Fund to the Educator Advancement Fund established under ORS 342.953. 44 (b) For the purpose of making the transfer under this subsection: 45 (A) The total amount available for all distributions from the State School Fund shall be reduced [3]

4 A-Eng. HB 3427 by $6 million; 1 (B) The amount distributed to school districts from the State School Fund under this section and 2 ORS 327.013 shall be reduced by $16.75 million; and 3 (C) The amount distributed to education service 4 districts from the State School Fund under this section and ORS 327.019 shall be reduced by $16.75 million. 5 6 amounts identified in this subsection shall be adjusted by the same (c) For each biennium, the by percentage 7 which the instructions furnished to state agencies by the Governor under ORS 291.204 direct the state agencies to adjust their agency budget requests for special payments under ORS 8 (6)(a)(C). 9 291.216 (13) Each biennium, the Department of Education shall transfer $12.5 million from the State 10 Language Learner Program Account established under ORS School Fund to the Statewide English 11 12 327.344. 13 (14) Each fiscal year, the Department of Education may expend up to $550,000 from the State School Fund 14 for the contract described in ORS 329.488. The amount distributed to education service districts from the State School Fund under this section and ORS 327.019 shall be reduced by the 15 16 amount expended by the department under this subsection. 17 to $350,000 from the State (15) Each biennium, the Department of Education may expend up of talented and gifted School Fund to provide administration of and support for the development 18 education under ORS 343.404. 19 to $150,000 from the State (16) Each biennium, the Department of Education may expend up 20 21 of a program to increase the number of speech-language School Fund for the administration 22 pathologists and speech-language pathology assistants under ORS 348.394 to 348.406. 23 Department of Education shall transfer the amount of $2.5 million from (17) Each fiscal year, the the State School Fund to the Small School District Supplement Fund established in section 3, chap- 24 ter 735, Oregon Laws 2013. 25 (18) Each biennium, the Department of Education shall transfer $2 million from 26 the State School 27 Fund for deposit to the Healthy School Facilities Fund established under ORS 332.337. 332.337, the department may expend moneys received in the Healthy School ORS Notwithstanding 28 Facilities Fund under this subsection only as grants for costs associated with testing for 29 elevated 30 levels of lead in water used for drinking or food preparation. 735, Oregon Laws 2013, section 7, ORS 327.008, as amended by section 7, chapter 31 SECTION 5. section 38, chapter 245, chapter 81, Oregon Laws 2014, section 2, chapter 68, Oregon Laws 2015, 32 2015, section 11, chapter 604, Oregon Laws Oregon Laws 2015, section 2, chapter 555, Oregon Laws 33 2015, sections 2015, section 2, chapter 644, Oregon Laws 2015, section 8, chapter 783, Oregon Laws 34 22 and 23, chapter 639, Oregon Laws 2017, sections 5 and 6, chapter 700, Oregon Laws 2017, and 35 section 34, chapter 725, Oregon Laws 2017, is amended to read: 36 327.008. (1)(a) There is established a State School Fund in the General Fund. 37 (b) The Department of Education, on behalf of the State of Oregon, may solicit and accept gifts, 38 public and private sources for the State School Fund. grants, donations and other moneys from 39 Moneys received as provided in this paragraph shall be deposited into the State School Fund. 40 (c) The State School Fund shall consist of moneys appropriated by the Legislative Assembly, 41 moneys transferred from the Education moneys transferred from the Fund for Student Success, 42 Stability Fund and the Oregon Marijuana Account and moneys received as provided in paragraph 43 (b) of this subsection. 44 (d) The State School Fund is continuously appropriated to the Department of Education for the 45 [4]

5 A-Eng. HB 3427 purposes of ORS 327.006 to 327.077, 327.095, 327.099, 327.101, 327.125, 327.137, 327.348, 336.575, 1 2 336.580, 336.635, 343.243, 343.533, 343.941 and 343.961. (2) There shall be apportioned from the State School Fund to each school district a State School 3 4 of the positive amount equal to a general purpose grant and a facility grant Fund grant, consisting and a transportation grant and a high cost disabilities grant minus local revenue, computed as pro- 5 6 vided in ORS 327.011 and 327.013. year after a public charter school ceases to operate because of dissol- 7 (3) For the first school ution or closure or because of termination or nonrenewal of a 8 charter, there shall be apportioned from the State School Fund to each school district that had sponsored a public charter school that 9 10 to the school district’s general purpose grant per extended ceased to operate an amount equal 11 ADMw multiplied by five percent of the ADM of the public charter school for the previous school year. 12 13 (4) There shall be apportioned from the State School Fund to each education service district a State School Fund grant as calculated under ORS 327.019. 14 (5) All figures used in the determination of the distribution of the State School Fund shall be 15 estimates for the same year as the distribution occurs, unless otherwise specified. 16 17 (6) Numbers of students in average daily membership used in the distribution formula shall be the numbers as of June of the year of distribution. 18 not use the portion of the State School Fund grant that is attributable (7) A school district may 19 to the facility grant for capital construction costs. 20 21 the State School Fund that is distributed as facility grants may not ex- (8) The total amount of ceed $7 million in any biennium. If 22 the total amount to be distributed as facility grants exceeds this Department of Education shall prorate the amount of funds available for facility 23 limitation, the 24 grants those school districts that qualified for a facility grant. If the total amount to be dis- among 25 tributed as facility grants does not exceed this limitation, any remaining amounts shall be expended 26 for expenses incurred by the Office of School Facilities as provided in ORS 326.125 (1). 27 (9) Each biennium, the Department of Education may expend from the State School Fund no 28 more than $6 million for expenses incurred by the Office of School Facilities under ORS 326.125 (2) 29 to (6). shall transfer to the Pediatric Nursing Fa- (10) Each fiscal year, the Department of Education 30 cility Account established in ORS 327.022 the amount necessary to pay the costs of educational 31 services provided to students admitted to pediatric nursing facilities as provided in ORS 343.941. 32 $55 ] amount of [ (11) Each fiscal year, the Department of Education shall transfer the 33 $35 million 34 from the State School Fund to the High Cost Disabilities Account established in ORS 327.348. 35 the Department of Education shall transfer $39.5 million from the State (12)(a) Each biennium, 36 School Fund to the Educator Advancement Fund established under ORS 342.953. 37 (b) For the purpose of making the transfer under this subsection: 38 (A) The total amount available for all distributions from the State School Fund shall be reduced 39 by $6 million; (B) The amount distributed to school districts 40 from the State School Fund under this section and 41 ORS 327.013 shall be reduced by $16.75 million; and 42 districts from the State School Fund under this (C) The amount distributed to education service 43 section and ORS 327.019 shall be reduced by $16.75 million. 44 (c) For each biennium, the amounts identified in this subsection shall be adjusted by the same 45 percentage by which the instructions furnished to state agencies by the Governor under ORS 291.204 [5]

6 A-Eng. HB 3427 direct the state agencies to adjust their agency budget requests for special payments under ORS 1 291.216 (6)(a)(C). 2 3 (13) Each biennium, the Department of Education shall transfer $12.5 million from the State Program Account established under ORS School Fund to the Statewide English Language Learner 4 5 327.344. 6 fiscal year, the Department of Education may expend up to $550,000 from the State Each (14) 7 School for the contract described in ORS 329.488. The amount distributed to education service Fund districts from the State School Fund under this section and ORS 327.019 shall be reduced by the 8 amount expended by the department under this subsection. 9 to $350,000 from the State (15) Each biennium, the Department of Education may expend up 10 of talented and gifted 11 School Fund to provide administration of and support for the development education under ORS 343.404. 12 (16) Each biennium, the Department of Education may expend up to $150,000 from the State 13 School Fund for the administration of a program to increase the number of speech-language 14 pathologists and speech-language pathology assistants under ORS 348.394 to 348.406. 15 (17) Each biennium, the Department of Education shall transfer $2 million from the State School 16 for Fund deposit to the Healthy School Facilities Fund established under ORS 332.337. 17 Notwithstanding 332.337, the department may expend moneys received in the Healthy School ORS 18 19 elevated Facilities Fund under this subsection only as grants for costs associated with testing for levels of lead in water used for drinking or food preparation. 20 of this 2019 Act become (1) The amendments to ORS 327.008 by section 5 21 SECTION 6. operative on July 1, 2020. 22 (2) The amendments to ORS 327.008 by section 5 of this 2019 Act apply to State School 23 Fund distributions commencing with the 2020-2021 distributions. 24 25 STUDENT INVESTMENT ACCOUNT 26 27 SECTION 7. Sections 8 to 19 of this 2019 Act are added to and made a part of ORS 28 chapter 327. 29 (1) The Student Investment Account is estab- Student Investment Account. 8. SECTION 30 lished within the Fund for Student Success. 31 (2) The Student Investment Account shall consist of: 32 (a) Moneys transferred to the account from the Fund for Student Success; 33 transferred to the account by the Legislative As- (b) Moneys appropriated or otherwise 34 sembly; 35 (c) Amounts donated to the account; and 36 (d) Other amounts deposited into the account from any source. 37 State of Oregon, may solicit and ac- (3) The Department of Education, on behalf of the 38 moneys from public and private sources for the Stu- cept gifts, grants, donations and other 39 dent Investment Account. Moneys received as provided in this subsection shall be deposited 40 into the Student Investment Account. 41 the De- (4) Moneys in the Student Investment Account are continuously appropriated to 42 grants under section 13 of this 2019 partment of Education for the purposes of distributing 43 Act. 44 SECTION 9. Allowed uses of grants from Student Investment Account. (1) In addition to 45 [6]

7 A-Eng. HB 3427 those moneys distributed through the State School Fund, the Department of Education shall 1 2 award grants from the Student Investment Account. Grants shall be distributed as provided under section 13 of this 2019 Act. 3 4 (2) The purposes of grants distributed under section 13 of this 2019 Act shall be to: 5 (a) Meet students’ mental or behavioral health needs; and 6 students, including reducing academic disparities (b) Increase academic achievement for 7 for: (A) Economically disadvantaged students, as determined based on 8 eligibility for free or United States Department of Agriculture’s current Income 9 reduced price lunches under the 10 Eligibility Guidelines; 11 (B) Students from racial or ethnic groups that have historically experienced academic disparities, as determined under rules adopted by the State Board of Education; 12 (C) Students with disabilities; 13 (D) Students who are English language learners; 14 (E) Students who are foster children, as defined in ORS 30.297; 15 rules adopted by the State Board (F) Students who are homeless, as determined under 16 of Education; and 17 student groups that have historically experienced academic disparities, as (G) Any other 18 determined by the State Board of Education by rule. 19 20 grant re- (3) Grant moneys received under section 13 of this 2019 Act may be used by a cipient only for: 21 (a) Increasing instructional time, which may include: 22 23 (A) More hours or days of instructional time; 24 (B) Summer programs; 25 (C) Before-school or after-school programs; or 26 (D) Technological investments that minimize class time used for assessments adminis- 27 tered to students. (b) Addressing students’ health or safety needs, which may include: 28 29 (A) Social-emotional learning and development; (B) Student mental and behavioral health; 30 31 (C) Improvements to teaching and learning practices or organizational structures that lead to better interpersonal relationships at the school; 32 (D) Student health and wellness; 33 (E) Trauma-informed practices; 34 (F) School health professionals and assistants; or 35 (G) Facility improvements directly related to improving student health or safety. 36 37 may include increasing the use of instructional assistants, (c) Reducing class sizes, which 38 or staff by using evidence-based criteria to ensure appropriate student-teacher ratios caseloads. 39 40 learning experi- (d) Expanding availability of and student participation in well-rounded ences, which may include: 41 early literacy practices and 42 (A) Developmentally appropriate and culturally responsive 43 programs in prekindergarten through third grade; 44 (B) Culturally responsive practices and programs in grades six through eight, including 45 learning, counseling and student support that is connected to colleges and careers; [7]

8 A-Eng. HB 3427 (C) Broadened curricular options at all grade levels, including access to: 1 2 (i) Art, music and physical education classes; 3 (ii) Science, technology, engineering and mathematics education; 4 organization (iii) Career and technical education, including career and technical student 5 programs; (iv) Electives that are engaging to students; 6 college credit programs, including dual credit programs, International (v) 7 Accelerated Baccalaureate programs and advanced placement programs; 8 (vi) Dropout prevention programs and transition supports; 9 10 (vii) Life skills classes; or 11 (viii) Talented and gifted programs; or (D) Access to licensed educators with a library media endorsement. 12 13 SECTION 10. Application requirements to receive grants from Student Investment Ac- (1) As used in this section, “eligible applicant” means: count. 14 (a) Common school districts and union high school districts; and 15 are not virtual public charter schools, as defined in ORS 16 (b) Public charter schools that 338.005, and that have a student population of which: 17 of students from the fol- (A) At least 35 percent of the student population is composed 18 19 lowing student groups: 20 (i) Economically disadvantaged, as described in section 9 (2)(b)(A) of this 2019 Act; 21 as (ii) Racial or ethnic groups that have historically experienced academic disparities, described in section 9 (2)(b)(B) of this 2019 Act; or 22 23 (iii) Students with disabilities, as described in section 9 (2)(b)(C) of this 2019 Act; and 24 (B) The percentage of the students from student groups identified under subparagraph (A) of this paragraph is greater than: 25 all students in the school district who are economically disadvan- (i) The percentage of 26 taged, if eligibility is 27 determined based on the percentage of students who are economically 28 disadvantaged; 29 students in the school district who are from racial or ethnic (ii) The percentage of all disparities, if eligibility is determined 30 groups that have historically experienced academic based on the percentage of students who are from those racial or ethnic groups; or 31 32 (iii) The percentage of all students in the school district who are disabled, if eligibility is 33 determined based on the percentage of students who are disabled. Account to (2)(a) Eligible applicants may apply for a grant from the Student Investment 34 receive a distribution under section 12 of this 2019 Act. 35 36 (b) Notwithstanding ORS 338.155 (9), a public charter school that is not an eligible appli- 37 cant may not apply for a grant under this section. 38 (3) Prior to preparing a grant application, an eligible applicant must: is a school district, determine whether the school district will 39 (a) If the eligible applicant grant ap- allow public charter schools sponsored by the school district to participate in the 40 41 plication and the grant agreement. a public charter school, determine whether the public 42 (b) If the eligible applicant is 43 charter school intends to apply for a grant and provide notice of that intent to the school 44 district that is the sponsor of the public charter school and to the Department of Education. 45 (4)(a) If an eligible applicant is a school district and decides to include public charter [8]

9 A-Eng. HB 3427 schools in the grant application and grant agreement, the school district must provide all 1 public charter schools sponsored by the school district the opportunity 2 to participate in the 3 grant application and grant agreement. required to participate in the grant application and 4 (b)(A) A public charter school is not grant agreement of a school district. 5 6 (B) If a public charter school does not participate in a grant application and grant agreement under this subsection: 7 The (i) 8 ADMw of the public charter school may not be used in the calculation of the 9 school district ADMw for grants distributed under section 13 of this 2019 Act; and is not entitled to any grant moneys distributed under sec- 10 (ii) The public charter school 11 tion 13 of this 2019 Act. 12 (C) If a public charter school participates in a grant application and grant agreement under this subsection: 13 the 14 (i) The public charter school and school district shall enter into an agreement for provision of services, including any accountability measures 15 distribution of moneys or the required of the public charter school by the school district; 16 (ii) The ADMw of the public charter school shall be used in the calculation of the school 17 18 district ADMw for grants distributed under section 13 of this 2019 Act; and 19 grant moneys or services provided for in (iii) The public charter school is entitled to any 20 the agreement entered into under this subparagraph. a grant application, an eligible applicant must deter- 21 (5)(a) For the purpose of preparing mine: 22 allowed uses identified in section 9 (3) of this 2019 Act the eligible ap- (A) Which of the 23 plicant will fund with grant moneys; and 24 paragraph the (B) Which of the eligible uses identified under subparagraph (A) of this 25 26 eligible applicant will designate to meeting student mental and behavioral health needs. paragraph (a) of (b) An eligible applicant shall make the determinations required under 27 this subsection by: 28 (A) Engaging in strategic planning; and 29 Education Commission established (B) Considering the recommendations of the Quality 30 under ORS 327.500. 31 32 (6)(a) The strategic planning required under subsection (5) of this section must include: (A) A completed needs assessment, as described in ORS 329.095; 33 34 of the potential academic impact, both for the students of the eligible (B) An analysis groups identified in section 9 (2)(b) of this 2019 Act, from the al- applicant and for student 35 lowed uses that would be funded by grant moneys; and 36 37 (C) The creation of budgets for the allowed uses that would be funded by grant moneys. this section must take into 38 (b) The strategic planning required under subsection (5) of 39 consideration: 40 (A) Input from the community of the eligible applicant, including school employees, stu- 41 dents from student groups identified in section 9 (2)(b) of this 2019 Act and parents of those 42 students; and 43 (B) Data collected by the eligible applicant to enable the eligible applicant to make decisions. equity-based 44 45 (7) Based on the strategic planning described in subsection (6) of this section, the eligible [9]

10 A-Eng. HB 3427 applicant shall develop a four-year plan for the use of grant moneys. The plan must be up- 1 dated every two years and must: 2 in section 9 (3) of this 2019 Act will be funded (a) Identify which allowed uses identified 3 grant with 4 moneys and which of those uses will be designated to meet student mental and behavioral health needs. 5 (b) Describe how the allowed uses identified under paragraph (a) of this subsection will 6 7 be used to: (A) Meet students’ mental and behavioral health needs; 8 (B) Increase academic achievement for students of the eligible applicant; and 9 (C) Reduce academic 10 disparities for student groups identified in section 9 (2)(b) of this applicant, and identify which of those student groups 2019 Act who are served by the eligible 11 will benefit from the allowed uses that are being funded with grant moneys. 12 13 (c) Include the budgets for the allowed uses to be funded with grant moneys. the eligible applicant at an open meeting, fol- (d) Be approved by the governing body of 14 15 lowing: (A) Provision of the plan at the main office of the eligible applicant and on the eligible 16 website; applicant’s 17 the plan by an administrator of the eligible applicant to the (B) Oral presentation of 18 19 governing body of the eligible applicant; and (C) Opportunity for the public to comment on the plan at an open meeting. 20 21 (e) Be a part of the local district continuous improvement plan described in ORS 329.095, if the eligible applicant is a school district. 22 (8) To apply 23 for a grant, an eligible applicant must submit an application every two years in a format and according to timelines prescribed by the Department of Education. The ap- 24 25 plication must include: 26 (a) A completed needs assessment, as described in ORS 329.095; 27 (b) The plan developed under subsection (7) of this section; and 28 under (c) Budget estimates for each of the allowed uses identified in the plan developed subsection (7) of this section that will be funded by grant moneys. 29 10 of this 2019 Act, any plans submitted for a grant Notwithstanding section SECTION 11. 30 to be used before the 2021-2023 biennium must be for from the Student Investment Account 31 a three-year plan and must be updated after the first year. 32 grants from the Student Investment Approval of applications to receive SECTION 12. 33 (1) As used in this section: Account; performance growth targets. 34 (a) “Disaggregated” means separated based on the student groups identified in section 9 35 (2)(b) of this 2019 Act. 36 “Five-year (b) completion rate” means the percentage of students who received a high 37 or who received a certificate for school diploma, a modified diploma or an extended diploma 38 passing an approved high school equivalency test such as the General Educational Develop- 39 ment test (GED) within five years of the student beginning the ninth grade. 40 (c) “High school diploma” means a diploma that is awarded to a student upon satisfaction 41 of the requirements prescribed by ORS 329.451 (2). 42 (d) “Ninth-grade on-track rates” means the percentage of students who, at the end of the 43 summer following the year the students began ninth grade, completed one quarter of the 44 credits required for high school graduation. 45 [10]

11 A-Eng. HB 3427 (e) “On-time graduation rate” means the percentage of students who received a high 1 2 diploma within four years of the students beginning the ninth school diploma or a modified grade. 3 4 of students who are absent, as de- (f) “Regular attendance rates” means the percentage policy, for less than 10 percent of the school days for termined by Department of Education 5 6 which the students are enrolled. (g) “Third-grade reading proficiency rate” means the percentage of students in the third 7 grade who are determined to be proficient 8 or above in English language arts, as determined under rules adopted by the State Board of Education. 9 10 (2) The Department of Education shall review all applications for grants from the Student Investment Account that comply with the requirements prescribed by section 10 of this 2019 11 Act. 12 (3) If an application complies with the requirements of section 10 of this 2019 Act, the 13 department shall collaborate with the grant recipient to develop applicable longitudinal per- 14 15 formance growth targets. The longitudinal performance growth targets must: (a) Be based on data available for longitudinal analysis; 16 (b) Be developed based on guidance established by the department; and 17 (c) Use the following applicable metrics: 18 19 (A) On-time graduation rates and five-year completion rates, including: (i) The overall on-time graduation rate and five-year completion rate. 20 21 (ii) Gaps in disaggregated on-time graduation rates and five-year completion rates. 22 (B) Ninth-grade on-track rates, including: 23 (i) The overall ninth-grade on-track rate. 24 (ii) Gaps in disaggregated ninth-grade on-track rates. (C) Third-grade reading proficiency rates, including: 25 26 (i) The overall third-grade reading proficiency rate. 27 (ii) Gaps in disaggregated third-grade reading proficiency rates. 28 (D) Regular attendance rates, including: 29 (i) The overall regular attendance rate. (ii) Gaps in disaggregated regular attendance rates. 30 (4) addition to the metrics identified in subsection (3) of this section, other local 31 In metrics may be used to develop applicable performance growth targets. 32 (5) When developing performance growth targets, the department and grant recipient 33 shall: 34 (a) Review disaggregated student data; 35 of strategically developing 36 (b) Apply a process adopted by the department for the purpose 37 equitable policies and programs; and (c) Identify which student groups identified in section 9 (2)(b) of this 38 2019 Act are most 39 at risk of not meeting performance growth targets. growth targets, the department and grant recipient (6)(a) After developing performance 40 41 shall enter into a grant agreement. The grant agreement must include applicable perform- targets for measuring the academic growth of the students of the grant recipi- 42 growth ance 43 ent. 44 (b) A grant agreement is not valid until approved by the governing body of the grant 45 recipient at an open meeting following: [11]

12 A-Eng. HB 3427 (A) Provision of the plan at the main office of the grant recipient and on the grant 1 recipient’s website; 2 3 (B) Oral presentation of the plan by an administrator of the grant recipient to the gov- 4 erning body of the grant recipient; and 5 (C) Opportunity for the public to comment on the plan at an open meeting. 6 (7) Any agreements between a public charter school and a grant recipient that is a school district shall become part of the grant agreement. 7 Calculations of grant amounts; distributions of grants. (1)(a) Except as 8 SECTION 13. 9 grant awarded from the Stu- provided by paragraph (d) of this subsection, the amount of a (the total amount available for 10 dent Investment Account = the grant recipient’s ADMw × the total ADMw of all grant recipients). ÷ distribution as grants in each biennium 11 (b) For purposes of this subsection and except as provided by paragraph (c) of this sub- 12 equals the ADMw as calculated under ORS 327.013, except that the additional section, ADMw 13 amount allowed for students who are in poverty families, as determined under ORS 327.013 14 (1)(c)(A)(v)(I), shall be 0.5. 15 16 the Department of Education shall remove from a school (c) When calculating ADMw, district’s calculation any amounts that are attributable to: 17 18 (A) A virtual public charter school, as defined in ORS 338.005; charter school that provided notice of the public charter school’s intent to 19 (B) A public apply for a grant as an eligible applicant; and 20 school district that did not participate in 21 (C) A public charter school sponsored by the the grant application or grant agreement. 22 grant distributed under this section may be adjusted by the depart- (d) The amount of a 23 24 ment to ensure that: 25 (A) A grant recipient does not receive any moneys for uses that are not allowed uses under section 9 (3) of this 2019 Act. 26 27 (B) A school district with an ADMw of 50 or less receives a minimum grant amount. 28 distribution of (2) The State Board of Education shall adopt any rules necessary for the grants under this section, including establishing: 29 (a) The minimum grant amounts under subsection (1)(d) of this section; and 30 (b) Any percentages and timelines for installment payments and adjustments of those 31 payments. installment 32 33 under (3) A grant recipient shall deposit the grant moneys the grant recipient receives 34 account as provided by this section into a separate account and shall apply amounts in that 35 the grant agreement. that allow for the The Department of Education shall establish timelines SECTION 14. 36 Act for the 2020-2021 school year. first distributions to be made under section 13 of this 2019 37 SECTION 15. Financial audits; determinations of moneys not spent in accordance with 38 grant agreement or failure to meet performance growth targets. (1)(a) Each year, each re- 39 cipient of a grant from the Student Investment Account shall: 40 (A) Conduct a financial audit of the use of grant moneys that is prepared in accordance 41 with the Municipal Audit Law; and 42 (B) Review the grant recipient’s progress toward meeting the performance growth tar- 43 gets in the grant agreement. 44 (b) Results of the financial audit and progress review must be: 45 [12]

13 A-Eng. HB 3427 (A) Made available at the main office of the grant recipient and on the grant recipient’s 1 website. 2 3 (B) Presented to the governing body of the grant recipient at an open meeting, following: 4 (i) Oral presentation of the results by an administrator of the grant recipient to the governing body of the grant recipient; and 5 6 (ii) Opportunity for the public to comment on the results at an open meeting. 7 (C) Forwarded to the Department of Education. (2)(a) Based on information received under subsection (1) of this section, the department 8 as shall determine each year whether grant moneys received by a grant recipient were used 9 provided by the grant agreement. 10 as provided by the grant agreement, the (b) If a grant recipient did not use grant moneys 11 department 12 shall: 13 (A) Collaborate with the grant recipient to identify and implement specific interventions; this (B) Provide technical assistance to the grant recipient as described in section 16 of 14 2019 Act; or 15 (C) Deduct amounts from future grant distributions. 16 be deducted from future grant distributions under paragraph (b)(C) (c) If amounts are to 17 18 of this subsection, the grant recipient may appeal to the State Board of Education for review as provided by the board by rule. 19 to commit to spending all available grant moneys, the de- (d) If a grant recipient fails 20 partment may deduct amounts not committed from future grant distributions. 21 22 (3)(a) The department shall determine each biennium if a grant recipient does not meet performance growth targets identified in the grant agreement. 23 24 (b) If a grant recipient does not meet the performance growth targets: (A) The grant recipient may submit an explanation 25 for the reasons why the performance 26 growth targets were not met; and (B) The department may: 27 (i) Take into consideration the explanation submitted by the grant recipient; 28 (ii) Require the grant recipient to enter into a coaching program described in section 17 29 of this 2019 Act; or 30 (iii) Direct the expenditure of grant moneys. 31 32 a performance review every four years, as re- (4) Each grant recipient must conduct 33 quired by standards adopted by the board by rule. 34 this section, (5)(a) Based on a review of the information received under subsection (1) of the department may require a 35 grant recipient to conduct a financial audit on a specific 36 funding area or multiple funding areas. 37 (b) The department may establish a procedure for conducting performance audits on a random basis or based on just cause as allowed under rules adopted by the board. 38 Technical assistance provided by the Department of Education. (1) The SECTION 16. 39 Department of Education shall make available technical assistance to eligible applicants, as 40 defined in section 10 of this 2019 Act, and to recipients of a grant from the Student Invest- 41 ment Account. The technical assistance shall include the provision of assistance with: 42 (a) Strategic planning for the use of grant moneys; 43 (b) Developing an application for a grant from the Student Investment Account; 44 (c) Identifying and implementing best practices for meeting performance growth targets; 45 [13]

14 A-Eng. HB 3427 and 1 2 (d) Identifying and implementing promising practices related to a grant agreement. (2) When providing technical assistance, the department shall: 3 4 the department to strategically develop equitable policies (a) Apply a process adopted by 5 and programs; and 6 the eligible applicant’s or grant (b) Ensure that technical assistance is based on 7 recipient’s specific needs and demographics. 8 under this section, the department (3) For the purpose of providing technical assistance 9 may enter into contracts with entities the department determines are qualified to provide the technical assistance. 10 Coaching program for grant recipients that do not meet performance 11 SECTION 17. growth targets. 12 establish a coaching program for re- (1) The Department of Education shall cipients of a grant from the Student Investment Account that do not meet the performance 13 14 growth targets specified in their grant agreements. A public charter school may participate in the coaching program only if the public charter school received a grant directly 15 from the 16 department and did not meet the performance growth targets specified in the public charter 17 school’s grant agreement. (2) If required by the department under section 15 of this 2019 Act to participate in a 18 participate in the coaching program. Participation coaching program, a grant recipient must 19 one year, unless the department allows for a in the coaching program must be for at least 20 21 program, the department shall advise and counsel grant shorter period of time. Under the growth targets and shall assist grant recipients with recipients on how to meet performance 22 23 ongoing professional development and peer collaboration. has completed the coaching program, the department shall 24 (3) After a grant recipient 16 25 make available to the grant recipient ongoing technical assistance as described in section 26 of this 2019 Act. (4) For the purpose of providing the coaching program under this section, the department 27 may enter into contracts with entities the department determines are qualified to provide 28 29 coaching. the school districts. Intensive program for high needs (1) The Department of SECTION 18. 30 Education shall establish an intensive program for school districts with the highest needs in 31 state. this 32 districts to participate in the in- (2)(a) The department shall identify and select school 33 tensive program. The department may not select a public charter school under this section. 34 participate in the intensive program must participate (b) A school district that agrees to 35 in the program for at least four years. 36 (3) school district that agrees to participate in the intensive program shall be eligible A 37 for additional funding from the Statewide Education Initiatives Account. The additional 38 funding shall be based on rules adopted by the State Board of Education and shall be calcu- 39 section 13 of this 2019 lated based on the ADMw of the school district, as calculated under 40 Act. 41 (4) A school district that agrees to participate in the intensive program shall: 42 (a) Commit to regular student success plan meetings to monitor practices; 43 (b) Use data to track student progress; 44 (c) Ensure school employees receive appropriate professional development and training; 45 [14]

15 A-Eng. HB 3427 (d) Create safe and inclusive learning environments; 1 (e) Improve school and school district practices and structures to support teaching and 2 and learning; 3 (f) Improve the skills of the members of the school board. 4 5 assisting school districts participating in the intensive program, (5) For the purpose of 6 the department shall establish student success teams. Student success teams shall be com- in school and school district improvement strategies, in- 7 posed of personnel with expertise cluding the use of differentiated instruction and inclusionary practices. 8 9 (6)(a) Under the intensive program, student success teams shall: (A) Advise and counsel school districts on how to improve performance outcomes; and 10 11 (B) Develop recommendations for meeting performance growth targets. (b) School district boards and 12 superintendents of school districts participating in an in- 13 tensive program must: (A) Accept all recommendations of the student success teams related to the use of Stu- 14 dent Investment 15 Account grant moneys and additional funding received under this section; 16 and (B) Consider all recommendations of the student success teams not described in subpar- 17 18 agraph (A) of this paragraph. (c) A school district that receives recommendations under this subsection must issue a 19 that: 20 report (A) Describes the recommendations; 21 (B) Identifies the recommendations that will be implemented and 22 the timelines for im- plementing the recommendations; and 23 24 (C) Identifies the recommendations that will not be implemented and an explanation for 25 why the recommendations will not be implemented. (d) The report required under paragraph (c) of this subsection must be: 26 27 main office and on the school district’s (A) Made available at the school district’s 28 and website; school dis- (B) Distributed to the school district community, including employees of the 29 trict and families of the students of the school district. 30 Reports to the Legislative Assembly. The Department of Education shall 31 SECTION 19. the Legislative Assembly related to education no later make a report to the committees of 32 than February 1 of each year regarding the implementation of sections 8 to 19 of this 2019 33 must include an annual performance review of each eligible applicant, as Act. The report 34 defined in section 10 of this 2019 Act. The report must: 35 a grant under sections 8 to 19 of this (1) Identify whether the eligible applicant received 36 2019 Act. 37 (2) For grant recipients, include a comparison of the grant recipient’s progress toward 38 targets meeting performance growth targets compared with the actual performance growth 39 established by the department for the following: 40 (a) On-time graduation rates and five-year completion rates, including the overall rate 41 and disaggregated student group rates; 42 (b) Ninth-grade on-track rates, including the overall rate and disaggregated student 43 group rates; 44 (c) Third-grade reading proficiency rates, including the overall rate and disaggregated 45 [15]

16 A-Eng. HB 3427 student group rates; 1 2 Regular attendance rates, including the overall rate and disaggregated student group (d) 3 rates; and 4 (e) Any optional local metrics. 5 of Education must make the first report required under The Department SECTION 20. 6 section 19 of this 2019 Act no later than February 1, 2022. SECTION 21. 7 ORS 329.095 is amended to read: 329.095. (1)(a) The Department of Education shall require school districts and schools to conduct 8 and self-evaluations 9 to periodically update their local district continuous improvement plans. Except subsection, the department may not require school districts 10 as provided by paragraph (b)(C) of this or schools to conduct self-evaluations or to update their local district 11 continuous improvement plans more frequently than biennially. 12 (b) The department may require a school district to: 13 (A) File, periodically, or at the department’s request, its local district continuous improvement 14 plan with the department; 15 (B) Notify the department of any substantial changes, as defined by rule of the State Board of 16 Education, to the school district; or 17 (C) Update its local district 18 continuous improvement plan when there has been a substantial 19 change, as defined by rule of the board, to the school district. as provided by this subsection shall involve the public 20 (c) The self-evaluation process conducted school districts shall ensure that representatives from the demo- 21 in the setting of local goals. The graphic groups of 22 their school population are invited to participate in the development of local dis- 23 trict continuous improvement plans to achieve the goals. 24 (2) As part of setting local goals, school districts shall undertake a communications process that 25 involves parents, students, teachers, school employees and community representatives to explain and discuss the local goals and their relationship to programs under this chapter. 26 (3) At the request of the school district, department staff shall provide 27 ongoing technical as- 28 sistance in the development and implementation of the local district continuous improvement plan. (4) The local district continuous improvement plan shall include: 29 (a) Goals to implement the following: 30 (A) A rigorous curriculum aligned with state standards; 31 (B) High-quality instructional programs; 32 33 (C) Short-term and long-term professional development plans; 34 (D) Programs and policies that achieve a safe educational environment; 35 (E) A plan for family and community engagement; 36 (F) Staff leadership development; 37 (G) High-quality data systems; (H) Improvement planning that is data-driven; 38 39 (I) Education service plans for students who have or have not exceeded all of the academic 40 content standards; and (J) A strong school library program; 41 42 (b) A review of demographics, student performance, staff characteristics and student access to, and ] 43 and use of, educational opportunities; [ 44 (c) A description of district efforts to achieve local efficiencies and efforts to make better use 45 of resources[ . ] ; and [16]

17 A-Eng. HB 3427 (d) A needs assessment, which shall: 1 (A) Be conducted in a manner that is inclusive of school employees, students from stu- 2 dent groups identified in section 9 (2)(b) of this 2019 Act and parents of those students. 3 4 (B) Address the following priorities: section (i) Reducing academic disparities for students from student groups identified in 5 9 (2)(b) of this 2019 Act; 6 (ii) Meeting students’ mental or behavioral health needs; 7 district or public 8 (iii) Providing equitable access to academic courses across the school charter school, with specific emphasis on access by students from 9 student groups identified 10 in section 9 (2)(b) of this 2019 Act; 11 (iv) Allowing teachers and staff to have sufficient time to: 12 (I) Collaborate with other teachers and staff; 13 school and on (II) Review data on students’ grades, absences and discipline, based on grade level or course; and 14 (III) Develop strategies to ensure that at-risk students stay on track to graduate; and 15 partnerships with other organizations, federally recognized Indian tribes, Possible (v) 16 school districts, education service districts, regional achievement collaboratives, post- 17 or nonprofit programs and 18 secondary institutions of education, education partners community-based 19 that have demonstrated achievement of positive outcomes in programs work with students from student groups identified in section 9 (2)(b) of this 2019 Act. 20 this 2019 Act become op- The amendments to ORS 329.095 by section 21 of SECTION 22. 21 erative on July 1, 2020. 22 23 STATEWIDE EDUCATION INITIATIVES ACCOUNT 24 25 Sections 24 and 25 of this 2019 Act are added to and made a part of ORS SECTION 23. 26 327. chapter 27 SECTION 24. Statewide Education Initiatives Account. (1) The Statewide Education Ini- 28 tiatives Account is established within the Fund for Student Success. 29 (2) The Statewide Education Initiatives Account shall consist of: 30 (a) Moneys transferred to the account from the Fund for Student Success; 31 transferred to the account by the Legislative As- (b) Moneys appropriated or otherwise 32 sembly; 33 (c) Amounts donated to the account; and 34 (d) Other amounts deposited into the account from any source. 35 State of Oregon, may solicit and ac- (3) The Department of Education, on behalf of the 36 cept gifts, grants, donations and other moneys from public and private sources for the 37 received as provided in this subsection Statewide Education Initiatives Account. Moneys 38 shall be deposited into the account. 39 (4) Moneys in the Statewide Education Initiatives Account are continuously appropriated 40 to the Department of Education for use as described in section 25 of this 2019 Act. 41 SECTION 25. Statewide Education Initiatives Account uses. (1) The Department of Edu- 42 cation shall use moneys in the Statewide Education Initiatives Account to provide funding 43 for statewide education initiatives, including: 44 (a) Funding the High School Graduation and College and Career Readiness Act at the 45 [17]

18 A-Eng. HB 3427 levels prescribed by ORS 327.856; 1 2 (b) Expanding school breakfast and lunch programs; 3 (c) Operating youth reengagement programs or providing youth reengagement services; 4 (d) and maintaining the Statewide School Safety and Prevention System Establishing 5 under section 36 of this 2019 Act; providing statewide equity initiatives, including the black or African- (e) Developing and 6 7 the American Indian or Alaskan Na- American education plan developed under ORS 329.841, tive education plan developed under section 38 of this 2019 Act, the Latino or Hispanic 8 any similar education plan education plan developed under section 39 of this 2019 Act or 9 10 identified by the department; 11 (f) Providing summer learning programs at schools that are considered high poverty un- der Title I of the federal Elementary and Secondary Education Act of 1965; 12 13 (g) Funding early warning systems to assist students in graduating from high school, as described in section 46 of this 2019 Act; 14 (h) Developing and implementing professional development programs and training pro- 15 grams, including programs that increase educator diversity and retain diverse educators; 16 (i) Planning for increased transparency and accountability in the public education system 17 of this state; 18 (j) Providing 19 additional funding to school districts participating in the intensive program under section 18 of this 2019 Act; 20 21 (k) Providing technical assistance, including costs incurred for: 22 (A) The coaching program described in section 17 of this 2019 Act; and 23 (B) The intensive program described in section 18 of this 2019 Act, including costs for student success teams; 24 Funding (L) 25 education service districts, as described in subsection (2) of this section; and (m) Funding costs incurred by the department in implementing this section and sections 26 8 to 19 and 52 of this 2019 Act. 27 (2)(a) The amount of a distribution to an education service district under this section = 28 × (the total amount available for distribution to ed- the education service district’s ADMw 29 ÷ ucation service districts in each biennium service dis- the total ADMw of all education 30 tricts that receive a distribution). 31 subsection, ADMw equals the ADMw as calculated under ORS (b) For purposes of this 32 327.013, except that the additional amount allowed for students who are in poverty families, 33 as determined under ORS 327.013 (1)(c)(A)(v)(I), shall be 0.5. 34 received under this section as provided (c) An education service district shall use moneys 35 located within the education service district. A by a plan developed by the school districts 36 to participate in the development of the plan or that has with- school district that declines 37 drawn from an education service district as provided by ORS 334.015 is not entitled to any 38 moneys distributed to the education service district under this subsection. 39 (d) A plan developed under this subsection must: 40 (A) Align with and support school districts in meeting the performance growth targets 41 of the school districts developing the plan; 42 (B) Include the provision of technical assistance to school districts in developing, imple- 43 menting and reviewing a plan for receiving a grant from the Student Investment Account; 44 (C) Provide for coordination with the department in administering and providing techni- 45 [18]

19 A-Eng. HB 3427 cal assistance to school districts, including coordinating any coaching programs established 1 under section 17 of this 2019 Act; and 2 (D) Be adopted and amended 3 as provided for local service plans under ORS 334.175 and approved by the department. 4 5 (e) Each education service district must submit an annual report to the department that: service district spent moneys received under this sub- (A) Describes how the education 6 7 and section; 8 an evaluation of the education service district’s compliance with the plan Includes (B) 9 from the superintendent of each school district that participated in the development of the plan. 10 (3) The State Board of Education shall adopt rules necessary for the distribution of 11 12 moneys under this section. 13 SCHOOL BREAKFAST AND LUNCH PROGRAMS 14 15 ORS 327.535 is amended to read: SECTION 26. 16 is eligible for 327.535. (1) As used in this section, “eligible student” means a student who 17 free or reduced price lunches under the United States Department of Agriculture’s current 18 Income Eligibility Guidelines. 19 ] make breakfast accessible at any school site and shall make (1) [ (2) A school district may 20 con- breakfast accessible if required by this section. [ Time spent by students consuming breakfast is 21 the students’ classroom and instruction sidered instructional time when students consume breakfast in 22 is being provided while students are consuming breakfast. No more than 15 minutes may be considered 23 instructional time when students are consuming breakfast. ] 24 [ (3) and Subject to subsections [ (3) ] of this section, a school district that provides and (5) ] (4) (2) 25 lunch at any school site shall make breakfast accessible as part of a breakfast program if 25 percent 26 [ students site are eligible for free or reduced price lunches or more of the students at the school 27 ] or under the United States Department of Agriculture’s current Income Eligibility Guidelines the 28 school site qualifies for assistance under Chapter I of Title I of the federal Elementary and Sec- 29 ondary Education Act of 1965. 30 under subsection [ (3) ] A school district that makes breakfast accessible as provided (4) ] (3) [ (2) 31 of Education for a waiver for all or for Department ] State Board of this section may apply to the [ 32 it unable to implement a breakfast particular grade levels if [ ] the school district is financially 33 program. The [ state board ] department may grant a waiver to the school district for a period not 34 to exceed two years, after which the school district must reestablish its claim of financial hardship 35 if the waiver is to be extended. 36 [ If the per meal federal reimbursement for the breakfast program falls below the 1991 (5) ] (4) 37 reimbursement levels, a school district may elect to discontinue the program until federal funding 38 is restored to those levels. No waiver is required for such election. 39 district that makes breakfast accessible at any school site shall make breakfast A school [ (6) (5) ] 40 who are eligible for free or re- students [ accessible at that school site at no charge to all eligible 41 duced price lunches under the United States Department of Agriculture’s current Income Eligibility 42 ]. For each breakfast that a school district Guidelines provides free of charge to a student who is 43 eligible for a reduced price lunch, the department [ of Education ] shall provide reimbursement to the 44 school district for the actual amount that a student would have been required to pay for the reduced 45 [19]

20 A-Eng. HB 3427 price breakfast. 1 (7)(a) Except as provided by subsection (8) of this section, a school district that makes 2 breakfast accessible at a school site may choose to make breakfast accessible at that school 3 site after the beginning of the school day. 4 5 (b) Time spent by students consuming breakfast is considered instructional time when 6 being provided students consume breakfast in the students’ classroom and instruction is while students are consuming breakfast. No more than 15 minutes may be 7 considered in- structional time when students are consuming breakfast. 8 site are eligible students, the 9 (8)(a) If 70 percent or more of the students at a school school district must make breakfast accessible at that school site after the beginning of the 10 school day. 11 12 (b) A school district that is required to make breakfast accessible as prescribed by par- agraph (a) of this subsection must ensure that breakfast is: 13 14 (A) Accessible to all students after the beginning of the school day, regardless of grade or arrival time; and 15 (B) Provided free of charge to all students, regardless of whether a student is an eligible 16 student. 17 to school districts to meet the re- (c) The department shall provide technical assistance 18 quirements of this subsection. of break- Technical assistance may include the development 19 fast delivery models. 20 21 demonstrate (d) Notwithstanding paragraph (a) of this subsection, if a school district can that 70 percent or more of the eligible students at a school site regularly 22 receive breakfast at the school site without the 23 school district complying with paragraph (a) of this subsection, 24 the school district is not required to comply with paragraph (a) of this subsection. State Board of Education may adopt any rules necessary for the implementation (9) 25 The 26 of this section. (1) The amendments to ORS 327.535 by section 26 of this 2019 Act become SECTION 27. 27 operative on July 1, 2020. 28 (2) Notwithstanding the operative date set forth in subsection (1) of this section, the 29 Department of Education may take any action before the operative date set forth in sub- 30 section (1) of this section that is necessary for the department to exercise, on and after the 31 of the duties, functions and operative date set forth in subsection (1) of this section, all 32 powers conferred on the department by the amendments to ORS 327.535 by section 26 of this 33 Act. 2019 34 ORS 327.527 is amended to read: SECTION 28. 35 Department of Education shall reimburse a school district, government agency 327.527. (1) The 36 or community group five cents for every breakfast or lunch the district, agency or group serves 37 during the summer as a part of: 38 (a) The United States Department of Agriculture’s Summer Food Service Program; or 39 (b) A summer meals program through an existing national school lunch program. 40 (2) In addition to the reimbursements provided under subsection (1) of this section, the Depart- 41 may award grants to school districts, government agencies and community of Education ment 42 groups to encourage participation in a program identified in subsection (1) of this section. Each 43 grant may not exceed $20,000 and must be used to: 44 (a) Purchase or upgrade necessary equipment and services required to provide food service and 45 [20]

21 A-Eng. HB 3427 meet sanitation requirements; 1 2 (b) Make any payment necessary to comply with sanitation requirements that may be required 3 prior to approval; or and necessary enrichment activities and (c) Fund participant outreach activities and materials 4 materials. 5 6 may award grants or enter into contracts to enable school districts (3) The department 7 Each grant or contract may to make breakfast accessible as required under ORS 327.535 (8). used to purchase or upgrade necessary equip- 8 not exceed $5,000 per school site and must be ment required to provide breakfast after the beginning of the school day. 9 (3) ] (4) The department may enter into a contract with a public or private entity for the pur- 10 [ poses of the entity providing: 11 12 (a) Technical assistance to applicants for and recipients of grants; and (b) Administration of the grant program. 13 14 (5) [ (4) ] adopt any rules necessary for the administration of The State Board of Education may section. this 15 2019 Act is added to and made a part of ORS chapter 327. Section 30 of this SECTION 29. 16 (1) For school districts with schools that provide United States Department SECTION 30. 17 meals to students as described in subsections (2) and (3) of this of Agriculture reimbursable 18 section, the Department of Education shall reimburse the school districts for costs incurred 19 by the school districts in providing the meals. The amounts of the reimbursements may not 20 exceed the amounts prescribed by subsections (2) and (3) of this section. 21 (2) For schools that offer reimburseable breakfast and lunch free of charge to all stu- 22 dents of the school based on the school’s or school district’s categorical eligibility to provide 23 reimburseable and lunch free of charge without consideration of individual eligi- breakfast 24 bility for free or reduced price meals, the amount of reimbursements provided under this 25 section may not exceed the difference between: 26 (a) The reimbursement rate established by the United States Department of Agriculture 27 for reimburseable meals; and 28 (b) Any amounts otherwise reimbursed or paid by state, federal or other sources. 29 (3) For schools that are not eligible to offer reimburseable breakfast and lunch free of 30 section but that provide reimburseable breakfast charge as described in subsection (2) of this 31 exceed 300 or lunch free of charge to students from households with incomes that do not 32 percent of the federal poverty guidelines, the amount of reimbursements provided under this 33 section may not exceed the difference between: 34 a student would have been required to pay for the breakfast (a) The actual amount that 35 reduced price lunch; or lunch, taking into consideration if the student qualified for a free or 36 and 37 (b) Any amounts otherwise reimbursed or paid by state, federal or other sources. 38 of Education may adopt any rules necessary for making reimburse- (4) The State Board 39 ments under this section. 40 (1) Section 30 of this 2019 Act becomes operative on July 1, 2020. SECTION 31. 41 (2) Section 30 of this 2019 Act applies to costs incurred on or after July 1, 2020. 42 SECTION 32. Hunger Free Schools Account is established in the State Treasury, (1) The 43 separate and distinct from the General Fund. 44 (2) Moneys in the Hunger Free Schools Account are continuously appropriated to the 45 [21]

22 A-Eng. HB 3427 Department of Education for the purpose of making reimbursements to school districts un- 1 der section 30 of this 2019 Act. 2 3 4 STATEWIDE YOUTH REENGAGEMENT SYSTEM 5 “eligible youth” SECTION 33. 6 (1) As used in this section, Youth reengagement program. means a person who: 7 21 years of age at the beginning of the 8 (a) Is at least 14 years of age but younger than school year; and 9 10 (b)(A) Is a school dropout, as defined in ORS 339.505; 11 (B) Is not exempt from attending public full-time schools under ORS 339.030; or (C) Is recommended to participate in a youth reengagement program by 12 the Department 13 of Human Services, a juvenile court, the Oregon Youth Authority or any other entity iden- 14 tified by the Youth Development Council by rule. (2) The Youth Development Division shall develop and administer a statewide youth re- 15 engagement system to provide appropriate educational opportunities and 16 access to services for eligible youths. 17 18 or other entity (3) Under the statewide youth reengagement system, a school district 19 youth reen- identified by the Youth Development Council by rule may choose to provide a 20 gagement program. A youth reengagement program must: (a) Be offered in collaboration with the Youth Development Division; and 21 (b) Include a partnership with an education service 22 district, a community college district, a community-based organization or any other entity a federally recognized Indian tribe, 23 identified by the Youth Development Council by rule. 24 (4) A youth reengagement program must offer, at a minimum, the following: 25 (a) Academic instruction that enables an eligible youth to receive credit that can be: 26 (A) Applied toward a high school diploma, a modified diploma or an 27 extended diploma; or (B) 28 Used to improve college or career readiness, including courses that assist the eligible 29 in youth preparing for an approved high school equivalency test such as the General Educa- 30 tional Development (GED) test; or 31 (b) Services for monitoring and supporting eligible youths, including: 32 (A) Academic counseling, career coaching and workforce readiness services; or (B) Assistance with accessing services and resources that support at-risk youth and re- 33 duce barriers to educational success. 34 program, 35 (5) If a school district or other entity chooses to provide a youth reengagement the school district or other entity may enter into an agreement to provide academic in- 36 struction or services as described in subsection (4) of this section. The agreement: 37 38 (a) May be with an education service district, a community college district or another 39 public entity or with a community-based organization; and 40 (b) Must comply with any other requirements prescribed by the State Board of Education 41 or the Youth Development Council by rule. (6)(a) The State Board of Education, in collaboration with the Youth Development Coun- 42 43 cil, shall establish by rule criteria for a school district or other entity to receive funding for Funding may be in the form eligible youths participating in a youth reengagement program. 44 45 of grants. [22]

23 A-Eng. HB 3427 (b) The criteria to receive funding may prescribe: 1 (A) Enrollment and attendance standards for eligible youths. 2 (B) Performance measures 3 that establish targets that must be met for purposes of ac- countability. The performance measure targets shall be based on standards adopted 4 by the 5 the program Youth Development Council and may take into account the specific purpose of 6 and any offered by the school district or other entity, the population served by the program 7 other factors identified by the council. (c) The criteria to receive funding must require a school district or other entity to pro- 8 vide to the Youth Development Division information that, at a minimum, describes: 9 (A) How the school district or other entity will identify, refer and enroll eligible youths; 10 youth reengage- 11 (B) How academic instruction and services will be provided through the ment program and what academic instruction and services will be provided; 12 (C) How student records will be maintained and how data will be collected and reported; 13 14 (D) How any applicable assessments under ORS 329.485 or 329.488 will be administered; 15 related (E) How the school district or other entity will provide special education and 16 who have an individualized education program services for eligible youths with disabilities or will provide necessary accommodations and plans for 17 eligible youths who qualify under section 504 of the Rehabilitation Act of 1978 (29 U.S.C. 794); 18 (F) How the school district or other entity will ensure that eligible youths receive ap- 19 propriate in-person guidance or support; and 20 21 (G) How the school district or other entity will record and report performance measures 22 for purposes of accountability, including longitudinal monitoring of student progress and post-secondary education and employment readiness. 23 24 Division shall provide technical (7) The Department of Education and Youth Development 25 to provide youth reengage- assistance to school districts and other eligible entities choosing programs. ment 26 shall coordinate with the State Board of Education (8)(a) The Youth Development Council 27 28 to adopt rules under this section. (b) When adopting rules under this section, the board and the council shall consult with 29 30 of education and community-based organizations that have pre- institutions post-secondary 31 reengagement programs, providers of online courses and programs and viously offered youth education service districts. 32 (9) Nothing in 33 this section affects the authority of a school district or other entity to or other educational services for eligible youths. directly offer youth reengagement programs 34 chapter 774, Oregon Laws 2015, and ORS 417.847, as amended by section 63, 35 SECTION 34. section 36, chapter 17, Oregon Laws 2017, is amended to read: 36 417.847. (1) The Youth Development Council is established. 37 (2) The council is established for the purpose of overseeing a unified system that provides ser- 38 children through youth 24 years of age in a manner that supports educational vices to school-age 39 success, focuses on crime prevention, reduces high risk behaviors and is integrated, measurable and 40 accountable. The council shall provide direction to the Youth Development Division. 41 (3) The council consists of no fewer than 15 members who are appointed by the Governor. The 42 Governor shall ensure that membership of the council satisfies any federal requirements for mem- 43 bership of a state advisory committee on juvenile justice, and shall include tribal representation in 44 the membership of the council. 45 [23]

24 A-Eng. HB 3427 (4) The council shall: 1 (a) Determine the availability of funding to support community-based youth development pro- 2 3 initiatives with demonstrated outcomes and strategic objectives established by grams, services and 4 the council by rule. 5 (b) Prioritize funding for services related to: to juvenile delinquency and 6 (A) The prevention of and intervention in the risk factors that lead 7 well-being of children and youth, the promotion of protective factors that improve the health and as supported by evidence-based program models and other research-based models; and 8 (B) The prevention of and intervention in gang violence and gang involvement. 9 10 and coordinate the statewide youth reengagement system described in Administer (c) 11 section 33 of this 2019 Act. 12 (5) The council may: (a) Enter into performance-based intergovernmental agreements with regional and county enti- 13 for the provision of youth development programs, services ties, and tribal governments, to contract 14 15 and initiatives that will achieve demonstrated outcomes and strategic objectives established by the council by rule. 16 (b) Determine the means by which services to children and youth may be provided effectively 17 18 and efficiently across multiple programs to improve the academic and social outcomes of children 19 youth. and identify (c) Assess state programs and services related to youth development and training, and 20 methods by which programs and services may be coordinated or consolidated. 21 goals established (d) Establish common academic and social indicators to support attainment of 22 23 by the council. (e) Establish common program outcome measurements and coordinate data collection across 24 multiple programs and services. 25 26 (f) Ensure implementation of best practices that: 27 (A) Are evidence based; (B) Are culturally, gender and age appropriate; 28 (C) Address individual risk factors; 29 30 (D) Build upon factors that improve the health and well-being of children and youth; and 31 (E) Include tribal best practices. council to serve as the chairperson or, if the 32 (6) The Governor may designate one member of the designate a chairperson, the council may elect one of its members to serve Governor chooses not to 33 as chairperson. 34 adopt rules 35 (7) In accordance with applicable provisions of ORS chapter 183, the council may necessary for the administration of the laws that the council is charged with administering. 36 ORS 417.847 by section Section 33 of this 2019 Act and the amendments to 37 SECTION 35. 34 of this 2019 Act become operative on July 1, 2020. 38 39 STATEWIDE SCHOOL SAFETY AND PREVENTION SYSTEM 40 41 SECTION 36. Statewide School Safety and Prevention System. (1) As used in this section: 42 (a) “Cyberbullying” has the meaning given that term in ORS 339.351. 43 (b) “Harassment, intimidation or bullying” has the meaning given that term in ORS 44 339.351. 45 [24]

25 A-Eng. HB 3427 (c) “Suicidal behavior” includes: 1 2 (A) Self-directed, injurious behavior with an intent to die as a result of the behavior; Nonfatal, self-directed, potentially injurious behavior with an intent to die as a result (B) 3 of the behavior that may not result in injury; or 4 5 (C) Thinking about, considering or planning suicide. 6 aggressive behavior with the intention to cause, or an outcome that (d) “Violence” means 7 poses a risk of causing, serious or lethal injury. (2) The Department of Education shall establish and maintain the Statewide School 8 9 Safety and Prevention System. (3) The system required under this section shall consist of the following: 10 (a) Assistance to school districts and education service districts in decreasing acts 11 of intimidation or bullying and acts of cyberbullying through the implementation 12 harassment, of effective prevention programs that: 13 (A) Incorporate evidenced-based, multitiered practices; and 14 (B) Support resiliency building and trauma-informed care practices. 15 (b) Assistance to school districts and education service districts in decreasing youth su- 16 17 and student icidal behavior through the implementation of effective prevention programs school safety and wellness programs that focus on early identification and intervention by 18 prevention specialists, as described in subsection (4) of this section, who: 19 20 youth suicidal behavior (A) Provide training, outreach and technical assistance related to 21 prevention and wellness; 22 schools and health agencies, including public and pri- (B) Support coordination between 23 vate behavioral health providers; and (C) Support 24 school districts and education service districts in the establishment of sui- 25 cidal behavior prevention programs. 26 (c) Assistance to school districts and education service districts in implementing a 27 multidisciplinary student safety assessment system to identify, assess and support students 28 safety assess- who present a potential risk for violence to others. Multidisciplinary school 29 and education service dis- ment teams shall be made available to assist each school district students who are engaged in violence or who are posing a threat of violence trict in assessing 30 to others. The teams shall: 31 (A) Assess potential danger and identify circumstances and risk factors that may in- 32 33 crease risk for potential violence; 34 collaboration with community part- (B) Develop management and intervention plans in and ners; 35 (C) Connect students and families to community resources and supports. 36 37 by ORS 339.329. (d) Promotion and use of the statewide school safety tip line established School and prevention specialists, as described in subsection (4) of this section, shall safety 38 and education 39 work collaboratively with the Oregon State Police to support school districts service districts in accessing and implementing the school safety tip line. 40 shall be supported by school safety and pre- (4) The system required under this section 41 42 vention specialists who: 43 (a) Serve regions of this state; 44 (b) Are cross-trained in safety assessments and in the prevention of youth suicide, of 45 acts of bullying, intimidation or harassment and of acts of cyberbullying; and [25]

26 A-Eng. HB 3427 (c) Provide or facilitate training, the development of programs and plans, the coordi- 1 nation 2 local teams and the provision of ongoing consultation to regional partners, school of districts and education service districts. 3 4 Board of Education, in consultation with the Oregon Health Authority and (5) The State other representatives of school districts, education service districts, school employees, hu- 5 shall adopt rules man services, mental health professionals and law enforcement agencies, 6 related to the system required under this section. 7 (1) Section 36 of this 2019 Act becomes operative on July 1, 2020. SECTION 37. 8 9 of this section, the (2) Notwithstanding the operative date set forth in subsection (1) date set forth in sub- Department of Education may take any action before the operative 10 11 section (1) of this section that is necessary for the department to exercise, on and after the of the duties, functions and operative date set forth in subsection (1) of this section, all 12 powers conferred on the department by section 36 of this 2019 Act. 13 14 STATEWIDE EQUITY INITIATIVES 15 16 (1) As used in this section, “plan student” means a student enrolled in early SECTION 38. 17 childhood through post-secondary education who: 18 (a) Is an American Indian or Alaskan Native; and 19 in education due to historical practices, as (b) Has experienced disproportionate results 20 identified by the State Board of Education by rule. 21 (2)(a) The Department of Education shall develop and implement a statewide education 22 plan for plan students. 23 (b) When developing the plan, the department shall consult with representatives from 24 tribal governments and from executive branch agencies who have formed government-to- 25 government relations to focus on education. Additionally, the department may receive input 26 from an advisory group consisting of community members, education stakeholders and rep- 27 resentatives of the Early Learning Division, the Youth Development Division and the Higher 28 Education Coordinating Commission. 29 (c) The department shall be responsible for: 30 (A) Implementing the plan developed under this subsection; 31 criteria, the applicant selection process and expectations for (B) Developing eligibility 32 recipients of grant awards described in this section; and 33 (C) Advising the State Board of Education on the adoption of rules under this section. 34 (3) The plan developed under this section must address: 35 students in every indicator of academic success, (a) The disparities experienced by plan 36 report card and other relevant reports related as documented by the department’s statewide 37 to plan students; 38 (b) The historical practices leading to disproportionate outcomes for plan students; and 39 (c) The educational needs of plan students from early childhood through post-secondary 40 this state and education as determined by examining culturally appropriate best practices in 41 across the nation. 42 (4) The plan developed and implemented under this section must provide strategies to: 43 (a) Address the disproportionate rate of disciplinary incidents involving plan students as 44 compared to all students in the education system; 45 [26]

27 A-Eng. HB 3427 (b) Increase parental engagement in the education of plan students; 1 (c) Increase the engagement of plan students in educational activities before and after 2 3 regular school hours; (d) Increase early childhood education and kindergarten readiness for plan students; 4 5 numeracy levels among plan students between kindergarten and (e) Improve literacy and 6 three; grade the middle school and (f) Support plan student transitions to middle school and through 7 8 high school grades to maintain and improve academic performance; (g) Support culturally responsive pedagogy and practices from early childhood through 9 post-secondary 10 education; from early childhood 11 (h) Support the development of culturally responsive curricula through post-secondary education; 12 (i) Increase attendance of plan students in early childhood programs through post- 13 secondary and professional certification programs; and 14 Increase attendance of plan students in four-year post-secondary institutions of edu- 15 (j) cation. 16 of the plan (5) The department shall submit a biennial report concerning the progress 17 developed and implemented under this section to a committee of the Legislative Assembly 18 19 at each even-numbered year regular session of the Legislative Assembly. related to education 20 early (6) The department, in consultation with the advisory group, shall award grants to 21 dis- learning hubs, providers of early learning services, school districts, education service institutions of education, tribal governments and community-based post-secondary tricts, 22 implemented organizations to implement the strategies provided in the plan developed and 23 24 under this section. 25 (7) To qualify for and receive grants described in this section, an applicant must identify by the State Board and demonstrate that the applicant meets the eligibility criteria adopted 26 of Education by rule. 27 this section, “plan student” means a student enrolled in early (1) As used in 28 SECTION 39. childhood through post-secondary education who: 29 Is (a) Latino or Hispanic, including individuals of Mexican, Cuban, Puerto Rican, South 30 American, Central American or Spanish descent; and 31 in education due to historical practices, as (b) Has experienced disproportionate results 32 identified by the State Board of Education by rule. 33 (2)(a) The Department of Education shall develop and implement a statewide education 34 plan for plan students. 35 (b) The department shall form an advisory group consisting of individuals representing: 36 (A) Urban and rural communities; 37 (B) Indigenous and immigrant populations; 38 (C) English language learners; 39 (D) Individuals with disabilities; 40 (E) Parents and students; 41 gender (F) Youth who are lesbian, gay, bisexual, transgender, queer or another minority 42 or sexual orientation; 43 (G) Community-based organizations serving Latino or Hispanic youth and families; and 44 (H) Education stakeholders, including representatives of the Early Learning Division, the 45 [27]

28 A-Eng. HB 3427 Youth Development Division and the Higher Education Coordinating Commission. 1 2 paragraph (b) of this subsection shall advise (c) The advisory group formed as provided in the department regarding: 3 4 (A) Development and implementation of the plan; 5 (B) Eligibility criteria, applicant selection processes and expectations for recipients of 6 grant awards described in this section; and (C) Adoption of rules by the State Board of Education for the implementation of the plan. 7 (3) The plan developed under this section must address: 8 9 every indicator of academic success, (a) The disparities experienced by plan students in as documented by the department’s statewide report card and other relevant reports related 10 to plan students; 11 12 (b) The historical practices leading to disproportionate outcomes for plan students; and 13 The (c) educational needs of plan students from early childhood through post-secondary education as determined by examining culturally appropriate best practices in this state and 14 across the nation. 15 (4) The plan developed and implemented under this section must provide strategies to: 16 (a) Address the disproportionate rate of disciplinary incidents involving plan 17 students compared to all students in the education system; 18 (b) Increase parental engagement in the education of plan students; 19 (c) Increase the engagement of plan students in educational activities before and after 20 21 regular school hours; (d) Increase early childhood education and kindergarten readiness for plan students; 22 (e) Improve literacy and 23 numeracy levels among plan students between kindergarten and 24 grade three; (f) Support plan student transitions to middle school and through the middle school and 25 26 high school grades to maintain and improve academic performance; pedagogy and practices from early childhood through 27 (g) Support culturally responsive education; post-secondary 28 (h) Support the development 29 of culturally responsive curricula from early childhood through post-secondary education; 30 (i) Increase attendance of plan students in community colleges and professional 31 certi- fication programs; and 32 (j) Increase attendance of plan students in four-year post-secondary institutions of 33 edu- 34 cation. 35 submit a biennial report concerning the progress of the plan (5) The department shall 36 implemented under this section to a committee of the Legislative Assembly and developed related to education 37 at each even-numbered year regular session of the Legislative Assembly. department, in consultation with the advisory group, shall award grants to early The 38 (6) learning hubs, providers of early learning services, school districts, post-secondary insti- 39 community-based organizations to implement the strategies pro- 40 tutions of education and 41 vided in the plan developed and implemented under this section. 42 (7) To qualify for and receive a grant described in this section, an applicant must identify 43 and demonstrate that the applicant meets the eligibility criteria established by the State 44 Board of Education by rule. The Department of Education shall submit a report concerning the devel- 45 SECTION 40. [28]

29 A-Eng. HB 3427 opment of the statewide education plans under sections 38 and 39 of this 2019 Act to an in- 1 2 terim committee of the Legislative Assembly related to education no later than January 1, 2021. 3 4 SECTION 41. Notwithstanding section 39 of this 2019 Act, the Department of Education 5 may not do any of the following prior to July 1, 2020: 6 Act, (1) Implement the statewide education plans developed under section 39 of this 2019 including awarding any grants to implement the plans; or 7 (2) Make any expenditures from any appropriations made to the department for the 8 im- plementation of the plans developed under section 39 of this 2019 Act. 9 10 11 SUMMER PROGRAMS FOR TITLE I SCHOOLS 12 Section 43 of this 13 SECTION 42. 2019 Act is added to and made a part of ORS chapter 327. SECTION 43. (1) In addition to those moneys distributed through the State School Fund, 14 schools the Department of Education shall make grants to improve student achievement in 15 that: 16 (a) Are considered 17 high poverty under Title I of the federal Elementary and Secondary Education Act of 1965; 18 has identified as having a significant achievement gap between his- (b) The department 19 students groups and other student groups pursuant to standards 20 underserved torically adopted by the State Board of Education; and 21 (c) The department has identified as needing additional supports and 22 interventions based 23 on: (A) Criteria used by the Department of Education to measure the performance of the 24 25 schools; and (B) The schools’ performance ranking compared to similar schools. 26 receive grants as provided in this section and (2) The department shall identify schools to 27 28 provided in shall notify the identified schools of the schools’ eligibility to receive grants as section. this 29 to provide instructional (3) Moneys received by a school under this section must be used 30 time during a summer program. The summer program must provide at least 60 hours of di- 31 32 rect academic instruction by a teacher licensed under ORS 342.125 or by an instructional 33 assistant, as defined in ORS 342.120. 34 the administration (4) The State Board of Education may adopt any rules necessary for 35 of this section. this 2019 Act, the Department of Education Notwithstanding section 43 of SECTION 44. 36 may not award any grants as provided under section 43 of this 2019 Act prior to July 1, 2020. 37 38 EARLY WARNING SYSTEM FOR HIGH SCHOOL GRADUATION 39 40 2019 Act is added to and made a part of ORS chapter 327. Section 46 of this SECTION 45. 41 SECTION 46. (1) In addition to those moneys distributed through the State School Fund, 42 the Department of Education shall award grants from the Statewide Education Initiatives 43 Account to school districts to implement the early warning system described in this section 44 that assist students in graduating from high school. 45 [29]

30 A-Eng. HB 3427 (2)(a) A system funded by a grant awarded under this section must enable school dis- 1 tricts, students, students’ families, educators, school counselors 2 and community organiza- 3 students in graduating from high school. tions to take necessary corrective actions to assist research on graduation rates 4 (b) Corrective actions that may be taken must be based on 5 and on reports of individual students related to: 6 (A) The student’s attendance; (B) The student’s behavior at school; 7 (C) The student’s academic or skill progress; and 8 9 (D) Any other factors identified by the State Board of Education by rule. apply for a grant under this 10 (3) The department shall assist school districts that may 11 section, that have applied for a grant under this section or that have received a grant under 12 this section, as appropriate, by: that the school districts (a) Providing technical assistance to school districts to ensure 13 understand the goals and objectives of the system; 14 in graduating 15 (b) Assisting school districts in developing expertise in assisting students from high school and developing a culture that encourages and assists students in graduating 16 from high school; 17 18 (c) Identifying meaningful predictive indicators of high school graduation; 19 (d) Developing local communication systems among students, students’ families, educa- 20 tors and community organizations to assist students in graduating from high school; (e) Identifying and developing interventions at 21 school, at home and in the community to 22 meet students’ needs; and (f) Reviewing existing policies and practices to: 23 (A) Expand policies and practices that encourage high school graduation; and 24 25 (B) Eliminate or modify policies and practices that may provide a disincentive to gradu- 26 ate from high school. 27 (4) The amount of each grant awarded under this section shall equal the school district’s $3. × 28 ADM as defined in ORS 327.006 (5) The State Board of Education shall adopt any rules necessary for the administration 29 of the grants described in this section. 30 Section 46 of this 2019 Act becomes operative on July 1, 2020. SECTION 47. 31 32 EDUCATOR PROFESSIONAL DEVELOPMENT 33 34 SECTION 48. (1) The Department of Education and the Educator Advancement Council, 35 Education in consultation with the Teacher Standards and Practices Commission, the Higher 36 Coordinating Commission and representatives of school districts and other education 37 stakeholders, shall develop a plan to provide an effective combination of programs and initi- 38 atives for the professional development of educators from kindergarten through grade 12 and 39 to be funded by the Statewide Education Initiatives Account. The plan shall be based on 40 consideration of increasing: 41 (a) Educator retention; 42 (b) Educator diversity; 43 (c) Mentoring and coaching of educators; 44 (d) Participation in educator preparation programs; and 45 [30]

31 A-Eng. HB 3427 (e) Educator scholarships. 1 (2) The department shall provide a report, and may include recommendations for legis- 2 lation, to an interim committee of the Legislative Assembly related to 3 education no later than January 15, 2020. 4 5 Section 48 of this 2019 Act is repealed on June 30, 2020. SECTION 49. 6 EARLY LEARNING ACCOUNT 7 8 SECTION 50. 9 Sections 51 and 52 of this 2019 Act are added to and made a part of ORS chapter 10 327. Account is established SECTION 51. 11 Early Learning Account. (1) The Early Learning within the Fund for Student Success. 12 13 (2) The Early Learning Account shall consist of: 14 of this 2019 (a) Moneys transferred from the Fund for Student Success under section 2 15 Act; (b) Moneys appropriated or otherwise transferred to the account by the Legislative As- 16 17 sembly; (c) Amounts donated to the account; and 18 (d) Other amounts deposited into the account from any source. 19 State of Oregon, may solicit and ac- (3) The Department of Education, on behalf of the 20 and other moneys from public and private sources for the Early cept gifts, grants, donations 21 22 received as provided in this subsection shall be deposited into the Learning Account. Moneys 23 Early Learning Account. (4) Moneys in the Early Learning Account are continuously appropriated to the Depart- 24 25 ment of Education for early learning programs as described in section 52 of this 2019 Act. (1) The Department of Education and the Early Learning Account uses. 52. SECTION 26 Early Learning Division shall use moneys in the Early Learning Account to provide funding 27 for early learning programs in a manner consistent with a statewide early learning system 28 Early Learning Council. Early learning programs that may receive plan overseen by the 29 moneys from the Early Learning Account include: 30 childhood special education or early intervention services, as provided by ORS (a) Early 31 343.475; 32 (b) Relief nurseries; 33 (c) Programs funded by the Early Childhood Equity Fund; 34 (d) The Oregon prekindergarten program and other public preschool programs estab- 35 lished under ORS 329.170 to 329.200, by increasing: 36 (A) The total number of spaces for children served by the programs; or 37 (B) Existing spaces for full-day programs from half-day programs; 38 (e) Professional development for early childhood educators; and 39 (f) Early Head Start programs. 40 (2) In addition to the uses identified in subsection (1) of this section, moneys in the Early 41 Learning Account may be used for staffing needs of the Early Learning Division for the 42 purpose of implementing this section. 43 (3) The State Board of Education and the Early Learning Council shall adopt rules nec- 44 essary for the distribution of moneys under this section. 45 [31]

32 A-Eng. HB 3427 EARLY CHILDHOOD EQUITY FUND 1 2 Early Childhood 3 Equity Fund. (1) The Early Childhood Equity Fund is es- SECTION 53. 4 and distinct from the General Fund. Moneys in the tablished in the State Treasury, separate Education Early Childhood Equity Fund are continuously appropriated to the Department of 5 to make grants under section 54 of this 2019 Act to culturally for the Early Learning Division 6 early childhood and parent support programs and to promote the ca- 7 specific early learning, pacity of culturally specific organizations to deliver these programs. 8 9 (2) The fund shall consist of: or otherwise transferred to the fund from the Legislative As- (a) Moneys appropriated 10 11 sembly; (b) Earnings received on moneys in the fund; and 12 (c) Other amounts deposited into the fund from any source. 13 54. SECTION 14 (1) The Early Learning Division Early childhood support grant program. under section 53 of this may make grants from the Early Childhood Equity Fund established 15 parent support programs 2019 Act to culturally specific early learning, early childhood and 16 that build capacity in communities, ensure children start kindergarten ready in this state 17 to succeed and support families to be stable, healthy and attached. For purposes of 18 this 19 subsection, a program is in this state if the program serves communities within the ge- 20 ographic boundaries of this state, including communities within Indian country of a federally 21 recognized Oregon Indian tribe that is within the geographic boundaries of this state. 22 (2) To receive a grant under this section, a program must: are at risk be- 23 (a) Provide outreach, support and resources to children and families who 24 cause of any combination of two or more factors, including their race, ethnicity, English 25 language proficiency, socioeconomic status and geographic location; and 26 to provide outreach, support and resources to children (b) Demonstrate a proven ability and families described in paragraph (a) of this subsection. 27 (3) The division shall monitor capacity needs and provide technical assistance to 28 grantees. 29 (4) The division shall conduct a biennial evaluation of programs that receive grants under 30 31 this section. The evaluation shall include measurement of outcomes that align with: 32 indicators, including family sta- (a) Current research regarding positive child and family 33 bility and early childhood school readiness; and 34 (b) Culturally specific approaches. consultation with the division, shall adopt rules nec- 35 (5) The Early Learning Council, in provisions of this section. The rules shall include requirements for 36 essary to carry out the grant eligibility under this section. 37 38 (6) On or before September 15 of each odd-numbered year, the division shall submit to 39 the interim committees of the Legislative Assembly related to early childhood and child welfare a report on the status and impact of grants made to programs under this section. 40 41 The report shall include changes in the capacity of culturally specific organizations and the 42 results of any biennial evaluations conducted in accordance with subsection (4) of this sec- 43 tion. ORS 417.790 is amended to read: SECTION 55. 44 417.790. The Early Learning Division shall: 45 [32]

33 A-Eng. HB 3427 (1) Make grants to fund research-based services and initiatives to improve outcomes for chil- 1 dren, youth or families. 2 (2) Make Great Start grants to fund community-based programs for children 3 zero through six years of age. A recipient shall use 4 Great Start grant funds to provide research-based early childhood 5 programs in community settings and to provide services that have proven to be successful and that These services shall meet the needs of the community. be provided in accordance with ORS 417.728. 6 7 this 2019 Act to fund culturally specific early learn- (3) Make grants under section 54 of ing, early childhood and parent support programs that build capacity in communities to 8 provide culturally appropriate services to 9 ensure children start kindergarten ready to suc- ceed and to support family stability. 10 11 12 PERSONAL INCOME TAX RATES 13 ORS 316.037 is amended to read: 14 SECTION 56. 316.037. (1)(a) A tax is imposed for each taxable year on the entire taxable income of every 15 16 resident of this state. The amount of the tax shall be determined in accordance with the following table: 17 _______________________________________________________________________________________ 18 19 The tax is: If taxable income is: 20 21 [ 5% of 4.75% Not over $2,000 ] 22 taxable 23 income 24 25 Over $2,000 but not 26 6.75% ] over $5,000 [ $100 ] $95 plus [ 7% 27 of the excess 28 over $2,000 29 30 Over $5,000 but not 31 ] plus [ $298 ] $310 [ over $125,000 9% 8.75% 32 of the excess 33 over $5,000 34 35 ] $11,110 [ Over $125,000 plus 9.9% $10,798 36 of the excess 37 over $125,000 38 _______________________________________________________________________________________ 39 40 years beginning in each calendar year, the Department of Revenue shall adopt a (b) For tax 41 table that shall apply in lieu of the table contained in paragraph (a) of this subsection, as follows: 42 (A) Except as provided in subparagraph (D) of this paragraph, the minimum and maximum dollar 43 amounts for each bracket for which a tax is imposed shall be increased by the cost-of-living adjust- 44 ment for the calendar year. 45 [33]

34 A-Eng. HB 3427 (B) The rate applicable to any rate bracket as adjusted under subparagraph (A) of this para- 1 graph [ shall ] 2 may not be changed. 3 (C) The amounts setting forth the tax, to the extent necessary to reflect the adjustments in the rate brackets, shall be adjusted. 4 (D) The rate brackets applicable to taxable income in excess of $125,000 may not be adjusted. 5 6 adjustment for any calen- (c) For purposes of paragraph (b) of this subsection, the cost-of-living dar year is the percentage (if any) by which the monthly averaged U.S. City Average Consumer 7 8 Price Index for the 12 consecutive months ending August 31 of the prior calendar year exceeds the monthly averaged index for the second quarter of the calendar year 1992. 9 used in this subsection, “U.S. City Average Consumer Price Index” means the U.S. City As (d) 10 (All Items) as published by the Bureau of Average Consumer Price Index for All Urban Consumers 11 Labor Statistics of the United States Department of Labor. 12 13 of $50, (e) If any increase determined under paragraph (b) of this subsection is not a multiple 14 the increase shall be rounded to the next lower multiple of $50. 15 (2) A tax is imposed for each taxable year upon the entire taxable income of every part-year resident of this state. The amount of the tax shall be computed under subsection (1) of this section 16 were a full-year resident and shall be multiplied by the ratio provided as if the part-year resident 17 under ORS 316.117 to determine the tax on income derived from sources within this state. 18 (3) A tax is imposed for each taxable year on the taxable income of every full-year nonresident 19 20 that is derived from sources within this state. The amount of the tax shall be determined in ac- 21 cordance with the table set forth in subsection (1) of this section. The amendments to ORS 316.037 by section 56 of this 2019 Act apply to tax 22 SECTION 57. years beginning on or after January 1, 2020. 23 24 CORPORATE ACTIVITY TAX 25 26 As used in sections 58 to 76 of this 2019 Act: Definitions. SECTION 58. 27 a person, arising from (1)(a) “Commercial activity” means the total amount realized by 28 of the person’s trade or business, without transactions and activity in the regular course 29 deduction for expenses incurred by the trade or business. 30 (b) “Commercial activity” does not include: 31 (A) Interest income except interest on credit sales; 32 (B) Receipts from the sale, exchange or other disposition of an asset described in section 33 the Internal Revenue Code, without regard to the length of time the person 1221 or 1231 of 34 held the asset; 35 of the (C) Proceeds received attributable to the repayment, maturity or redemption 36 principal of a loan, bond, mutual fund, certificate of deposit or marketable instrument; 37 account of any (D) The principal amount received under a repurchase agreement or on 38 transaction properly characterized as a loan to the person; 39 (E) Contributions received by a trust, plan or other arrangement, any of which is de- 40 scribed in section 501(a) of the Internal Revenue Code, or to which title 26, subtitle A, 41 chapter 1, subchapter (D) of the Internal Revenue Code applies; 42 (F) Proceeds received from the issuance of the taxpayer’s own stock, options, warrants, 43 puts or calls, or from the sale of the taxpayer’s treasury stock; 44 (G) Proceeds received on the account of payments from insurance policies, except those 45 [34]

35 A-Eng. HB 3427 proceeds received for the loss of business revenue; 1 2 (H) Gifts or charitable contributions received, membership dues received by trade, pro- fessional, homeowners’ or condominium associations, payments 3 received for educational 4 courses, meetings or meals, or similar payments to a trade, professional or other similar 5 receipts received by any person when any excess receipts are association, and fundraising donated or used exclusively for charitable purposes; 6 (I) Damages received as 7 the result of litigation in excess of amounts that, if received without litigation, would be treated as commercial activity; 8 9 other amounts received or acquired by an agent on behalf of (J) Property, money and another in excess of the agent’s commission, fee or other remuneration; 10 11 (K) Tax refunds, other tax benefit recoveries and reimbursements for the tax imposed 12 under sections 58 to 76 of this 2019 Act made by entities that are part of the same unitary this 2019 Act, and reimbursements made by entities group as provided under section 60 of 13 of a unitary group that are required to be made for economic parity that are not members 14 of this 2019 among multiple owners of an entity whose tax obligation under sections 58 to 76 15 Act is required to be reported and paid entirely by one owner, as provided in section 60 of 16 this 2019 Act; 17 (L) Pension reversions; 18 (M) Contributions to capital; 19 20 or other disposition of motor vehicle fuel (N) Receipts from the sale, transfer, exchange 21 or any other product used for the propulsion of motor vehicles; (O) In the case of receipts from the sale of cigarettes or tobacco products by a wholesale 22 23 federal and dealer, retail dealer, distributor, manufacturer or seller, an amount equal to the 24 for such cigarettes or tobacco products under state excise taxes paid by any person on or 25 subtitle E of the Internal Revenue Code or ORS chapter 323; of receipts from the sale of malt beverages, wine or alcoholic liquor, all (P) In the case 26 as defined in ORS 471.001, or cider, as defined in ORS 471.023, by a person holding a license 27 issued under ORS chapter 471, an amount equal to the federal and state excise taxes paid 28 by any person on or for such malt beverages, wine or alcoholic liquor under subtitle E of the 29 to the Oregon Liquor Internal Revenue Code or ORS chapter 471, and any net amount paid 30 31 to sell alcoholic liquor under ORS chapter 471 in Control Commission by a person licensed 32 excess of the purchase price paid by the licensee; 33 as defined in ORS 475B.015, (Q) In the case of receipts from the sale of marijuana items, by a person holding a license issued under 34 ORS 475B.010 to 475B.545, an amount equal to the state excise taxes paid by any person on or for such marijuana items under and federal 35 subtitle E of the Internal Revenue Code or ORS 475B.700 to 475B.760; 36 realized by a vehicle dealer certified under ORS 822.020 from the sale or 37 Receipts (R) 38 other transfer of a motor vehicle, as defined in ORS 801.360, to another vehicle dealer for the 39 purpose of resale by the transferee vehicle dealer, but only if the sale or other transfer was 40 based upon the transferee’s need to meet a specific customer’s preference for a motor vehi- 41 cle; 42 (S) Registration fees or taxes collected by a vehicle dealer certified under ORS 822.020 43 at the sale or other transfer of a motor vehicle, as defined in ORS 801.360, that are owed to the motor vehicle and passed to the third party by the a third party by the purchaser of 44 45 dealer; [35]

36 A-Eng. HB 3427 (T) Receipts from a financial institution for services provided to the financial institution 1 2 issuance, processing, servicing and management of loans or credit in connection with the the receipts have at least 50 percent accounts, if the financial institution and the recipient of 3 or controlled, directly or constructively through related of their ownership interests owned 4 5 interests, by common owners; retained as commissions by a holder of a license under ORS 6 (U) In the case of amounts chapter 462, an amount equal to the amounts specified under ORS chapter 462 that must be 7 8 tax and the amounts specified under paid to or collected by the Department of Revenue as a 9 ORS chapter 462 to be used as purse money; in-home care 10 (V) Net revenue of residential care facilities as defined in ORS 443.400 or 11 agencies as defined in ORS 443.305, to the extent that the revenue is derived from or received as compensation for providing services to a medical assistance or Medicare recipient; 12 (W) Dividends received; 13 (X) Distributive income received from a pass-through entity; 14 15 (Y) Receipts from sales to a wholesaler in this state, if the seller receives certification that the wholesaler will sell the purchased property at the time of sale from the wholesaler 16 outside this state; 17 (Z) Rebates paid to purchasers by retailers or wholesalers; 18 (AA) Receipts from the wholesale or retail sale of groceries; 19 (BB) Receipts from transactions among members of a unitary group; 20 21 purpose charge moneys collected under ORS 757.612 and (CC) Moneys, including public 22 conservation measures collected un- costs of funding or implementing cost-effective energy der ORS 757.689, that are collected from customers, passed to a utility 23 and approved by the resource acqui- Public Utility Commission and that support energy conservation, renewable 24 sition and low-income assistance programs; 25 the payment of loans through (DD) Moneys collected by a utility from customers for 26 on-bill financing; 27 (EE) Surcharges collected under ORS 757.736; 28 29 (FF) Moneys passed to a utility by the Bonneville Power Administration for the purpose 30 of effectuating the Regional Power Act Exchange credits or pursuant to any settlement as- sociated with the exchange credit; 31 (GG) Moneys collected by a utility for franchise fees, 32 privilege taxes, federal taxes, local 33 taxes and fees payable under ORS 756.310; (HH) Charges paid to the Residential Service Protection Fund required by chapter 34 290, Oregon Laws 1987; 35 (II) Universal service surcharge moneys collected by telecommunications carriers and 36 37 paid into the universal service fund established in ORS 759.425; 38 (JJ) Moneys collected for public purpose funding as described in ORS 759.430; 39 (KK) Moneys collected for the federal universal service fund as determined by the Fed- 40 eral Communications Commission; 41 (LL) In the case of a seller or provider of telecommunications services, the amount of the emergency communications system that is tax imposed under ORS 403.200 for access to 42 collected from subscribers or consumers; 43 44 (MM) In the case of a transient lodging tax collector, the amount of tax imposed under 45 ORS 320.305 and of any local transient lodging tax imposed upon the occupancy of transit [36]

37 A-Eng. HB 3427 lodging; 1 (NN) In the case of a seller of bicycles, the amount of tax imposed under ORS 320.415 2 3 upon retail sales of bicycles; 4 (OO) In the case of a qualified heavy equipment provider, the amount of tax imposed 5 under section 2, chapter 64, Oregon Laws 2018, upon the rental price of heavy equipment; (PP) Receipts representing business done with or for members of an agricultural coop- 6 erative in this state that is a cooperative organization described in section 1381 of the 7 8 Internal Revenue Code; and contract or subcontract (QQ) Revenue received by a business entity that is mandated by 9 10 to be distributed to another person or entity if the revenue constitutes sales commissions the business entity, including, without 11 that are paid to a person who is not an employee of 12 limitation, a split-fee real estate commission. (2)(a) “Commercial activity of a financial institution” includes all items of income without 13 deduction for expenses. 14 is a holding company, “commercial (b) If the reporting person for a financial institution 15 Y-9 filed 16 activity of a financial institution” includes all items of income reported on the FR 17 by the holding company. 18 (c) If the reporting person for a financial institution is a bank organization, “commercial report 19 activity of a financial institution” includes all items of income reported on the call 20 filed by the bank organization. a nonbank financial organization, 21 (d) If the reporting person for a financial institution is 22 all items of income reported in ac- “commercial activity of a financial institution” includes cordance with generally accepted accounting principles. 23 of income without deduction (3) “Commercial activity of an insurer” includes all items 24 reported on the statement of income accompanying the for expenses and all items of income 25 annual statement required under ORS 731.574 26 to be filed with the Director of the Department of Consumer and Business Services. 27 (4) “Cost inputs” means the cost of goods sold as calculated under section 471 of the 28 Internal Revenue Code. 29 means engaging in any activity, whether legal or illegal, that is (5) “Doing business” 30 during a calendar conducted for, or results in, the receipt of commercial activity at any time 31 32 year. (6) “Excluded person” means any of the following: 33 and 501(j) of the Internal Revenue Code, (a) Organizations described in sections 501(c) 34 503 or 35 unless the exemption is denied under section 501(h), (i) or (m) or under section 502, 36 505 of the Internal Revenue Code. 37 (b) Organizations described in section 501(d) of the Internal Revenue Code, unless the 38 exemption is denied under section 502 or 503 of the Internal Revenue Code. (c) Organizations described in section 501(e) of the Internal Revenue Code. 39 (d) Organizations described in section 501(f) of the Internal Revenue Code. 40 (e) Charitable risk pools described in section 501(n) of the Internal Revenue Code. 41 (f) Organizations described in section 521 of the Internal Revenue Code. 42 529 of the Internal Revenue (g) Qualified state tuition programs described in section 43 44 Code. 45 (h) Foreign or alien insurance companies, but only with respect to the underwriting [37]

38 A-Eng. HB 3427 profit derived from writing wet marine and transportation insurance subject to tax under 1 ORS 731.824 and 731.828. 2 3 (i) Governmental entities. 4 (j) Any person with commercial activity that does not exceed $1 million for the calendar is part of a unitary group as provided in section 60 of this 2019 year, other than a person that 5 6 Act with commercial activity in excess of $1 million. Oregon Laws 2003, long 7 (k) Hospitals subject to assessment under section 2, chapter 736, term care facilities subject 8 to assessment under section 16, chapter 736, Oregon Laws 2003, 9 or any entity subject to assessment under section 3, 5 or 9, chapter 538, Oregon Laws 2017. (7) “Financial institution” has the meaning given 10 that term in ORS 314.610, except that “financial institution” does not include a credit union. 11 (8)(a) “FR Y-9” means the 12 consolidated or parent-only financial statements that a holding company is required to file with the Federal Reserve Board pursuant to 12 U.S.C. 1844. 13 (b) In the case of a holding company required to file both consolidated and parent-only 14 15 statements that the holding financial statements, “FR Y-9” means the consolidated financial company is required to file. 16 (9) “Governmental entity” means: 17 (a) The United States and any of its unincorporated agencies and instrumentalities. 18 (b) Any incorporated agency or instrumentality of the United States wholly owned by the 19 United States or by a corporation wholly owned by the United States. 20 21 (c) The State of Oregon and any of its unincorporated agencies and instrumentalities. 22 (d) Any county, city, district or other political subdivision of the state. (e) Any public corporation. 23 (f) A federally recognized Indian tribe. 24 (10) “Groceries” means food as defined in 7 U.S.C. 2012(k). 25 (11) “Insurer” has the meaning given that term in ORS 317.010. 26 (12) “Internal Revenue Code,” except where the Legislative Assembly has provided oth- 27 States or to the Internal Revenue Code as they are 28 erwise, refers to the laws of the United 29 amended and in effect on December 31, 2018. employees, not to include compen- (13) “Labor costs” means total compensation of all 30 31 sation paid to any single employee in excess of $500,000. 32 propulsion the for or any other product used (14)(a) “Motor vehicle fuel of motor 33 means: vehicles” (A) Motor vehicle fuel as defined in ORS 319.010; and 34 (B) Fuel the use of which in a motor vehicle is subject to taxation under ORS 319.530. 35 other product used for the propulsion of motor vehicles” 36 (b) “Motor vehicle fuel or any 37 does not mean: 38 (A) Electricity; or component or accessory of a (B) Electric batteries or any other mechanical or physical 39 vehicle. motor 40 41 (15) “Person” includes individuals, combinations of individuals of any form, receivers, 42 assignees, trustees in bankruptcy, firms, companies, joint-stock companies, business trusts, 43 estates, partnerships, limited liability partnerships, limited liability companies, associations, 44 joint ventures, clubs, societies, entities organized as for-profit corporations under ORS 45 chapter 60, C corporations, S corporations, qualified subchapter S subsidiaries, qualified [38]

39 A-Eng. HB 3427 subchapter S trusts, trusts, entities that are disregarded for federal income tax purposes and 1 any other entities. 2 (16) “Retailer” means a person doing business by selling tangible personal property to a 3 purchaser for a purpose other than: 4 5 (a) Resale by the purchaser of the property as tangible personal property in the regular 6 course of business; (b) Incorporation by the purchaser of the property 7 in the course of regular business as an ingredient or component of real or personal property; or 8 the property in the production for sale of a new 9 (c) Consumption by the purchaser of article of tangible personal property. 10 11 sourced to this state un- (17) “Taxable commercial activity” means commercial activity der section 66 of this 2019 Act, less any subtraction pursuant to section 64 of this 2019 Act. 12 13 (18)(a) “Taxpayer” means any person or unitary group required to register, file or pay tax under sections 58 to 76 of this 2019 Act. 14 (b) “Taxpayer” does not include excluded persons. 15 (19)(a) “Unitary business” means a business enterprise in which there exists directly or 16 17 indirectly between the members or parts of the enterprise a sharing or exchange of value as demonstrated by: 18 19 (A) Centralized management or a common executive force; (B) Centralized administrative services or functions resulting in economies of scale; or 20 21 (C) Flow of goods, capital resources or services demonstrating functional integration. (b) “Unitary business” may include a business enterprise the activities of which: 22 23 the same general line of business, such as manufacturing, wholesaling or re- (A) Are in 24 tailing; or (B) Constitute steps in a vertically integrated process, such as 25 the steps involved in the refining and mar- production of natural resources, which might include exploration, mining, 26 27 keting. 28 (20) “Unitary group” means a group of persons with more than 50 percent common ownership, either direct or indirect, that is 29 engaged in business activities that constitute a 30 unitary business. 31 (21) “Wholesaler” means a person primarily doing business by merchant distribution of tangible personal property to retailers or to other wholesalers. 32 A taxpayer’s method of accounting for commercial Accounting methods. SECTION 59. 33 activity, cost inputs and labor costs for a tax year shall be the same as the taxpayer’s 34 for federal income tax purposes for the taxpayer’s federal tax year method of accounting 35 year. If a taxpayer’s method of accounting for federal income tax pur- that includes the tax 36 for commercial activity under sections poses changes, the taxpayer’s method of accounting 37 58 to 76 of this 2019 Act shall be changed accordingly. 38 and pay taxes under SECTION 60. Unitary groups. A unitary group shall register, file 39 a single taxpayer and may exclude receipts from trans- sections 58 to 76 of this 2019 Act as 40 actions among its members. The Department of Revenue may collect identifying information 41 about all members of a unitary group and may require disclosure to the department, for each 42 member, of the commercial activity in Oregon and in the United States. 43 SECTION 61. Taxation of property transferred into state. (1) Except as provided in sub- 44 section (2) of this section: 45 [39]

40 A-Eng. HB 3427 (a) A person shall include as taxable commercial activity the value of property the person 1 2 transfers into this state for the person’s own use in the course of a trade or business within one year after the person receives the property outside this state; and 3 4 (b) In the case of a unitary group, the taxpayer shall include as taxable commercial ac- 5 transferred into this state tivity the value of property that any of the taxpayer’s members members within one for the use in the course of a trade or business by any of the taxpayer’s 6 year after the taxpayer receives the property outside this state. 7 (2) Property brought into this 8 state within one year after it is received outside this state by a person or unitary group described in subsection (1) of this section may not be included 9 as 10 commercial activity as required under subsection (1) of this section if the De- taxable 11 partment of Revenue ascertains that the property’s receipt outside this state by the person 12 or unitary group followed by its transfer into this state within one year was not intended in to avoid in whole or in part the tax imposed under sections 58 to 76 of this whole or in part 13 14 2019 Act. 15 (3) The department may adopt rules necessary to administer this section. Joint and several liability. All members of a unitary group during the tax 16 SECTION 62. interest is owed are jointly and severally year or periods for which additional tax, penalty or 17 liable for such amounts. Although the reporting person shall be assessed for the liability, 18 assessment against any member of the unitary group or amounts due may be collected by 19 pursued against any member of the unitary group. 20 SECTION 63. (1) Corporate activity tax imposed on commercial activity. A corporate ac- 21 tivity tax is imposed on each person with taxable commercial activity for the privilege of 22 this state. The tax is imposed upon persons with substantial nexus with doing business in 23 is not a transactional tax and is not subject this state. The tax imposed under this section 24 is in to the Interstate Income Act of 1959 (P.L. 86-272). The tax imposed under this section 25 addition to any other taxes or fees imposed under the tax laws of this state. The tax imposed 26 under this section is imposed on the person receiving the commercial activity and is not a 27 tax imposed directly on a purchaser. The tax imposed under this section is an annual privi- 28 to the Department of Revenue. lege tax for the calendar year and shall be remitted quarterly 29 business during any A taxpayer is subject to the annual corporate activity tax for doing 30 portion of such calendar year. 31 if any of the following applies. The (2) A person has substantial nexus with this state 32 person: 33 (a) Owns or uses a part or all of its capital in this state. 34 issued by the Secretary of State au- (b) Holds a certificate of existence or authorization 35 thorizing the person to do business in this state. 36 (c) Has bright-line presence in this state. 37 state to an extent that the person can be required to (d) Otherwise has nexus with this 38 imposed under sections 58 to 76 of this 2019 Act under the United States Con- remit the tax 39 stitution. 40 state for the calendar year if any of the (3) A person has bright-line presence in this 41 following applies. The person: 42 (a) Owns at any time during the calendar year property in this state with an aggregate 43 value of at least $50,000. For purposes of this paragraph, owned property is valued at original 44 cost and rented property is valued at eight times the net annual rental charge. 45 [40]

41 A-Eng. HB 3427 (b) Has during the calendar year payroll in this state of at least $50,000. Payroll in this 1 state includes the following: 2 3 (A) Any amount subject to withholding by the person under ORS 316.167 and 316.172; 4 (B) Any other amount the person pays as compensation to an individual under the 5 supervision or control of the person for work done in this state; and 6 (C) Any amount the person pays for services performed in this state on the person’s behalf by another. 7 8 (c) Has during the calendar year commercial activity, sourced to this state under section 66 of this 2019 Act, of at least $750,000. 9 10 calendar year within this state at least 25 percent of the (d) Has at any time during the person’s total property, total payroll or total commercial activity. 11 domiciled in this state for corporate, commercial or (e) Is a resident of this state or is 12 13 other business purposes. Subtraction. SECTION 64. 14 (1) A taxpayer shall subtract from commercial activity sourced 15 state 35 percent of the greater of the following amounts paid or incurred by the tax- to this 16 payer in the tax year: 17 (a) The amount of cost inputs; or (b) The taxpayer’s labor costs. 18 apportioned to this 19 (2) The amounts in subsection (1)(a) or (b) of this section shall be 20 state in the manner required for apportionment of income under ORS 314.605 to 314.675. this section may 21 (3) Notwithstanding subsection (1) of this section, the subtraction under 22 not exceed 95 percent of the taxpayer’s commercial activity in this state. corporate activity tax imposed under section 63 Rate of taxation. (1) The 23 SECTION 65. of this 2019 Act for each calendar year shall equal $250 plus the product of the taxpayer’s 24 excess of $1 million for the calendar year multiplied by 0.57 taxable commercial activity in 25 percent. 26 commercial activity does (2) A tax is not owed under this section if the person’s taxable 27 not exceed $1 million. 28 66. (1) For purposes of sections 58 to 76 of this Sourcing of commercial activity. SECTION 29 or 2019 Act, commercial activity other than commercial activity of financial institutions 30 insurers shall be sourced to this state as follows: 31 (a) In the case of the sale, rental, lease or license of real property, if and to the extent 32 the property is located in this state. 33 rental, lease or license of tangible personal property, if and to the (b) In the case of the 34 extent the property is located in this state. 35 (c) In the case of the sale of tangible personal property, if and to the extent the property 36 is delivered to a purchaser in this state. 37 (d) In the case of the sale of a service, if and to the extent the service is delivered to a 38 location in this state. 39 the sale, rental, lease or license of intangible property, if and to the (e) In the case of 40 extent the property is used in this state. If the receipts are not based on the amount of use 41 of the property, but rather on the right to use the property, and the payor has the right to 42 use the property in this state, the receipts shall be sourced to this state to the extent the 43 receipts are based on the right to use the property in this state. 44 (2) If the sourcing provisions of subsection (1) of this section do not fairly represent the 45 [41]

42 A-Eng. HB 3427 extent of a person’s commercial activity attributable to this state, the person may request, 1 or the Department of Revenue may require or permit, an alternative method. A request un- 2 3 der this subsection by a person must be made within the statute of limitations applicable to 4 sections 58 to 76 of this 2019 Act. adopt rules to provide additional guidance to the application of 5 (3) The department may 6 this section, and to provide alternative methods of sourcing commercial activity that apply to financial institutions and to insurers, and to any other persons, or a subset of persons, 7 8 that are engaged in similar business or trade activities. 9 10 LOCAL TAX PREEMPTION 11 Local taxes preempted. 12 SECTION 67. (1) Except as expressly authorized by this section, 13 the authority to impose, in this state, a tax upon the commercial activity of an entity is vested solely in the Legislative Assembly. A city, 14 county, district or other political subdivi- impose, by ordinance or other law, a tax 15 sion or municipal corporation of this state may not upon commercial activity or upon receipts from grocery sales. 16 (2) Subsection (1) of this section does not apply: 17 (a) To any tax, or to subsequent amendments of the provisions of any tax, if the ordi- 18 19 nance or other law imposing the tax is in effect and operative on April 1, 2019, or is adopted 20 by initiative or referendum petition at an election held prior to March 1, 2019; or (b) To the imposition of franchise fees or franchise taxes. 21 22 REGISTRATION PROCEDURES 23 24 with commercial activity in (1) Any person or unitary group Registration. SECTION 68. 25 excess of $750,000 in the tax year shall register with the Department of Revenue. 26 (2) The department by rule may establish the information pertaining to the person or 27 and unitary group that must be submitted to the department accompanying the registration 28 the time and manner for issuance of registrations under this section. 29 as required under this (3) The department may impose a penalty for failing to register 30 month that a person or unitary group has failed to register section, not to exceed $100 per 31 imposed not or a total of $1,000 in a calendar year. The penalty under this subsection may be 32 the person or unitary earlier than 30 days after the date on which the commercial activity of 33 group exceeds $750,000 for the tax year. 34 Records. Every person doing business in this SECTION 69. state shall keep records, re- 35 ceipts, invoices and other pertinent papers related to the corporate activity tax imposed un- 36 der section 63 of this 2019 Act in a form required by the Department of Revenue. 37 38 RETURNS AND PAYMENTS 39 40 SECTION 70. Returns, payment. (1) For purposes of the corporate activity tax imposed 41 under section 63 of this 2019 Act, every person doing business in this state with commercial 42 activity for the tax year in excess of $1 million shall file not later than April 15 of the fol- 43 lowing year an annual return. The return must be filed with the Department of Revenue in 44 a form prescribed by the department. 45 [42]

43 A-Eng. HB 3427 (2) The corporate activity tax imposed under section 63 of this 2019 Act is due and pay- 1 able to the department on or before the last day of January, April, July and October of each 2 year for the previous calendar quarter. 3 4 (3) The department may by rule extend the time for making any return for good cause. a return is extended at the request of a taxpayer, interest on any unpaid 5 If the time for filing originally re- tax at the rate established under ORS 305.220 from the time the return was 6 7 quired to be filed to the time of payment, shall be added and paid. Accounting, installment payment. (1) Subject to rules adopted by the De- 8 SECTION 71. partment of Revenue, the corporate activity tax imposed under section 63 of this 2019 Act 9 10 the becomes payable in accordance with the system of accounting regularly employed by 11 taxpayer. the case of a lease, contract, sale or arrangement described in section 4216(c) of (2) In 12 4217(e)(2) of the Internal the Internal Revenue Code, rules similar to the rules of section 13 14 Revenue Code shall apply for purposes of the corporate activity tax. a credit or refund for taxes previously paid on debts that are (3) A person is entitled to 15 16 deductible under section 166 of the Internal Revenue Code. 17 COLLECTION 18 19 of Revenue is authorized to and shall Rules, uniformity. The Department SECTION 72. 20 adopt rules requiring uniformity in application, reporting and collection and otherwise car- 21 rying out the purposes of sections 58 to 76 of this 2019 Act. 22 (1) For purposes of sections 58 to 76 of this Quitting business, successor. SECTION 73. 23 2019 Act, “successor” means any person to whom another person quitting, selling out, ex- 24 or indirectly, in bulk changing or disposing of a business sells or otherwise conveys, directly 25 mer- and not in the ordinary course of business, a major part of the materials, supplies, 26 chandise, inventory, fixtures or equipment of the person. Any person obligated to fulfill the 27 a successor to any contractor defaulting in the per- terms of a contract shall be considered 28 formance of any contract as to which the person is a surety or guarantor. 29 or otherwise disposes of a busi- (2) If any person quits business or sells out, exchanges 30 ness or stock of goods, any corporate activity tax imposed under section 63 of this 2019 Act 31 shall become immediately due and payable. The person shall, within 45 days after the sale, 32 exchange or disposition, make a return and pay the tax due. 33 (3) Notwithstanding ORS 314.835, the successor is liable for the full amount of the tax 34 to pay any tax due until a receipt and may withhold from the purchase price a sum sufficient 35 pre- or evidence from the Department of Revenue showing payment in full of any tax due is 36 a receipt or other evidence is not presented to the successor sented to the successor. If 37 and the amount paid shall, to the extent paid, within 45 days, the successor may pay the tax 38 greater be considered a payment of the purchase price. If the tax paid by the successor is 39 than the purchase price, the amount of the difference is a debt due to the successor from 40 the seller or transferor. 41 (4) A successor is not liable for any tax due from the person from whom the successor 42 has acquired a business or stock of goods if the successor gives written notice to the de- 43 partment of the acquisition and the department does not assess a deficiency against the 44 seller or transferor within 18 months of receipt of the notice of acquisition and mail or de- 45 [43]

44 A-Eng. HB 3427 liver a copy of the assessment to the successor. 1 2 APPLICABILITY OF TAX LAWS 3 4 Act or where Except as otherwise provided in sections 58 to 76 of this 2019 SECTION 74. 5 6 the context requires otherwise: examination of re- (1) The provisions of ORS chapters 305 and 314 as to the audit and 7 8 determination of and notices of deficiencies, assessments, col- turns, periods of limitation, refunds, conferences, appeals to the lections, liens, delinquencies, claims for refund and 9 confidentiality of returns and the 10 Oregon Tax Court, stays of collection pending appeal, penalties relative thereto, and the procedures relating thereto, apply 11 to the determinations 12 of taxes, penalties and interest under sections 58 to 76 of this 2019 Act. is not defined in section 58 of this 2019 Act shall have the meaning (2) Any term that 13 given that term for the purposes of ORS chapter 305, 314, 316 or 317. 14 15 DISPOSITION OF PROCEEDS 16 17 Payments to Department of Revenue. For purposes of sections 58 to 76 of 18 SECTION 75. this 2019 Act, and except as otherwise provided by law, all taxes, interest and penalties im- 19 posed and all amounts of corporate activity tax collected or required to be paid to the state 20 to the Department of Revenue and upon receipt by the department shall be shall be paid 21 as provided in section 76 of this 2019 Act. turned over to the State Treasurer, to be disbursed 22 SECTION 76. (1) Except as otherwise provided by Suspense account, other disposition. 23 law, all moneys received by the Department of Revenue under sections 58 to 76 of this 2019 24 Act shall be deposited in the State Treasury and credited to a suspense account established 25 under ORS 293.445 separate and distinct from the General Fund. The department may pay 26 expenses for the administration, collection and enforcement of the tax imposed under 27 sections 58 to 76 of this 2019 Act out of moneys received from the corporate activity tax 28 Refunds, including refunds of erroneous overpay- imposed under section 63 of this 2019 Act. 29 legal interest, ments or refunds of other moneys received in which the department has no 30 shall be paid out of the suspense account. 31 payment of refunds, the net revenue shall be transferred to the Fund for Stu- After (2) 32 of this 2019 Act. A working balance of unreceipted dent Success established under section 2 33 under sections 58 to 76 of this 2019 Act may be retained by revenue from the tax imposed 34 payment of refunds, but such working balance may not at the close the department for the 35 of any fiscal year exceed the amount of $500,000. 36 (3) There are continuously appropriated to the department amounts necessary to pay the 37 administrative expenses of the department in administering, collecting and enforcing the 38 corporate activity tax imposed under section 63 of this 2019 Act. 39 40 UNDERPAYMENT OR UNDERREPORTING 41 42 SECTION 77. and penalties. Interest (1) The Department of Revenue may not impose any 43 interest or penalty that would otherwise apply to taxes due if the interest or penalty is based 44 on underpayment or underreporting that results solely from the operation of sections 58 to 45 [44]

45 A-Eng. HB 3427 1 76 of this 2019 Act. 2 (2) A taxpayer shall pay at least 80 percent of the balance due for any quarter or the 3 department may impose a penalty as provided in ORS 314.400 (3). SECTION 78. 4 77 of this 2019 Act applies to tax years beginning on or after Jan- Section 5 uary 1, 2020, and before January 1, 2021, and to returns filed on or before April 15, 2021. 6 APPLICABILITY 7 8 9 SECTION 79. Sections 58 to 76 of this 2019 Act apply to tax years beginning on or after January 1, 2020. 10 11 PARTS NOT SEVERABLE 12 13 the intent of the Legislative Assembly that each part of this 2019 Act It is SECTION 80. 14 be considered as essentially and inseparably connected with and dependent upon every other 15 16 The Legislative Assembly does not intend part. that any part of this 2019 Act be the law if any other part does not become law. 17 18 19 REPORT FROM DEPARTMENT OF EDUCATION 20 No later than February 1, 2020, the Department of Education shall provide SECTION 81. 21 a report, and may include recommendations for legislation, to an interim committee of the 22 Legislative Assembly related to education regarding the progress of implementing this 2019 23 Act. 24 Section 81 of this 2019 Act is repealed on December 31, 2020. SECTION 82. 25 26 CAPTIONS 27 28 only for The unit and section captions used in this 2019 Act are provided SECTION 83. 29 the convenience of the reader and do not become part of the statutory law of this state or 30 express any legislative intent in the enactment of this 2019 Act. 31 32 EFFECTIVE DATE 33 34 the 2019 SECTION 84. This 2019 Act takes effect on the 91st day after the date on which 35 regular session of the Eightieth Legislative Assembly adjourns sine die. 36 37 [45]

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