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School-Finance Legislation Clears House, Senate in North Dakota

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The North Dakota House has passed a watered-down version of a plan proposed by Gov. Edward T. Schafer in an effort to make the way schools are financed more equal across school districts.

The bill had languished in committee, and some observers said lawmakers passed the amended version last month chiefly to maintain a House-sponsored alternative to a competing school-equity bill that was approved by the Senate.

With each of the bills on its way to the opposite chamber, committee hearings on the measures could begin as early as this week.

For his part, the Governor told local reporters that he did not think the Senate plan would move the state far enough toward equity among districts of disparate wealth.

The proposal would add $35.5 million in funding for schools, without raising taxes. But it would be distributed through a slightly revised version of the current state-aid formula, which many observers say is badly flawed as well as underfunded.

Mr. Schafer told reporters he would be willing to keep the legislature in Bismarck past its scheduled adjournment date to address changes--apparently a veiled veto threat.

The Governor "wants something substantial done about equity," Tom Decker, the director of school district finance and organization for the state education department, said last week. The department worked with the Governor on his bill.

New Lawsuit?

In addition, some of the school districts that were the plaintiffs in a lawsuit against the state are apparently frustrated with the legislature and are wondering if they should try again. The state supreme court fell one vote short last year of the supermajority needed to declare the finance system unconstitutional.

As proposed, the Governor's no-new-taxes plan would have put $25.5 million into a special fund to be distributed--outside the basic state-aid formula--to districts with relatively little property wealth, and therefore less ability to raise revenue through property taxes. (See Education Week, Feb. 15, 1994.)

In calculating a district's wealth, the original plan took into account any outside income a district receives--such as federal impact aid, or oil, gas, and coal revenues.

That riled some district officials, and House lawmakers altered Mr. Schafer's proposal so that income would not be counted in determining districts' wealth. The change would qualify many more districts to split the equity pot, increasing the potential payoff for some and cutting it for others.

And it would leave property wealth as the only criterion for extra payments, said Larry A. Klundt, the executive director of the North Dakota Council of School Administrators.

"The net effect of that is it re-creates all the arguments we've had in our state regarding [equity funding]," Mr. Klundt said.

"Getting to equity," Mr. Decker of the education department said, "means taking into consideration all the revenue sources a district has."

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