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HB 1130

A BILL for an Act to amend and reenact section 15.1-27-04.1 of the North Dakota Century Code, relating to the option for a school district to reduce its local contribution deduction in the school state aid formula by the percentage of the local contribution which comes from in lieu of revenue.

69th Legislative Assembly (2025-26) Introduced by Brad Bekkedahl and 8 co-sponsors

HB 1130 lets ND districts reduce the local-contribution deduction in the state aid formula by the share of PILOT/in-lieu revenues, potentially boosting aid for those districts.

Second reading, failed to pass, yeas 23 nays 23
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Bill Summary · HB 1130

Summary — HB 1130 (North Dakota)

Title: An Act to amend and reenact section 15.1‑27‑04.1, N.D.C.C., relating to the option for a school district to reduce its local contribution deduction in the school state aid formula by the percentage of the local contribution which comes from in lieu of revenue

Purpose

HB 1130 would amend North Dakota Century Code section 15.1‑27‑04.1 (the statute that establishes district baseline funding and the calculation of school state aid) to give a school district the option to reduce the local‑contribution deduction used in the state aid formula by the portion (percentage) of that local contribution that is funded by “in lieu of” revenue (payments‑in‑lieu‑of‑taxes, commonly called PILOTs).

In short: where part of a district’s local revenue contribution is made up of payments that substitute for property tax (PILOTs), the district could treat that portion as eligible to reduce the local share deducted from state aid — potentially increasing its state aid entitlement.

Key provisions / changes

  • Amends and reenacts N.D.C.C. § 15.1‑27‑04.1 (the baseline funding / state aid calculation statute).
  • Creates (or clarifies) an option allowing a district to reduce the local contribution deduction in the state aid formula proportionally by the percentage of the local contribution that is paid from in‑lieu revenue rather than from regular property tax levy.
  • Applies within the structure of the existing baseline funding provisions (which already specify the composition of baseline funding, exclusions, and per‑weighted‑student calculations and reductions).
  • The statute being amended contains definitions and lists of revenue types that are part of baseline funding (examples in the statute include mineral revenue, certain payments in lieu of taxes such as payments on electricity generation from non‑coal sources, leasing revenue from federally acquired land, and reimbursements like homestead/disabled veterans credits). HB 1130 targets the treatment of local contributions composed of these in‑lieu revenue types when computing the local deduction from state aid.

Who would be affected

  • Primary: school districts that receive significant payments‑in‑lieu‑of‑taxes (PILOTs) or similar “in lieu of” revenues (for example, districts with energy generation or mineral‑related payments, lease income from federal land, or other allocated in‑lieu payments).
  • Secondary: the State (superintendent of public instruction and the state aid budgeting process) — a change in deduction treatment could increase state aid payments to eligible districts, affecting state aid budgets and possibly requiring allocation adjustments.
  • Districts without in‑lieu revenue would see no direct effect.

Potential fiscal/operational impact

  • Districts that currently contribute local resources largely composed of PILOTs could see increased state aid because less of their local contribution would be deducted in the state aid formula.
  • State general fund or education aid appropriations could face increased demand if more aid becomes payable as a result; the bill does not by itself appropriate funds.
  • Administrative effect: the Department/superintendent of public instruction would implement the change in the state aid calculation process.

Procedural / timeline notes

  • Introduced: November 12, 2024. Sponsors include Representatives Richter, Jonas, Novak, Sanford, Swiontek, Murphy and Senators Bekkedahl, Patten, Schaible.
  • The bill amends a complex, existing baseline/state‑aid formula that already phases adjustments and per‑unit calculations (the section includes retroactive/effective clauses and year‑by‑year payment rules).
  • Latest status provided: Second reading — failed to pass (vote: yeas 23, nays 23). The bill had committee and amendment activity (multiple engrossments and conference committee activity prior to the recorded second‑reading result).

Practical takeaway

HB 1130 is a technical, targeted change to the state school aid formula intended to treat PILOT or other in‑lieu revenues more favorably for districts when calculating the local contribution deduction. If enacted, it would primarily benefit districts relying on substantial in‑lieu payments and would shift some funding responsibility toward the state formula, with corresponding budgetary implications for state education funding.

Compiled from official sources — confirm details with the bill’s official record.

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