North Dakota legislators got to work Wednesday on an effort to radically revise the state's K-12 school funding system in the face of a pending lawsuit from nine school districts that believe they're being shortchanged.

Submitted to legislators after months of study by an independent commission, the plan would boost state school funding by $80 million and create a whole new formula for distributing it.

Its dual aim is to ensure adequate state funding for a quality education system and provide a simple, equitable distribution of the money among school districts to make sure all North Dakota children benefit.

The measure also aims to satisfy the plaintiff districts, which agreed to hold off on their lawsuit if a compromise could be reached through legislation.

"It is essentially a one-of-a-kind thing in the nation to solve this as a consensus," said State Superintendent Wayne Sanstead at a Wednesday hearing of the Senate Education Committee.

If passed, the new formula would represent a historic change in the history of state education funding. The current formula, which distributes money based on district enrollment, has been heavily tweaked and added to, but never re-written.

"With each change we made over the years it developed some flaws that made it a system that's not fair to everyone," said Rep. Dave Monson, R-Osnabrock, another commission member.

Under the commission's plan, school districts would start with a base state allocation of $3,090 per student.

That allocation would increase based on the number of special case students enrolled in the district. Special case students include those who are home schooled, speak English as a second language or attend the school from a bordering state.

"If the dollars follow the kids - irrespective of if they're in a district of 200 or 2,000 - it provides for an equitable distribution," said Sen. Tim Flakoll, R-Fargo, who's the measure's primary sponsor.

The proposed formula would also increase the per student allocation based on district size, giving the smallest schools $1.25 per student for every $1 per student at the largest schools. Studies show small schools have to spend more per student to provide the same level of education as larger schools because of the efficiencies enjoyed by the larger schools.

In addition, the plan calls for separate equity payments from the state to districts with a property tax base that's less than 90 percent of the state average of $17,801 per student. Districts with a property tax base that's more than 150 percent of the state average would see a drop-off in aid from the state.

"We think that school districts should be able to enjoy some of the advantages of their wealth, but only to a point," said Lt. Gov. Jack Dalrymple, who chaired the independent commission.

Made up of legislators and school officials, the North Dakota Commission on Education Improvement was appointed by Gov. John Hoeven in January 2006 as part of an agreement to delay the lawsuit.

Grafton School Board President Dan Gaustad, a plaintiff in the lawsuit, said he thinks the revision can solve his district's problems.

"Right now, we can only provide core resources," he said. "This would let us add more coursework."

Gaustad said his district of about 900 students hasn't determined a use for the additional state resources, but would consider adding more Advanced Placement courses to its high school.

Criticism of the measure is focused part of the bill that defines the worth of oil tax revenues and tuition payments from out-of-district students in determining the relative wealth of districts.

Rep. Kari Conrad, D-Minot, said the bill is unfair to the Minot Public School District, which receives money from the federal government for students it educates from a nearby Air Force base.

Under the new formula, that money would be counted as tuition payments, thus reducing the district's state aid.

The measure also counts each dollar of oil and gas taxes as equivalent to an additional $0.75 of property taxes.

Vicki Steiner, a lobbyist with the North Dakota Association of Oil and Gas Producing Counties, said this is unfair because that money is intended to pay for infrastructure damage done by oil wells and coal mining, not for schools.

(Reach reporter Jonathan Rivoli at 223-8482 or jonathan.rivoli@; bismarcktribune.com.)