1.2relating to education finance; establishing prekindergarten allowances; increasing
1.3the basic general education formula allowance; increasing funding for the Board
1.4of Trustees of the Minnesota State Colleges and Universities; increasing funding
1.5for the Board of Regents of the University of Minnesota; increasing funding
1.6for the Office of Higher Education; modifying income tax rates; appropriating
1.7money;amending Minnesota Statutes 2006, sections 126C.10, subdivision 2;
1.8127A.45, subdivision 12; 136A.121, subdivision 5; 270B.14, subdivision 1,
1.9by adding a subdivision; 290.06, subdivision 2c; 290.091, subdivisions 1, 3;
1.10proposing coding for new law in Minnesota Statutes, chapters 124D; 270C;
1.11repealing Minnesota Statutes 2006, section 124D.175.
1.12BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.15	Section 1. SUMMARY OF APPROPRIATIONS.

1.16    The amounts shown in this section summarize direct appropriations, by fund, made
1.17in this article.

1.18			2008		2009		Total
1.19	General	$	95,490,000	$	255,247,000	$	350,737,000

1.20    Sec. 2. [124D.332] PREKINDERGARTEN EDUCATION ACT.
1.21    Subdivision 1. Allowance; establishment; purpose. A prekindergarten education
1.22allowance finance system is established to provide choices for families of young children,
1.23close the achievement gap in kindergarten through grade 12 public education, improve
1.24learning preparedness, and promote healthy development and school readiness through
1.25quality early care and education settings.
2.1    Subd. 2. Eligibility; allowance amount. A parent or legal guardian of a child
2.2domiciled in this state who will be at least age three and has not reached the age of five on
2.3August 31 is eligible to receive a prekindergarten education allowance of $200 for each
2.4eligible child. In addition, the prekindergarten education allowance for each eligible child
2.5must be increased according to the following:

2.6 2.7	Federal Adjusted Gross Income	Additional Prekindergarten Allowance Amount
2.8	Under $10,000	$3,800
2.9	$10,000 - $19,999	$3,300
2.10	$20,000 - $29,999	$2,800
2.11	$30,000 - $39,999	$1,800
2.12	$40,000 - $49,999	$800
2.13	$50,000 - $74,999	$300
2.14	$75,000 - $99,999	$0
2.15	$100,000 - $149,999	$0
2.16	$150,000 - $249,999	$0
2.17	$250,000 and over	$0

2.18    As used in this section, "federal adjusted gross income" means the federal adjusted
2.19gross income as defined in section 62 of the Internal Revenue Code of 1986 of the parent
2.20or legal guardian of the child who has physical custody of the child for more than half
2.21the tax year. Federal adjusted gross income is calculated for the purposes of this section
2.22as the tax year beginning two years before the year in which the eligible parent or legal
2.23guardian is notified of the prekindergarten allowance. For the purposes of this section a
2.24custodial parent's adjusted gross income includes the adjusted gross income of the parent's
2.25spouse if the parent is considered to be married for income tax purposes under section
2.267703 of the Internal Revenue Code of 1986.
2.27    Subd. 3. Commissioner of education duties. (a) The commissioner of education
2.28shall review the data provided by the Department of Revenue under section 270C.135.
2.29By January 31, 2008, and each subsequent year, the commissioner shall submit the
2.30prekindergarten education allowance to each eligible recipient. The commissioner shall
2.31notify the parent or legal guardian of an eligible child of the amount of the prekindergarten
2.32education allowance available. Notification must include instructions on how to use the
2.33allowance to obtain eligible services and a list of approved providers in the area.
2.34    (b) The commissioner of education must align the data provided by the Department
2.35of Revenue with the applications received according to subdivision 4 to ensure that
2.36persons eligible to receive a prekindergarten education allowance are not counted more
2.37than once. In the event that an eligible recipient is included in the Department of Revenue
2.38data and the alternative process under subdivision 4, the commissioner shall use the
3.1data from the Department of Revenue for the purposes of establishing prekindergarten
3.2education allowance eligibility and amount.
3.3    (c) The commissioner shall establish a process to transfer the prekindergarten
3.4education allowance to recipients. The department may utilize technology to transfer the
3.5prekindergarten education allowance through e-mail or other methods to reduce costs.
3.6Recipients may not transfer allowances to another person.
3.7    (d) Each prekindergarten education allowance shall have the monetary value stated
3.8for each eligible child. The prekindergarten allowance may not be used to purchase
3.9services until September 1 of the year in which the allowance is issued following its
3.10transmission to eligible recipients. In the event that a recipient moves during the year in
3.11which a prekindergarten education allowance is valid, the recipient may apply to the
3.12department to split or divide the prekindergarten education allowance among two or
3.13more providers.
3.14    (e) The commissioner must review and approve work plan amendments from
3.15federally designated Head Start grantees and school district programs that meet the
3.16criteria in subdivision 8 and state the methods in which the grantees or programs will
3.17expand or enhance services beyond levels that are funded through specific state or federal
3.18appropriations for these purposes.
3.19    Subd. 4. Alternative process. The commissioner of education, in conjunction with
3.20the commissioner of human services, shall establish a method to locate potential recipients
3.21who do not file income taxes and inform them of the availability of the prekindergarten
3.22education allowance. For the purpose of establishing eligibility for the prekindergarten
3.23education allowance, the commissioners of education and human services must accept
3.24recipients identified in other public funding eligibility processes, including, but not
3.25limited to, public school programs, Head Start, and child care assistance programs. In
3.26addition, the commissioners of education and human services must make a sample form
3.27available to providers that can be used to determine eligibility of potential recipients. The
3.28commissioner must submit a prekindergarten education allowance to an eligible recipient
3.29who used the alternative processes.
3.30    Subd. 5. Redeeming an allowance. (a) A recipient who has received a
3.31prekindergarten education allowance may transmit the allowance provided in subdivision
3.323 or subdivision 4 to pay for services provided to the recipient's eligible dependent child
3.33from September 1 of that year through August 31 of the following year in an approved
3.34early childhood education and care program or by an approved early childhood education
3.35and care provider as defined in subdivision 8.
4.1    (b) An eligible provider or program that has provided services under subdivision
4.27 to an eligible child whose parent or guardian received a prekindergarten education
4.3allowance, must remit the allowance to the Department of Education in a manner
4.4determined by the commissioner of education.
4.5    Subd. 6. Payments to approved programs. The commissioner shall reimburse
4.6providers or programs that received a prekindergarten education allowance from a
4.7recipient on behalf of an eligible three- or four-year-old child on a reimbursement basis
4.8for services provided from September 1 to August 31. An eligible provider that accepts
4.9prekindergarten education allowance as a form of payment for services must maintain
4.10documentation of services provided and the commissioner must verify information
4.11submitted by eligible providers to ensure appropriate services were provided to eligible
4.12recipients for whom the early childhood allowances were used as a form of payment.
4.13    Subd. 7. Use of allowance. The prekindergarten education allowance may only
4.14be used for services designed to promote school readiness in an approved quality early
4.15childhood care and education setting according to subdivision 8, that are provided to an
4.16eligible child who is at least age three and has not yet reached age five on August 31 of
4.17the year in which the allowance is issued.
4.18    Subd. 8. Provider certification. (a) A quality early care and education setting is any
4.19service or program that receives a quality rating from the Department of Human Services
4.20under the Minnesota Early Learning Foundation quality rating system administered by
4.21the Department of Human Services and agrees to accept a prekindergarten education
4.22allowance to pay for services. For allowances issued in 2008 only, a provider may satisfy
4.23the quality rating system requirements and be deemed eligible to participate in this
4.24program if the provider has received a provisional quality rating system approved from
4.25either the Department of Education or the Department of Human Services.
4.26    (b) For the purposes of receiving a provisional quality rating, a child care program
4.27or provider must be approved by the commissioner of human services and a school
4.28district or a Head Start program must be approved by the commissioner of education.
4.29Programs and providers must apply for approval in the form and manner prescribed by the
4.30commissioners. To receive approval, the commissioners must determine that applicants:
4.31    (1) use research-based curricula that are aligned with the education standards,
4.32under section 120B.021, instruction and child assessment instruments approved by the
4.33Departments of Education and Human Services, in consultation with the Minnesota Early
4.34Learning Foundation;
4.35    (2) provide a program of sufficient intensity and duration to improve the school
4.36readiness of participating children;
5.1    (3) provide opportunities for parent involvement; and
5.2    (4) meet other research-based criteria determined necessary by the commissioners.
5.3    (c) Notwithstanding paragraph (b), for allowances issued in 2008 only, Head Start
5.4programs meeting Head Start performance standards and accredited child care centers
5.5are granted a provisional quality rating for the purposes of receiving a prekindergarten
5.6education allowance under this section.
5.7    (d) A provider deemed eligible to receive a prekindergarten education allowance
5.8under paragraphs (a) to (c) may use the allowance to enhance services above the current
5.9quality levels, increase the duration of services provided, or expand the number of children
5.10to whom services are provided beyond levels that are funded through specific state or
5.11federal appropriations for these purposes.
5.12    (e) For allowances issued in 2008 and 2009 only, when no quality program is
5.13available, a recipient may direct the prekindergarten education allowance to a provider
5.14or program for school readiness quality improvements that will make the provider or
5.15program eligible for a quality rating according to the quality rating system. Allowable
5.16expenditures that will increase the capacity of the provider or program to help children to
5.17be ready for kindergarten include purchase of curricula and assessment tools, as described
5.18in paragraph (b), clause (1), professional development and training on the area of curricula
5.19and assessment tools, purchase of materials to improve the learning environment, and
5.20other expenditures preapproved by the commissioner of human services for child care
5.21providers and the commissioner of education for school district programs.
5.22    Subd. 9. Allowance not income for purposes of other publicly funded programs.
5.23    Notwithstanding any law to the contrary, the prekindergarten education allowance issued
5.24to the parent or guardian of an eligible child does not count as earned income for purposes
5.25of the medical assistance, MinnesotaCare, MFIP, school readiness, Head Start, or child
5.26care assistance programs.
5.27EFFECTIVE DATE.This section is effective July 1, 2007.

5.28    Sec. 3. Minnesota Statutes 2006, section 126C.10, subdivision 2, is amended to read:
5.29    Subd. 2. Basic revenue. The basic revenue for each district equals the formula
5.30allowance times the adjusted marginal cost pupil units for the school year. The formula
5.31allowance for fiscal year 2005 is $4,601. The formula allowance for fiscal year 2006 is
5.32$4,783. The formula allowance for fiscal year 2007 and subsequent years is $4,974.
5.33The formula allowance for fiscal year 2008 is $5,074. The formula allowance for fiscal
5.34year 2009 and subsequent years is $5,176.

6.1    Sec. 4. Minnesota Statutes 2006, section 127A.45, subdivision 12, is amended to read:
6.2    Subd. 12. Payment percentage for certain aids. (a) One hundred percent of the
6.3aid for the current fiscal year must be paid for the following aids: reimbursement for
6.4enrollment options transportation, according to sections 124D.03, subdivision 8, 124D.09,
6.5subdivision 22 , and 124D.10; school lunch aid, according to section 124D.111; and
6.6hearing impaired support services aid, according to section 124D.57; and prekindergarten
6.7education allowance aid, according to section 124D.332 .
6.8    (b) One hundred percent of the aid for the current fiscal year, based on enrollment
6.9in the previous year, must be paid for the first grade preparedness program according to
6.10section 124D.081.

6.11    Sec. 5. Minnesota Statutes 2006, section 270B.14, subdivision 1, is amended to read:
6.12    Subdivision 1. Disclosure to commissioner of human services. (a) On the request
6.13of the commissioner of human services, the commissioner shall disclose return information
6.14regarding taxes imposed by chapter 290, and claims for refunds under chapter 290A, to
6.15the extent provided in paragraph (b) and for the purposes set forth in paragraph (c).
6.16    (b) Data that may be disclosed are limited to data relating to the identity,
6.17whereabouts, employment, income, and property of a person owing or alleged to be owing
6.18an obligation of child support.
6.19    (c) The commissioner of human services may request data only for the purposes of
6.20carrying out the child support enforcement program and to assist in the location of parents
6.21who have, or appear to have, deserted their children. Data received may be used only
6.22as set forth in section 256.978.
6.23    (d) The commissioner shall provide the records and information necessary to
6.24administer the supplemental housing allowance to the commissioner of human services.
6.25    (e) At the request of the commissioner of human services, the commissioner of
6.26revenue shall electronically match the Social Security numbers and names of participants
6.27in the telephone assistance plan operated under sections 237.69 to 237.711, with those of
6.28property tax refund filers, and determine whether each participant's household income is
6.29within the eligibility standards for the telephone assistance plan.
6.30    (f) The commissioner may provide records and information collected under sections
6.31295.50 to 295.59 to the commissioner of human services for purposes of the Medicaid
6.32Voluntary Contribution and Provider-Specific Tax Amendments of 1991, Public Law
6.33102-234. Upon the written agreement by the United States Department of Health and
6.34Human Services to maintain the confidentiality of the data, the commissioner may provide
6.35records and information collected under sections 295.50 to 295.59 to the Centers for
7.1Medicare and Medicaid Services section of the United States Department of Health and
7.2Human Services for purposes of meeting federal reporting requirements.
7.3    (g) The commissioner may provide records and information to the commissioner of
7.4human services as necessary to administer the early refund of refundable tax credits.
7.5    (h) The commissioner may disclose information to the commissioner of human
7.6services necessary to verify income for eligibility and premium payment under the
7.7MinnesotaCare program, under section 256L.05, subdivision 2.
7.8    (i) The commissioner may disclose information to the commissioner of human
7.9services necessary to verify whether applicants or recipients for the Minnesota family
7.10investment program, general assistance, food support, and Minnesota supplemental aid
7.11program have claimed refundable tax credits under chapter 290 and the property tax
7.12refund under chapter 290A, and the amounts of the credits.
7.13    (j) The commissioner may disclose information in the time and manner described in
7.14section 270C.135 to the commissioner of human services to administer the prekindergarten
7.15education allowance under section 124D.332.

7.16    Sec. 6. Minnesota Statutes 2006, section 270B.14, is amended by adding a subdivision
7.17to read:
7.18    Subd. 19. Disclosure to Department of Education. The commissioner may
7.19disclose information in the time and manner described in section 270C.135 to the
7.20commissioner of education to administer the prekindergarten education allowance under
7.21section 124D.332.

7.22    Sec. 7. [270C.135] PREKINDERGARTEN EDUCATION ALLOWANCE
7.23ELIGIBLE CLAIMANT DATA.
7.24    By October 31, 2008, and each subsequent year, the commissioner must review
7.25returns from the most recent year for which data are available and provide to the
7.26commissioners of education and human services, the names, addresses, and amount
7.27of prekindergarten education allowance due to each eligible claimant under section
7.28124D.332.

7.29    Sec. 8. ALLOWANCE PAYMENT SYSTEM RECOMMENDATION.
7.30    The commissioners of education and human services, in conjunction with
7.31the Minnesota Early Learning Foundation and early childhood stakeholders, shall
7.32work together to recommend necessary modifications for full implementation of the
7.33prekindergarten education allowance finance system. The commissioners of education and
8.1human services shall report to the legislature by January 15, 2008, any legislative changes
8.2needed to improve the prekindergarten education allowance finance system.

8.3    Sec. 9. 2007 DATA TRANSMISSION, DEPARTMENT OF REVENUE.
8.4    By December 15, 2007, the commissioner of revenue must review returns from
8.5the most recent year for which data are available and provide to the commissioners of
8.6education and human services, the names, addresses, and amount of the prekindergarten
8.7education allowance due to each eligible claimant under Minnesota Statutes, section
8.8124D.332.

8.9    Sec. 10. ALL DAY KINDERGARTEN FACILITY ASSESSMENT.
8.10    (a) The commissioner of education must contract with an independent contractor that
8.11has extensive experience in education facilities to study the state's readiness to implement
8.12all day kindergarten throughout the state.
8.13    (b) The contractor must:
8.14    (1) conduct an in-depth analysis of the state's kindergarten facilities to assess
8.15whether the state's districts and charter schools have sufficient facilities that would be
8.16required to implement all day kindergarten throughout the state;
8.17    (2) examine the quality of kindergarten facilities throughout the state;
8.18    (3) examine the differences in kindergarten facilities, if any, between greater
8.19Minnesota and the metropolitan area;
8.20    (4) determine whether a district's tax base has an effect on a district's ability to
8.21provide sufficient kindergarten facilities throughout the state; and
8.22    (5) report its findings to the education finance committees of the house and senate
8.23before January 30, 2008.

8.24    Sec. 11. APPROPRIATIONS; DEPARTMENT OF EDUCATION.
8.25    Subdivision 1. Department of Education. The sums indicated in this section are
8.26appropriated from the general fund to the Department of Education. These appropriations
8.27are added to any appropriations for the same purpose in 2007 S.F. No. 2095 for the fiscal
8.28years indicated.
8.29    Subd. 2. General education aid. For general education aid under Minnesota
8.30Statutes, section 126C.13, subdivision 4:

8.31		$	93,424,000	.....	2008
8.32		$	199,294,000	.....	2009

9.1    The 2008 appropriation includes $0 for fiscal year 2007 and $93,424,000 for fiscal
9.2year 2008.
9.3    The 2009 appropriation includes $9,800,000 for fiscal year 2008 and $189,494,000
9.4for fiscal year 2009.
9.5    Subd. 3. Nonpublic pupil aid. For nonpublic pupil education aid under Minnesota
9.6Statutes, sections 123B.40 to 123B.43, and 123B.87:

9.7		$	116,000	.....	2008
9.8		$	243,000	.....	2009

9.9    The 2008 appropriation includes $0 for fiscal year 2007 and $116,000 for fiscal
9.10year 2008.
9.11    The 2009 appropriation includes $14,000 for fiscal year 2008 and $229,000 for
9.12fiscal year 2009.
9.13    Subd. 4. Nonpublic pupil transportation. For nonpublic pupil transportation aid
9.14under Minnesota Statutes, section 123B.92, subdivision 9:

9.15		$	384,000	.....	2008
9.16		$	801,000	.....	2009

9.17    The 2008 appropriation includes $0 for fiscal year 2007 and $384,000 for fiscal
9.18year 2008.
9.19    The 2009 appropriation includes $44,000 for fiscal year 2008 and $757,000 for
9.20fiscal year 2009.
9.21    Subd. 5. Tribal contract schools. For tribal contract school aid under Minnesota
9.22Statutes, section 124D.83:

9.23		$	26,000	.....	2008
9.24		$	55,000	.....	2009

9.25    The 2008 appropriation includes $0 for fiscal year 2007 and $26,000 for fiscal
9.26year 2008.
9.27    The 2009 appropriation includes $3,000 for fiscal year 2008 and $52,000 for fiscal
9.28year 2009.
9.29    Subd. 6. Prekindergarten allowances. For the Prekindergarten Education Act
9.30under Minnesota Statutes, sections 124D.332 and 270C.135:

9.31

$

53,804,000

.....

2009

9.32    This appropriation is available until expended.
10.1    Subd. 7. All day kindergarten; facilities assessment. For an assessment of all
10.2day kindergarten facilities:

10.3

$

100,000

.....

2008

10.4    Subd. 8. Department. For the administrative costs associated with the
10.5Prekindergarten Education Act under Minnesota Statutes, sections 124D.332 and
10.6270C.135:

10.7		$	1,234,000	.....	2008
10.8		$	867,000	.....	2009

10.9    Sec. 12. APPROPRIATIONS; DEPARTMENT OF HUMAN SERVICES.
10.10    Subdivision 1. Department of Human Services. The sums indicated in this section
10.11are appropriated from the general fund to the Department of Human Services. These
10.12appropriations are added to any appropriations for the same purpose in 2007 S.F. No.
10.132171 for the fiscal years indicated.
10.14    Subd. 2. Department. For the administrative costs associated with the
10.15Prekindergarten Education Act under Minnesota Statutes, sections 124D.332 and
10.16270C.135:

10.17		$	206,000	.....	2008
10.18		$	183,000	.....	2009

10.19    Sec. 13. REPEALER.
10.20Minnesota Statutes 2006, section 124D.175, is repealed.

10.23

Section 1. SUMMARY OF APPROPRIATIONS.

10.24    The amounts shown in this section summarize direct appropriations, by fund, made
10.25in this article.

10.26			2008		2009		Total
10.27	General	$	34,500,000	$	58,500,000	$	93,000,000

10.28

Sec. 2. HIGHER EDUCATION APPROPRIATIONS.

10.29    The sums shown in the columns marked "Appropriations" are appropriated to the
10.30agencies and for the purposes specified in this article. The appropriations are from the
11.1general fund, or another named fund, and are available for the fiscal years indicated
11.2for each purpose. The figures "2008" and "2009" used in this article mean that the
11.3appropriations listed under them are available for the fiscal year ending June 30, 2008, or
11.4June 30, 2009, respectively. "The first year" is fiscal year 2008. "The second year" is fiscal
11.5year 2009. "The biennium" is fiscal years 2008 and 2009.

11.6				APPROPRIATIONS
11.7				Available for the Year
11.8				Ending June 30
11.9					2008		2009

11.10 11.11 11.12

Sec. 3. BOARD OF TRUSTEES OF THE MINNESOTA STATE COLLEGES AND UNIVERSITIES

$

18,050,000

$

33,350,000

11.13This appropriation is added to the
11.14appropriation in 2007 S.F. No. 1989, article
11.151, section 4, and includes amounts for
11.16inflation and to limit tuition increases.
11.17The legislature intends that the Board of
11.18Trustees will not increase tuition more than
11.19three percent in each year of the biennium at
11.20all institutions in the system.
11.21The legislature is concerned that Minnesota's
11.22ranking among the top five states in the nation
11.23with the highest two-year college tuition is
11.24a significant barrier to college access that
11.25will eventually lead to workforce shortages
11.26and economic development challenges. The
11.27Board of Trustees is encouraged to explore
11.28alternative tuition strategies to limit to less
11.29than three percent the tuition increases at
11.30community colleges, technical colleges,
11.31and consolidated community and technical
11.32colleges.

11.33 11.34

Sec. 4. BOARD OF REGENTS OF THE UNIVERSITY OF MINNESOTA

$

9,200,000

$

17,800,000

12.1This appropriation is added to the
12.2appropriation in 2007 S.F. No. 1989, article
12.31, section 5.
12.4The Board of Regents of the University
12.5of Minnesota is encouraged to implement
12.6tuition increases that do not exceed five
12.7percent in each year of the biennium.

12.8 12.9

Sec. 5. MINNESOTA OFFICE OF HIGHER EDUCATION

$

7,250,000

$

7,350,000

12.10This appropriation is added to the
12.11appropriation in 2007 S.F. No. 1989, article
12.121, section 3, and includes amounts to fund
12.13the state grant program.

12.14    Sec. 6. Minnesota Statutes 2006, section 136A.121, subdivision 5, is amended to read:
12.15    Subd. 5. Grant stipends. The grant stipend shall be based on a sharing of
12.16responsibility for covering the recognized cost of attendance by the applicant, the
12.17applicant's family, and the government. The amount of a financial stipend must not
12.18exceed a grant applicant's recognized cost of attendance, as defined in subdivision 6, after
12.19deducting the following:
12.20    (1) the assigned student responsibility of at least 46 45 percent of the cost of
12.21attending the institution of the applicant's choosing;
12.22    (2) the assigned family responsibility as defined in section 136A.101; and
12.23    (3) the amount of a federal Pell grant award for which the grant applicant is eligible.
12.24    The minimum financial stipend is $100 per academic year.


12.27    Section 1. Minnesota Statutes 2006, section 290.06, subdivision 2c, is amended to read:
12.28    Subd. 2c. Schedules of rates for individuals, estates, and trusts. (a) The income
12.29taxes imposed by this chapter upon married individuals filing joint returns and surviving
12.30spouses as defined in section 2(a) of the Internal Revenue Code must be computed by
12.31applying to their taxable net income the following schedule of rates:
12.32    (1) On the first $25,680 $31,150, 5.35 percent;
12.33    (2) On all over $25,680 $31,150, but not over $102,030 $123,750, 7.05 percent;
13.1    (3) On all over $102,030 $123,750, but not over $250,000, 7.85 percent;
13.2    (4) On all over $250,000, 9.7 percent.
13.3    Married individuals filing separate returns, estates, and trusts must compute their
13.4income tax by applying the above rates to their taxable income, except that the income
13.5brackets will be one-half of the above amounts.
13.6    (b) The income taxes imposed by this chapter upon unmarried individuals must be
13.7computed by applying to taxable net income the following schedule of rates:
13.8    (1) On the first $17,570 $21,310, 5.35 percent;
13.9    (2) On all over $17,570 $21,310, but not over $57,710 $69,990, 7.05 percent;
13.10    (3) On all over $57,710 $69,990, but not over $141,250, 7.85 percent;
13.11    (4) On all over $141,250, 9.7 percent.
13.12    (c) The income taxes imposed by this chapter upon unmarried individuals qualifying
13.13as a head of household as defined in section 2(b) of the Internal Revenue Code must be
13.14computed by applying to taxable net income the following schedule of rates:
13.15    (1) On the first $21,630 $26,230, 5.35 percent;
13.16    (2) On all over $21,630 $26,230, but not over $86,910 $105,410, 7.05 percent;
13.17    (3) On all over $86,910 $105,410, but not over $212,500, 7.85 percent;
13.18    (4) On all over $212,500, 9.7 percent.
13.19    (d) In lieu of a tax computed according to the rates set forth in this subdivision, the
13.20tax of any individual taxpayer whose taxable net income for the taxable year is less than
13.21an amount determined by the commissioner must be computed in accordance with tables
13.22prepared and issued by the commissioner of revenue based on income brackets of not
13.23more than $100. The amount of tax for each bracket shall be computed at the rates set
13.24forth in this subdivision, provided that the commissioner may disregard a fractional part of
13.25a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.
13.26    (e) An individual who is not a Minnesota resident for the entire year must compute
13.27the individual's Minnesota income tax as provided in this subdivision. After the
13.28application of the nonrefundable credits provided in this chapter, the tax liability must
13.29then be multiplied by a fraction in which:
13.30    (1) the numerator is the individual's Minnesota source federal adjusted gross income
13.31as defined in section 62 of the Internal Revenue Code and increased by the additions
13.32required under section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), and (9),
13.33and reduced by the Minnesota assignable portion of the subtraction for United States
13.34government interest under section 290.01, subdivision 19b, clause (1), and the subtractions
13.35under section 290.01, subdivision 19b, clauses (9), (10), (14), (15), and (16), after applying
13.36the allocation and assignability provisions of section 290.081, clause (a), or 290.17; and
14.1    (2) the denominator is the individual's federal adjusted gross income as defined in
14.2section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in
14.3section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), and (9), and reduced by the
14.4amounts specified in section 290.01, subdivision 19b, clauses (1), (9), (10), (14), (15),
14.5and (16).

14.6    Sec. 2. Minnesota Statutes 2006, section 290.091, subdivision 1, is amended to read:
14.7    Subdivision 1. Imposition of tax. In addition to all other taxes imposed by this
14.8chapter a tax is imposed on individuals, estates, and trusts equal to the excess (if any) of
14.9    (a) an amount equal to 6.4 7.75 percent of alternative minimum taxable income after
14.10subtracting the exemption amount, over
14.11    (b) the regular tax for the taxable year.

14.12    Sec. 3. Minnesota Statutes 2006, section 290.091, subdivision 3, is amended to read:
14.13    Subd. 3. Exemption amount. (a) For purposes of computing the alternative
14.14minimum tax, the exemption amount is:
14.15    (1) for taxable years beginning before January 1, 2006, the exemption determined
14.16under section 55(d) of the Internal Revenue Code, as amended through December 31,
14.171992; and
14.18    (2) for taxable years beginning after December 31, 2005, $60,000 for married
14.19couples filing joint returns, $30,000 for married individuals filing separate returns, estates,
14.20and trusts, and $45,000 for unmarried individuals.
14.21    (b) The exemption amount determined under this subdivision is subject to the phase
14.22out under section 55(d)(3) of the Internal Revenue Code, except that alternative minimum
14.23taxable income as determined under this section must be substituted in the computation
14.24of the phase out, and the income threshold used in the phase out must be adjusted for
14.25inflation as provided in paragraph (c).
14.26    (c) For taxable years beginning after December 31, 2006, the exemption amount
14.27under paragraph (a), clause (2), and the income threshold for the phase out under
14.28paragraph (b) must be adjusted for inflation. The commissioner shall make the inflation
14.29adjustments in accordance with section 1(f) of the Internal Revenue Code except that for
14.30the purposes of this subdivision the percentage increase must be determined from the year
14.31starting September 1, 2005, and ending August 31, 2006, as the base year for adjusting for
14.32inflation for the tax year beginning after December 31, 2006. The determination of the
14.33commissioner under this subdivision is not a rule under the Administrative Procedure Act.
15.1EFFECTIVE DATE.This section is effective for taxable years beginning after
15.2December 31, 2006.