KRS 160.125: School of innovation pilot project -- Fund -- Applications -- Distribution of

funds -- Report -- Matching funds -- Termination of participation.

(1) There is hereby established the school of innovation pilot project to provide school

districts with the opportunity to explore innovative school operation models.

(2) (a) There is hereby established in the State Treasury a trust and agency account to

be known as the school of innovation pilot project fund. The fund shall consist

of moneys received from state appropriations, gifts, grants, and federal funds.

(b) The fund shall be administered by the Kentucky Department of Education.

(c) Amounts deposited in the fund shall be used to support the school of

innovation pilot project under this section and no other purpose.

(d) Notwithstanding KRS 45.229, fund amounts not expended at the close of a

fiscal year shall not lapse but shall be carried forward into the next fiscal year.

(3) The school of innovation pilot project shall begin August 1, 2026, and end June 30,

2028, and shall consist of:

(a) Beginning with the first year of the pilot project, any school of innovation

established by Covington Independent School District; and

(b) To the extent funds are available and beginning with the 2027 -2028 schoo l

year, a cohort of two (2) schools of innovation chosen from applications

submitted by local boards of education that meet the following criteria:

1. The applicant has previously or concurrently been approved under KRS

156.161 for a school of innovation;

2. The school of innovation is not a virtual program as defined in KRS

157.320;

3. The application proposes a significant innovative educational

opportunity to improve student outcomes, school operations, or both

through approaches that would be difficult or impractical to implement

under existing statutory or regulatory requirements; and

4. The applicant identifies matching moneys consisting of district

revenues, philanthropic contributions, or other funds that are to be

dedicated for the operation of the school of innovation until the end of

the pilot project and which shall be eligible to serve as matching funds

under subsection (4) of this section.

(4) The Kentucky Board of Education shall:

(a) Establish an annual timeline for application submission and approval for each

year of the pilot project; and

(b) Review and approve two (2) applications under subsection (3) of this section

for admission into th e pilot project under subsection (3)(b) of this section to

the extent that funds are available during the operation of the pilot project.

The department shall distribute funds from the school of innovation pilot

project fund to an approved applicant in amo unts that match the funds

dedicated by the approved applicant under subsection (3) of this section. The

funds shall be distributed on a regular schedule to the approved applicant so

long as the applicant operates the school of innovation as outlined in the

approved application. An approved applicant may submit an amended

application so long as the amended application continues to meet the

minimum requirements of subsection (3) of this section. Both the matching

funds and the pilot project funds shall be res tricted to the operation and

support of the school of innovation, unless granted a waiver from the

Kentucky Board of Education.

(5) At the end of each school year, a school district participating in the pilot project

shall submit to the Kentucky Department of Education a report which shall be

compiled by the department and submitted to the Legislative Research Commission

for referral to the Interim Joint Committee on Education. The report shall include:

(a) A description of the district's school of innovati on activities during the school

year and how the school is innovating, including innovations through the

waiving of statute or administrative regulation;

(b) The education service providers and any other entities the school district has

partnered with for the operation of the school of innovation;

(c) A general accounting of how the district and matching pilot project funds

have been used;

(d) The academic programs offered by the school of innovation;

(e) The enrollment details of the school of innovation;

(f) What student and school performance factors the district shall use to

determine success of the school of innovation and the current status on those

factors; and

(g) What hindrances to innovation the district may have encountered.

(6) Matching funds for the pilot project may include contributions from one (1) or more

private or philanthropic entities, including nonprofit organizations that partner with

school districts to support the design or implementation of schools of innovation.

(7) An application under subsection (3) of this section:

(a) May be submitted collectively by two (2) or more local boards of education;

and

(b) Shall identify the waivers applicable to each school district, the

responsibilities of each school district in operating the school of innovation,

and the matching funds each school district shall provide to support the school

of innovation.

(8) If the Kentucky Board of Education at any time finds by a two -thirds (2/3) majority

vote that the operation of the school of innovation under this subsection has

endangered students, impeded student academic achievement, or supported

financial malfeasance or criminal activity, then the school of innovation's

participation in the long -term component of the school of innovation pilot project

shall be terminated and no further funds shall be distributed.