SECTION 1. Chapter 71 of the General Laws is hereby amended by inserting after section 7C the following 2 sections:-

Section 7D. (a) To provide for the reimbursement of the part of the cost of transportation not reimbursable under section 7A, the state treasurer shall annually, on or before November twentieth, pay to a rural school district the sums required for full reimbursement of extraordinary transportation costs incurred directly by a rural school district as a result of the transportation between school and home of any pupil.

(b) Rural school districts may establish a Rural School Transportation Reimbursement Account. Reimbursements made by the commonwealth pursuant to this section may be deposited into the account.

(c) Regional school districts that receive reimbursement pursuant to section 16C shall not be eligible for school transportation reimbursement pursuant to this section.

Section 7E. (a) There is hereby established and set upon the books of the commonwealth a separate fund known as the Non-Resident Pupil Transportation Fund. The fund shall be credited with: (i) appropriations or other money authorized or transferred by the general court and specifically designated to be credited to the fund; (ii) funds from public and private sources, including, but not limited to gifts, grants and donations; and (iii) any interest earned on such money. Amounts credited shall not be subject to appropriation and shall be expended by the department of elementary and secondary education to reimburse schools for the costs associated with the transportation of pupils who attend schools in school districts that are not located within the municipality that the pupil resides in to be administered by the department of elementary and secondary education in accordance with this section.

(b) A qualified school district eligible for funding shall include any school district that enrolls pupils in its schools who reside outside of the municipality where the school is located.

(c) Annually, not later than December first, the department of elementary and secondary education shall submit a report to the house and senate committees on ways and means detailing the calculation and planned distribution of funds to school districts; provided, that, funds distributed from this section shall not be considered chapter 70 aid for the calculation of the minimum required local contribution for the upcoming fiscal year.

(d) Every 5 years, the department of elementary and secondary education shall determine the adequacy of funding for the purposes of this section and recommend to the general court any necessary adjustment.