Current Status Bill Number:995 Type of Legislation:General Bill GB Introducing Body:Senate Introduced Date:19960110 Primary Sponsor:Setzler All Sponsors:Setzler, Giese, Bryan, Lander, Washington, Drummond, Land, Mescher, Hayes, Elliott, Leatherman, Waldrep, Holland, Moore and Martin Drafted Document Number:pfm\7740sd.96 Residing Body:Senate Current Committee:Education Committee 04 SED Subject:Public School Facilities Assistance Act
Body Date Action Description Com Leg Involved
______ ________ _______________________________________ _______ ____________
Senate 19960110 Introduced, read first time, 04 SED
referred to Committee
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TO AMEND TITLE 59, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO EDUCATION, BY ADDING CHAPTER 144 SO AS TO ENACT THE "PUBLIC SCHOOL FACILITIES ASSISTANCE ACT", TO MAKE FUNDS AVAILABLE TO CONSTRUCT AND RENOVATE PUBLIC SCHOOL FACILITIES, AND TO AUTHORIZE THE ISSUANCE OF SCHOOL REVENUE BONDS FOR SPECIFIED PURPOSES IN CONNECTION THEREWITH.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Title 59 of the 1976 Code is amended by adding:
Section 59-144-10. This chapter may be cited as the `Public School Facilities Assistance Act'. Funds available from the Educational Assistance Endowment Fund, as established in Chapter 143 of this title, must be used for the purposes of the Public School Facilities Assistance Act as provided in this chapter.
Section 59-144-20. For the benefit of the people of the State and the increase of their commerce, welfare, and prosperity, it is essential that the school districts of this State be assisted in obtaining adequate school facilities to assist youth in achieving the required levels of learning. It is the purpose of this chapter to provide a measure of assistance to the school districts of this State in securing the facilities and structures which are needed to accomplish the goals and purposes of public education, all to the public benefit and good, to the extent and manner provided in this chapter.
Section 59-144-30. Funds made available through this chapter must be used for permanent school instructional facilities and fixed equipment including the costs for construction, improvement, enlargement, or renovation of public school facilities. However, after all construction and renovation needs identified in a district's school facilities improvement plan have been met, the district may request to use its allocation for payment of debt service. As used in this chapter, `school facilities' only includes facilities necessary for instructional and related purposes including, but not limited to, classrooms, libraries, media centers, laboratories, cafeterias, physical education spaces, related interior and exterior facilities, and the conduit, wiring, and powering of hardware installations for classroom computers or for area network systems. `School facilities' does not include unimproved real property, centralized district administration facilities, portable classrooms, or other facilities, including those normally identified with interscholastic sports activities.
Section 59-144-40. There is created the School Facilities Assistance Authority, hereinafter in this chapter referred to as the `authority'. The authority is declared to be a state agency and may exercise any power conferred upon it by this chapter in the performance of its duties and responsibilities. The authority shall consist of the members of the State Budget and Control Board who shall serve ex officio, and all the functions and powers of the authority under this chapter are hereby conferred upon the State Budget and Control Board in order to perform its duties and responsibilities under this chapter.
Section 59-144-50. In order to immediately assist school districts with their instructional facilities' needs, the authority may declare that up to two hundred million dollars shall be allotted to the several districts of this State for each of the first three fiscal years after the effective date of this chapter, including the year this chapter is enacted. However, the authority shall declare annually the amount to be allotted under this chapter for that year in order to assist with the instructional facilities' needs of the school districts and as is prudent to meet the requirements of the Educational Assistance Endowment Fund over time. The authority is directed to issue revenue bonds as required to furnish sufficient funds for school districts choosing to expend all or a portion of their allotments. A school district may accumulate its allotments for up to seventy-two months to meet the facilities' needs identified in its capital improvement plan.
Section 59-144-60. Of the total amount made available for allotments to the school districts, a specified amount must be set aside for a Special Needs Grants program by the authority. These funds must be used pursuant to Section 59-144-220 for established critical needs where a lack of financial resources prevents significant progress in meeting those needs. The funding for this Special Needs Grants program shall not exceed ten percent of the total funds available for allotments to the school districts. Any unallocated funds from the Special Needs Grants program must be reallocated annually to the school districts using the formula established by this chapter.
Section 59-144-100. Funds made available under this chapter must be allotted annually to the school districts using formulas based on facilities' needs, past fiscal effort in providing for facilities, and district wealth. This allocation shall be made in the following manner:
(a) Fifty percent of the funds allocated annually to the several school districts for facilities' needs must be distributed based on a standardized assessment of the districts' needs for facilities using a uniform estimate of costs as established in Section 59-144-120. Individual district allotments must be based on the district facilities need relative to the state total facilities need. For the first year's allotment, however, the school districts' facilities' needs must be defined as the amount of needs reported in the 1994 Department of Education Facilities Report. For the first two years of the program, district allotments must be adjusted for an overstatement or an understatement of need. As the uniform assessment of needs and the standardized cost allowances are implemented and as district facilities' needs are verified, subsequent district allotments must be adjusted to correct for an overstatement of needs in any previous year.
(b) Twenty-five percent of the funds allocated annually to the school districts must be distributed based on equalized effort defined as the prior five years' average expenditures for capital projects and debt service, including lease-purchase obligations, for school instructional facilities divided by the average assessed value of all property subject to ad valorem school taxation and adjusted to reflect an equalized per pupil mill value. Individual district allotments must be based on a district's equalized effort relative to the state total equalized effort. The amount included for lease-purchase obligations shall not include the costs of utilities or operation and maintenance of the leased facility.
(c) Twenty-five percent of the funds allocated annually must be distributed based on relative district wealth. Individual district allotments must be based on the prior year's Education Finance Act allocation relative to the state total allocation except that an adjustment must be made to provide a minimum factor as established by the State Board of Education so that a district shall qualify for a minimum amount of funding.
(d) A district's annual allotment must be the sum of the three amounts calculated as provided in this section. Funds from a district's allotment shall be made available as needed once approval is received from the State Board of Education pursuant to Chapter 23 of this title.
Section 59-144-110. The State Board of Education shall establish and appoint a twenty-member advisory committee to assist in developing guidelines, regulations, and standards pursuant to this chapter. The State Superintendent of Education shall recommend members for the advisory committee which shall include individuals with backgrounds in the following areas:
(a) capital improvements financing,
(b) building construction,
(c) school building design,
(d) district finances,
(e) district administration,
(f) local boards of trustees,
(g) classroom instruction, and
(h) educational facilities requirements at the primary, elementary, middle, and high school levels.
Members of the committee shall receive mileage, subsistence, and per diem as provided by law for members of state boards, committees, and commissions to be paid from Public School Facilities Assistance Act funds. The members of the advisory committee shall serve at the pleasure of the State Board of Education.
Section 59-144-120. The State Board of Education responsibilities in regard to this chapter include:
(1) adopting policies, guidelines, and standards for a comprehensive school facility survey with annual updates to be undertaken by every district. The survey shall include a description of all existing school facilities and a list of needed renovations, modifications, and new construction projects. The Department of Education shall provide consultation and technical assistance with regard to the survey. The survey must be filed with the Department of Education and may be revised by the district following established guidelines. No school district which has not assisted with and complied with this survey is eligible to receive funds under this chapter. This comprehensive survey shall serve as the basis for a uniform statewide school facilities inventory and data base on building conditions and maintenance management. To this end, the Department of Education shall review district surveys to ensure complete and uniform reporting;
(2) adopting policies, guidelines, and regulations for district five-year comprehensive school facilities improvement plans with annual updates. Local school district facilities construction plans shall include, but are not limited to, a list of construction projects currently eligible for funding under this chapter, school facilities projected as needed five years in the future, and proposed new construction, alterations, and renovations as appropriate for instructional programs to be listed in priority order;
(3) developing policies, guidelines, and standards for a uniform assessment of facilities' needs and standardized cost allowances for estimating the cost in meeting these needs in order to provide for a systematic reporting of each district's needs to be used in calculating the allotment of funds under Section 59-144-100. Facilities' needs include, but are not limited to, facility need capacity and condition, space requirements, program standards, and pupil growth. Costs allowances shall be developed to include such measures as costs per square foot, costs per pupil, or costs per teaching unit with such costs adjusted annually to reflect changes in the cost of labor and materials. These standards and cost allowances are to be used only for providing a uniform reporting of districts' needs for formula allotment purposes and are not intended to limit district options in determining the most appropriate manner in which to meet individual district needs;
(4) developing policies and guidelines for school districts to notify the State Board of Education of the anticipated times of expenditures from district allotments so that the authority may schedule bond issues for school facilities funding under this chapter;
(5) adopting policies, standards, and regulations to ensure the accuracy of district reporting required under this chapter and the use of funds disbursed under this chapter; and
(6) establishing policies, standards, and regulations for determining projects eligible for funding under the Special Needs Grants program due to:
(a) extraordinary growth of student population in excess of the efficient operating capacity of existing facilities;
(b) replacement of educational facilities certified by the Department of Education as hazardous to health and safety;
(c) needed renovations, modernization, or replacement of educational facilities in order to correct deficiencies which produce educationally obsolete or inaccessible environments;
(d) natural disasters; and
(e) consolidation of school attendance areas to improve efficiency and offer a broader range of educational programs for students.
Section 59-144-130. Every three years by December first beginning with the year 1998, the State Board of Education shall report to the General Assembly the projected five-year school facilities improvement requirements reported by the school districts, the needs identified since the last report, and those previously identified needs addressed since the last report.
Section 59-144-140. The Department of Education's responsibilities shall include:
(1) providing staffing assistance to the State Board of Education and the advisory committee in the development of policies, guidelines, standards, and regulations implementing this chapter;
(2) providing technical assistance to school districts in completing the comprehensive school facilities survey and annual updates and assisting districts in developing their five-year comprehensive school facilities improvement plans;
(3) ensuring compliance with state standards and requirements, inspecting construction projects for education facilities, and approving completed construction pursuant to Chapter 23 of this title for projects financed in whole or in part with funds allocated under this chapter. To assist with the inspection of construction projects, the State Board of Education may designate selected local units of administration which have staff qualified to conduct the inspections to act on behalf of the Department of Education; and
(4) reviewing each district's school facility surveys, funding applications, and financial reports to ensure compliance with the intent of this chapter.
Section 59-144-150. To qualify for funds under this chapter, each school district shall meet the conditions and qualifications provided for in this chapter. Funds must be withheld from districts when inappropriate reporting of facilities' needs is found or when inappropriate use of funds is documented.
Section 59-144-160. To accomplish the statewide uniform facilities inventory and data base and to assist districts with the comprehensive facilities improvement plans, the authority shall release to the Department of Education for this purpose up to two hundred thousand dollars from Public School Facilities Assistance Act funds for each of the first three years after the effective date of this chapter including the year this chapter is enacted. The department may carry forward these funds for use for the same purpose in subsequent years.
Section 59-144-170. By December 1, 1998, the State Board of Education shall recommend to the General Assembly changes to be made to this chapter regarding program objectives, appropriate funding levels, and funding allotment formulas.
Section 59-144-200. Special Needs Grants funding shall be made available to school districts through the Joint Bond Review Committee. Facilities' needs approved by State Board of Education and determined to be eligible for this Special Needs Grants program must be forwarded to the Joint Bond Review Committee for a determination of the projects to be funded annually. In addition, annual funding for instructional facilities' needs at the special school district within the Department of Juvenile Justice must be received from Special Needs Grants funding.
Section 59-144-210. The State Board of Education shall report to the Joint Bond Review Committee the applications for projects which are eligible for Special Needs Grants funding. The Joint Bond Review Committee shall rank the eligible projects by priority statewide on the basis of facility need capacity and condition, district ability to fund, pupil growth, and district past efforts to fund instructional facilities. The grants provided under this Special Needs Grants program for eligible educational facilities do not need to be identical among all grant recipients, but may take into consideration a district's fiscal capacity and past efforts to meet facility needs.
Section 59-144-220. To assist school districts of this State in providing adequate school facilities under the Special Needs Grants program, the Joint Bond Review Committee may enter into grant agreements with school districts to finance a portion of the cost of a project due to:
(1) extraordinary growth of student population in excess of the efficient operating capacity of existing facilities;
(2) replacement of educational facilities certified by the Department of Education as hazardous to health and safety;
(3) needed renovations, modernization, or replacement of educational facilities in order to correct deficiencies which produce educationally obsolete or inaccessible environments;
(4) natural disasters; and
(5) consolidation of school attendance areas to improve efficiency and offer a broader range of educational programs for students.
Section 59-144-230. Before implementing the Special Needs Grants program, the Joint Bond Review Committee, in conjunction with the State Board of Education, shall adopt regulations as needed to implement the program, including:
(1) any continuing requirements that must be met by a school district and by a project after the giving of state grants or during the term of the grant;
(2) requirements for the planning, design, construction, and completion of a project or portion of a project to be financed in whole or in part with a state grant, to be consistent with existing provisions of law and State Board of Education regulations and guidelines;
(3) the manner in which a participating school district shall give evidence of satisfactory financing for that portion of the school district's match which shall be required as part of the grant agreement with the district.
Section 59-144-240. A school district's match for the Special Needs Grants program may be met in whole or in part with current funds on hand, district allotment from the school building fund, and the Education Improvement Act building fund, or from the proceeds of local obligations, including general obligation bonds, use agreements, or similar obligations.
Section 59-144-250. (A) Funding for the special school district within the Department of Juvenile Justice shall be allotted annually from Special Needs Grants funds based on a modification of the formula for regular districts using facilities' needs, derived effort in providing for facilities, and derived district wealth in the manner provided in this section.
(B) The allotment for facilities' needs must be the same amount as allotted to a regular school district with the same relative need compared to the state total facilities need as calculated under Section 59-144-100(a). The Department of Juvenile Justice shall follow the standardized assessment of district needs using a uniform estimate of costs as established in Section 59-144-120.
(C) The funds allocated annually based on effort shall be calculated using the statewide average allocation for effort per pupil for school districts pursuant to Section 59-144-100(b) multiplied by number of kindergarten though grade twelve students served by the individual district.
(D) The funds allocated annually based on district wealth must be the same as the minimum amount given to regular school districts pursuant to Section 59-144-100(c) using the minimum wealth factor.
(E) The allotment for the Department of Juvenile Justice shall be the sum of the three amounts calculated as provided in this section.
Section 59-144-260. A district which has not complied with the requirements of Section 59-144-120 is not eligible to receive funds from the Special Needs Grants program. Funds from a district's allotment shall be made available as needed once approval for the project is received from the State Board of Education pursuant to Chapter 23 of this title and the Department of Juvenile Justices' funds shall be available once approval is received from the Joint Bond Review Committee. Funds shall be withheld from districts when inappropriate reporting of facilities' needs is found or when inappropriate use of funds is documented.
Section 59-144-300. The authority, in its role as manager of the Educational Assistance Endowment Fund, may assist school districts of this State in providing school facilities, and for this purpose the authority may:
(1) adopt regulations for the conduct of its affairs and business;
(2) adopt an official seal and alter it;
(3) maintain an office at a place it designates;
(4) sue and be sued in its own name;
(5) use such state funds as appropriated by the General Assembly for the purposes of this chapter;
(6) issue state school revenue bonds for the purposes of this chapter and fund or refund them as provided in this chapter;
(7) do all things necessary or convenient to carry out the purposes of this chapter.
Section 59-144-310. In addition to any other contractual remedies, a grant agreement may be enforced according to its terms and conditions in the circuit court of this State, and the court may utilize the process of injunction or mandamus to effect the enforcement of the agreement.
Section 59-144-320. School districts may perform acts, take actions, adopt proceedings, and make and carry out grant agreements which are contemplated by this chapter. The grant agreements do not need to be identical among all participants in the financing of the authority but may be structured as determined by the authority according to the needs of the participating school districts and the authority.
Section 59-144-330. All expenses incurred in carrying out the provisions of this chapter are payable solely from funds as prescribed in this chapter and no liability may be incurred by the authority beyond monies provided under the provisions of this chapter. The State may make allocations or grants of money or property to the authority to enable it to carry out its purposes and for the exercise of its powers. This section may not be construed to limit any other power to make grants to the authority.
Section 59-144-400. In order to obtain funds for school facilities' needs funded under this chapter, the authority may issue from time to time revenue bonds under the conditions prescribed by this chapter and in accordance with the regulations promulgated pursuant to the provisions of this chapter by the authority. Payment of the principal of and interest on any revenue bonds must be secured by a pledge of the revenue due and to become due under either:
(1) amounts designated from the Educational Assistance Endowment Fund; or
(2) such other dedicated revenue as determined by the General Assembly.
Section 59-144-410. (A) In anticipation of the sale of revenue bonds, the authority may issue bond anticipation notes.
(B) The revenue bonds of every issue are payable solely out of revenues of the authority pledged to the bonds. Even if revenue bonds and notes are payable from a special fund, they are, for all purposes, negotiable instruments, subject only to the provisions of the revenue bonds and notes for registration.
(C) The revenue bonds must be sold by the Governor and the State Treasurer and may be issued as serial bonds or as term bonds, or the authority, in its discretion, may issue bonds of both types. The revenue bonds must be authorized by the resolution of the authority and bear a date, mature at a time not exceeding thirty years from their respective dates, bear interest at rates payable at a time, be in denominations, be in a registered form, carry registration privileges, be executed in a manner, payable in lawful money of the United States of America at the place, and be subject to terms of redemption, as the resolution may provide. The revenue bonds or notes may be sold at public or private sale for a price determined by the authority.
(D) A resolution authorizing revenue bonds or an issue of revenue bonds may contain provisions, which must be a part of the contract with the holders of the revenue bonds to be authorized as to:
(1) pledging all or some designated portion of the revenues derived from the Educational Assistance Endowment Fund;
(2) pledging all or some designated portion of other revenues dedicated by the General Assembly;
(3) setting aside of reserves or special funds, and the regulation and disposition of them;
(4) limitations on the purpose to which the proceeds of the sale of an issue of revenue bonds then or thereafter to be issued may be applied and pledging the proceeds to secure the payment of the revenue bonds or any issue of the revenue bonds;
(5) limitations on the issuance of additional revenue bonds secured by the same revenues, the terms upon which additional bonds may be issued and secured, and the refunding of outstanding revenue bonds;
(6) the procedure, if any, by which the terms of a contract with bondholders may be amended or abrogated, the amount of revenue bonds the holders of which shall consent to, and the manner in which the consent may be given;
(7) limitations on the amount of pledged revenues to be expended for operating, administrative, or other expenses of the authority; and
(8) defining the acts or omissions to act which constitute a default in the duties of the authority to holders of the revenue bonds or notes and providing the rights and remedies of the holders in the event of a default.
(E) Neither the members of the authority nor a person executing the revenue bonds is liable personally on the revenue bonds or is subject to personal liability or accountability by reason of the issuance of the bonds or notes.
(F) In the event that any of the members or officers of the authority cease to be members before the delivery of any bonds signed by them, their signatures or authorized facsimile signatures are nevertheless valid and sufficient for all purposes as if they had remained in office until the delivery of the bonds.
Section 59-144-420. Revenue bonds issued under the provisions of this chapter may be secured by a trust agreement by and between the authority and a corporate trustee, which may be the State Treasurer or a trust company or bank having the powers of a trust company designated by the State Treasurer as doing business within the State. The trust agreement or the resolution providing for the issuance of the revenue bonds may pledge or assign the revenues pledged to secure the revenue bonds that are the subject of the trust. The trust agreement or resolution providing for the issuance of the revenue bonds may contain provisions for protecting and enforcing the rights and remedies of the bondholders as may be reasonable and proper and not in violation of laws, including particularly provisions specifically authorized to be included in a resolution of the authority authorizing revenue bonds. A bank or trust company incorporated under the laws of the State or of the United States and having an office in this State which may act as depository of the proceeds of bonds or of revenues or other monies may furnish indemnifying bonds or pledge securities as required by the authority. A trust agreement may set forth the rights and remedies of the bondholders and of the trustee and may restrict the individual right of action by bondholders.
A trust agreement or resolution may contain other provisions the authority considers reasonable and proper for the security of the bondholders. All expenses incurred in carrying out the provisions of the trust agreement or resolution may be treated as a part of the cost of the operation of the authority.
Section 59-144-430. Revenue bonds issued under the provisions of this chapter do not constitute a debt or liability of the State or of a political subdivision of the State or a pledge of faith and credit of the State or of a political subdivision, but are payable solely from the revenues pledged to them. All such revenue bonds must contain on their face a statement that neither the State of South Carolina nor the authority is obligated to pay the principal of or interest on the revenue bonds except from revenues and that neither the faith and credit nor the taxing power of the State of South Carolina or of a political subdivision of the State is pledged to the payment of the principal of or the interest on the revenue bonds. The issuance of revenue bonds under the provisions of this chapter does not directly, indirectly, or contingently obligate the State or a political subdivision of the State to levy or to pledge any form of taxation for payment of the revenue bonds or to make an appropriation for their payment, other than the obligation of the participating public school districts to levy and collect taxes to pay their local obligations.
Section 59-144-440. A sufficient amount of the revenues pledged with respect to an issue of revenue bonds must be set aside at regular intervals provided in the resolution or trust agreement in a special fund which is pledged to, and charged with, the payment of the principal of and the interest on the revenue bonds as they become due, and the redemption price or the purchase price of revenue bonds retired by call or purchase as provided in the resolution. The pledge of revenues is valid and binding from the time the pledge is made; the revenues pledged and received by the authority are subject immediately to the lien of the pledge without physical delivery or further act, and the lien of the pledge is valid and binding as against all parties having claims of any kind in tort, contract, or otherwise against the authority, irrespective of the notice. The use and disposition of money to the credit of the special fund is subject to the provisions of the resolution authorizing the issuance of the revenue bonds or of the trust agreement. Any such resolution or trust agreement shall provide that special fund is the fund for a particular issue of revenue bonds, and, additionally, may permit and provide for the issuance of revenue bonds having a subordinate lien on the revenues and, in such case, the authority may create separate or other similar funds for subordinate lien revenue bonds.
In order to secure further the payment of the revenue bonds, a debt service reserve fund may be established with respect to any issuance of revenue bonds in an amount and funded in a manner as may be prescribed in the resolution or trust agreement.
Section 59-144-450. All monies received by the authority pursuant to this article, whether as proceeds from the sale of revenue bonds or as revenues, are trust funds to be held and applied solely as provided in this chapter. An officer with whom, or a bank or trust company with which, the monies are deposited shall act as trustee of the monies and hold and apply the monies for the purposes authorized by this chapter, subject to regulations as this chapter and the resolution authorizing the revenue bonds of an issue or the trust agreement securing the bonds may provide.
Section 59-144-460. Except to the extent the rights may be restricted by a resolution authorizing the issuance of or a trust agreement securing the revenue bonds, a holder of revenue bonds issued under the provisions of this chapter or a coupon or other right or interest pertaining to the revenue bond, and the trustee under a trust agreement may protect and enforce all rights under the laws of the State or under the resolution or trust agreement, by suit, action, mandamus, or other proceedings, either at law or in equity, and may enforce and compel the performance of all duties required by this chapter or by the resolution or trust agreement to be performed by the authority or by an officer, employee, or agent of it, including requiring the authority to enforce the local obligations, the revenues from which are pledged to the holder's revenue bonds.
Section 59-144-470. Revenue bonds issued under the provisions of this chapter are exempt from taxation as provided in Section 12-1-60.
Section 59-144-480. It shall be lawful for all executors, administrators, guardians, and other fiduciaries to invest any monies in their hands in bonds issued pursuant to this article."
SECTION 2. This act takes effect upon approval by the Governor.