PRINTER'S NO. 753
No. 664 Session of 1985
INTRODUCED BY FREIND AND GALLAGHER, MARCH 25, 1985
REFERRED TO COMMITTEE ON EDUCATION, MARCH 25, 1985
AN ACT
1 Amending the act of March 10, 1949 (P.L.30, No.14), entitled "An
2 act relating to the public school system, including certain
3 provisions applicable as well to private and parochial
4 schools; amending, revising, consolidating and changing the
5 laws relating thereto," authorizing school districts to
6 finance the acquisition of school buildings, equipment and
7 furnishings by entering into loan agreements, mortgages,
8 security agreements or any other contracts, instruments or
9 agreements with the State Public School Building Authority;
10 and making editorial changes.
11 The General Assembly of the Commonwealth of Pennsylvania
12 hereby enacts as follows:
13 Section 1. Section 652(2.1) of the act of March 10, 1949
14 (P.L.30, No.14), known as the Public School Code of 1949,
15 amended August 5, 1977 (P.L.178, No.46), is amended to read:
16 Section 652. Tax Levy; Purposes; Limitations.--In all school
17 districts of the first class the school taxes for the following
18 fiscal year shall be levied annually, by the board of public
19 education thereof, on or after the second Monday of November and
20 before the first Monday of December following. In all school
21 districts of the first class A the school taxes for the
1 following fiscal year shall be levied annually by the board of
2 public education on or after the first Monday of December and
3 before the end of the current fiscal year. The board of public
4 education thereof shall annually levy a tax on each dollar of
5 the total assessments of all property assessed and certified for
6 taxation in said district, which tax shall be ascertained,
7 determined, and fixed by adding together the following:
8 * * *
9 (2.1) An amount sufficient to pay any rentals, loan
10 repayments or other payments agreed to be paid to the State
11 Public School Building Authority or any other authority created
12 by the General Assembly, having State-wide jurisdiction.
13 * * *
14 Section 2. Section 672(b) of the act, amended February 4,
15 1982 (P.L.1, No.1), is amended to read:
16 Section 672. Tax Levy; Limitations.--* * *
17 (b) Boards of school directors of districts of the second,
18 third, and fourth classes are hereby authorized to levy
19 annually, a tax on each dollar of the total assessment of all
20 property assessed and certified for taxation therein, (1) to pay
21 up to and including the salaries and increments of the teaching
22 and supervisory staff, (2) to pay rentals, loan repayments or
23 other payments due any municipality authority or nonprofit
24 corporation or due the State Public School Building Authority,
25 (3) to pay interest and principal on any indebtedness incurred
26 pursuant to the act of July 12, 1972 (P.L.781, No.185), known as
27 the "Local Government Unit Debt Act," or any prior or subsequent
28 act governing the incurrence of indebtedness of the school
29 district, which tax shall be unlimited, and (4) to pay for the
30 amortization of a bond issue which provided a school building
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1 prior to the first Monday of July, 1959.
2 * * *
3 Section 3. Section 784 of the act, amended June 28, 1951
4 (P.L.920, No.172), is amended to read:
5 Section 784. Contracts to Lease and Leases; Operation and
6 Maintenance.--Any school district shall have power and
7 authority, with the approval of the Department of [Public
8 Instruction] Education, to enter into [contracts] lease
9 agreements, loan agreements, mortgages, security agreements or
10 any other contracts, instruments or agreements, with the State
11 Public School Building Authority to lease as lessee from the
12 Authority or to finance or refinance the acquisition,
13 construction or improvement of any school building or any
14 improvement thereto, and the furnishings and equipment thereof,
15 [constructed by the Authority] and any equipment necessary or
16 desirable in the operation of a school district, for a term not
17 exceeding forty (40) years, [at such rental or rentals] but in
18 no event longer than the average useful life of the property
19 being leased, financed, refinanced, acquired, constructed or
20 improved, such agreements to provide for rentals, loan
21 repayments or other payments as may be determined by the
22 Authority, and upon the execution of a contract or contracts for
23 the construction of, or during the period of construction of, or
24 upon the completion of such school buildings or improvements and
25 the furnishings and equipment thereof, or upon the acquisition
26 of such school building or improvements and the furnishings and
27 equipment thereof or upon the acquisition of other facilities or
28 equipment necessary or desirable in the operation of a school
29 district, the school district shall have power and authority to
30 [lease the same as lessee, for a term not exceeding forty (40)
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1 years, at] perform its obligations under such agreements and pay
2 such [rental or] rentals, loan repayments or other payments as
3 may be determined by the Authority. There shall be included in
4 the annual budget of all school districts an appropriation to
5 meet the amount of such [rental or] rentals, loan repayments or
6 other payments.
7 Any school district shall have the power and authority to pay
8 for operation and maintenance of any school building or any
9 improvement thereto, and furnishings and equipment thereof,
10 leased as lessee by it from the Authority under the provisions
11 of the first paragraph of this section.
12 Section 4. Section 785 of the act, amended September 7, 1955
13 (P.L.582, No.150), is amended to read:
14 Section 785. Failure to Pay Rent; Withholding
15 Appropriation.--In all cases where the board of directors of any
16 school district fails to pay or to provide for the payment of
17 any [rental or rentals] sums due the State Public School
18 Building Authority for any period in accordance with the terms
19 of any lease agreement, loan agreement, mortgage, security
20 agreement or any other contract, instrument or agreement entered
21 into under the terms of subdivision (f) of this article, upon
22 written notice thereof from the Authority, the [State
23 Superintendent of Public Instruction] Secretary of Education
24 shall notify such board of school directors of its obligation
25 and shall withhold out of any State appropriation due such
26 school district an amount equal to the amount of the [rental or
27 rentals] sums owing by such school district to the State Public
28 School Building Authority and shall pay over the amount so
29 withheld to the Authority in payment of [the rental] such sums.
30 Section 5. Section 786 of the act, added May 9, 1949
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1 (P.L.1017, No.296) and amended January 14, 1970 (1969 P.L.468,
2 No.192), is amended to read:
3 Section 786. Joint Action of Districts.--With the approval
4 of the Department of [Public Instruction] Education any two or
5 more school districts may (1) jointly enter into contracts, loan
6 agreements and leases with the State Public School Building
7 Authority for the construction or improvement of a school
8 building and the furnishings and equipment thereof for the joint
9 use of school districts, and may (2) either jointly or
10 individually convey or lease, as hereinbefore provided, to the
11 Authority, any lands and improvements now owned or hereafter
12 acquired by any one or more of such school districts, and may
13 (3) jointly acquire title to additional lands or interests in
14 land, as hereinbefore provided.
15 The sharing of the cost of such land and improvements and of
16 the [rental or rentals] sums payable to the Authority and the
17 maintenance, government and control of the school shall be
18 agreed upon by the boards of directors of such districts so
19 joining, in such manner and in such proportions as they may
20 agree upon. All schools established under the provisions of this
21 section shall be maintained, governed and controlled as other
22 public schools under the laws of this Commonwealth.
23 Section 6. Section 2574(a), (b), (c), (c.1) and (d) of the
24 act, amended March 22, 1956 (1955 P.L.1315, No.417), September
25 29, 1959 (P.L.992, No.407), November 30, 1959 (P.L.1601,
26 No.579), September 12, 1961 (P.L.1268, No.555) and June 12, 1968
27 (P.L.192, No.96), are amended to read:
28 Section 2574. Approved Reimbursable Rental for Leases
29 Hereafter Approved and Approved Reimbursable Sinking Fund
30 Charges on Indebtedness.--(a) For school building projects for
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1 which the general construction contract is awarded subsequent to
2 March 22, 1956, and for approved school building projects for
3 which the general construction contract was awarded but for
4 which a lease agreement, loan agreement, or other agreement was
5 not approved by the Department of [Public Instruction] Education
6 prior to March 22, 1956, the Department of [Public Instruction]
7 Education shall calculate an approved reimbursable [rental]
8 payment or approved reimbursable sinking fund charges.
9 Reimbursable sinking fund charges may include charges for
10 temporary indebtedness within constitutional limitations, if the
11 indebtedness is incurred for approved permanent improvements to
12 the school plant including the cost of acquiring a suitable site
13 for a school building, the cost of constructing a new school
14 building, or the cost of providing needed additions or
15 alterations to existing buildings for which no bond issue is
16 provided and for which an approved obligation or obligations
17 other than bonds have been issued and the obligation or
18 obligations are payable within five (5) years from the date of
19 issue of the obligation in equal annual installments.
20 Approved reimbursable [rental] payments or sinking fund
21 charge shall consist of that part of the annual [rental] payment
22 or sinking fund charge attributable to--
23 (1) The cost of acquiring the land upon which the school
24 buildings are situate, the cost of necessary rough grading to
25 permit proper placement of the building upon said land and the
26 cost of sewage treatment plants, as required by the Department
27 of Health, to the extent that such costs are deemed reasonable
28 by the Department of [Public Instruction] Education and the
29 interest on such costs of acquisition, grading and sewage
30 treatment plants earned subsequent to date the construction
19850H0664B0753 - 6 -
1 contract is awarded, and
2 (2) The approved building construction cost and the interest
3 on such construction cost.
4 (b) For new school buildings the approved building
5 construction cost shall be the lesser of
6 (1) The cost of constructing the school buildings including
7 the cost of essential fixtures and equipment but excluding
8 architect's fees in excess of six per cent (6%) of the contract
9 price, or
10 (2) The product of the rated pupil capacity as determined by
11 the Department of [Public Instruction] Education at the time the
12 project is approved and (i) one thousand one hundred dollars
13 ($1100) in the case of elementary schools, (ii) one thousand
14 seven hundred dollars ($1700) in the case of secondary schools,
15 (iii) an amount in the case of combined elementary-secondary
16 schools obtained by multiplying the rated elementary pupil
17 capacity by one thousand one hundred dollars ($1100) and the
18 rated secondary pupil capacity by one thousand seven hundred
19 dollars ($1700) and dividing the sum by the total rated pupil
20 capacity.
21 (3) The provisions of clause (2) of subsection (b) hereof
22 shall apply to all school building projects for which the
23 general construction contract is awarded prior to July 1, 1966,
24 and for approved school building projects for which a lease was
25 approved by the Department of [Public Instruction] Education
26 prior to July 1, 1966. For school buildings for which the
27 general construction contract is awarded subsequent to July 1,
28 1966 and for approved school building projects for which the
29 general construction contract was awarded but for which a lease
30 agreement, loan agreement or other agreement was not approved by
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1 the Department of [Public Instruction] Education prior to July
2 1, 1966, the product of the rated pupil capacity as determined
3 by the Department of [Public Instruction] Education at the time
4 the project is approved and (i) two thousand three hundred
5 dollars ($2300) in the case of elementary schools, (ii) three
6 thousand dollars ($3000) in the case of secondary schools, (iii)
7 an amount in the case of combined elementary-secondary schools
8 obtained by multiplying the rated elementary pupil capacity by
9 two thousand three hundred dollars ($2300) and the rated
10 secondary pupil capacity by three thousand dollars ($3000) and
11 dividing the sum by the total rated pupil capacity.
12 (c) For additions or alterations to existing buildings
13 approved building construction cost shall be the lesser of
14 (1) The cost of constructing the additions or alterations
15 including the cost of essential fixtures and equipment but
16 excluding architect's fees in excess of six per cent (6%) of the
17 contract price, or
18 (2) The difference obtained by subtracting the appraisal
19 value of the existing building from the product of rated pupil
20 capacity of the altered or expanded building as determined by
21 the Department of [Public Instruction] Education at the time the
22 project is approved and (i) one thousand one hundred dollars
23 ($1100) in the case of elementary schools, (ii) one thousand
24 seven hundred dollars ($1700) in the case of secondary schools,
25 (iii) an amount in the case of combined elementary-secondary
26 schools obtained by multiplying the rated elementary pupil
27 capacity of the altered or expanded building by one thousand one
28 hundred dollars ($1100) and the rated secondary pupil capacity
29 of the altered or expanded building by one thousand seven
30 hundred dollars ($1700) and dividing the sum by the total rated
19850H0664B0753 - 8 -
1 pupil capacity of the altered or expanded building.
2 Appraisal value shall be the valuation made immediately
3 before the additions or alterations are begun by three competent
4 appraisers, one appointed by the school authorities, one by the
5 [Superintendent of Public Instruction] Secretary of Education,
6 and the third by the other two.
7 (3) The provisions of clause (2) of subsection (c) hereof
8 shall apply to all school building projects for which the
9 general construction contract is awarded prior to July 1, 1966
10 and for approved school building projects for which a lease was
11 approved by the Department of [Public Instruction] Education
12 prior to July 1, 1966. For school buildings for which the
13 general construction contract is awarded subsequent to July 1,
14 1966 and for approved school building projects for which the
15 general construction contract was awarded but for which a lease
16 agreement, loan agreement or other agreement was not approved by
17 the Department of [Public Instruction] Education prior to July
18 1, 1966, the difference obtained by subtracting the appraisal
19 value of the existing building from the product of rated pupil
20 capacity of the altered or expanded building as determined by
21 the Department of [Public Instruction] Education at the time the
22 project is approved and (i) two thousand three hundred dollars
23 ($2300) in the case of elementary schools, (ii) three thousand
24 dollars ($3000) in the case of secondary schools, (iii) an
25 amount in the case of combined elementary-secondary schools
26 obtained by multiplying the rated elementary pupil capacity of
27 the altered or expanded building by two thousand three hundred
28 dollars ($2300) and the rated secondary pupil capacity of the
29 altered or expanded building by three thousand dollars ($3000)
30 and dividing the sum by the total rated pupil capacity of the
19850H0664B0753 - 9 -
1 altered or expanded building.
2 Appraisal value shall be the valuation made immediately
3 before the additions or alterations are begun by three competent
4 appraisers, one appointed by the school authorities, one by the
5 [Superintendent of Public Instruction] Secretary of Education,
6 and the third by the other two.
7 (c.1) If the Commonwealth makes any payment under section
8 2575.1 of this act on account of a preliminary payment by a
9 school district on the approved building construction cost, the
10 amount of the preliminary payments by the school district shall
11 be subtracted from the amount of the approved building
12 construction cost for the purpose of calculating the approved
13 reimbursable [rental] payment on projects undertaken pursuant to
14 sections 783, 790 or 791 of this act.
15 * * *
16 (d) For purposes of calculating the amount of [rental]
17 payment reimbursement the approved reimbursable [rental] payment
18 for a school project constructed for two or more school
19 districts shall annually be apportioned among the participating
20 districts on the basis of the proportion which the valuation of
21 each district as certified by the state tax equalization board
22 during the preceding school year bears to the total valuation of
23 all participating districts. In special cases where the best
24 interests of the Commonwealth and of the school districts will
25 be better served by permitting the districts to establish for
26 themselves some method other than market valuation as the basis
27 for determining their respective shares of the annual [lease
28 rental] payment, the [Superintendent of Public Instruction]
29 Secretary of Education may issue a special order approving such
30 method of sharing the [rental] payment and authorizing that the
19850H0664B0753 - 10 -
1 [rental] payment reimbursement for that particular project shall
2 be calculated on the basis of the proportionate share of
3 [rental] the payment actually paid by each district.
4 * * *
5 Section 7. Section 2574.2 of the act, added December 6, 1972
6 (P.L.1445, No.323), is amended to read:
7 Section 2574.2. Approved Reimbursable Annual Rental for
8 Leases of Buildings and Facilities for School Use.--For extended
9 leases of or long term loan agreements, or other agreements with
10 respect to the financing or refinancing of the acquisition,
11 construction or improvement of buildings and facilities for
12 school use authorized under the provisions of section 703.1
13 which have been approved by the Secretary of Education, the
14 Department of Education shall calculate an approved reimbursable
15 annual [rental] payment charge.
16 Approved reimbursable annual [rental] payment for such
17 approved [leases] lease agreements, loan agreements or other
18 agreements for the leasing of or the financing or refinancing of
19 the acquisition, construction or improvement of building
20 facilities constructed for school use shall be the lesser of (i)
21 the product of the annual [rental] payment payable under the
22 provisions of the approved lease agreement, loan agreement or
23 other agreement times the ratio of the pupil scheduled area to
24 the architectural area, or (ii) the product of the rated pupil
25 capacity as determined by the Department of Education at the
26 time of initial lease agreement, loan agreement or other
27 agreement times one hundred sixty dollars ($160) for elementary
28 schools, two hundred twenty dollars ($220) for secondary
29 schools, or two hundred seventy dollars ($270) for area
30 vocational-technical schools.
19850H0664B0753 - 11 -
1 Annual approved [rental] payment payable for approved
2 [leases] lease agreements, loan agreements or other agreements
3 for the leasing of or the financing or refinancing of the
4 acquisition, construction or improvement of existing facilities
5 altered for school use shall be the lesser of (i) the product of
6 the annual [rental] payment payable under the provisions of the
7 approved lease agreement, loan agreement or other agreement
8 times the ratio of the pupil scheduled area to the architectural
9 area, or (ii) the product of the rated pupil capacity, as
10 determined by the Department of Education at the time of initial
11 lease agreement, loan agreement or other agreement, times one
12 hundred twelve dollars ($112) for elementary, one hundred fifty-
13 four dollars ($154) for secondary, or one hundred eighty-nine
14 dollars ($189) for area vocational-technical schools.
15 Section 8. Section 2575 of the act, amended June 12, 1968
16 (P.L.192, No.96), is amended to read:
17 Section 2575. Payments on Account of Leases Hereafter
18 Approved and on Account of Sinking Fund Charges on Indebtedness
19 for School Buildings Hereafter Constructed.--(a) The
20 Commonwealth shall pay annually to each school district erecting
21 or sharing in the erection of a building or buildings under the
22 provisions of the Public School Building Authority Act, the
23 Municipality Authority Act, section 758 of the Public School
24 Code of 1949, or section 791 of the Public School Code of 1949,
25 on account of buildings for which the lease agreement, loan
26 agreement or other agreement is approved on or after March 22,
27 1956, or through the incurring of indebtedness by the issuance
28 of general obligation bonds on account of buildings for which
29 the general construction contract is awarded on or after March
30 22, 1956, an amount to be determined by multiplying the
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1 district's capital account reimbursement fraction computed for
2 the year 1967 or aid ratio whichever is larger by the approved
3 reimbursable [rental] payment or approved reimbursable sinking
4 fund charge.
5 (b) The Commonwealth shall pay, annually, to each school
6 district which constructs, purchases or leases with the approval
7 of the Department of [Public Instruction] Education an area
8 vocational-technical school building or technical institute
9 building or which shares in the construction, purchase or lease
10 of such building or buildings under provisions of the Public
11 School Building Authority Act, the Municipality Authority Act,
12 section 758 of the Public School Code of 1949, or section 791 of
13 the Public School Code of 1949, or other agency, or through the
14 incurring of indebtedness by the issuance of general obligation
15 bonds, an amount to be determined by multiplying the district's
16 aid ratio or fifty per cent, whichever is more, by the approved
17 reimbursable [rental] payment or approved reimbursable sinking
18 fund charge multiplied by the district's proportionate share of
19 such [rental] payment or sinking fund charge.
20 Section 9. Section 2576 of the act, amended July 11, 1957
21 (P.L.775, No.373) and October 21, 1965 (P.L.601, No.312), is
22 amended to read:
23 Section 2576. Approval of Department of [Public Instruction]
24 Education.--(a) No payment shall be made to any school district
25 on account of any lease agreement, loan agreement or other
26 agreement entered into with the State Public School Building
27 Authority or any municipality authority or nonprofit corporation
28 under section 758 of this act or any profit or nonprofit
29 corporation, partnership, association or person under section
30 791 of this act or on account of sinking fund charges on
19850H0664B0753 - 13 -
1 indebtedness for school buildings unless such lease agreement,
2 loan agreement or other agreement or sinking fund charge is
3 approved by the Department of [Public Instruction] Education.
4 Except as hereinafter provided, the Department of [Public
5 Instruction] Education may give its approval to any lease
6 agreement, loan agreement or other agreement heretofore or
7 hereafter entered into and to any payments on account of sinking
8 fund charges on indebtedness for school buildings if it shall
9 find in the case of all school districts, except school
10 districts of the first class, first class A and second class
11 which are not part of a county-wide plan, that the [leased]
12 project [or the project for which the indebtedness is incurred,]
13 is in conformance with county-wide plans prepared by the county
14 board of school directors and approved pursuant to the standards
15 of the [State Board] Department of Education for the orderly
16 development of improved attendance areas and administrative
17 units and for the improved housing of public schools in the
18 Commonwealth, and in the case of all school districts, that the
19 school building will conform with standards and regulations
20 prescribed by the department with respect to educational and
21 architectural design, building materials, fixtures and
22 equipment, location, usefulness for community activities,
23 safety, comfort and convenience, and that the school district or
24 school districts [which incur the indebtedness or to which the
25 project is to be leased] entering into such agreements will have
26 the ability to meet from current revenues the [rental] payment
27 or sinking fund charge or their respective shares of [rental]
28 the payment or sinking fund charge and to defray the cost of
29 their respective shares of the cost of operation and maintenance
30 of the project.
19850H0664B0753 - 14 -
1 (b) The department shall have the right to disapprove or
2 approve with reservation a lease agreement, loan agreement or
3 other agreement because of any failure on the part of the
4 authority or school district to comply with the provisions of
5 the laws of the Commonwealth relating to such authority or
6 nonprofit corporation or profit or nonprofit corporation,
7 partnership, association or person or school district only to
8 such extent as will prevent the school district from paying a
9 greater sum as [rental] payment thereunder because of such
10 noncompliance with law. For that purpose, the department may
11 require a modification of the lease agreement, loan agreement or
12 other agreement if not at that time executed or may approve the
13 lease agreement, loan agreement or other agreement with the
14 reservation that the department will pay the reimbursement on
15 that amount only which would have been determined by reason of
16 the lower [rental] payment.
17 (c) The Department of [Public Instruction] Education shall
18 not approve any project for which Commonwealth reimbursement is
19 sought unless an inspection has been made by the department of
20 the location and adequacy of existing school facilities and the
21 determination made that existing facilities are inadequate in
22 terms of prevailing educational standards.
23 Section 10. Section 2578(a) of the act, amended December 22,
24 1959 (P.L.1974, No.726), is amended to read:
25 Section 2578. Payments.--(a) Payments to a school district
26 shall be determined and approved by the Department of [Public
27 Instruction] Education. The amount so approved shall be included
28 in and be payable from any future appropriations made to the
29 Department of [Public Instruction] Education. Payments to school
30 districts shall be made semi-annually where the districts lease
19850H0664B0753 - 15 -
1 agreement, loan agreement or other agreement specifies that
2 [lease] payments shall be paid semi-annually.
3 * * *
4 Section 11. Sections 2579 and 2580 of the act, amended July
5 11, 1957 (P.L.775, No.373), are amended to read:
6 Section 2579. Inspection of Projects by Department of
7 [Public Instruction] Education.--The Department of [Public
8 Instruction] Education shall inspect, during construction, the
9 work performed by or under contract with a municipality
10 authority, nonprofit corporation, profit or nonprofit
11 corporation, partnership, association or person or school
12 district, on all projects for the [rental] payment or sinking
13 fund charge of which the Commonwealth will make reimbursement,
14 and shall compel compliance with approved plans.
15 Section 2580. Changes in the Amount of Lease Rentals.--
16 Reimbursements to school districts on account of [rental]
17 payments in excess of the amount specified in the [lease]
18 agreement between the school districts and the State Public
19 School Building Authority or any municipality authority or
20 nonprofit corporation or profit or nonprofit corporation,
21 partnership, association or person or in the case of refinancing
22 on account of [rental] payments provided by a renegotiated
23 [lease] agreement shall be calculated in the same manner as the
24 specified [lease rental] payment.
25 Section 12. This act shall take effect immediately.
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