1Amending the act of March 10, 1949 (P.L.30, No.14), entitled "An
2act relating to the public school system, including certain
3provisions applicable as well to private and parochial
4schools; amending, revising, consolidating and changing the
5laws relating thereto," in grounds and buildings, further
6providing for approval by Department of Education of plans,
7etc. of buildings and exceptions; providing for
8accountability and reducing costs in construction process;
9further providing for limitation on new applications for
10Department of Education approval of school building projects;
11providing for interest on delayed reimbursement; and, in
12reimbursements by Commonwealth and between school districts,
13further providing for definitions, for approved reimbursable
14rental for leases hereafter approved and approved
15reimbursable sinking fund charges on indebtedness, for
16payments on account of leases hereafter approved and on
17account of sinking fund charges on indebtedness for school
18buildings hereafter constructed and for payments on account
19of building costs; and providing for lump sum reimbursement
20for construction or reconstruction.

21The General Assembly finds and declares that:

22(1) Recognizing challenges have developed and escalated
23over a period of years in the process of Commonwealth
24reimbursement for public school construction and
25reconstruction, which have caused delays in approvals by the

1Department of Education for reimbursement payments owed to
2school districts throughout this Commonwealth as well as the
3limitation on school district submission of new applications
4for Commonwealth reimbursement, and acknowledging that these
5challenges were born of an antiquated, complex and overly
6burdensome administrative process, as well as financially
7unsustainable Commonwealth construction and reconstruction
8reimbursement obligations, it is a matter of high priority
9that these challenges be addressed.

10(2) Therefore, it is the intent of the General Assembly
11to reform the existing process of Commonwealth reimbursement
12for public school construction and reconstruction to ensure
13that a modern, simplified and financially sustainable process
14is instituted.

15The General Assembly of the Commonwealth of Pennsylvania
16hereby enacts as follows:

17Section 1. Section 731 of the act of March 10, 1949 (P.L.30,
18No.14), known as the Public School Code of 1949, amended June
1927, 1973 (P.L.75, No.34), is amended to read:

20Section 731. Approval by Department of Plans, etc., of
21Buildings; Exceptions.--(a) The Department of Education, with
22respect to construction or reconstruction of public school
23buildings, shall have the power and its duties shall be:

24(1) To review all projects, plans and specifications for
25school building construction or reconstruction, and to make
26recommendations thereon to the General Assembly and the
27Governor: Provided, however, That approval of the Department of 
28Education shall not be required for projects, plans and 
29specifications for school construction projects for which 
30reimbursement from the Commonwealth is not requested;

1(2) To assist school districts in preplanning construction
2and reconstruction projects, and offer such architectural,
3engineering and financial advice as will enable the project to
4comply with the standards prescribed by the State Board of
5Education;

6(3) To hold hearings on any or all projects and subpoena
7witnesses, administer oaths, take testimony and compel the
8production of documents relevant to any investigation;

9(4) To act as liaison between the public, local school
10officials, the General Assembly, and the Governor on school
11building construction and reconstruction projects;

12(5) To receive and investigate complaints from the public or
13other source concerning any school building construction or
14reconstruction project;

15(6) To conduct investigations on any phase of school
16building construction or reconstruction projects.

17(7) To provide for an electronic database on its publicly
18accessible Internet website for the purpose of providing public
19access to information on public school construction and
20reconstruction projects, building purchases and charter school
21lease reimbursements submitted for the approval of, or approved
22by, the Department of Education. The electronic database shall
23indicate the date each application for reimbursement was
24submitted to the Department of Education and the date of
25approval for each step of the reimbursement process as outlined
26in section 731.2 of this act.

27(b) The Department of Education shall employ engineers,
28architects, financial advisors, and such other staff personnel
29as may be necessary for the proper performance of the duties of
30the Department with respect to construction or reconstruction of

1public school buildings.

2(c) No public school building shall be contracted for,
3constructed, or reconstructed, in any school district of the
4second, third, or fourth class until the plans and
5specifications therefor have been approved by the Department of
6Education[.

7When ordinary repairs are proposed, such as plastering,
8painting, replacement of floors, improvement of school grounds,
9repairing or providing walks, roadways or retaining walls, the
10cost of which in districts of the second class or in districts
11of the third and fourth class will not exceed fifteen thousand
12dollars ($15,000) per building, no approval shall be required.
13Where any structural change is involved, such as moving or
14adding doors, windows, partitions, making additions or any
15excavations, or any work which may affect the safety or health
16of the pupils, or any work which comes under the jurisdiction of
17another department of the Commonwealth, approval of the
18Department of Education shall be required regardless of the cost
19of such structural change.]:

20Provided, however, That approval of the Department of Education
21shall not be required for projects, plans and specifications for
22school construction projects for which reimbursement from the
23Commonwealth is not requested.

24(d) No school building shall be purchased by any school
25district until such purchase shall have been approved by the
26Department of Education. Such approval shall not be given unless
27the school building to be purchased and any approved structural
28changes or renovations meet the standards required to operate
29public school buildings of a similar age currently in use in the
30Commonwealth.

1Section 2. The act is amended by adding a section to read:

2Section 731.2. Accountability and Reducing Costs in
3Construction Process.--(a) No later than July 1, 2015, the
4department shall develop and implement a process, including
5standardized forms and procedures, which shall be used by school
6districts to apply for Commonwealth reimbursement for school
7construction and reconstruction projects and which shall be
8known as the Accountability and Reducing Costs in Construction
9Process. In developing the Accountability and Reducing Costs in
10Construction Process, the department shall separate the process
11into five (5) benchmark steps of department approval which shall
12be labeled one (1) through five (5) and shall minimally include
13the following:

14(1) Step 1 shall consist of the following:

15(i) project description;

16(ii) project justification; and

17(iii) a technical schematic design review conference with
18the department.

19(2) Step 2 shall consist of the following:

20(i) site acquisition, if applicable to the project;

21(ii) project accounting based on cost estimates; and

22(iii) a conference with the department to review completed
23construction documents, including bid specifications, drawings
24for the project and documentation regarding the fulfillment of
25State and local agency requirements.

26(3) Step 3 shall consist of the following:

27(i) project accounting based on costs for actual
28construction bids for which contracts shall be awarded; and

29(ii) project financing, including financing method and the
30calculation of the temporary reimbursable percent for the

1project. In calculating the temporary reimbursable percent, the
2department shall factor in a twenty (20) percentage point
3reduction which shall be utilized until the calculation of the
4permanent reimbursable percent is completed in Step 4.

5Approval through Step 3 shall initiate project reimbursement
6from the Commonwealth.

7(4) Step 4 shall consist of the following:

8(i) interim reporting of project modifications, including
9the reporting of change orders and supplemental contracts; and

10(ii) project accounting based on the final costs of a
11project after completion of the following:

12(A) construction of the project; and

13(B) payment for all construction or reconstruction work,
14unless the department has granted an exception.

15The calculation of the permanent reimbursable percent for a
16project shall take place during Step 4.

17(5) Step 5 shall consist of project refinancing, where
18applicable, to allow for the restructuring, refinancing or
19refunding of existing indebtedness.

20(b) (1) Except as provided for in paragraph (2), school
21districts shall be reimbursed by the department in the order in
22which their projects received approval for Commonwealth
23reimbursement by the Department of Education.

24(2) The Secretary of Education may prioritize the
25reimbursement of a school construction or reconstruction project
26of a school district declared to be in financial recovery status
27under Article VI-A of this act. Projects that are given priority
28under this paragraph shall be reimbursed before all other
29projects.

30(c) (1) School districts shall develop a complete

1districtwide facility study of all district educational
2facilities, including the district administrative offices. The
3study shall be completed prior to, and within five (5) years of,
4the initial date of submission to the department of an
5application for Commonwealth reimbursement of a school
6construction or reconstruction project.

7(2) The study shall provide an appraisal as to each
8facility's ability to meet current and planned education program
9requirements, the degree to which the present facilities meet
10reasonably current construction standards, and an estimated cost
11of necessary repairs and improvements.

12(3) The study shall be submitted to the department along
13with an initial application for Commonwealth reimbursement of a
14school construction or reconstruction project.

15(4) The department shall not grant to school districts any
16exceptions, waivers or variances to the provisions of this
17subsection.

18(d) (1) In order to receive Commonwealth reimbursement for
19the construction of a new building, a school district shall,
20within Step 1 of the Accountability and Reducing Costs in
21Construction Process provided for in subsection (a), complete
22and submit to the department a cost-benefit analysis of the
23project that compares the construction of the proposed new
24building to the expansion or renovation of an existing building
25for the same purpose.

26(2) If the cost of a new building exceeds that of the
27expansion or renovation of an existing building for the same
28purpose, the school district shall only be eligible for
29Commonwealth reimbursement for the new building if substantial
30evidence is presented which demonstrates the necessity of a new

1building and how a new building would better meet the needs of
2the school district and its students than a building expansion
3or renovation.

4(3) A determination by the department that insufficient
5evidence was provided to demonstrate the necessity of a new
6building rather than a building expansion or renovation shall be
7appealable by a school district under 2 Pa.C.S. (relating to
8administrative law and procedure).

9(4) The department shall not grant to school districts any
10exceptions, waivers or variances to the provisions of this
11subsection.

12(e) (1) School districts shall not be eligible for
13Commonwealth reimbursement of school construction or
14reconstruction project costs for any existing building which is
15less than thirty (30) years old or for which a Commonwealth
16reimbursable project has been approved by the department within
17the preceding thirty (30) years. The thirty (30) year period
18between eligible Commonwealth reimbursable projects for a school
19building shall be calculated from the bid opening date of the
20previous Commonwealth reimbursable project to the bid opening
21date of the proposed Commonwealth reimbursable project.

22(2) The department shall not grant to school districts any
23exceptions, waivers or variances to the provisions of this
24subsection except in the case of an emergency. For the purposes
25of this paragraph, an emergency shall include a natural
26disaster, fire or flood.

27(f) (1) School districts shall not be eligible for
28Commonwealth reimbursement of school construction or
29reconstruction project costs for any existing building where the
30cost of expansion or renovation of the building, excluding costs

1for building purchase, movable fixtures and equipment, asbestos
2abatement, roof replacement, site development and architect
3fees, is less than forty (40) percent of the replacement value
4of the entire building.

5(2) The provisions of this subsection shall not apply to
6area vocational-technical school construction or reconstruction
7projects.

8(3) The department shall not grant to school districts any
9exceptions, waivers or variances to the provisions of this
10subsection.

11(g) The department shall, where possible and appropriate,
12automate the Accountability and Reducing Costs in Construction
13Process to allow school districts to submit plans and documents
14relating to reimbursement for a school construction or
15reconstruction project electronically.

16(h) A school district shall not be required to submit any
17school construction or reconstruction project plans, drawings,
18bid specifications or other documents to the department on
19microfilm as a condition of receiving Commonwealth reimbursement
20for a construction or reconstruction project.

21(i) A school district shall not be required to resubmit to
22the department any completed plans, drawings, bid specifications
23or other documents for a school construction or reconstruction
24project for which the department received a completed
25application by October 1, 2012, due to the implementation of
26this section.

27(j) Subsections (c), (d), (e) and (f) shall not apply to any
28school construction or reconstruction project for which a
29completed school construction or reconstruction project
30application was submitted to the department by October 1, 2012.

1(k) No later than twelve (12) months after the effective
2date of this section, the department shall develop such rules
3and guidelines as may be necessary to implement this section:
4Provided, however, That the department shall not create steps of
5approval in addition to those provided for under subsection (a)
6and shall not require more than one school board resolution at
7each step.

8(l) For the purposes of this section, the term "department"
9shall mean the Department of Education of the Commonwealth.

10Section 3. Section 732.1(b) of the act, amended July 9, 2013
11(P.L.408, No.59), is amended to read and the section is amended
12by adding a subsection to read:

13Section 732.1. Limitation on New Applications for Department
14of Education Approval of Public School Building Projects.--* * *

15(b) (1) The Department of Education shall, in consultation
16with school district officials and the General Assembly, conduct
17a review of the Department of Education's current process
18through which public school building projects are reviewed and
19approved for Commonwealth reimbursement. The review shall
20incorporate an analysis of impacting local factors, including,
21but not limited to, tax effort and building requirements, and
22shall make recommendations to the chair and minority chair of
23the Appropriations Committee of the Senate, the chair and
24minority chair of the Education Committee of the Senate, the
25chair and minority chair of the Appropriations Committee of the
26House of Representatives and the chair and minority chair of the
27Education Committee of the House of Representatives by May 1,
282013. The Department of Education shall also conduct a Statewide
29analysis of school facilities and future capital needs and shall
30submit a preliminary report on that analysis by May 1, 2014.

1(2) The Statewide analysis shall be completed and submitted
2to the chairman and minority chairman of the Appropriations
3Committee of the Senate, the chairman and minority chairman of
4the Education Committee of the Senate, the chairman and minority
5chairman of the Appropriations Committee of the House of
6Representatives and the chairman and minority chairman of the
7Education Committee of the House of Representatives no later
8than May 1, 2015.

9(c) (1) Any school district that began a school
10construction or reconstruction project during the time in which
11the Department of Education was not accepting or approving new
12school construction and reconstruction project applications for
13reimbursement pursuant to subsection (a) shall remain eligible
14and may apply for Commonwealth reimbursement for those school
15construction or reconstruction projects following the expiration
16of the limitation provided for under subsection (a).

17(2) No later than twelve (12) months after the effective
18date of this section the department shall develop such rules and
19guidelines as may be necessary to implement this subsection.

20Section 4. The act is amended by adding a section to read:

21Section 732.2. Interest on Delayed Reimbursement.--(a) Each
22school district which has satisfactorily met all construction or
23reconstruction reimbursement requirements established by this
24act, Title 22 of the Pennsylvania Code and the Department of
25Education and which has submitted all appropriate documentation
26to the Department of Education necessary to receive approval for
27reimbursement for a school construction or reconstruction
28project and which has not been approved for reimbursement after
29a period of one (1) year following the last date of submission
30of required documentation, shall be eligible to receive interest

1on the delayed reimbursement.

2(b) The interest on delayed reimbursement shall be an amount
3equal to the prime rate of interest, as listed in the first
4edition of the Wall Street Journal published in the year,
5multiplied by the total amount of construction or reconstruction
6reimbursement for which the school district is eligible under
7Article XXV of this act but has not received, calculated for
8each year in which the school district does not receive
9reimbursement.

10(c) Interest payments on delayed reimbursement shall be
11included in those payments made to a school district for
12Commonwealth reimbursement of a construction or reconstruction
13project when such payments commence.

14Section 5. Section 2501 of the act is amended by adding a
15definition to read:

16Section 2501. Definitions.--For the purposes of this article
17the following terms shall have the following meanings:

18* * *

19(31) "Department." The Department of Education of the
20Commonwealth.

21Section 6. Section 2574(b.1), (c.4) and (c.6) of the act,
22amended or added July 13, 2005 (P.L.226, No.46) and July 11,
232006 (P.L.1092, No.114), are repealed:

24Section 2574. Approved Reimbursable Rental for Leases
25Hereafter Approved and Approved Reimbursable Sinking Fund
26Charges on Indebtedness.--* * *

27[(b.1) For school buildings constructed and based on an
28approved school facility design received from the Department of
29Education's school facility design clearinghouse, for which the
30general construction contract is awarded subsequent to January

11, 2005, and for approved school building projects for which the
2general construction contract was awarded but for which a lease
3or general obligation bond resolution was not approved by the
4Department of Education prior to January 1, 2005, the approved
5building construction cost shall additionally include the
6product of the rated pupil capacity as determined by the
7Department of Education at the time the project is approved and
8(i) four hundred seventy dollars ($470) in the case of
9elementary schools, (ii) six hundred twenty dollars ($620) in
10the case of secondary schools, (iii) an amount in the case of
11combined elementary-secondary schools obtained by multiplying
12the rated elementary pupil capacity by four hundred seventy
13dollars ($470) and the rated secondary pupil capacity by six
14hundred twenty dollars ($620) and dividing the sum by the total
15rated pupil capacity.]

16* * *

17[(c.4) For school buildings for which the general
18construction contract is awarded on or after January 1, 2005,
19and for approved school building projects for which the general
20construction contract was awarded but for which a lease or
21general obligation bond resolution was not approved by the
22Department of Education prior to January 1, 2005, and where the
23school building receives a silver, gold or platinum
24certification from the United States Green Building Council's
25Leadership in Energy and Environmental Design Green Building
26Rating System or two, three or four Globes under the Green
27Building Initiative's Green Globes Green Building Rating System
28on or after January 1, 2005, the Department of Education shall
29adjust the approved building construction cost to additionally
30include the product of the rated pupil capacity as determined by

1the Department of Education at the time the project is approved
2and (i) four hundred seventy dollars ($470) in the case of
3elementary schools, (ii) six hundred twenty dollars ($620) in
4the case of secondary schools, (iii) an amount in the case of
5combined elementary-secondary schools obtained by multiplying
6the rated elementary pupil capacity by four hundred seventy
7dollars ($470) and the rated secondary pupil capacity by six
8hundred twenty dollars ($620) and dividing the sum by the total
9rated pupil capacity. The Department of Education in
10consultation with the Governor's Green Government Council shall
11issue guidelines to carry out this section.]

12* * *

13[(c.6) If a school district receives reimbursement for a
14school construction project under this section, the school
15district, upon request by the Department of Education, shall do
16all of the following:

17(i) Provide information required by the department to
18determine whether the school construction project meets criteria
19established by the department for certification as an approved
20school facility design for purposes of the department's school
21facility design clearinghouse.

22(ii) Authorize the department, in its discretion, to certify
23the school construction project as an approved school facility
24design and to include information about the certified project in
25the department's school facility design clearinghouse.]

26* * *

27Section 7. Section 2575(a) of the act, amended July 12, 1968
28(P.L.192, No.96), is amended to read:

29Section 2575. Payments on Account of Leases Hereafter
30Approved and on Account of Sinking Fund Charges on Indebtedness

1for School Buildings Hereafter Constructed.--(a) The
2Commonwealth shall pay annually to each school district erecting
3or sharing in the erection of a building or buildings under the
4provisions of the Public School Building Authority Act, the
5Municipality Authority Act, section 758 of the Public School
6Code of 1949, or section 791 of the Public School Code of 1949,
7on account of buildings for which the lease is approved on or
8after March 22, 1956, or through the incurring of indebtedness
9by the issuance of general obligation bonds on account of
10buildings for which the general construction contract is awarded
11on or after March 22, 1956, an amount to be determined by
12multiplying the district's [capital account reimbursement
13fraction computed for the year 1967 or] aid ratio [whichever is
14larger] by the approved reimbursable rental or approved
15reimbursable sinking fund charge.

16* * *

17Section 8. Section 2575.1 of the act, amended July 9, 1992
18(P.L.392, No.85), is amended to read:

19Section 2575.1. Payments on Account of Building Costs.--(a)
20The Commonwealth shall pay to any school district making a
21preliminary payment on account of the approved building
22construction or approved renovation cost as authorized by
23section 783 or by clause (4) of section 790 or by clause (5) of
24section 791 of this act, an amount determined by multiplying the
25district's [capital account reimbursement fraction computed for
26the year 1967 or] aid ratio [whichever is larger] by the amount
27of the payment made by the school district.

28(b) Whenever any school district provides the full payment
29on account of approved building construction or approved
30renovation cost without incurring debt, or without assuming a

1lease, the Commonwealth shall pay to such school district an
2amount determined by multiplying the district's [capital account
3reimbursement fraction computed for the year 1967 or] aid ratio
4[whichever is larger] by the amount of the payment made by the
5school district.

6(c) The payment required by this section shall be made for
7the year in which the school district made its payment on
8account of the approved building construction or approved
9renovation cost.

10Section 9. The act is amended by adding a section to read:

11Section 2581. Lump Sum Reimbursement for Construction or
12Reconstruction.--

13(1) The department may, upon the availability of sufficient
14funds and the mutual agreement of the department and a school
15district, provide an immediate lump sum payment to the school
16district as full reimbursement for a construction or
17reconstruction project that has received all required approvals
18from the department for Commonwealth reimbursement. The lump sum
19payment provided for under this section shall be equal to
20seventy-five percent (75%) of the total allowable construction
21or reconstruction reimbursement provided for under Article XXV
22of this act for which the school district is eligible: Provided,
23however, That such payments shall not include reimbursement for
24interest incurred by a school district.

25(2) No later than twelve (12) months after the effective
26date of this section, the department shall develop such rules
27and guidelines as may be necessary to implement this section.

28Section 10. For the 2014-2015 fiscal year the General
29Assembly shall appropriate not less than $396,198,000 to the
30Authority Rentals and Sinking Fund Requirements line item in the

1General Appropriation Act.

2Section 11. This act shall take effect as follows:

3(1) The addition of section 731.2(d), (e), (f) and (g)
4of the act shall take effect July 1, 2015.

5(2) The remainder of this act shall take effect
6immediately.