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 the State System of Higher
6Education, further providing for definitions, for powers and
7duties of the Board of Governors, for powers and duties of
8councils of trustees and for method of disposition and
9consideration by the General Assembly, and providing for
10transfer from the State System of Higher Education; and
11providing for transfer institutions.

12The General Assembly of the Commonwealth of Pennsylvania
13hereby enacts as follows:

14Section 1. Section 2001-A of the act of March 10, 1949
15(P.L.30, No.14), known as the Public School Code of 1949, is
16amended by adding clauses to read:

17Section 2001-A. Definitions.--The following words and
18phrases when used in this article shall, for the purpose of this
19article, have the following meanings, respectively, except in
20those instances where the context clearly indicates a different
21meaning:

22* * *

23(22) "Transfer institution" shall mean an institution that

1has transferred from a State-owned institution to a State-
2related institution.

3(23) "State-owned institution" shall mean an institution
4that is part of the State System of Higher Education.

5Section 2. Sections 2006-A(a) and 2009-A of the act are
6amended by adding clauses to read:

7Section 2006-A. Powers and Duties of the Board of
8Governors.--(a) The Board of Governors shall have overall
9responsibility for planning and coordinating the development and
10operation of the system. The powers and duties of the Board of
11Governors shall be:

12* * *

13(13.2) To receive an institution's resolution to transfer
14from the system.

15* * *

16Section 2009-A. Powers and Duties of Councils of Trustees.--
17In accordance with the rules and regulations adopted by the
18board, the council of each institution shall have the power and
19its duty shall be:

20* * *

21(14) By resolution adopted by the council to authorize the
22institution's transfer from the system in accordance with
23section 2021-A.

24Section 3. Section 2018-A of the act is amended by adding a
25subsection to read:

26Section 2018-A. Method of Disposition; Consideration by the
27General Assembly.--* * *

28(h) This section shall not apply to property contained in a
29resolution to transfer under section 2021-A.

30Section 4. The act is amended by adding a section to read:

1Section 2021-A. Transfer From the System.--(a) By
2resolution of a council of trustees, an institution may transfer
3from the system. In order to qualify for a transfer, an
4institution must meet all of the following:

5(1) Have a student enrollment over seven thousand (7,000).

6(2) Have an unqualified audit opinion, also known as an
7unmodified opinion, for the preceding three (3) years.

8(3) Have the financial ability to compensate the
9Commonwealth for the depreciated value of the property.

10(4) Continue to contribute the employer share for pension
11obligations, as determined by the Public School Employees'
12Retirement System and the State Employees' Retirement System.

13(b) Once the resolution and qualifying documents are
14submitted to the chancellor, the chancellor shall notify the
15Governor, the Board of Governors, the Department of General
16Services and the Department of Education, within seven (7) days,
17of the resolution for transfer. The chancellor shall publish the
18resolution of transfer in the Pennsylvania Bulletin. Within
19fourteen (14) days of notification, the chancellor shall
20initiate a timeline, in agreement with the institution's council
21of trustees, or its designee, for establishing the transfer
22process. The final agreement shall be a signed legal document
23detailing the terms of the transfer and shall be completed
24within thirty (30) days of notification. If the transfer
25institution and the system fail to agree to a transfer agreement
26within thirty (30) days, the transfer institution and the system
27shall submit to mediation and shall be prohibited from
28litigation. Each party shall submit a list of three (3) names of
29individuals from the American Arbitration Association and agree
30to a mediator from a submitted list or, in the event of a

1failure to agree, seek selection of a mediator from the court of
2common pleas in the county where the institution is situated.
3The mediator shall convene the parties to complete the transfer
4plan within thirty (30) days of the mediator's selection.

5(c) Upon finalization of the transfer process, the transfer
6institution shall declare its name and shall be deemed a State-
7related university.

8(d) The transfer institution shall continue to receive the
9appropriation for its operational cost at a minimum in the
10amount allocated to the institution in the fiscal year preceding
11the council of trustees' approval of transfer. These funds shall
12be removed in whole from the system appropriation and
13appropriated in a separate appropriation act each year to the
14transfer institution. In addition, all assets of the university
15as identified in the transfer institution's most recent
16financial audit and financial statements shall remain with and
17be the property of the transfer institution.

18(e) Collective bargaining agreements in force at the time of
19the transfer shall remain in force for the term of the
20contracts. New collective bargaining agreements with
21professional employes and noninstructional employes shall be
22negotiated by the transfer institution's council of trustees.

23(f) The transfer institution shall own and maintain land,
24buildings and other facilities which are used, together with
25land and buildings owned by the Commonwealth, for higher
26education, which land, buildings and other facilities are under
27the entire control and management of the board of trustees.

28(g) The following procedure shall apply to the transfer of
29any State-owned land, buildings and other facilities from the
30Commonwealth to a transfer institution:

1(1) The transfer institution shall pay the Commonwealth for
2the depreciated value of the State-owned land, buildings and
3other facilities on the university's campus as determined by the
4Office of the Budget for the year in which the council of
5trustees approves the transfer.

6(2) Funding for construction projects and other capital
7improvements by the transfer institution previously approved by
8the Commonwealth and allocated directly by the Commonwealth or
9through the system to the transfer institution shall be paid to
10the transfer institution. The amount of these funds will be
11added to the depreciated value of the State-owned land,
12buildings and other facilities to establish the total amount
13that the transfer institution will repay the Commonwealth.

14(3) Funds repaid by the transfer institution shall be
15distributed in the following manner:

16(i) seventy percent (70%) to the system; and

17(ii) thirty percent (30%) to the transfer institution to
18provide financial aid to Pennsylvania residents attending the
19transfer institution.

20(4) The transfer institution shall make payments directly to
21the Commonwealth over a period of up to thirty (30) years in
22order to reimburse the Commonwealth for the depreciated value of
23the State-owned land, buildings and other facilities.

24(5) The transfer institution shall bear the responsibility
25for the indebtedness.

26(h) The charter of the transfer institution shall be amended
27by changing the university name as recommended by the transfer
28institution. The transfer institution shall continue as a
29nonprofit corporation for the same purposes as, and with all
30rights and privileges granted to the university prior to its

1decision to transfer.

2Section 5. The act is amended by adding an article to read:

3ARTICLE XX-B.1

4TRANSFER INSTITUTIONS

5Section 2001-B.1. Definitions.

6The following words and phrases when used in this article
7shall have the meanings given to them in this section unless the
8context clearly indicates otherwise:

9"Chancellor." The chief executive officer of the State
10System of Higher Education.

11"State-owned institution." An institution that is part of
12the State System of Higher Education under Article XX-A.

13"State-related institution." The Pennsylvania State
14University, including the Pennsylvania College of Technology,
15the University of Pittsburgh, Temple University, Lincoln
16University and their branch campuses.

17"Transfer institution." An institution that has transferred 
18from a State-owned institution to a State-related institution 
19under section 2021-A.

20Section 2002-B.1. Board of trustees.

21(a) General rule.--The following apply:

22(1) Upon the election to transfer, the board of trustees
23of a transfer institution shall consist of ten voting members
24of the council of trustees who were serving at the time the
25institution submitted its resolution of transfer under
26section 2021-A and one additional vacancy. The additional
27vacancy shall be appointed by the Governor for a term of four
28years.

29(2) The 11 trustees under paragraph (1) shall be
30designated Commonwealth trustees. The members shall continue

1to serve for the balance of their respective terms with the
2exception of the chancellor who shall resign immediately upon
3affirmative vote of the resolution.

4(3) The Governor, or the Governor's designee, and the
5Secretary of Education shall serve on the board of trustees
6as ex officio members.

7(4) The appointive members shall serve four-year terms.

8(b) Commonwealth trustee vacancies.--Vacancies shall be
9filled as follows:

10(1) As the terms of Commonwealth trustees expire, the
11successor trustees shall be appointed in the following
12manner:

13(i) The first appointment shall be made by the
14Governor with the advice and consent of a majority of the
15Senate.

16(ii) The second appointment shall be made by the
17President pro tempore of the Senate.

18(iii) The third appointment shall be made by the
19Speaker of the House of Representatives.

20(2) Thereafter, as vacancies occur, Commonwealth
21trustees shall be appointed in rotation in the order set
22forth under paragraph (1), except that appointments shall
23conform to the following:

24(i) A total of three appointments shall be made by
25the Governor with the advice and consent of a majority of
26the Senate.

27(ii) A total of four appointments shall be made by
28the President pro tempore of the Senate.

29(iii) A total of four appointments shall be made by
30the Speaker of the House of Representatives.

1(3) All appointments to fill Commonwealth trustee
2vacancies shall be made by July 1 of the year in which the
3vacancy occurs.

4(c) Expansion.--Within six months after becoming a transfer
5institution, the by-laws of the institution shall be amended to
6provide for an additional 24 trustees, in addition to the 11
7Commonwealth trustees appointed under subsection (b), and to
8establish a procedure whereby each following year six new
9trustees will be elected for four-year terms until a total
10complement of 35 trustees is reached. The council of trustees
11may further expand its membership but the ratio of Commonwealth
12trustees must always remain at approximately one-third of the
13total membership.

14(d) Appointment and reappointment of additional trustees.--
15(Reserved).

16(e) Powers.--All management, control and conduct of the
17instructional, administrative and financial affairs of the
18transfer institution shall be vested in the board of trustees.
19The board may exercise all the powers of the transfer
20institution and create by-laws for its own government, as well
21as for the governing of the transfer institution.

22Section 2003-B.1. Public support and tuition.

23The transfer institution shall maintain such tuition and fee
24schedules for Pennsylvania resident and non-Pennsylvania
25resident students as are set forth annually under the
26appropriation act for the transfer institution. The amounts
27appropriated by the appropriation act for the transfer
28institution shall be no less than its prior State allocations as
29a State-owned institution and shall be sufficient for the
30maintenance of the tuition and fee schedules by the transfer

1institution. If the amounts appropriated are not sufficient for
2the maintenance of the tuition and fee schedules, the transfer
3institution shall have the right to alter the tuition and fee
4schedules to the extent necessary to provide required income
5equal to the amount not provided by the appropriation act.

6Section 2004-B.1. Capital improvements.

7The benefits of all Commonwealth or Commonwealth authority
8programs for capital development and improvement shall be
9available to a transfer institution under terms and conditions
10comparable to those applicable to a State-related institution.
11The Commonwealth may, by agreement with the board of trustees of
12the transfer institution, acquire lands, erect and equip
13buildings and provide facilities for the use of the transfer
14institution.

15Section 2005-B.1.  Appropriations.

16The sums appropriated by the Commonwealth to a transfer
17institution shall be paid to the board of trustees only upon
18presentation by them of certified payrolls and vouchers showing
19expenditures in accordance with the appropriation. The Auditor
20General shall draw a warrant upon the State Treasurer for
21payment of approved expenditures. All expenditures made by the
22board of trustees in respect to such appropriations shall be
23subject to a post-audit by the Auditor General.

24Section 2006-B.1. Issuance of bonds.

25(a) General rule.--The board of trustees of a transfer
26institution may provide for the issuance of bonds in the name of
27the transfer institution for any proper purpose in the same
28manner as provided when the institution was a State-owned
29institution.

30(b) Prohibitions.--The transfer institution shall have no

1power at any time or in any manner to pledge the credit or the
2taxing power of the Commonwealth or any political subdivision
3nor shall any of its obligations be deemed to be obligations of
4the Commonwealth or of any of its political subdivisions, nor
5shall the Commonwealth or any of its political subdivisions be
6liable for the payment of principal of or interest on such
7obligations.

8(c)  Taxation.--Bonds issued by the transfer institution and
9loans secured by mortgages, their transfer and the income from
10their transfer, including any profits made on sale, shall at all
11times be free from taxation within the Commonwealth.

12Section 2007-B.1. Reports.

13The president of the transfer institution shall each year, no
14later than October 1, make a report of all the activities of the
15transfer institution, including all instructional,
16administrative and financial activities, for the preceding
17scholastic and fiscal year to the board of trustees. The board
18of trustees shall transmit the report to the Governor and to the
19General Assembly.

20Section 6. The act of March 15, 1899 (P.L.8, No.4), entitled
21"An act to regulate the manner in which appropriations to
22educational, penal, reformatory, charitable, benevolent, or
23eleemosynary institutions shall be paid," shall not apply to any
24appropriation made under this act.

25Section 7. This act shall take effect July 1, 2014.