Amendment 6753 to House Bill 1589 P.N. 3086, Regular Session 2015-2016

H1589B3086A06753 DMS:CDM 04/12/16 #90 A06753

AMENDMENTS TO HOUSE BILL NO. 1589

Sponsor: SENATOR CORMAN

Printer's No. 3086

Amend Bill, page 2, by inserting between lines 55 and 56

Providing for school district debt refinancing bonds;

Amend Bill, page 34, by inserting between lines 21 and 22

Section 15.1. The act is amended by adding an article to

read:

ARTICLE XVII-E.2

SCHOOL DISTRICT DEBT REFINANCING BONDS

Section 1701-E.2. Definitions.

The following words and phrases when used in this article

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Authority." The Commonwealth Financing Authority.

"Cost of a project." The term includes all items

reimbursable under law.

"Cost of PlanCon project." Approved reimbursable rentals and

approved reimbursable sinking fund charges, capital grants, any

necessary or appropriate reserves, costs of issuance and any

other financing costs related to a PlanCon project.

"Department." The Department of Education of the

Commonwealth.

"Finance." The lending or providing of funds to a school

district for payment of the cost of a project and the provision

of funds for a PlanCon project.

"Financing Law." The provisions of 64 Pa.C.S. Ch. 15

(relating to Commonwealth Financing Authority).

"PlanCon project." The funding of approved reimbursable

rentals for approved leases and approved reimbursable sinking

fund charges authorized under section 2574 of the Public School

Code of 1949 and capital grants for a project authorized to be

approved under section 2574.4 of the Public School Code of 1949.

"Project." As defined in 64 Pa.C.S. Ch. 15 (relating to

Commonwealth Financing Authority) or any project of a school

district that is eligible for reimbursement by the Commonwealth

as required under Subarticle (f) of Article XXV of the Public

School Code of 1949 for approved rental or sinking fund charges.

"Public School Code of 1949." The act of March 10, 1949

(P.L.30, No.14), known as the Public School Code of 1949.

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Section 1702-E.2. Bond issuance.

(a) Declaration of policy.--The General Assembly finds and

declares that:

(1) Funding the payment of reimbursements to school

districts for construction and reconstruction projects,

through the authority, is in the best interest of the

Commonwealth.

(2) The Financing Law is to be liberally construed to

effect the legislative and public purposes.

(3) One of those stated purposes is the protection of

"the health, safety and general welfare of the people of this

Commonwealth" pursuant to 64 Pa.C.S. § 1503(6) (relating to

findings and declaration of policy).

(4) In order to accomplish such a goal "it is desirable

to build, improve and finance facilities owned by

municipalities, municipal authorities and other authorities

and instrumentalities of the Commonwealth," which includes

school districts, pursuant to 64 Pa.C.S. § 1503(7).

(b) Authority.--Notwithstanding any other law the authority

shall establish a program to issue bonds on behalf of school

districts to provide reimbursements from the Commonwealth as

required under Article XXV of the Public School Code of 1949 for

approved rental or sinking fund charges.

(1) Bonds issued under this article shall not be a debt

or liability of the Commonwealth and shall not create or

constitute any indebtedness, liability or obligation of the

Commonwealth.

(2) Bond obligations shall be payable solely from

revenues or funds pledged or available for repayment as

authorized under this article.

(3) Each bond must contain on its face a statement that:

(i) The authority is obligated to pay the principal

of or interest on the bonds only from the revenues or

funds pledged or available for repayment as authorized

under this article.

(ii) Neither the Commonwealth nor any school

district is obligated to pay the principal of or interest

on the bonds.

(iii) The full faith and credit of the Commonwealth

or of any school district is not pledged to the payment

of the principal of or the interest on the bonds.

(d) Review for form and legality.--For the purposes of

issuing bonds under this article, the duties of the Attorney

General under section 204 of the act of October 15, 1980

(P.L.950, No.164), known as the Commonwealth Attorneys Act,

relating to the issuance of bonds may be performed by the first

deputy attorney general.

Section 1703-E.2. Limitations on bond issuance.

The authority may issue bonds for a PlanCon project in an

aggregate principal amount not to exceed $2,500,000,000, unless

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the authority and the department determine this amount is

insufficient to carry out the purposes of this article, then the

authority shall adopt a resolution to petition the Secretary of

the Budget to increase the maximum aggregate principal amount.

The Secretary of the Budget may approve the petition and, if

approved, shall publish notice of the approval in the

Pennsylvania Bulletin. The authority shall not issue any bonds

for the PlanCon project, except refunding bonds, after June 30,

2025. The authority, in consultation with the department and the

Office of the Budget, shall determine the principal amounts of

taxable and tax-exempt bonds to be issued during a fiscal year.

Notwithstanding any other limitation, the authority, at the

request of the department, may issue refunding bonds at any time

while bonds issued for the PlanCon project are outstanding,

provided that the final maturity of any series of bonds being

refunded shall not be extended. Interest on bonds issued for the

PlanCon project and refunding bonds authorized under this

section shall be payable at such time or times as the authority

shall determine in the resolution authorizing such bonds and

shall otherwise be subject to the other provisions of the

Financing Law. The aggregate principal amount of bonds set forth

in this section shall not be subject to the debt limitations set

forth in 64 Pa.C.S. § 1543 (relating to indebtedness).

Section 1704-E.2. Service agreement authorized.

The authority and the department may enter into any agreement

or service agreement to effectuate the purposes of this article,

including an agreement to secure bonds issued for a PlanCon

project, pursuant to which the department shall agree to pay

service charges to the authority in each fiscal year that the

bonds or refunding bonds are outstanding in amounts sufficient

to timely pay in full the debt service and any other financing

costs due on the bonds issued for the PlanCon project. The

department's payment of such service charges shall be subject to

and dependent upon the appropriation of funds by the General

Assembly to the department for payment of the service charges.

The service agreement may be amended or supplemented by the

authority and the department in connection with the issuance of

any series of bonds or refunding bonds authorized in this

section.

Section 1705-E.2. Deposit of bond proceeds.

The net proceeds of bonds, other than refunding bonds,

exclusive of costs of issuance, reserves and any other financing

charges, shall be transferred by the authority to the State

Treasurer for deposit into a restricted account established in

the State Treasury and held solely for the purpose of paying

costs of a PlanCon project which are due to school districts.

Payment by the department shall follow the process required by

Article VII of the Public School Code of 1949, unless the

department is specifically directed to follow a different

process by this article. The department shall requisition

payments due to school districts from that account. To pay for

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expenses related to its administration of this program, the

department, with the approval of the Governor and the authority,

may charge a fee against the proceeds deposited in the

restricted account.

Section 1706-E.2. Sinking fund charges for school building

projects.

The following shall apply:

(1) All school districts which submitted completed

applications to the department prior to the effective date of

this section, and which vote to proceed with construction and

awarded bids on their construction contracts no later than

July 1, 2019, shall, as permitted by law, either be awarded a

one-time capital grant, if available, for the approved

project in lieu of approved reimbursement payments or, if not

available, shall receive payments in the form of

reimbursements.

(2) The department shall administer the payments due and

payable under this section, and shall determine the amount of

the capital grant due each school district which shall not

exceed the maximum reimbursable project amount.

Section 1707-E.2. Limitation on new applications for Department

of Education approval of public school building

projects.

For the 2015-2016 and 2016-2017 school years, the Department

of Education shall not accept or approve new building

construction or reconstruction project applications. Completed

school building construction or reconstruction project

applications received by the Department of Education by May 15,

2016, are not subject to this subsection.

Section 1708-E.2. Public School Building Construction and

Reconstruction Advisory Committee.

(a) Establishment.--There is established an advisory

committee.

(b) Duties.--The committee shall review and make findings

and recommendations related to the program for State

reimbursement for construction and reconstruction and lease of

public school buildings.

following:

(1) The Secretary of Education or a designee.

(2) One member appointed by the President pro tempore of

the Senate and the Speaker of the House of Representatives.

(3) A representative from each of the following:

(i) The Pennsylvania Association of School Business

Officials.

(ii) The Pennsylvania School Boards Association.

(4) The chairperson and minority chairperson of the

Appropriations Committee and Education Committee of the

Senate and the chairperson and minority chairperson of the

Appropriations Committee and Education Committee of the House

of Representatives.

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(5) One member appointed by the President pro tempore of

the Senate.

(6) One member appointed by the Minority Leader of the

Senate.

(7) One member appointed by the Speaker of the House of

Representatives.

(8) One member appointed by the Minority Leader of the

House of Representatives.

(d) First meeting.--The committee shall hold its first

meeting within 30 days of the effective date of this section

regardless of whether all of the committee members have been

appointed to the committee. At the first meeting, the Department

of Education shall present its report relating to the Statewide

analysis of school facilities and capital needs as required

under section 732.1 of the Public School Code of 1949.

(e) Chairperson.--The committee shall appoint a member to

serve as chairperson of the committee.

(f) Call of chairperson.--The committee shall hold meetings

at the call of the chairperson.

(g) Reimbursement.--The members may not receive compensation

for their services, but shall be reimbursed for all necessary

travel and other reasonable expenses incurred in connection with

the performance of their duties as members of the committee.

(h) Support.--The General Assembly shall provide

administrative support, meeting space and any other assistance

required by the committee to carry out its duties under this

section in cooperation with the department. The department shall

provide the committee with data, research and other information

upon request.

(i) Report.--The committee shall issue a report not later

than May 15, 2017, of the committee's findings to the Governor,

the President pro tempore of the Senate, the Majority Leader and

Minority Leader of the Senate, the Appropriations Committee and

Education Committee of the Senate, the Speaker of the House of

Representatives, the Majority Leader and Minority Leader of the

House of Representatives, the Appropriations Committee and

Education Committee of the House of Representatives and the

Secretary of Education.

Section 1709-E.2. Public school building lease and debt service

reimbursements for fiscal year 2015-2016.

(a) General rule.--For the 2015-2016 fiscal year, the

Department of Education shall utilize undistributed funds not

expended as of April 15, 2016, from appropriations for payment

on account of annual rental or sinking fund charges on school

buildings, including charter schools, to make reimbursements for

school building leases and debt service necessary to make

payments in fiscal year 2015-2016 under this article.

(b) Exclusion.--This section shall not include reimbursement

for debt service meeting the criteria for bond issuance under

this article.

Section 1710-E.2. Posting of information by department.

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No later than July 1, 2016, and every 90 days thereafter, the

Department of Education shall post and update on its publicly

accessible Internet website in a searchable and sortable format

the following information related to public school construction

and reconstruction projects, building purchases and lease

reimbursements submitted for the approval of, or approved by,

the department:

(1) The type of project, elementary school, middle

school, intermediate school, high school, charter school or

vocational technical school by school entity.

(2) The scope of project, new construction, renovation,

addition, purchase or lease.

(3) The date of receipt of each application.

(4) The date of department approval of each application.

(5) The date of approval or denial of any waiver or

exception granted by the department.

(6) The reason for approval or denial of any waiver or

exception granted by the department.

(7) The date of submission of the application for each

step of the reimbursement process.

(8) The date of approval of the application for each

step of the reimbursement process.

(9) The anticipated total project cost.

(10) Whether the project reached the maximum

reimbursable project amount.

(11) The anticipated term of State reimbursement.

(12) The anticipated total reimbursement amount.

(13) The temporary reimbursable percentage.

(14) The permanent reimbursable percentage.

(15) The dates of expected State payments.

(16) The dates of expected school district payments.

(17) Whether the project was financed by cash.

(18) The date a project was voided, if applicable.

(19) A summary of the terms of the project's debt

service or lease.

(20) An analysis of the callability of the project's

debt service.

Section 1711-E.2. Documentation requirements.

Notwithstanding any other provision of law, the following

shall apply to school building construction and reconstruction

projects for which reimbursement from the appropriation for

payments on account of annual rental or sinking fund charges on

school buildings or charter schools is being sought:

(1) For a school district that has received approval

from the department for reimbursement but fails to submit all

additional project documentation requested within 90 days of

the request, the department shall move the project back in

the reimbursement order until such time as the school

district complies with the information request and shall move

other projects up in the reimbursement order.

(2) The Secretary of Education may grant waivers to

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school districts that fail to submit requested documentation

under paragraph (1) and are in the process of reconciling

financial records, or are facing litigation or bond

refinancing delays.

Amend Bill, page 39, lines 21 through 25, by striking out all

of said lines

Amend Bill, page 51, by inserting between lines 16 and 17

(17.1) If the fiscal year 2015-2016 appropriation for

basic education funding exceeds the amount appropriated for

basic education funding in fiscal year 2014-2015, the

Commonwealth shall pay to each school district a basic

education funding allocation which shall consist of the

following:

(i) An amount equal to the school district's basic

education funding allocation for the 2013-2014 school

year.

(ii) A student-based allocation to be calculated as

follows:

(A) Multiply the school district's student-

weighted average daily membership by the median

household income index and local effort capacity

index.

(B) Multiply the product in clause (A) by the

difference between the amount appropriated for the

allocation of basic education funding to school

districts and the amount appropriated for the

allocation in subparagraph (i).

of the products in clause (A) for all school

districts.

(iii) For the purpose of subparagraph (ii):

(A) Student-weighted average daily membership

for a school district shall be the sum of the

following:

(I) The average of the school district's

three most recent years' average daily

membership.

(II) The acute poverty average daily

membership calculated as follows:

(a) Multiply the school district's acute

poverty percentage by its average daily

membership.

(b) Multiply the product in unit (a) by

0.6.

(III) The poverty average daily membership

calculated as follows:

(a) Multiply the school district's

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poverty percentage by its average daily

membership.

(b) Multiply the product in unit (a) by

0.3.

(IV) The concentrated poverty average daily

membership for qualifying school districts with

an acute poverty percentage equal to or greater

than 30%, to be calculated as follows:

(a) Multiply the school district's acute

poverty percentage by its average daily

membership.

(b) Multiply the product in unit (a) by

0.3.

(V) The number of the school district's

limited English-proficient students multiplied by

0.6.

(VI) The average daily membership for the

school district's students enrolled in charter

schools and cyber charter schools multiplied by

0.2.

(VII) The sparsity/size adjustment for

qualifying school districts with a sparsity/size

ratio greater than the sparsity/size ratio that

represents the 70th percentile sparsity/size

ratio for all school districts calculated as

follows:

(a) Divide the school district's

sparsity/size ratio by the sparsity/size

ratio that represents the 70th percentile for

all school districts.

(b) Subtract one from the quotient in

unit (a).

(II), (III), (IV), (V) and (VI) by the amount

in unit (b).

(d) Multiply the product in unit (c) by

0.7.

(B) Local effort index for a school district

shall be calculated as follows:

(I) Determine the school district's local

effort factor calculated as follows:

(a) Multiply the school district's

median household income by its number of

households.

(b) Divide the school district's local

tax-related revenue by the product in unit

(a).

1,000.

(d) Divide the product in unit (c) by

the Statewide median of unit (c).

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(II) Determine the school district's excess

spending factor, to be calculated as follows:

(a) Divide the school district's current

expenditures by the sum of its average daily

membership and the amounts in clause (A)(II),

(III), (IV), (V), (VI) and (VII).

(b) Divide the quotient in unit (a) by

the Statewide median of unit (a).

(b).

(III) Multiply the school district's local

effort factor by the lesser of one or the school

district's excess spending factor.

district shall be calculated as follows:

(I) Divide the school district's local tax-

related revenue by the sum of its market value

and personal income valuation.

(II) Multiply the sum of the school

district's market value and personal income

valuation by the Statewide median of subclause

(I).

(III) Determine the school district's local

capacity per student by dividing the product in

subclause (II) by the sum of its average daily

membership and the amounts in clause (A)(II),

(III), (IV), (V), (VI) and (VII).

(IV) If the school district's local capacity

per student is less than the Statewide median of

subclause (III):

(a) Divide the school district's local

capacity per student by the Statewide median.

(b) Subtract the quotient in unit (a)

from one.

school district shall equal the sum of its

local effort index and local capacity index.

(d) The data used to calculate the

factors and indexes in this section shall be

based on the most recent years for which data

is available as determined by the Department

of Education.

(iv) As used in subparagraph (ii), the following

words and phrases shall have the meanings given to them

in this subparagraph unless the context clearly indicates

otherwise:

"Acute poverty percentage." The number of children

six to 17 years of age living in a household where the

ratio of income to poverty is less than 100% of the

Federal poverty guidelines divided by the total number of

children six to 17 years of age as determined by the most

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recent five-year estimate of the United States Census

Bureau's American Community Survey.

"Households." The number of households in each

school district as determined by the most recent five-

year estimate of the United States Census Bureau's

American Community Survey.

"Local tax-related revenue." The sum of school

district revenues for State property tax reduction

allocation, taxes levied and assessed, delinquencies on

taxes levied and assessed, revenue from local government

units, and other local revenues not specified elsewhere,

as designated in the Manual of Accounting and Financial

Reporting for Pennsylvania Public Schools.

"Median household income." The median household

income for school districts and the State as determined

by the most recent five-year estimate of the United

States Census Bureau's American Community Survey.

"Median household income index." A number calculated

as follows:

(1) Divide a school district's median household

income by the State median household income.

(2) Divide one by the quotient in paragraph (1).

"Poverty percentage." The number of children six to

seventeen years of age living in a household where the

ratio of income to poverty is between 100% and 184% of

the Federal poverty guidelines divided by the total

number of children six to 17 years of age as determined

by the most recent five-year estimate of the United

States Census Bureau's American Community Survey.

"Size ratio." A number calculated as follows:

(1) Divide the average of a school district's

three most recent years' average daily membership by

the Statewide average of the three most recent years'

average daily membership for all school districts.

(2) Multiply the amount in paragraph (1) by 0.5.

(3) Subtract the amount in paragraph (2) from

one.

"Sparsity ratio." A number calculated as follows:

(1) Divide the average of a school district's

three most recent years' average daily membership by

its total square miles as reported in the latest

decennial census as reported by United States Census

Bureau.

(2) Divide the State total average daily

membership by the State total square miles.

(3) Divide the quotient in paragraph (1) by the

quotient in paragraph (2).

(4) Multiply the quotient in paragraph (3) by

0.5.

(5) Subtract the product in paragraph (4) from

one.

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"Sparsity/size ratio." A number calculated by adding

the following amounts:

(1) The sparsity ratio multiplied by 0.4.

(2) The size ratio multiplied by 0.6.

(17.2) The department shall deduct from payments to

school districts made under paragraph (17.1) which occur

after April 15, 2016, the difference between the following if

the difference as calculated is a positive amount:

(i) The amount distributed to school districts from

the appropriation in the General Appropriation Act of

2015 for ready-to-learn block grants.

(ii) The amount to be distributed under paragraph

(21).

(17.3) Notwithstanding any provision of the General

Appropriation Act of 2015 and the act of March 28, 2016 (P.L.

, No.1A), known as the Supplement to the General

Appropriation Act of 2015, to the contrary, any amounts

deducted under paragraph (17.2) from payments to school

districts made under paragraph (17.1) shall be used to make

payments under paragraph (21) to school entities, if the

difference between the following is calculated as a negative

amount:

(i) The amount distributed to school entities from

the appropriation in the General Appropriation Act of

2015 for ready-to-learn block grants.

(ii) The amount to be distributed under paragraph

(21).

Amend Bill, page 54, line 1, by striking out "THE" and

inserting

If payments to school entities are made under paragraphs

(17.1) and (21), the

Amend Bill, page 54, lines 12 and 13, by striking out all of

said lines and inserting

(21) From the appropriation for the Ready to Learn Block

Grant, funds shall be distributed to school entities as

follows:

(i) Each school entity shall receive:

(A) An amount equal to the amount paid during

the 2013-2014 school year under section 2599.2 of the

Public School Code of 1949.

(B) A Ready to Learn Block Grant subsidy equal

to the amount paid during the 2014-2015 school year

under section 1722-J(21)(ii).

determined as follows:

(I) Multiply the amount of funding the

school district received under section 1722-J(21)

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(ii) by the difference between the amount of the

appropriation for the Ready to Learn Block Grant

in fiscal year 2015-2016 and fiscal year 2014-

2015.

(II) Divide the product in subclause (I) by

the sum of the amounts under section 1722-J(21)

(ii) for all school districts.

(ii) If insufficient funds are appropriated pursuant

to subparagraph (i), payments shall be made on a pro rata

basis.

(iii) Funding received by a school entity under

subparagraph (i)(A) shall be used in accordance with

section 2599.2 of the Public School Code of 1949, or as

allowed under subparagraph (v).

(iv) To be eligible to receive funding under

subparagraph (i)(B) and (C), each school entity shall

submit a plan for approval to the Department of Education

outlining how the funding will be used to maintain and

improve academic performance.

(v) Funds distributed under subparagraph (i)(B) and

1722-J(21)(v)(A) through (L).

(vi) For the purpose of this paragraph, a school

entity shall be a school district, charter school, cyber

charter school or regional charter school.

(22) Notwithstanding any provision of law to the

contrary, the revenues received by a school district under

paragraph (21)(i)(B) shall not be included in the school

district's budgeted total expenditure per average daily

membership used to calculate the amount to be paid to a

charter school under section 1725-A(a)(2) and (3) of the

Public School Code of 1949.

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