THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY PAYTON, BRIGGS, CALTAGIRONE, COHEN, JOSEPHS, STURLA AND YOUNGBLOOD, SEPTEMBER 29, 2010

REFERRED TO COMMITTEE ON EDUCATION, SEPTEMBER 29, 2010  

AN ACT

Amending Title 24 (Education) of the Pennsylvania Consolidated

Statutes, establishing the Pennsylvania Public School

Construction Authority and the Pennsylvania Public School

Construction Task Force; providing for their powers and

duties; establishing the Public School Construction Reserve

Fund, the Public School Building and Facility Adequacy Grant

Program, a direct grant program and an interest subsidy

program; and authorizing the issuance of bonds.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Title 24 of the Pennsylvania Consolidated

Statutes is amended by adding a part to read:

PART II

BASIC EDUCATION

Chapter

33.  Pennsylvania State of the Art Schools Program

CHAPTER 33

PENNSYLVANIA STATE OF THE ART

SCHOOLS PROGRAM

Sec.

3301.  Short title of chapter.

3302.  Findings.

3303.  Purpose of chapter.

3304.  Definitions.

3305.  School building and facility assessment report.

3306.  Pennsylvania Public School Construction Task Force.

3307.  Public school building and facility adequacy standards.

3308.  Needs assessment report.

3309.  Pennsylvania Public School Construction Authority.

3310.  Annual report.

3311.  School district capital improvement plans.

3312.  Public School Building and Facility Adequacy Grant

Program.

3313.  Direct grant program.

3314.  Interest subsidy program.

3315.  Bond issuance.

3316.  Public School Construction Reserve Fund.

§ 3301.  Short title of chapter.

This chapter shall be known and may be cited as the

Pennsylvania State of the Art Schools Act.

§ 3302.  Findings.

The General Assembly finds and declares as follows:

(1)  Quality education for the children of this

Commonwealth is essential for the future success of children

of this Commonwealth and the country.

(2)  Essential elements of this Commonwealth's public

school system are the school buildings and facilities that

ideally provide a safe and secure environment for learning

and facilitate educational opportunities for students in this

Commonwealth's public schools.

(3)  Regrettably not all public school buildings and

facilities in this Commonwealth are capable of providing this

high quality of education due to the physical condition or

insufficient capacity of those buildings and facilities.

(4)  Due to the decreasing percentage of the State

funding share for education and an increasing cost burden on

local revenue sources, necessary maintenance on needy public

school buildings and facilities has been deferred until

school district budgets can afford those additional costs,

and regrettably this burden on school district budgets has

not lessened.

(5)  As a result of these deferrals, certain school

buildings and facilities are not in a condition to provide a

safe and secure location for schooling of children in this

Commonwealth.

(6)  Several school districts have also experienced

difficulty in funding new building and facility construction

for various purposes, such as accommodating increases in

student population and providing students with access to

schools that provide and utilize recent technological

advances to educate students.

(7)  Another essential element of this Commonwealth's

public schools is various instructional equipment, which is

essential to providing an education for the students of the

public schools, including computer and science laboratories.

(8)  Due to the decreasing percentage in the State

funding share, it is increasingly difficult for school

districts to purchase and utilize instructional equipment,

such as computers and other electronic equipment, that

provides students with the means to learn and to succeed in

the digital age.

§ 3303.  Purpose of chapter.

This chapter is intended to:

(1)  Provide Statewide comparable data on the current

physical condition of public school buildings and facilities.

(2)  Establish minimum adequacy standards for school

buildings and facilities, including physical conditions,

maintenance, compatibility with educational technology and

sufficient building area per student to avoid overcrowding.

(3)  Determine the cost of essential and deferred

maintenance with the goal of improving the current physical

condition of existing eligible school buildings and

facilities to comply with minimum adequacy standards.

(4)  Provide State assistance in the school district

design of new construction to comply with minimum adequacy

standards.

(5)  Establish a tax-exempt bond program for the funding

of new school building and facility construction and the

repair and maintenance of eligible school buildings and

facilities and the purchase of school building and facility

equipment.

(6)  Establish the Public School Building and Facility

Adequacy Grant Program to distribute grants and funding to

eligible school districts under two separate funding

programs.

(7)  Establish the Public School Construction Reserve

Fund to address the bonds debt service and to fund emergency

school maintenance needs.

§ 3304.  Definitions.

The following words and phrases when used in this chapter

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

context clearly indicates otherwise:

"Adequacy grant program."  The Public School Building and

Facility Adequacy Grant Program established by this chapter.

"Authority."  The Pennsylvania Public School Construction

Authority established by this chapter.

"Bond."  The notes, bonds and other evidences of indebtedness

or obligations which the Pennsylvania Public School Construction

Authority is authorized to issue under this chapter.

"Construction."  This term includes acquisition and

construction, and the term "to construct" shall mean and include

to acquire and to construct in such a manner as may be deemed

desirable.

"Cost of project."  The cost of all real estate, properties,

rights and easements acquired, the cost of construction of a

school building and facility and the furnishing and equipment

thereof, all financing charges, interest prior to and during

construction and engineering and legal expenses.

"Current physical condition."  In reference to a public

school building or facility, this term shall include the current

condition of the heating, cooling, electrical and plumbing

systems; the building's exterior, including the roof, windows

and exterior doors; the building's interior, including the

walls, ceilings, floors, interior doors, lighting, glass,

educational equipment, school equipment and rest rooms;

gymnasiums and locker rooms; and technological capacity.

"Deferred maintenance."  All regularly scheduled and

unscheduled maintenance required for the proper upkeep of a

school building or facility that has not been timely performed

but postponed to a later time.

"Educational equipment."  All furniture, equipment and other

appliances for the use of the public schools. This term shall

exclude equipment utilizing educational technology.

"Educational technology."  Any technical or scientific method

of sending, receiving, storing, packaging or assimilating audio,

video, graphic, data or any combination thereof by means of

electromagnetic signal and any equipment, processes and

facilities that are used for instruction in the public schools.

"Emergency maintenance."  The performance of essential

maintenance on structurally unsound school buildings and

facilities to address the immediate risk to the health and

safety of students, employees and the public.

"Essential maintenance."  The level of deferred maintenance

that must be completed for a school building or facility to

comply with the requirements of the school building and facility

adequacy standards.

"Financing."  The provision of a grant or funding to a school

district for payment of the cost of a project.

"Fund."  The Public School Construction Reserve Fund

established by this chapter.

"Manmade disaster."  Any industrial, nuclear or

transportation accident, explosion, conflagration or other

similar condition resulting from manmade causes which threatens

or causes substantial damage to property, human suffering,

hardship or loss of life.

"Natural disaster."  Any hurricane, tornado, storm, flood,

high water, wind-driven water, tidal wave, earthquake,

landslide, snowstorm, drought, fire, explosion or other

catastrophe which results in substantial damage to property,

hardship, suffering or possible loss of life.

"Needs assessment report."  The report prepared by the

Department of the Auditor General that lists and calculates the

total cost for the completion of all deferred maintenance and

essential maintenance. This report shall include a copy of the

school building and facility assessment report.

"School building and facility assessment report."  The report

compiled and organized by the Department of the Auditor General

that lists the current physical condition of every public school

in the Commonwealth. This report shall include the data

collected and compiled by the contracted private entity.

"School buildings and facilities."  All buildings and

structures used by school districts for the classroom

instruction of students. This term shall include gymnasiums and

locker rooms but shall exclude stadiums, field houses, swimming

pools and practice fields.

"School buildings and facilities adequacy standards."  The

standards proposed by the School Construction Task Force and

accepted by the authority, establishing minimum standards for

school buildings and facilities.

"School equipment."  Equipment and machinery that are

necessary for the proper and safe operation of a school building

or facility.

"Structurally unsound buildings and facilities."  School

buildings and facilities that have extensive problems arising

from uncompleted essential maintenance, which also pose a threat

to the safety and health of students, employees and the public.

"Task force."  The Pennsylvania Public School Construction

Task Force established by this chapter.

"Technological capacity."  The ability of a school building

or facility to accommodate educational technology.

§ 3305.  School building and facility assessment report.

(a)  Duty to prepare report.--The Department of the Auditor

General shall:

(1)  Prepare guidelines within two months of the

effective date of this chapter for the conduct of a Statewide

school building and facility assessment to collect data on

the current physical condition of all public school buildings

and facilities in every school district in this Commonwealth

and shall submit the guidelines and requirements for the

conduct of the school building and facility assessment by a

private entity to competitive bidding, as provided under 62

Pa.C.S. Pt. I (relating to Commonwealth procurement code).

(2)  Enter into a contract with a private entity as soon

as practicable for the purpose of conducting the school

building and facility assessment.

(3)  Prepare a school building and facility assessment

report that presents the Statewide data in a uniform manner

within nine months of the effective date of this chapter.

(4)  Transmit the school building and facility assessment

report upon completion to the Pennsylvania Public School

Construction Task Force.

(b)  Contents of report.--The school building and facility

assessment report shall provide uniform Statewide data regarding

the current condition of public school buildings and facilities

in this Commonwealth and shall include:

(1)  The current condition of school buildings and

facilities on a Statewide basis, a school district basis and

an individual public school basis.

(2)  Expected longevity of each school building and

facility.

(3)  Calculations of current school building and facility

student capacity and space requirements necessary to

accommodate expected fluctuations in future student

population for a period of five years.

(4)  Each school building's and facility's compliance or

noncompliance with safety requirements, including any local

building or construction codes.

(5)  The ability of each school building and facility to

accommodate educational technology.

(c)  Governmental assistance.--For the purposes of preparing

guidelines for the conduct of the building and facility

assessments and preparing the school building and facility

assessment report, the Department of the Auditor General may

request the assistance of local school districts, the Division

of Facilities Management of the Department of Education and

other departments, agencies and entities of the Commonwealth as

deemed necessary by the Department of the Auditor General.

(d)  Timing for preparation of report.--At the completion of

the private entity's assessment data compilation, the Department

of the Auditor General shall prepare the Statewide school

building and facility assessment report.

§ 3306.  Pennsylvania Public School Construction Task Force.

(a)  Establishment.--There is hereby established the

Pennsylvania Public School Construction Task Force.

(b)  Membership.--The authority shall appoint 19 members to

the task force, which shall be comprised as follows:

(1)  Three school directors, provided that no two or more

school directors shall serve on the same board of school

directors.

(2)  Three school district superintendents.

(3)  Three principals of public elementary or secondary

school buildings.

(4)  Three teachers employed by a public school district.

(5)  Three parents of a public elementary or secondary

school student.

(6)  Four representatives of the private sector

architectural and construction management industries.

(c)  Duties.--The task force shall have the duty to:

(1)  Review and utilize the data contained in the school

building and facility assessment report and draft the

proposed public school building and facility adequacy

standards within three months of the receipt of the school

building and facility assessment report.

(2)  Transmit the completed proposed public school

building and facility adequacy standards to the authority for

approval.

(3)  Transmit a copy of the approved public school

building and facility adequacy standards to the Department of

the Auditor General for utilization in calculating the cost

for compliance with the minimum standards, following an

approval of the proposed standards by the authority.

(4)  Review and incorporate any changes, revisions or

suggestions that the authority provides to the task force

into the proposed adequacy standards and to resubmit the

revised proposed adequacy standards to the authority

following a provisional approval of the adequacy standards by

the authority.

(5)  Review and redraft the proposed adequacy standards

incorporating any suggestions and criticisms provided by the

authority following a rejection of the proposed adequacy

standards by the authority.

§ 3307.  Public school building and facility adequacy standards.

(a)  Proposal of standards.--The task force shall utilize the

uniform data contained in the school building and facility

assessment report to propose adequacy standards to the authority

for public school buildings and facilities that require a

minimum level of:

(1)  Essential maintenance.

(2)  Structural and building integrity.

(3)  Instructional area for education on a per student

basis.

(4)  Technological capacity in school buildings and

facilities.

(b)  Uniformity required.--The proposed adequacy standards

shall be uniform and have uniform Statewide application to all

public school buildings and facilities of this Commonwealth.

§ 3308.  Needs assessment report.

(a)  Duty to prepare.--The Department of the Auditor General

shall prepare a needs assessment report for all public school

buildings and facilities which shall:

(1)  Identify all deferred maintenance in each school

building and facility.

(2)  Identify the essential maintenance required for each

school building and facility to comply with the school

building and facility adequacy standards.

(3)  Calculate the total cost for the completion of all

deferred maintenance for each school building and facility.

(4)  Calculate the total cost for the completion of

essential maintenance that is required for each school

building and facility to comply with the school building and

facility adequacy standards.

(b)  Submission to authority.--The Department of the Auditor

General shall submit the needs assessment report to the

authority within two months of receiving a copy of the adequacy

standards from the task force. The needs assessment report shall

be presented in a uniform manner.

(c)  Governmental assistance.--For the purposes of preparing

the needs assessment report for school buildings and facilities,

the Department of the Auditor General may request the assistance

of local school districts, the Division of Facilities Management

of the Department of Education, and other departments, agencies

and entities of the Commonwealth as deemed necessary by the

Department of the Auditor General.

§ 3309.  Pennsylvania Public School Construction Authority.

(a)  Establishment.--There is hereby established a

Pennsylvania Public School Construction Authority.

(b)  Membership.--The authority shall be comprised of 14

members as follows:

(1)  The Governor or his designee.

(2)  The Auditor General or his designee.

(3)  The State Treasurer or his designee.

(4)  The Secretary of Education or his designee.

(5)  The Secretary of the Budget or his designee.

(6)  The Secretary of General Services or his designee.

(7)  The President pro tempore of the Senate or his

designee, the Minority Leader of the Senate or his designee,

the Speaker of the House of Representatives or his designee,

and the Minority Leader of the House of Representatives or

his designee.

(8)  Four representatives of the private sector

architectural and construction management industries, who

shall be appointed by the Governor.

(c)  Term.--The term of the members of the authority shall be

as follows:

(1)  The Governor, Auditor General, State Treasurer,

Secretary of Education, Secretary of the Budget, Secretary of

General Services and the members of the General Assembly

shall serve concurrently with their positions, and a designee

of one of these officials shall serve the same term as the

appointing official.

(2)  The four representatives of the private sector

architectural and construction management industries shall

serve for terms of three years. Upon the end of their terms,

the Governor may reappoint them to the authority or may

appoint other representatives of the private sector

architectural and construction management industries.

(d)  Reimbursement for expenses.--Each member of the

authority shall serve without compensation for the performance

of official duties but may be reimbursed for actual and

necessary expenses reasonably incurred in the performance of the

duties of the authority.

(e)  Duties.--The authority shall have the following powers

and duties:

(1)  Appoint the initial members of the task force within

two months of the effective date of this chapter.

(2)  Review and approve, conditionally approve or reject

the proposed public school building and facility adequacy

standards submitted by the task force within 30 days of the

receipt of the proposed standards.

(3)  Establish guidelines for the operation and

administration of the grant program, including criteria,

eligibility and funding for emergency public school

infrastructure needs, within three months of the effective

date of this chapter.

(4)  Create a central depository for information on

school building projects through the establishment and

maintenance of an electronic database that contains the

condition and needs for every school building and facility.

The electronic database shall be designed so that information

can be easily collected, stored, amended, reviewed and

disseminated. The information contained in this database

shall be available for public inspection.

(5)  Serve the school districts as a resource in

designing and constructing school buildings and facilities

that comply with the school building and facility adequacy

standards established by this chapter and to assist the

districts in best utilizing their funding from the program,

including the provision and utilization of existing model

plans of school buildings or the development of new model

plans for school buildings.

(6)  Operate and administer the fund and adequacy

program.

(7)  Prepare an annual report on the operation and

administration of the adequacy program and fund, which shall

be submitted to the chairman of the Committee on Education of

the Senate and the chairman of the Committee on Education of

the House of Representatives within three months of the end

of the fiscal year.

(8)  Have continuing succession.

(9)  Sue and be sued, implead and be impleaded, complain

and defend in all courts.

(10)  Adopt, use and alter at will a corporate seal.

(11)  Acquire, purchase, hold, lease as lessee and use

any property real, personal or mixed, tangible or intangible,

or any interest therein, necessary or desirable, for carrying

out the purposes of the authority and to sell, lease as

lessor, transfer and dispose of any property or any interest

therein at any time acquired by it.

(12)  Make bylaws for the management and regulation of

its affairs.

(13)  Appoint officers, agents, employees and servants,

to prescribe their duties and to fix their compensation.

(14)  Finance projects by making grants to any eligible

school district.

(15)  Borrow money for the purpose of financing or

refinancing the cost of any project, make and issue

negotiable notes, bonds and other evidences of indebtedness

or obligations of the authority to the extent authorized

under this chapter and to secure the payment of such bonds,

or any part thereof, by pledge or deed of trust of all or any

of its revenues and receipts, and to make such agreements

with the purchasers or holders of such bonds or with others

in connection with such bonds when issued or to be issued as

the authority shall deem advisable, and in general to provide

for the security of the bonds and the rights of the holder

thereof.

(16)  Make contracts of every name and nature and to

execute all instruments necessary or convenient for the

carrying of its business.

(17)  Borrow money and accept grants from and enter into

contracts or other transaction with any Federal agency,

without limitation of the other powers and duties specified

in this subsection.

(18)  Pledge, hypothecate or otherwise encumber all or

any of the revenues or receipts of the authority as security

for all or any of the obligations of the authority.

(19)  Do all acts and things necessary or convenient to

carry out the powers granted to it by this chapter.

(f)  Exercise of powers and duties.--

(1)  The powers and duties of the authority shall be

exercised by a governing body consisting of the members of

the authority acting as a board. Within 30 days after the

effective date of this chapter, the board shall meet and

organize by electing from their number a president, treasurer

and secretary. At the first regular meeting in each year

thereafter, they shall elect from their number a president

and a secretary.

(2)  Nine members shall constitute a quorum of the board

for the purpose of organizing the authority and conducting

the business thereof and for all other purposes, and all

action shall only be taken by a vote of a majority of the

members of the authority unless the bylaws shall require a

larger number. The board shall have full authority to manage

the properties and business of the authority and to

prescribe, amend and repeal bylaws, rules and regulations

governing the manner in which the business of the authority

may be conducted and the powers granted to it may be

exercised and embodied. The board shall fix and determine the

number of officers, agents and employees of the authority and

their respective compensation and duties and may delegate to

one or more of their number or to one or more of the

officers, agents or employees such powers and duties as it

may deem proper.

(g)  Limitation.--The authority shall have no power at any

time or in any manner to pledge the credit or taxing power of

the Commonwealth or any of its school districts, nor shall any

of its debts or obligations be deemed to be obligations of the

Commonwealth or any of its school districts, nor shall the

Commonwealth or any of its school districts be liable for the

payment of principal or interest on such obligations.

§ 3310.  Annual report.

The authority shall submit an annual report to the chairman

of the Committee on Education of the Senate and the chairman of

the Committee on Education of the House of Representatives

regarding the administration and operation of the fund and

adequacy grant program.

§ 3311.  School district capital improvement plans.

(a)  Plan necessary for program funding.--Following

completion of the school building and facility assessment, the

adequacy standards, needs assessment and the adequacy grant

program guidelines, any school district that submits an

application for funding under the program shall prepare and

retain on file an annual and a five-year capital improvement

plan. The five-year capital improvement plan shall be updated

annually.

(b)  Contents of plan.--The capital improvement plan shall:

(1)  Address the deficiencies in the school district's

school buildings and facilities as listed in the school

building and facility assessment, needs assessment and

authority report.

(2)  Comply with the school building and facility

adequacy standards.

(3)  Include all of the following:

(i)  The project descriptions and rationale for

repair, maintenance and construction of school buildings

or facilities.

(ii)  The project floor plans or a copy of project

blueprints.

(iii)  The student and school district employee

capacity of each school building or facility in the

capital improvement plan.

(iv)  The current and projected student enrollment

for a five-year period.

(v)  The funding sources and cost estimates,

including applicable cost estimates contained in the

needs assessment and authority report.

(vi)  The school district efforts to comply with the

requirements of the school building and facility adequacy

standards.

(vii)  The calculations of the average useful life

for each project financed under the adequacy grant

program.

§ 3312.  Public School Building and Facility Adequacy Grant

Program.

(a)  Establishment.--The Public School Building and Facility

Adequacy Grant Program is hereby established and shall be

administered by the authority.

(b)  Components of program.--The adequacy grant program shall

consist of two separate components which shall be known as the

direct grant program and the interest subsidy program. The

adequacy grant program shall be funded by moneys generated from

the issuance of bonds and deposited in the fund. Fifty percent

of those funds in the fund generated from bond proceeds shall

fund the direct grant program, and the remaining 50% shall fund

the interest subsidy program.

§ 3313.  Direct grant program.

(a)  Grants to be provided.--The direct grant program shall

provide direct grants to eligible school districts for 100% of

the cost of a project, including the performance of essential

maintenance on or construction of a public school building or

facility and educational equipment.

(b)  Applications.--School districts eligible under this

program may submit an annual application to the authority. The

authority shall establish procedures and guidelines regarding

the application for and award of direct grants under this

program. The procedures and guidelines shall include:

(1)  Provisions for accountability to ensure that the

direct grants are used in accordance with this chapter.

(2)  The following project priority list for the award of

grants under the program:

(i)  To replace or reconstruct school buildings and

facilities destroyed or damaged by manmade or natural

disasters.

(ii)  To perform essential maintenance on the most

deficient school buildings and facilities.

(iii)  To replace school buildings and facilities

that no longer are structurally sound or have components

that are no longer structurally sound.

(iv)  To construct new school buildings and

facilities to alleviate the overcrowding caused by

population growth.

(v)  To purchase educational equipment.

(c)  Eligibility criteria.--The authority shall establish

eligibility criteria for grant recipients, in which eligibility

shall be based on at least one of the following:

(1)  The school district has at least 50% of its students

eligible for free or reduced-cost lunches under the National

School Lunch Act (60 Stat. 230, 42 U.S.C. § 1751 et seq.).

(2)  The school district receives a poverty supplement in

its basic education funding.

(3)  The school district has a market value income aid

ratio of 0.8000 or higher.

Any school district that meets the eligibility criteria under

this subsection shall be classified as a special need district.

§ 3314.  Interest subsidy program.

(a)  Funding to be provided.--

(1)  The interest subsidy program shall provide funding

in the form of a reimbursement to a school district that is

not classified as a special need district for a specific

percentage of the total costs of a project for the

performance of essential maintenance on or the construction

of school buildings and facilities.

(2)  The authority shall establish a formula for the

calculation of the percentage of the total project costs

which may be reimbursed to the school district.

(b)  Eligibility criteria.--The authority shall establish

eligibility criteria for the award of the funding under this

program which shall incorporate the following project priority

list:

(1)  To replace or reconstruct school buildings and

facilities destroyed or damaged by manmade or natural

disasters.

(2)  To alleviate the overcrowding caused by population

growth or to replace school buildings and facilities that no

longer are structurally sound or have components that are no

longer structurally sound.

(3)  To replace or reconstruct school buildings and

facilities that pose a risk to the health and safety of

students, employees and the public.

(4)  To alter facilities to provide accessibility for

qualified individuals with disabilities, as defined under the

Americans with Disabilities Act of 1990 (Public Law 101-336,

42 U.S.C. § 12101 et seq.)

(5)  To purchase educational equipment.

(c)  Prerequisite for eligibility.--In order for a school

district to be eligible under the interest subsidy program, the

school district must obtain financing for a project at the

lowest available interest rate. The guidelines for the program

established by the authority shall address sufficient

documentation of such lowest available interest rate.

§ 3315.  Bond issuance.

(a)  Amount authorized.--The authority is authorized to issue

a maximum of $3,000,000,000 in negotiable bonds in four

individual series of $750,000,000 over the course of two years

for the purpose of funding the adequacy grant program to provide

grants and reimbursements for the construction, maintenance and

equipping of public schools in this Commonwealth. The term of

each series of bonds shall be based on the average useful life

of the projects financed.

(b)  Terms.--

(1)  The bonds of the authority shall be of such series,

bear such date or dates, mature at such time or times, not

exceeding 30 years from their respective dates, bear such

interest at such rate or rates payable semiannually, be in

such denominations, be in such form, either coupon or fully

registered without coupons, carry such registration,

exchangeability and interchangeability privileges, be payable

in such medium of payment and at such place or places, be

subject to such terms of redemption at such prices not

exceeding 105% of the principal amount thereof and be

entitled to such priorities in the revenues and receipts of

the authority as such resolution or resolutions may provide.

The interest on bonds issued shall be paid during the term

for which the bonds were issued. The bonds shall be signed by

such officers, either manually or by facsimile as the

authority shall determine, and shall have imprinted thereon a

facsimile of the corporate seal, attested by the facsimile

signature of the treasurer of the authority, all as may be

prescribed in such resolution or resolutions. Any of the

bonds may be issued and delivered notwithstanding that any of

the authorized persons signing the bonds or whose facsimile

signature shall be upon the bonds shall have ceased to hold

their respective offices at the time when the bonds shall

actually be delivered.

(2)  The bonds shall be sold as the authority shall

determine at private sale or to the highest responsible

bidder or bidders after public notice by advertisement. The

notice shall contain a general description of the bonds, the

manner, place and time of the sale or time limit for the

receipt of proposals, the name of the officer to whom the

bids or proposals shall be delivered and a statement of the

terms and conditions of the sale, which shall include a

statement of the highest net interest cost or highest

interest cost computed by the Present Worth Method, whichever

is specified, acceptable to the authority. For the purposes

of this section, net interest cost shall be determined by

ascertaining the total amount of interest payable with

respect to the bonds, computed from the date of the bonds to

the stated maturity dates thereof, plus the amount of any

discount from the principal amount of the bond or less the

amount of any premium in excess of the principal amount of

the bonds. Pending the preparation of the definitive bonds,

interim receipts may be issued to the purchaser or purchasers

of such bonds and may contain such terms and conditions as

the authority may determine.

(3)  The bonds are hereby made securities in which all

officers of the Commonwealth and its political subdivisions

and municipal officers and administrative departments, boards

and commissions of the Commonwealth, all banks, bankers,

savings banks, trust companies, savings and loan

associations, investment companies and other persons carrying

on a banking business, all insurance companies, insurance

associations and other persons carrying on an insurance

business and all administrators, executors, guardians,

trustees and other fiduciaries, and all other persons

whatsoever who now or may hereafter be authorized to invest

in bonds or other obligations of the Commonwealth, may

properly and legally invest any funds, including capital,

belonging to them or within their control, and the bonds or

other securities or other obligations are hereby made

securities which may properly and legally be deposited with

and received by any State or municipal officers or agency of

the Commonwealth for any purpose for which the deposit of

bonds or other obligations of the Commonwealth is now or may

hereafter be authorized by law.

(c)  Contents of resolution.--Any resolution authorizing the

bonds may contain provisions which shall be a part of the

contract with the holders thereof as to:

(1)  Pledging the full faith and credit of the authority,

but not of the Commonwealth or any county or other political

subdivision thereof, for such obligations or restricting the

same to all or any of the revenues or receipts of the

authority from all or any projects.

(2)  The financing and the duties of the authority with

reference thereto.

(3)  The terms and provisions of the bonds.

(4)  Limitations on the purposes to which the proceeds of

the bonds, then or to be later issued, or of any loan or

grant by the United States may be applied.

(5)  The setting aside of reserves or sinking funds and

the regulation and disposition thereof.

(6)  The terms and provisions of any deed of trust or

indenture securing the bonds or under which the same may be

issued.

(7)  Any other or additional agreements with the holders

of the bonds.

(d)  Documents.--The authority may enter into any deeds of

trust, indentures or other agreements with any bank or trust

company or other person or persons in the United States having

power to enter into the same, including any Federal agency, as

security for such bonds and may assign and pledge all or any of

the revenues or receipts of the authority thereunder. Such deed

of trust, indenture or other agreement may contain such

provisions as may be customary in such instruments or as the

authority may authorize, including, but without limitation,

provisions as to:

(1)  The construction, improvement, financing, operation,

maintenance and repair of any project or projects and the

duties of the authority with reference thereto.

(2)  The application of funds and the safeguarding of

funds on hand or on deposit.

(3)  The rights and remedies of the trustee and the

holders of the bonds, which may include restrictions upon the

individual right of action of such bondholders.

(4)  The terms and provisions of the bonds or the

resolutions authorizing the issuance of the same.

(e)  Bonds as negotiable instruments.--Bonds of the authority

shall have the qualities of negotiable instruments under 13

Pa.C.S. (relating to commercial code).

(f)  Rights and remedies of bondholders.--

(1)  The rights and remedies conferred in this section

upon or granted to the bondholders shall be in addition to

and not in limitation of any rights and remedies lawfully

granted to such bondholders by the resolution or resolutions

providing for the issuance of bonds or by any deed of trust,

indenture or other agreement under which the same may be

issued or secured. In the event that the authority shall

default in the payment of principal of or interest on any of

the bonds after the principal or interest shall become due,

whether at maturity or upon call for redemption, and such

default shall continue for a period of 30 days, or in the

event that the authority shall fail or refuse to comply with

the provisions of this chapter or shall default in any

agreement made with the holders of the bonds, the holders of

25% in aggregate principal amount of the bonds then

outstanding, by instrument or instruments filed in the office

of the recorder of deeds of the county, and proved or

acknowledged in the same manner as a deed to be recorded may,

except as such right may be limited under the provisions of

any deed of trust, indenture or other agreement as provided

earlier, appoint a trustee to represent the bondholders for

the purposes provided in this section. Such trustee and any

trustee under any deed of trust, indenture or other agreement

may, and, upon written request of the holders of 25%, or such

other percentage as may be specified in any deed of trust,

indenture or other agreement as provided in this section, in

principal amount of the bonds then outstanding, shall in his

or its own name:

(i)  by mandamus or other suit, action or proceeding

at law or in equity to enforce all rights of the

bondholders, including the right to require the authority

to collect rates and other charges adequate to carry out

any agreement as to, or pledge of the revenues or

receipts thereof, the authority, and to require the

authority to carry out any other agreements with or for

the benefit of the bondholders, and to perform its and

their duties under this chapter;

(ii)  bring suit upon the bonds;

(iii)  by action or suit in equity to require the

authority to account as if it were the trustee of an

express trust for the bondholders;

(iv)  by an action or suit in equity to enjoin any

acts or things which may be unlawful or in violation of

the rights of the bondholders; or

(v)  by notice in writing to the authority to declare

all bonds due and payable and if all defaults shall be

made good, then with the consent of the holders of 25%,

or such other percentage as may be specified in any deed

of trust, indenture or other agreement as provided in

this section, of the principal amount of the bonds then

outstanding, to annul such declaration and its

consequences.

(2)  Any trustee, whether appointed as aforesaid or

acting under a deed of trust, indenture or other agreement,

and whether or not all bonds have been declared due and

payable, shall be entitled as of right to the appointment of

a receiver, who may, to the same extent that the authority

itself could do so, enter and take possession of the

facilities of the authority or any parts thereof, the

revenues or receipts from which are or may be applicable to

the payment of the bonds so in default, and operate and

maintain the same and collect and receive other revenues

thereafter rising therefrom in the same manner as the

authority might do and shall deposit all such moneys in a

separate account and apply the same in such manner as the

court shall direct. In any suit, action or proceeding by the

trustees, the fees, counsel fees and expenses of the trustee

and of the receiver, if any, and all costs and disbursements

allowed by the court shall be a first charge on any revenues

and receipts from which are or may be applicable to the

payment of the bonds so in default. The trustee shall, in

addition to the foregoing, have and possess all of the powers

necessary or appropriate for the exercise of any functions

specifically set forth in this section or incident to the

general representation of the bondholders in the enforcement

and protection of their rights.

(3)  In addition to all other rights and all other

remedies, any holder of bonds of the authority shall have the

right by mandamus or other suit, action or proceeding at law

or in equity to enforce his rights against the authority to

collect his fees, rentals and other such charges adequate to

carry out any agreement as to, or pledge of, such fees,

rentals or other charges or income, revenues and receipts and

to require the authority to carry out any of its covenants

and agreements with the bondholders and to perform its and

their duties under this chapter.

(g)  Sinking fund.--The bonds of the authority shall be

issued under one or more resolutions or one or more trust

indentures and, as provided in such resolution or trust

indenture, the moneys set aside in any sinking fund pledged for

any particular bonds or series of bonds shall be held for the

sole benefit of such bonds, separate and apart from the moneys

pledged for any other bonds of the authority issued under any

other resolution or trust indenture.

(h)  Commonwealth pledge.--The Commonwealth does hereby

pledge to and agree with any person, firm or corporation or

Federal agency subscribing to or acquiring the bonds to be

issued by the authority for the construction, financing,

extension, improvement or enlargement of any project or part

thereof that the Commonwealth will not limit or alter the rights

hereby vested in the authority or limit or alter any provisions

for the security and protection of the authority and its

bondholders contained in this act or as now provided by law

until all bonds at any time issued, together with the interest

thereon, are fully met and discharged. The Commonwealth does

further pledge to and agree with the United States and any other

Federal agency that, in the event that any Federal agency shall

construct or contribute any funds for the construction,

financing, extension improvement or enlargement of any project

or any portion thereof, the Commonwealth will not alter or limit

the rights and powers of the authority in any manner which would

be inconsistent with the continued maintenance and operation of

the project or the improvement thereof, or which would be

inconsistent with the due performance of any agreements between

the authority and any such Federal agency, and the authority

shall continue to have and may exercise all powers in this

section for carrying out of the purposes of this chapter and the

purposes of the United States in the construction or improvement

or enlargement of any project or such portion thereof.

(i)  Tax exemption for authority.--The effectuation of the

authorized purposes of the authority established under this

chapter shall and will be in all respects for the benefit of the

people of this Commonwealth, for the increase of their welfare

and prosperity and for the improvement of their education and

educational facilities, and, since the authority will be

performing essential governmental functions in effectuating such

purposes, the authority shall be exempt from payment of any

taxes or assessments on any property acquired, held, owned,

leased or used by it for such purposes, and the bonds issued by

the authority, their transfer and the income therefrom,

including any profits made on the sale thereof, shall at all

times be free from taxation, other than inheritance and estate

taxation within this Commonwealth.

§ 3316.  Public School Construction Reserve Fund.

(a)  Establishment.--The Public School Construction Reserve

Fund is hereby established in the State Treasury. The board of

the authority shall operate and administer the fund and shall

establish guidelines for the administration and operation of the

fund.

(b)  Use of moneys.--Moneys in the fund shall be used by the

authority as follows:

(1)  Proceeds raised from the sale of the bonds shall be

used to fund the adequacy grant program of which 50% of the

proceeds shall fund the direct grant program and the

remaining 50% shall fund the interest subsidy program.

(2)  Funds transferred by the State Treasurer into the

fund under subsection (c) shall be used as follows:

(i)  First to alleviate existing debt service.

(ii)  After the annual debt service payment has been

made, the remaining funds shall be used for funding

emergency maintenance for structurally unsound school

buildings and facilities.

(c)  Primary funding source.--To fully fund the annual debt

service, up to the sum of 100% of the amount allocated for

school construction and modernization under the Department of

Education's "PlanCon" program may be used, and at least one-half

of the allocation shall be used, with any amount unused and

remaining from this allocation being returned to the General

Fund annually.

(d)  Other funding sources.--The authority shall deposit any

other moneys made available to the authority from any source for

such purposes into the fund.

(e)  Use of remaining funds.--The fund shall have the

priority of alleviating existing debt service arising from the

bond issuance. When the annual debt service payment has been

paid, any remaining funds shall be used for emergency public

school maintenance needs in this Commonwealth in accordance with

guidelines established by the authority for emergency school

construction and maintenance funding.

Section 2.  This act shall take effect immediately.