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PRINTER'S NO. 3715
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
2247
Session of
2015
INTRODUCED BY GROVE, ORTITAY, PHILLIPS-HILL, SAYLOR AND MOUL,
JULY 7, 2016
REFERRED TO COMMITTEE ON FINANCE, JULY 7, 2016
AN ACT
Amending the act of June 27, 2006 (1st Sp.Sess., P.L.1873,
No.1), entitled "An act providing for taxation by school
districts, for the State funds formula, for tax relief in
first class cities, for school district choice and voter
participation, for other school district options and for a
task force on school cost reduction; making an appropriation;
prohibiting prior authorized taxation; providing for
installment payment of taxes; restricting the power of
certain school districts to levy, assess and collect taxes;
and making related repeals," in taxation by school districts,
further providing for adoption of preliminary budget
proposals, repealing provisions relating to local tax study
commission and further providing for public referendum
requirements for increasing certain taxes and for school
district tax notices; in State funds formula, providing for
Public School Employees' Retirement System pension
contribution cost savings; and, in tax relief in cities of
the first class, further providing for tax relief.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Sections 311(d)(3) and 331 of the act of June 27,
2006 (1st Sp.Sess., P.L.1873, No.1), known as the Taxpayer
Relief Act, are repealed:
Section 311. Adoption of preliminary budget proposals.
* * *
(d) Resolution.--
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* * *
[(3) A board of school directors that adopts a
resolution under this section shall not be eligible to seek
referendum exceptions under section 333(f), and section
333(e) shall not apply.]
* * *
[Section 331. Local tax study commission.
(a) Appointment.--A board of school directors shall appoint
a local tax study commission prior to adopting a resolution
under section 331.2(b) or 332(b)(1). The local tax study
commission shall be appointed no later than 180 days prior to
the date on which the board of school directors is required to
adopt a resolution under section 331.2(b) or 332(b)(1).
(b) Membership.--The local tax study commission shall
consist of five, seven or nine members who are resident
individuals or taxpayers of the school district and shall
reflect the socioeconomic, age and occupational diversity of the
school district to the extent possible, except that one member
of the local tax study commission may be a member of the board
of school directors and no member shall be an official or
employee or a relative thereof of the school district.
(c) Staff and expenses.--The school district shall provide
necessary and reasonable support staff and shall reimburse the
members of the local tax study commission for necessary and
reasonable expenses in the discharge of their duties. Receipts
shall be required for all reimbursable expenses under this
subsection.
(d) Contents of study.--The local tax study commission shall
study the existing taxes levied, assessed and collected by the
school district and the effect of any county or municipal taxes
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imposed concurrently with the school district. The local tax
study commission shall determine how the tax policies of the
school district could be improved by the levy, assessment and
collection of the taxes authorized under section 321. The study
shall include consideration of all of the following:
(1) Historic and present rates of and revenue from taxes
currently levied, assessed and collected.
(2) The percentage of total revenues provided by taxes
currently levied, assessed and collected.
(3) The age, income, employment and property use
characteristics of the existing tax base.
(4) Projected revenues of taxes currently levied,
assessed and collected, including taxes authorized and taxes
not levied under this chapter.
(e) Recommendation.--Within 90 days of its appointment, the
local tax study commission shall make a nonbinding
recommendation to the board of school directors regarding the
imposition of the taxes authorized under section 321, commencing
in the subsequent fiscal year. Prior to making its
recommendation, the local tax study commission shall hold at
least one public hearing. The recommendation of the local tax
study commission shall be presented at a public meeting of the
board of school directors. The board of school directors shall
make such recommendation available to interested persons upon
request.
(f) Failure to issue a recommendation.--If the local tax
study commission fails to make a recommendation under subsection
(e), the board of school directors shall discharge the local tax
study commission.
(g) Adoption of recommendation.--The board of school
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directors shall accept or reject the recommendation of the local
tax study commission prior to adopting a resolution under
section 331.2(b) or section 332(b)(1).
(h) Materials.--All records of the local tax study
commission, including receipts, tapes, minutes of meetings and
written communications, for public inspection during the regular
business hours of the school district.]
Section 2. Section 333 of the act, amended June 30, 2011
(P.L.148, No.25), is amended to read:
Section 333. Public referendum requirements for increasing
certain taxes.
(a) Applicability.--The following provisions shall apply to
this section:
(1) For the 2006-2007 fiscal year, the tax increase
proposed by any board of school directors shall not exceed
the index unless an exception under former subsection (f) or
(n) is approved pursuant to former subsection (j), provided
that a board of school directors that did not elect to
participate in the former act of July 5, 2004 (P.L.654,
No.72), known as the Homeowner Tax Relief Act, shall have the
authority to petition the court of common pleas for an
additional tax rate increase if the tax rate increase allowed
by the index and any exception approved pursuant to former
subsection (j) is insufficient to balance the proposed
budget. No later than July 15, 2006, the court shall grant
the school district's request for the tax rate increase upon
good cause shown if the school district proves by clear and
convincing evidence that the tax rate increase authorized
under this paragraph is insufficient to balance the proposed
budget. For a board of school directors subject to this
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paragraph, the dates by which the board of school directors,
the department and the court of common pleas shall be
required to comply with section 311 and [subsections]
subsection (e) and former subsection (j) shall be 92 days
after the dates set forth in those provisions, except that
the date by which the board of school directors shall be
required to comply with all of the provisions of section
311(c) shall be ten days prior to the date by which the board
of school directors is required to adopt a preliminary
budget. Any exceptions granted to a board of school directors
under section 333 of the former Homeowner Tax Relief Act
shall remain in full force and effect. Notwithstanding the
provisions of this paragraph, a board of school directors
that sought and was granted approval for one or more
exceptions under section 333 of the former Homeowner Tax
Relief Act may apply for any exception under former
subsections (f)(v) and (n), where the dollar amount of an
exception approved by the department under the former
Homeowner Tax Relief Act is less than the dollar amount of
the exception for which the school district is eligible under
this act.
(2) This section shall apply to each board of school
directors beginning with any proposed tax increase that takes
effect in the 2007-2008 fiscal year and each fiscal year
thereafter.
(b) Prohibitions.--[Except as set forth in subsection (j),
unless] Unless there is compliance with subsection (c), a board
of school directors may not do any of the following:
(1) Increase the rate of a tax levied for the support of
the public schools by more than the index. For purposes of
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compliance with this paragraph, a school district which is
situated in more than one county and which levies real estate
taxes under section 672.1 of the act of March 10, 1949
(P.L.30, No.14), known as the Public School Code of 1949,
shall apply the index to each separate rate of real estate
taxes levied.
(2) Levy a tax for the support of the public schools
which was not levied in the 2005-2006 fiscal year.
(3) Raise the rate of the earned income and net profits
tax if already imposed under the authority of the Local Tax
Enabling Act except as otherwise provided for under section
331.2 or 332.
(4) Notwithstanding any other provision of this chapter
to the contrary, the adoption of a referendum under section
331.2 or 332 confers on the board of school directors the
authority to raise income taxes only to the extent contained
in the language of the referendum, and any future increase of
an income tax to be used for the purpose of property tax
reduction shall be submitted to the electors of the school
district at a subsequent municipal election pursuant to the
provisions of section 332.
(c) Referendum.--
(1) In order to take an action prohibited under
subsection (b)(1), at the election immediately preceding the
start of the school district fiscal year in which the
proposed tax increase would take effect, a referendum stating
the specific rate or rates of the tax increase must be
submitted to the electors of the school district, and a
majority of the electors voting on the question must approve
the increase.
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(2) In order to take an action under subsection (b)(2),
at the election immediately preceding the start of the school
district fiscal year in which the proposed tax would take
effect, a referendum stating the proposed tax and the rate at
which it will be levied must be submitted to the electors of
the school district, and a majority of the electors voting on
the question must approve the tax.
(3) [Except as set forth in subsection (j), a] A school
district acting pursuant to this subsection shall submit the
referendum question required under this section to the
election officials of each county in which it is situate no
later than 60 days prior to the election immediately
preceding the fiscal year in which the tax increase would
take effect.
(4) The election officials of each county shall, in
consultation with the board of school directors, draft a
nonlegal interpretative statement which shall accompany the
referendum question in accordance with section 201.1 of the
act of June 3, 1937 (P.L.1333, No.320), known as the
Pennsylvania Election Code. The nonlegal interpretative
statement shall include information that references the items
of expenditure for which the tax increase is sought and the
consequence of the referendum being disapproved by the
electorate.
(d) Failure to approve referendum.--
(1) If a referendum question submitted under subsection
(c)(1) is not approved, the board of school directors may
approve an increase in the tax rate of not more than the
index.
(2) If a referendum question submitted under subsection
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(c)(2) is not approved, the board of school directors may not
levy the tax.
(e) Tax rate submissions.--A school district that has
adopted a preliminary budget proposal under section 311 that
includes an increase in the rate of any tax levied for the
support of public schools shall submit information on the
increase to the department on a uniform form prepared by the
department. The school district shall submit such information no
later than 85 days prior to the date of the election immediately
preceding the beginning of the school district's fiscal year.
The department shall compare the proposed percentage increase in
the rate of any tax with the index. Within ten days of the
receipt of the information required under this subsection but no
later than 75 days prior to the date of the election immediately
preceding the beginning of the school district's fiscal year,
the department shall inform the school district whether the
proposed tax rate increase is less than or equal to the index.
If the department determines that the proposed percentage
increase in the rate of the tax exceeds the index, the
department shall notify the school district that:
(1) the proposed tax increase must be reduced to an
amount less than or equal to the index; or
(2) the proposed tax increase must be approved by the
electorate under subsection (c)(1)[; or
(3) an exception must be sought under subsection (j)].
[(f) Referendum exceptions.--A school district may, without
seeking voter approval under subsection (c), increase the rate
of a tax levied for the support of the public schools by more
than the index if all of the following apply:
(1) The revenue raised by the allowable increase under
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the index is insufficient to balance the proposed budget due
to one or more of the expenditures listed in paragraph (2).
(2) The revenue generated by increasing the rate of a
tax by more than the index will be used to pay for any of the
following:
(iii) Costs associated with the following:
(A) For a board of school directors that elected
to participate in the former act of July 5, 2004
(P.L.654, No.72), known as the Homeowner Tax Relief
Act, to pay interest and principal on any
indebtedness incurred under 53 Pa.C.S. Pt. VII Subpt.
B (relating to indebtedness and borrowing) prior to
September 4, 2004. In no case may the school district
incur additional debt under this clause except for
the refinancing of existing debt, including the
payment of costs and expenses related to such
refinancing and the establishment of funding of
appropriate debt service reserves. An increase under
this clause shall be rescinded following the final
payment of interest and principal.
(A.1) For a board of school directors that did
not elect to participate in the former act of July 5,
2004 (P.L.654, No.72), known as the Homeowner Tax
Relief Act, to pay interest and principal on any
indebtedness incurred under 53 Pa.C.S. Pt. VII Subpt.
B prior to the effective date of this act. In no case
may the school district incur additional debt under
this clause except for the refinancing of existing
debt, including the payment of costs and expenses
related to such refinancing and the establishment of
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funding of appropriate debt service reserves. An
increase under this clause shall be rescinded
following the final payment of interest and
principal.
(B) To pay interest and principal on any
electoral debt incurred under 53 Pa.C.S. Pt. VII
Subpt. B. An increase under this clause shall be
rescinded following the final payment of interest and
principal.
(E) For purposes of this subparagraph, electoral
debt includes the refunding or refinancing of
electoral debt for which an exception is permitted
under clause (B) as long as the refunding or
refinancing incurs no additional debt other than for:
(I) costs and expenses related to the
refunding or refinancing; and
(II) funding of appropriate debt service
reserves.
(F) For purposes of this subparagraph,
indebtedness includes the refunding or refinancing of
indebtedness for which an exception is permitted
under clauses (A) and (A.1) as long as the refunding
or refinancing incurs no additional debt other than
for:
(I) costs and expenses related to the
refunding or refinancing; and
(II) funding of appropriate debt service
reserves.
(v) Costs incurred in providing special education
programs and services to students with disabilities if
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the increase in expenditures on special education
programs and services, net of State special education
payments, was greater than the index. The dollar amount
of this exception shall be equal to the portion of the
increase that exceeds the index.
(g) Revenue derived from increase.--Any revenue derived from
an increase in the rate of any tax allowed pursuant to
subsection (f)(2)(iii) shall not exceed the anticipated dollar
amount of the expenditure.
(h) Limitation on tax rate.--The increase in the rate of any
tax allowed pursuant to an exception under subsection (f)(2)(v)
or (n) shall not exceed the rate increase required as determined
by the department pursuant to subsection (j).
(j) Department approval.--
(1) A school district that seeks to increase the rate of
tax due to an expenditure under subsection (f)(2)(iii) or (v)
or (n) shall obtain the approval of the department before
imposing the tax increase. The department shall establish
procedures for administering the provisions of this
subsection, which may include an administrative hearing on
the school district's submission.
(2) A school district proceeding under the provisions of
this subsection shall publish in a newspaper of general
circulation and on the district's publicly accessible
Internet site, if one is maintained, notice of its intent to
seek department approval at least one week prior to
submitting its request for approval to the department. If the
department schedules a hearing on the school district's
request, the school district shall publish notice of the
hearing in a newspaper of general circulation and on the
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district's publicly accessible Internet site, if one is
maintained, immediately upon receiving the information from
the department. The notice shall include the date, time and
place of the hearing.
(3) The department shall approve a school district's
request under this subsection if a review of the data under
paragraph (4) demonstrates that:
(i) the school district qualifies for one or more
exceptions under subsection (f)(2)(iii) or (v) or (n);
and
(ii) the sum of the dollar amounts of the exceptions
for which the school district qualifies makes the school
district eligible under subsection (f)(1).
(4) For the purpose of determining the eligibility of a
school district for an exception under subsection (f)(2)(v),
the department shall utilize data from the most recent school
years for which annual financial report data required under
section 2553 of the Public School Code of 1949 has been
received. The department shall inform school districts of the
school years determined under this subsection no later than
30 days prior to the date on which public inspection of
proposed school budgets is required under section 311(c).
(5) (i) The department shall rule on the school
district's request and shall inform the school district
of its decision no later than 55 days prior to the date
of the election immediately preceding the beginning of
the school district's fiscal year.
(ii) If the department approves the request, the
department shall determine the dollar amount of the
expenditure for which the exception is sought and the tax
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rate increase required to fund the exception.
(iii) If the department denies the request, the
school district may submit a referendum question under
subsection (c)(1). The question must be submitted to the
election officials no later than 50 days prior to the
date of the election immediately preceding the beginning
of the school district's fiscal year.
(6) Within 30 days of the deadline under paragraph (5)
(i), the department shall submit a report to the President
pro tempore of the Senate, the Minority Leader of the Senate,
the Speaker of the House of Representatives and the Minority
Leader of the House of Representatives enumerating the school
districts which sought an exception under this subsection.
The department shall also publish the report on its publicly
accessible Internet site. The report shall include:
(i) The name of each school district making a
request under this subsection.
(ii) The specific exceptions requested by each
school district and the dollar amount of the expenditure
for each exception.
(iii) The department's ruling on the request for the
exception.
(iv) If the exception was approved, the dollar
amount of the expenditure for which the exception was
sought and the tax rate increase required to fund the
exception.
(v) A statistical summary of the information in
subparagraphs (ii), (iii) and (iv).
(l) Index calculation.--No later than August 15, 2005, and
each August 15 thereafter, the department shall calculate the
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index. The department shall publish the index by September 1,
2005, and each September 1 thereafter in the Pennsylvania
Bulletin.]
(m) Election interference prohibited.--
(1) No public funds may be used to urge any elector to
vote for or against a referendum or be appropriated for
political or campaign purposes.
(2) This subsection shall not be construed to prohibit
the use of public funds for dissemination of factual
information relative to a referendum appearing on an election
ballot.
(3) As used in this subsection, the term "public funds"
means any funds appropriated by the General Assembly or by a
political subdivision.
[(n) Treatment of certain required payments.--
(1) The provisions of subsections (f) and (j) shall
apply to a school district's share of payments to the Public
School Employees' Retirement System as required under 24
Pa.C.S. § 8327 (relating to payments by employers) if the
increase in estimated payments between the current year and
the upcoming year, as determined by the department under this
section, is greater than the index.
(2) For purposes of this subsection, the following
apply:
(i) The school district's share of payments as
required by 24 Pa.C.S. § 8327 for the current year shall
be determined by the department using:
(A) The lesser of the school district's total
compensation for the current year or the school
district's total compensation for the 2011-2012
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school year.
(B) The employer contribution rate under 24
Pa.C.S. § 8328 (relating to actuarial cost method)
for the current year.
(C) A State retirement subsidy calculation based
on the school district's total compensation under
clause (A) and the employer contribution rate under
clause (B).
(ii) The school district's share of payments as
required by 24 Pa.C.S. § 8327 for the upcoming year shall
be determined by the department using all of the
following:
(A) The lesser of the school district's:
(I) estimated total compensation for the
upcoming year; or
(II) total compensation for the 2011-2012
school year.
(B) The employer contribution rate under 24
Pa.C.S. § 8328 for the upcoming year.
(C) A State retirement subsidy calculation based
on the school district's total compensation under
clause (A) and the employer contribution rate under
clause (B).
(3) The dollar amount to which subsection (f) applies
shall be determined as follows:
(i) Multiply:
(A) the index; by
(B) the school district's share of payments for
the current year, as determined by the department
under this subsection.
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(ii) Subtract:
(A) the product under subparagraph (i); from
(B) the amount of increase, as determined by the
department under this subsection, in the school
district's share of payments between:
(I) the current year; and
(II) the upcoming year.
(4) As used in this subsection, the term "compensation"
has the meaning ascribed in 24 Pa.C.S. § 8102 (relating to
definitions).]
(o) Rescission.--
(1) Any increase in a rate of a tax levied for support
of the public schools imposed prior to or during the 2011-
2012 school year under a referendum exception granted, prior
to the effective date of this subsection, under former
subsection (f)(2)(i), (ii) or (iii)(C) and (D) shall be
rescinded:
(i) immediately following fulfillment of the court
order or administrative order that was the basis for the
referendum exception;
(ii) immediately following the payment of costs to
resolve a condition which posed an immediate threat of
serious physical harm or injury to the students, staff or
residents of the school district that was the basis for
the referendum exception; or
(iii) following the final payment of interest and
principal related to the indebtedness.
(2) For the purposes of this subsection, the term "final
payment of interest and principal" does not include a school
district's payment of debt as a result of refunding or
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refinancing the debt.
(p) Application of cost savings.--
(1) If a school district of the first class A, second
class, third class or fourth class realizes cost savings from
a reduction in the school district's annual required
contribution, the school district shall apply the amount of
cost savings realized as follows:
(i) Except as provided under subparagraph (ii), the
school district shall apply 80% of the cost savings to a
reduction in the school district's millage rate. A
reduction in the millage rate under this subparagraph
shall be the new base millage rate under section 336(b).
The school district shall use the remaining 20% to cover
the costs of general operations.
(ii) A school district that received from the
Department of Education an exception under former
subsection (f) shall apply 100% of the cost savings
realized to a reduction in the school district's millage
rate.
(2) As used in this subsection, the term "annual
required contribution" shall mean periodic required
contributions expressed as a dollar amount or a percentage of
covered plan compensation consisting of both the total
employer cost and the amortization payment.
Section 3. Section 343 of the act is amended to read:
Section 343. School district tax notices.
(a) Tax notice.--A school district that implements homestead
and farmstead exclusions or millage rate reductions shall
itemize the homestead and farmstead exclusion or millage rate
reduction on tax bills sent to [homestead and farmstead owners,]
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property owners indicating the [original amount of] tax
liability of the previous tax year, the amount of the exclusion
and [the net amount of tax due after the exclusion is applied.],
if there is no millage rate reduction, the amount property
owners could save if the school district collected a 1% increase
in the earned income and net profit tax and used the revenue in
accordance with section 334(a). The tax bill shall be easily
understandable and include a notice pursuant to subsection (b).
(b) Notice of property tax relief.--A school district that
implements homestead and farmstead exclusions or millage rate
reductions shall include with the [homestead or farmstead]
property owner's tax bill a notice that the tax bill includes a
homestead or farmstead exclusion or millage rate reduction. The
notice shall at a minimum take the following form:
NOTICE OF PROPERTY TAX RELIEF
Your enclosed tax bill includes a tax reduction for your
[homestead and/or farmstead] property. As [an eligible
homestead and/or farmstead] a property owner, you have
received tax relief through a homestead and/or farmstead
exclusion or millage rate reduction which has been provided
under the Pennsylvania Taxpayer Relief Act, a law passed by
the Pennsylvania General Assembly designed to reduce your
property taxes. If (insert name of school district) increases
its earned income or net profits tax by 1%, your property
taxes would be reduced by (insert amount of reduction) as an
individual property owner.
Section 4. The act is amended by adding a section to read:
Section 506. Public School Employees' Retirement System pension
contribution cost savings.
(a) Transfer.--Within 30 days after the enactment of a
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general appropriations bill, the secretary shall transfer from
the General Fund 80% of the revenue from any cost savings
realized from a reduction in the Commonwealth's annual Public
School Employees' Retirement System contribution into the fund.
(b) Calculation.--The secretary shall determine the cost
savings under this section by calculating the amount of the
Commonwealth's annual Public School Employees' Retirement
System's contribution in the current fiscal year subtracted from
the Commonwealth's annual Public School Employees' Retirement
System contribution in the prior fiscal year.
(c) Certification.--The secretary shall certify the amount
of cost savings under this section by April 15 of each year for
transfer into the fund in the next fiscal year.
Section 5. Section 703(c)(3)(i) of the act is repealed:
Section 703. Tax relief.
* * *
(c) Exceptions.--The wage and net profits tax rates may only
be raised above the rates specified in subsection (b)(2) if all
of the following apply:
* * *
(3) The increase is necessary to respond to any of the
following:
[(i) A fiscal threat or condition, as certified by
the city's director of finance, that occurs to the city
as set forth in section 333(f) or an equivalent fiscal
threat that affects the citizens of the city. It shall be
the responsibility of the city's director of finance with
the approval of the Pennsylvania Intergovernmental
Cooperation Authority to ensure that any additional tax
revenue raised is equal to the amount expended to respond
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to the fiscal threat or condition. If the amount of
revenue raised through rate adjustment exceeds the amount
necessary to respond, over the course of the city's
approved financial plan to the fiscal threat, the excess
amount shall be used for wage tax and net profits tax
reduction in the immediately succeeding approved
financial plan but only if the tax rate reduction,
expressed as the difference between the two tax rates,
would exceed .0002.]
* * *
Section 6. This act shall take effect in 60 days.
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