2013 -- S 0262

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LC01028

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

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A N A C T

RELATING TO EDUCATION - FOUNDATION LEVEL SCHOOL SUPPORT

     Introduced By: Senators Pearson, and Picard

     Date Introduced: February 12, 2013

     Referred To: Senate Finance

It is enacted by the General Assembly as follows:

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     SECTION 1.  Sections 16-7-41 and 16-7-41.1 of the General Laws in Chapter 16-7

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entitled "Foundation Level School Support" are hereby amended to read as follows:

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     16-7-41. Computation of school housing aid. -- (a) In each fiscal year the state shall pay

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to each community a grant to be applied to the cost of school housing equal to the following:

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     The cost of each new school housing project certified to the commissioner of elementary

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and secondary education not later than July 15 of the fiscal year shall be divided by the actual

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number of years of the bond issued by the local community or the Rhode Island Health and

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Educational Building Corporation in support of the specific project, times the school housing aid

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ratio; and provided, further, with respect to costs of new school projects financed with proceeds

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of bonds issued by the local community or the Rhode Island Health and Educational Building

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Corporation in support of the specific project, the amount of the school housing aid payable in

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each fiscal year shall not exceed the amount arrived at by multiplying the principal and interest of

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the bonds payable in each fiscal year by the school housing aid ratio and which principal and

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interest amount over the life of the bonds, shall, in no event, exceed the costs of each new school

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housing project certified to the commissioner of elementary and secondary education. If a

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community fails to specify or identify the appropriate reimbursement schedule, the commissioner

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of elementary and secondary education may at his or her discretion set up to a five (5) year

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reimbursement cycle for projects under five hundred thousand dollars ($500,000); up to ten (10)

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years for projects up to three million dollars ($3,000,000); and up to twenty (20) years for

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projects over three million dollars ($3,000,000).

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     (b) Aid shall be provided for the same period as the life of the bonds issued in support of

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the project and at the school housing aid ratio applicable to the local community at the time of the

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bonds issued in support of the project as set forth in § 16-7-39.

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     (c) Aid shall be paid either to the community or in the case of projects financed through

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the Rhode Island Health and Educational Building Corporation, to the Rhode Island Health and

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Educational Building Corporation or its designee including, but not limited to, a trustee under a

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bond indenture or loan and trust agreement, in support of bonds issued for specific projects of the

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local community in accordance with this section, § 16-7-40 and § 16-7-44. Notwithstanding the

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preceding, in case of failure of any city, town or district to pay the amount due in support of

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bonds issued on behalf of a city or town school project financed by the Rhode Island Health and

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Educational Building Corporation, upon notification by the Rhode Island Health and Educational

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Building Corporation, the general treasurer shall deduct the amount from aid provided under this

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section, § 16-7-40, § 16-7-44 and § 16-7-15 through § 16-7-34.3 due the city, town or district and

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direct said funding to the Rhode Island Health and Educational Building Corporation or its

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designee. Provided, if a community's school department undertakes repairs eligible for school

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housing aid reimbursement and funds such repairs from the school district’s budget, as opposed

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to the community's municipal budget, then the reimbursement aid shall be paid directly to the

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school department.

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     (d) Notwithstanding any provisions of law to the contrary, in connection with the

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issuance of refunding bonds benefiting any local community, any net interest savings resulting

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from the refunding bonds issued by such community or a municipal public buildings authority for

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the benefit of the community or by the Rhode Island health and educational building corporation

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for the benefit of the community, in each case in support of school housing projects for the

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community, shall be allocated between the community and the state of Rhode Island, by applying

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the applicable school housing aid ratio at the time of issuance of the refunding bonds, calculated

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pursuant to § 16-7-39, that would otherwise apply in connection with school housing projects of

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the community. In connection with any such refunding of bonds, the finance director or the chief

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financial officer of the community shall certify such net interest savings to the commissioner of

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elementary and secondary education. Notwithstanding § 16-7-44 or any other provision of law to

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the contrary, school housing projects costs in connection with any such refunding bond issue shall

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include bond issuance costs incurred by the community, the municipal public buildings authority

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or the Rhode Island health and educational building corporation, as the case may be, in

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connection therewith. In connection with any refunding bond issue, school housing project costs

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shall include the cost of interest payments on such refunding bonds, if the cost of interest

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payments was included as a school housing cost for the bonds being refunded. A local community

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or municipal public buildings authority shall not be entitled to the benefits of this subsection (d)

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unless the net present value savings resulting from the refunding is at least three percent (3%) of

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the refunded bond issue.

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     (e) Any provision of law to the contrary notwithstanding, the commissioner of

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elementary and secondary education shall cause to be monitored the potential for refunding

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outstanding bonds of local communities or municipal public building authorities or of the Rhode

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Island Health and Educational Building Corporation issued for the benefit of local communities

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or municipal public building authorities and benefiting from any aid referenced in this section. In

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the event it is determined by said monitoring that the net present value savings which could be

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achieved by refunding such bonds of the type referenced in the prior sentence including any

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direct costs normally associated with such refundings is equal to (i) at least one hundred thousand

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dollars ($100,000) and (ii) for the state and the communities or public building authorities at least

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three percent (3%) of the bond issue to be refunded including associated costs then, in such event,

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the commissioner (or his or her designee) may direct the local community or municipal public

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building authority for the benefit of which the bonds were issued, to refund such bonds. Failure of

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the local community or municipal public buildings authority to timely refund such bonds, except

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due to causes beyond the reasonable control of such local community or municipal public

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building authority, shall result in the reduction by the state of the aid referenced in this § 16-7-4.1

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associated with the bonds directed to be refunded in an amount equal to ninety percent (90%) of

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the net present value savings reasonably estimated by the commissioner of elementary and

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secondary education (or his or her designee) which would have been achieved had the bonds

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directed to be refunded been refunded by the ninetieth (90th) day (or if such day is not a business

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day in the state of Rhode Island, the next succeeding business day) following the date of issuance

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of the directive of the commissioner (or his or her designee) to refund such bonds. Such reduction

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in the aid shall begin in the fiscal year following the fiscal year in which the commissioner issued

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such directive for the remaining term of the bond.

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     (f) Payments shall be made in accordance with § 16-7-40 and this section.

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     16-7-41.1. Eligibility for reimbursement. -- School districts, not municipalities, may

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apply for and obtain approval for a project under the necessity of school construction process set

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forth in the regulations of the board of regents for elementary and secondary education. Such

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approval will remain valid until June 30 of the third fiscal year following the fiscal year in which

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the board of regents for elementary and secondary education's approval is granted. Only those

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projects undertaken at school facilities under the care and control of the school committee and

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located on school property may qualify for reimbursement under §§ 16-7-35 - 16-7-47. Facilities

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with combined school and municipal uses or facilities that are operated jointly with any other

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profit or non-profit agency do not qualify for reimbursement under §§ 16-7-35 - 16-7-47. Projects

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completed by June 30 of a fiscal year are eligible for reimbursement in the following fiscal year.

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A project for new school housing or additional housing shall be deemed to be completed when

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the work has been officially accepted by the school committee or when the housing is occupied

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for its intended use by the school committee, whichever is earlier.

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     Notwithstanding the provisions of this section, the board of regents shall not grant final

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approval for any project between June 30, 2011 and June 30, 2014 except for projects that are

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necessitated by immediate health and safety reasons. In the event that a project is requested

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during the moratorium because of immediate health and safety reasons, those proposals shall be

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reported to the chairs of the house and senate finance committees.

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     Any project approval granted prior to the adoption of the school construction regulations

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in 2007, and which are currently inactive; and any project approval granted prior to the adoption

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of the school construction regulations in 2007 which did not receive voter approval or which has

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not been previously financed, are no longer eligible for reimbursement under this chapter. The

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department of elementary and secondary education shall develop recommendations for further

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cost containment strategies in the school housing aid program.

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     Provided, if a community's school department undertakes repairs eligible for school

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housing aid reimbursement and funds such repairs from the school district's budget, as opposed to

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the community's municipal budget, then the reimbursement aid shall be paid directly to the school

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department.

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     SECTION 2. This act shall take effect upon passage.

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LC01028

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO EDUCATION - FOUNDATION LEVEL SCHOOL SUPPORT

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     This act would provide that if a community's school department undertakes repairs

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eligible for school housing aid reimbursement and funds such repairs from the school district's

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budget, as opposed to the community's municipal budget, then the reimbursement aid would be

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paid directly to the school department.

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     This act would take effect upon passage.

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LC01028

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