2018 -- S 2855 SUBSTITUTE A

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LC005486/SUB A

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2018

____________

A N   A C T

RELATING TO SCHOOL CONSTRUCTION AND EDUCATION

     Introduced By: Senators Gallo, Pearson, Cano, Ruggerio, and Goodwin

     Date Introduced: May 03, 2018

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Sections 16-7-23, 16-7-36, 16-7-39, 16-7-40, 16-7-41, 16-7-41.1, and 16-7-

44 of the General Laws in Chapter 16-7 entitled "Foundation Level School Support [See Title 16

Chapter 97 – The Rhode Island Board of Education Act]" are hereby amended to read as follows:

     16-7-23. Community requirements -- Adequate minimum budget provision.

     (a) The school committee's budget provisions of each community for current

expenditures in each budget year shall provide for an amount from all sources sufficient to

support the basic program and all other approved programs shared by the state. Each community

shall contribute local funds to its school committee in an amount not less than its local

contribution for schools in the previous fiscal year except to the extent permitted by §§ 16-7-23.1

and 16-7-23.2. Provided, that for the fiscal years 2010 and 2011 each community shall contribute

to its school committee in an amount not less than ninety-five percent (95.0%) of its local

contribution for schools for the fiscal year 2009. Calculation of the annual local contribution shall

not include Medicaid revenues received by the municipality or district pursuant to chapter 8 of

title 40. A community which has a decrease in enrollment may compute maintenance of effort on

a per pupil rather than on an aggregate basis when determining its local contribution; furthermore,

a community which experiences a nonrecurring expenditure for its schools may deduct the

nonrecurring expenditure in computing its maintenance of effort. The deduction of nonrecurring

expenditures shall be with the approval of the commissioner. Provided, however, that

notwithstanding any provision of this title to the contrary, debt service that is no longer carried on

the books of any school district shall not be included in any school districts' district's annual

budget, nor shall non-recurring debt service be included in maintenance of effort as set forth in

this chapter, nor shall any non-recruiting debt service be included in the operating budget of any

school district. For the purposes set forth above non-recurring capital lease payments shall be

considered non-recurring debt service. The courts of this state shall enforce this section by means

of injunctive relief.

     (b) Districts' annual maintenance expenditures must meet the requirements of subsection

(b)(1), (b)(2), or (b)(3) of this section.

     (1) A minimum of three percent (3%) of the operating budget shall be dedicated

exclusively for maintenance expenditures as defined in § 16-7-36(11) provided that for FY 2019,

that amount shall be one and one-half percent (1.5%), for FY 2020 that amount shall be two

percent (2%), and for FY 2021 that amount shall be two and one-half percent (2.5%).

     (2) A minimum of three percent (3%) of the replacement value shall be dedicated

exclusively for maintenance expenditures as defined in § 16-7-36(11) provided that for FY 2019,

that amount shall be one percent (1%), for FY 2020 that amount shall be one and one-half percent

(1.5%), for FY 2021 that amount shall be two percent (2%), and for FY 2022 that amount shall be

two and one-half percent (2.5%).

     (3) A minimum of three dollars ($3.00), subject to inflation, per square foot of building

space shall be dedicated exclusively for maintenance expenditures as defined in § 16-7-36(11).

     (c) The department of elementary and secondary education shall be responsible for

establishing a reporting mechanism to ensure the intent of this section is being met. In the event

that a district does not meet its minimum expenditure requirement in a given year, the state shall

direct state housing aid paid pursuant to § 16-4-41-or § 16-105-5, in an amount equal to the

shortfall, to a restricted fund created by the district and dedicated solely to meeting maintenance

requirements.

     (b)(d) Whenever any state funds are appropriated for educational purposes, the funds

shall be used for educational purposes only and all state funds appropriated for educational

purposes must be used to supplement any and all money allocated by a city or town for

educational purposes and, in no event, shall state funds be used to supplant, directly or indirectly,

any money allocated by a city or town for educational purposes. All state funds shall be

appropriated by the municipality to the school committee for educational purposes in the same

fiscal year in which they are appropriated at the state level even if the municipality has already

adopted a school budget. All state and local funds unexpended by the end of the fiscal year of

appropriation shall remain a surplus of the school committee and shall not revert to the

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municipality. Any surplus of state or local funds appropriated for educational purposes shall not

in any respect affect the requirement that each community contribute local funds in an amount not

less than its local contribution for schools in the previous fiscal year, subject to subsection (a) of

this section, and shall not in any event be deducted from the amount of the local appropriation

required to meet the maintenance of effort provision in any given year.

     16-7-36. Definitions. 

     The following words and phrases used in §§ 16-7-35 to 16-7-47 have the following

meanings:

     (1) "Adjusted equalized weighted assessed valuation" means the equalized weighted

assessed valuation for a community as determined by the division of property valuation within the

department of revenue in accordance with § 16-7-21; provided, however, that in the case of a

regional school district the commissioner of elementary and secondary education shall apportion

the adjusted equalized weighted assessed valuation of the member cities or towns among the

regional school district and the member cities or towns according to the proportion that the

number of pupils of the regional school district bears to the number of pupils of the member cities

or towns.

     (2) "Approved project" means a project which has complied with the administrative

regulations governing §§ 16-7-35 through 16-7-47, and which has been authorized to receive state

school housing reimbursement by the commissioner of elementary and secondary education.

     (3) "Commissioning Agent" means a person or entity who ensures that systems are

designed, installed, functionally tested, and capable of being operated and maintained to perform

in conformity with the design intent of a project.

     (3)(4) "Community" means any city, town, or regional school district established

pursuant to law; provided, however, that the member towns of the Chariho regional high school

district, created by P.L. 1958, ch. 55, as amended, shall constitute separate and individual

communities for the purposes of distributing the foundation level school support for school

housing for all grades financed in whole or in part by the towns irrespective of any

regionalization.

     (5) "Facilities Condition Index" means the cost to fully repair the building divided by the

cost to replace the building as determined by the school building authority.

     (6) "Functional Utilization" means the ratio of the student population within a school

facility to the capacity of the school facility to adequately serve students as defined by the school

building authority.

     (7) "Owners Program Manager" means owner's program manager as defined in § 37-2-7.

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     (8) "Prime contractor" means the construction contractor who is responsible for the

completion of a project.

     (4)(9) "Reference year" means the year next prior to the school year immediately

preceding that in which aid is to be paid. 

     (10) "Subject to inflation" means the base amount multiplied by the percentage of

increase in the Producer Price Index (PPI) Data for Nonresidential Building Construction (NAICS

236222) as published by the United States Department of Labor, Bureau of Labor Statistics

determined as of September 30 of the prior calendar year.

     (11) "Maintenance expenditures" means amounts spent for repairs or replacements for the

purpose of keeping a school facility open and safe for use, including repairs, maintenance, and

replacements to a school facility's heating, lighting, ventilation, security and other fixtures to keep

the facility or fixtures in effective working condition. Maintenance shall not include contracted or

direct custodial or janitorial services, expenditures for the cleaning of a school facility or its

fixtures, the care and upkeep of grounds, recreational facilities, or parking lots, or the cleaning of

or repairs and replacements to movable furnishings or equipment.

     16-7-39. Computation of school housing aid ratio.

     For each community, the percent of state aid for school housing costs shall be computed

in the following manner:

     (1) The adjusted equalized weighted assessed valuation for the district is divided by the

resident average daily membership for the district (grades twelve (12) and below); (2) the

adjusted equalized weighted assessed valuation for the state is divided by the resident average

daily membership for the state (grades twelve (12) and below); (1) is then divided by (2) and the

resultant ratio is multiplied by a factor currently set at sixty-two percent (62%) which represents

the approximate average district share of school support; the resulting product is then subtracted

from one hundred percent (100%) to yield the housing aid share ratio, provided that in no case

shall the ratio be less than thirty percent (30%). Provided, that effective July 1, 2010, and

annually at the start of each fiscal year thereafter, the thirty percent (30%) floor on said housing

aid share shall be increased by five percent (5%) increments each year until said floor on the

housing aid share ratio reaches a minimum of not less than forty percent (40%). This provision

shall apply only to school housing projects completed after June 30, 2010 that received approval

from the board of regents prior to June 30, 2012. Provided further, for the fiscal year beginning

July 1, 2012 and for subsequent fiscal years, the minimum housing aid share shall be thirty-five

percent (35%) for all projects receiving board of regents council on elementary and secondary

education approval after June 30, 2012. The resident average daily membership shall be

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determined in accordance with § 16-7-22(1).

     (2) No district shall receive a combined total of more than twenty (20) incentive

percentage points for projects that commence construction by December 30, 2023, and five (5)

incentive points for projects that commence construction thereafter. Furthermore, a district's share

shall not be decreased by more than half of its regular share irrespective of the number of

incentive points received nor shall a district's state share increase by more than half of its regular

share irrespective of the number of incentive points received.

     16-7-40 Increased school housing ratio for regional schools – Energy conservation –

Access for people with disabilities – Asbestos removal projects Increased school housing

ratio. 

     (a)(1) In the case of regional school districts, the school housing aid ratio shall be

increased by two percent (2%) for each grade so consolidated.

     (2) Regional school districts undertaking renovation project(s) shall receive an increased

share ratio of four percent (4%) for those specific project(s) only, in addition to the combined

share ratio calculated in § 16-7-39 and this subsection.

     (b) In the case of projects undertaken by regionalized and/or non-regionalized school

districts specifically for the purposes of energy conservation, access for people with disabilities,

and/or asbestos removal, the school housing aid share ratio shall be increased by four percent

(4%) for these specific projects only, in the calculation of school housing aid. The increased share

ratio shall continue to be applied for as log as the project(s) receive state housing aid. In order to

qualify for the increased share ratio, seventy-five percent (75%) of the project costs must be

specifically directed to either energy conservation, access for people with disabilities, and/or

asbestos removal or any combination of these projects. The board of regents for elementary and

secondary education shall promulgate rules and regulations for the administration and operation

of this section. In the case of projects undertaken by districts specifically for the purposes of

school safety and security, the school housing aid share ratio shall be increased by five percent

(5%) for these specific projects only, in the calculation of school housing aid. The increased share

ratio shall continue to be applied for as long as the project(s) receives state housing aid. In order

to qualify for the increased share ratio, seventy-five percent (75%) of the project costs must be

specifically directed to school safety and security measures. The council on elementary and

secondary education shall promulgate rules and regulations for the administration and operation

of this section.

     (c) Upon the transfer of ownership from the state to the respective cities and towns of the

regional career and technical center buildings located in Cranston, East Providence, Newport,

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Providence, Warwick, Woonsocket and the Chariho regional school district, the school housing

aid share ratio shall be increased by four percent (4%) for the renovation and/or repair of these

buildings. To qualify for the increased share ratio, as defined in § 16-7-39, renovation and repair

projects must be submitted for approval through the necessity of school construction process prior

to the end of the second full fiscal year following the transfer of ownership and assumption of

local care and control of the building. Only projects at regional career and technical centers that

have full program approval from the department of elementary and secondary education shall be

eligible for the increased share ratio. The increased share ratio shall continue to be applied for as

long as the renovation and/or repair project receives school housing aid. For purposes of

addressing health and safety deficiencies as defined by the school building authority, including

the remediation of hazardous materials, the school housing aid ratio shall be increased by five

percent (5%) so long as the construction of the project commences by December 30, 2022, is

completed by December 30, 2027, and a two hundred fifty million dollar ($250,000,000) general

obligation bond is approved on the November 2018 ballot. In order to qualify for the increased

share ratio, twenty-five percent (25%) of the project costs or a minimum of five hundred thousand

dollars ($500,000) must be specifically directed to this purpose.

     (d) For purposes of educational enhancement, including projects devoted to the

enhancement of early childhood education and career and technical education, the school housing

aid ratio shall be increased by five percent (5%) so long as construction of the project commences

by December 30, 2022, is completed by December 30, 2027, and a two hundred fifty million

dollar ($250,000,000) general obligation bond is approved on the November 2018 ballot. In order

to qualify for the increased share ratio, twenty-five percent (25%) of the project costs or a

minimum of five hundred thousand dollars ($500,000) must be specifically directed to these

purposes.

     (e) For replacement of a facility that has a Facilities Condition Index of sixty-five percent

(65%) or higher, the school housing ratio shall be increased by five percent (5%) so long as

construction of the project commences by December 30, 2023, is completed by December 30,

2028, does not receive a bonus pursuant to § 16-7-40(f) or § 16-7-40(g), and a two hundred fifty

million dollar ($250,000,000) general obligation bond is approved on the November 2018 ballot.

In order to qualify for the increased share ratio, twenty-five percent (25%) of the project costs or

a minimum of five hundred thousand dollars ($500,000) must be specifically directed to this

purpose.

     (f) For any new construction or renovation that increases the functional utilization of any

facility from less than sixty percent (60%) to more than eight percent (80%), including the

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consolidation of buildings within or across districts, the school housing aid ratio shall be

increased by five percent (5%) so long as construction of the project commences by December

30, 2023, is completed by December 30, 2028, and a two hundred fifty million dollar

($250,000,000) general obligation bond is approved on the November 2018 ballot. In order to

qualify for the increased share ratio, twenty-five percent (25%) of the project costs or a minimum

of five hundred thousand dollars ($500,000) must be specifically directed to this purpose.

     (g) For any new construction or renovation that decreases the functional utilization of any

facility from more than one hundred twenty percent (120%) to between eighty-five percent (85%)

to one hundred five percent (105%), the school housing ratio shall be increased by five percent

(5%) so long as construction of the project commences by December 30, 2023, is completed by

December 30, 2028, and a two hundred fifty million dollar ($250,000,000) general obligation

bond is approved on the November 2018 ballot. In order to qualify for the increased share ratio,

twenty-five percent (25%) of the project costs or a minimum of five hundred thousand dollars

($500,000) must be specifically directed to this purpose.

     (h) For consolidation of two (2) or more school buildings, within or across districts into

one school building, the school housing aid ratio shall be increased by five percent (5%) so long

as construction of the project commences by December 30, 2023, is completed by December 30,

2028, a two hundred fifty million dollar ($250,000,000) general obligation bond is approved on

the November 2018 ballot, and does not receive a bonus pursuant to § 16-7-40(f) or § 16-7-40(g).

In order to qualify for the increased share ratio, twenty-five percent (25%) of the project costs or

a minimum of five hundred thousand dollars ($500,000) must be specifically directed to this

purpose.

     (i) Any regionalized and/or non-regionalized school district receiving an increased share

ratio for a project approved prior to July 1, 2018, shall continue to receive the increased share

ratio for as long as the project receives state housing aid.

     16-7-41 Computation of school housing aid. 

     (a) In each fiscal year the state shall pay to each community a grant to be applied to the

cost of school housing equal to the following:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

the project and at the school housing aid ratio applicable to the local community as set forth in §

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

project is approved by the council on elementary and secondary education.

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

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

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

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

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

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

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

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

Educational Building Corporation, the general treasurer shall deduct the amount from aid

provided under this section, § 16-7-40, § 16-7-44 and § 16-7-15 through § 16-7-34.3 due the city,

town or district and direct said funding to the Rhode Island Health and Educational Building

Corporation or its designee.

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

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

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

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

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

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

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

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

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the community; provided however, that for any refundings that occur between July 1, 2013 and

December 31, 2015, the community shall receive eighty percent (80%) of the total savings and

the state shall receive twenty percent (20%). In connection with any such refunding of bonds, the

finance director or the chief financial officer of the community shall certify such net interest

savings to the commissioner of elementary and secondary education. Notwithstanding § 16-7-44

or any other provision of law to the contrary, school housing projects costs in connection with

any such refunding bond issue shall include bond issuance costs incurred by the community, the

municipal public buildings authority or the Rhode Island health and educational building

corporation, as the case may be, in connection therewith. In connection with any refunding bond

issue, school housing project costs shall include the cost of interest payments on such refunding

bonds, if the cost of interest payments was included as a school housing cost for the bonds being

refunded. A local community or municipal public buildings authority shall not be entitled to the

benefits of this subsection (d) unless the net present value savings resulting from the refunding is

at least three percent (3%) of the refunded bond issue.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

such directive for the remaining term of the bond.

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

     (g) For purposes of financing or refinancing school facilities in the city of Central Falls

through the issuance bonds through the Rhode Island Health and Educational Building

Corporation, the city of Central Falls shall be considered an "educational institution" within the

meaning of subdivision 45-38.1-3(13) of the general laws.

     16-7-41.1 Eligibility for reimbursement. 

     (a) School districts, not municipalities, may apply for and obtain approval for a project

under the necessity of school construction process set forth in the regulations of the board of

regents for council on elementary and secondary education, provided, however, in the case of

municipality which issues bonds through the Rhode Island Health and Educational Building

Corporation to finance or refinance school facilities for a school district which is not part of the

municipality, the municipality may apply for and obtain approval for a project. Such approval

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

of regents for council on elementary and secondary education's approval is granted. Only those

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

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

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

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

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

fiscal year. A project for new school housing or additional housing shall be deemed to be

completed when the work has been officially accepted by the school committee or when the

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

     (b) Notwithstanding the provisions of this section, the board of regents shall not grant

final approval for any project between June 30, 2011 and May 1, 2015 except for projects that are

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

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

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

     (c) Any project approval granted prior to the adoption of the school construction

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

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

or which has not been previously financed, are no longer eligible for reimbursement under this

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chapter. The department of elementary and secondary education shall develop recommendations

for further cost containment strategies in the school housing aid program.

     (d) Beginning July 1, 2015, the council on elementary and secondary education shall

approve new necessity of school construction applications on an annual basis. The department of

elementary and secondary education shall develop an annual application timeline for LEAs

seeking new necessity of school construction approvals.

     (e) Beginning July 1, 2019, no state funding shall be provided for projects in excess of

ten million dollars ($10,000,000) unless the prime contractor for the project has received

certification from the school building authority.

     (f) Beginning July 1, 2019, the necessity of school construction process set forth in the

regulations of the council on elementary and secondary education shall include a single statewide

process, developed with the consultation of the department of environmental management, that

will ensure community involvement throughout the investigation and remediation of

contaminated building sites for possible reuse as the location of a school. That process will fulfill

all provisions of § 23-19.14-5 related to the investigation of reuse of such sites for schools.

     (g) Beginning July 1, 2019, school housing projects exceeding one million five hundred

thousand dollars ($1,500,000) subject to inflation shall include an owners program manager and a

commissioning agent. The cost of the program manager and commissioning agent shall be

considered a project cost eligible for aid pursuant to §§ 16-7-41 and 16-105-5.

     (h) Temporary housing, or swing space, for students shall be a reimbursable expense so

long as a district can demonstrate that no other viable option to temporarily house students exists

and provided that use of the temporary space is time limited for a period not to exceed twenty-

four (24) months and tied to a specific construction project. 

     (i) Environmental site remediation, as defined by the school building authority, shall be a

reimbursable expense up to one million dollars ($1,000,000) per project.

     (j) If, within thirty (30) years of construction, a newly constructed school is sold to a

private entity, the state shall receive a portion of the sale proceeds equal to that project's housing

aid reimbursement rate at the time of project completion.

     (k) All projects must comply with § 37-13-6, ensuring that prevailing wage laws are

being followed, and § 37-14.1-6, ensuring that minority business enterprises reach a minimum of

ten percent (10%) of the dollar value of the bid.

     16-7-44 School housing project costs. 

     School housing project costs, the date of completion of school housing projects, and the

applicable amount of school housing project cost commitments shall be in accordance with the

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regulations of the commissioner of elementary and secondary education and the provisions of §§

16-7-35 – 16-7-47; provided, however, that school housing project costs shall include the

purchase of sites, buildings, and equipment, the construction of buildings, and additions or

renovations of existing buildings and/or facilities. School housing project costs shall include the

cost of interest payment on any bond issued after July 1, 1988, provided that such bond is

approved by the voters on or before June 30, 2003, or issued by a municipal public building

authority or by the appropriate approving authority on or before June 30, 2003. Except as

provided in § 16-7-41(d), those projects approved after June 30, 2003, interest payments may

only be included in project costs provided that the bonds for these projects are issued through the

Rhode Island Health and Educational Building Corporation. School housing project costs shall

exclude: (1) any bond issuance costs incurred by the municipality or regional school district; (2)

demolition costs for buildings, facilities, or sites deemed surplus by the school committee; and (3)

restrictions pursuant to § 16-7-44.1 below. A building, facility, or site is declared surplus by a

school committee when the committee no longer has such building, facility, or site under its

direct care and control and transfers control to the municipality, § 16-2-15. The board of regents

for council on elementary and secondary education will promulgate rules and regulations for the

administration of this section. These rules and regulations may provide for the use of lease

revenue bonds, capital leases, or capital reserve funding, to finance school housing provided that

the term of any bond, or capital lease shall not be longer than the useful life of the project and

these instruments are subject to the public review and voter approval otherwise required by law

for the issuance of bonds or capital leases. Cities or towns issuing bonds, or leases issued by

municipal public buildings authority for the benefit of a local community pursuant to chapter 50

of title 45 shall not require voter approval. Effective January 1, 2008, and except for interim

finance mechanisms, refunding bonds, borrowing from the school building authority capital fund,

and bonds issued by the Rhode Island Health and Educational Building Corporation to finance

school housing projects for towns, cities, or regional school districts borrowing for which has

previously been authorized by an enabling act of the general assembly, all bonds, notes and other

forms of indebtedness issued in support of school housing projects shall require passage of an

enabling act by the general assembly.

     SECTION 2. Sections 16-105-3, 16-105-7, and 16-105-8 of the General Laws in Chapter

16-105 entitled "School Building Authority" are hereby amended to read as follows:

     16-105-3 Roles and responsibilities. 

     The school building authority roles and responsibilities shall include:

     (1) Management of a system with the goal of ensuring equitable and adequate school

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housing for all public school children in the state;

     (2) Prevention of the cost of school housing from interfering with the effective operation

of the schools;

     (3) Management of school housing aid in accordance with statute;

     (4) Reviewing and making recommendations to the council on elementary and secondary

education on necessity of school construction applications for state school housing aid and the

school building authority capital fund, based on the recommendations of the school building

authority advisory board;

     (5) Promulgating, managing Managing and maintaining school construction regulations,

standards, and guidelines applicable to the school housing program, based on the

recommendations of the school building authority advisory board, created in § 16-105-8. Said

regulations shall require conformance with the minority business enterprise requirements set forth

in § 37-14.1-6;

     (6) Developing a prequalification and review process for prime contractors, architects and

engineers seeking to bid on projects in excess of ten million dollars ($10,000,000) in total costs

subject to inflation. Notwithstanding any general laws to the contrary, a prequalification shall be

valid for a maximum of two (2) years from the date of issuance. Factors to be considered by the

school building authority in granting a prequalification to prime contractors shall include, but not

be limited to, the contractor's history of completing complex projects on time and on budget,

track record of compliance with applicable environmental and safety regulations, evidence that

completed prior projects prioritized the facility's future maintainability, and compliance with

applicable requirements for the use of women and minority owned subcontractors;

     (i) At least annually, a list of prequalified contractors, architects, and engineers shall be

publically posted with all other program information.

     (7) Providing technical assistance and guidance to school districts on the necessity of

school construction application process;

     (6)(8) Providing technical advice and assistance, training, and education to cities, towns,

and/or LEAs and to general contractors, subcontractors, construction or project managers,

designers and others in planning, maintenance, and establishment of school facility space;

     (7)(9) Developing a project priority system, based on the recommendations of the school

building authority advisory board, in accordance with school construction regulations for the state

school housing aid set forth in §§ 16-7-35 to 16-7-47 and the school building authority capital

fund, subject to review and, if necessary, to be revised on intervals not to exceed five (5) years.

Project priorities shall be in accordance with include, but not be limited to, the following order of

LC005486/SUB A - Page 13 of 21

priorities:

     (i) Projects to replace or renovate a building that is structurally unsound or otherwise in a

condition seriously jeopardizing the health and safety of school children where no alternative

exists;

     (ii) Projects needed to prevent loss of accreditation;

     (iii) Projects needed for the replacement, renovation, or modernization of the HVAC

system in any schoolhouse to increase energy conservation and decrease energy-related costs in

said schoolhouse;

     (iv) Projects needed to replace or add to obsolete buildings in order to provide for a full

range of programs consistent with state and approved local requirements; and

     (v) Projects needed to comply with mandatory, instructional programs.

     (8)(10) Maintaining a current list of requested school projects and the priority given

them;

     (9)(11) Collecting and maintaining readily available data on all the public school

facilities in the state;

     (12) Collecting, maintaining, and making publicly available quarterly progress reports of

all ongoing school construction projects that shall include, at a minimum, the costs of the project

and the time schedule of the project;

     (10)(13) Recommending policies and procedures designed to reduce borrowing for

school construction programs at both state and local levels;

     (11)(14) At least every five (5) years, conducting a needs survey to ascertain the capital

construction, reconstruction, maintenance, and other capital needs for schools in each district of

the state, including public charter schools;

     (12)(15) Developing a formal enrollment projection model or using projection models

already available;

     (13)(16) Encouraging local education agencies to investigate opportunities for the

maximum utilization of space in and around the district;

     (14)(17) Collecting and maintaining a clearinghouse of prototypical school plans that

may be consulted by eligible applicants;

     (18) Retaining the services of consultants, as necessary, to effectuate the roles and

responsibilities listed within this section;

(15)(19) By regulation, offering additional incentive points to the school housing aid ratio

calculation set forth in § 16-7-39, as the authority, based upon the recommendation of the

advisory board, determines will promote the purposes of this chapter. Said regulations may

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delineate the type and amounts of any such incentive percentage points; provided, however, that

no individual category of incentive points shall exceed two (2) additional points; and provided

further, that no district shall receive a combined total of more than five (5) incentive percentage

points. Such incentive points may be awarded for a district's use of highly efficient construction

delivery methods; regionalization with other districts; superior maintenance practices of a district;

energy efficient and sustainable design and construction; the use of model schools as adopted by

the authority; and other incentives as recommended by the advisory board and determined by the

authority to encourage the most cost-effective and quality construction. No district shall receive a

combined total of more than twenty (20) incentive percentage points for projects that commence

construction by December 30, 2023, and five (5) incentive points for projects that commence

construction thereafter; provided further, these caps shall be in addition to amounts received

under §§ 16-7-40(a)(1) and 16-7-40(a)(2). Furthermore, a district's share shall not be decreased

by more than half of its regular share irrespective of the number of incentive points received, nor

shall a district's state share increase by more than half of its regular share, including amounts

received under §§ 16-7-40(a)(1) and 16-7-40(a)(2), irrespective of the number of incentive points

received. Notwithstanding any provision of the general laws to the contrary, the reimbursement

or aid received under this chapter or chapter 38.2 of title 45 shall not exceed one hundred percent

(100%) of the sum of the total project costs plus interest costs. If a two hundred and fifty million

dollar ($250,000,000) general obligation bond is approved on the November 2018 ballot, projects

approved between May 1, 2015 and January 1, 2018 are eligible to receive incentive points

(above and beyond what the project was awarded at the time of approval) pursuant to § 16-7-39

and § 16-7-40. Provided, however, any project approved during this time period with a project

cost in excess of one million five hundred thousand dollars ($1,500,000), which does not include

an owners program manager and a commissioning agent, shall only be eligible to receive five (5)

incentive points. Incentive points awarded pursuant to the provisions of this subsection shall only

be applied to reimbursements occurring on or after July 1, 2018. Any project approved between

May 1, 2015 and January 1, 2018 that is withdrawn and/or resubmitted for approval shall not be

eligible for any incentive points.

     16-105-7 Expenses incurred by the department school building authority Expenses

incurred by the school building authority. 

     In order to provide for one-time or limited expenses of the department of elementary and

secondary education school building authority under this chapter, the Rhode Island health and

educational building corporation shall provide funding from the school building authority capital

fund, fees generated from the origination of municipal bonds and other financing vehicles used

LC005486/SUB A - Page 15 of 21

for school construction, and its own reserves. The school building authority shall, by October 1 of

each year, report to the governor and the chairs of the senate and house finance committees, the

senate fiscal advisor, and the house fiscal advisor the amount sought for expenses for the next

fiscal year.

     There is also hereby established a restricted receipt account within the budget of the

department of elementary and secondary education entitled "school construction services", to be

financed by the Rhode Island health and educational building corporation's sub-allotments of fees

generated from the origination of municipal bonds and other financing vehicles used for school

construction and its own reserves. Effective July 1, 2018, this account shall be utilized for the

express purpose of supporting personnel expenditures directly related to the administration of the

school construction aid program.

     16-105-8. School building authority advisory board established. 

     (a) There is hereby established a school building authority advisory board that shall

advise the school building authority regarding the best use of the school building authority capital

fund, including the setting of statewide priorities, criteria for project approval, and

recommendations for project approval and prioritization.

     (b) The school building authority advisory board shall consist of seven (7) members as

follows:

     (1) The general treasurer, or designee;

     (2) The director of the department of administration, who shall serve as chair;

     (3) A member of the governor's staff, as designated by the governor The chair of the

Rhode Island health and educational building corporation; and

     (4) Four (4) members of the public, appointed by the governor, and who serve at the

pleasure of the governor, each of whom shall have expertise in education and/or construction, real

estate, or finance. At least one of these four (4) members shall represent a local education agency

and at least one of these four (4) members shall be an educator.

     (c) In addition to the purposes in subsection (a), the school building authority advisory

board shall advise the school building authority on, including but not limited to, the following:

     (1) The project priorities for the school building authority capital fund;

     (2) Legislation as it may deem desirable or necessary related to the school building

authority capital fund and the school housing aid program set forth in §§ 16-7-35 to 16-7-47;

     (3) Policies and procedures designed to reduce borrowing for school construction

programs at both state and local levels;

     (4) Development of a formal enrollment projection model or consideration of using

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projection models already available;

     (5) Processes and procedures necessary to apply for, receive, administer, and comply

with the conditions and requirements respecting any grant, gift, or appropriation of property,

services, or monies;

     (6) The collection and maintenance of a clearinghouse of prototypical school plans which

may be consulted by eligible applicants and recommend incentives to utilize these prototypes;

     (7) The determination of eligible cost components of projects for funding or

reimbursement, including partial or full eligibility for project components for which the benefit is

shared between the school and other municipal and community entities;

     (8) Development of a long-term capital plan in accordance with needs and projected

funding;

     (9) Collection and maintenance of data on all the public school facilities in the state,

including information on size, usage, enrollment, available facility space, and maintenance;

     (10) Advising districts on the conduct of a needs survey to ascertain the capital

construction, reconstruction, maintenance, and other capital needs for schools across the state;

     (11) The recommendation of policies, rules, and regulations that move the state toward a

pay-as-you-go funding system for school construction programs; and

     (12) Encouraging local education agencies to investigate opportunities for the maximum

utilization of space in and around the district.

     SECTION 3. Sections 45-38.2-2, 45-38.2-3 and 45-38.2-4 of the General Laws in

Chapter 45-38.2 entitled "School Building Authority Capital Fund" are hereby amended to read

as follows:

     45-38.2-2. School building authority capital fund.

     (a) There is hereby established a school building authority capital fund. The corporation

shall establish and set up on its books the fund, to be held in trust and to be administered by the

corporation as provided in this chapter. This fund shall be in addition to the annual appropriation

for committed expenses related to the repayment of housing aid commitments. The corporation

shall deposit the following monies into the fund:

     (1) The difference between the annual housing aid appropriation and housing aid

commitment amounts appropriated or designated to the corporation by the state for the purposes

of the foundation program for school housing; provided that for FY 2019 and FY 2020 that

amount shall be used for technical assistance to districts pursuant to § 16-105-3(7);

     (2) Loan repayments, bond refinance interest savings, and other payments received by the

corporation pursuant to loan or financing agreements with cities, towns, or LEAs executed in

LC005486/SUB A - Page 17 of 21

accordance with this chapter;

     (3) Investment earnings on amounts credited to the fund;

     (4) Proceeds of bonds of the corporation issued in connection with this chapter to the

extent required by any trust agreement for such bonds;

     (5) Administrative fees levied by the corporation, with respect to financial assistance

rendered under this chapter and specified in § 45-38.2-3(a)(4), less operating expenses;

     (6) Other amounts required by provisions of this chapter or agreement, or any other law

or any trust agreement pertaining to bonds to be credited to the fund; and

     (7) Any other funds permitted by law which the corporation in its discretion shall

determine to credit thereto.

     (b) The corporation shall establish and maintain fiscal controls and accounting

procedures conforming to generally accepted government accounting standards sufficient to

ensure proper accounting for receipts in and disbursements from the school building authority

capital fund.

     (c) The school building authority shall establish and maintain internal controls to ensure

that LEAs are providing adequate asset protection plans, all LEAs have equal access and

opportunity to address facility improvements on a priority basis, and to ensure that funding from

the school building authority capital fund has the greatest impact on facility gaps in state priority

areas. The school building authority will also manage necessity of school construction approvals

in accordance with the funding levels set forth by the general assembly.

     45-38.2-3. Administration.

     (a) The corporation shall have all the powers necessary or incidental to carry out and

effectuate the purposes and provisions of this chapter including:

     (1) To receive and disburse such funds from the state as may be available for the purpose

of the fund subject to the provisions of this chapter;

     (2) To make and enter into binding commitments to provide financial assistance to cities,

towns and LEAs from amounts on deposit in the fund;

     (3) To enter into binding commitments to provide subsidy assistance for loans and city,

town, and LEA obligations from amounts on deposit in the fund;

     (4) To levy administrative fees on cities, towns, and LEAs as necessary to effectuate the

provisions of this chapter; provided the fees have been previously authorized by an agreement

between the corporation and the city, town, or LEA; provided that the fee does not exceed one

tenth of one percent (0.001) of the principal amount;

     (5) To engage the services of third-party vendors to provide professional services;

LC005486/SUB A - Page 18 of 21

     (6) To establish one or more accounts within the fund; and

     (7) Such other authority as granted to the corporation under chapter 38.1 of title 45.

     (b) Subject to the provisions of this chapter, and to any agreements with the holders of

any bonds of the corporation or any trustee therefor, amounts held by the corporation for the

account of the fund shall be applied by the corporation, either by direct expenditure,

disbursement, or transfer to one or more other funds and accounts held by the corporation or a

trustee under a trust agreement or trust indenture entered into by the corporation with respect to

bonds or notes issued by the corporation under this chapter or by a holder of bonds or notes

issued by the corporation under this chapter, either alone or with other funds of the corporation, to

the following purposes:

     (1) To provide financial assistance to cities, towns and LEAs to finance costs of approved

projects, and to refinance the costs of the projects, subject to such terms and conditions, if any, as

are determined by the department and/or the corporation;

     (2) To fund reserves for bonds of the corporation and to purchase insurance and pay the

premiums therefor, and pay fees and expenses of letters or lines of credit and costs of

reimbursement to the issuers thereof for any payments made thereon or on any insurance, and to

otherwise provide security for, and a source of payment for obligations of the corporation, by

pledge, lien, assignment, or otherwise as provided in chapter 38.1 of title 45;

     (3) To pay or provide for subsidy assistance as determined by the school building

authority;

     (4) To provide a reserve for, or to otherwise secure, amounts payable by cities, towns,

and LEAs on loans and city, town, and LEA obligations outstanding in the event of default

thereof; amounts in any account in the fund may be applied to defaults on loans outstanding to the

city, town, or LEA for which the account was established and, on a parity basis with all other

accounts, to defaults on any loans or city, town, or LEA obligations outstanding; and

     (5) To provide a reserve for, or to otherwise secure, by pledge, lien, assignment, or

otherwise as provided in chapter 38.1 of title 45, any bonds or notes of the corporation issued

under this chapter.

     (c) The repayment obligations of the city, town, or LEA for loans shall be in accordance

with its eligibility for state aid for school housing as set forth in §§ 16-7-39, 16-77.1-5, and 105-

3(15).

     (d) In addition to other remedies of the corporation under any loan or financing

agreement or otherwise provided by law, the corporation may also recover from a city, town or

LEA, in an action in superior court, any amount due the corporation together with any other

LC005486/SUB A - Page 19 of 21

actual damages the corporation shall have sustained from the failure or refusal of the city, town,

or LEA to make the payments or abide by the terms of the loan or financing agreement.

     45-38.2-4 Payment of state funds. 

     (a) Subject to the provisions of subsection (b), upon the written request of the

corporation, the general treasurer shall pay to the corporation, from time to time, from the

proceeds of any bonds or notes issued by the state for the purposes of this chapter or funds

otherwise lawfully payable to the corporation for the purposes of this chapter, such amounts as

shall have been appropriated or lawfully designated for the fund. All amounts so paid shall be

credited to the fund in addition to any other amounts credited or expected to be credited to the

fund.

     (b) The corporation and the state may enter into, execute, and deliver one or more

agreements setting forth or otherwise determining the terms, conditions, and procedures for, and

the amount, time, and manner of payment of, all amounts available from the state to the

corporation under this section.

     (c) The corporation, per order of the school building authority capital fund, is authorized

to grant a district or municipality its state share of an approved project cost, pursuant to §§ 16-7-

39 and 16-77.1-5. Construction pay-as-you-go grants received from the school building authority

capital fund shall not be considered a form of indebtedness subject to the provisions of § 16-7-44.

     (d)(1) Notwithstanding the provisions of §§ 45-12-19 and 45-12-20, and notwithstanding

city or town charter provisions to the contrary, prior to July 1, 2016, no voter approval shall be

required for loans in any amount made to a city or town for the local education agency's share of

total project costs.

     (2) Notwithstanding the provisions of §§ 45-12-19 and 45-12-20, and notwithstanding

city or town charter provisions to the contrary, on or after July 1, 2016, up to five hundred

thousand dollars ($500,000) may be loaned to a city or town for the local education agency 's

share of total project costs without the requirement of voter approval.

     (e)(1) Funds from the two hundred fifty million ($250,000,000) in general obligation

bonds, if approved on the November 2018 ballot, shall first be used to support the state share of

foundational housing aid and shall be offered to LEAs on a pay-as-you-go basis and not as a

reimbursement of debt service for previously completed projects.

     (2) Funds to support the state share of foundational housing aid in a given year on a pay-

as-you-go basis shall be offered proportionately to LEAs based on the total state share of

foundational housing aid awarded to projects in that year.

     (3) Any excess funds may be transferred to the school building authority capital fund in

LC005486/SUB A - Page 20 of 21

an amount not to exceed five percent (5%) of any amount of bonds issued in a given year.

     (e)(f) Notwithstanding any provision to the contrary, the term of any bond, capital lease,

or other financing instrument shall not exceed the useful life of the project being financed.

     (g) In accordance with §§ 45-10-5.1 and 45-10-6, the auditor general shall give guidance

to municipalities and school districts on the uniform financial reporting of construction debt

authorized and issued, and on funding received from the state within ninety (90) days of the

passage of this article.

     SECTION 4. This act shall take effect upon passage.

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LC005486/SUB A - Page 21 of 21

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO SCHOOL CONSTRUCTION AND EDUCATION

***

     This act would temporarily expand incentives to enhance the school housing aid ratio to

encourage new school and renovation projects. School districts would be eligible for share ratio

increases for projects that address health and safety deficiencies, specific high-demand subject

areas, replacing and consolidating facilities.

     This act would take effect upon passage.

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