HB2440 - 451R - House Bill Summary

House of Representatives

HB 2440

schools; impact aid revenue bonds

Sponsors: Representatives Norris, May Cardamone, et. al.

DPA/SE	Committee on Education
DP	Committee on Ways and Means
DPA/SE	Committee on Appropriations
x	Caucus and COW
	As Passed the House

HB 2440 allows school districts to issue revenue bonds that are secured by the district’s Federal Impact Aid.

History

Under Students FIRST, the state is required to provide funding to school districts to ensure that school facilities meet the state’s minimum guidelines. School districts may fund projects not included under the guidelines or to exceed the guidelines by issuing capital overrides or class “B” general obligation bonds. These options require an election and result in a secondary property tax levy.

In school districts with mainly federal lands and therefore low or no property valuation, exceeding the state guidelines through secondary property tax levies is difficult. However, these districts receive annual Federal Impact Aid (P.L. 81-874) payments. Federal Impact Aid is federal funding received by school districts that have a lower property tax base because the property base includes federal land (mainly accommodation districts for military bases or school districts on reservations). HB 2440 allows these school districts to issue revenue bonds for capital projects using Federal Impact Aid as the revenue source to secure the bonds.

Provisions

· Allows a school district to issue impact aid revenue bonds for the same purposes that school districts are allowed to issue class “B” bonds. The total amount of the revenue bonds is limited to three times the average of the school districts annual impact aid revenues for the five years immediately preceding the issuance of the bonds. An election is not required for the issuance of the bonds.

· Provides that the bonds shall be issued upon resolution of the governing board. The resolution shall include the terms of the bonds including the interest rates and payment schedule.

· Provides that each year that there are outstanding bonds, the school district shall deposit in a fund the amounts necessary to make payments on the principal and interest that will become due during the year.

· Provides that holders of impact aid revenue bonds shall rely solely on impact aid revenues of the school district for the satisfaction of the bonds. The bonds shall be paid solely from impact aid revenues.

· Provides that the Attorney General, upon request of the school district, shall examine the bonds and pass on the validity of the bonds and the regularity of the proceedings authorizing the bonds. Bonds so approved constitute binding and legal obligations of the school district according to the terms of the bonds.

The Education Committee adopted a same subject strike-everything amendment. The provisions of the same subject strike-everything amendment are as follows:

· Requires an election authorizing the use of Impact Aid Revenue Bonds. The election procedure is the same as the procedure for issuing class “B” bonds. A statement is required to inform the voters that the impact aid bonds will be fully funded by revenues the school district receives from the federal government and does not require a tax levy. HB 2440 as introduced does not require an election.

· Allows school districts to issue impact aid revenue bonds and provides for the method of securing the bonds. The total aggregate amount of the bonds can not exceed three times the average of the school district’s annual impact aid revenues for the five years immediately preceding the issuance of the bonds (same as in the introduced HB 2440).

· States that the bonds may only be used for the same reasons that class “B” are used. This includes the provision that the revenue bond proceeds shall not be expended for items whose useful life is less than five years.

· Establishes the Impact Aid Revenue Bond Building and Debt Service Funds. Requires the County Treasurer to credit the amount of principal and interest due each year from the school districts impact aid revenues. Provides that the school district can not issue bonds on impact aid revenues that are used for other purposes.

· Provides the statutory framework for securing the principal and interest for the bonds, cancellation of unsold impact aid revenue bonds, payment of impact aid revenue bonds, investment of monies in the impact aid building fund and debt service funds, audit provisions, lien of pledge, tax exemption, effect of changing circumstances on bonds, and the validity of the bonds by the attorney general. This framework is the same as for the Students FIRST revenue bonding provisions for the state.

· Excludes accommodation districts from using impact aid to revenue bond against.

HB 2440 passed the Ways and Means Committee unamended.

The Appropriation Committee adopted a similar same subject strike-everything amendment as the Education Committee’s amendment. The only provisions that are different for the Appropriation Committee strike-everything amendment are as follows:

· Provides that the election for revenue bonds may be held on any of the four statutory dates rather than just a November election.

· Provides that the school district can not issue general obligation bonds if the district has issued impact aid revenue bonds.

· All other provisions are the same as the Education Committee strike-everything amendment.

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· 45th Legislature