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
DPA/SE	Caucus and COW
x	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

· 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.

· 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.

The Education Committee adopted a strike-everything amendment. The provisions of the strike-everything amendment are explained above.

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 were different 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.

The Committee of the Whole adopted the Appropriation Committee amendment with the following amendment:

· Provides that a school district shall provide the county treasurer with an impact aid revenue bond debt service schedule.

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· 45th Legislature