2013 -- S 0529

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LC01837

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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 Pichardo, Kettle, P Fogarty, Bates, and Crowley

     Date Introduced: February 28, 2013

     Referred To: Senate Finance

It is enacted by the General Assembly as follows:

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     SECTION 1. Section 16-7-41.1 of the General Laws in Chapter 16-7 entitled

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

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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 sections 16-7-35 -- 16-7-47.

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

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other profit or non-profit agency do not qualify for reimbursement under sections 16-7-35 -- 16-7-

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

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

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

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housing is occupied 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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     SECTION 2. Chapter 16-7 of the General Laws entitled "Foundation Level School

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Support" is hereby amended by adding thereto the following section:

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     16-7-41.2. School modernization and reconstruction trust fund. – (a) As used in this

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section, the following words shall, unless the context requires otherwise, have the following

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meanings:

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     (1) “Corporation” means the Rhode Island health and educational building corporation,

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established pursuant to chapter 45-38.1, the "Rhode Island Health and Educational Building

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Corporation Act."

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     (2) “Dedicated sales tax revenue amount” means all moneys received by the state equal to

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1 percent (1%) of the following taxes set forth in chapter 44-18 (“Sales and Use Taxes – Liability

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and Computation”); sales taxes pursuant to section 44-18-18; local meals and beverage taxes

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pursuant to section 44-18-18.1; and use taxes pursuant to section 44-18-20.

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     (3) “Receipts from sales” means gross receipts from nonexempt sales, less amounts

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abated or reimbursed.

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     (4) “Sales price of purchases” means sales price of nonexempt purchases, less amounts

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abated or reimbursed.

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     (b) There shall be established a separate fund from the general fund, to be known as the

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school modernization and reconstruction trust fund. There shall be credited to the fund the

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dedicated sales tax revenue amounts collected. Annual receipts into the fund on account of any

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fiscal year shall be considered to meet the full obligation of the state to the corporation for such

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fiscal year.

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     (c) Amounts in the fund shall be held by the state treasurer or his or her designee, as

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trustee and not on account of the state, exclusively for the purposes of the corporation, and the

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state treasurer shall disburse amounts in the fund to the corporation, without further

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appropriation, upon the request from time to time of the chairperson of the corporation. All

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amounts in the fund, including investment earnings, shall be available for expenditure by the

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corporation for any lawful purpose, including without limitation payment of debt service on debt

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obligations issued by the corporation, and may be pledged to secure debt of the corporation in

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such manner and according to such priority as the corporation may determine.

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     (d) The corporation shall certify annually to the treasurer as trustee with copies provided

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to the clerks of the house and senate and to the house and senate finance committees that it has

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made provision in its annual budget for sufficient amounts to be available to meet debt service

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payments or other payments due under financing obligations, including, without limitation, leases

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or grant obligations.

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     (e) Subject to applicable restrictions contained in any bond resolution, trust or security

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agreement or credit enhancement agreement, surety bond or insurance policy related to

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indebtedness incurred by the corporation, including without limitation coverage requirements, if

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the corporation shall determine that the balance of the fund exceeds the amount necessary to

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achieve the purposes of the corporation, including, without limitation, to meet debt service

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payments, lease payments and grant obligations, the corporation may transfer the excess amount

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to the state.

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     (f) In order to increase the marketability of any bonds or notes of the trust which may be

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secured by or payable from amounts held in the fund, the sums to be credited to the fund are

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hereby impressed with a trust for the benefit of the trust and the holders from time to time of the

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bonds or notes, and in consideration of the acceptance of payment for the bonds or notes, the state

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covenants with the purchasers and all subsequent holders and transferees of the bonds or notes

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that while the bond or note shall remain outstanding, and so long as the principal of or interest on

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the bond or note shall remain unpaid, the sums to be credited to the fund shall not be diverted

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from the control of the trust and, so long as the sums are necessary, as determined by the

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corporation in accordance with any applicable bond resolution, trust or security agreement or

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credit enhancement agreement, surety bond or insurance policy related to indebtedness incurred

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by the trust, for the purposes for which they have been pledged.

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     SECTION 3. This act shall take effect upon passage.

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LC01837

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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 establish the Rhode Island School Modernization and Reconstruction

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Trust Fund. The fund would be funded through the state sales and use taxes, as well as the meals

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tax. The purpose of the fund would be to provide a new mechanism for funding building projects

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through the Rhode Island Health and Educational Building Corporation. This act would also

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repeal a current moratorium on granting approval for certain new school building construction

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projects.

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     This act would take effect upon passage.

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LC01837

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