Report Title:

Fix Hawaii's Schools Act

Description:

Creates new school construction special fund; makes appropriations for DOE operations, repair, and maintenance; allows DOE to use certificates of participation to finance the construction of new schools; requires new schools to meet energy-efficient standards. (SD2)

HOUSE OF REPRESENTATIVES

H.B. NO.

2182

TWENTY-THIRD LEGISLATURE, 2006

H.D. 1

STATE OF HAWAII

S.D. 2


 

A BILL FOR AN ACT

 

RELATING TO EDUCATION.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

PART I

SECTION 1. The legislature finds that Hawaii's future is dependent upon our youth, and the investments we make in our young people today will determine the course of our State in the years to come. One of the greatest investments we can make is to provide our youth with the best possible opportunities in education, and therefore the purpose of this Act is to provide:

(1) Resources for operations and repair and maintenance of Hawaii's educational facilities; and

(2) Flexibility to the department of education for the construction of new schools.

PART II

SECTION 2. A proper scholastic environment, one that is safe, secure, well-maintained, and clean, has proven to be a key contributor to a child's capacity to learn.

However, the legislature finds that there is a continuing backlog of repair and maintenance projects for Hawaii's public schools. In 2001, the Hawaii Opinion Poll on public education found that rundown, poorly kept, or inadequate facilities ranked third in the ten biggest problems facing our schools. Student leaders at the 2005 Hawaii secondary student conference passed a resolution supporting the expenditure of funds to relieve the backlog.

The condition of our schools increasingly depends on the availability of funds and effective management of facility needs. It is equally important that our schools be provided with sufficient funds for their operations, which also directly affect student achievement.

The purpose of this part is to provide resources for both the operations and repair and maintenance of Hawaii's public schools.

SECTION 3. There is appropriated out of the general revenues of the State of Hawaii the sum of $1, or so much thereof as may be necessary for fiscal year 2006-2007, for repair and maintenance of department of education school facilities.

The sum appropriated shall be expended by the department of education for the purposes of this part.

SECTION 4. The director of finance is authorized to issue general obligation bonds in the sum of $1, or so much thereof as may be necessary, and the same sum, or so much thereof as may be necessary, is appropriated for fiscal year 2006-2007, for the purpose of capital improvement projects for the department of education.

SECTION 5. The appropriation made for the capital improvement projects authorized by this part shall not lapse at the end of the fiscal year for which the appropriation is made; provided that all moneys from the appropriation unexpended or unencumbered as of June 30, 2008, shall lapse as of that date.

The sum appropriated shall be expended by the department of education for the purposes of this part.

SECTION 6. There is appropriated out of the general revenues of the State of Hawaii the sum of $1, or so much thereof as may be necessary for fiscal year 2006-2007, for operations of the department of education.

The sum appropriated shall be expended by the department of education for the purposes of this part.

PART III

SECTION 7. The legislature finds that the department of education may serve Hawaii's students more effectively if given flexibility in certain areas of its operations. The purpose of this part is to:

(1) Authorize the department to independently issue certificates of participation when initiating the construction of new schools; and

(2) Establish a special fund from which lease back payments may be made.

SECTION 8. Chapter 302A, Hawaii Revised Statutes, is amended by adding a new section to part VI to be appropriately designated and to read as follows:

"§302A-   New school construction special fund. (a) There is created in the state treasury the new school construction special fund, to be administered by the department, into which shall be deposited:

(1) Appropriations, including designated appropriations made for the operations of the department of education; and

(2) All interest earnings accruing from moneys in the fund.

(b) Expenditures from the fund shall be limited to interest earnings and shall be solely for the purpose of making lease back payments for new schools constructed through financing agreements entered into pursuant to chapter 37D, including using certificates of participation.

(c) New schools constructed with moneys appropriated from the new school construction special fund shall meet energy-efficient design standards, pursuant to chapter 196."

SECTION 9. Section 37D-2, Hawaii Revised Statutes, is amended to read as follows:

"§37D-2 Financing agreements. (a) There is [hereby] established and authorized the financing agreement program of the State. Any agency desiring to acquire or improve projects through the financing agreement program established and authorized by this chapter shall submit a written request to the department providing such information as the department shall require. Notwithstanding any other law to the contrary, and except for the Hawaii health systems corporation, only with the approval by the attorney general as to form and legality and upon the written request of one or more participating agencies may the department enter into a financing agreement in accordance with this chapter, except that [the]:

(1) The department of education may enter into a financing agreement in accordance with this chapter without the approval of the director but with the approval of the attorney general as to form and legality; and

(2) The board of regents of the University of Hawaii may enter into a financing agreement in accordance with this chapter without the approval of the director and of the attorney general as to form and legality;

if the principal amount of the financing agreement does not exceed $3,000,000.

A financing agreement may be entered into by the department on behalf of one or more participating agencies at any time (before or after commencement or completion of any improvements or acquisitions to be financed) and shall be upon terms and conditions the department finds to be advantageous. In each case of a written request by the judiciary to participate in the financing agreement program, the department shall implement the request; provided that the related financing agreement shall be upon terms and conditions the department finds to be advantageous. Any financing agreement entered into by the department without the approval required by this section shall be void and of no effect.

(b) A single financing agreement may finance a single item or multiple items of property to be used by multiple agencies or may finance a single item or multiple items of property to be used by a single agency. The department shall bill any participating agency that benefits from property acquired with the proceeds of a financing agreement for such participating agency's pro rata share of:

(1) The department's costs of administration of the financing agreement program; and

(2) The financing costs, including the principal and interest components of the financing agreement, and insurance premiums;

on a monthly or other periodic basis, and may deposit payments received in connection with the billings with a trustee as security for a financing agreement. Any participating agency receiving such a bill shall be authorized and shall pay the amounts billed from the available moneys.

[(b)] (c) Financing agreements shall be subject to the following limitations:

(1) Amounts payable by a participating agency to or upon the direction of the department in respect to a project and by the department under a financing agreement shall be limited to available moneys. In no circumstance shall the department be obligated to pay amounts due under a financing agreement from any source other than available moneys. If, by reason of insufficient available moneys or other reason, amounts due under a financing agreement are not paid when due, the lender may exercise any property right that the department has granted to it in the financing agreement, against the property that was purchased with the proceeds of the financing agreement, and apply the amounts so received toward payments scheduled to be made by the department under the financing agreement;

(2) No property rights may be granted in property unless the property is being acquired, is to be substantially improved, is to be refinanced with the proceeds of a financing agreement, or is land on which the property is located;

(3) Notwithstanding any other law to the contrary, and except for the Hawaii health systems corporation and as otherwise provided in this section with respect to the department of education and the University of Hawaii, and except as provided in chapter 323F as to the Hawaii health systems corporation, an agency shall not have the power to enter into a financing agreement, except through the department as authorized by this chapter, and nothing in this chapter shall be construed to authorize the sale, lease, or other disposition of property owned by an agency;

(4) Except as otherwise provided in this section with respect to the department of education and the University of Hawaii, the sale, assignment, or other disposition of any financing agreements, including certificates of participation relating thereto, shall require the approval of the director; and

(5) The department shall not be subject to chapter 103D and any and all other requirements of law for competitive bidding for financing agreements."

SECTION 10. There is appropriated out of the general revenues of the State of Hawaii the sum of $1, or so much thereof as may be necessary for fiscal year 2006-2007, to be deposited into the new school construction special fund.

The sum appropriated shall be expended by the department of education for the purposes of this part.

SECTION 11. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 12. This Act shall take effect on July 1, 2050.