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COMMITTEE REPORT
April 22, 1999
S. 379
Introduced by Senators Bryan, Setzler, Giese, Drummond, Martin, McGill, J. Verne Smith, Ravenel, Anderson, O'Dell, Passailaigue, Moore, Branton, Courtney, Wilson, Hutto, Fair, Hayes, Washington, Alexander, Leventis, Saleeby, Land, Reese, Short, Patterson, Holland, McConnell, Russell, Rankin, Mescher, Thomas, Grooms, Ryberg, Ford, Gregory, Waldrep, Jackson, Matthews, Courson, Glover, Cork, Elliott, Peeler and Leatherman
S. Printed 4/22/99--H.
Read the first time February 18, 1999.
To whom was referred a Bill (S. 379), to amend Title 59, Code of Laws of South Carolina, 1976, by adding Chapter 146 so as to enact the "State School Facilities Bond Act", etc., respectfully
That they have duly and carefully considered the same, and recommend that the same do pass with amendment:
Amend the bill, as and if amended, by striking all after the enacting words and inserting:
/SECTION 1. Title 59 of the 1976 Code is amended by adding:
Section 59-146-10. This chapter may be cited as the 'public School Facilities Improvement Fund Act of 1999'.
Section 59-146-20. The General Assembly finds that:
(1) For the next five years, there is a need in the amount of $3,998,975,400 for the building and renovation of public school facilities in this State;
(2) There is scheduled or planned funding of these needs in the sum of only $1,424,957,400;
(3) There is a statewide funding shortfall of $2,574,018,000 to meet these public school facility needs;
(4) It is necessary and desirable to provide state assistance for construction and renovation of public school facilities.
Section 59-146-30. As used in this chapter:
(1) 'Department' means the State Department of Education.
(2) 'Coin-operated device' means the nonpayout electronic machine which is licensed pursuant to Section 12-21-2720(A)(3).
(3) 'Education Lottery Account' means any funds deposited in an account created and funded for education as a result of the authorization for operation of a statewide lottery.
(4) 'Local school district' means a public body corporate and politic operating as a school district pursuant to Section 59-1-160.
(5) 'Net machine income' means the amount of money that goes into a coin-operated device, less winnings.
(6) 'Value engineering' means a systematic approach of seeking the best functional balance between cost, reliability, and performance of a building design.
Section 59-146-40. There is created in the state treasury an account, separate and distinct from the general fund, titled the 'Public School Facilities Improvement Fund of 1999'. Funds deposited in the account must be allocated as provided in this chapter for the funding of construction and renovation of public school facilities. Any interest earned by the funds in the account must remain in the account and must be allocated to the several school districts of the State with cash balances in the fund, each to the extent the interest is attributable to each of their balances.
Section 59-146-50. (A) The account described in Section 59-146-40 must be funded by the revenues collected from a fifteen percent tax hereby imposed on the net machine income of coin-operated devices. In the alternative, should the tax rate otherwise imposed on the net machine income of coin-operated devices exceed fifteen percent, the account must be funded by the revenues representing the collection of the first twenty percent of the tax otherwise imposed.
(B) Beginning July 1, 2000, and ending June 30, 2008, the State Treasurer must transfer annually one hundred twenty-five million dollars of revenues derived from the tax on net machine income as described in subsection (A) to the Public School Facilities Improvement Fund.
(C) If revenues derived from the tax on net machine income do not amount to one hundred twenty-five million dollars in any one fiscal year, the State Treasurer must transfer from the Educational Lottery Account to the Public School Facilities Improvement Fund, as the first priority, a sum sufficient to attain the total transfer amount of one hundred twenty-five million dollars.
Section 59-146-60. (A)(1) Monies in the Public School Facilities Improvement Fund must be allocated annually to the state's several local school districts based on a district's second preceding year 135-day average daily membership, divided by the statewide second preceding year 135-day average daily membership times the funds available.
(2) In making the annual allocation pursuant to this chapter, the department shall ensure that each local school district receives an amount no less than one-eighth of the allocation the district would receive pursuant to a total statewide allocation of seven hundred fifty million dollars as provided by the Public School Facilities Assistance program of the Children's Education Endowment Fund of 1996.
(B) A local school district may use monies from the Public School Facilities Improvement Fund to meet its current construction and renovation needs or to retire its existing debt incurred by reason of facilities improvement.
Section 59-146-70. The department shall ensure that the local school district facility plan utilizes value engineering to achieve optimum cost effectiveness."
SECTION 2. This section takes effect July 1, 1999. /
Renumber sections to conform.
Amend totals and title to conform.
HENRY E. BROWN, JR., for Committee.
EXPLANATION OF IMPACT:
State Department of Education (SDE):
SDE anticipates enactment of this bill would result in additional workload for the Office of District Facilities Management (ODFM). This office at SDE is responsible for approving local school district construction plans (Section 59-23-40 of the S.C. Code of Laws, 1976) and inspecting all new local facilities before they can be occupied (Section 59-23-190 of the S.C. Code of Laws, 1976). SDE estimates enactment of this bill would increase the workload for ODFM by at least two-thirds.
SDE estimates the need for a minimum of three additional architects at $56,000 each including fringe benefits, and one administrative specialist at $30,000 including fringe benefits. Other operating expenses including travel, office supplies, rent, etc., are estimated to be $50,000 annually. One-time office set-up cost is estimated at $3,500 per FTE. Total estimated impact for the first year is estimated to be $262,000. Subsequent annual costs are estimated to be $248,000.
Debt Service
The State Treasurer's Office estimates the total debt service for bond issues totaling $750 million would be approximately $1,047,528,000.
Approved By:
Don Addy
Office of State Budget
TO AMEND TITLE 59, CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING CHAPTER 146 SO AS TO ENACT THE "STATE SCHOOL FACILITIES BOND ACT" WHICH AUTHORIZES THE ISSUANCE OF SCHOOL FACILITIES BONDS AS GENERAL OBLIGATION BONDS OF THE STATE OF SOUTH CAROLINA AND TO PRESCRIBE THE TERMS, CONDITIONS, USES, AND DISTRIBUTION OF THE BONDS AND THEIR PROCEEDS.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Title 59 of the 1976 Code is amended by adding:
Section 59-146-10. This chapter may be cited as the 'State School Facilities Bond Act'.
Section 59-146-20. It is declared that, for the benefit of the people of the State, the increase of their commerce, welfare and prosperity, and the improvement of their health and living conditions, it is essential that this and future generations of youth be given the full opportunity to learn and to develop their intellectual and mental capacities; that it is essential that school districts of this State be provided with adequate educational facilities and appropriate additional means to assist the youth in achieving the required levels of learning and development of their intellectual and mental capacities; and that it is the purpose of this chapter to provide a measure of assistance to enable school districts in this State to provide the facilities and structures which are needed to accomplish the purposes of this chapter, all to the public benefit and good, to the extent and manner provided in this chapter.
Section 59-146-30. As used in this chapter:
(1) 'Department' means the State Department of Education.
(2) 'School district' means a public body corporate and politic operating as a school district under the provisions of Chapter 17, Title 59.
(3) 'School facilities' means only those facilities defined as 'school facilities' in Section 59-144-30.
(4) 'State Board' means the State Board of Education.
(5) 'State school facilities bonds' means general obligation bonds of the State of South Carolina issued under the authority of this chapter.
Section 59-146-40. In order to obtain funds for allocation to school districts for school facilities, there shall be issued from time to time state school facilities bonds under the conditions prescribed by this chapter.
Section 59-146-50. The maximum principal amount of state school facilities bonds that may be issued pursuant to this chapter shall not exceed seven hundred fifty million dollars except that this limitation shall not apply to any state school facilities bonds issued for the purpose of refunding prior issues of state school facilities bonds. It is the intent of the General Assembly for the Department of Education to allocate seven hundred fifty million dollars pursuant to Section 59-144-100 and to inform each school district of their individual allocation. Further, it is the intent of the General Assembly that not more than two hundred fifty million dollars of state school facilities bonds shall be issued in fiscal year 1999-2000. The authority to issue bonds under this chapter shall expire four years from the effective date of this chapter. The four-year limitation, however, does not apply to bonds issued to retire bond anticipation notes.
Section 59-146-60. The State Board of Education, by resolution, shall notify the State Budget and Control Board of the following:
(1) the amount then required for allocation to local school districts for school facilities for the next fiscal year;
(2) a tentative time schedule setting forth the period of time during which the sum requested will be expended;
(3) a debt service table showing the annual principal and interest requirements for all state school facilities bonds then outstanding; and
(4) the total amount of all state school facilities bonds issued.
This notification shall be presented to the Budget and Control Board by March first of each year.
Section 59-146-70. Following the receipt of the notification presented pursuant to Section 59-146-60, the State Budget and Control Board shall, by resolution duly adopted, effect the issuance of state school facilities bonds, or pending the issuance thereof, effect the issuance of bond anticipation notes pursuant to Chapter 17 of Title 11.
Section 59-146-80. In order to effect the issuance of state school facilities bonds, the State Budget and Control Board shall adopt a resolution providing for the issuance of state school facilities bonds pursuant to the provisions of this chapter. The authorizing resolution must include:
(1) schedules setting forth the aggregate of all general obligation debt of the State (excluding highway bonds, state institution bonds, tax anticipation notes, and bond anticipation notes) together with certificates of the State Treasurer and State Auditor evidencing compliance with the provisions of paragraph 6(c) of Section 13 of Article X of the South Carolina Constitution;
(2) a schedule showing the aggregate of state school facilities bonds issued, the purposes for which they were issued, the annual payments required to retire the state school facilities bonds, the interest thereon, and the amount of any special funds applicable to the retirement of the outstanding state school facilities bonds;
(3) the amount of state school facilities bonds to be issued; and
(4) a schedule showing future annual principal requirements and estimated annual interest requirements on the state school facilities bonds to be issued.
Section 59-146-90. The state school facilities bonds must bear the date and mature at the time that the resolution provides, except that no state school facilities bonds may mature more than thirty years from its date of issue. The state school facilities bonds may be in the denominations, be payable in the medium of payment, be payable at the place and at the time, and be subject to redemption or repurchase and contain other provisions determined by the State Budget and Control Board before their issuance. The bonds may bear interest payable at the times and at the rates as determined by the State Budget and Control Board.
Section 59-146-100. All state school facilities bonds issued under this chapter are exempt from taxation as provided in Section 12-2-50.
Section 59-146-110. All state school facilities bonds issued under this chapter must be signed by the Governor and the State Treasurer. The Governor and the State Treasurer may sign these obligations by a facsimile of their signatures. The Great Seal of the State must be affixed to, impressed, or reproduced upon each of them and each must be attested by the Secretary of State. The delivery of the state school facilities bonds executed and authenticated is valid notwithstanding changes in officers or seal occurring after the execution or authentication.
Section 59-146-120. For the payment of the principal and interest on all state school facilities bonds issued and outstanding pursuant to this chapter there is pledged the full faith, credit, and taxing power of the State of South Carolina, and in accordance with the provisions of paragraph (4) of Section 13 of Article X of the South Carolina Constitution, the General Assembly hereby allocates on an annual basis sufficient tax revenues to provide for the punctual payment of the principal and interest on the debt authorized by this chapter.
Section 59-146-130. State school facilities bonds must be sold by the Governor and the State Treasurer upon sealed proposals, after publication of notice of the sale one or more times at least seven days before the sale, in a financial paper published in New York City which regularly publishes notices of sale of state or municipal bonds. The state school facilities bonds may be awarded only to the lowest interest cost bidder, but the right is reserved to reject all bids and to readvertise the state school facilities bonds for sale. For the purpose of bringing about successful sales of the bonds, the State Budget and Control Board may do all things ordinarily and customarily done in connection with the sale of state or municipal bonds. All expenses incident to the sale of the bonds must be paid from the proceeds of the sale of the bonds.
Section 59-146-140. The proceeds of the sale of state school facilities bonds shall be received by the State Treasurer and applied by him to the purposes for which issued, except that the accrued interest, if any, shall be used to discharge in part the first interest to become due on such bonds, and the premium, if any, shall be used to discharge the payment of the first installment of principal to become due on such bonds, but the purchasers of such bonds shall in no way be liable for the proper application of the proceeds to the purposes for which they are intended.
Section 59-146-150. It is lawful for all executors, administrators, guardians, and other fiduciaries to invest any monies in their hands in bonds issued pursuant to this chapter.
Section 59-146-160. The proceeds received from the issuance of state school facilities bonds, after deducting the costs of issuance, must be allocated to the school districts in the same manner and for the same purposes as provided in Section 59-144-100 and the first paragraph of Section 59-144-30.
Section 59-146-170. The responsibilities and duties of the State Department of Education and State Board of Education shall be as outlined in Sections 59-144-120, 59-144-130, and 59-144-140.
Section 59-146-180. To qualify for the funds under this chapter, each school district shall meet the requirements of this chapter and any guidelines promulgated hereunder. Funds must be withheld from districts when inappropriate reporting of facilities' needs is found or when appropriate use of funds is documented."
SECTION 2. This act takes effect upon approval by the Governor.
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