Senate Bill No. 397
(By Senators Miller, Sharpe and Blatnik)
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[Introduced February 16, 1995; referred to the Committee
on Education; and then to the Committee on Finance.]
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A BILL to amend and reenact section six, article nine-d, chapter
eighteen of the code of West Virginia, one thousand nine
hundred thirty-one, as amended, relating to the school
building authority; and appropriating "pay as you go"
funding for the authority.
Be it enacted by the Legislature of West Virginia:
That section six, article nine-d, chapter eighteen of the
code of West Virginia, one thousand nine hundred thirty-one, as
amended, be amended and reenacted to read as follows:
ARTICLE 9D. SCHOOL BUILDING AUTHORITY.
§18-9D-6. School building capital improvements fund in state
treasury; school construction fund in state
treasury; school building debt service fund in state treasury; school improvement fund in state
treasury; collections to be paid into special
funds; authority to pledge such collections as
security for refunding revenue bonds; authority to
finance projects on a cash basis.
(a) There is continued in the state treasury a school
building capital improvements fund to be expended by the
authority as provided in this article.
The school building authority shall have authority to pledge
all or such part of the revenues paid into the school building
capital improvements fund as may be needed to meet the
requirements of any revenue bond issue or issues authorized by
this article prior to the twentieth day of July, one thousand
nine hundred ninety-three, or revenue bonds issued to refund
revenue bonds issued prior to that date, including the payment of
principal of, interest and redemption premium, if any, on, such
revenue bonds and the establishing and maintaining of a reserve
fund or funds for the payment of the principal of, interest and
redemption premium, if any, on such revenue bond issue or issues
when other moneys pledged may be insufficient therefor, including
such additional protective pledge of revenues as the authority in
its discretion has provided by resolution authorizing the issue of such bonds or in any trust agreement made in connection
therewith. The authority may further provide in such resolution
and in such trust agreement for such priorities on the revenues
paid into such school building capital improvements fund as may
be necessary for the protection of the prior rights of the
holders of bonds issued at different times under the provisions
of this article.
Any balance remaining in the school building capital
improvements fund after the authority has issued bonds authorized
by this article, and after the requirements of all funds
including reserve funds established in connection with the bonds
issued prior to the twentieth day of July, one thousand nine
hundred ninety-three, pursuant to this article have been
satisfied, may be used for the redemption of any of the
outstanding bonds issued hereunder which by their terms are then
redeemable, or for the purchase of such bonds at the market
price, but not exceeding the price, if any, at which such bonds
shall in the same year be redeemable, and all bonds redeemed or
purchased shall forthwith be canceled and shall not again be
issued.
The school building authority, in its discretion, may use the moneys in the school building capital improvements fund to
finance the cost of projects on a cash basis. Any pledge of
moneys in such fund for revenue bonds issued prior to the
twentieth day of July, one thousand nine hundred ninety-three,
shall be a prior and superior charge on such fund over the use of
any of the moneys in such fund to pay for the cost of any project
on a cash basis: Provided, That any expenditures from such fund,
other than for the retirement of revenue bonds, may only be made
by the authority in accordance with the provisions of this
article.
(b) There is hereby created in the state treasury a special
fund named the school building debt service fund into which shall
be deposited on and after the first day of April, one thousand
nine hundred ninety-four, the amounts specified in section
eighteen, article twenty-two, chapter twenty-nine of this code.
All amounts deposited in the fund shall be pledged to the
repayment of the principal, interest and redemption premium, if
any, on any revenue bonds or refunding revenue bonds authorized
by this article: Provided, That moneys so deposited may not be
pledged to the repayment of any revenue bonds issued prior to the
first day of January, one thousand nine hundred ninety-four, or with respect to revenue bonds issued for the purpose of refunding
revenue bonds issued prior to the first day of January, one
thousand nine hundred ninety-four. The authority may further
provide in the resolution and in the trust agreement for
priorities on the revenues paid into the school building debt
service fund as may be necessary for the protection of the prior
rights of the holders of bonds issued at different times under
the provisions of this article. On or prior to the first day of
May of each year, commencing the first day of May, one thousand
nine hundred ninety-four, the authority shall certify to the
state lottery director the principal and interest and coverage
ratio requirements for the following fiscal year on any revenue
bonds issued on or after the first day of January, one thousand
nine hundred ninety-four, and for which moneys deposited in the
school building debt service fund have been pledged, or will be
pledged, for repayment pursuant to this section: Provided,
however, That before the first day of May, one thousand nine
hundred ninety-four, the authority shall also certify to the
lottery director of the state the principal, interest and
coverage ratio requirements for the fiscal year ending on the
thirtieth day of June, one thousand nine hundred ninety-five, on any revenue bonds issued, or to be issued, on or after the first
day of January, one thousand nine hundred ninety-four.
After the authority has issued bonds authorized by this
article, and after the requirements of all funds have been
satisfied, including coverage and reserve funds established in
connection with the bonds issued pursuant to this article, any
balance remaining in the school building debt service fund may be
used for the redemption of any of the outstanding bonds issued
hereunder which, by their terms, are then redeemable or for the
purchase of the outstanding bonds at the market price, but not
to exceed the price, if any, at which redeemable, and all bonds
redeemed or purchased shall be forthwith canceled and shall not
again be issued.
(c) There is hereby created in the state treasury a special
fund named the school construction fund into which shall be
deposited on and after the first day of July, one thousand nine
hundred ninety-four, the amounts specified in section thirty,
article fifteen, chapter eleven of this code, together with any
moneys appropriated thereto by the Legislature. Expenditures
from the school construction fund shall be for the purposes set
forth in this article, including lease-purchase payments under agreements made pursuant to subsection (e), section fifteen of
this article and section nine, article five of this chapter and
are authorized from collections in accordance with the provisions
of article three, chapter twelve of this code and from other
revenues annually appropriated by the Legislature from lottery
revenues as authorized by section eighteen, article twenty-two,
chapter twenty-nine of this code, pursuant to the provisions set
forth in article two, chapter five-a of this code. Amounts
collected which are found from time to time to exceed the funds
needed for purposes set forth in this article may be transferred
to other accounts or funds and redesignated for other purposes by
appropriation of the Legislature.
(d) There is hereby created in the state treasury a special
fund named the school major improvement fund into which shall be
deposited on and after the first day of July, one thousand nine
hundred ninety-four, the amounts specified in section thirty,
article fifteen, chapter eleven of this code, together with any
moneys appropriated thereto by the Legislature. Expenditures
from the school major improvement fund shall be for the purposes
set forth in this article and are authorized from collections in
accordance with the provisions of article three, chapter twelve of this code and from other revenues annually appropriated by
the Legislature from lottery revenues as authorized by section
eighteen, article twenty-two, chapter twenty-nine of this code,
pursuant to the provisions set forth in article two, chapter
five-a of this code. Amounts collected which are found from time
to time to exceed the funds needed for purposes set forth in this
article may be transferred to other accounts or funds and
redesignated for other purposes by appropriation of the
Legislature.
(e) The Legislature hereby finds and declares that the
supreme court of appeals of West Virginia has held that the
issuance of additional revenue bonds authorized under the school
building authority act, as enacted in this article prior to the
twentieth day of July, one thousand nine hundred ninety-three,
constituted an indebtedness of the state in violation of section
four, article X of the Constitution of West Virginia, but that
revenue bonds issued hereunder prior to the twentieth day of
July, one thousand nine hundred ninety-three, are not invalid.
The Legislature further finds and declares that the financial
capacity of a county to construct, lease and improve school
facilities depends upon the county's bonding capacity (local property wealth), voter willingness to pass bond issues and the
county's ability to reallocate other available county funds
instead of criteria related to educational needs or upon the
ability of the school building authority created in this article
to issue bonds that comply with said holding of the West Virginia
supreme court of appeals or otherwise assist counties with the
financing of facilities construction and improvement. The
Legislature hereby further finds and declares that this section,
as well as section eighteen, article twenty-two, chapter
twenty-nine of this code, have been reenacted during the first
extraordinary session of the West Virginia Legislature in the
year one thousand nine hundred ninety-four, in an attempt to
comply with said holding of the supreme court of appeals of West
Virginia.
The Legislature hereby further finds and declares that it
intends, through the reenactment of this section and section
eighteen, article twenty-two, chapter twenty-nine of this code,
to dedicate a source of state revenues to special funds for the
purposes of paying the debt service on bonds and refunding bonds
issued subsequent to the first day of January, one thousand nine
hundred ninety-four, the proceeds of which will be utilized for the construction and improvement of school building facilities.
The Legislature hereby further finds and declares that it
intends, through the reenactment of this section and section
thirty, article fifteen, chapter eleven of this code and section
eighteen, article twenty-two, chapter twenty-nine of this code,
to appropriate revenues to two special funds for the purposes of
construction and improvement of school building facilities.
Furthermore, the Legislature intends to encourage county boards
of education to maintain existing levels of county funding for
construction, improvement and maintenance of school building
facilities and to generate additional county funds for such
purposes through bonds and special levies whenever possible. The
Legislature further encourages the school building authority,
the state board of education and county boards of education to
propose uniform project specifications for comparable projects
whenever possible to meet county needs at the lowest possible
cost.
The Legislature hereby further finds and declares that it
intends, through the reenactment of this section and section
eighteen, article twenty-two, chapter twenty-nine of this code,
to comply with the provisions of sections four and six, article X; and section one, article XII of the Constitution of West
Virginia.
(f) In addition to the funding provided in this article, the
Legislature hereby further finds and declares that it intends,
through the reenactment of this section to provide for "pay as
you go" funding to dedicate from state revenues for the purposes
of the construction and improvement of school building
facilities. The Legislature hereby further finds and declares
that it intends, through the reenactment of this section to
appropriate revenues for the purposes of providing for "pay as
you go" funding for construction and improvement of school
building facilities. The source of revenue to be appropriated is
as follows:
(1) Up to fifteen million dollars from the budget surplus in
fiscal year one thousand nine hundred ninety-five -- ninety-six;
(2) Eight million dollars from interest earned by the school
buidling authority;
(3) Five to seven million dollars from the school building
authority budgeted maintenance fund;
(4) Two million dollars from the parkways, economic
development and tourism authority;
(5) One million dollars from the governor's requested budget
for tourism package; and
(6) Twelve million dollars from the budget surplus for the
fiscal year one thousand nine hundred ninety-six -- ninety-seven.
NOTE: The purpose of this bill is to provide "pay as you
go" funding for construction and improvement of school building
facilities under the School Building Authority.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.