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PUBLIC LAWS OF MAINE
Second Special Session of the 118th

CHAPTER 787

H.P. 1622 - L.D. 2252

An Act to Implement the Recommendations of the Governor's Commission on School Facilities

Mandate preamble. This measure requires one or more local units of government to expand or modify activities so as to necessitate additional expenditures from local revenues but does not provide funding for at least 90% of those expenditures. Pursuant to the Constitution of Maine, Article IX, Section 21, two thirds of all of the members elected to each House have determined it necessary to enact this measure.

     Emergency preamble. Whereas, Acts of the Legislature do not become effective until 90 days after adjournment unless enacted as emergencies; and

     Whereas, Members of the Joint Standing Committee on Education and Cultural Affairs during both the 117th Legislature and the 118th Legislature have forged partnerships with the Department of Education, the State Board of Education and other interested parties to address the growing needs of many communities across the State that continue to struggle with unmet school construction needs due to growing student populations, overcrowded schools and the significant increase in the use of portable leased classrooms to meet urgent space needs, inadequate facilities to meet the demands of modern educational programs, strained local budgets that have deferred the maintenance of existing school facilities and limited state contributions to support school construction costs; and

     Whereas, conditions existing in certain public schools resulting in a serious inability to provide appropriate educational programs and services consistently throughout the State constitute an immediate threat to the health, safety and general welfare of the citizens of the State; and

     Whereas, the Governor's Commission on School Facilities has conducted a comprehensive review to determine the true scope of local school construction needs throughout the State and has prepared a sensible and feasible plan for public financing to meet current and future school construction needs; and

     Whereas, these problems require immediate and decisive action in implementing this comprehensive statewide strategy so that the most efficient investment of public resources in both new construction and renovation of existing school facilities will result in the design of effective learning environments for student achievement; and

     Whereas, in the judgment of the Legislature, these facts create an emergency within the meaning of the Constitution of Maine and require the following legislation as immediately necessary for the preservation of the public peace, health and safety; now, therefore,

Be it enacted by the People of the State of Maine as follows:

     Sec. 1. 20-A MRSA §1, sub-§19-A is enacted to read:

     19-A. Newly incurred capital outlay and debt service. "Newly incurred capital outlay and debt service" means capital outlay and debt service costs for a school construction project approved for funding by the voters on or after June 1, 1998.

     Sec. 2. 20-A MRSA §4001, sub-§3, ¶A, as enacted by PL 1981, c. 693, §§5 and 8, is amended to read:

     Sec. 3. 20-A MRSA §4001, sub-§7 is enacted to read:

     7. Maintenance and capital improvement program. A school administrative unit, including the unorganized territories, shall maintain a maintenance and capital improvement program for all school facilities, utilizing a maintenance template and software provided by the department and shall annually allocate a minimum percentage of the replacement value of its real estate to facility maintenance, capital improvement or capital reserve accounts. The department and the Department of Administrative and Financial Services, Bureau of General Services shall establish the minimum percentage in consultation with the education community. The Department of Education and the Bureau of General Services shall adopt rules necessary to implement this subsection. Rules adopted by the Department of Education and the Bureau of General Services to implement this subsection are major substantive rules pursuant to Title 5, chapter 375, subchapter II-A.

     Sec. 4. 20-A MRSA §5804, sub-§3 is enacted to read:

     3. Debt service factor. Notwithstanding subsection 1, beginning with the 1999-2000 school year, a school administrative unit may charge a debt service factor for newly incurred capital outlay and debt service, as defined in section 1, subsection 19-A. The debt service factor must be an amount agreed upon by both the sending and receiving units, with the approval of the commissioner, and may not exceed 10% of a school's legal tuition rate per student in any one year. The debt service factor adjustment must be limited to a period of time not to exceed the receiving unit's repayment period for newly incurred capital outlay and debt service. The percentage of the debt service factor must be proportional to the cost of the project and the number of tuition students.

     Sec. 5. 20-A MRSA §5805, sub-§4 is enacted to read:

     4. Debt service factor. Notwithstanding subsections 1 and 2, beginning with the 1999-2000 school year, a school administrative unit may charge a debt service factor for newly incurred capital outlay and debt service, as defined in section 1, subsection 19-A. The debt service factor must be an amount agreed upon by both the sending and receiving units, with the approval of the commissioner, and may not exceed 10% of a school's legal tuition rate per student in any one year. The debt service factor adjustment must be limited to a period of time not to exceed the receiving unit's repayment period for newly incurred capital outlay and debt service. The percentage of the debt service factor must be proportional to the cost of the project and the number of tuition students.

     Sec. 6. 20-A MRSA §15603, sub-§8, ¶B, as amended by PL 1989, c. 466, §1, is further amended to read:

     Sec. 7. 20-A MRSA §15603, sub-§8, ¶C, as amended by PL 1993, c. 410, Pt. F, §10, is further amended to read:

     Sec. 8. 20-A MRSA §15603, sub-§8, ¶E, as amended by PL 1991, c. 268, §2, is further amended to read:

     Sec. 9. 20-A MRSA §15603, sub-§8, ¶F is enacted to read:

     Sec. 10. 20-A MRSA §15907, sub-§1, as amended by PL 1983, c. 426, §4, is further amended to read:

     1. Payment of State's share. The state allocation for debt service costs shall must be paid by the commissioner to each unit according to that unit's debt retirement schedule and rules adopted pursuant to this chapter.

     Sec. 11. 20-A MRSA §15918 is enacted to read:

§15918. Maintenance and capital improvement plan assistance

     The department and the Department of Administrative and Financial Services, Bureau of General Services shall provide assistance to school administrative units, including the unorganized territories, in establishing maintenance and capital improvement programs under section 4001, subsection 7. The department, with assistance from the Department of Administrative and Financial Services, Bureau of General Services, shall provide a maintenance template, software and assistance with initial inventory inputs to ensure consistent comprehensive local maintenance and capital improvement plans and to provide for electronic reporting of maintenance and capital improvement progress by school administrative units to the department. The Department of Education and the Bureau of General Services shall adopt rules necessary to implement this section. Rules adopted by the Department of Education and the Bureau of General Services to implement this section are major substantive rules pursuant to Title 5, chapter 375, subchapter II-A.

     Sec. 12. 30-A MRSA §5953-E is enacted to read:

§5953-E. Maine School Facilities Finance Program

     There is established the Maine School Facilities Finance Program to promote efficient capital financing activities for the construction, renovation and maintenance of school facilities and the leasing and lease-purchase of school facilities.

     1. Loan application. In addition to the other forms of financial assistance available under this chapter, a public school, school administrative district, municipality, community school district or other school administrative unit may apply for a loan from the School Revolving Renovation Fund under section 6006-F, in this section called the "fund," the proceeds of which must be used to finance the cost of school repair and renovation under section 6006-F, subsection 3, as designated by the Department of Education.

     2. Loan; loan agreements. Loans from the fund are subject to this subsection.

     3. Loan management. Proceeds from any indebtedness from the fund incurred by a school administrative unit for the purposes of new construction, renovation or capital acquisition must be deposited in the bank. Proceeds from any other indebtedness incurred by a school administrative unit for the purposes of new construction, renovation or capital acquisition may be deposited in the bank. Any proceeds held must be invested by the bank for the benefit of the school administrative unit. The bank shall pay to a school administrative unit those amounts necessary for incurred costs or for reimbursement for incurred costs associated with the project for which the indebtedness was incurred. Funds from any indebtedness from the fund remaining after payment of all eligible project and financing costs must be deposited in the fund.

     4. Eligibility certification. A loan to a school administrative unit may not be made under this section until:

The Department of Education and the bank shall adopt rules necessary to implement this section. Rules adopted by the Department of Education and the bank to implement this section are major substantive rules pursuant to Title 5, chapter 375, subchapter II-A.

     Sec. 13. 30-A MRSA §§6006-E and 6006-F are enacted to read:

§6006-E. Maine School Facilities Finance Program master lease

     In addition to and in furtherance of any other assistance available to a school administrative unit in this chapter, the bank, in cooperation with the Department of Education, shall establish a lease program for buildings to be used by all school administrative units whose school facility lease payments receive reimbursement, subsidy or other payment from the State. For the purposes of this section, a lease program is a system for awarding leases for a school administrative unit pursuant to a competitive bidding process. All proceeds from leases administered by the bank must be held and invested by the bank and paid to the school administrative unit to reimburse incurred costs associated with capital acquisitions, leases or improvements approved by the Department of Education.

§6006-F. School Revolving Renovation Fund

     1. Fund established. The School Revolving Renovation Fund, referred to in this section as the "fund," is established in the custody of the bank.

     2. Administration. The bank shall administer and invest the fund. The fund must be established and held separate and apart from any other funds or money of the State or the bank and must be used and administered exclusively for the purposes authorized in this section. The fund consists of:

     3. Purposes. The fund may be used:

     4. Priorities. Periodically, and at least annually, the Department of Education shall prepare and certify to the bank a project priority list of those school administrative units whose projects are eligible for loans under this section. In establishing the priority list, the department shall grant special consideration to projects that include urgent health and safety needs. The department shall submit with the list the factors considered when determining the priorities.

     5. Eligibility terms. The bank and the Department of Education shall develop by rule the terms of repayment of loans. A loan made pursuant to this section may not carry an interest rate higher than 0%. A loan may be made only if a project is certified by the Department of Education as eligible for financing

     under this section and is on the priority list prepared under subsection 4. The repayment period may vary depending upon the financial condition of a school administrative unit as identified by the Department of Education.

     6. Forgiveness of principal payments. The fund must provide direct grants by forgiving the principal payments of a loan for an eligible school administrative unit. The amount of the forgiveness of principal payments must be determined by the school administrative unit's state share percentage of debt service costs as determined in Title 20-A, section 15611, not to exceed:

     7. Establishment of accounts. The bank may establish accounts and subaccounts within the fund as it determines desirable to effectuate the purposes of this section, including, but not limited to, accounts to segregate a portion or portions of the fund as security for bonds issued by the bank for deposit in the fund and to be invested for the benefit of specified projects receiving financial assistance from the fund.

     8. Rules. The Department of Education and the bank shall adopt rules necessary to implement this section. Rules adopted by the Department of Education and the bank to implement this section are major substantive rules pursuant to Title 5, chapter 375, subchapter II-A.

     Sec. 14. 30-A MRSA §6014, as amended by PL 1989, c. 104, Pt. C, §§8 and 10, is further amended to read:

§6014. Governmental unit intercept

     The Treasurer of State may receive from the Federal Government any amount of money as appropriated, allocated, granted, turned over or in any way provided for the purposes of the bank or this chapter. Unless otherwise directed by federal authority, these amounts shall must be credited to and deposited in the General Fund and are available to the bank.

     The Treasurer of State shall pay and deposit in the General Fund and make available to the bank, any funds or money in the treasurer's custody or control whether the funds or money is available because of any grant, allocation or appropriation by the Federal Government or the State or any state agency to assist any governmental unit in paying its municipal securities or school construction loan liability under section 5953-E, referred to in this section as "loan liability," owned or held by the bank, or required by the terms of any other law to be paid to holders or owners of municipal securities or loan liability upon failure or default of a governmental unit to pay the principal of or interest on its municipal securities or loan liability when due and payable, to the extent that any such funds or money is applicable with respect to municipal securities or loan liability of a particular governmental unit which that are then owned or held by the bank and as to which that governmental unit has failed or defaulted to make payment of principal or interest as and when due and payable.

     To the extent that the Treasurer of State is the custodian of any funds or money due or payable to a governmental unit at any time after written notice to the Treasurer of State from the bank to the effect that the governmental unit has not paid or is in default as to the payment of principal of or interest on any municipal securities or loan liability of that governmental unit then held or owned by the bank, the Treasurer of State shall withhold the payment of such funds or money from the governmental unit until the amount of the principal or interest then due and unpaid has been paid to the bank, or the Treasurer of State has been advised that arrangements, satisfactory to the bank, have been made for the payment of the principal and interest.

     Sec. 15. Major substantive rules; emergency rulemaking. Notwithstanding any other provision of law, major substantive school construction and renovation rules authorized to be provisionally adopted by the Department of Education under this Act must be initially adopted as emergency rules under the provisions of the Maine Revised Statutes, Title 5, sections 8054 and 8073. In adopting emergency major substantive rules as provided in this section, the department must hold at least one public hearing on the rules, publish notice of the rulemaking at least 3 to 10 days prior to the public hearing under Title 5, section 8053, subsection 5, paragraph A and comply with Title 5, section 8056, subsection 1, paragraphs A and B. Emergency major substantive rules adopted by the department under this section must also be provisionally adopted and filed with the Legislature for review during the First Regular Session of the 119th Legislature.

     Sec. 16. Use of alternative delivery systems; stakeholder group. The Department of Education, the State Board of Education and the Department of Administrative and Financial Services, Bureau of General Services shall establish a stakeholder group to review and discuss alternative delivery systems for school construction. The stakeholder

     group review shall include, but may not be limited to the following:

     1. Defining circumstances under which alternative delivery systems would be applicable to school construction projects with clear definitions of each circumstance;

     2. Establishing clear rules for each of the circumstances described in subsection 1;

     3. Ensuring adequate oversight of the alternative delivery system process from appropriate state agencies; and

     4. Reviewing all issues surrounding appropriate errors and insurance levels.

     The stakeholder group includes, but is not limited to, representatives of the following stakeholders: the Department of Education; the State Board of Education; the Department of Administrative and Financial Services, Bureau of General Services; school superintendents; school boards; the Maine Education Association; engineers; architects; and contractors. The stakeholder group shall report its findings and any recommended legislation to the joint standing committee of the Legislature having jurisdiction over education and cultural affairs in the 119th Legislature by January 30, 1999. The joint standing committee of the Legislature having jurisdiction over education and cultural affairs is authorized to report out a bill based on the stakeholder group's report and recommended legislation.

     Sec. 17. Appropriation. The following funds are appropriated from the General Fund to carry out the purposes of this Act.

1998-99

EDUCATION, DEPARTMENT OF

School Renovation

Deappropriates funds as an offset to an appropriation provided in Public Law 1997, chapter 643, Part S, section 6.

     Sec. 18. Payment. Any appropriations or allocations to the School Revolving Renovation Fund in the Department of Education in fiscal year 1998-99 must be paid to the Maine Municipal Bond Bank in accordance with the following schedule: $9,575,000 on September 1, 1998; and $10,000,000 on January 1, 1999.

     Sec. 19. Appropriation. The following funds are appropriated from the General Fund to carry out the purposes of this Act.

1998-99

EDUCATION, DEPARTMENT OF

School Construction

Provides funds for computer hardware and software to inventory public school facilities and establish maintenance and capital improvement plans in all Maine schools.

     Sec. 20. Allocation. The following funds are allocated from Other Special Revenue to carry out the purposes of this Act.

1998-99

EDUCATION, DEPARTMENT OF

Support Systems

Provides for the allocation of funds for one Education Specialist III position and one Education Specialist II position to manage the Maine School Facilities Finance Program, the School Revolving Renovation Fund, lease and lease-purchase proposals, and to provide assistance to all Maine schools in developing facility maintenance plans.

DEPARTMENT OF EDUCATION ____________
TOTAL $115,523

     Sec. 21. Allocation. The following funds are allocated from Other Special Revenue to carry out the purposes of this Act.

1998-99

ADMINISTRATIVE AND FINANCIAL SERVICES, DEPARTMENT OF

Bureau of General Services Planning - Construction - Administration

Provides for the allocation of funds to procure necessary architectural and engineering services for the bureau's oversight of school construction and renovation projects.

     Emergency clause. In view of the emergency cited in the preamble, this Act takes effect when approved.

Effective April 16, 1998.

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