HB 469: "An Act relating to school construction and major maintenance financing; providing a remedy to the constitutional violations found in Kasayulie et al. v. State of Alaska, Case No. 3AN-97-3782 CV; relating to the public school trust fund; relating to the Education Facilities Financing Authority; and providing for an effective date."
00 HOUSE BILL NO. 469 01 "An Act relating to school construction and major maintenance financing; providing a 02 remedy to the constitutional violations found in Kasayulie et al. v. State of Alaska, Case 03 No. 3AN-97-3782 CV; relating to the public school trust fund; relating to the Education 04 Facilities Financing Authority; and providing for an effective date." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 07 to read: 08 LEGISLATIVE FINDINGS AND INTENT. (a) The legislature finds that 09 (1) art. VII, sec. 1, Constitution of the State of Alaska, provides that the 10 legislature shall establish and maintain a system of public schools open to all children of the 11 state; 12 (2) adequate public school facilities that provide a safe and effective 13 atmosphere for learning are integral to the success of the initiative for quality schools in the 14 state;
01 (3) every school-age child in the state deserves the opportunity to attend an 02 adequate public school facility; 03 (4) the current value of public school and school-related facilities statewide is 04 nearly $5,000,000,000; 05 (5) the state should protect its investment in our public school facilities by 06 recognizing where new public school facilities are needed and repairing and maintaining the 07 existing public school facilities that are deficient; 08 (6) the Department of Education and Early Development compiles a statewide 09 list of projects for which grant applications are submitted under AS 14.11.011 and ranks those 10 projects according to priority needs; 11 (7) the current statewide lists of public school construction, repair, and 12 maintenance needs include over 145 school projects with a total cost to the state of over 13 $875,000,000; 14 (8) the superior court of the Third Judicial District found in Kasayulie et al. v. 15 State of Alaska, Case No. 3AN-97-3782 CV, that the state had failed to provide 16 constitutionally adequate public school facilities to all children of the state; 17 (9) to correct the constitutional violations found in Kasayulie et al. v. State of 18 Alaska, it is necessary to eliminate future debt-reimbursement funding under AS 14.11.100 19 and to provide sufficient funding to allow every school-age child in this state to have the 20 opportunity to attend an adequate public school facility; 21 (10) the establishment of the Education Facilities Financing Authority as 22 provided in this Act will provide an effective means for financing public school facilities. 23 (b) It is the intent of the legislature that sufficient funding be appropriated for school 24 construction and major maintenance projects, as those terms are defined in AS 14.11.135, to 25 allow every school-age child in Alaska to have the opportunity to attend an adequate public 26 school facility. 27 * Sec. 2. AS 14.11.100 is amended by adding a new subsection to read: 28 (s) Except for funds allocated to school districts under this section, the 29 legislature shall appropriate or allocate funds for the costs of school construction, 30 additions to schools, or major rehabilitation projects that are approved under 31 AS 14.11.015.
01 * Sec. 3. AS 36.30.850(b) is amended by adding a new paragraph to read: 02 (45) contracts of the Education Facilities Financing Authority 03 (AS 44.27.100). 04 * Sec. 4. AS 37.05.530(g) is amended to read: 05 (g) Amounts received by the state under 42 U.S.C. 6508 and not appropriated 06 for grants to municipalities under (d) of this section shall be deposited at the end of 07 each fiscal year as follows: (1) 25 percent to the principal of the Alaska permanent 08 fund; and (2) one and one-half [.5] percent to the public school trust fund 09 (AS 37.14.110). The amounts remaining after the deposits to the Alaska permanent 10 fund and the public school trust fund may be appropriated to the power cost 11 equalization and rural electric capitalization fund (AS 42.45.100). The amounts 12 remaining after any appropriation to the power cost equalization and rural electric 13 capitalization fund shall lapse into the general fund for use by the state for the 14 following facilities and services: planning; construction, maintenance, and operation 15 of essential public facilities; and other necessary public services. 16 * Sec. 5. AS 37.14.110(c) is amended to read: 17 (c) The commissioner of revenue shall determine the net income of the fund in 18 accordance with investment accounting principles and in a manner that preserves the 19 distinction between principal and income and that excludes capital gains or losses 20 realized on principal. The principal of the fund [AND THE CAPITAL GAINS OR 21 LOSSES REALIZED ON PRINCIPAL] shall be perpetually retained in the fund for 22 investment purposes. 23 * Sec. 6. AS 37.14.140 is amended to read: 24 Sec. 37.14.140. Utilization of public school trust fund [INCOME]. The net 25 income of the fund may not be appropriated for a purpose other than the support of the 26 state public school program, including construction and major maintenance 27 expenses. The legislature may appropriate the income of the fund for the purpose 28 of securing and servicing bonds issued by the Education Facilities Financing 29 Authority under AS 44.27.100. The commissioner of revenue shall invest realized 30 net income that has not been appropriated or that has been appropriated but not 31 expended until the income is appropriated and expended.
01 * Sec. 7. AS 37.14.150 is amended to read: 02 Sec. 37.14.150. Contributions. During each fiscal year the commissioner of 03 revenue shall transfer to the fund created in AS 37.14.110 a sum equal to one and 04 one-half [OF ONE] percent of the total receipts derived from the management of state 05 land, including amounts paid to the state as proceeds of sale or annual rent of surface 06 rights, mineral lease rentals, royalties, royalty sale proceeds, and federal mineral 07 revenue-sharing payments or bonuses. 08 * Sec. 8. AS 39.25.110 is amended by adding a new paragraph to read: 09 (41) the employees of the Education Facilities Financing Authority 10 established under AS 44.27.100. 11 * Sec. 9. AS 39.50.200(b) is amended by adding a new paragraph to read: 12 (59) Education Facilities Financing Authority (AS 44.27.100). 13 * Sec. 10. AS 44.27 is amended by adding new sections to read: 14 Article 3. Education Facilities Financing Authority. 15 Sec. 44.27.100. Education Facilities Financing Authority. There is created 16 the Education Facilities Financing Authority. The authority is created as a public 17 corporation of the state in the Department of Revenue. The authority is an 18 instrumentality of the state but has a legal existence independent of and separate from 19 the state and has continuing succession until its existence is terminated by law. The 20 authority is subject to AS 37.07 (Executive Budget Act). 21 Sec. 44.27.110. Board of directors. The authority is governed by a board of 22 seven directors, consisting of the commissioner of revenue, the commissioner of 23 education and early development, the commissioner of transportation and public 24 facilities, two members elected by the Board of Education and Early Development 25 from among its membership, and two public members appointed by the governor. In 26 appointing the public members, the governor shall give preference to persons who 27 have experience and expertise in finance or education. At least one public member 28 shall be a resident of a rural area of the state. The two directors appointed by the 29 governor serve at the governor's pleasure for four-year terms and may be reappointed. 30 The directors are subject to AS 39.50 (public official financial disclosure). Before 31 entering on the duties of office, a director shall take and subscribe to an oath to
01 perform the duties faithfully, impartially, and justly to the best of the director's ability. 02 A record of the oath shall be filed in the Office of the Governor. 03 Sec. 44.27.120. Officers, quorum, and meetings. (a) The directors shall elect 04 one of their number as chair. The directors shall elect a secretary and a treasurer who 05 need not be directors, and the same person may be elected to serve both as secretary 06 and treasurer. The powers of the authority are vested in the board of directors, and four 07 directors of the authority constitute a quorum. Action may be taken and motions and 08 resolutions adopted by the authority at any meeting at which a quorum is present by 09 the affirmative vote of a majority of those directors present. A vacancy in the 10 directorship of the authority does not impair the right of a quorum to exercise all of the 11 powers and perform all of the duties of the authority. 12 (b) The directors and officers of the authority may meet and transact business 13 by an electronic medium if (1) public notice of the time and locations where the 14 meeting will be held by an electronic medium has been given in the same manner as if 15 the meeting were held in a single location; (2) participants and members of the public 16 in attendance can hear and have the same right to participate in the meeting as if the 17 meeting were conducted in person; and (3) copies of pertinent reference materials, 18 statutes, regulations, and audio-visual materials are reasonably available to 19 participants and to the public. A meeting by an electronic medium as provided in this 20 subsection has the same legal effect as a meeting in person. 21 (c) The authority may appoint persons as employees it considers advisable and 22 may employ professional advisors, counsel, technical experts, agents, and others as 23 appropriate. The employees of the authority are in the exempt service under 24 AS 39.25.110. 25 Sec. 44.27.130. Powers of the authority. The authority may 26 (1) sue and be sued; 27 (2) adopt and alter an official seal; 28 (3) make and enforce bylaws and regulations for the conduct of its 29 business and for the use of its services and facilities; 30 (4) maintain an office at any place in the state; 31 (5) acquire, hold, use, and dispose of its income, revenue, funds, and
01 money; 02 (6) acquire, rent, lease, hold, use, and dispose of other personal 03 property for its purposes; 04 (7) subject to AS 44.27.160, issue its bonds or notes and provide for 05 and secure payment of the bonds or notes, provide for the rights of holders of the 06 bonds or notes, and purchase, hold, and dispose of any of its bonds or notes; 07 (8) fix and revise from time to time and charge and collect fees and 08 charges for the use of its services or facilities; 09 (9) accept gifts or grants from the United States, or from any 10 governmental unit or person, carry out the terms or provisions or make agreements for 11 the gifts or grants, and do all things necessary, useful, desirable, or convenient in 12 connection with procuring, accepting, or disposing of the gifts or grants; 13 (10) do anything authorized by AS 44.27.100 - 44.27.250, through its 14 officers, agents, or employees, or by contracts with a person; 15 (11) make, enter into, and enforce all contracts necessary, convenient, 16 or desirable for the purpose of the authority or pertaining to a purchase or sale of 17 bonds, or other investments, or the performance of its duties and execution of any of 18 its powers under AS 44.27.100 - 44.27.250; 19 (12) purchase or hold bonds at prices and in a manner the authority 20 considers advisable; 21 (13) adopt and amend regulations by motion, by resolution, or in 22 another manner permitted under the bylaws of the authority; 23 (14) procure insurance against any losses in connection with its 24 property, operations, or assets in amounts and from insurers it considers desirable; 25 (15) to the extent permitted under its contracts with the holders of 26 bonds or notes of the authority, consent to modification of the rate of interest, time and 27 payment of installment of principal or interest, security, or any other term of a bond or 28 note, contract or agreement of any kind to which the authority is a party; and 29 (16) do all acts and things necessary, convenient, or desirable to carry 30 out the powers expressly granted or necessarily implied in AS 44.27.100 - 44.27.250. 31 Sec. 44.27.140. Issuance of bonds and pledges of assets. (a) Subject to
01 AS 44.27.160 and except as provided in (b) of this section, the authority may issue its 02 bonds or notes in principal amounts sufficient to provide funds for the construction of 03 schools or school facilities that are approved under AS 14.11.015(a) and authorized by 04 the legislature. 05 (b) Bonds or notes may be issued or agreements made for a project under (a) 06 of this section only after 07 (1) the legislature has authorized the facility and its construction cost; 08 and 09 (2) the commissioner of education and early development has certified 10 that 11 (A) the facility is designed in accordance with the energy 12 performance standards adopted under AS 44.42.020(a); or 13 (B) the designer and builder of the facility have certified that 14 the facility will be designed and constructed in accordance with the energy 15 performance standards and regulations adopted under AS 44.42.020(a). 16 (c) The authority may issue its bonds or notes in principal amounts that it 17 finds necessary to provide funds for the 18 (1) payment, funding, or refunding of the principal of, or interest or 19 redemption premiums on, bonds or notes issued by it, whether the bonds or notes or 20 interest to be funded or refunded have or have not become due; and 21 (2) establishment or increase of reserves to secure or to pay the 22 principal of or interest on bonds or notes and all other costs or expenses of the 23 authority incident to and necessary or convenient to carry out the purpose and powers 24 of the authority. 25 (d) Except as otherwise provided in AS 44.27.100 - 44.27.250 or by the 26 authority, every issue of bonds or notes shall be payable out of the revenue or funds of 27 the authority, subject only to agreements with the holders of particular bonds or notes 28 pledging particular revenue or funds. 29 (e) Bonds shall be authorized by resolution of the board and shall be dated and 30 mature as provided in the resolution, except that a bond may not mature more than 15 31 years from the date of its issue. Bonds shall bear interest at rates, be in the
01 denominations, be in the form, either coupon or registered, carry the registration 02 privileges, be executed in the manner, be payable in the medium or payment, at the 03 place or places, and be subject to the terms of redemption provided in the resolution or 04 a subsequent resolution. Bonds or notes may be sold at a public or private sale. 05 (f) The authority may disburse funds necessary to comply with the 06 construction provisions of (a) of this section. An agreement not to modify an 07 appropriation for construction after bonds or notes have been issued for the purpose is 08 valid. The authority shall exclude from the total school construction cost of the local 09 district all state and federal funds included in these costs except funds provided under 10 this section and AS 43.50.140. 11 Sec. 44.27.150. Trust indentures and trust agreements. (a) In the discretion 12 of the authority, an issue of bonds may be secured by a trust indenture or trust 13 agreement between the authority and a corporate trustee, including a trust company, 14 bank, or national banking association, with corporate trust powers, located inside or 15 outside the state, or by a secured loan agreement or other instrument or under a 16 resolution giving powers to a corporate trustee by means of which the authority may 17 (1) make and enter into any and all the covenants and agreements with 18 the trustee or the holders of the bonds that the authority may determine to be necessary 19 or desirable, including, without limitation, covenants, provisions, limitations, and 20 agreements as to 21 (A) the application, investment, deposit, use, and disposition of 22 the proceeds of bonds of the authority or of money or other property of the 23 authority in which it has an interest; 24 (B) the terms and conditions on which additional bonds of the 25 authority may be issued; and 26 (C) the vesting in a trustee of rights, powers, duties, funds, or 27 property in trust for the benefit of bondholders, including the right to enforce 28 payment, performance, and all other rights of the authority or of the 29 bondholders, under any agreement of the authority; 30 (2) pledge, mortgage, or assign money, agreements, property, or other 31 rights or assets of the authority either presently in hand or to be received in the future,
01 or both; and 02 (3) provide for other matters of the like or different character that in 03 any way affect the security or protection of the bonds. 04 (b) For the purpose of securing one or more issues of its bonds, the board may 05 establish one or more special funds, called "capital reserve funds," and shall pay into 06 the capital reserve funds the proceeds of the sale of its bonds and other money that 07 may be made available to the authority for the purpose of those funds from another 08 source. The special funds shall be established only if the board determines that the 09 establishment of the funds would enhance the marketability of the bonds. Money held 10 in a capital reserve fund, except as provided in this section, shall be used as required 11 solely for (1) the payment of the principal of, and interest on, bonds or of the sinking 12 fund payments with respect to those bonds, (2) the purchase or redemption of bonds, 13 or (3) the payment of a redemption premium required to be paid when those bonds are 14 redeemed before maturity; however, money in a fund may not be withdrawn from it at 15 any time in an amount that would reduce the amount of that fund to less than the 16 capital reserve requirement set out in (c) of this section, except for the purpose of 17 making, with respect to those bonds, payment, when due, of principal, interest, 18 redemption premiums, and the sinking fund payments for the payment of which other 19 money of the authority is not available. Income or interest earned by, or increment to, 20 a capital reserve fund, from the investment of the fund or amounts in it, may be 21 transferred by the authority to other funds or accounts of the authority to the extent 22 that the transfer does not reduce the amount of the capital reserve fund below the 23 capital reserve fund requirement under (c) of this section. 24 (c) If the board decides to issue bonds secured by a capital reserve fund, the 25 bonds may not be issued if the amount in the capital reserve fund is less than an 26 amount that may be established by resolution of the board, called the "capital reserve 27 fund requirement," unless the authority, at the time of issuance of the obligations, 28 deposits in the capital reserve fund from the proceeds of the obligations to be issued or 29 from other sources, an amount that, together with the amount then in the fund, is not 30 less than the capital reserve fund requirement. 31 (d) In computing the amount of a capital reserve fund for the purpose of this
01 section, securities in which all or a portion of the funds are invested shall be valued by 02 a reasonable method established by the board by resolution. Valuation on a particular 03 date shall include the amount of any interest earned or accrued to that date. 04 (e) The chair of the board shall annually, not later than January 2, make and 05 deliver to the governor and the legislature a certificate stating the amount, if any, 06 required to restore a capital reserve fund to the capital reserve fund requirement. The 07 legislature may appropriate the amount described in this subsection, and all money 08 appropriated during the then current fiscal year by the legislature for the restoration 09 shall be deposited by the authority in the proper capital reserve fund. This section does 10 not create a debt or liability of the state. 11 (f) If the board decides to issue bonds secured by a capital reserve fund, the 12 bonds may not be issued until 10 days after the authority has mailed notification to the 13 state bond committee and the Legislative Budget and Audit Committee by certified 14 mail of its intention to establish a capital reserve fund to secure the bond issue. The 15 notification must include the amount of the capital reserve fund to be established and 16 the amount of bonds proposed to be issued. The notification must be accompanied by 17 the amount of bonds proposed to be issued, estimates of the need to withdraw money 18 from the capital reserve fund during the term of the bond issue, the amount that may 19 be withdrawn, and the dates on which withdrawals will be needed. The authority shall 20 annually prepare a revised estimate, considering the same factors, and a statement of 21 all withdrawals that have occurred from the date of issuance of the bonds to the end of 22 the calendar year. The revised estimate and statement shall be submitted to the state 23 bond committee and the Legislative Budget and Audit Committee by January 30 of the 24 year following preparation of the revised estimate. 25 Sec. 44.27.160. Bonding limitations. The authority may not issue bonds or 26 make agreements under AS 44.27.140 unless the money in the education facilities 27 fund established under AS 44.27.190 equals or exceeds $1,500,000,000. 28 Sec. 44.27.170. Nonliability on bonds. (a) Neither the members of the board 29 nor a person executing the bonds is personally liable on the bonds or is subject to 30 personal liability or accountability as a result of the issuance of the bonds. 31 (b) Bonds issued by the authority do not constitute an indebtedness or other
01 liability of the state or of a political subdivision of the state, except the authority. 02 Bonds shall be payable solely from the income and receipts or other funds or property 03 of the authority. The authority may not pledge the faith or credit of the state or of a 04 political subdivision of the state, except the authority, to the payment of a bond. 05 Sec. 44.27.180. Pledge and agreement of state. (a) The state pledges to and 06 agrees with the holders of bonds issued under AS 44.27.100 - 44.27.250 that the state 07 will not limit or alter the rights and powers vested in the authority under AS 44.27.100 08 - 44.27.250 to fulfill the terms of a contract made by the authority with the 09 bondholders and that the state will not in any way impair the rights and remedies of 10 the bondholders until the bonds, together with the interest on them with interest on 11 unpaid installments of interest, and all costs and expenses in connection with an action 12 or proceeding by or on behalf of the bondholders are fully met and discharged. The 13 authority may use this pledge and agreement of the state in agreements involving 14 bondholders. 15 (b) The pledge of the state is limited to the express provisions of (a) of this 16 section and is not a guarantee, surety, promise, undertaking, or assurance of repayment 17 or performance of any obligation of the authority. 18 Sec. 44.27.190. Education facilities fund. (a) The education facilities fund is 19 established in the authority. The fund consists of appropriations made to the fund by 20 the legislature and, subject to appropriation, the income of the fund. The authority may 21 enter into agreements for financial covenants or pledge amounts in the fund that 22 exceed $1,500,000,000 to secure the payment of bonds of the authority and may make 23 expenditures from the fund for the purpose of the agreements. 24 (b) The education facilities fund and any other funds of the authority shall be 25 invested by the Alaska Permanent Fund Corporation as agent of the authority in the 26 manner provided for assets of the permanent fund under AS 37.13.120 unless 27 otherwise provided in a trust agreement securing bonds. 28 Sec. 44.27.200. Annual audit. The authority shall have its financial records 29 audited annually by a certified public accountant. The legislative auditor may 30 prescribe the form and content of the financial records of the authority and may have 31 access to the records at any time.
01 Sec. 44.27.210. Annual report. Before March 1 of each year, the authority 02 shall submit to the governor and the legislature a comprehensive report describing 03 operations, income, and expenditures for the preceding 12-month period. 04 Sec. 44.27.250. Definitions. In AS 44.27.100 - 44.27.250, unless the context 05 requires otherwise, 06 (1) "authority" means the Education Facilities Financing Authority 07 established under AS 44.27.100; 08 (2) "board" means the board of directors of the Education Facilities 09 Financing Authority; 10 (3) "bonds" means revenue bonds, notes, or other obligations of the 11 authority issued under AS 44.27.100 - 44.27.250; 12 (4) "fund" means the education facilities fund established under 13 AS 44.27.190. 14 * Sec. 11. The uncodified law of the State of Alaska is amended by adding a new section to 15 read: 16 AUTHORIZATION OF FACILITIES. The Education Facilities Financing Authority 17 established under AS 44.27.100, enacted by sec. 10 of this Act, is authorized under 18 AS 44.27.140(a), enacted by sec. 10 of this Act, to issue its bonds for construction for those 19 facilities that, after the effective date of this Act, are placed on the prioritized list of the 20 Department of Education and Early Development under AS 14.11.015. 21 * Sec. 12. This Act takes effect July 1, 2007.