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ARIZONA STATE SENATE
Fifty-Fourth Legislature, Second Regular Session
SFB; department of administration
Purpose
Transfers the School Facilities Board (SFB) into the Arizona Department of Administration (ADOA) and establishes the School Facilities Oversight Board (Oversight Board) with outlined authority. Appropriates $40,000,000 in FY 2021 to the newly created School Capital Assistance Fund (School Capital Fund) and $60,000,000 to the Building Renewal Grant Fund (BRG Fund). Contains requirements for enactment for initiatives and referendums (Proposition 105).
Background
The SFB consists of nine Governor-appointed members and the Superintendent of Public Instruction who are charged with assessing school facilities and equipment deficiencies to distribute grants for building repairs and renovations in addition to inspecting school buildings to ensure compliance with building adequacy standards and preventive maintenance guidelines (A.R.S. § 15-2002).
Additionally, the SFB: 1) reviews and approves student population projections to determine which school districts are entitled to monies for new facilities; 2) certifies that plans for new schools meet building adequacy standards; and 3) develops prototypical elementary and high school designs. Minimum school facility adequacy guidelines are also adopted by the SFB in addition to providing information to school districts on improving and maintaining environmental quality in school buildings (A.R.S. § 15-2002).
Services and funding for school district facilities are provided through the New School Facilities Fund (NSF Fund), BRG Fund and Emergency Deficiencies Correction Fund (Emergency Deficiencies Fund) to provide capital funding for K-12 school districts.
Currently, the Governor appoints an Executive Director for the SFB who must demonstrate competency in school finance, facilities design or facilities management. The Executive Director of the SFB is responsible for analyzing applications for SFB monies and reviewing or auditing the expenditure of monies by a school district for deficiencies corrections and NSF funding (A.R.S. § 15‑2002).
H.B. 2679 appropriates $40,000,000 to the School Capital Fund and $60,000,000 to the BRG Fund from the state General Fund (state GF) in FY 2021.
Provisions
Oversight Board
1. Transfers and establishes the Oversight Board within ADOA.
2. Modifies Oversight Board membership as follows:
a) specifies that the member representing an organization of taxpayers must represent a statewide organization of taxpayers;
b) removes the requirement that the registered professional architect member must have knowledge and experience in school architecture;
c) removes the requirement that the registered professional engineer member must have current knowledge and experience in school engineering;
d) adds two members who are owners or officers of a private construction company with experience in constructing large commercial or government buildings, not including school construction;
e) adds one person representing the business community; and
f) adds the ADOA Director or their assigned designee to serve as the Chairperson of the Oversight Board and as an advisory nonvoting member for all other purposes.
3. Removes the requirement that the Oversight Board have one member who:
a) is an elected school district governing board member with knowledge and experience in finance;
b) has knowledge and experience in public procurement;
c) has demographic knowledge and experience;
d) is a teacher and provides classroom instruction; and
e) is an owner or officer of a private construction company whose business does not include school construction.
4. Removes the requirement that the Governor appoint a Chairperson from the appointed members.
5. Outlines ADOA responsibilities for approving proposed projects for grant funding and reporting requirements.
6. Allows a school district, whose project is determined to not meet eligibility requirements, to directly appeal to the ADOA Director rather than to the Oversight Board's Executive Director.
7. Allows a school district, upon the ADOA Director's determination of project ineligibility, to directly appeal to the Oversight Board.
8. Requires the Oversight Board to adopt rules regarding the validation of adjacent ways projects, rather than validating proposed adjacent ways projects submitted by school districts.
9. Prohibits the Oversight Board from directing ADOA to:
a) award monies to fund new facilities financed by class A bonds issued by a school district; or
b) distribute monies to a school district for replacing or repairing facilities if associated costs are covered by insurance or a performance or payment bond.
10. Allows the Oversight Board to direct ADOA to transfer monies between the Capital Reserve Fund, the Emergency Deficiencies Fund and the NSF Fund, under prescribed conditions.
11. Subjects any school district
project authorized by the Oversight Board or ADOA to
State Board of Education (SBE) adopted procurement rules.
12. Prohibits the Oversight Board or ADOA from adopting any procurement policy or procedure that alters, supplements or subtracts from the SBE-adopted procurement rules.
13. Directs the Oversight Board to establish a subcommittee to adopt minimum school facility safety standards.
14. Requires school districts to consider the safety standards when completing approved projects or constructing new facilities with monies received from the BRG Fund or the NSF Fund.
15. Adds to the list of exemptions from authorization of school district electors, school sites and buildings that are completely funded with monies distributed by ADOA or at the direction of the Oversight Board.
16. Terminates the Oversight Board on July 1, 2022.
Emergency Deficiencies Fund
17. Directs ADOA to administer the Emergency Deficiencies Fund at the direction of the Oversight Board.
18. Prohibits ADOA from transferring monies from the NSF Fund if the Oversight Board determines the transfer will affect, disrupt or reduce any approved capital projects.
BRG Fund
19. Directs ADOA to administer the BRG Fund.
20. Prohibits ADOA from distributing BRG Fund monies unless the requested estimated project cost exceeds 50 percent of the school district’s allocation from the School Capital Fund.
21. Specifies a building renewal grant (grant) expires 12 months after the grant request is approved unless ADOA issues an extension.
22. Requires ADOA to extend a grant expiration date if ADOA approves a project and determines similar projects will take longer than 12 months on average to complete.
23. Directs ADOA to establish a process for a school district to request an extension.
24. Requires a school district, upon expiration of a grant, to return any unused BRG Fund monies to ADOA for deposit into the BRG Fund.
25. Directs ADOA to:
a) implement policies requiring a school district to report completed preventive maintenance activities from the previous year for the facility for which monies are being requested; and
b) submit a monthly report to the Oversight Board detailing how BRG Fund monies were distributed.
26. Requires the Oversight Board to adopt rules for:
a) approving grants; and
b) time frames for ADOA regarding:
i. responding to an email or telephone call;
ii. approving or denying grant requests for critical projects;
iii. notifying an applicant about an incomplete application;
iv. providing regular updates to applicants with completed applications; and
v. distributing monies from the BRG Fund.
NSF Fund
27. Directs ADOA to administer the NSF Fund and distribute monies to school districts at the direction of the Oversight Board for constructing new school facilities.
28. Allows a school district with condemned buildings to apply for monies from the NSF Fund.
School Capital Fund
29. Establishes the School Capital Fund administered by the State Treasurer consisting of legislative appropriations.
30. Directs the State Treasurer to:
a) invest and divest monies;
b) distribute monies to school districts as outlined; and
c) compile a monthly report detailing all expenditures of School Capital Fund monies and submit the report to the Oversight Board.
31. Allows a school district to use School Capital Fund monies for building projects or any part of a building as outlined in the Oversight Board’s database, as follows:
a) major renovations and repairs to a building used for student instruction or other academic purposes;
b) upgrading systems and areas to maintain or extend a building’s useful life;
c) infrastructure costs; and
d) project or construction assessments, or both.
32. Restricts a school district from using School Capital Fund monies for the following:
a) new construction;
b) remodeling interior space for aesthetic or preferential reasons;
c) exterior beautification;
d) demolition;
e) routine preventive maintenance; and
f) any project in a building, or part of a building, being leased to another entity.
33. Requires a school district to submit a request to the State Treasurer for School Capital Fund monies and upon receiving the required expenditure information, the State Treasurer automatically transmits the requested amount to the school district.
34. Limits the transmitted amount of monies from exceeding the pro rata amount based upon the school district’s weighted student count from the prior fiscal year, as calculated by the State Treasurer.
35. Increases, to include nonresident pupils, the weighted student count for a school district that serves as the district of attendance for nonresident pupils.
36. Requires the distributions to be based on a school district’s average daily membership data as of June 1 from the prior year reported from the Arizona Department of Education to the State Treasurer annually by June 15.
37. Requires each school district to establish a local-level school capital assistance fund for allocations from School Capital Fund.
38. Requires a school district receiving School Capital Fund monies to account for all expenditures and submitted to the State Treasurer on a prescribed form.
39. Deems accommodation schools ineligible for School Capital Fund monies.
40. Specifies monies earned from investment are credited to the School Capital Fund.
41. Establishes School Capital Fund monies are continuously appropriated and exempt from lapsing.
Adjacent Ways
42. Requires ADOA to:
a) validate proposed adjacent ways projects submitted by school districts as prescribed by Oversight Board rules; and
b) submit a monthly report to the Oversight Board detailing each validated adjacent ways project.
43. Requires a school district governing board to file an adjacent ways project proposal with ADOA, instead of the SFB, and requires ADOA to review a project within 60 days of receiving a project proposal that is greater than $50,000 and meets outlined requirements.
Statutory Transfer and Renumbering
44. Transfers and renumbers Title 15, Chapter 16 relating to School Capital Finance to Title 41 and establishes a new Chapter 56 relating to the School Facilities Board.
45. Renames Title 41, Chapter 56, Article 1 from School Facilities Board to School Facilities Oversight Board.
Succession
46. Allows current SFB members to continue to serve as Oversight Board members until their current term of office expires.
47. Deems that ADOA and the Oversight Board within ADOA succeed to the SFB authority, powers, duties and responsibilities as outlined.
48. Specifies the Act does not alter the actions taken or impair the valid obligations of the SFB in existence before the effective date.
49. Continues the enforcement of SFB-adopted administrative rules and orders until superseded by administrative action by the Oversight Board or ADOA.
50. Deems all SFB administrative matters, contracts and judicial and quasi-judicial actions are transferred and retain the same status with the Oversight Board or ADOA.
51. Deems all SFB equipment, records, furnishings and other property, data and investigative findings, obligations and appropriated monies remaining unexpended and unencumbered are transferred to the Oversight Board or ADOA.
52. Deems all SFB issued certificates, licenses, registrations, permits and other indicia of qualification and authority to retain their validity for the duration of their terms of validity as provided by law.
53. Specifies all SFB-employed personnel who are under the state personnel system are transferred to comparable positions and pay classifications in the respective administrative units of the Oversight Board.
Appropriations
54. Appropriates the following amounts from the state GF in FY 2021:
a) $40,000,000 to the School Capital Fund; and
b) $60,000,000 to the BRG Fund.
Miscellaneous
55. Makes technical and conforming changes.
56. Establishes the distributions of outstanding state school facilities revenue bonds is subject to the affirmative vote of at least three-fourths of the members of each house of the Legislature (Proposition 105).
57. Becomes effective on the general effective date.
House Action
ED 2/17/20 DPA 11-1-0-1
APPROP 2/19/20 DPA 10-1-0-0
3rd Read 2/26/20 59-0-1
Prepared by Senate Research
March 6, 2020
JO/kja