SB27

Report Title:

School Repair and Maintenance; General Obligation Bonds

Description:

Authorizes the issuance of general obligation bonds for the repair and maintenance of public schools. Creates the principals' repair and maintenance account. Gives the principal of each public school the sole discretion to select projects, award bids, and accept work.

THE SENATE	S.B. NO.	27
TWENTY-FIRST LEGISLATURE, 2001
THIRD SPECIAL SESSION
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO SCHOOL REPAIR AND MAINTENANCE.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that there is an immediate need to address the deteriorating condition of Hawaii's public schools. As the legislature found in Act 309 and Act 316, Session Laws of Hawaii 2001, the backlog of repair and maintenance projects for public schools across the State is now more than $600,000,000. Since no public school in Hawaii is ever given sufficient funds to cover all of its repair and maintenance needs, the deterioration of each campus compounds with each passing year. The legislature finds that the dire need to repair the State's rundown, unhealthy, and even dangerous school facilities is hampering public education.

Furthermore, the tragic aftermath of the September 11th terrorist attacks has resulted in the layoff of numerous workers around the State, including those in the construction and building industry. The legislature finds that there is an immediate need for the infusion of funds in the form of capital improvement projects to allow Hawaii to regain its forward economic momentum. The construction work generated by the repair and maintenance of Hawaii's public schools will serve as the catalyst to improve the State's severe economic condition, while providing a substantially improved physical environment for our children to learn and thrive.

The legislature further finds that the current system for the repair and maintenance of Hawaii's public schools -- in which each school meets with the department of accounting and general services on an annual basis to advise the department of its needs and to obtain departmental approval -- is too time-consuming and cumbersome to allow for the necessary infusion of capital into the State's economy. The legislature finds that it would be preferable if the principal of each public school, rather than the State, were given the authority to approve each such project. Bringing the responsibility for decision-making and approval for these projects down to the local level will improve the overall efficiency of the system necessary for the immediate implementation of construction projects necessary to get Hawaii's economy back on track. The legislature finds that not only will this process stimulate Hawaii's economy by employing a wide variety of building and trade businesses, but the money will go back into the local communities, rebuilding the economy literally from the ground up.

Accordingly, the purposes of this Act are to:

(1) Authorize the issuance of general obligation bonds for the repair and maintenance of public schools until June 30, 2002;

(2) Create the principals' repair and maintenance account to receive the moneys from the issuance of the bonds, and from which to appropriate funds. The account will be terminated on June 30, 2003, and all unexpended and unencumbered moneys remaining on balance with the account will lapse to the credit of the general obligation bond fund on that date;

(3) Provide that moneys shall be used exclusively for the repair and maintenance of public schools, and give the principal of each public school the sole discretion to select projects, award bids, and accept work for each such project. Moneys are to be allocated to each school in proportion to the number of students attending each school, so that the schools with larger student populations will receive more funds. Contracts must be awarded within six months, and construction must begin within one year of the effective date of this Act. Moneys in the account are allocated directly to the principals of each school to ensure that the money and decision-making authority remain at the local level; the principals decide which projects to fund in their respective schools. The principals may hire consultants to facilitate the implementation of the school repair and maintenance projects, or may request assistance from the department of accounting and general services; and

(4) Preempt all procurement laws, except for certain policies and procedures already established by the comptroller pursuant to section 36-35(e), Hawaii Revised Statutes, entitled "state educational facilities repair and maintenance account", as enacted by Act 316, Session Laws of Hawaii 2001, section 2.

SECTION 2. Principals' repair and maintenance account. (a) There is created within the state general fund under EDN 100 an account to be administered by the department of education and to be designated as the principals' repair and maintenance account (hereinafter, the "account"). The account shall be funded from the proceeds of general obligation bonds of the State as may be authorized by the legislature. The financial transactions of the account shall be subject to audit by an independent auditing agency.

(b) Pending authorization and issuance of general obligation bonds, the director of finance, with the approval of the governor, shall advance $ , or so much thereof as is requested by the department of education, to the account from moneys available in the general fund; provided that the moneys advanced from the general fund shall be repaid by the department from the proceeds of obligations issued for the purposes of the account.

(c) The department of education shall not be required to pay interest on any general fund moneys advanced to the account as provided in subsection (b).

(d) Moneys on deposit in the account shall be applied by the principal of each public school exclusively for the repair and maintenance of the public schools as provided in this section. Each principal shall provide the superintendent of education with a summary of each repair or maintenance project, setting forth the nature of the project, the anticipated starting and completion date of the project, and any other information as the department deems relevant or as the superintendent may request; provided that each principal shall have sole discretion to establish school repair and maintenance priorities for the principal's school.

(e) The superintendent shall compile the reports submitted by each principal pursuant to subsection (d) and submit findings and recommendations, including a financial statement of the account and the status of school repair and maintenance projects undertaken pursuant to this section, to the legislature no later than twenty days before the convening of the regular sessions of 2003 and 2004.

(f) Moneys on deposit in the account shall be expended by the principal of each public school as provided in subsection (d), subject to the following conditions and limitations:

(1) Expenditures from the proceeds of general obligation bonds may be expended by each school principal without the approval of the board of education, the superintendent of education, or any other person, so long as the purposes and amounts for which the moneys are to be applied are consistent with the purposes of this section;

(2) Moneys in the account shall be allocated to each public school in accordance with a formula to be determined by the superintendent of education on a per pupil basis, such that those schools with the greatest number of students shall receive more funds than those schools having smaller numbers of students;

(3) Contracts shall be awarded by each principal to one or more private contractors within six months of the effective date of this Act. Construction on any project shall begin within one year of the effective date of this Act. The principal of each school may withhold payment to contractors, cancel a contract, or take such other measures as may be necessary to enforce this paragraph;

(4) Moneys in the account shall be allocated directly to the principal of each school, who shall be solely responsible for deciding which repair and maintenance projects to fund in that school. The department of education shall not withhold any moneys from the account to be allocated to school principals for administrative or any other purposes, except to avoid an illegal result. The principal of each school shall solicit proposals for each project, select winning bidders, authorize payment, and take all other measures as may be necessary to ensure that each contract is performed and delivered in accordance with all applicable laws, construction requirements, and the highest quality standards;

(5) The principals of each school may enter into such contracts as may be necessary with consultants to facilitate the implementation of school repair and maintenance projects without regard to chapters 76 and 77, or may request assistance from the department of accounting and general services; provided that any personnel assigned to a principal from the department of accounting and general services shall report directly to the school principal and not to the department of accounting and general services or to the comptroller during the period of assignment;

(6) Criteria used to establish repair and maintenance requirements may include:

(A) The remaining useful life of the school facility and its major components;

(B) The adjusted life of the school facility and its major components after repair or maintenance;

(C) The current and future repair and maintenance requirements of the school facility and its components based on established industry standards or product manufacturer recommendations;

(D) Whether a school facility will continue to be used for the next twenty-five years; and

(E) Whether a repair or maintenance project is required for health or safety reasons, to comply with legal mandates, to comply with current building codes, or for preventive maintenance reasons;

provided that demolition of a facility or any of its components may be recommended if the cost of the repairs do not justify the adjusted life or remaining life of the facility; and

(7) The expenditure of funds for any school repair and maintenance project shall be exempt from all public procurement laws, including chapter 103D; provided that:

(A) The expenditure of public funds for any project shall comply with the internal policies and procedures for the procurement of goods, services, and construction developed by the comptroller pursuant to section 36-35(e)(1);

(B) Insofar as is practical, and based on specifications developed, adequate and reasonable competition of no fewer than three proposals shall be solicited by the principal of each school for each project, based on rules adopted by the comptroller pursuant to section 36-35(e)(2);

(C) Considering all factors, including quality, warranty, and delivery, the award shall be made by the principal of each school to the vendor with the most advantageous proposal;

(D) The procurement requirements shall not be artificially divided or parceled so as to avoid competitive bidding or competitive proposals; and

(E) Formal design for projects shall be done when there is a clear need to preserve structural integrity, health, and safety, or to clearly communicate construction requirements.

(f) The department of education shall maintain proper books and records showing, among other things:

(1) The amount and purpose of the application of moneys on deposit in the account;

(2) Separate accounting for earnings on moneys on deposit in the account; and

(3) Proceeds of advances from the general fund.

SECTION 3. The director of finance is authorized to issue general obligation bonds in the sum of $ , or so much thereof as may be necessary for fiscal year 2001-2002, and the same sum, or so much thereof as may be necessary shall be deposited into the principals' repair and maintenance account established by this Act.

SECTION 4. There is appropriated out of the principals' repair and maintenance account the sum of $ , or so much thereof as may be necessary for fiscal year 2001-2002, and the same sum, or so much thereof as may be necessary for fiscal year 2002-2003, for the repair and maintenance of the public schools as provided in this Act.

The sums appropriated shall be expended by the department of education in accordance with this Act.

SECTION 5. Upon the repeal of this Act, all unexpended and unencumbered moneys remaining on balance with the principals' repair and maintenance account shall lapse to the credit of the general obligation bond fund; provided that, pursuant to Article VII, section 7 of the Hawaii Constitution, no appropriation for which the source is general obligation bond funds nor any portion of any that appropriation shall lapse if the legislature determines that the appropriation or any portion of the appropriation is necessary to qualify for federal aid financing and reimbursement.

SECTION 6. This Act shall take effect upon its approval and shall be repealed on June 30, 2003.

INTRODUCED BY:	_____________________________