Establishes the Hawaii school repair and maintenance trust fund as a separate fund of Hawaii 3R's, a nonprofit corporation, for coordination of private and federal efforts to repair and maintain public schools. Establishes a tax credit and procurement procedures for state contracts.

A BILL FOR AN ACT

SECTION 1. The legislature finds that the backlog of repair and maintenance projects for public schools across the State is now estimated at more than $640,000,000. This accumulation of work has occurred because of tight budgets over the last decade, when an average of only $22,000,000 a year was appropriated for the upkeep of elementary, middle, and high school campuses, even though they required an estimated $66,000,000 in maintenance each year.

The legislature further finds that no public school in the State is ever given sufficient funds to cover all of its repair and maintenance needs, so the deterioration and degradation of each campus compounds with each passing school year. The general practice has been to repair only the most critical, health-threatening conditions, or to tackle the least-involved projects in order to keep facilities operating.

The governor has proposed that the sum of $45,000,000 be included in the capital improvements project budget for the repair and maintenance of our schools. While clearly a substantial sum that is much needed, it pales in comparison to the total deferred maintenance requirements of the system.

As a consequence, if those moneys are handled in the manner that is typical of the system, they will be governed by the priority matrix and handled in a way that dissipates them throughout the whole of the system and leaves no single place readied and prepared to provide the physical environment in which powerful learning can occur. Its impact will be marginalized and no school will receive the critical infusion necessary to adequately address all its repair and maintenance needs. No school will receive anything more than crisis management treatment. There will be no visible or obvious impact in any locale, and no campus will be restored to the status of an intact and healthy learning environment.

The legislature finds that education is universally recognized as the key to Hawaii’s future in a global, high-tech economy. However, except for the State's most modern campuses, such as at Kapolei, Kapaa, or Keeau, the legislature finds that schools statewide will never support the kind of teaching our children deserve if facilities continue to be rundown, unhealthy, and even dangerous.

The legislature finds that one of the components of school repair and maintenance is the development of a "sweat-equity" program that consists of professional and community work hours, materials, and design contributions, local business donations, military participation, and other in-kind endowments, that would be the basis for restoration projects within geographical regions defined by their kindergarten through grade twelve school complexes. The intent of this program is to place parents and immediate communities on the front line for their respective schools.

Finally, the legislature finds that there is a need to develop a public-private partnership to mobilize the community by involving stakeholders in Hawaii's public educational system, including parents of students, alumni, teachers, business, and government, as well as the students themselves, to actually complete the repair and maintenance projects.

Accordingly, the purpose of this Act is to begin to work towards eliminating the $640,000,000 repair and maintenance backlog for Hawaii's public schools. This is to be accomplished through:

SECTION 2. Public-private partnership for school maintenance and repair. (a) There is established within the department of education for administrative purposes a pilot project to be known as the public-private partnership for school maintenance and repair, to assist in the public-private funding of public school repair and maintenance projects.

(b) The partnership shall serve primarily as an oversight group to work with the department of education and the department of accounting and general services. The partnership shall include representatives of key stakeholders’ groups with expertise in the relevant domains to establish the guidelines and principles for grants and contracts, as well as to review and advise in the identification and selection of appropriate repair and maintenance projects.

(c) The partnership shall develop programs to:

SECTION 3. Hawaii school repair and maintenance trust fund. (a) There is established the Hawaii school repair and maintenance trust fund (hereinafter, "trust fund") as a separate fund of Hawaii 3R's, a Hawaii nonprofit organization. Moneys received from the state, county, or federal government, private contributions of cash or other property, and the income and capital gains earned by the trust fund shall constitute its assets.

(b) Hawaii 3R's shall expend moneys in the form of either grants to organizations or contracts with private vendors from the trust fund for the repair and maintenance of public schools in Hawaii in accordance with this section.

(c) The trust fund may receive contributions, grants, endowments, or gifts in cash or otherwise from all sources, including corporations or other businesses, foundations, government, individuals, and other interested parties. The legislature intends that the public and private sectors work together as partners in securing contributions for the trust fund, and that Hawaii 3R's assist the public and private sectors in reviewing and investigating all potential funding sources. The State may donate moneys to the trust fund by legislative appropriation; provided that any appropriations made by the State are not intended to supplant the funding of any existing public school repair and maintenance programs, including school-level minor repairs and maintenance accounts established under section 302A-1504, Hawaii Revised Statutes.

(d) Hawaii 3R's shall appoint the members of the Hawaii school maintenance and repair advisory board, which shall be responsible for:

Members of the advisory board shall be stakeholders in Hawaii's public educational system, including students, parents of students, alumni, teachers, community and business leaders in the private sector, and representatives from the department of education and the department of accounting and general services, shall be represented on the advisory board.

(e) The aggregate principal sum deposited in the trust fund, and any income and capital gains earned by the trust fund but not expended for administration or for the purposes of section 2, shall be invested in accordance with the provisions of Hawaii 3R's in a manner intended to maximize the rate of return on investment of the trust fund consistent with the objective of preserving the trust fund’s principal.

(f) There shall be an endowment component of the trust fund.

(g) The use of any state funds may be restricted by the legislation appropriating these funds to the trust fund.

(h) All state funds appropriated to the trust fund by this Act shall be matched by private, federal, county, or other contributions. For the purposes of this section, matching private contributions shall be deemed satisfied by the receipt of any of the following:

(i) Any organization submitting a proposal to Hawaii 3R's for trust fund moneys shall meet all of the following standards at the time of application:

(j) The public-private partnership for school maintenance and repair shall assist Hawaii 3R's in the implementation of this section by providing assistance in seeking sources of funding and in other relevant areas as requested by Hawaii 3R's.

(k) Organizations or agencies to which trust fund moneys are awarded shall agree to comply with the following conditions before receiving the award:

(l) The advisory board of Hawaii 3R's shall review grant proposals only twice annually. Hawaii 3R's shall establish criteria on which to base awards.

(m) Notwithstanding any law to the contrary:

The procurement policy board shall adopt rules pursuant to chapter 91, Hawaii Revised Statutes, to implement this subsection, including, without limitation, rules to ensure administrative simplicity while ensuring as much competition as is practicable for various dollar amounts under the small purchase procedures; and the extent of the preference for private contractors based on the length of time that a private contractor is participating in the school repair and maintenance program, the dollar amount of the bid, and other factors.

(n) The trust fund shall be audited annually by an independent auditor. The results of each annual audit shall be submitted to the department of the attorney general not later than thirty days from the date Hawaii 3R's receives the audit results. In addition, Hawaii 3R's shall retain for a period of three years and permit the department of the attorney general, the department of accounting and general services, the department of education, state legislators, and the auditor, or their duly authorized representatives, to inspect and have access to any documents, papers, books, records, and other evidence that is pertinent to the trust fund.

(o) In the event of termination of the trust fund or the dissolution of Hawaii 3R's, the unspent appropriations of the State, if any, shall revert back to the State. Any other amounts remaining in the trust fund shall be distributed in accordance with the recommendations of the board of Hawaii 3R's.

(p) The trust fund shall not be placed in the state treasury, and the State shall not administer the fund, nor shall the State be liable for its operation or solvency.

SECTION 4. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235- Credit for school repair and maintenance. (a) There shall be allowed to each taxpayer subject to the tax imposed by this chapter, a credit for contributions, including in-kind services, provided by private businesses in Hawaii for the repair and maintenance of public schools. The credit shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed.

(b) The amount of the credit determined under this section for the taxable year shall be equal to ______ per cent of the value of contributions, including in-kind services, for that taxable year up to a maximum of $_______.

(c) For purposes of this section, the term "public schools" has the same meaning as defined in section 302A-101.

(d) The credit allowed under this section shall be claimed against net income tax liability for the taxable year. A tax credit under this section which exceeds the taxpayer's income tax liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted.

(e) All claims for tax credits under this section, including any amended claims, shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credits may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

(f) No deduction shall be allowed for that portion of the contributions, including in-kind services, paid or incurred for the taxable year that is equal to the amount of the credit determined under this section.

(g) The director of taxation shall prepare forms as may be necessary to claim a credit under this section. The director may also require the taxpayer to furnish reasonable information in order that the director may ascertain the validity of the claim for credit made under this section. The director of taxation may adopt any rules under chapter 91 and forms necessary to carry out this section."

SECTION 5. The state comptroller shall submit reports of the progress of the public-private partnership for school maintenance and repair and the Hawaii school repair and maintenance trust fund no later than twenty days prior to the convening of the regular sessions of 2002, 2003, and 2004.

SECTION 6. There is appropriated out of the general revenues of the State of Hawaii the sum of $ , or so much thereof as may be necessary for fiscal year 2001-2002, for deposit into the Hawaii school repair and maintenance trust fund, to be matched by private sector donations in accordance with the provisions of this Act, including start-up supplies for the public-private partnership for school maintenance and repair. The sum appropriated shall be expended by the department of education for the purposes of this Act.

SECTION 7. There is appropriated out of the general revenues of the State of Hawaii the sum of $ , or so much thereof as may be necessary for fiscal year 2001-2002, for the salary of a staff person within the department of accounting and general services to coordinate public and private efforts to repair and maintain public schools. The sum appropriated shall be expended by the department of accounting and general services for the purposes of this Act.

SECTION 8. If any provision of this Act, or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the Act, which can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 9. It is the intent of this Act not to jeopardize the receipt of any federal aid nor to impair the obligation of the State or any agency thereof to the holders of any bond issued by the State or by any such agency, and to the extent, and only to the extent, necessary to effectuate this intent, the governor may modify the strict provisions of this Act, but shall promptly report any such modification with reasons therefor to the legislature at its next session thereafter for review by the legislature.

SECTION 10. New statutory material is underscored.

SECTION 11. This Act shall take effect on July 1, 2001; provided that section 4 of this Act, upon its approval, shall apply to taxable years beginning after December 31, 2000.