Creates a public school construction, repair, and maintenance trust fund for the construction and improvement of public school facilities. Establishes an income tax check off to allow taxpayers to designate a part of their income tax refund to a specific public school.

A BILL FOR AN ACT

SECTION 1. The future of the State lies in its youth, and their education should be accordingly one of its highest priorities. Act 51 of the 2004 regular session implements much needed changes in Hawaii's educational system. Through that legislation the State has made significant changes to positively impact the quality of education for its youth. Still, there is much more work to be done. Often overlooked is the state of public school facilities. Currently, there is a backlog of repair and maintenance projects, which raises much concern. Numerous schools throughout the State are in dire need of repair and maintenance as well as the construction of new facilities.

The legislature finds that more innovative ways need to be implemented to assist in the funding of building and maintaining the state's public school facilities. One way that has been used to bring awareness to the need of funding is to provide taxpayers a mechanism to conveniently donate a portion of their refund. Although the Hawaii school-level minor repairs and maintenance special fund currently exists, the moneys collected through that fund do not cover the construction of necessary new facilities. Furthermore, to encourage taxpayers to participate in such a program, a choice would be given to them to designate a school for their donation to the fund.

The purpose of this Act is to create a public school construction, repair, and maintenance trust fund for the building and improvement of public school facilities, and to establish an income tax check off to allow taxpayers to designate a part of their income tax refund to a specific public school.

SECTION 2. Chapter 302A, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§302A-   Public school construction, repair, and maintenance trust fund. (a) There is established within the state treasury the public school construction, repair, and maintenance trust fund (hereafter "fund") to be administered by the department. Moneys received from the State, county, or federal government, private contributions of cash or other property, income tax check-off system authorized by section 235-102.5, and the income and capital gains earned by the fund shall constitute its assets.

(b) The department shall expend moneys from the fund in the form of either grants to organizations or contracts with private vendors for the repair, maintenance, and construction of public schools in Hawaii in accordance with this section.

(c) The 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 public and private sectors review and investigate all potential funding sources. The State may appropriate moneys to the fund; provided that any appropriations made by the State are not intended to supplant the funding of any existing public school construction, repair, and maintenance programs.

(d) The department shall appoint the members of the public school construction, repair, and maintenance advisory board, which shall be responsible for:

(e) In managing the moneys in the fund, the department shall exercise ordinary business care and prudence given the facts and circumstances prevailing at the time of action or decision. In doing so, the department shall consider its long-and short-term needs in carrying out its purposes, its present and anticipated financial requirements, expected total return on its investments, price trends, and general economic conditions.

(f) There may be an endowment component of the fund, and the department may accumulate net income and add the same to the principal.

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

(h) The department may expend principal from the fund for the purposes of the fund.

(i) Any organization submitting a proposal to the department for moneys shall meet the following standards at the time of application:

(j) All proposals submitted to the department for moneys shall be approved by the superintendent of education for consistency in meeting design and materials standards for public schools.

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

(l) Chapter 103D shall not apply to organizations or agencies that apply for grants or contracts under this section; provided that the department shall be held accountable for the use of the funds under a contract with the department.

(m) Any contract awarded by the department shall be made with as much competition as is practical to execute its purposes.

(n) The fund shall be audited annually by an independent auditor. In addition, the department shall retain for a period of three years and permit the department, 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 fund.

(o) For every dollar of state moneys granted by the fund to the project, there shall be a minimum of $1 in value matched from private, federal, county, or community service.

(p) The superintendent of education shall submit an annual report of the progress of the public school construction, repair, and maintenance trust fund no later than twenty days prior to the convening of each regular session of the legislature."

SECTION 3. Section 235-102.5, Hawaii Revised Statutes, is amended to read as follows:

"§235-102.5 Income check-off authorized. (a) Any individual whose state income tax liability for any taxable year is $2 or more may designate $2 of the liability to be paid over to the Hawaii election campaign fund, any other law to the contrary notwithstanding, when submitting a state income tax return to the department. In the case of a joint return of a husband and wife having a state income tax liability of $4 or more, each spouse may designate that $2 be paid to the fund. The director of taxation shall revise the individual state income tax form to allow the designation of contributions to the fund on the face of the tax return and immediately above the signature lines. An explanation shall be included which clearly states that the check-off does not constitute an additional tax liability. If no designation was made on the original tax return when filed, a designation may be made by the individual on an amended return filed within twenty months and ten days after the due date for the original return for such taxable year. A designation once made whether by an original or amended return may not be revoked.

(b) Notwithstanding any law to the contrary, any individual whose state income tax refund for any taxable year is $2 or more may designate $2 of the refund to be deposited into the school-level minor repairs and maintenance special fund established by section 302A-1504.5, when submitting a state income tax return to the department. In the case of a joint return of a husband and wife having a state income tax refund of $4 or more, each spouse may designate that $2 be deposited into the special fund. The director of taxation shall revise the individual state income tax return form to allow the designation of contributions to the special fund on the face of the tax return and immediately above the signature lines. If no designation was made on the original tax return when filed, a designation may be made by the individual on an amended return filed within twenty months and ten days after the due date for the original return for such taxable year. A designation once made, whether by an original or amended return, may not be revoked.

(c) Notwithstanding any law to the contrary, any individual whose state income tax refund for any taxable year is $2 or more may designate $2 of the refund to be paid over to the libraries special fund established by section 312-3.6, when submitting a state income tax return to the department. In the case of a joint return of a husband and wife having a state income tax refund of $4 or more, each spouse may designate that $2 be deposited into the special fund. The director of taxation shall revise the individual state income tax form to allow the designation of contributions to the fund on the face of the tax return and immediately above the signature lines. If no designation was made on the original tax return when filed, a designation may be made by the individual on an amended return filed within twenty months and ten days after the due date for the original return for such taxable year. A designation once made, whether by an original or amended return, may not be revoked.

(d) Notwithstanding any law to the contrary, any individual whose state income tax refund for any taxable year is $5 or more may designate $5 of the refund to be paid over as follows:

When designated by a taxpayer submitting a state income tax return to the department, the department of budget and finance shall allocate the moneys among the several funds as provided in this subsection. In the case of a joint return of a husband and wife having a state income tax refund of $10 or more, each spouse may designate that $5 be paid over as provided in this subsection. The director of taxation shall revise the individual state income tax form to allow the designation of contributions pursuant to this subsection on the face of the tax return and immediately above the signature lines. If no designation was made on the original tax return when filed, a designation may be made by the individual on an amended return filed within twenty months and ten days after the due date for the original return for such taxable year. A designation once made, whether by an original or amended return, may not be revoked.

(e) Notwithstanding any law to the contrary, any individual whose state income tax refund for any taxable year is $           or more may designate $           of the refund to be deposited into the public school construction, repairs, and maintenance trust fund established by section 302A-   , when submitting a state income tax return to the department. In the case of a joint return of a husband and wife having a state income tax refund of $           or more, each spouse may designate that $           be deposited into the special fund. The director of taxation shall:

If no designation was made on the original tax return when filed, a designation may be made by the individual on an amended return filed within twenty months and ten days after the due date for the original return for such taxable year. A designation once made, whether by an original or amended return, may not be revoked."

SECTION 4. New statutory material is underscored.

SECTION 5. This Act shall take effect on July 1, 2005;

provided that section 3 shall apply to taxable years beginning after December 31, 2004.