SB952.DOC

SECTION 1. The legislature finds that article X, section 1, of the Hawaii State Constitution states, in relevant part, that "[t]he State shall provide for the establishment, support and control of a statewide system of public schools . . . including physical facilities therefor." The legislature further finds that this provision of the Hawaii State Constitution imposes an obligation on the State to provide funding for public charter school facilities.

Department of education schools that convert to charter schools have pre-existing facilities and remain on the department of education's regular repair and maintenance and capital improvement schedules.

Hawaii 3R's, a Hawaii nonprofit organization, brings outside financing and human resources together to tackle the repair and maintenance backlog in Hawaii's public schools. Currently, all of Hawaii 3R's public school repair and maintenance projects must be selected from the department of accounting and general services' unfunded repair and maintenance backlog list, which includes conversion charter schools. Start-up charter schools however, receive no such support and have historically received legislative appropriations for facilities assistance on an ad hoc basis.

The purpose of this Act is to support the funding of public charter school facilities by creating a program similar to the Hawaii 3R's school repair and maintenance program by establishing the Hawaii public charter school facilities fund in order to support start-up charter schools, conversion charter schools, not-for-profit corporations that support charter schools, and community development institutions that support charter schools. This program differs from the Hawaii 3R's school repair and maintenance program in that it would:

(1) Be expanded to include acquisition, pre-development, rehabilitation, construction, and other capital improvement projects, in addition to repair and maintenance; and

(2) Accommodate more complex capital improvement projects.

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

"§302D- Hawaii public charter school facilities special fund. (a) There is established within the state treasury a special fund to be known as the Hawaii public charter school facilities special fund, hereinafter referred to as the "special fund", into which shall be deposited:

(1) Appropriations by the legislature to the special fund;

(2) Contributions, grants, endowments, gifts in cash or otherwise, loans, and the proceeds from bond financing from all sources, including corporations or other businesses, foundations, government entities, individuals, and any other interested parties; and

(3) Income and capital gains earned by the special fund.

(b) The special fund shall be administered by the commission, and the moneys in the special fund shall be used only for the purposes specified in subsection (c).

(c) The commission shall expend moneys in the special fund in the form of grants, loans, or contracts to charter schools, not-for-profit corporations that support charter schools, and private vendors for the repair, maintenance, acquisition, predevelopment, rehabilitation, construction, or other capital improvement projects for charter school facilities or facilities administered, operated, or developed by not-for-profit corporations that support public charter schools. The commission may give priority to projects that exhibit best practices in green building or sustainable construction, rehabilitation, repair, and maintenance.

(d) There is established the Hawaii public charter school facilities fund advisory board, which shall be placed in the commission for administrative purposes. The advisory board shall consist of the executive director of the commission, who shall serve as an ex officio, non-voting member, and six members who shall be appointed by the commission. The advisory board shall:

(1) Solicit and raise funds for the special fund;

(2) Establish criteria for the expenditure of moneys from the special fund;

(3) Review grant and loan proposals;

(4) Make recommendations for grants, loans, and other specific expenditures; and

(5) Engage in any other activities necessary to support the prudent and efficient use of moneys from the special fund.

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

(f) The legislature may restrict the use of moneys that the legislature appropriates to the special fund.

(g) Any organization submitting a proposal to the commission for use of moneys in the special fund on behalf of a charter school shall:

(1) Be a for-profit organization duly registered under the laws of the State, a not-for-profit organization under section 501(c)(3) of the Internal Revenue Code or a state or county agency;

(2) Have experience with the project or program area for which the proposal is being made; and

(3) Be licensed and accredited, as applicable, in accordance with the requirements of federal, state, or county government.

(h) Any organization to which moneys from the special fund are awarded shall agree to the following conditions prior to receiving the award:

(1) Use only persons qualified to engage in the activity to be funded;

(2) Comply with all applicable federal, state, and county laws; and

(3) Comply with any other requirements prescribed by the commission to ensure adherence by the recipient of the award with applicable federal, state, and county laws and with the purposes of this section.

(i) Chapter 42F or 103D shall not apply to organizations or agencies that apply for grants or contracts under this section; provided that the commission shall be held accountable for the use of the funds.

(j) The special fund shall be audited annually by an independent auditor. The results of each annual audit shall be submitted to the department of budget and finance no later than thirty days from the date the commission receives the audit results. The commission shall retain the results of the audit for a period of three years and permit the department of budget and finance, state legislators, and the legislative auditor, or their duly authorized representatives, to inspect and have access to any documents, papers, books, records, and other evidence pertinent to the special fund.

(k) The special fund may receive matching funds from private, federal, or county sources; provided that this matching value may include:

(1) The fair market value of contributions of in-kind goods and services;

(2) Federal funding intended for charter schools that passes through the department as the designated state education agency or local education agency; and

(3) Federal funding that passes through any agency, board, panel, or other subdivision of the State for the benefit of charter schools.

(l) The commission shall submit an annual report on the special fund to the legislature no later than twenty days prior to the convening of each regular session."

SECTION 3. There is appropriated out of the general revenues of the State of Hawaii the sum of $10,000,000 or so much thereof as may be necessary for fiscal year 2013-2014 and the same sum or so much thereof as may be necessary for fiscal year 2014-2015 to be deposited into the Hawaii public charter school facilities special fund established by section 2 of this Act.

The sums appropriated shall be expended by the department of education for the purposes of this Act.

SECTION 4. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval; provided that section 3 shall take effect on July 1, 2013.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	952
TWENTY-SEVENTH LEGISLATURE, 2013
STATE OF HAWAII