Institute Charter Schools & Bond Indebtedness

The act allows a school district board of education (school district) to consider and submit to the eligible electors of the district the question of contracting a bonded indebtedness for capital construction or land and facilities needs of an institute charter school (school) located within the school district. In order for a school district to consider whether to include the capital construction needs of a school located within the school district, the school must submit a capital construction plan to the board of education (board) of the school district. The capital construction plan must include, but is not limited to: Reasons why the school capital construction must be financed by bonded indebtedness; A description of the capital construction that will be financed by bonded indebtedness; A description of the architectural, functional, and construction standards that meet applicable state building code requirements and that will be applied to each facility subject to the capital construction project (project); An estimate of the total costs for completing capital construction that will be financed by the bonded indebtedness; An estimate of the amount of time needed to complete the project; A statement addressing whether the construction or renovation, payment of overrun costs, and other project issues will be managed by the school or the school district and whether costs for project management will be negotiated between the school or the school district; Reasons why revenue sources other than bonded indebtedness are inadequate to fully finance the school capital construction; and The school's proposed method for disbursement of its share of the bonded indebtedness proceeds. When a school district, in its sole discretion, wants to include the capital construction needs of a school in a ballot question, the board must, prior to submitting the ballot question to the voters of the school district, enter into a written agreement with the school that includes: The process by which investment and interest earnings on bonded indebtedness proceeds are distributed and the process by which the investment and interest earnings proceeds and the bonded indebtedness proceeds are released to the school; The allocation of investment and interest earnings on the bonded indebtedness proceeds; Allocation of the costs to submit the ballot question, which must be borne by both the school district and the school in proportion to the respective portions of the total bonded indebtedness proceeds that are to be received; An agreement that if the school's charter is revoked or not renewed, if the school becomes insolvent and can no longer operate as a school, or if the school otherwise ceases to exist, the school district has priority in recovering debt over all other debtors for costs and payments of all other debts secured by the capital construction and that ownership of any capital construction, land, or facilities financed by the bonded indebtedness proceeds automatically reverts to the school district; and An agreement that the school shall not encumber any capital construction financed by bonded indebtedness with any additional debt without the express approval of the school district. If the school district denies approval, the school district shall provide written reasons for the denial. APPROVED by Governor May 18, 2024 EFFECTIVE August 7, 2024(Note: This summary applies to this bill as enacted.)