HS HB 373 -- SCHOOL BUILDING REVOLVING FUND (Kreider)

Currently, certain excursion gambling boat proceeds must be
transferred to the state school moneys fund.  The substitute
revises these provisions to transfer $50 million of these
proceeds to fund lines 1 through 10 of the foundation formula
completely, to be followed by funds transferred to the school
building revolving fund--$30 million the first year and $15
million thereafter.  The revolving fund will not exceed $440
million in the aggregate.

The bill narrows the use of revolving fund moneys from loans and
grants to lease-purchases only.  A school district may make
application for a lease-purchase when, as in current law, it
meets the minimum criteria for state aid and is accredited for
kindergarten through grade 12, and when it has a bonded
indebtedness of no less than 9% and an equalized assessed
valuation per pupil less than the statewide average. Categories
for application priority are created, in descending order as
follows: (1) districts for which capital replacement costs
exceed insurance proceeds in cases of fire or natural disaster
(to be ranked on basis of percentage of bonding capacity), (2)
districts with a cumulative growth percentage in the third
through fifth previous years in excess of 12%, and (3) districts
with less than the statewide average equalized assessed
valuation per pupil and more than 9% bonded indebtedness.

Lease-purchases must be repaid within 10 years; unobligated
funds must be returned.  Districts defaulting on their payments
will face prosecution, and defaulted property may be claimed by
the state board of education for use as a charter school.
Property purchased by lease-purchase from the revolving fund
will remain the property of the state until the lease-purchase
is repaid, but the state will have no liability for the property
unless the state board of education takes possession upon
payment default.

HB 373 -- SCHOOL BUILDING REVOLVING FUND

SPONSOR:  Kreider

COMMITTEE ACTION:  Voted "do pass" by the Committee on
Education-Elementary and Secondary by a vote of 24 to 0.

This bill stipulates that certain excursion gambling boat
proceeds must first be transferred to fund lines 1 through 10 of
the foundation formula completely, with any excess funds then
being transferred to the school building revolving fund.  The
bill narrows the use of moneys from the building fund from loans
and grants to 15-year loans only. In addition to existing loan
eligibility criteria, school districts may request loans from
the fund when they exceed their bonded indebtedness ceiling.
The limit on total debt is revised to include debt from lease
purchases and obligations to the school building revolving fund
in addition to the current factors of short-term debt and bonded
indebtedness.  Priority will be given to districts in 4
categories, in the following order:  districts replacing a
building destroyed by fire or other disaster for which capital
replacement costs exceed insurance proceeds; districts having a
high percentage of growth in very recent years; districts having
a high percentage of growth sustained over the past several
years; and districts replacing old buildings, based on the
oldest date of construction.  Loan interest follows a sliding
scale from zero percent for districts replacing destroyed
buildings up to the par rate received on invested state funds
for districts replacing old buildings.  Unobligated funds must
be returned, and districts defaulting on their loan payments
will face prosecution.

FISCAL NOTE:  No impact on state funds.

PROPONENTS:  Supporters say that SB 380 created the revolving
fund for building but the fund has not received enough moneys to
be useful.  This bill uses excess gaming revenues to provide
seed money in the neighborhood of $50 million. Placing excess
revenue in the building revolving fund is a fiscally
conservative use for the money, as opposed to using it for
operating funds. The loans provided by this bill would not draw
matching funds for state aid, although they might affect teacher
salary compliance percentages.  The revised priorities for
granting loans would help districts at or near their debt
ceiling and undergoing explosive growth or that have had a
building destroyed.  Even if voters approve HJR 2 raising the
debt ceiling, districts need to start building as soon as
possible; this bill provides a vehicle for districts that need
help.

Testifying for the bill were Represenatatives Kreider and Stoll;
Nixa R-II School District; Ozark R-VI School District;
Cooperating School Districts of Greater Kansas City; School
Administrators Coalition;  and Missouri School Teachers
Association.

OPPONENTS:  There was no opposition voiced to the committee.

Becky DeNeve, Research Analyst

HB 373 -- School Building Revolving Fund

Co-Sponsors:  Kreider, Stoll

This bill stipulates that certain excursion gambling boat
proceeds must first be transferred to fund lines 1 through 10 of
the foundation formula completely, with any excess funds then
being transferred to the school building revolving fund.  The
bill narrows the use of moneys from the building fund from loans
and grants to 15-year loans only. In addition to existing loan
eligibility criteria, school districts may request loans from
the fund when they exceed their bonded indebtedness ceiling.
The limit on total debt is revised to include debt from lease
purchases and obligations to the school building revolving fund
in addition to the current factors of short-term debt and bonded
indebtedness.  Priority will be given to districts in 4
categories, in the following order:  districts replacing a
building destroyed by fire or other disaster for which capital
replacement costs exceed insurance proceeds; districts having a
high percentage of growth in very recent years; districts having
a high percentage of growth sustained over the past several
years; and districts replacing old buildings, based on the
oldest date of construction.  Loan interest follows a sliding
scale from zero percent for districts replacing destroyed
buildings up to the par rate received on invested state funds
for districts replacing old buildings.  Unobligated funds must
be returned, and districts defaulting on their loan payments
will face prosecution.