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AN ACT relating to financing of school building projects. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. KRS 160.160 is amended to read as follows: 3
(1) Each school district shall be under the management and control of a board of 4
education consisting of five (5) members, except in counties containing a city of the 5
first class wherein a merger pursuant to KRS 160.041 shall have been accomplished 6
which shall have seven (7) members elected from the divisions and in the manner 7
prescribed by KRS 160.210(5), to be known as the "Board of Education of ...., 8
Kentucky." Each board of education shall be a body politic and corporate with 9
perpetual succession. It may sue and be sued; make contracts; expend funds 10
necessary for liability insurance premiums and for the defense of any civil action 11
brought against an individual board member in his or her official or individual 12
capacity, or both, on account of an act made in the scope and course of his or her 13
performance of legal duties as a board member; purchase, receive, hold, and sell 14
property; issue its bonds to build and construct improvements; and do all things 15
necessary to accomplish the purposes for which it is created. Each board of 16
education shall elect a chairman and vice chairman from its membership in a 17
manner and for a term prescribed by the board not to exceed two (2) years. 18
(2) In acquiring, constructing, or renovating[No board of education shall participate 19
in any financing of] school buildings, school improvements, appurtenances thereto, 20
or furnishing and equipment, including education technology equipment, a board of 21
education shall establish the[ without]: 22
(a) [First establishing the ]Cost of the project[ in advance of financing,] based on 23
the estimates of the architects or engineers who prepared the plans and 24
specifications or the receipt of advertised, public, and competitive bids for 25
the[such] project, in accordance with KRS Chapter 424; and 26
(b) [Establishing the ]Estimated cost of financing and debt service[in advance of 27 UNOFFICIAL COPY 22 RS BR 1998
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the sale] of any bonds, certificates of participation in any leases, or other 1
evidences of financial commitments to be issued by or on behalf of the[such] 2
board. Any bonds, leases, participations, or other financial arrangements shall 3
be sold[not involve a final commitment of the board until the purchaser or 4
lender involved shall have been determined by public advertising] in 5
accordance with KRS Chapter 424. 6
(3) No board of education shall make a mortgage, lien, or other encumbrance upon any 7
school building owned by the board, or transfer title to any such school building as 8
part of any financing arrangement, without the specific approval of the Department 9
of Education, and without the transaction being entered into pursuant to a detailed 10
plan or procedure specifically authorized by Kentucky statute. 11
(4) Without the approval of the Department of Education, no board may lease, as 12
lessee, a building or public facility that has been or is to be financed at the request 13
of the board or on its behalf through the issuance of bonds, leases, certificates of 14
participation[ by another public body or by a nonprofit corporation serving as an 15
agency and instrumentality of the board, or by a leasing corporation. Any lease, 16
participation], or other financial arrangement[ shall not involve a final commitment 17
of the board] unless and until the purchaser or lender involved in same shall have 18
been determined by public advertising[ in accordance with KRS Chapter 424. No 19
transaction shall be entered into by the board except upon the basis of public 20
advertising] and competitive bidding in accordance with KRS Chapter 424. 21
(5) Rental payments due by a board under a lease approved by the Department of 22
Education in accordance with subsection (4) of this section shall be due and payable 23
not less than ten (10) days prior to the interest due date for the bonds, notes, or other 24
debt obligations issued to finance the building or public facility. If a board fails to 25
make a rental payment when due under a lease, upon notification to the Department 26
of Education by the paying agent, bond registrar, or trustee for the bonds not less 27 UNOFFICIAL COPY 22 RS BR 1998
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than three (3) days prior to the interest due date, the Department of Education shall 1
withhold or intercept any funds then due the board to the extent of the amount of the 2
required payment on the bonds and remit the amount to the paying agent, bond 3
registrar, or trustee as appropriate. Thereafter, the Department of Education shall 4
resolve the matter with the board and adjust remittances to the board to the extent of 5
the amount paid by the Department of Education on the board's behalf. 6
(6) Bonds, notes or leases negotiated to provide education technology shall not be sold 7
for longer than seven (7) years or the useful life of the equipment as established by 8
the state technology master plan, whichever is less. 9
Section 2. KRS 162.160 is amended to read as follows: 10
(1) When any city desires to construct a school building, under the provisions of KRS 11
162.150, the governing body of the city shall, by ordinance, cause plans and 12
specifications for the building to be duly made and filed in the office of the city 13
clerk. The plans and specifications shall give a full description of the building to be 14
constructed, the details thereof and the manner of construction. The plans and 15
specifications shall be prepared by an architect selected by the city and approved by 16
the board of education of the school district, and shall be submitted to the board of 17
education of the school district and to the chief state school officer for approval. 18
(2) If the plans and specifications are approved by [, and if ]the board of education of 19
the school district and the chief state school officer[offers to lease the building 20
under a lease of the kind provided in KRS 162.140], the city governing body shall 21
cause the city clerk to advertise for bids, and thereafter the city governing body, 22
through the mayor, may contract for the construction of the building. 23
Section 3. KRS 162.170 is amended to read as follows: 24
For the purpose of defraying the cost of constructing or acquiring any school buildings 25
and appurtenances for common school purposes under the provisions of KRS 162.150, 26
any city may borrow money and issue negotiable revenue bonds. [No ]Bonds for common 27 UNOFFICIAL COPY 22 RS BR 1998
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school purposes may[shall] be issued if: 1
(1) [until ]The conditions of KRS 162.160(1) have been complied with;[,] and 2
(2) [ until ]Authorized by an ordinance specifying the proposed undertaking, the 3
amount of bonds to be issued, and the maximum rate of interest the bonds are to 4
bear. The ordinance shall further provide that the buildings and appurtenant 5
facilities are to be constructed or acquired under the provisions of KRS 162.150 to 6
162.280. 7