SLS 15RS-264 REENGROSSED
2015 Regular Session
SENATE BILL NO. 249
BY SENATOR WARD
Prefiled pursuant to Article III, Section 2(A)(4)(b)(i) of the Constitution of Louisiana.
SCHOOLS. Creates the School Choice Loan Fund. (gov sig)
1 AN ACT
2 To enact Part III of Chapter 43 of Title 17 of the Louisiana Revised Statutes of 1950, to be
3 comprised of R.S. 17:4033, relative to school choice; to create and provide for the
4 School Choice Loan Fund; to provide for qualifications and criteria for eligibility for
5 such loans; to provide for the adoption of rules to govern the issuance, use, and
6 repayment of such loans; and to provide for related matters.
7 Be it enacted by the Legislature of Louisiana:
8 Section 1. Part III of Chapter 43 of Title 17 of the Louisiana Revised Statutes of
9 1950, comprised of R.S. 17:4033, is hereby enacted to read as follows:
10 PART III. SCHOOL CHOICE LOAN F UND
11 ยง4033. School Choice Loan Fund; creation; purpose; eligibility; criteria; rules
12 A. The School Choice Loan Fund, hereafter referred to as the "fund",
13 is hereby created within the state treasury for the purpose of providing a source
14 for funding low-interest loans to assist schools with funding to start a new
15 school or expand an existing school.
16 B. All monies appropriated to the fund and any grants, other donations,
17 or other sources of financial assistance directed to the fund shall be deposited
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1 into the fund. Monies in the fund shall be subject to appropriation by the
2 legislature and shall be appropriated to the State Board of Elementary and
3 Secondary Education for allocation by the board as low-interest loans for the
4 purposes provided in this Section. All unexpended and unencumbered monies
5 remaining in the fund at the end of each fiscal year shall remain in the fund.
6 The monies in the fund shall be invested by the state treasurer in accordance
7 with state law, and interest earned on the investment of these monies shall be
8 credited to the fund, after compliance with the requirements of Article VII,
9 Section 9(B) of the Constitution of Louisiana, relative to the Bond Security and
10 Redemption Fund.
11 C.(1) The State Board of Elementary and Secondary Education shall
12 administer the use of the monies appropriated from the fund and, with the
13 guidance of the Louisiana Office of Financial Institutions, shall adopt rules
14 governing a loan application and approval process in accordance with the
15 Administrative Procedure Act. The adopted rules shall include, at a minimum,
16 policies regarding credit, collateral, closing, interest rate, terms, repayment, and
17 the collection process. The rules shall ensure that unless appropriate collateral
18 has been secured, any loan funds received may only be used to purchase
19 equipment or other items which shall become the property of the state if the
20 loan is not fully repaid. The rules shall provide that the state board shall be
21 given superior lien status above any other lien or privilege held against the
22 collateral, or shall provide collateral with no other lien or privilege held against
23 it, and shall provide that all loans shall have a maximum loan-to-value ratio of
24 eighty percent. The rules shall provide that a loan applicant shall provide all
25 financial documentation required by the state board to prove the financial
26 soundness of the applicant, including cash flow projections, current and future
27 projected liabilities, and financial statements. The rules shall provide that loan
28 funding appropriated by the legislature be prioritized to fund applications from
29 public schools or public school districts, while funding from nonpublic sources
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1 be prioritized to fund applications from nonpublic schools. The rules shall also
2 provide that loan funding may only be used for program-related administrative
3 and legal costs and to purchase tangible items such as equipment, technology,
4 instructional materials, and facility acquisition, construction, renovation, and
5 repairs. Such equipment, property, or other items shall become the property of
6 the state if the loan is not fully repaid. The state board may reject any request
7 for loan funding which does not comply with the terms of this Part.
8 (2) Loans shall not exceed one hundred thousand dollars and shall be
9 used only to pay for school start-up or expansion expenses as provided in this
10 Part and state board rule. No money loaned as provided in this Part may be
11 used to pay prior debts of the organization, corporation, or other legal entity
12 which owns, operates, or has any other legal authority over the school, any of
13 the natural persons principally involved in the administration or operation of
14 the school, or any former or current business or nonprofit venture of any
15 natural persons for any purchase not related to the school, or to pay to members
16 of the immediate family of any natural persons, or to make any investments.
17 Section 2. This Act shall become effective upon signature by the governor or, if not
18 signed by the governor, upon expiration of the time for bills to become law without signature
19 by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If
20 vetoed by the governor and subsequently approved by the legislature, this Act shall become
21 effective on the day following such approval.
The original instrument was prepared by Jeanne Johnston. The following
digest, which does not constitute a part of the legislative instrument, was
prepared by Nancy Vicknair.
DIGEST
SB 249 Reengrossed 2015 Regular Session Ward
Proposed law creates the School Choice Loan Fund as follows:
(1)Creates the School Choice Loan Fund (fund) to provide low-interest loans to assist
qualified schools with funding to start a new school or expand an existing school.
(2) Requires that all monies appropriated to the fund and any grants, other donations, or
other sources of financial assistance directed to the fund be deposited into the fund.
Monies in the fund are subject to appropriation by the legislature to the State Board
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of Elementary and Secondary Education (BESE) for allocation as low-interest loans
for the purposes as provided in proposed law. All unexpended and unencumbered
monies remain in the fund at the end of each fiscal year. Monies in the fund are to
be invested by the state treasurer, and interest earned shall be credited to the fund,
after compliance/with constitutional requirements, relative to the Bond Security and
Redemption Fund.
(3)Requires BESE to administer the use of the monies appropriated from the fund and
adopt rules governing a loan application and approval process, with guidance from
OFI, in accordance with the Administrative Procedure Act. Specifies that the rules
adopted include policies regarding credit, collateral, closing, interest rate, terms,
repayment, and the collection process. The rules must include the following
provisions that:
(a)Ensure that, unless appropriate collateral has been secured, loan funds may
be used only to purchase equipment or other items which shall become the
property of the state if the loan is not fully repaid.
(b)Require that BESE be given superior lien status above any other lien or
privilege held against the collateral, or shall provide collateral with no other
lien or privilege held against it, and shall provide that all loans shall have a
maximum loan-to-value ratio of 80%.
(c)Require that a loan applicant provide all financial documentation required by
BESE to prove the financial soundness of the applicant, including cash flow
projections, current and future projected liabilities, and financial statements.
(d)Require that loan funding appropriated by the legislature be prioritized to
fund applications from public schools or public school districts, while
funding from nonpublic sources be prioritized to fund applications from
nonpublic schools.
(e)Require that loan funding be used only for program-related administrative
and legal costs and to purchase tangible items such as equipment,
technology, instructional materials, and facility acquisition, construction,
renovation, and repairs.
(f)Require that any equipment, property, or other items purchased with loan
funds become the property of the state if the loan is not fully repaid.
(4)Authorizes BESE to reject any request for loan funding which does not comply with
proposed law.
(5)Provides that loans shall not exceed $100,000 and shall be used only to pay for
school start-up or expansion expenses as provided by proposed law and state board
rule.
(6)Loan funds may not be used to pay prior debts of the organization, corporation or
other legal entity which owns, operates, or has any other legal authority over the
school, any of the natural persons principally involved in the administration or
operation of the school, or any former or current business or nonprofit venture of any
such natural persons for any purchase not related to the school, or to pay to members
of the immediate family of any such natural persons, or to make any investments.
Effective upon signature of the governor or lapse of time for gubernatorial action.
(Adds R.S. 17:4033)
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Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Education to the
original bill
1. Removes all references to nonpublic schools.
2. Adds requirement that BESE seek guidance from OFI when adopting rules
that govern the loan application and approval process.
3. Adds requirement that BESE be given superior lien status against the
collateral.
4. Adds requirement that loans have a minimum loan-to-value ratio of 80%.
5. Adds requirement that the loan applicant provide all financial documentation
to BESE to prove financial soundness.
Senate Floor Amendments to engrossed bill
1. Adds requirement that loan funding appropriated by the legislature be
prioritized to fund applications from public schools or public school districts,
while funding from nonpublic sources be prioritized to fund applications
from nonpublic schools.
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