Tennessee 2025-2026 Regular Session

Tennessee Senate Bill SB0593 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1
2	2	HOUSE BILL 224
3	3	By Haston
4	4
5	5	SENATE BILL 593
6	6	By Walley
7	7
8	8
9	9	SB0593
10	10	000957
11	11	- 1 -
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13	13	AN ACT to amend Tennessee Code Annotated, Title 49,
14	14	relative to capital improvements.
15	15
16	16	BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
17	17	SECTION 1. Tennessee Code Annotated, Title 49, Chapter 2, is amended by adding
18	18	the following as a new part:
19	19	49-2-901.
20	20	This part is known and may be cited as the "School District Capital Improvements
21	21	Investment Trust Act."
22	22	49-2-902.
23	23	As used in this part, unless the context otherwise requires:
24	24	(1) "Capital improvements" means construction, renovations,
25	25	improvements, modernizations, and maintenance of buildings, facilities, and
26	26	grounds owned or operated by a local education agency;
27	27	(2) "Capital improvements plan" means a written plan developed by a
28	28	local board of education that details needed capital improvements for a period of
29	29	no less than five (5) years, which may be amended by the LEA;
30	30	(3) "General purpose budget" means the primary fund used to cover daily
31	31	operating expenses of an LEA; and
32	32	(4) "State funding board" or "funding board" means the board created
33	33	pursuant to § 9-9-101.
34	34	49-2-903.
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36	36
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39	39	A local board of education may establish an investment trust for the purpose of
40	40	prospectively funding capital improvements for the benefit of the local board of
41	41	education's LEA. In order for a local board of education to establish and maintain an
42	42	investment trust pursuant to this part, then local board of education shall:
43	43	(1) Adopt a capital improvements plan;
44	44	(2) Maintain a public school fund balance that is no less than two (2)
45	45	months of expenditures from the LEA's general purpose budget;
46	46	(3) Adopt, in writing, an investment policy authorizing how assets in the
47	47	trust may be invested;
48	48	(4) Ensure that the trust conforms to all applicable laws, rules, and
49	49	regulations of the internal revenue service, if any;
50	50	(5) Ensure that the local board of education's capital improvement plan is
51	51	reviewed by a third party; and
52	52	(6) Ensure that the trust document is submitted to, and approved by, the
53	53	state funding board.
54	54	49-2-904.
55	55	(a) A trust created under this part is irrevocable, and the assets thereof must be
56	56	preserved, invested, and expended solely pursuant to, and for the purposes of, this
57	57	section and must not be loaned or otherwise transferred or used for any other purpose.
58	58	The assets of the trust may only be expended to:
59	59	(1) Make payments for capital improvements in accordance with the
60	60	terms of the LEA's capital improvements plan; or
61	61	(2) Pay the costs of administering the trust.
62	62	(b) The department of the treasury may establish investment guidelines for trusts
63	63	established under this part.
64	64
65	65
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68	68	(c) An investment trust created pursuant to this part has the powers, privileges,
69	69	and immunities of a corporation, and all of its business must be transacted, all of its
70	70	funds must be invested, and all of its cash, securities, and other property must be held in
71	71	trust for the purpose for which the trust was created.
72	72	(d) Notwithstanding another law to the contrary, all assets, income, and
73	73	distributions of the investment trust must be protected against the claims of creditors of
74	74	the LEA, including, but not limited to, construction managers, contractors, and sub-
75	75	contractors. Assets, income, and distributions of the investment trust are not subject to
76	76	execution, attachment, garnishment, bankruptcy, insolvency laws, or other process
77	77	whatsoever, and an assignment of any right of any such action is not enforceable
78	78	against the investment trust in any court.
79	79	49-2-905.
80	80	A local board of education that establishes an investment trust under this part
81	81	has all powers necessary or convenient to carry out this part and the purposes and
82	82	objectives of the investment trust, including, but not limited to:
83	83	(1) The power to invest funds of the trust in an instrument, obligation,
84	84	security, or property that constitutes a legal investment, as provided in the
85	85	investment policy adopted pursuant to § 49-2-903(3);
86	86	(2) The power to contract for the provision of a service necessary for the
87	87	management or operation of the investment trust;
88	88	(3) The power to contract with financial consultants, auditors, and other
89	89	consultants as necessary to carry out the local board of education's
90	90	responsibilities under this part;
91	91	(4) The power to prepare annual financial reports, including financial
92	92	statements, at the close of each fiscal year relative to the activities of the trust.
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97	97	The statements and reports must contain the information required by the state
98	98	funding board and must be prepared in accordance with the governmental
99	99	accounting standards board; and
100	100	(5) Upon the request of the state funding board, the power to file the
101	101	annual report and financial statements with the chair of the funding board. The
102	102	report and statements must be filed with the chair no later than ninety (90)
103	103	calendar days from the date of the request, unless the chair extends the deadline
104	104	established in this subdivision (5) in writing.
105	105	49-2-906.
106	106	A local board of education's annual report, including financial statements, and all
107	107	books, accounts, and financial records of a trust created under this part are subject to
108	108	audit by the comptroller of the treasury. An LEA that maintains a trust under this part
109	109	may, with the prior approval of the comptroller of the treasury, engage licensed
110	110	independent public accountants to perform any required audits. An audit contract
111	111	between an LEA and an independent public accountant must be on contract forms
112	112	prescribed by the comptroller of the treasury. The LEA is responsible for the
113	113	reimbursement of the costs of audits prepared by the comptroller of the treasury and for
114	114	the payment of fees for audits prepared by licensed independent public accountants.
115	115	SECTION 2. This act takes effect upon becoming a law, the public welfare requiring it.