EDUCATION BILLS FAVORABLY REPORTED TO THE FINANCE, REVENUE AND BONDING COMMITTEE

You asked for a brief summary of bills the Education Committee reported favorably to the Finance, Revenue and Bonding Committee.

sSB 402 — AN ACT CONCERNING AUTHORIZATION OF STATE GRANT COMMITMENTS FOR SCHOOL BUILDING PROJECTS AND CONCERNING CHANGES TO THE STATUTES CONCERNING SCHOOL BUILDING PROJECTS

The act authorizes $345.37 million in state grant commitments for 29 new school construction projects of various types. It also reauthorizes a total of 17 previously authorized projects, 12 for the first time, three for the third time, and one for the fourth time. These projects have changed substantially (more than 10%) in cost or scope. The reauthorizations increase state grant commitments by a net $87.2 million from the amounts previously authorized for these projects.

The bill requires school project change orders issued after July 1, 2008 to be submitted to the State Department of Education (SDE) within six months of their issuance dates. It excludes any change order not submitted within six months and in a manner prescribed by the education commissioner from project costs eligible for a school construction grant.

A change order is an amendment to a school construction project that does not have to be publicly bid. SDE guidelines state that school districts should use change orders only for unforeseen or emergency conditions arising during construction. The education commissioner reviews change orders to determine if their costs are eligible for state reimbursement.

By law, if the state grant for a school project equals 100% of its eligible cost, the building must be used for the grant purpose for at least 20 years from the date the General Assembly approves the grant. If within the 20-year period, the building's use is changed, its title reverts to the state unless the education commissioner, for good cause, decides otherwise. This bill extends the reversion requirement to projects for which the state pays 95% or more of the project cost.

This change conforms to the 2004 reduction in state grant support for interdistrict magnet school, vocational agriculture center, and regional special education facility projects from 100% to 95% of the eligible cost.

The bill requires applications for state grants for new or replacement school projects filed on or after July 1, 2008 to:

1. identify all potential sites for the project,

2. state that each potential site has been evaluated for programmatic and construction suitability,

3. include two appraisals of the purchase price for each potential site, and

4. include a Phase 1 environmental analysis of each site and, if the education commissioner considers it necessary, a Phase 2 assessment of any site.

For purposes of a grant application, the bill allows an applicant to use the cost of the most expensive site as part of the project's estimated costs. But if the district ultimately uses a less expensive site, it cannot increase the estimated project costs without legislative authorization.

sHB 5594 — AN ACT CONCERNING A CORPORATE TAX CREDIT AND AN INCOME TAX CREDIT FOR DONATIONS TO EDUCATION FOUNDATIONS

The bill establishes credits against the personal income tax and the corporation and other business taxes for donations to nonprofit, tax-exempt educational foundations established to provide private funds to support local and regional school boards. The bill limits aggregate business and personal income tax credits to $3 million per year for each type of credit.

The income tax credit is up to 33% of a monetary donation, with a maximum credit of $25,000 for single and $50,000 for joint filers. The business tax credit is up to 25% of the value of any donation of money, personal property, or services in a single year, or 90% of any such donations made for two consecutive years, with a maximum annual credit of $200,000. The business tax credit applies against the insurance premium, corporation, air carrier, railroad company, cable and satellite t.v., and utility companies taxes.

In each case, the credit cannot exceed the taxpayer's liability for the year the donation is made. Excess credits cannot be carried forward. The business tax credit does not apply to activities that are part of a business' normal course of business.

The bill establishes a process for taxpayers to apply for credits and for the Department of Revenue Services to review and approve credit applications.

EFFECTIVE DATE: Upon passage and applicable to tax and income years starting on or after January 1, 2008.


March 20, 2008		2008-R-0229
EDUCATION BILLS FAVORABLY REPORTED TO THE FINANCE, REVENUE AND BONDING COMMITTEE

By: Judith Lohman, Chief Analyst