HB2555 - 551R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 15-119, Arizona Revised Statutes, is amended to read:

START_STATUTE15-119. Vacant and partially used buildings; list; sale or lease; equipment; definitions

A. The division of school facilities board, in conjunction with within the department of administration, shall annually publish a list of vacant buildings and partially used buildings that are owned by this state or by school districts in this state and that may be suitable for the operation of a school. The division of school facilities board shall make the list publicly available on the website of the division of school facilities board and on request to applicants for charter schools, to applicants applying to the division of school facilities board for additional space and to existing district and charter schools. The list shall include the address of each building, a short description of the building, the name of the owner of the building and any other pertinent information related to the vacancy and capacity of the building. The division of school facilities board shall annually submit the list to the governor, the president of the senate and the speaker of the house of representatives and provide a copy of the list to the secretary of state and the state board for charter schools.

B. If a school district decides to sell or lease a vacant building or partially used building, the school district may not prohibit a charter school or a private school from negotiating to buy or lease the property in the same manner as other potential buyers or lessees. A school district may not accept an offer for the sale or lease of the vacant building or partially used building from a potential buyer or lessee that is less than an offer from a charter school or private school. This section does not require the owner of a building on the list to sell or lease the building or a portion of the building to a charter school, to any other school or to any other prospective buyer or tenant, except that the owner of a building on the list may not withdraw the property from sale or lease solely because a charter school or private school is the highest bidder. At the conclusion of a lease for an existing tenant that is a public school or that is providing services to public school students, the lease may be terminated, renewed according to the terms of the existing agreement, or renewed with a negotiated increase. The building owner must provide the rationale for a proposed increase to the lessee, which may include considerations for the percentage of revenue that should be dedicated to educational facilities, inflators related to student enrollment increases or the annual GDP price deflator as defined in section 41‑563, or expenses for building and parking lot maintenance and upgrades.

C. A school district may sell used equipment to a charter school or private school before the school district attempts to sell or dispose of the equipment by other means.

D. Buildings that are used for career and technical education, special education services, preschool programs, schools that have been open for less fewer than five years or magnet schools are not considered partially used buildings for the purposes of this section, except that these exemptions this exemption may not be applied to more than twenty‑five percent of a district's school buildings.

E. For the purposes of this section:

1. "Partially used building" means a building with at least four thousand five hundred square feet of contiguous, unused space.

2. "Vacant building" means a building that has been vacant and unused for at least two years. END_STATUTE

Sec. 2. Section 15-181, Arizona Revised Statutes, is amended to read:

START_STATUTE15-181. Charter schools; purpose; scope

A. Charter schools may be established pursuant to this article to provide a learning environment that will improve pupil achievement. Charter schools provide additional academic choices for parents and pupils. Charter schools may consist of new schools or all or any portion of an existing school. Charter schools are public schools that serve as alternatives to traditional public schools and charter schools are not subject to the requirements of article XI, section 1, Constitution of Arizona, or title 41, chapter 16 of this title 56.

B. Charter schools shall comply with all provisions of this article in order to receive state funding as prescribed in section 15‑185. END_STATUTE

Sec. 3. Section 15-203, Arizona Revised Statutes, is amended to read:

START_STATUTE15-203. Powers and duties

A. The state board of education shall:

1. Exercise general supervision over and regulate the conduct of the public school system and adopt any rules and policies it deems necessary to accomplish this purpose.

2. Keep a record of its proceedings.

3. Make rules for its own government.

4. Determine the policy and work undertaken by it.

5. Subject to title 41, chapter 4, article 4, employ staff.

6. Prescribe and supervise the duties of its employees pursuant to title 41, chapter 4, article 4, if not otherwise prescribed by statute.

7. Delegate to the superintendent of public instruction the execution of board policies and rules.

8. Recommend to the legislature changes or additions to the statutes pertaining to schools.

9. Prepare, publish and distribute reports concerning the educational welfare of this state.

10. Prepare a budget for expenditures necessary for proper maintenance of the board and accomplishment of its purposes and present the budget to the legislature.

11. Aid in the enforcement of laws relating to schools.

12. Prescribe a minimum course of study in the common schools, minimum competency requirements for the promotion of pupils from the third grade and minimum course of study and competency requirements for the promotion of pupils from the eighth grade. The state board of education shall prepare a fiscal impact statement of any proposed changes to the minimum course of study or competency requirements and, on completion, shall send a copy to the director of the joint legislative budget committee and the executive director of the school facilities board school facilities division within the department of administration. The state board of education shall not adopt any changes in the minimum course of study or competency requirements in effect on July 1, 1998 that will have a fiscal impact on school capital costs.

13. Prescribe minimum course of study and competency requirements for the graduation of pupils from high school. The state board of education shall prepare a fiscal impact statement of any proposed changes to the minimum course of study or competency requirements and, on completion, shall send a copy to the director of the joint legislative budget committee and the executive director of the school facilities board school facilities division within the department of administration. The state board of education shall not adopt any changes in the minimum course of study or competency requirements in effect on July 1, 1998 that will have a fiscal impact on school capital costs.

14. Pursuant to section 15‑501.01, supervise and control the certification of persons engaged in instructional work directly as any classroom, laboratory or other teacher or indirectly as a supervisory teacher, speech therapist, principal or superintendent in a school district, including school district preschool programs, or any other educational institution below the community college, college or university level, and prescribe rules for certification.

15. Adopt a list of approved tests for determining special education assistance to gifted pupils as defined in and as provided in chapter 7, article 4.1 of this title. The adopted tests shall provide separate scores for quantitative reasoning, verbal reasoning and nonverbal reasoning and shall be capable of providing reliable and valid scores at the highest ranges of the score distribution.

16. Adopt rules governing the methods for the administration of all proficiency examinations.

17. Adopt proficiency examinations for its use and determine the passing score for the proficiency examinations.

18. Include within its budget the cost of contracting for the purchase, distribution and scoring of the examinations as provided in paragraphs 16 and 17 of this subsection.

19. Supervise and control the qualifications of professional nonteaching school personnel and prescribe standards relating to qualifications. The standards shall not require the business manager of a school district to obtain certification from the state board of education.

20. Impose such disciplinary action, including the issuance of a letter of censure, suspension, suspension with conditions or revocation of a certificate, on a finding of immoral or unprofessional conduct.

21. Establish an assessment, data gathering and reporting system for pupil performance as prescribed in chapter 7, article 3 of this title, including qualifying examinations for the college credit by examination incentive program pursuant to section 15‑249.06.

22. Adopt a rule to promote braille literacy pursuant to section 15‑214.

23. Adopt rules prescribing procedures for the investigation by the department of education of every written complaint alleging that a certificated person has engaged in immoral conduct.

24. For purposes of federal law, serve as the state board for vocational and technological education and meet at least four times each year solely to execute the powers and duties of the state board for vocational and technological education.

25. Develop and maintain a handbook for use in the schools of this state that provides guidance for the teaching of moral, civic and ethical education. The handbook shall promote existing curriculum frameworks and shall encourage school districts to recognize moral, civic and ethical values within instructional and programmatic educational development programs for the general purpose of instilling character and ethical principles in pupils in kindergarten programs and grades one through twelve.

26. Require pupils to recite the following passage from the declaration of independence for pupils in grades four through six at the commencement of the first class of the day in the schools, except that a pupil shall not be required to participate if the pupil or the pupil's parent or guardian objects:

We hold these truths to be self‑evident, that all men are created equal, that they are endowed by their creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness. That to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed. . . .

27. Adopt rules that provide for certification reciprocity pursuant to section 15‑501.01.

28. Adopt rules that provide for the presentation of an honorary high school diploma to a person who has never obtained a high school diploma and who meets both of the following requirements:

(a) Currently resides in this state.

(b) Provides documented evidence from the department of veterans' services that the person enlisted in the armed forces of the United States and served in World War I, World War II, the Korean conflict or the Vietnam conflict.

29. Cooperate with the Arizona‑Mexico commission in the governor's office and with researchers at universities in this state to collect data and conduct projects in the United States and Mexico on issues that are within the scope of the duties of the department of education and that relate to quality of life, trade and economic development in this state in a manner that will help the Arizona‑Mexico commission to assess and enhance the economic competitiveness of this state and of the Arizona‑Mexico region.

30. Adopt rules to define and provide guidance to schools as to the activities that would constitute immoral or unprofessional conduct of certificated persons.

31. Adopt guidelines to encourage pupils in grades nine, ten, eleven and twelve to volunteer for twenty hours of community service before graduation from high school. A school district that complies with the guidelines adopted pursuant to this paragraph is not liable for damages resulting from a pupil's participation in community service unless the school district is found to have demonstrated wanton or reckless disregard for the safety of the pupil and other participants in community service. For the purposes of this paragraph, "community service" may include service learning. The guidelines shall include the following:

(a) A list of the general categories in which community service may be performed.

(b) A description of the methods by which community service will be monitored.

(d) Orientation and notification procedures of community service opportunities for pupils entering grade nine, including the development of a notification form. The notification form shall be signed by the pupil and the pupil's parent or guardian, except that a pupil shall not be required to participate in community service if the parent or guardian notifies the principal of the pupil's school in writing that the parent or guardian does not wish the pupil to participate in community service.

(e) Procedures for a pupil in grade nine to prepare a written proposal that outlines the type of community service that the pupil would like to perform and the goals that the pupil hopes to achieve as a result of community service. The pupil's written proposal shall be reviewed by a faculty advisor, a guidance counselor or any other school employee who is designated as the community service program coordinator for that school. The pupil may alter the written proposal at any time before performing community service.

(f) Procedures for a faculty advisor, a guidance counselor or any other school employee who is designated as the community service program coordinator to evaluate and certify the completion of community service performed by pupils.

32. To facilitate the transfer of military personnel and their dependents to and from the public schools of this state, pursue, in cooperation with the Arizona board of regents, reciprocity agreements with other states concerning the transfer credits for military personnel and their dependents. A reciprocity agreement entered into pursuant to this paragraph shall:

(a) Address procedures for each of the following:

(i) The transfer of student records.

(ii) Awarding credit for completed coursework.

(iii) Permitting a student to satisfy the graduation requirements prescribed in section 15‑701.01 through the successful performance on comparable exit‑level assessment instruments administered in another state.

(b) Include appropriate criteria developed by the state board of education and the Arizona board of regents.

33. Adopt guidelines that school district governing boards shall use in identifying pupils who are eligible for gifted programs and in providing gifted education programs and services. The state board of education shall adopt any other guidelines and rules that it deems necessary in order to carry out the purposes of chapter 7, article 4.1 of this title.

34. For each of the alternative textbook formats of human-voiced audio, large‑print and braille, designate alternative media producers to adapt existing standard print textbooks or to provide specialized textbooks, or both, for pupils with disabilities in this state. Each alternative media producer shall be capable of producing alternative textbooks in all relevant subjects in at least one of the alternative textbook formats. The board shall post the designated list of alternative media producers on its website.

35. Adopt a list of approved professional development training providers for use by school districts as provided in section 15‑107, subsection J. The professional development training providers shall meet the training curriculum requirements determined by the state board of education in at least the areas of school finance, governance, employment, staffing, inventory and human resources, internal controls and procurement.

36. Adopt rules to prohibit a person who violates the notification requirements prescribed in section 15‑183, subsection C, paragraph 8 or section 15‑550, subsection C from certification pursuant to this title until the person is no longer charged or is acquitted of any offenses listed in section 41‑1758.03, subsection B. The state board shall also adopt rules to prohibit a person who violates the notification requirements, certification surrender requirements or fingerprint clearance card surrender requirements prescribed in section 15‑183, subsection C, paragraph 9 or section 15‑550, subsection D from certification pursuant to this title for at least ten years after the date of the violation.

37. Adopt rules for the alternative certification of teachers of nontraditional foreign languages that allow for the passing of a nationally accredited test to substitute for the education coursework required for certification.

38. Adopt rules to define competency‑based educational pathways for college and career readiness that may be used by schools. The rules shall include the following components:

(a) The establishment of learning outcomes that will be expected for students in a particular subject.

(b) A process and criteria by which assessments may be identified or established to determine whether students have reached the desired competencies in a particular subject.

(c) A mechanism to allow pupils in grades seven through twelve who have demonstrated competency in a subject to immediately obtain credit for the mastery of that subject. The rules shall include a list of applicable subjects, including the level of competency required for each subject.

39. In consultation with the department of health services, the department of education, medical professionals, school health professionals, school administrators and an organization that represents school nurses in this state, adopt rules that prescribe the following for school districts and charter schools:

(a) Annual training in the administration of auto‑injectable epinephrine for designated medical and nonmedical school personnel. The annual training prescribed in this subdivision is optional during any fiscal year in which a school does not stock epinephrine auto‑injectors at the school during that fiscal year.

(b) Annual training for all school site personnel on the recognition of anaphylactic shock symptoms and the procedures to follow when anaphylactic shock occurs, following the national guidelines of the American academy of pediatrics. The annual training prescribed in this subdivision is optional during any fiscal year in which a school does not stock epinephrine auto‑injectors at the school during that fiscal year.

(d) Procedures for annually requesting a standing order for epinephrine auto‑injectors pursuant to section 15‑157 from the chief medical officer of the department of health services, the chief medical officer of a county health department, a doctor of medicine licensed pursuant to title 32, chapter 13 or a doctor of osteopathic medicine licensed pursuant to title 32, chapter 17.

(e) Procedures for reporting the use of epinephrine auto‑injectors to the department of health services.

40. In consultation with the department of education, medical professionals, school health professionals, school administrators and an organization that represents school nurses in this state, adopt rules that prescribe the following for school districts and charter schools that elect to administer inhalers:

(a) Annual training in the recognition of respiratory distress symptoms and the procedures to follow when respiratory distress occurs, in accordance with good clinical practice, and the administration of inhalers, as directed on the prescription protocol, by designated medical and nonmedical school personnel.

(b) Requirements for school districts and charter schools that elect to administer inhalers to designate at least two employees at each school to be trained in the recognition of respiratory distress symptoms and the procedures to follow when respiratory distress occurs, in accordance with good clinical practice, and at least two employees at each school to be trained in the administration of inhalers, as directed on the prescription protocol.

(d) Procedures for annually requesting a standing order for inhalers and spacers or holding chambers pursuant to section 15‑158 from the chief medical officer of a county health department, a physician licensed pursuant to title 32, chapter 13 or 17 or a nurse practitioner licensed pursuant to title 32, chapter 15.

(e) Procedures for notifying a parent once an inhaler has been administered.

41. Adopt rules for certification that allow substitute teachers who can demonstrate primary teaching responsibility in a classroom as defined by the state board of education to use the time spent in that classroom toward the required capstone experience for standard teaching certification.

42. For the purposes of Sandra Day O'Connor civics celebration day instruction under section 15‑710.01, develop a list of recommended resources relating to civics education that align with the academic standards prescribed by the state board of education in social studies pursuant to sections 15‑701 and 15‑701.01. The state board shall establish a process that allows public schools to recommend resources for addition to the list.

B. The state board of education may:

1. Contract.

2. Sue and be sued.

3. Distribute and score the tests prescribed in chapter 7, article 3 of this title.

4. Provide for an advisory committee to conduct hearings and screenings to determine whether grounds exist to impose disciplinary action against a certificated person, whether grounds exist to reinstate a revoked or surrendered certificate and whether grounds exist to approve or deny an initial application for certification or a request for renewal of a certificate. The board may delegate its responsibility to conduct hearings and screenings to its advisory committee. Hearings shall be conducted pursuant to title 41, chapter 6, article 6.

5. Proceed with the disposal of any complaint requesting disciplinary action or with any disciplinary action against a person holding a certificate as prescribed in subsection A, paragraph 14 of this section after the suspension or expiration of the certificate or surrender of the certificate by the holder.

6. Assess costs and reasonable attorney fees against a person who files a frivolous complaint or who files a complaint in bad faith. Costs assessed pursuant to this paragraph shall not exceed the expenses incurred by the department of education in the investigation of the complaint. END_STATUTE

Sec. 4. Section 15-213.01, Arizona Revised Statutes, is amended to read:

START_STATUTE15-213.01. Procurement practices; guaranteed energy cost savings contracts; definitions

A. Notwithstanding section 15‑213, subsection A, a school district may contract for the procurement of a guaranteed energy cost savings contract with a qualified provider through a competitive sealed proposal process as provided by the procurement practices adopted by the state board of education.

B. A school district may enter into a guaranteed energy cost savings contract with a qualified provider if it determines that the energy savings project pays for itself within the expected life, according to the manufacturer's equipment standards, of the energy cost savings measures implemented, the term of the financial agreement or twenty‑five years, whichever is shortest, if the recommendations in the proposal are followed. The school district shall retain the cost savings achieved by a guaranteed energy cost savings contract, and these cost savings may be used to pay for the contract and project implementation.

C. The school district shall use objective criteria in selecting the qualified provider, including the cost of the contract, the energy cost savings, the net projected energy savings, the quality of the technical approach, the quality of the project management plan, the financial solvency of the qualified provider and the experience of the qualified provider with projects of similar size and scope. The school district shall set forth each criterion with its respective numerical weighting in the request for proposal.

D. In selecting a contractor to perform any construction work related to performing the guaranteed energy cost savings contract, the qualified provider may develop and use a prequalification process for contractors. These prequalifications may require the contractor to demonstrate that the contractor is adequately bonded to perform the work and that the contractor has not failed to perform on a prior job.

E. A study shall be performed by the selected qualified provider in order to establish the exact scope of the guaranteed energy cost savings contract, the fixed cost savings guarantee amount and the methodology for determining actual savings. This report shall be reviewed and approved by the school district before the actual installation of any equipment. The qualified provider shall transmit a copy of the approved study to the division of school facilities board within the department of administration and the governor's office of energy policy.

F. The guaranteed energy cost savings contract shall require that, in determining whether the projected energy savings calculations have been met, the energy savings shall be computed by comparing the energy baseline before installation or implementation of the energy cost savings measures with the energy consumed after installation or implementation of the energy cost savings measures. The qualified provider and the school district may agree to make modifications to the energy baseline only for any of the following:

1. Changes in utility rates.

2. Changes in the number of days in the utility billing cycle.

3. Changes in the square footage of the facility.

4. Changes in the operational schedule of the facility.

5. Changes in facility temperature.

6. Significant changes in the weather.

7. Significant changes in the amount of equipment or lighting used in the facility.

8. Significant changes in the nature or intensity of energy use, such as the change of classroom space to laboratory space.

G. The information to develop the energy baseline shall be derived from historical energy costs or actual energy measurements or shall be calculated from energy measurements at the facility where energy cost savings measures are to be installed or implemented. The baseline shall be established before the installation or implementation of energy cost savings measures.

H. At the qualified provider's expense, the proposal shall include an independent third‑party validation of cost savings calculations associated with each proposed energy cost savings measure by a licensed, registered professional engineer, with credentials from the national association of energy engineers, who has demonstrated experience in energy analysis. The school district must approve the selection of the credentialed engineer.

I. A school district, or two or more school districts, may enter into a financing agreement with a qualified provider or the financial institution, trustee or paying agent for the purchase and installation or implementation of energy cost savings measures. The guaranteed energy cost savings contract may provide for payments over a period of not more than the expected life, according to the manufacturer's equipment standards, of the energy cost savings measures implemented, the term of the financial agreement or twenty‑five years, whichever is shortest. The contract shall provide that all payments, except obligations on termination of the contract before its expiration, shall be made pursuant to the terms of the financing agreement. If a school district purchases the energy cost savings measure, the qualified provider shall guarantee that the energy cost savings meet or exceed the school district's total cost of the energy savings project purchase.

J. The guaranteed energy cost savings contract shall include a written guarantee of the qualified provider that the energy savings will meet or exceed the costs of the energy cost savings measures over the expected life, according to the manufacturer's equipment standards, of the energy cost savings measures implemented, the term of the financial agreement or twenty‑five years, whichever is shortest. The qualified provider shall:

1. For the term of the guaranteed energy cost savings contract, prepare a measurement and verification report on an annual basis in addition to an annual reconciliation of savings.

2. Reimburse the school district for any shortfall of guaranteed energy cost savings on an annual basis.

3. Use the international performance and measurement and verification protocol standards or the federal energy management program standards to validate the savings guarantee.

K. The school district may obtain any required financing as part of the original competitive sealed proposal process from the qualified provider or a third-party financing institution.

L. A qualified provider that is awarded the contract shall give a sufficient bond to the school district for its faithful performance of the equipment installment.

M. The qualified provider is required to make public the information in the subcontractor's bids only if the qualified provider is awarded the guaranteed energy cost savings contract by the school district.

N. For all projects carried out under this section, the district shall report to the governor's office of energy policy:

1. The name of the project.

2. The name of the qualified provider.

3. The total cost of the project.

4. The expected energy cost savings and relevant escalators.

5. The agreed‑on baseline in the measurement and verification agreement in both kilowatt hours and dollars.

O. This section does not apply to the construction of new buildings.

P. A school district may use a simplified energy performance contract for projects that are less than five hundred thousand dollars $500,000. Simplified energy performance contracts are not required to include an energy savings guarantee and shall comply with all requirements in this section except for the requirements that are specifically related to the energy savings guarantee and the measurement and verification of the guaranteed savings.

Q. For the purposes of this section:

1. "Construction" means the process of building, altering, repairing, improving or demolishing any school district structure or building, or other public improvements of any kind to any school district real property. Construction does not include the routine operation, routine repair or routine maintenance of existing structures, buildings or real property.

2. "Energy baseline" means a calculation of the amount of energy used in an existing facility before the installation or implementation of the energy cost savings measures.

3. "Energy cost savings measure" means a training program or facility alteration designed to reduce energy consumption and may include one or more of the following, and any related meters or other measuring devices:

(a) Insulating the building structure or systems in the building.

(b) Storm windows or doors, caulking or weather stripping, multiglazed windows or door systems, additional glazing, reductions in glass area, or other window and door system modifications that reduce energy consumption.

(d) Heating, ventilating or air conditioning system modifications or replacements, including geothermal.

(e) Replacing or modifying lighting fixtures to increase the energy efficiency of the lighting system without increasing the overall illumination of a facility unless an increase in illumination is necessary to conform to the applicable state or local building code for the lighting system after the proposed modifications are made.

(f) Indoor air quality improvements to increase air quality that conform to the applicable state or local building code requirements.

(g) Energy recovery systems.

(h) Installing a new or retrofitting an existing day lighting system.

(i) Procurement of low‑cost utility supplies of all types, including electricity, natural gas, propane and water.

(j) Devices that reduce water consumption and water costs or that reduce sewer charges.

(k) Rainwater harvesting systems.

(l) Combined heat and power systems.

(m) Renewable and alternative energy projects and renewable energy power service agreements.

(n) Self‑generation systems.

(o) Any additional building systems and infrastructure that produce energy, or that provide utility cost savings not specifically mentioned in this paragraph, if the improvements meet the life‑cycle cost requirement and enhance building system performance or occupant comfort and safety, excluding those systems that fall under section 15‑213.02.

(p) Geothermal.

4. "Guaranteed energy cost savings contract" means a contract for implementing one or more energy cost savings measures.

5. "Life‑cycle cost" means the sum of present values of investment costs, capital costs, installation costs, energy costs, operating costs, maintenance costs and disposal costs and utility rebates over the life of the project, product or measure as provided by federal life‑cycle cost rules, regulations and criteria contained in the United States department of energy federal energy management program "guidance on life‑cycle cost analysis" required by executive order 13423, January 2007.

6. "Qualified provider" means a person or a business that is experienced in designing, implementing or installing energy cost savings measures, that has a record of established projects or measures of similar size and scope, that has demonstrated technical, operational, financial and managerial capabilities to design and operate energy cost savings measures and projects and that has the financial ability to satisfy guarantees for energy cost savings. END_STATUTE

Sec. 5. Section 15-213.03, Arizona Revised Statutes, is amended to read:

START_STATUTE15-213.03. Procurement practices; guaranteed energy production contracts; definitions

A. Notwithstanding section 15‑213, subsection A, a school district may contract for the procurement of procure a guaranteed energy production contract with a qualified provider through a competitive sealed proposal process as provided by the procurement practices adopted by the state board of education.

B. The school district shall use objective criteria in selecting the qualified provider, including the guaranteed energy price, the guaranteed energy production, the quality of the technical approach, the quality of the project management plan, the financial solvency of the qualified provider and the experience of the qualified provider with projects of similar size and scope. The school district shall set forth each criterion with its respective numerical weighting in the request for proposal.

C. In selecting a contractor to perform any construction work related to performing the guaranteed energy production contract, the qualified provider may develop and use a prequalification process for contractors. These prequalifications may require the contractor to demonstrate that the contractor is adequately bonded to perform the work and that the contractor has not failed to perform on a prior job.

D. When submitting a proposal for the installation of equipment, the qualified provider shall include information containing the guaranteed energy production associated with each proposed energy production measure. The school district shall review and approve this guarantee before the actual installation of any equipment. The qualified provider shall transmit a copy of the approved guarantee to the division of school facilities board within the department of administration and to the governor's office of energy policy.

E. A guaranteed energy production contract shall include a guaranteed energy price, and a written guaranteed energy production as measured on an annual basis over the expected life of the energy production measures implemented or within twenty‑five years, whichever is shorter. The qualified provider shall:

1. Prepare a measurement and verification report on an annual basis in addition to an annual reconciliation of any guaranteed energy production shortfall.

2. Reimburse the school district for any guaranteed energy production shortfall on an annual basis by multiplying any energy production shortfall by either the difference between the guaranteed energy price and the effective utility rate, or an alternative method as mutually agreed on by the school district and the qualified provider.

F. The school district may obtain any required financing as part of the original competitive sealed proposal process from the qualified provider or a third-party financing institution.

G. A qualified provider that is awarded the contract shall give a sufficient bond to the school district for its faithful performance of the equipment installment.

H. The qualified provider is required to make public information in the subcontractor's bids only if the school district awards the qualified provider the guaranteed energy production contract.

I. For all projects carried out under this section, the district shall report to the governor's office of energy policy and the division of school facilities board within the department of administration:

1. The name of the project.

2. The name of the qualified provider.

3. The total cost of the project.

4. The expected guaranteed energy production and guaranteed energy price, including relevant escalators, if applicable, over the term of the guaranteed energy production contract.

J. For all projects carried out under this section, the district shall report to the division of school facilities board within the department of administration, by October 15 each year, the actual energy production and guaranteed energy price.

K. For the purposes of this section:

1. "Actual energy production" means the actual amount of energy that flows from the energy production measure on an annual basis as measured by a meter in kilowatt hours alternating current.

2. "Construction" means the process of building, altering, repairing, improving or demolishing any school district structure or building, or other public improvements of any kind to any school district real property. Construction does not include the routine operation, routine repair or routine maintenance of existing structures, buildings or real property.

3. "Effective utility rate" means the average price per kilowatt hour that a school district paid to its utility provider for electricity service to the facility that is the subject of the guaranteed energy production contract over the previous twelve months.

4. "Energy production measure" means renewable and alternative energy projects or renewable energy power service agreements.

5. "Guaranteed energy price" means the agreed on price to be charged to the school for each kilowatt hour alternating current of actual energy production as such may change on an annual basis as set forth in the guaranteed energy production contract.

6. "Guaranteed energy production" means the amount of energy, measured in kilowatt hours alternating current, that the qualified provider guarantees for each year of the guaranteed energy production contract.

7. "Guaranteed energy production contract" means a contract for implementing one or more energy production measures between one or more qualified providers and a school district.

8. "Guaranteed energy production shortfall" means the amount, if any, that the actual energy production is less than the guaranteed energy production in any given year.

9. "Qualified provider" means a person or a business that is experienced in designing, implementing or installing energy cost savings measures, that has demonstrated technical, operational, financial and managerial capabilities to design and operate cost savings measures and projects and that has the financial ability to satisfy guarantees for guaranteed energy production, financial solvency and experience for projects of similar size and scope. END_STATUTE

Sec. 6. Section 15-341, Arizona Revised Statutes, is amended to read:

START_STATUTE15-341. General powers and duties; immunity; delegation

A. The governing board shall:

1. Prescribe and enforce policies and procedures for the governance of to govern the schools that are not inconsistent with law or rules prescribed by the state board of education.

2. Exclude from schools all books, publications, papers or audiovisual materials of a sectarian, partisan or denominational character. This paragraph does not prohibit the elective course permitted by section 15‑717.01.

3. Manage and control the school property within its district, except that a district may enter into a partnership with an entity, including a charter school, another school district or a military base, to operate a school or offer educational services in a district building, including at a vacant or partially used building, or in any building on the entity's property pursuant to a written agreement between the parties.

4. Acquire school furniture, apparatus, equipment, library books and supplies for the use of the schools to use.

5. Prescribe the curricula and criteria for the promotion promoting and graduation of graduating pupils as provided in sections 15‑701 and 15‑701.01.

6. Furnish, repair and insure, at full insurable value, the school property of the district.

7. Construct school buildings on approval by a vote of the district electors.

8. Make In the name of the district, conveyances of convey property belonging to the district and sold by the board.

9. Purchase school sites when authorized by a vote of the district at an election conducted as nearly as practicable in the same manner as the election provided in section 15‑481 and held on a date prescribed in section 15‑491, subsection E, but such authorization shall not necessarily specify the site to be purchased and such authorization shall not be necessary to exchange unimproved property as provided in section 15‑342, paragraph 23.

10. Construct, improve and furnish buildings used for school purposes when such buildings or premises are leased from the national park service.

11. Purchase school sites or construct, improve and furnish school buildings from the proceeds of the sale of school property only on approval by a vote of the district electors.

12. Hold pupils to strict account for disorderly conduct on school property.

13. Discipline students for disorderly conduct on the way to and from school.

14. Except as provided in section 15‑1224, deposit all monies received by the district as gifts, grants and devises with the county treasurer who shall credit the deposits as designated in the uniform system of financial records. If not inconsistent with the terms of the gifts, grants and devises given, any balance remaining after expenditures for the intended purpose of the monies have been made shall be used for reduction of school district taxes for the budget year, except that in the case of accommodation schools the county treasurer shall carry the balance forward for use by the county school superintendent for accommodation schools for the budget year.

15. Provide that, if a parent or legal guardian chooses not to accept a decision of the teacher as provided in paragraph 42 of this subsection, the parent or legal guardian may request in writing that the governing board review the teacher's decision. This paragraph does not release school districts from any liability relating to a child's promotion or retention.

16. Provide for adequate supervision over pupils in instructional and noninstructional activities by certificated or noncertificated personnel.

17. Use school monies received from the state and county school apportionment exclusively for payment of to pay salaries of teachers and other employees and contingent expenses of the district.

18. Make an annual Annually report to the county school superintendent on or before October 1 in the manner and form and on the blanks prescribed by the superintendent of public instruction or county school superintendent. The board shall also make reports directly to the county school superintendent or the superintendent of public instruction whenever required.

19. Deposit all monies received by school districts other than student activities monies or monies from auxiliary operations as provided in sections 15‑1125 and 15‑1126 with the county treasurer to the credit of the school district except as provided in paragraph 20 of this subsection and sections 15‑1223 and 15‑1224, and the board shall expend the monies as provided by law for other school funds.

20. Establish bank accounts in which the board during a month may deposit miscellaneous monies received directly by the district. The board shall remit monies deposited in the bank accounts at least monthly to the county treasurer for deposit as provided in paragraph 19 of this subsection and in accordance with the uniform system of financial records.

21. Prescribe and enforce policies and procedures for disciplinary action against a teacher who engages in conduct that is a violation of the policies of the governing board but that is not cause for dismissal of the teacher or for revocation of the certificate of the teacher. Disciplinary action may include suspension without pay for a period of time not to exceed ten school days. Disciplinary action shall not include suspension with pay or suspension without pay for a period of time longer than ten school days. The procedures shall include notice, hearing and appeal provisions for violations that are cause for disciplinary action. The governing board may designate a person or persons to act on behalf of the board on these matters.

22. Prescribe and enforce policies and procedures for disciplinary action against an administrator who engages in conduct that is a violation of the policies of the governing board regarding duties of administrators but that is not cause for dismissal of the administrator or for revocation of the certificate of the administrator. Disciplinary action may include suspension without pay for a period of time not to exceed ten school days. Disciplinary action shall not include suspension with pay or suspension without pay for a period of time longer than ten school days. The procedures shall include notice, hearing and appeal provisions for violations that are cause for disciplinary action. The governing board may designate a person or persons to act on behalf of the board on these matters. For violations that are cause for dismissal, the provisions of notice, hearing and appeal in chapter 5, article 3 of this title shall apply. The filing of a timely request for a hearing suspends the imposition of a suspension without pay or a dismissal pending completion of the hearing.

23. Notwithstanding sections 13‑3108 and 13‑3120, prescribe and enforce policies and procedures that prohibit a person from carrying or possessing a weapon on school grounds unless the person is a peace officer or has obtained specific authorization from the school administrator.

24. Prescribe and enforce policies and procedures relating to the health and safety of all pupils participating in district‑sponsored practice sessions or games or other interscholastic athletic activities, including:

(a) The provision of water.

(b) Guidelines, information and forms, developed in consultation with a statewide private entity that supervises interscholastic activities, to inform and educate coaches, pupils and parents of the dangers of concussions and head injuries and the risks of continued participation in athletic activity after a concussion. The policies and procedures shall require that, before a pupil participates in an athletic activity, the pupil and the pupil's parent must sign an information form at least once each school year that states that the parent is aware of the nature and risk of concussion. The policies and procedures shall require that a pupil who is suspected of sustaining a concussion in a practice session, game or other interscholastic athletic activity be immediately removed from the athletic activity and that the pupil's parent or guardian be notified. A coach from the pupil's team or an official or a licensed health care provider may remove a pupil from play. A team parent may also remove the parent's own child from play. A pupil may return to play on the same day if a health care provider rules out a suspected concussion at the time the pupil is removed from play. On a subsequent day, the pupil may return to play if the pupil has been evaluated by and received written clearance to resume participation in athletic activity from a health care provider who has been trained in the evaluation and management of concussions and head injuries. A health care provider who is a volunteer and who provides clearance to participate in athletic activity on the day of the suspected injury or on a subsequent day is immune from civil liability with respect to all decisions made and actions taken that are based on good faith implementation of the requirements of this subdivision, except in cases of gross negligence or wanton or wilful neglect. A school district, school district employee, team coach, official or team volunteer or a parent or guardian of a team member is not subject to civil liability for any act, omission or policy undertaken in good faith to comply with the requirements of this subdivision or for a decision made or an action taken by a health care provider. A group or organization that uses property or facilities owned or operated by a school district for athletic activities shall comply with the requirements of this subdivision. A school district and its employees and volunteers are not subject to civil liability for any other person or organization's failure or alleged failure to comply with the requirements of this subdivision. This subdivision does not apply to teams that are based in another state and that participate in an athletic activity in this state. For the purposes of this subdivision, athletic activity does not include dance, rhythmic gymnastics, competitions or exhibitions of academic skills or knowledge or other similar forms of physical noncontact activities, civic activities or academic activities, whether engaged in for the purposes of competition or recreation. For the purposes of this subdivision, "health care provider" means a physician who is licensed pursuant to title 32, chapter 13 or 17, an athletic trainer who is licensed pursuant to title 32, chapter 41, a nurse practitioner who is licensed pursuant to title 32, chapter 15, and a physician assistant who is licensed pursuant to title 32, chapter 25.

(c) Guidelines, information and forms that are developed in consultation with a statewide private entity that supervises interscholastic activities to inform and educate coaches, pupils and parents of the dangers of heat-related illnesses, sudden cardiac death and prescription opioid use. Before a pupil participates in any district‑sponsored practice session or game or other interscholastic athletic activity, the pupil and the pupil's parent must be provided with information at least once each school year on the risks of heat-related illnesses, sudden cardiac death and prescription opioid addiction.

25. Establish an assessment, data gathering and reporting system as prescribed in chapter 7, article 3 of this title.

26. Provide special education programs and related services pursuant to section 15‑764, subsection A to all children with disabilities as defined in section 15‑761.

27. Administer competency tests prescribed by the state board of education for the graduation of pupils from high school.

28. Ensure that insurance coverage is secured for all construction projects for purposes of general liability, property damage and workers' compensation and secure performance and payment bonds for all construction projects.

29. Keep in the personnel file of all current and former employees who provide instruction to pupils at a school information about the employee's educational and teaching background and experience in a particular academic content subject area. A school district shall inform parents and guardians of the availability of the information and shall make the information available for inspection on request of parents and guardians of pupils enrolled at a school. This paragraph does not require any school to release personally identifiable information in relation to any teacher or employee, including the teacher's or employee's address, salary, social security number or telephone number.

30. Report to local law enforcement agencies any suspected crime against a person or property that is a serious offense as defined in section 13‑706 or that involves a deadly weapon or dangerous instrument or serious physical injury and any conduct that poses a threat of death or serious physical injury to employees, students or anyone on the property of the school. This paragraph does not limit or preclude the reporting by a school district or an employee of a school district of suspected crimes other than those required to be reported by this paragraph. For the purposes of this paragraph, "dangerous instrument", "deadly weapon" and "serious physical injury" have the same meanings prescribed in section 13‑105.

31. In conjunction with local law enforcement agencies and emergency response agencies, develop an emergency response plan for each school in the school district in accordance with minimum standards developed jointly by the department of education and the division of emergency management within the department of emergency and military affairs.

32. Provide written notice to the parents or guardians of all students enrolled in the school district at least ten days before a public meeting to discuss closing a school within the school district. The notice shall include the reasons for the proposed closure and the time and place of the meeting. The governing board shall fix a time for a public meeting on the proposed closure not less than ten days before voting in a public meeting to close the school. The school district governing board shall give notice of the time and place of the meeting. At the time and place designated in the notice, the school district governing board shall hear reasons for or against closing the school. The school district governing board is exempt from this paragraph if the governing board determines that the school shall be closed because it poses a danger to the health or safety of the pupils or employees of the school. A governing board may consult with the division of school facilities board within the department of administration for technical assistance and for information on the impact of closing a school. The information provided from the division of school facilities board within the department of administration shall not require the governing board to take or not take any action.

33. Incorporate instruction on Native American history into appropriate existing curricula.

34. Prescribe and enforce policies and procedures:

(a) Allowing pupils who have been diagnosed with anaphylaxis by a health care provider licensed pursuant to title 32, chapter 13, 14, 17 or 25 or by a registered nurse practitioner licensed and certified pursuant to title 32, chapter 15 to carry and self-administer emergency medications, including epinephrine auto‑injectors, while at school and at school‑sponsored activities. The pupil's name on the prescription label on the medication container or on the medication device and annual written documentation from the pupil's parent or guardian to the school that authorizes possession and self-administration is sufficient proof that the pupil is entitled to the possession and self‑administration of the medication. The policies shall require a pupil who uses an epinephrine auto‑injector while at school and at school‑sponsored activities to notify the nurse or the designated school staff person of the use of the medication as soon as practicable. A school district and its employees are immune from civil liability with respect to all decisions made and actions taken that are based on good faith implementation of the requirements of this subdivision, except in cases of wanton or wilful neglect.

(b) For the emergency administration of epinephrine auto‑injectors by a trained employee of a school district pursuant to section 15‑157.

35. Allow the possession and self-administration of prescription medication for breathing disorders in handheld inhaler devices by pupils who have been prescribed that medication by a health care professional licensed pursuant to title 32. The pupil's name on the prescription label on the medication container or on the handheld inhaler device and annual written documentation from the pupil's parent or guardian to the school that authorizes possession and self-administration shall be sufficient proof that the pupil is entitled to the possession and self‑administration of the medication. A school district and its employees are immune from civil liability with respect to all decisions made and actions taken that are based on a good faith implementation of the requirements of this paragraph.

36. Prescribe and enforce policies and procedures to prohibit pupils from harassing, intimidating and bullying other pupils on school grounds, on school property, on school buses, at school bus stops, at school‑sponsored events and activities and through the use of electronic technology or electronic communication on school computers, networks, forums and mailing lists that include the following components:

(a) A procedure for pupils, parents and school district employees to confidentially report to school officials incidents of harassment, intimidation or bullying. The school shall make available written forms designed to provide a full and detailed description of the incident and any other relevant information about the incident.

(b) A requirement that school district employees report in writing suspected incidents of harassment, intimidation or bullying to the appropriate school official and a description of appropriate disciplinary procedures for employees who fail to report suspected incidents that are known to the employee.

(c) A requirement that, at the beginning of each school year, school officials provide all pupils with a written copy of the rights, protections and support services available to a pupil who is an alleged victim of an incident reported pursuant to this paragraph.

(d) If an incident is reported pursuant to this paragraph, a requirement that school officials provide a pupil who is an alleged victim of the incident with a written copy of the rights, protections and support services available to that pupil.

(e) A formal process for the documentation of reported incidents of harassment, intimidation or bullying and for the confidentiality, maintenance and disposition of this documentation. School districts shall maintain documentation of all incidents reported pursuant to this paragraph for at least six years. The school shall not use that documentation to impose disciplinary action unless the appropriate school official has investigated and determined that the reported incidents of harassment, intimidation or bullying occurred. If a school provides documentation of reported incidents to persons other than school officials or law enforcement, all individually identifiable information shall be redacted.

(f) A formal process for the investigation by the appropriate school officials of suspected incidents of harassment, intimidation or bullying, including procedures for notifying the alleged victim and the alleged victim's parent or guardian when a school official or employee becomes aware of the suspected incident of harassment, intimidation or bullying.

(g) Disciplinary procedures for pupils who have admitted or been found to have committed incidents of harassment, intimidation or bullying.

(h) A procedure that sets forth consequences for submitting false reports of incidents of harassment, intimidation or bullying.

(i) Procedures designed to protect the health and safety of pupils who are physically harmed as the result of incidents of harassment, intimidation and bullying, including, if appropriate, procedures to contact emergency medical services or law enforcement agencies, or both.

(j) Definitions of harassment, intimidation and bullying.

37. Prescribe and enforce policies and procedures regarding changing or adopting attendance boundaries that include the following components:

(a) A procedure for holding public meetings to discuss attendance boundary changes or adoptions that allows public comments.

(b) A procedure to notify the parents or guardians of the students affected.

(d) A process for placing public meeting notices and proposed maps on the school district's website for public review, if the school district maintains a website.

(e) A formal process for presenting the attendance boundaries of the affected area in public meetings that allows public comments.

(f) A formal process for notifying the residents and parents or guardians of the affected area as to the decision of the governing board on the school district's website, if the school district maintains a website.

(g) A formal process for updating attendance boundaries on the school district's website within ninety days of an adopted boundary change. The school district shall send a direct link to the school district's attendance boundaries website to the department of real estate.

38. If the state board of education determines that the school district has committed an overexpenditure as defined in section 15‑107, provide a copy of the fiscal management report submitted pursuant to section 15‑107, subsection H on its website and make copies available to the public on request. The school district shall comply with a request within five business days after receipt.

39. Ensure that the contract for the superintendent is structured in a manner in which up to twenty percent of the total annual salary included for the superintendent in the contract is classified as performance pay. This paragraph does not require school districts to increase total compensation for superintendents. Unless the school district governing board votes to implement an alternative procedure at a public meeting called for this purpose, the performance pay portion of the superintendent's total annual compensation shall be determined as follows:

(a) Twenty‑five percent of the performance pay shall be determined based on the percentage of academic gain determined by the department of education of pupils who are enrolled in the school district compared to the academic gain achieved by the highest ranking of the fifty largest school districts in this state. For the purposes of this subdivision, the department of education shall determine academic gain by the academic growth achieved by each pupil who has been enrolled at the same school in a school district for at least five consecutive months measured against that pupil's academic results in the 2008‑2009 school year. For the purposes of this subdivision, of the fifty largest school districts in this state, the school district with pupils who demonstrate the highest statewide percentage of overall academic gain measured against academic results for the 2008‑2009 school year shall be assigned a score of 100 and the school district with pupils who demonstrate the lowest statewide percentage of overall academic gain measured against academic results for the 2008‑2009 school year shall be assigned a score of 0.

(b) Twenty‑five percent of the performance pay shall be determined by the percentage of parents of pupils who are enrolled at the school district who assign a letter grade of "A" to the school on a survey of parental satisfaction with the school district. The parental satisfaction survey shall be administered and scored by an independent entity that is selected by the governing board and that demonstrates sufficient expertise and experience to accurately measure the results of the survey. The parental satisfaction survey shall use standard random sampling procedures and provide anonymity and confidentiality to each parent who participates in the survey. The letter grade scale used on the parental satisfaction survey shall direct parents to assign one of the following letter grades:

(i) A letter grade of "A" if the school district is excellent.

(ii) A letter grade of "B" if the school district is above average.

(iii) A letter grade of "C" if the school district is average.

(iv) A letter grade of "D" if the school district is below average.

(v) A letter grade of "F" if the school district is a failure.

(c) Twenty‑five percent of the performance pay shall be determined by the percentage of teachers who are employed at the school district and who assign a letter grade of "A" to the school on a survey of teacher satisfaction with the school. The teacher satisfaction survey shall be administered and scored by an independent entity that is selected by the governing board and that demonstrates sufficient expertise and experience to accurately measure the results of the survey. The teacher satisfaction survey shall use standard random sampling procedures and provide anonymity and confidentiality to each teacher who participates in the survey. The letter grade scale used on the teacher satisfaction survey shall direct teachers to assign one of the following letter grades:

(i) A letter grade of "A" if the school district is excellent.

(ii) A letter grade of "B" if the school district is above average.

(iii) A letter grade of "C" if the school district is average.

(iv) A letter grade of "D" if the school district is below average.

(v) A letter grade of "F" if the school district is a failure.

(d) Twenty‑five percent of the performance pay shall be determined by other criteria selected by the governing board.

40. Maintain and store permanent public records of the school district as required by law. Notwithstanding section 39‑101, the standards adopted by the Arizona state library, archives and public records for the maintenance and storage of school district public records shall allow school districts to elect to satisfy the requirements of this paragraph by maintaining and storing these records either on paper or in an electronic format, or a combination of a paper and electronic format.

41. Adopt in a public meeting and implement policies for principal evaluations. Before adopting principal evaluation policies, the school district governing board shall provide opportunities for public discussion on the proposed policies. The governing board shall adopt policies that:

(a) Are designed to improve principal performance and improve student achievement.

(b) Include the use of quantitative data on the academic progress for all students, which shall account for between twenty percent and thirty‑three percent of the evaluation outcomes.

(d) Describe both of the following:

(i) The methods used to evaluate the performance of principals, including the data used to measure student performance and job effectiveness.

(ii) The formula used to determine evaluation outcomes.

42. Prescribe and enforce policies and procedures that define the duties of principals and teachers. These policies and procedures shall authorize teachers to take and maintain daily classroom attendance, make the decision to promote or retain a pupil in a grade in common school or to pass or fail a pupil in a course in high school, subject to review by the governing board in the manner provided in section 15‑342, paragraph 11.

43. Prescribe and enforce policies and procedures for the emergency administration by an employee of a school district pursuant to section 36‑2267 of naloxone hydrochloride or any other opioid antagonist approved by the United States food and drug administration.

44. In addition to the notification requirements prescribed in paragraph 36 of this subsection, prescribe and enforce reasonable and appropriate policies to notify a pupil's parent or guardian if any person engages in harassing, threatening or intimidating conduct against that pupil. A school district and its officials and employees are immune from civil liability with respect to all decisions made and actions taken that are based on good faith implementation of the requirements of this paragraph, except in cases of gross negligence or wanton or wilful neglect. A person engages in threatening or intimidating if the person threatens or intimidates by word or conduct to cause physical injury to another person or serious damage to the property of another on school grounds. A person engages in harassment if, with intent to harass or with knowledge that the person is harassing another person, the person anonymously or otherwise contacts, communicates or causes a communication with another person by verbal, electronic, mechanical, telephonic or written means in a manner that harasses on school grounds or substantially disrupts the school environment.

B. Notwithstanding subsection A, paragraphs 7, 9 and 11 of this section, the county school superintendent may construct, improve and furnish school buildings or purchase or sell school sites in the conduct of an accommodation school.

C. If any school district acquires real or personal property, whether by purchase, exchange, condemnation, gift or otherwise, the governing board shall pay to the county treasurer any taxes on the property that were unpaid as of the date of acquisition, including penalties and interest. The lien for unpaid delinquent taxes, penalties and interest on property acquired by a school district:

1. Is not abated, extinguished, discharged or merged in the title to the property.

2. Is enforceable in the same manner as other delinquent tax liens.

D. The governing board may not locate a school on property that is less than one‑fourth mile from agricultural land regulated pursuant to section 3‑365, except that the owner of the agricultural land may agree to comply with the buffer zone requirements of section 3‑365. If the owner agrees in writing to comply with the buffer zone requirements and records the agreement in the office of the county recorder as a restrictive covenant running with the title to the land, the school district may locate a school within the affected buffer zone. The agreement may include any stipulations regarding the school, including conditions for future expansion of the school and changes in the operational status of the school that will result in a breach of the agreement.

E. A school district, its governing board members, its school council members and its employees are immune from civil liability for the consequences of adoption and implementation of policies and procedures pursuant to subsection A of this section and section 15‑342. This waiver does not apply if the school district, its governing board members, its school council members or its employees are guilty of gross negligence or intentional misconduct.

F. A governing board may delegate in writing to a superintendent, principal or head teacher the authority to prescribe procedures that are consistent with the governing board's policies.

G. Notwithstanding any other provision of this title, a school district governing board shall not take any action that would result in a reduction of pupil square footage unless the governing board notifies the school facilities oversight board established by section 15‑2001 41‑5701.02 of the proposed action and receives written approval from the school facilities oversight board to take the action. A reduction includes an increase in administrative space that results in a reduction of pupil square footage or sale of school sites or buildings, or both. A reduction includes a reconfiguration of grades that results in a reduction of pupil square footage of any grade level. This subsection does not apply to temporary reconfiguration of grades to accommodate new school construction if the temporary reconfiguration does not exceed one year. The sale of equipment that results in a reduction that falls below the equipment requirements prescribed in section 15‑2011 41‑5711, subsection B is subject to commensurate withholding of school district district additional assistance monies pursuant to the direction of the school facilities oversight board. Except as provided in section 15‑342, paragraph 10, proceeds from the sale of school sites, buildings or other equipment shall be deposited in the school plant fund as provided in section 15‑1102.

H. Subsections C through G of this section apply to a county board of supervisors and a county school superintendent when operating and administering an accommodation school.

I. A school district governing board may delegate authority in writing to the superintendent of the school district to submit plans for new school facilities to the school facilities oversight board for the purpose of certifying that the plans meet the minimum school facility adequacy guidelines prescribed in section 15‑2011 41‑5711. END_STATUTE

Sec. 7. Section 15-342, Arizona Revised Statutes, is amended to read:

START_STATUTE15-342. Discretionary powers

The governing board may:

1. Expel pupils for misconduct.

2. Exclude from grades one through eight children under six years of age.

3. Make such separation of groups of pupils as it deems advisable.

4. Maintain such special schools during vacation as deemed necessary for the benefit of the pupils of the school district.

5. Permit Allow a superintendent or principal or representatives of the superintendent or principal to travel for a school purpose, as determined by a majority vote of the board. The board may permit allow members and members‑elect of the board to travel within or without the school district for a school purpose and receive reimbursement. Any expenditure for travel and subsistence pursuant to this paragraph shall be as provided in title 38, chapter 4, article 2. The designated post of duty referred to in section 38‑621 shall be construed, for school district governing board members, to be the member's actual place of residence, as opposed to the school district office or the school district boundaries. Such expenditures shall be a charge against the budgeted school district funds. The governing board of a school district shall prescribe procedures and amounts for reimbursement of lodging and subsistence expenses. Reimbursement amounts shall not exceed the maximum amounts established pursuant to section 38‑624, subsection C.

6. Construct or provide in rural districts housing facilities for teachers and other school employees that the board determines are necessary for the operation of to operate the school.

7. Sell or lease to the state, a county, a city, another school district or a tribal government agency any school property required for a public purpose, provided if the sale or lease of the property will not affect the normal operations of a school within the school district.

8. Annually budget and expend funds spend monies for membership in an association of school districts within this state.

9. Enter into leases or lease‑purchase agreements for school buildings or grounds, or both, as lessor or as lessee, for periods of less than twenty years subject to voter approval for construction of school buildings as prescribed in section 15‑341, subsection A, paragraph 7.

10. Subject to title 41, chapter 16 of this title 56, sell school sites or enter into leases or lease‑purchase agreements for school buildings and grounds, as lessor or as lessee, for a period of twenty years or more, but not to exceed ninety‑nine years, if authorized by a vote of the school district electors in an election called by the governing board as provided in section 15‑491, except that authorization by the school district electors in an election is not required if one of the following requirements is met:

(a) The market value of the school property is less than $50,000 or the property is procured through a renewable energy development agreement, an energy performance contract, which among other items includes a renewable energy power service agreement, or a simplified energy performance contract pursuant to section 15‑213.01.

(b) The buildings and sites are completely funded with monies distributed by the school facilities division within the department of administration or at the direction of the school facilities oversight board, or its predecessor.

(c) The transaction involves the sale of improved or unimproved property pursuant to an agreement with the school facilities oversight board in which the school district agrees to sell the improved or unimproved property and transfer the proceeds of the sale to the school facilities oversight board in exchange for monies from the school facilities oversight board for the acquisition of a more suitable school site. For a sale of property acquired by a school district prior to before July 9, 1998, a school district shall transfer to the school facilities oversight board that portion of the proceeds that equals the cost of the acquisition of a more suitable school site. If there are any remaining proceeds after the transfer of monies to the school facilities oversight board, a school district shall only use those remaining proceeds for future land purchases approved by the school facilities oversight board, or for capital improvements not funded by the school facilities oversight board for any existing or future facility.

(d) The transaction involves the sale of improved or unimproved property pursuant to a formally adopted plan and the school district uses the proceeds of this sale to purchase other property that will be used for similar purposes as the property that was originally sold, provided that if the sale proceeds of the improved or unimproved property are used within two years after the date of the original sale to purchase the replacement property. If the sale proceeds of the improved or unimproved property are not used within two years after the date of the original sale to purchase replacement property, the sale proceeds shall be used towards payment of toward paying any outstanding bonded indebtedness. If any sale proceeds remain after paying for outstanding bonded indebtedness, or if the district has no outstanding bonded indebtedness, sale proceeds shall be used to reduce the district's primary tax levy. A school district shall not use this subdivision unless all of the following conditions exist:

(i) The school district is the sole owner of the improved or unimproved property that the school district intends to sell.

(ii) The school district did not purchase the improved or unimproved property that the school district intends to sell with monies that were distributed pursuant to title 41, chapter 16 of this title 56.

(iii) The transaction does not violate section 15‑341, subsection G.

11. Review the decision of a teacher to promote a pupil to a grade or retain a pupil in a grade in a common school or to pass or fail a pupil in a course in high school. The pupil has the burden of proof to overturn the decision of a teacher to promote, retain, pass or fail the pupil. In order to sustain the burden of proof, the pupil shall demonstrate to the governing board that the pupil has mastered the academic standards adopted by the state board of education pursuant to sections 15‑701 and 15‑701.01. If the governing board overturns the decision of a teacher pursuant to this paragraph, the governing board shall adopt a written finding that the pupil has mastered the academic standards. Notwithstanding title 38, chapter 3, article 3.1, the governing board shall review the decision of a teacher to promote a pupil to a grade or retain a pupil in a grade in a common school or to pass or fail a pupil in a course in high school in executive session unless a parent or legal guardian of the pupil or the pupil, if emancipated, disagrees that the review should be conducted in executive session and then the review shall be conducted in an open meeting. If the review is conducted in executive session, the board shall notify the teacher of the date, time and place of the review and shall allow the teacher to be present at the review. If the teacher is not present at the review, the board shall consult with the teacher before making its decision. Any request, including the written request as provided in section 15‑341, the written evidence presented at the review and the written record of the review, including the decision of the governing board to accept or reject the teacher's decision, shall be retained by the governing board as part of its permanent records.

12. Provide transportation or site transportation loading and unloading areas for any child or children if deemed for the best interest of the district, whether within or without the district, county or state.

13. Enter into intergovernmental agreements and contracts with school districts or other governing bodies as provided in section 11‑952. Intergovernmental agreements and contracts between school districts or between a school district and other governing bodies as provided in section 11‑952 are exempt from competitive bidding under the procurement rules adopted by the state board of education pursuant to section 15‑213.

14. Include in the curricula it prescribes for high schools in the school district career and technical education, vocational education and technology education programs and career and technical, vocational and technology program improvement services for the high schools, subject to approval by the state board of education. The governing board may contract for the provision of career and technical, vocational and technology education as provided in section 15‑789.

15. Suspend a teacher or administrator from the teacher's or administrator's duties without pay for a period of time of not to exceed ten school days, if the board determines that suspension is warranted pursuant to section 15‑341, subsection A, paragraphs paragraph 21 and or 22.

16. Dedicate school property within an incorporated city or town to such that city or town or within a county to that county for use as a public right‑of‑way if both of the following apply:

(a) Pursuant to an ordinance adopted by such the city, town or county, there will be conferred upon on the school district privileges and benefits that may include benefits related to zoning.

(b) The dedication will not affect the normal operation of any school within the district.

17. Enter into option agreements for the purchase of school sites.

18. Donate surplus or outdated learning materials, educational equipment and furnishings to nonprofit community organizations where if the governing board determines that the anticipated cost of selling the learning materials, educational equipment or furnishings equals or exceeds the estimated market value of the materials.

19. Prescribe policies for the assessment of to assess reasonable fees for students to use district‑provided parking facilities. The fees are to be applied by the district solely against costs incurred in operating or securing the parking facilities. Any policy adopted by the governing board pursuant to this paragraph shall include a fee waiver provision in appropriate cases of need or economic hardship.

20. Establish alternative educational education programs that are consistent with the laws of this state to educate pupils, including pupils who have been reassigned pursuant to section 15‑841, subsection E or F.

21. Require a period of silence to be observed at the commencement of the first class of the day in the schools. If a governing board chooses to require a period of silence to be observed, the teacher in charge of the room in which the first class is held shall announce that a period of silence not to exceed one minute in duration will be observed for meditation, and during that time no activities shall take place and silence shall be maintained.

22. Require students to wear uniforms.

23. Exchange unimproved property or improved property, including school sites, where if the governing board determines that the improved property is unnecessary for the continued operation of the school district without requesting authorization by a vote of the school district electors and if the governing board determines that the exchange is necessary to protect the health, safety or welfare of pupils or when if the governing board determines that the exchange is based on sound business principles for either:

(a) Unimproved or improved property of equal or greater value.

(b) Unimproved property that the owner contracts to improve if the value of the property ultimately received by the school district is of equal or greater value.

24. For common and high school pupils, assess reasonable fees for optional extracurricular activities and programs conducted when the common or high school is not in session, except that no fees shall not be charged for pupils' access to or use of computers or related materials. For high school pupils, the governing board may assess reasonable fees for fine arts and vocational education courses and for optional services, equipment and materials offered to the pupils beyond those required to successfully complete the basic requirements of any other course, except that no fees shall not be charged for pupils' access to or use of computers or related materials. Fees assessed pursuant to this paragraph shall be adopted at a public meeting after notice has been given to all parents of pupils enrolled at schools in the district and shall not exceed the actual costs of the activities, programs, services, equipment or materials. The governing board shall authorize principals to waive the assessment of all or part of a fee assessed pursuant to this paragraph if it creates an economic hardship for a pupil. For the purposes of this paragraph, "extracurricular activity" means any optional, noncredit, educational or recreational activity that supplements the education program of the school, whether offered before, during or after regular school hours.

25. Notwithstanding section 15‑341, subsection A, paragraphs 7 and 9, construct school buildings and purchase or lease school sites, without a vote of the school district electors, if the buildings and sites are totally funded from one or more of the following:

(a) Monies in the unrestricted capital outlay fund, except that the estimated cost shall not exceed $250,000 for a district that utilizes uses section 15‑949.

(b) Monies distributed from at the direction of the school facilities oversight board established by section 15‑2001 41‑5701.02 or by the school facilities division within the department of administration pursuant to title 41, chapter 56.

This paragraph shall does not be construed to eliminate the requirement for an election to raise revenues for a capital outlay override pursuant to section 15‑481 or a bond election pursuant to section 15‑491.

26. Conduct a background investigation that includes a fingerprint check conducted pursuant to section 41‑1750, subsection G for certificated personnel and personnel who are not paid employees of the school district, as a condition of employment. A school district may release the results of a background check to another school district for employment purposes. The school district may charge the costs of fingerprint checks to its fingerprinted employee, except that the school district may not charge the costs of fingerprint checks for personnel who are not paid employees of the school district.

27. Unless otherwise prohibited by law, sell advertising as follows:

(a) Advertisements shall be age appropriate and not contain promotion of promote any substance that is illegal for minors such as alcohol, tobacco and drugs or gambling. Advertisements shall comply with the state sex education policy of abstinence.

(b) Advertising approved by the governing board for the exterior of school buses may appear only on the sides of the bus in the following areas:

(i) The signs shall be below the seat level rub rail and not extend above the bottom of the side windows.

(ii) The signs shall be at least three inches from any required lettering, lamp, wheel well or reflector behind the service door or stop signal arm.

(iii) The signs shall not extend from the body of the bus so as to allow a handhold or present a danger to pedestrians.

(iv) The signs shall not interfere with the operation of any door or window.

(v) The signs shall not be placed on any emergency doors.

(c) The school district shall establish an advertisement fund that is composed of revenues from the sale of advertising. The monies in an advertisement fund are not subject to reversion.

28. Assess reasonable damage deposits to pupils in grades seven through twelve for the use of using textbooks, musical instruments, band uniforms or other equipment required for academic courses. The governing board shall adopt policies on any damage deposits assessed pursuant to this paragraph at a public meeting called for this purpose after providing notice to all parents of pupils in grades seven through twelve in the school district. Principals of individual schools within the district may waive the damage deposit requirement for any textbook or other item if the payment of the damage deposit would create an economic hardship for the pupil. The school district shall return the full amount of the damage deposit for any textbook or other item if the pupil returns the textbook or other item in reasonably good condition within the time period prescribed by the governing board. For the purposes of this paragraph, "in reasonably good condition" means the textbook or other item is in the same or a similar condition as it was when the pupil received it, plus ordinary wear and tear.

29. Notwithstanding section 15‑1105, expend surplus monies in the civic center school fund for maintenance and operations or unrestricted capital outlay, if sufficient monies are available in the fund after meeting the needs of programs established pursuant to section 15‑1105.

30. Notwithstanding section 15‑1143, expend spend surplus monies in the community school program fund for maintenance and operations or unrestricted capital outlay, if sufficient monies are available in the fund after meeting the needs of programs established pursuant to section 15‑1142.

31. Adopt guidelines for standardization of to standardize the format of the school report cards required by section 15‑746 for schools within the district.

32. Adopt policies that require parental notification when a law enforcement officer interviews a pupil on school grounds. Policies adopted pursuant to this paragraph shall not impede a peace officer from the performance of performing the peace officer's duties. If the school district governing board adopts a policy that requires parental notification:

(a) The policy may provide reasonable exceptions to the parental notification requirement.

(b) The policy shall set forth whether and under what circumstances a parent may be present when a law enforcement officer interviews the pupil, including reasonable exceptions to the circumstances under which a parent may be present when a law enforcement officer interviews the pupil, and shall specify a reasonable maximum time after a parent is notified that an interview of a pupil by a law enforcement officer may be delayed to allow the parent to be present.

33. Enter into voluntary partnerships with any party to finance with funds monies other than school district funds monies and cooperatively design school facilities that comply with the adequacy standards prescribed in section 15‑2011 41‑5711 and the square footage per pupil requirements pursuant to section 15‑2041 41‑5741, subsection D, paragraph 3, subdivision (b). The design plans and location of any such school facility shall be submitted to the school facilities oversight board for approval pursuant to section 15‑2041 41‑5741, subsection 0. If the school facilities oversight board approves the design plans and location of any such school facility, the party in partnership with the school district may cause to be constructed and the district may begin operating the school facility before monies are distributed from at the direction of the school facilities oversight board pursuant to section 15‑2041 41‑5741. Monies distributed from the new school facilities fund to a school district in a partnership with another party to finance and design the school facility shall be paid to the school district pursuant to section 15‑2041 41‑5741. The school district shall reimburse the party in partnership with the school district from the monies paid to the school district pursuant to section 15‑2041 41‑5741, in accordance with the voluntary partnership agreement. Before the school facilities oversight board distributes directs the distribution of any monies pursuant to this subsection, the school district shall demonstrate to the school facilities oversight board that the facilities to be funded pursuant to section 15‑2041 41‑5741, subsection O meet the minimum adequacy standards prescribed in section 15‑2011 41‑5711. If the cost to construct the school facility exceeds the amount that the school district receives from the new school facilities fund, the partnership agreement between the school district and the other party shall specify that, except as otherwise provided by the other party, any such excess costs shall be the responsibility of the school district. The school district governing board shall adopt a resolution in a public meeting that an analysis has been conducted on the prospective effects of the decision to operate a new school with existing monies from the school district's maintenance and operations budget and how this decision may affect other schools in the school district. If a school district acquires land by donation at an appropriate school site approved by the school facilities oversight board and a school facility is financed and built on the land pursuant to this paragraph, the school facilities oversight board shall distribute direct the distribution of an amount equal to twenty percent of the fair market value of the land that can be used for academic purposes. The school district shall place the monies in the unrestricted capital outlay fund and increase the unrestricted capital budget limit by the amount of the monies placed in the fund. Monies distributed under this paragraph shall be distributed from the new school facilities fund pursuant to section 15‑2041 41‑5741. If a school district acquires land by donation at an appropriate school site approved by the school facilities oversight board and a school facility is financed and built on the land pursuant to this paragraph, the school district shall not receive monies from the school facilities board for the donation of real property pursuant to section 15‑2041 41‑5741, subsection F. It is unlawful for:

(a) A county, city or town to require as a condition of any land use approval that a landowner or landowners that entered into a partnership pursuant to this paragraph provide any contribution, donation or gift, other than a site donation, to a school district. This subdivision only applies to the property in the voluntary partnership agreement pursuant to this paragraph.

(b) A county, city or town to require as a condition of any land use approval that the landowner or landowners located within the geographic boundaries of the school subject to the voluntary partnership pursuant to this paragraph provide any donation or gift to the school district except as provided in the voluntary partnership agreement pursuant to this paragraph.

(c) A community facilities district established pursuant to title 48, chapter 4, article 6 to be used for reimbursement of financing the construction of a school pursuant to this paragraph.

(d) A school district to enter into an agreement pursuant to this paragraph with any party other than a master planned community party. Any land area consisting of at least three hundred twenty acres that is the subject of a development agreement with a county, city or town entered into pursuant to section 9‑500.05 or 11‑1101 shall be deemed to be a master planned community. For the purposes of this subdivision, "master planned community" means a land area consisting of at least three hundred twenty acres, which may be noncontiguous, that is the subject of a zoning ordinance approved by the governing body of the county, city or town in which the land is located that establishes the use of the land area as a planned area development or district, planned community development or district, planned unit development or district or other land use category or district that is recognized in the local ordinance of such county, city or town and that specifies the use of such land is for a master planned development.

34. Enter into an intergovernmental agreement with a presiding judge of the juvenile court to implement a law-related education program as defined in section 15‑154. The presiding judge of the juvenile court may assign juvenile probation officers to participate in a law-related education program in any school district in the county. The cost of juvenile probation officers who participate in the program implemented pursuant to this paragraph shall be funded by the school district.

35. Offer to sell outdated learning materials, educational equipment or furnishings at a posted price commensurate with the value of the items to pupils who are currently enrolled in that school district before those materials are offered for public sale.

36. If the school district is a small school district as defined in section 15‑901, and if permitted allowed by federal law, opt out of federal grant opportunities if the governing board determines that the federal requirements impose unduly burdensome reporting requirements.

37. Prescribe and enforce policies and procedures for the emergency administration of inhalers by trained employees of the school district and nurses who are under contract with the school district pursuant to section 15‑158.

38. Develop policies and procedures to allow principals to budget for or assist with budgeting federal, state and local monies. END_STATUTE

Sec. 8. Section 15-481, Arizona Revised Statutes, is amended to read:

START_STATUTE15-481. Override election; budget increases; informational pamphlet; notice; ballot; effect

A. If a proposed budget of a school district exceeds the aggregate budget limit for the budget year, at least ninety days before the proposed election the governing board shall order an override election to be held on the first Tuesday following the first Monday in November as prescribed by section 16‑204, subsection F for the purpose of presenting the proposed budget to the qualified electors of the school district who by a majority of those voting either shall affirm or reject the budget. At the same time as the order of the election, the governing board shall publicly declare the deadline for submitting arguments, as set by the county school superintendent pursuant to subsection B, paragraph 9 of this section, to be submitted in the informational pamphlet and shall immediately post the deadline in a prominent location on the district's website. In addition, the governing board shall prepare an alternate budget that does not include an increase in the budget of more than the amount permitted allowed as provided in section 15‑905. If the qualified electors approve the proposed budget, the governing board of the school district shall follow the procedures prescribed in section 15‑905 for adopting a budget that includes the authorized increase. If the qualified electors disapprove the proposed budget, the governing board shall follow the procedures prescribed in section 15‑905 for adopting a budget that does not include the proposed increase or the portion of the proposed increase that exceeds the amount authorized by a previously approved budget increase as prescribed in subsection P of this section.

B. The county school superintendent shall prepare an informational pamphlet on the proposed increase in the budget and a sample ballot and, at least forty days prior to before the election, shall transmit the informational pamphlet and the sample ballot to the governing board of the school district. The governing board, on receipt of the informational pamphlet and the ballot, shall mail or distribute the informational pamphlet and the ballot to the households in which qualified electors reside within the school district at least thirty‑five days prior to before the election. Any distribution of material concerning the proposed increase in the budget shall not be conducted by children enrolled in the school district. The informational pamphlet shall contain the following information:

1. The date of the election.

2. The voter's polling place and the times it is open.

3. The proposed total increase in the budget that exceeds the amount permitted pursuant to section 15‑905.

4. The total amount of the current year's budget, the total amount of the proposed budget and the total amount of the alternate budget.

5. If the override is for a period of more than one year, a statement indicating the number of years the proposed increase in the budget would be in effect and the percentage of the school district's revenue control limit that the district is requesting for the future years.

6. The proposed total amount of revenues that will fund the increase in the budget and the amount that will be obtained from a levy of taxes on the taxable property within the school district for the first year for which the budget increase was adopted.

7. The proposed amount of revenues that will fund the increase in the budget and that will be obtained from other than a levy of taxes on the taxable property within the school district for the first year for which the budget increase was adopted.

8. The dollar amount and the purpose for which the proposed increase in the budget is to be expended for the first year for which the budget increase was adopted. The purpose statement shall only present factual information in a neutral manner. Advocacy for the expenditures is strictly limited to the arguments submitted pursuant to paragraph 9 of this subsection.

9. At least two arguments, if submitted, but no not more than ten arguments for and two arguments, if submitted, but no not more than ten arguments against the proposed increase in the budget. The arguments shall be in a form prescribed by the county school superintendent, and each argument shall not exceed two hundred words. Arguments for the proposed increase in the budget shall be provided in writing and signed by the governing board. The ballot arguments for the proposed increase in the budget shall be signed as the governing board of the school district without listing any member's individual name for the arguments for the proposed increase. If submitted, additional arguments in favor of the proposed increase in the budget shall be provided in writing and signed by those in favor. Arguments against the proposed increase in the budget shall be provided in writing and signed by those in opposition. The names of persons and entities submitting written arguments shall be included in the informational pamphlet. The county school superintendent shall review all factual statements contained in the written arguments and correct any inaccurate statements of fact. The superintendent shall not review and correct any portion of the written arguments that are identified as statements of the author's opinion. The county school superintendent shall make the written arguments available to the public as provided in title 39, chapter 1, article 2. A deadline for submitting arguments to be included in the informational pamphlet shall be set by the county school superintendent.

10. A statement that the alternate budget shall be adopted by the governing board if the proposed budget is not adopted by the qualified electors of the school district.

11. The current limited property value and the net assessed valuation provided by the department of revenue, the first year tax rate for the proposed override and the estimated amount of the secondary property taxes if the proposed budget is adopted for each of the following:

(a) An owner‑occupied residence whose assessed valuation is the average assessed valuation of property classified as class three, as prescribed by section 42‑12003 for the current year in the school district.

(b) An owner‑occupied residence whose assessed valuation is one‑half of the assessed valuation of the residence in subdivision (a) of this paragraph.

(c) An owner‑occupied residence whose assessed valuation is twice the assessed valuation of the residence in subdivision (a) of this paragraph.

(d) A business whose assessed valuation is the average of the assessed valuation of property classified as class one, as prescribed by section 42‑12001, paragraphs 12 and 13 for the current year in the school district.

12. If the election is conducted pursuant to subsection L or M of this section, the following information:

(a) An executive summary of the school district's most recent capital improvement plan submitted to the school facilities oversight board.

(b) A complete list of each proposed capital improvement that will be funded with the budget increase and a description of the proposed cost of each improvement, including a separate aggregation of capital improvements for administrative purposes as defined by the school facilities oversight board.

(c) The tax rate associated with each of the proposed capital improvements and the estimated cost of each capital improvement for the owner of a single family home that is valued at eighty thousand dollars $80,000.

C. For the purpose of this section, the school district may use its staff, equipment, materials, buildings or other resources only to distribute the informational pamphlet at the school district office or at public hearings and to produce such information as required in subsection B of this section. , provided that nothing in This subsection shall does not preclude school districts from holding or participating in any public hearings at which testimony is given by at least one person for the proposed increase and one person against the proposed increase. Any written information provided by the district pertaining to the override election shall include financial information showing the estimated first year tax rate for the proposed budget override amount.

D. If any amount of the proposed increase will be funded by a levy of taxes in the district, the election prescribed in subsection A of this section shall be held on the first Tuesday following the first Monday in November as prescribed by section 16‑204, subsection F. If the proposed increase will be fully funded by revenues from other than a levy of taxes, the elections prescribed in subsection A of this section shall be held on any date prescribed by section 16‑204. The elections shall be conducted as nearly as practicable in the manner prescribed in article 1 of this chapter, sections 15‑422 through 15‑424 and section 15‑426, relating to special elections, except that:

1. The notices required pursuant to section 15‑403 shall be posted not less than twenty‑five days before the election.

2. Ballots shall be counted pursuant to title 16, chapter 4, article 10.

E. If the election is to exceed the revenue control limit and if the proposed increase will be fully funded by a levy of taxes on the taxable property within the school district, the ballot shall contain the words "budget increase, yes" and "budget increase, no", and the voter shall signify the voter's desired choice. The ballot shall also contain the amount of the proposed increase of the proposed budget over the alternate budget, a statement that the amount of the proposed increase will be based on a percentage of the school district's revenue control limit in future years, if applicable, as provided in subsection P of this section and the following statement:

Any budget increase authorized by this election shall be entirely funded by a levy of taxes on the taxable property within this school district for the year for which adopted and for ____ subsequent years, shall not be realized from monies furnished by the state and shall not be subject to the limitation on taxes specified in article IX, section 18, Constitution of Arizona. Based on the current net assessed valuation used for secondary property tax purposes, to fund the proposed increase in the school district's budget would require an estimated tax rate of $_______________ dollar per one hundred dollars $100 of net assessed valuation used for secondary property tax purposes and is in addition to the school district's tax rate that will be levied to fund the school district's revenue control limit allowed by law.

F. If the election is to exceed the revenue control limit and if the proposed increase will be fully funded by revenues from other than a levy of taxes on the taxable property within the school district, the ballot shall contain the words "budget increase, yes" and "budget increase, no", and the voter shall signify the voter's desired choice. The ballot shall also contain:

1. The amount of the proposed increase of the proposed budget over the alternate budget.

2. A statement that the amount of the proposed increase will be based on a percentage of the school district's revenue control limit in future years, if applicable, as provided in subsection P of this section.

3. The following statement:

Any budget increase authorized by this election shall be entirely funded by this school district with revenues from other than a levy of taxes on the taxable property within the school district for the year for which adopted and for ______ subsequent years and shall not be realized from monies furnished by the state.

G. Except as provided in subsection H of this section, the maximum budget increase that may be requested and authorized as provided in subsection E or F of this section or the combination of subsections E and F of this section is fifteen percent of the revenue control limit as provided in section 15‑947, subsection A for the budget year. If a school district requests an override pursuant to section 15‑482 or to continue with a budget override pursuant to section 15‑482 for pupils in kindergarten programs and grades one through three that was authorized before December 31, 2008, the maximum budget increase that may be requested and authorized as provided in subsection E or F of this section or the combination of subsections E and F of this section is ten percent of the revenue control limit as provided in section 15‑947, subsection A for the budget year.

H. Special budget override provisions for school districts with a student count of less than one hundred fifty‑four in kindergarten programs and grades one through eight or with a student count of less than one hundred seventy‑six in grades nine through twelve are as follows:

1. The maximum budget increase that may be requested and authorized as provided in subsections E and F of this section is the greater of the amount prescribed in subsection G of this section or a limit computed as follows:

(a) For common or unified districts with a student count of less than one hundred fifty‑four in kindergarten programs and grades one through eight, the limit computed as prescribed in item (i) or (ii) of this subdivision, whichever is appropriate:

(i)

Small School Support Level Weight Phase Down

Student Student for Small Isolated Reduction

Count Count Limit School Districts Base Level Factor

- 125 x 1.358 + (0.0005 x x $ = $

(500 - Student Count))

Small Isolated

Phase Down Phase Down School District

Base Reduction Factor Elementary Limit

$150,000 - $ = $

(ii)

Small School Support Level Weight Phase Down

Student Student for Small Reduction

Count Count Limit School Districts Base Level Factor

- 125 x 1.278 + (0.0003 x x $ = $

(500 - Student Count))

Small

Phase Down Phase Down School District

Base Reduction Factor Elementary Limit

$150,000 - $ = $

(b) For unified or union high school districts with a student count of less than one hundred seventy‑six in grades nine through twelve, the limit computed as prescribed in item (i) or (ii) of this subdivision, whichever is appropriate:

(i)

Small School Support Level Weight Phase Down

Student Student for Small Isolated Reduction

Count Count Limit School Districts Base Level Factor

- 100 x 1.468 + (0.0005 x x $ = $ __

(500 - Student Count))

Small Isolated

Phase Down Phase Down District

Base Reduction Factor Secondary Limit

$350,000 - $ = $

(ii)

Small School Support Level Weight Phase Down

Student Student for Small Reduction

Count Count Limit School Districts Base Level_ Factor

- 100 x 1.398 + (0.0004 x x $ = $

(500 - Student Count))

Small

Phase Down Phase Down School District

Base Reduction Factor Secondary Limit

$350,000 - $ = $

(c) If both subdivisions (a) and (b) of this paragraph apply to a unified school district, its limit for the purposes of this paragraph is the combination of its elementary limit and its secondary limit.

(d) If only subdivision (a) or (b) of this paragraph applies to a unified school district, the district's limit for the purposes of this paragraph is the sum of the limit computed as provided in subdivision (a) or (b) of this paragraph plus ten percent of the revenue control limit attributable to those grade levels that do not meet the eligibility requirements of this subsection. If a school district budgets monies outside the revenue control limit pursuant to section 15‑949, subsection E, the district's limit for the purposes of this paragraph is only the ten percent of the revenue control limit attributable to those grade levels that are not included under section 15‑949, subsection E. For the purposes of this subdivision, the revenue control limit is separated into elementary and secondary components based on the weighted student count as provided in section 15‑971, subsection B, paragraph 2, subdivision (a).

2. If a school district utilizes this subsection to request an override of more than one year, the ballot shall include an estimate of the amount of the proposed increase in the future years in place of the statement that the amount of the proposed increase will be based on a percentage of the school district's revenue control limit in future years, as prescribed in subsections E and F of this section.

3. Notwithstanding subsection P of this section, the maximum period of an override authorized pursuant to this subsection is five years.

4. Subsection P, paragraphs 1 and 2 of this section do not apply to overrides authorized pursuant to this subsection.

I. If the election is to exceed the revenue control limit as provided in section 15‑482 and if the proposed increase will be fully funded by a levy of taxes on the taxable property within the school district, the ballot shall contain the words "budget increase, yes" and "budget increase, no", and the voter shall signify the voter's desired choice. The ballot shall also contain the amount of the proposed increase of the budget over the alternate budget, a statement that the amount of the proposed increase will be based on a percentage of the school district's revenue control limit in future years, if applicable, as provided in subsection Q of this section, and the following statement:

Any budget increase authorized by this election shall be entirely funded by a levy of taxes on the taxable property within this school district for the year for which adopted and for _____ subsequent years, shall not be realized from monies furnished by the state and shall not be subject to the limitation on taxes specified in article IX, section 18, Constitution of Arizona. Based on the current net assessed valuation used for secondary property tax purposes, to fund the proposed increase in the school district's budget that will be funded by a levy of taxes on the taxable property within this school district would require an estimated tax rate of $__________ dollar per one hundred dollars $100 of net assessed valuation used for secondary property tax purposes and is in addition to the school district's tax rate that will be levied to fund the school district's revenue control limit allowed by law.

J. If the election is to exceed the revenue control limit as provided in section 15‑482 and if the proposed increase will be fully funded by revenues other than a levy of taxes on the taxable property within the school district, the ballot shall contain the words "budget increase, yes" and "budget increase, no", and the voter shall signify the voter's desired choice. The ballot shall also contain the amount of the proposed increase of the proposed budget over the alternate budget, a statement that the amount of the proposed increase will be based on a percentage of the school district's revenue control limit in future years, if applicable, as provided in subsection Q of this section and the following statement:

Any budget increase authorized by this election shall be entirely funded by this school district with revenues from other than a levy of taxes on the taxable property within the school district for the year for which adopted and for _____ subsequent years and shall not be realized from monies furnished by the state.

K. The maximum budget increase that may be requested and authorized as provided in subsection I or J of this section, or a combination of both of these subsections, is five percent of the revenue control limit as provided in section 15‑947, subsection A for the budget year. For a common school district not within a high school district or a common school district within a high school district that offers instruction in high school subjects as provided in section 15‑447, five percent of the revenue control limit means five percent of the revenue control limit attributable to the weighted student count in preschool programs for children with disabilities, kindergarten programs and grades one through eight as provided in section 15‑971, subsection B. For a unified school district, five percent of the revenue control limit means five percent of the revenue control limit attributable to the weighted student count in preschool programs for children with disabilities, kindergarten programs and grades one through twelve. For a union high school district, five percent of the revenue control limit means five percent of the revenue control limit attributable to the weighted student count in grades nine through twelve.

L. If the election is to exceed district additional assistance and if the proposed increase will be fully funded by a levy of taxes on the taxable property within the school district, the ballot shall contain the words "budget increase, yes" and "budget increase, no", and the voter shall signify the voter's desired choice. An election held pursuant to this subsection shall be held on the first Tuesday after the first Monday of November. The ballot shall also contain the amount of the proposed increase of the proposed budget over the alternate budget and the following statement:

Any budget increase authorized by this election shall be entirely funded by a levy of taxes on the taxable property within this school district for the year in which adopted and for _____ subsequent years, shall not be realized from monies furnished by the state and shall not be subject to the limitation on taxes specified in article IX, section 18, Constitution of Arizona. Based on the current net assessed valuation used for secondary property tax purposes, to fund the proposed increase in the school district's budget would require an estimated tax rate of $_______________ dollar per one hundred dollars $100 of net assessed valuation used for secondary property tax purposes and is in addition to the school district's tax rate that will be levied to fund the school district's district additional assistance allowed by law.

M. If the election is to exceed district additional assistance and if the proposed increase will be fully funded by revenues from other than a levy of taxes on the taxable property within the school district, the ballot shall contain the words "budget increase, yes" and "budget increase, no", and the voter shall signify the voter's desired choice. An election held pursuant to this subsection shall be held on the first Tuesday after the first Monday of November. The ballot shall also contain the amount of the proposed increase of the proposed budget over the alternate budget and the following statement:

Any budget increase authorized by this election shall be entirely funded by this school district with revenues from other than a levy of taxes on the taxable property within the school district for the year in which adopted and for ______ subsequent years and shall not be realized from monies furnished by the state.

N. If the election is to exceed a combination of the revenue control limit as provided in subsection E or F of this section, the revenue control limit as provided in subsection I or J of this section or district additional assistance as provided in subsection L or M of this section, the ballot shall be prepared so that the voters may vote on each proposed increase separately and shall contain statements required in the same manner as if each proposed increase were submitted separately.

O. If the election provides for a levy of taxes on the taxable property within the school district, at least thirty days prior to before the election, the department of revenue shall provide the school district governing board and the county school superintendent with the current net assessed valuation of the school district. The governing board and the county school superintendent shall use the current net assessed valuation of the school district to translate the amount of the proposed dollar increase in the budget of the school district over that allowed by law into a tax rate figure.

P. If the voters in a school district vote to adopt a budget in excess of the revenue control limit as provided in subsection E or F of this section, any additional increase shall be included in the aggregate budget limit for each of the years authorized. Any additional increase shall be excluded from the determination of equalization assistance. The school district governing board, however, may levy on the net assessed valuation used for secondary property tax purposes of the property in the school district the additional increase if adopted under subsection E of this section for the period of one year, two years or five through seven years as authorized. If an additional increase is approved as provided in subsection F of this section, the school district governing board may only use revenues derived from the school district's prior year's maintenance and operation fund ending cash balance to fund the additional increase. If a budget increase was previously authorized and will be in effect for the budget year or budget year and subsequent years, as provided in subsection E or F of this section, the governing board may request a new budget increase as provided in the same subsection under which the prior budget increase was adopted, which shall not exceed the maximum amount permitted allowed under subsection G of this section. If the voters in the school district authorize the new budget increase amount, the existing budget increase no longer is in effect. If the voters in the school district do not authorize the budget increase amount, the existing budget increase remains in effect for the time period for which it was authorized. The maximum additional increase authorized as provided in subsection E or F of this section and the additional increase that is included in the aggregate budget limit is based on a percentage of a school district's revenue control limit in future years, if the budget increase is authorized for more than one year. If the additional increase:

1. Is for two years, the proposed increase in the second year is equal to the initial proposed percentage increase.

2. Is for five years or more, the proposed increase is equal to the initial proposed percentage increase in the following years of the proposed increase, except that in the next to last year it is two‑thirds of the initial proposed percentage increase and it is one‑third of the initial proposed percentage increase in the last year of the proposed increase.

Q. If the voters in a school district vote to adopt a budget in excess of the revenue control limit as provided in subsection I or J of this section, any additional increase shall be included in the aggregate budget limit for each of the years authorized. Any additional increase shall be excluded from the determination of equalization assistance. The school district governing board, however, may levy on the net assessed valuation used for secondary property tax purposes of the property in the school district the additional increase if adopted under subsection I of this section for the period of one year, two years or five through seven years as authorized. If an additional increase is approved as provided in subsection J of this section, the increase may only be budgeted and expended if sufficient monies are available in the maintenance and operation fund of the school district. If a budget increase was previously authorized and will be in effect for the budget year or budget year and subsequent years, as provided in subsection I or J of this section, the governing board may request a new budget increase as provided in the same subsection under which the prior budget increase was adopted that does not exceed the maximum amount permitted under subsection K of this section. If the voters in the school district authorize the new budget increase amount, the existing budget increase no longer is in effect. If the voters in the school district do not authorize the budget increase amount, the existing budget increase remains in effect for the time period for which it was authorized. The maximum additional increase authorized as provided in subsection I or J of this section and the additional increase that is included in the aggregate budget limit is based on a percentage of a school district's revenue control limit in future years, if the budget increase is authorized for more than one year. If the additional increase:

1. Is for two years, the proposed increase in the second year is equal to the initial proposed percentage increase.

R. If the voters in a school district vote to adopt a budget in excess of district additional assistance as provided in subsection L of this section, any additional increase shall be included in the aggregate budget limit for each of the years authorized. The additional increase shall be excluded from the determination of equalization assistance. The school district governing board, however, may levy on the net assessed valuation used for secondary property tax purposes of the property in the school district the additional increase for the period authorized but not to exceed ten years. For overrides approved by a vote of the qualified electors of the school district at an election held from and after October 31, 1998, the period of the additional increase prescribed in this subsection shall not exceed seven years for any capital override election.

S. If the voters in a school district vote to adopt a budget in excess of district additional assistance as provided in subsection M of this section, any additional increase shall be included in the aggregate budget limit for each of the years authorized. The additional increase shall be excluded from the determination of equalization assistance. The school district governing board may only use revenues derived from the school district's prior year's maintenance and operation fund ending cash balance and capital outlay fund ending cash balance to fund the additional increase for the period authorized but not to exceed ten years. For overrides approved by a vote of the qualified electors of the school district at an election held from and after October 31, 1998, the period of the additional increase prescribed in this subsection shall not exceed seven years for any capital override election.

T. In addition to subsections P and S of this section, from the maintenance and operation fund and capital outlay fund ending cash balances, the school district governing board shall first use any available revenues to reduce its primary tax rate to zero and shall use any remaining revenues to fund the additional increase authorized as provided in subsections F and M of this section.

U. If the voters in a school district disapprove the proposed budget, the alternate budget that, except for any budget increase authorized by a prior election, does not include an increase in the budget in excess of the amount provided in section 15‑905 shall be adopted by the governing board as provided in section 15‑905.

V. The governing board may request that any override election be cancelled if any change in chapter 9 of this title changes the amount of the aggregate budget limit as provided in section 15‑905. The request to cancel the override election shall be made to the county school superintendent at least eighty days prior to before the date of the scheduled override election.

W. For any election conducted pursuant to subsection L or M of this section:

1. The ballot shall include the following statement in addition to any other statement required by this section:

The capital improvements that are proposed to be funded through this override election are to exceed the state standards and are in addition to monies provided by the state.

___________ school district is proposing to increase its budget by $__________ to fund capital improvements over and above those funded by the state. Under the students first capital funding system, _________ school district is entitled to state monies for new construction and renovation of school buildings in accordance with state law.

2. The ballot shall contain the words "budget increase, yes" and "budget increase, no", and the voter shall signify the voter's desired choice.

3. At least eighty‑five days before the election, the school district shall submit proposed ballot language to the director of the Arizona legislative council. The director of the Arizona legislative council shall review the proposed ballot language to determine whether the proposed ballot language complies with this section. If the director of the Arizona legislative council determines that the proposed ballot language does not comply with this section, the director, within ten calendar days of the receipt of after receiving the proposed ballot language, shall notify the school district of the director's objections, and the school district shall resubmit revised ballot language to the director for approval.

X. If the voters approve the budget increase pursuant to subsection L or M of this section, the school district shall not use the override proceeds for any purposes other than the proposed capital improvements listed in the informational pamphlet, except that up to ten percent of the override proceeds may be used for general capital expenses, including cost overruns of proposed capital improvements.

Y. Each school district that currently increases its budget pursuant to this section is required to shall hold a public meeting each year between September 1 and October 31 at which an update of the programs or capital improvements financed through the override is discussed and at which the public is permitted allowed an opportunity to comment and:

1. If the increase is pursuant to subsection L or M of this section, at a minimum, the update shall include the progress of capital improvements financed through the override, a comparison of the current status and the original projections on the construction of capital improvements, the costs of capital improvements and the costs of capital improvements in progress or completed since the prior meeting and the future capital plans of the school district. The school district shall include in the public meeting a discussion of the school district's use of state capital aid and voter‑approved bonding in funding capital improvements, if any.

2. If the increase is pursuant to subsection E, F, I or J of this section, the update shall include at a minimum the amount expended in the previous fiscal year and the amount included in the current budget for each of the purposes listed in the informational pamphlet prescribed by subsection B of this section.

Z. If a budget in excess of district additional assistance was previously adopted by the voters in a school district and will be in effect for the budget year or budget year and subsequent years, as provided in subsection L or M of this section, the governing board may request an additional budget in excess of district additional assistance. If the voters in a school district authorize the additional budget in excess of district additional assistance, the existing district additional assistance budget increase remains in effect.

AA. Notwithstanding any other law, the maximum budget increase that may be authorized pursuant to subsection L or M of this section is ten percent of the school district's revenue control limit.

BB. If the election is to continue to exceed the revenue control limit and if the proposed override will be fully funded by a continuation of a levy of taxes on the taxable property in the school district, the ballot shall contain the words "budget override continuation, yes" and "budget override continuation, no", and the voter shall signify the voter's desired choice. The ballot shall also contain the amount of the proposed continuation of the budget increase of the proposed budget over the alternate budget, a statement that the amount of the proposed increase will be based on a percentage of the school district's revenue control limit in future years, if applicable, as provided in subsection P of this section and the following statement:

Any budget increase continuation authorized by this election shall be entirely funded by a levy of taxes on the taxable property in this school district for the year for which adopted and for _______ subsequent years, shall not be realized from monies furnished by the state and shall not be subject to the limitation on taxes specified in article IX, section 18, Constitution of Arizona. Based on the current net assessed valuation used for secondary property tax purposes, to fund the proposed continuation of the increase in the school district's budget would require an estimated continuation of a tax rate of $_______________ dollar per one hundred dollars $100 of assessed valuation used for secondary property tax purposes and is in addition to the school district's tax rate that will be levied to fund the school district's revenue control limit allowed by law.

CC. If the election is to continue to exceed the revenue control limit as provided in section 15‑482 and if the proposed override will be fully funded by a continuation of a levy of taxes on the taxable property in the school district, the ballot shall contain the words "budget override continuation, yes" and "budget override continuation, no", and the voter shall signify the voter's desired choice. The ballot shall also contain the amount of the proposed continuation of the budget increase of the proposed budget over the alternate budget, a statement that the amount of the proposed increase will be based on a percentage of the school district's revenue control limit in future years, if applicable, as provided in subsection P of this section and the following statement:

Any budget increase continuation authorized by this election shall be entirely funded by a levy of taxes on the taxable property in this school district for the year for which adopted and for ______ subsequent years, shall not be realized from monies furnished by the state and shall not be subject to the limitation on taxes specified in article IX, section 18, Constitution of Arizona. Based on the current net assessed valuation used for secondary property tax purposes, to fund the proposed continuation of the increase in the school district's budget would require an estimated continuation of a tax rate of $_______________ dollar per one hundred dollars $100 of net assessed valuation used for secondary property tax purposes and is in addition to the school district's tax rate that will be levied to fund the school district's revenue control limit allowed by law. END_STATUTE

Sec. 9. Section 15-491, Arizona Revised Statutes, is amended to read:

START_STATUTE15-491. Elections on school property; exceptions

A. The governing board of a school district may, and on petition of fifteen percent of the school electors as shown by the poll list at the last preceding annual school election shall, call an election for the following purposes:

1. To locate or change the location of school buildings.

2. To purchase or sell school sites or buildings or sell school sites pursuant to section 15‑342 or to build school buildings, but the authorization by vote of the school district shall not necessarily specify the site to be purchased.

3. To decide whether the bonds of the school district shall be issued and sold for the purpose of raising money monies for purchasing or leasing school lots, for building or renovating school buildings, for supplying school buildings with furniture, equipment and technology, for improving school grounds, for purchasing pupil transportation vehicles or for liquidating any indebtedness already incurred for such purposes. Bonds issued for furniture, equipment and technology, other than fixtures, shall mature no not later than the July 1 that follows the fifth year after the bonds were issued. A school district shall not issue class B bonds until the school district has obligated in contract the entire proceeds of any class A bonds issued by the school district. The total amount of class A and class B bonds issued by a school district shall not exceed the debt limitations prescribed in article IX, sections 8 and 8.1, Constitution of Arizona.

4. To lease for twenty or more years, as lessor or as lessee, school buildings or grounds. Approval by a majority of the school district electors voting authorizes the governing board to negotiate for and enter into a lease. The ballot shall list the school buildings or grounds for which a lease is sought. If the governing board does not enter into a lease of twenty or more years of the school buildings or grounds listed on the ballot within twenty years of after the date of the election and the board continues to seek such a lease, the governing board shall call a special election to reauthorize the board to negotiate for and to enter into a lease of ten twenty or more years.

5. To change the list of capital projects or the purposes authorized by prior voter approval to issue bonds.

6. To extend from six to ten years the time period to issue class B bonds authorized in 2009 or earlier. Elections pursuant to this paragraph may not be held later than the sixth November after the election approving the issuance of the bonds.

B. No A petition shall be is not required for the holding of the first election to be held in a joint common school district for any of the purposes specified in subsection A of this section. The certification of election results required by section 15‑493 shall be made to the board of supervisors of the jurisdictional county.

C. When the election is called to determine whether or not bonds of the school district shall be issued and sold for the purposes enumerated in the call for the election, the question shall be submitted to the vote of the qualified electors of the school district as defined in section 15‑401 and subject to section 15‑402.

D. The governing board shall order the election to be held and the election notice and procedures to be conducted in the manner prescribed in title 35, chapter 3, article 3. If a petition for an election has been filed with the governing board as provided in subsection A of this section, the board shall act on the petition within sixty days by ordering the election to be held as provided in this subsection. If a school district bond election is scheduled for the same date a school district will hold an override election, the governing body shall deliver a copy of the notice of election and ballot to the county school superintendent who shall include the notice of election and ballot with the informational pamphlet and ballot prepared for the override election. Mailing of the information required for both the override and bond elections shall constitute compliance with the notice provisions of this section.

E. The elections to be held pursuant to this section shall only be held on dates prescribed by section 16‑204, except that elections held pursuant to this section to decide whether class B bonds shall be issued, or any other obligation incurred that will require the assessment of secondary property taxes, shall only be held on the first Tuesday after the first Monday of November.

F. Subsection A, paragraph 2 of this section does not apply to the sale of school property if the market value of the school property is less than fifty thousand dollars $50,000.

G. Bond counsel fees, financial advisory fees, printing costs and paying agent and registrar fees for bonds issued pursuant to an election under this section shall be paid from either the amount authorized by the qualified electors of the school district or current operating funds. Bond election expenses shall be paid from current operating funds only.

H. For any election conducted to decide whether class B bonds will be issued pursuant to this section:

1. Except as provided in paragraph 2 of this subsection, the ballot shall include the following statement:

The capital improvements that are proposed to be funded through this bond issuance are to exceed the state standards and are in addition to monies provided by the state.

__________ school district is proposing to issue class B general obligation bonds totaling $__________ to fund capital improvements over and above those funded by the state. Under the students first capital funding system, _________ school district is entitled to state monies for new construction and renovation of school buildings in accordance with state law.

2. For a school district that is a career technical education district, the ballot shall include the following statement:

___________, a career technical education district, is proposing to issue class B general obligation bonds totaling $___________ to fund capital improvements at a campus owned or operated and maintained by the career technical education district.

3. The ballot shall conform to the requirements of title 35, chapter 3, article 3.

4. At least eighty‑five days before the election, the school district shall submit proposed ballot language to the county school superintendent and the director of the Arizona legislative council. The director of the Arizona legislative council shall review the proposed ballot language to determine whether the proposed ballot language complies with this section. If the director of the Arizona legislative council determines that the proposed ballot language does not comply with this section, the director, within ten calendar days of the receipt of after receiving the proposed ballot language, shall notify the school district and the county school superintendent of the director's objections, and the school district shall resubmit revised ballot language to the director for approval.

5. No Not later than thirty‑five days before a class B bond election conducted pursuant to this section, the school district shall mail an informational pamphlet prepared by the county school superintendent to each household that contains a qualified elector in the school district. The informational pamphlet shall contain, at a minimum, the following information:

(a) An executive summary of the school district's most recent capital plan submitted to the school facilities oversight board.

(b) A complete list of each proposed capital improvement that will be funded with the proceeds of the bonds and a description of the proposed cost of each improvement, including a separate aggregation of capital improvements for administrative purposes as defined by the school facilities oversight board.

I. For any election conducted to decide whether impact aid revenue bonds shall be issued pursuant to this section:

1. The ballot shall include the following statement:

The capital improvements that are proposed to be funded through this bond issuance are to exceed the state standards and are in addition to monies provided by the state.

__________ school district is proposing to issue impact aid revenue bonds totaling $__________ to fund capital improvements over and above those funded by the state. Under the students first capital funding system, _________ school district is entitled to state monies for new construction and renovation of school buildings in accordance with state law.

2. The ballot shall contain the words "bond approval, yes" and "bond approval, no", and the voter shall signify the voter's desired choice.

3. At least eighty‑five days before the election, the school district shall submit proposed ballot language to the director of the legislative council. The director of the legislative council shall review the proposed ballot language to determine whether the proposed ballot language complies with this section. If the director of the legislative council determines that the proposed ballot language does not comply with this section, the director, within ten calendar days of the receipt of after receiving the proposed ballot language, shall notify the school district of the director's objections, and the school district shall resubmit revised ballot language to the director for approval.

4. No Not later than thirty‑five days before an impact aid revenue bond election conducted pursuant to this section, the school district shall mail an informational pamphlet prepared by the county school superintendent to each household that contains a qualified elector in the school district. The informational pamphlet shall contain, at a minimum, the following information:

(a) The date of the election.

(b) The voter's polling place and the times it is open.

(c) An executive summary of the school district's most recent capital plan submitted to the school facilities oversight board.

(d) A complete list of each proposed capital improvement that will be funded with the proceeds of the bonds and a description of the proposed cost of each improvement, including a separate aggregation of capital improvements for administrative purposes as defined by the school facilities oversight board.

(e) A statement that impact aid revenue bonds will be fully funded by aid that the school district receives from the federal government and do not require a levy of taxes in the district.

(f) A statement that if the bonds are approved, the first priority for the impact aid will be to pay the debt service for the bonds and that other uses of the monies are prohibited until the debt service obligation is met.

(g) A statement that if the impact aid revenue bonds are approved, the school district shall not issue or sell class B bonds while the district has existing indebtedness from impact aid revenue bonds, except for bonds issued to refund any bonds issued by the board.

J. If the voters approve the issuance of school district class B bonds or impact aid revenue bonds, the school district shall not use the bond proceeds for any purposes other than the proposed capital improvements listed in the informational pamphlet, except that up to ten percent of the bond proceeds may be used for general capital expenses, including cost overruns of proposed capital improvements. The proposed capital improvements may be changed by a subsequent election as provided by this section.

K. Each school district that issues bonds under this section is required to shall hold a public meeting each year between September 1 and October 31, until the bond proceeds are spent, at which an update of the progress of capital improvements financed through bonding is discussed and at which the public is permitted allowed an opportunity to comment. At a minimum, the update shall include a comparison of the current status and the original projections on the construction of capital improvements, the costs of capital improvements and the costs of capital improvements in progress or completed since the prior meeting and the future capital bonding plans of the school district. The school district shall include in the public meeting a discussion of the school district's use of state capital aid and voter‑approved capital overrides in funding capital improvements, if any.

L. If an election is held to change the purpose or list of capital projects authorized by prior voter approval to issue bonds pursuant to subsection A, paragraph 5 of this section, the following requirements apply:

1. The election may be held only on the first Tuesday after the first Monday in November.

2. No Not later than thirty‑five days before the election, the school district shall mail an informational pamphlet prepared by the county school superintendent to each household in the school district that contains a qualified elector. The informational pamphlet shall contain, at a minimum, the following information:

(a) The date of the election.

(b) The voter's polling place and the times it is open.

(d) A complete list of each proposed capital improvement that is in addition to the initial capital improvements presented in the informational pamphlet when the bonds were approved and the proposed cost of each improvement, including a separate aggregation of capital improvements for administrative purposes as defined by the school facilities oversight board.

(e) A complete list of each capital improvement that was presented in the informational pamphlet when the bonds were initially approved and that is proposed to be eliminated or to have its cost reduced, and the proposed cost of each improvement, including a separate aggregation of capital improvements for administrative purposes as defined by the school facilities oversight board.

(f) Arguments for and against the proposed change, if submitted, as provided by section 15‑481, subsection B, paragraph 9. The ballot arguments for the proposed change shall be signed as the governing board of the school district without listing any member's individual name for the arguments for the proposed change.

3. The ballot shall contain the words "change capital improvements, yes" and "change capital improvements, no", and the voter shall signify the voter's desired choice.

4. If the election is to add a purpose that was not on the initial ballot, the ballot shall list the purpose that is proposed to be added.

M. If an election is held to extend the time to issue bonds pursuant to subsection A, paragraph 6 of this section, the following requirements apply:

1. The election may be held only on the first Tuesday after the first Monday in November.

(a) The date of the election.

(b) The voter's polling place and the times it is open.

(d) Arguments for and against the proposed change, if submitted, as provided in section 15‑481, subsection B, paragraph 9. The ballot arguments for the proposed change shall be signed as the governing board of the school district without listing any member's individual name for the arguments for the proposed change.

3. The ballot shall contain the words "extend time to issue bonds, yes" and "extend time to issue bonds, no", and the voter shall signify the voter's desired choice. END_STATUTE

Sec. 10. Section 15-907, Arizona Revised Statutes, is amended to read:

START_STATUTE15-907. Incurring liabilities in excess of school district budget; petition; approval; procedure for expenditures

A. In the event of excessive and unexpected legal expenses or for an emergency for which the school district did not receive funding from the school facilities board pursuant to section 15‑2022 41‑5721 because there were insufficient monies in the emergency deficiencies correction fund, the governing board of the school district may petition the county school superintendent, or in the case of an accommodation school, the county school superintendent may petition the county board of supervisors, requesting authority to incur liabilities in excess of the school district budget, in an amount the governing board deems necessary. The governing board of the school district shall follow the procedures for the truth in taxation notice and hearing prescribed in section 15‑905.01, subsection B.

B. The county school superintendent shall forward the petition together with the superintendent's recommendation and a copy of the budget of the school district to the board of supervisors.

C. The board of supervisors shall hold a hearing on the petition within twenty days after receipt and shall determine whether the petition shall be allowed, allowed after revision or denied.

D. If the petition is allowed in whole or in part, the governing board shall be authorized to incur liabilities in accordance with the petition, and a copy of the order of the board of supervisors authorizing the incurring of such liabilities shall be filed with the county school superintendent. The county school superintendent, upon on presentation of proper vouchers, shall draw warrants against the additional allowance. Any liability so incurred shall be in addition to the aggregate budget estimate of the school district for the succeeding year.

E. The portion of the primary tax rate to fund these liabilities in excess of the school district budget as provided in this section shall not be included in the computation of additional state aid for education prescribed in section 15‑972. END_STATUTE

Sec. 11. Section 15-964, Arizona Revised Statutes, is amended to read:

START_STATUTE15-964. Federal impact adjustment

A. The governing board of a school district may compute a federal impact adjustment to the unrestricted capital budget limit. The maximum amount of the federal impact adjustment is the sum of the following:

1. Twenty‑five per cent percent of the monies received from forest reserve funds by the school district in the prior fiscal year as provided in section 41‑736.

2. For a school district that is not an accommodation school, the lesser of:

(a) Twenty‑five per cent percent of the title VIII of the elementary and secondary education act of 1965 revenues received in the prior fiscal year.

(b) The total amount of title VIII of the elementary and secondary education act of 1965 revenues received in the prior fiscal year minus the sum of the following:

(i) The amount of title VIII of the elementary and secondary education act of 1965 assistance used to increase the general budget limit as provided in section 15‑905, subsections K and O for the prior fiscal year.

(ii) The amount budgeted for title VIII of the elementary and secondary education act of 1965 administrative costs as provided in section 15‑905, subsection P for the current year.

(iii) The amount budgeted for principal and interest on impact aid revenue bonds pursuant to section 15‑2104 41‑5804 for the current year.

B. The federal impact adjustment shall only be budgeted and expended for new construction, major renovation of buildings or expenditures that may be budgeted in the unrestricted capital fund.

C. If the governing board underestimated the amount of the federal impact adjustment for the current year, the board may adjust the unrestricted capital budget limit and the budget before May 15. If the board overestimated the amount of the federal impact adjustment for the current year, the board shall adjust the unrestricted capital budget limit and the budget before May 15. Not later than May 18, the budget as revised shall be submitted electronically to the superintendent of public instruction. END_STATUTE

Sec. 12. Section 15-995, Arizona Revised Statutes, is amended to read:

START_STATUTE15-995. Special district assessment for adjacent ways by school district

A. The governing board of a school district may contract for constructing, maintaining or otherwise improving any public way adjacent to any parcel of land owned by the school district or leased for school purposes by the school district, or an intersection of any public way adjoining a quarter block in which the parcel of land is situated, and for the construction of constructing sidewalks, sewers, utility lines, roadways and other related improvements in or along such streets and intersections, and to pay for such improvements by the levy of levying a special assessment on the taxable property in the school district. A school district shall not use any portion of the monies generated from the special assessment for any construction, maintenance or other improvements to the school district's property except improvements necessary to ensure the safe ingress to and egress from public school property directly adjacent to the public way for buses and fire equipment. The assessment shall be made a part of the itemized statement that is regularly filed with the county school superintendent and that shows the amount of monies needed for the expenses of schools within the school district for the ensuing year. Each adjacent ways project proposal to be funded through this special assessment must be filed with the division of school facilities board within the department of administration and include the project cost estimate. If the entire project cost for the adjacent ways project is greater than fifty thousand dollars $50,000, the school facilities board division shall approve or deny the project within sixty days after receipt of receiving the filing of the project proposal by the school district and the expenditure shall not be made unless the school facilities board division validates both of the following within sixty days after receipt of receiving the filing of the proposal:

1. The project that is proposed to be funded by the assessment is in compliance complies with state laws relating to adjacent ways projects.

2. The proposal selected by the school district does not contain additional work that is not listed in the adjacent ways proposal submitted by the school district.

B. If any property that is owned by a school district or leased by a school district for school purposes from any city or county, the state or the United States is included within the assessment district to be assessed to pay the costs and expenses of any public improvements initiated by a city, in order to make the assessments thereon payable by the city in which the improvement is initiated, the governing board may contract with the municipality or its improvement district to reimburse it for the amount of the assessment against the property and to pay the amount so contracted for by the levy of a special assessment as provided by subsection A of this section.

C. The governing board of the school district shall follow the truth in taxation notice and hearing requirements prescribed in section 15‑905.01, subsection B.

D. The portion of the primary tax rate to fund adjacent ways as provided in this section shall not be included in the computation of additional state aid for education as prescribed in section 15‑972. END_STATUTE

Sec. 13. Section 15-996, Arizona Revised Statutes, is amended to read:

START_STATUTE15-996. Duties of county treasurer relating to school district's monies

The county treasurer shall:

1. Receive and hold all school district monies and keep a separate account for each school district and for the special county school reserve fund. The county treasurer may maintain separate accounts for each fund of a school district or the county treasurer may maintain only two accounts for each school district's monies in addition to the funds provided for in sections 15‑1024, 15‑1025 and 15‑2041 41‑5741. If only two accounts are maintained, the first account shall consist of maintenance and operation, unrestricted capital outlay and adjacent ways monies and the classroom site fund prescribed in section 15‑977 and the second account shall consist of federal and state grant monies and all other monies.

2. Pool school district monies for investment except as provided in sections 15‑1024 and 15‑1025. Interest earned on the monies pooled for investment shall be apportioned at least quarterly to the appropriate school district based on an average monthly balance as prescribed in the uniform system of accounting for county treasurers as provided in section 41-1279.21.

3. Notwithstanding section 11‑605, register warrants only as follows:

(a) If separate accounts are maintained for each fund, warrants may only be registered on the maintenance and operation, unrestricted capital outlay and adjacent ways accounts and the classroom site fund prescribed in section 15‑977 and only if the total cash balance of all three accounts is insufficient to pay the warrants, except that, during the period of time when a school district is under receivership pursuant to section 15‑103, a warrant may be registered on the debt service account for which the cash balance in the debt service account is insufficient to cover the debt service payment if there are not sufficient monies in the debt service account to cover the debt.

(b) If the county treasurer maintains only two accounts as provided in paragraph 1 of this section:

(i) The county treasurer may register warrants only on the first account and only if the balance of that account is insufficient to pay the warrants.

(ii) The county treasurer may honor warrants for any federal or state grant fund with a negative balance as long as the total balance in the second account is positive. If the second account total balance is negative, the warrant for a federal or state grant fund shall be charged to the maintenance and operation fund. Any interest charged to the federal or state grant fund as a result of a negative balance that is in excess of interest earned on the fund shall be transferred to the maintenance and operation fund at the end of the fiscal year or the end of the grant year. If a federal or state grant fund has a negative balance at the end of the fiscal year or grant year, sufficient expenditures shall be transferred to the maintenance and operation fund to eliminate the negative balance.

4. Notify the county school superintendent by the fifteenth day of each calendar month of the month end balances of each school district account.

5. Pay warrants issued by the county school superintendent and duly endorsed by the person entitled to receive the monies.

6. On each property tax bill and each property tax statement prepared, separately state and identify by name each school district's primary property tax rate, the secondary property tax rate that is associated with overrides, the secondary property tax rate that is associated with class A bonds and the secondary property tax rate that is associated with class B bonds. For the purposes of this paragraph, "class A bonds" and "class B bonds" have the same meanings prescribed in section 15‑101. END_STATUTE

Sec. 14. Section 15-1021, Arizona Revised Statutes, is amended to read:

START_STATUTE15-1021. Limit on bonded indebtedness; limit on authorization and issuance of bonds; definitions

A. Until December 31, 1999, a school district may issue class A bonds for the purposes specified in this section and chapter 4, article 5 of this title to an amount in the aggregate, including the existing indebtedness, not exceeding fifteen percent of the taxable property used for secondary property tax purposes, as determined pursuant to title 42, chapter 15, article 1, within a school district as ascertained by the last property tax assessment previous to issuing the bonds.

B. From and after December 31, 1998, a school district may issue class B bonds for the purposes specified in this section and chapter 4, article 5 of this title to an amount in the aggregate, including the existing class B indebtedness, not exceeding ten percent of the net assessed value of the full cash value of the property in that school district, or one thousand five hundred dollars $1,500 per student count pursuant to section 15‑901, subsection A, paragraph 13, whichever amount is greater. A school district shall not issue class B bonds until the proceeds of any class A bonds issued by the school district have been obligated in contract. The total amount of class A and class B bonds issued by a school district shall not exceed the debt limitations prescribed in article IX, section 8, Constitution of Arizona.

C. Until December 31, 1999, a unified school district, as defined under article IX, section 8.1, Constitution of Arizona, may issue class A bonds for the purposes specified in this section and chapter 4, article 5 of this title to an amount in the aggregate, including the existing indebtedness, not exceeding thirty percent of the taxable property used for secondary property tax purposes, as determined pursuant to title 42, chapter 15, article 1, within a unified school district as ascertained by the last property tax assessment previous to issuing the bonds.

D. From and after December 31, 1998, a unified school district, as defined under article IX, section 8.1, Constitution of Arizona, may issue class B bonds for the purposes specified in this section and chapter 4, article 5 of this title to an amount in the aggregate, including the existing class B indebtedness, not exceeding twenty percent of the net assessed value of the full cash value of the property in that school district, or one thousand five hundred dollars $1,500 per student count pursuant to section 15‑901, subsection A, paragraph 13, whichever amount is greater. A unified school district shall not issue class B bonds until the proceeds of any class A bonds issued by the unified school district have been obligated in contract. The total amount of class A and class B bonds issued by a unified school district shall not exceed the debt limitations prescribed in article IX, section 8.1, Constitution of Arizona.

E. Bonds authorized to be issued by an election held after July 1, 1980 and before November 24, 2009 may not be issued more than six years after the date of the election, except that the time period may be extended to ten years pursuant to an election conducted pursuant to section 15‑491, subsection A, paragraph 6 and except that class A bonds shall not be issued after December 31, 1999. Bonds authorized to be issued by an election held after November 24, 2009 may not be issued more than ten years after the date of the election.

F. Except as provided in section 15‑491, subsection A, paragraph 3, bond proceeds shall not be expended for items whose useful life is less than the average life of the bonds issued, except that bond proceeds shall not be expended for items whose useful life is less than five years.

G. A career technical education district shall not spend class B bond proceeds to construct or renovate a facility located on the campus of a school in a school district that participates in the career technical education district unless the facility is only used to provide career and technical education and is available to all pupils who live within the career technical education district. If the facility is not owned by the career technical education district, an intergovernmental agreement or a written contract shall be executed for ten years or the duration of the bonded indebtedness, whichever is greater. The intergovernmental agreement or written contract shall include provisions:

1. That preserve the usage of the facility renovated or constructed, or both, only for career and technology programs operated by the career technical education district.

2. That include the process to be used by the participating district to compensate the career technical education district in the event that the facility is no longer used only for career and technical education programs offered by the career technical education district during the life of the bond.

H. A school district shall not authorize, issue or sell bonds pursuant to this section if the school district has any existing indebtedness from impact aid revenue bonds pursuant to title 41, chapter 16 56, article 8 of this title, except for bonds issued to refund any bonds issued by the governing board.

I. For the purposes of this section, "full cash value" and "net assessed value" have the same meanings prescribed in section 42‑11001. END_STATUTE

Sec. 15. Section 15-1107, Arizona Revised Statutes, is amended to read:

START_STATUTE15-1107. Litigation recovery fund; disposition of proceeds

A. Monies received for and derived from settlement of legal controversies or from recovery of costs, attorney fees or damages by a school district in litigation by or against the school district shall be deposited with the county treasurer who shall credit the deposits to the litigation recovery fund of the school district. The litigation recovery fund is a continuing fund that is not subject to reversion.

B. If a school district receives monies as provided in subsection A of this section for the purpose of replacing or repairing school buildings or other school property, the governing board, or the superintendent or chief administrative officer with the approval of the governing board, may apply the proceeds only to:

1. Reimburse the school facilities board building renewal grant fund established by section 15‑2032 41‑5731 or the emergency deficiencies correction fund established by section 15‑2022 41‑5721 to the extent that monies were received by the school district from the school facilities board, from those funds for replacing or repairing school buildings or other school property that was the subject of the dispute and the monies recovered by the school district pursuant to subsection A of this section are designated for the replacement or repair. The school district shall prioritize the reimbursement of the school facilities board as described in this paragraph, if applicable.

2. Pay any outstanding bonded indebtedness of the school district that is payable from the levy of taxes on property within the school district.

3. Construct, acquire, improve, repair or furnish school buildings after notice. If the proceeds are applied to a project that costs more than two hundred fifty thousand dollars $250,000, the governing board, or the superintendent or chief administrative officer with the approval of the governing board, may apply the proceeds after notice and a hearing.

4. Replace or repair the school property other than school buildings.

C. Except as provided in subsection B of this section, the governing board, or the superintendent or chief administrative officer with the approval of the governing board, may apply the proceeds of litigation recoveries to procure legal services or for the costs of litigation. END_STATUTE

Sec. 16. Repeal

Section 15-2003, Arizona Revised Statutes, is repealed.

Sec. 17. Transfer and renumber

Title 15, chapter 16, Arizona Revised Statutes, is transferred and renumbered for placement in title 41, Arizona Revised Statutes, as a new chapter 56. Title 15, chapter 16, articles 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 and 11, Arizona Revised Statutes, are transferred and renumbered for placement in title 41, chapter 56, Arizona Revised Statutes, as added by this act, as new articles 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 and 11, respectively. The following sections are transferred and renumbered for placement in title 41, chapter 56, article 1:

Former Sections New Sections

15-2001 ………………………………………………………………………………………………………………………… 41-5701.02

15-2002 ………………………………………………………………………………………………………………………………… 41-5702

15‑2004 ………………………………………………………………………………………………………………………………… 41-5703

15-2005 ………………………………………………………………………………………………………………………………… 41-5704

15‑2006 ………………………………………………………………………………………………………………………………… 41-5705

The following section is transferred and renumbered for placement in title 41, chapter 56, article 2:

Former Section New Section

15-2011 ………………………………………………………………………………………………………………………………… 41-5711

The following section is transferred and renumbered for placement in title 41, chapter 56, article 3:

Former Section New Section

15-2022 ………………………………………………………………………………………………………………………………… 41-5721

The following section is transferred and renumbered for placement in title 41, chapter 56, article 4:

Former Section New Section

15-2032 ………………………………………………………………………………………………………………………………… 41-5731

The following section is transferred and renumbered for placement in title 41, chapter 56, article 5:

Former Section New Section

15-2041 ………………………………………………………………………………………………………………………………… 41-5741

The following sections are transferred and renumbered for placement in title 41, chapter 56, article 6:

Former Sections New Sections

15-2051 ………………………………………………………………………………………………………………………………… 41-5751

15-2052 ………………………………………………………………………………………………………………………………… 41-5752

15-2053 ………………………………………………………………………………………………………………………………… 41-5753

15‑2054 ………………………………………………………………………………………………………………………………… 41-5754

15-2055 ………………………………………………………………………………………………………………………………… 41-5755

15‑2056 ………………………………………………………………………………………………………………………………… 41-5756

15-2057 ………………………………………………………………………………………………………………………………… 41-5757

15-2059 ………………………………………………………………………………………………………………………………… 41-5758

15-2060 ………………………………………………………………………………………………………………………………… 41-5759

15‑2061 ………………………………………………………………………………………………………………………………… 41-5760

15-2062 ………………………………………………………………………………………………………………………………… 41-5761

15‑2064 ………………………………………………………………………………………………………………………………… 41-5762

15-2065 ………………………………………………………………………………………………………………………………… 41-5763

15‑2066 ………………………………………………………………………………………………………………………………… 41-5764

The following sections are transferred and renumbered for placement in title 41, chapter 56, article 7:

Former Sections New Sections

15-2081 ………………………………………………………………………………………………………………………………… 41-5781

15-2082 ………………………………………………………………………………………………………………………………… 41-5782

15-2083 ………………………………………………………………………………………………………………………………… 41-5783

15‑2084 ………………………………………………………………………………………………………………………………… 41-5784

15-2085 ………………………………………………………………………………………………………………………………… 41-5785

15‑2086 ………………………………………………………………………………………………………………………………… 41-5786

15-2087 ………………………………………………………………………………………………………………………………… 41-5787

15-2088 ………………………………………………………………………………………………………………………………… 41-5788

15-2089 ………………………………………………………………………………………………………………………………… 41-5789

15‑2090 ………………………………………………………………………………………………………………………………… 41-5790

15-2091 ………………………………………………………………………………………………………………………………… 41-5791

15‑2093 ………………………………………………………………………………………………………………………………… 41-5792

15-2094 ………………………………………………………………………………………………………………………………… 41-5793

15‑2095 ………………………………………………………………………………………………………………………………… 41-5794

The following sections are transferred and renumbered for placement in title 41, chapter 56, article 8:

Former Sections New Sections

15-2101 ………………………………………………………………………………………………………………………………… 41-5801

15-2102 ………………………………………………………………………………………………………………………………… 41-5802

15-2103 ………………………………………………………………………………………………………………………………… 41-5803

15‑2104 ………………………………………………………………………………………………………………………………… 41-5804

15-2105 ………………………………………………………………………………………………………………………………… 41-5805

15‑2106 ………………………………………………………………………………………………………………………………… 41-5806

15-2107 ………………………………………………………………………………………………………………………………… 41-5807

15-2108 ………………………………………………………………………………………………………………………………… 41-5808

15-2109 ………………………………………………………………………………………………………………………………… 41-5809

15‑2110 ………………………………………………………………………………………………………………………………… 41-5810

15-2111 ………………………………………………………………………………………………………………………………… 41-5811

15‑2112 ………………………………………………………………………………………………………………………………… 41-5812

15-2113 ………………………………………………………………………………………………………………………………… 41-5813

15‑2114 ………………………………………………………………………………………………………………………………… 41-5814

15-2115 ………………………………………………………………………………………………………………………………… 41-5815

The following sections are transferred and renumbered for placement in title 41, chapter 56, article 9:

Former Sections New Sections

15-2131 ………………………………………………………………………………………………………………………………… 41-5831

15-2132 ………………………………………………………………………………………………………………………………… 41-5832

The following section is transferred and renumbered for placement in title 41, chapter 56, article 10:

Former Section New Section

15-2141 ………………………………………………………………………………………………………………………………… 41-5841

The following sections are transferred and renumbered for placement in title 41, chapter 56, article 11:

Former Sections New Sections

15-2151 ………………………………………………………………………………………………………………………………… 41-5851

15-2152 ………………………………………………………………………………………………………………………………… 41-5852

15-2153 ………………………………………………………………………………………………………………………………… 41-5853

15‑2154 ………………………………………………………………………………………………………………………………… 41-5854

15-2155 ………………………………………………………………………………………………………………………………… 41-5855

15‑2156 ………………………………………………………………………………………………………………………………… 41-5856

15-2157 ………………………………………………………………………………………………………………………………… 41-5857

15-2158 ………………………………………………………………………………………………………………………………… 41-5858

Sec. 18. Section 35-185.01, Arizona Revised Statutes, is amended to read:

START_STATUTE35-185.01. Treasurer's warrant notes; form; redemption; exception

A. If monies are not available to pay warrants, checks or substitute checks, or electronic funds transfer vouchers of the department of administration presented to the state treasurer pursuant to section 35‑185, the treasurer, in lieu of payment, shall issue and shall exchange or sell a treasurer's warrant note or notes in the amount or amounts equal to the sum of the face value of the warrants, checks or substitute checks, or electronic funds transfer vouchers presented for payment. Treasurer's warrant notes shall be issued in lieu of payment of state general fund warrants, checks or substitute checks, or electronic funds transfer vouchers only or in exchange for previously issued treasurer's warrant notes. Before issuing warrant notes, the state treasurer is not required to divest from program funding obligations issued pursuant to section 15‑2157 41‑5857, board funding obligations issued pursuant to section 28‑7678, monies in the budget stabilization fund or operating monies invested in securities that are earning a rate of interest greater than the cost of issuing warrant notes. For the purposes of this subsection, "monies are not available" means an operating cash balance is not available to pay warrants, checks or substitute checks, or electronic funds transfer vouchers except for those operating monies invested in program funding obligations issued pursuant to section 15‑2157 41‑5857, board funding obligations issued pursuant to section 28‑7678, monies in the budget stabilization fund or operating monies invested in securities that are earning a rate of interest greater than the total cost of issuing any warrant notes.

B. The face value of a treasurer's warrant note may be equal to the sum of any combination of warrants, checks or substitute checks, and electronic funds transfer vouchers presented for payment. The treasurer may sell warrant notes at public or private sale and shall use the proceeds of the sale to pay warrants, checks or substitute checks, and electronic funds transfer vouchers previously presented pursuant to section 35‑185. Treasurer's warrant notes shall not be sold at a price below their face value.

C. Each treasurer's warrant note sold or exchanged shall be dated the date the respective warrants are presented for payment. If the date of delivery of a treasurer's warrant note that is sold is later than the date of presentment of the respective warrant or warrants, the purchaser of the treasurer's warrant note shall pay the accrued interest as an additional purchase price. The accrued interest shall be paid to the holder of the respective unpaid warrant or warrants, which shall be deemed to bear interest at the same rate as the respective treasurer's warrant note from presentment to payment from the proceeds of warrant notes sold.

D. The treasurer shall establish a maturity date for each treasurer's warrant note of not longer than ninety days from the date of initial issue. The treasurer may specify that treasurer's warrant notes may be called for redemption at any time before the specified maturity date.

E. The treasurer shall pay interest from the treasurer's warrant note redemption fund on the face value of each warrant note at the rate established by the state treasurer at the time of issuing the warrant note. Interest shall be paid from the date of the treasurer's warrant note until the maturity date or redemption date. The treasurer shall establish the interest rate before the exchange or sale of warrant notes at a rate of not more than the maximum rate permitted by the state loan commissioners.

F. The state loan commissioners, at a meeting called and chaired by the state treasurer, shall fix or change the maximum rate of interest that may be paid on warrant notes. Any change of the maximum allowable rate of interest as established by the state loan commissioners shall not affect warrant notes issued before the date of the change.

G. Each treasurer's warrant note shall be signed by the treasurer or the treasurer's designated agent and countersigned by the director of the department of administration or the director's designated agent. The required signatures may be electronic signatures. All treasurer's warrant notes shall be substantially in the following form:

Treasurer's warrant note

(20__ to ____ fiscal year)

Number _____________________

Phoenix, Arizona _________________, 20__

On ________________, 20__, the treasurer of the state of Arizona will pay to the order of _____________________ at ______________________________ $_____________ with interest at __________ per annum from the date of issuance until paid (calculated on a 365/366 day basis).

(insert early redemption provisions)

____________________________ ____________________________

(Countersigned) State Treasurer

Director of the department

of administration

H. Treasurer's warrant notes may be exchanged or sold for the combined face value of any number of treasurer's warrant notes previously issued. Except for those treasurer's warrant notes issued in exchange for or to redeem treasurer's warrant notes previously issued, treasurer's warrant notes may not be issued, exchanged or sold except in payment of or to provide monies to pay warrants, checks or substitute checks, and electronic funds transfer vouchers presented for payment as provided in section 35‑185.

I. Treasurer's warrant notes issued in any fiscal year shall be numbered consecutively beginning with the number one. Treasurer's warrant notes shall be redeemed in numerical order. If the treasurer has sufficient monies to pay only a portion of the lowest numbered outstanding warrant note, the treasurer may deposit the monies with the paying agent pursuant to subsection K of this section or call in the lowest numbered warrant note, before maturity according to its terms, and pay the bearer the amount available and issue to the bearer a new warrant note bearing a number that will preserve, for the new warrant note, the priority of the partially paid warrant note and bearing a value equal to the amount of principal and interest remaining unpaid. The new warrant note and the partial payment of principal and interest on the partially paid warrant note shall be exchanged for the partially paid warrant note. The new warrant note shall pay interest at the same rate as the partially paid warrant note. The treasurer may make the changes in the form and date of the new warrant note as necessary to reflect the amount of unpaid interest on the partially paid warrant note.

J. The treasurer may include in the form of the treasurer's warrant notes provisions regarding the redemption and payment of treasurer's warrant notes before maturity as are consistent with subsections I and K of this section and section 35‑185.02. If prior redemption is to be a provision of a treasurer's warrant note, the note shall provide a method to notify the holder of the note by publication or written, telegraphic or electronic means as chosen by the treasurer.

K. The treasurer may appoint a paying agent to facilitate the redemption and payment of treasurer's warrant notes. Monies deposited with the paying agent shall be allocated to pay the principal of, interest on and any prior redemption premiums associated with treasurer's warrant notes in numerical order. A treasurer's warrant note is deemed paid for all purposes of this section and section 35‑185.02 when there is deposited with the paying agent sufficient monies to pay all amounts when due on the treasurer's warrant note and all amounts when due on all outstanding treasurer's warrant notes bearing a lower number. A paying agent appointed pursuant to this subsection shall provide security deposits as required by the treasurer.

L. When the treasurer or the paying agent, if payment is made to a paying agent, pursuant to subsection K of this section, pays treasurer's warrant notes or when the warrant notes are redeemed, the treasurer or paying agent shall mark on the face of the treasurer's warrant notes the word "cancelled" or shall cancel the warrant notes by electronic means indicating the date of cancellation and shall promptly present the notes to the director of the department of administration who shall give the state treasurer a receipt therefor.

M. If the state loan commissioners determine that it will result in a lower net effective interest rate on one, some or all warrant notes to be issued by the treasurer during the current fiscal year, the commissioners may authorize the treasurer to purchase letters of credit and to incur and pay insurance premiums, attorney fees or other related costs incurred with respect to treasurer's warrant notes. All such payments shall be treated in the same manner as interest to be paid on treasurer's warrant notes and shall be paid from the treasurer's warrant note redemption fund.

N. If treasurer's warrant notes are to be exchanged for warrants, checks or substitute checks, or electronic funds transfer vouchers held by banks or savings and loan associations, the treasurer may enter into agreements with such banks or savings and loan associations to provide for the issuance, reissuance and custody of treasurer's warrant notes, the fixing of the interest rates on the treasurer's warrant notes and the method of giving notice to the holders of the notes. Such agreements may provide for a book entry system for the treasurer's warrant notes or may provide for the issuance of one note with an appropriate grid on the reverse, which shall show the advancements made by the banks or savings and loan associations and also the payments of interest and reductions of principal. Such agreements may be continuing in nature, may be executed at any time and may apply to any treasurer's warrant notes exchanged for either warrants, checks or substitute checks, or electronic funds transfer vouchers or treasurer's warrant notes at any time during the remainder of the fiscal year in which the agreement is made. The agreements shall provide a method to preserve the priority of, interest rate on and other terms of each treasurer's warrant note exchanged pursuant to the agreement. Any such agreement shall not become effective until approved by the state loan commissioners. END_STATUTE

Sec. 19. Section 35-313, Arizona Revised Statutes, is amended to read:

START_STATUTE35-313. Investment of trust and treasury monies; loan of securities

A. The state treasurer shall invest and reinvest trust and treasury monies in any of the following items:

1. Obligations issued or guaranteed by the United States or any of its agencies, sponsored agencies, corporations, sponsored corporations or instrumentalities.

2. Repurchase agreements collateralized with securities that are authorized for investment pursuant to state law and that are purchased from authorized counterparties that have adequate capital and liquidity as determined by the state treasurer.

3. Bonds or other evidences of indebtedness of this state or any of the counties or incorporated cities, towns or duly organized school districts.

4. Commercial paper whose issuer is investment grade for short‑term obligations by any two nationally recognized statistical rating organizations.

5. Bills of exchange or time drafts known as banker's acceptances that are drawn on and accepted by a commercial bank.

6. Negotiable certificates of deposit issued by a nationally or state-chartered bank or savings and loan association.

7. Bonds, debentures, notes or other evidences of indebtedness that are denominated in United States dollars and that carry an investment grade rating by a nationally recognized bond rating agency.

8. Securities of or any other interests in any open‑end or closed‑end management type investment company or investment trust, including exchange traded products whose underlying investments are invested in securities allowed by state law, registered under the investment company act of 1940 (54 Stat. 789; 15 United States Code sections 80a‑1 through 80a‑64), as amended. For any treasurer investment pool that seeks to maintain a constant share price, both of the following apply:

(a) The investment company or investment trust takes delivery of the collateral for any repurchase agreement either directly or through an authorized custodian.

(b) The investment policy of the investment company or investment trust includes seeking to maintain a constant share price.

9. Certificates of deferred property taxes as provided by section 42‑17309.

10. Treasurer's warrant notes issued pursuant to section 35‑185.01 or registered warrants of a county issued pursuant to section 11‑605, if the yield is equal to or greater than yields on eligible investment instruments of comparable maturities.

11. Shares in the treasurer's local government investment pools pursuant to section 35‑326 if investment policies of the pool seek to maintain a constant share price.

12. Shares in the treasurer's long‑term local government investment pools, the terms of which are determined by the state board of investment, pursuant to section 35‑326.01.

13. Subject to subsection D of this section, state transportation board funding obligations delivered pursuant to section 28‑7678.

14. Deposits placed in accordance with the procedures prescribed in section 35‑323.01.

15. Institutional common trust funds whose underlying investments are invested in securities allowed by state law.

16. Program funding obligations delivered by the credit enhancement eligibility board pursuant to section 15‑2157 41‑5857.

B. In case of default or failure to honor a county treasurer's warrant, the state treasurer may withhold the first state shared revenues that would otherwise be distributed to the defaulting county in the amount necessary to honor the note, including accrued interest to and beyond the date of default.

C. The state treasurer may contract to loan securities owned by the trust funds and operating monies deposited in the investment pools pursuant to section 35‑316, subsection B to the financial or dealer community through one or more of the entities listed in section 35‑317, subsection A, or authorized by the board of investment pursuant to section 35‑311, subsection E, if the borrower transfers collateral to the state treasurer or acting agent of the state in the form of cash or securities authorized for investment pursuant to state law. Collateral posted in the form of cash shall be in an amount equal to at least one hundred percent of the market value of the loaned securities as agreed. Collateral posted in the form of securities shall be in an amount of at least one hundred two percent of the market value of the loaned securities as established from time to time by the board of investment. The loaned securities shall be valued as to market value daily, and, if necessary, the borrower shall post additional collateral, as agreed, to ensure that the required margin is maintained. The state treasurer may collect from the borrower all dividends, interest, premiums, rights and other distributions to which the lender of securities would otherwise be entitled. The state treasurer may terminate the contract on at least five business days' notice, as agreed, and the borrower may terminate the contract on at least two business days' notice, as agreed.

D. The state treasurer shall invest operating monies in state transportation board funding obligations delivered pursuant to section 28‑7678 pursuant to the following:

1. The state treasurer shall liquidate investments of operating monies if necessary to invest in state transportation board funding obligations, except that if operating monies in the state general fund fall below an $800,000,000 average over the previous twelve consecutive months, the state treasurer is not required to purchase state transportation board funding obligations pursuant to this subsection.

2. Each series of state transportation board funding obligations shall bear interest at a fixed interest rate equal to the mean bid‑ask price of the United States treasury obligation with a maturity date closest to the maturity date of the state transportation board funding obligation as determined by the pricing system used by the state treasurer before the date the state treasurer receives a certificate from the state transportation board that states the board's determination to deliver an obligation to the state treasurer and the anticipated delivery date of the obligation. The delivery date shall be between fifteen and sixty days after the day the state treasurer receives the certificate.

3. The state treasurer shall notify the state transportation board and the director of the department of transportation in writing when the operating monies fall below $400,000,000. If operating monies fall below $200,000,000, the state treasurer may call the investment in the state transportation board funding obligations in $25,000,000 increments up to the amount that the operating monies are below $200,000,000. The state treasurer shall give the state transportation board and the director of the department of transportation at least fifteen days' notice of the call. END_STATUTE

Sec. 20. Section 37-221, Arizona Revised Statutes, is amended to read:

START_STATUTE37-221. Sale or lease of state lands for public education purposes

A. Notwithstanding any other law, school districts may enter into leases of state land for more than ten years if the land is to be used for public education purposes. These leases shall be granted according to the constitution of this state and department rules. School districts shall make all applications apply for leases for educational purposes on forms prepared and furnished by the department, and an authorized agent of the governing board of the school district shall sign and swear to the application. A school district shall not use lands leased to it under this section except for public educational education purposes.

B. The department shall develop procedures to give priority to the procedures used for school districts to lease state lands for public education purposes. The department shall develop procedures to simplify the procedures used for school districts to lease state lands for public education purposes. The procedures shall specify that any leases entered into and any improvements made to properties leased pursuant to this section using state monies shall comply with the requirements of title 15 41, chapter 16 56.

C. The department shall develop procedures to give priority to the procedures used for school districts to purchase state lands for public education purposes. The department shall develop procedures to simplify the procedures used for school districts to purchase state lands for public education purposes. The procedures shall specify that any purchase of school lands by school districts using state monies shall comply with the requirements of title 15 41, chapter 16 56.

D. Any monies received by the department from the lease of state public school land for public education purposes pursuant to this section shall be transferred to the school facilities board for deposit in the new school facilities fund established by section 15‑2041 41‑5741.

E. For the purposes of this section, a school district shall be considered to have abandoned a lease when leased property and any improvements are no longer being used for public education purposes. END_STATUTE

Sec. 21. Section 37-521, Arizona Revised Statutes, is amended to read:

START_STATUTE37-521. Permanent state school fund; composition; use

A. After any appropriation pursuant to section 37-527, the permanent state school fund shall consist of:

1. The proceeds of all lands granted to the state by the United States for the support of common schools.

2. All property which accrues to the state by escheat or forfeiture.

3. All property donated for the benefit of the common schools, unless the terms of the donation otherwise provide.

4. All unclaimed shares and dividends of any corporation incorporated under the laws of this state.

5. The proceeds of sale of timber, mineral, gravel or other natural products or property from school lands and state lands other than those granted for specific purposes.

6. The residue of the lands granted for payment of the bonds and accrued interest issued by Maricopa, Pima, Yavapai and Coconino counties, after the purpose of the grant has been satisfied, and the five per cent of the proceeds of sales of public lands lying within this state sold by the United States subsequent to admission of this state into the union, as granted by the enabling act.

B. The fund shall be and remain a perpetual fund and distributions from the fund pursuant to article X, section 7, Constitution of Arizona, plus monies derived from the rental of the lands and property, interest and accrued rent for that year credited pursuant to section 37‑295 and interest paid on installment sales, shall be used as follows:

1. If there are outstanding state school facilities revenue bonds pursuant to title 15 41, chapter 16 56, article 6, outstanding qualified zone academy bonds pursuant to title 15 41, chapter 16 56, article 7 or outstanding state school trust revenue bonds issued to correct existing deficiencies, the state treasurer and the state land department shall annually transfer to the state school facilities revenue bond debt service fund established in section 15‑2054 41‑5754, the state school improvement revenue bond debt service fund established in section 15‑2084 41‑5784 and the state school trust revenue bond debt service fund the amount that is necessary to pay that fiscal year's debt service on outstanding state school facilities revenue bonds, qualified zone academy bonds and state school trust revenue bonds, before transferring amounts for any other uses.

2. If there are no outstanding state school facilities revenue bonds pursuant to title 15 41, chapter 16 56, article 6 or if the amount of monies available under this subsection exceeds the amount required under paragraph 1 of this subsection, the monies are subject to legislative appropriation to the new school facilities fund established by section 15‑2041 41‑5741.

3. If the amount of monies available under this subsection exceeds the amount required under paragraphs 1 and 2 of this subsection, the legislature may annually appropriate an amount to be used as provided in section 15‑971, subsection H, except that the amount appropriated may not exceed the amount appropriated from the permanent state school fund and from the rent and interest paid on installment sales for this purpose in fiscal year 2000‑2001.

4. Notwithstanding paragraphs 1, 2 and 3 of this subsection, from and after June 30, 2001, any expendable earnings under this subsection that exceed the fiscal year 2000‑2001 expendable earnings shall be deposited in the classroom site fund established by section 15‑977. END_STATUTE

Sec. 22. Section 41-2632, Arizona Revised Statutes, is amended to read:

START_STATUTE41-2632. Cooperative purchasing authorized; definitions

A. Any public procurement unit may either participate in, sponsor, conduct or administer a cooperative purchasing agreement for the procurement of to procure any materials, services, professional services, construction or construction services with one or more public procurement units or external procurement activities in accordance with an agreement entered into between the participants. The cooperative purchasing may include joint or multiparty contracts between public procurement units and open‑ended public procurement unit contracts that shall be are available to local public procurement units. A nonprofit corporation may enter into an agreement pursuant to this section if one or more of the parties involved is a public procurement unit. An agreement entered into as provided in this article is exempt from section 11‑952, subsection D. Parties under a cooperative purchasing agreement may:

1. Sponsor, conduct or administer a cooperative agreement for the procurement to procure or disposal dispose of any materials, services or construction.

2. Cooperatively use materials or services.

3. Commonly use or share warehousing facilities, capital equipment and other facilities.

4. Provide personnel, except that the requesting public procurement unit shall pay the public procurement unit providing the personnel the direct and indirect cost of providing the personnel, in accordance with the agreement.

5. On request, make available to other public procurement units informational, technical or other services or software that may assist in improving the efficiency or economy of procurement. The public procurement unit furnishing the informational, technical or other services or software has the right to request reimbursement for the reasonable and necessary costs of providing these services or software.

6. Pursuant to the rules for cooperative purchasing adopted by the director, purchase materials, services, professional services, construction or construction services under the terms of a contract between a vendor and a public procurement unit or an external procurement activity without complying with the requirements of sections 41‑2533, 41‑2534 and 41‑2535.

B. The division of school facilities board within the department of administration or school districts, or both, may enter into an agreement with a public procurement unit pursuant to this section for the purpose of procuring materials and services needed to correct deficiencies in school facilities.

C. The activities described in this section do not limit what parties may do under a cooperative purchasing agreement.

D. A nonprofit corporation operating as a public procurement unit under this section, on request of the auditor general, shall provide to the auditor general all documentation concerning any cooperative purchasing transaction the public procurement unit administers under this section.

E. A nonprofit corporation operating as a public procurement unit under this section shall comply with all procurement laws applicable to the public procurement unit participating in a cooperative purchasing transaction that the nonprofit corporation administers.

F. This section does not abrogate the responsibility of each public procurement unit to ensure compliance with procurement laws that apply to the particular public procurement, notwithstanding the fact that the cooperative purchase is administered by a nonprofit corporation operating under this section.

G. Any public procurement unit conducting or administering a cooperative purchasing agreement for the procurement of to procure construction services or professional services shall comply with the requirements of section 34‑603 or 41‑2578.

H. For the purposes of this section:

1. "Construction services" has the same meaning prescribed in section 41‑2503.

2. "Professional services" has the same meaning prescribed in section 41‑2578. END_STATUTE

Sec. 23. Section 41-3022.18, Arizona Revised Statutes, is amended to read:

START_STATUTE41-3022.18. School facilities oversight board; termination July 1, 2022

A. The school facilities oversight board terminates on July 1, 2022.

B. Title 15 41, chapter 16 56, articles 1, 2, 3, 4, 5, 6, 7, 8 and 9 and this section are repealed on January 1, 2023 only if either:

1. The board has no outstanding state school facilities revenue bonds issued pursuant to title 15 41, chapter 16 56, article 6, no outstanding state school improvement revenue bonds issued pursuant to title 15 41, chapter 16 56, article 7 and no outstanding lease‑to‑own transactions pursuant to sections 15‑2004 41‑5703, 15‑2005 41‑5704 and 15‑2006 41‑5705.

2. The legislature has otherwise provided for paying or retiring any outstanding state school facilities revenue bonds, any outstanding state school improvement revenue bonds and any outstanding lease-to-own transactions.

C. If neither of the conditions in subsection B of this section have has occurred on or before January 1, 2023, title 15 41, chapter 16 56, articles 1, 2, 3, 4, 5, 6, 7, 8 and 9 and this section are repealed thirty days after the retirement of all revenue bonds issued pursuant to title 15 41, chapter 16 56, articles 6 and 7 and any outstanding lease‑to‑own transactions issued pursuant to sections 15‑2004 41‑5703, 15‑2005 41‑5704 and 15‑2006 41‑5705. END_STATUTE

Sec. 24. Section 41-3026.01, Arizona Revised Statutes, is amended to read:

START_STATUTE41-3026.01. Credit enhancement eligibility board; termination July 1, 2026

A. The credit enhancement eligibility board terminates on July 1, 2026.

B. Title 15 41, chapter 16 56, articles 10 and 11 are repealed on January 1, 2027 only if both of the following apply:

1. The board has no outstanding program funding obligations issued pursuant to title 15 41, chapter 16 56, article 11 or the legislature has otherwise provided for paying or retiring any outstanding program funding obligations issued pursuant to title 15 41, chapter 16 56, article 11.

2. There are no outstanding guaranteed financings approved pursuant to title 15 41, chapter 16 56, article 11.

C. If both of the conditions in subsection B of this section do not exist on January 1, 2027, title 15 41, chapter 16 56, articles 10 and 11 are repealed thirty days after both of the conditions in subsection B of this section are met. END_STATUTE

Sec. 25. Heading change

The article heading of title 41, chapter 56, article 1, as transferred and renumbered, is changed from "SCHOOL FACILITIES BOARD" to "SCHOOL FACILITIES".

Sec. 26. Title 41, chapter 56, article 1, Arizona Revised Statutes, as transferred and renumbered, is amended by adding sections 41-5701 and 41-5701.01, to read:

START_STATUTE41-5701. Definitions

In this chapter, unless the context otherwise requires:

1. "Board" means the school facilities oversight board.

2. "Division" means the division of school facilities within the department of administration. END_STATUTE

START_STATUTE41-5701.01. Division of school facilities

A. The division of school facilities is established within the department of administration.

B. The director of the department of administration shall appoint the director of the division. END_STATUTE

Sec. 27. Section 41-5701.02, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5701.02. School facilities oversight board; members; conflict of interest; violation; classification; change orders; notification

A. The school facilities oversight board is established within the division consisting of the following members who shall be are appointed by the governor pursuant to section 38‑211 in such a manner as to provide for approximate geographic balance and approximate balance between public and private members:

1. One member who is an elected member of a school district governing board with knowledge and experience in the area of finance.

2. One private citizen who represents an organization of taxpayers.

3. One member with knowledge and experience in public procurement.

4. One member who is a registered professional architect and who has current knowledge and experience in school architecture.

5. One member with knowledge and experience in school facilities management in a public school system.

6. One member with knowledge and experience in demographics.

7. One member who is a teacher and who currently provides classroom instruction.

8. One member who is a registered professional engineer and who has current knowledge and experience in school engineering.

9. One member who is an owner or officer of a private construction company whose business does not include school construction.

1. One member who represents a statewide organization of taxpayers.

2. One member who is a registered professional architect.

3. One member with knowledge and experience in school facilities management in a public school system.

4. One member who is a registered professional engineer.

5. Two members who are owners or officers of a private construction company, who have knowledge of and experience in constructing large commercial or government buildings and whose businesses do not include school construction.

6. One person who represents the business community.

B. In addition to the members appointed pursuant to subsection A of this section: ,

1. The superintendent of public instruction or the superintendent's designee shall serve as an advisory nonvoting member of the school facilities oversight board.

2. The director of the department of administration or the director's designee shall serve as chairperson of the school facilities oversight board but for all other purposes shall serve as an advisory nonvoting member.

C. The governor shall appoint a chairperson from members appointed pursuant to subsection A of this section.

D. C. Members of the school facilities oversight board serve four‑year terms. The school facilities oversight board shall meet as often as the members deem necessary. A majority of the members constitutes a quorum for the transaction of business.

E. D. The unexcused absence of a member for more than three consecutive meetings is justification for removal by a majority vote of the board. If the member is removed, notice shall be given of the removal pursuant to section 38‑292.

F. E. The governor shall fill a vacancy by appointment of a qualified person as provided in subsection A of this section.

G. F. Members of the board who are employed by government entities are not eligible to receive compensation. Members of the board who are not employed by government entities are entitled to payment of one hundred fifty dollars $150 for each meeting attended, prorated for partial days spent for each meeting, up to two thousand five hundred dollars $2,500 each year. All members are eligible for reimbursement of expenses pursuant to title 38, chapter 4, article 2. These expenses and the payment of compensation are payable to a member from monies appropriated to the board from the new school facilities fund.

H. G. Members and employees of the school facilities oversight board are subject to title 38, chapter 3, article 8.

I. H. In addition to the requirements prescribed in subsection H G of this section, employees of the school facilities oversight board may not have a direct or indirect financial interest in any property purchased, facility constructed or contract financed with monies made available by the board or any other public monies. A person who knowingly violates this subsection is guilty of a class 1 misdemeanor.

J. I. The school facilities board division shall establish policies and procedures relating to building renewal grant change orders that include the following:

1. The board staff division shall approve or reject a change order within two business days.

2. If a school district approves work referenced in a change order before the board division approves the change order, the school district is responsible for the cost and construction of the project.

K. J. The school facilities board division shall establish policies and procedures to ensure that it notifies school districts in a uniform manner and at least annually of the services and funding that are available from the board and the division for facility construction, renovation and repair projects. The board division shall update and post this information on its website on or before July 1 of each year.

L. K. The school facilities board division shall establish and maintain a list of the persons who are responsible for facilities management at each school district in this state. A school district shall promptly notify the board division of any change to persons who are responsible for facilities management at that school district. The board division shall update and post this information on its website on or before July 1 of each year.

M. L. Members of the school facilities oversight board may not solicit, accept or provide gifts that are prohibited by state law. END_STATUTE

Sec. 28. Section 41-5702, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5702. Powers and duties; staffing; reporting requirements

A. The school facilities board division shall:

1. Make assessments of Assess school facilities and equipment deficiencies and approve the distribution of grants as appropriate.

2. Maintain a database of school facilities to administer allow for the administration of the building renewal grant fund and new school facilities formula and the building renewal grant fund. The facilities listed in the database must include all buildings that are owned by school districts. The school facilities board division shall ensure that the database is updated on at least an annual basis. Each school district shall report to the school facilities board no division not later than September 1 of each year information as required by the school facilities board for the administration of division to administer the building renewal grant fund and computation of by the school facilities oversight board to compute new school facilities formula distributions, including the nature and cost of major repairs, renovations or physical improvements to or replacement of building systems or equipment that were made in the previous year and that were paid for either with local monies or monies provided by the school facilities board from the building renewal grant fund. Each school district shall report any school or school buildings that have been closed, that are vacant or partially used pursuant to section 15‑119 and that have been leased to another entity or that operate as a charter school. The school facilities board division shall develop guidelines and definitions for the reporting prescribed in this paragraph and may review or audit the information, or both, to confirm the information submitted by a school district. Notwithstanding any other provision of this chapter, if a school district converts space that is listed in the database maintained pursuant to this paragraph to space that will be used for administrative purposes, the school district is responsible for any costs associated with the conversion converting, maintenance maintaining and replacement of replacing that space. If a building is significantly upgraded or remodeled, the school facilities board division shall adjust the age of that school facility in the database as follows:

(a) Determine the building capacity value as follows:

(i) Multiply the student capacity of the building by the per pupil square foot capacity established by section 15‑2041 41‑5741.

(ii) Multiply the product determined in item (i) of this subdivision by the cost per square foot established by section 15‑2041 41‑5741.

(b) Divide the cost of the renovation by the building capacity value determined in subdivision (a) of this paragraph.

(c) Multiply the quotient determined in subdivision (b) of this paragraph by the currently listed age of the building in the database.

(d) Subtract the product determined in subdivision (c) of this paragraph from the currently listed age of the building in the database, rounded to the nearest whole number. If the result is a negative number, use zero.

3. Inspect, contract with a third party to inspect or certify school district self-inspections of school buildings at least once every five years to ensure compliance with the building adequacy standards prescribed in section 15‑2011 41‑5711, the accuracy of the reporting of vacant and partially used buildings pursuant to this subsection and routine preventive maintenance guidelines as prescribed in this section with respect to construction of constructing new buildings and maintenance of maintaining existing buildings. The school facilities board division shall randomly select twenty school districts every thirty months and inspect provide for them to be inspected pursuant to this paragraph.

4. Review and approve student population projections submitted by school districts to determine to what extent school districts are entitled to monies to construct new facilities pursuant to section 15‑2041. The board shall make a final determination within five months after the receipt of an application by a school district for monies from the new school facilities fund.

5. Certify that plans for new school facilities meet the building adequacy standards prescribed in section 15‑2011.

6. 4. Develop prototypical elementary and high school designs. The board division shall review the design differences between the schools with the highest academic productivity scores and the schools with the lowest academic productivity scores. The board division shall also review the results of a valid and reliable survey of parent quality rating in the highest performing schools and the lowest performing schools in this state. The survey of parent quality rating shall be administered by the department of education. The board division shall consider the design elements of the schools with the highest academic productivity scores and parent quality ratings in the development of elementary and high school designs. The board division shall develop separate school designs for elementary, middle and high schools with varying pupil capacities.

7. 5. Develop application forms, reporting forms and procedures to carry out the requirements of this article, including developing and implementing policies and procedures to:

(a) Ensure that the division and the school facilities oversight board, as applicable, notifies notify school districts in a uniform manner of the services and funding available for school districts from the board or the division for facility construction, renovation and repair projects. The policies and procedures shall require the division and the board to provide at least one annual communication to school districts in a manner prescribed by the board division and shall require each school district to develop and maintain a list of persons who are responsible for facilities management at that school district.

(b) Establish a project eligibility assessment for all projects submitted for building renewal grant funding or emergency deficiencies correction funding, including establishing standardized criteria for project eligibility. Before the board division formally approves a project, the staff of the board division may review the costs and scope of the proposed project with persons and entities that have submitted bids on the project.

(c) Ensure that the division and the school facilities oversight board maintains maintain standardized documentation of all projects submitted to the board and the division for consideration to receive services or a financial award from the board or the division. The board and the division shall maintain standardized documentation of any project awarded monies by the board or the division, including records of payments to school districts in a manner prescribed by the board division. The standardized documentation shall include the following as part of the eligibility determination criteria:

(i) Whether the problem that the proposed project intends to address caused the building or facility to fall below the minimum school facility adequacy guidelines prescribed in section 15‑2011 41‑5711.

(ii) Whether the school district performed the routine preventive maintenance required pursuant to by section 15‑2032 41‑5731 on the building or facility.

(d) Require a school district to submit contact information for each proposed project, including the name, e‑mail email address and telephone number of persons who are responsible for facilities management at the school district.

(e) Require a school district to provide justification for each proposed project, including all of the following:

(i) The school district's use or planned use of the facility.

(ii) A detailed description of the problem and the school district's recommended solution.

(iii) Any completed professional study regarding the proposed project.

(iv) Any citation or report from government entities.

(v) The estimated cost of the proposed project, with documentation.

(vi) The project category.

(vii) A description of any local funding that will be used for the proposed project.

(viii) Documentation on associated insurance coverage, if applicable.

(f) If the application is for monies from the building renewal grant fund established by section 15‑2032, require the school district to report the preventive maintenance activities completed during the previous twelve months for the facility for which the monies are being requested.

(g) (f) Require that an initial application not be considered complete until all necessary information is submitted.

(h) (g) Allow a school district to submit an incomplete application and request technical assistance from the staff of the board if the school district is unable to provide sufficient information in the initial application.

(i) (h) If applicable, require that a complete application be received by the board at least fifteen business days before the next regularly scheduled board meeting in order for the application to be considered at that meeting. An incomplete application may be considered at that meeting if both the staff of the board and the superintendent of the school district deem the project critical.

(j) (i) Allow the staff of the board or the division, as applicable, to notify a school district in writing before review by the board or division that the proposed project does not meet eligibility criteria prescribed in this chapter. The written notification shall include documentation to support the staff's determination that the proposed project does not meet the eligibility criteria prescribed in this chapter. The school district may directly appeal the staff's determination of ineligibility to the executive director of the board division. The school district may directly appeal the executive director's determination of ineligibility to the board.

(k) (j) Prohibit the staff of the board or division from requesting that a school district withdraw a project application from review by the board or division if the initial staff review determines that the proposed project may be ineligible for monies from the board pursuant to this chapter.

8. Review and approve or reject requests submitted by school districts to take actions pursuant to section 15‑341, subsection G.

9. 6. Submit electronically an annual report on or before December 15 to the speaker of the house of representatives, the president of the senate, the superintendent of public instruction, the secretary of state and the governor that includes the following information:

(a) A detailed description of the amount of monies distributed by the school facilities board division under this chapter in the previous fiscal year.

(b) A list of each capital project that received monies from the school facilities board division under this chapter during the previous fiscal year, a brief description of each project that was funded and a summary of the board's division's reasons for the distribution of distributing monies for the project.

(c) A summary of the findings and conclusions of the building maintenance inspections conducted pursuant to this article during the previous fiscal year.

(d) A summary of the findings of common design elements and characteristics of the highest performing schools and the lowest performing schools based on academic productivity, including the results of the parent quality rating survey. For the purposes of this subdivision, "academic productivity" means academic year advancement per calendar year as measured with student‑level data using the statewide nationally standardized norm‑referenced achievement test.

10. 7. On or before December 1 of each year, report electronically to the joint committee on capital review the amounts necessary to fulfill the requirements of sections 15‑2022 and 15‑2041 section 41‑5721 for the following three fiscal years. In developing the amounts necessary for this report, the school facilities board division shall use the most recent average daily membership data available. On request from the board division, the department of education shall make available the most recent average daily membership data for use in calculating the amounts necessary to fulfill the requirements of section 15‑2041 41‑5721 for the following three fiscal years. The board division shall provide copies of the report to the president of the senate, the speaker of the house of representatives and the governor.

11. Adopt minimum school facility adequacy guidelines to provide the minimum quality and quantity of school buildings and the facilities and equipment necessary and appropriate to enable pupils to achieve the educational goals of the Arizona state schools for the deaf and the blind. The school facilities board shall establish minimum school facility adequacy guidelines applicable to the Arizona state schools for the deaf and the blind.

12. In each even‑numbered year, report electronically to the joint committee on capital review the amounts necessary to fulfill the requirements of section 15‑2041 for the Arizona state schools for the deaf and the blind for the following two fiscal years. The Arizona state schools for the deaf and the blind shall incorporate the findings of the report in any request for new school facilities monies. Any monies provided to the Arizona state schools for the deaf and the blind for new school facilities are subject to legislative appropriation.

13. 8. On or before June 15 of each year, submit electronically detailed information regarding demographic assumptions, and a proposed construction schedule and new school construction cost estimates for individual projects approved in the current fiscal year and expected project approvals for the upcoming fiscal year to the joint committee on capital review for its review. A copy of the report shall also be submitted electronically to the governor's office of strategic planning and budgeting. The joint legislative budget committee staff, the governor's office of strategic planning and budgeting staff and the school facilities board division staff shall agree on the format of the report.

14. 9. Every two years, provide school districts with information on improving and maintaining the indoor environmental quality in school buildings.

15. On or before December 31 of each year, report to the joint legislative budget committee on all class B bond approvals by school districts in that year. Each school district shall report to the school facilities board on or before December 1 of each year information required by the school facilities board for the report prescribed in this paragraph.

16. Validate proposed adjacent ways projects submitted by school districts as prescribed in section 15‑995.

10. Adopt rules regarding the validation of adjacent ways projects pursuant to paragraph 11 of this subsection.

11. Validate proposed adjacent ways projects that are submitted by school districts as prescribed in section 15‑995 pursuant to rules adopted by the division under paragraph 10 of this subsection.

12. Submit a monthly report to the school facilities oversight board that details each adjacent ways project validated pursuant to paragraph 11 of this subsection.

13. Brief the joint committee on capital review at least once each year regarding the use of monies from all of the following:

(a) The emergency deficiencies correction fund established by section 41-5721.

(b) The building renewal grant fund established by section 41-5731.

B. The school facilities oversight board or the division may contract for the following services in compliance with the procurement practices prescribed in title 41, chapter 23 of this title:

1. Private services.

2. Construction project management services.

3. Assessments for school buildings to determine if the buildings have outlived their useful life pursuant to section 15‑2041 41‑5741, subsection G or have been condemned.

4. Services related to land acquisition and development of a school site.

C. The board shall:

1. Review and approve student population projections submitted by school districts to determine to what extent school districts are entitled to monies to construct new facilities pursuant to section 41‑5741. The school facilities oversight board shall make a final determination within five months after receiving an application from a school district for monies from the new school facilities fund.

2. Certify that plans for new school facilities meet the building adequacy standards prescribed in section 41‑5711.

3. Review and approve or reject requests submitted by school districts to take actions pursuant to section 15‑341, subsection G.

4. On or before December 15 of each year electronically submit a report to the speaker of the house of representatives, the president of the senate, the superintendent of public instruction, the secretary of state and the governor that includes the following information:

(a) A detailed description of the amount of monies the board distributed under this chapter in the previous fiscal year.

(b) A list of each capital project that received monies from the board under this chapter during the previous fiscal year, a brief description of each project that was funded and a summary of the board's reasons for distributing monies for the project.

(c) A summary of the findings and conclusions of the building maintenance inspections conducted pursuant to this article during the previous fiscal year.

5. On or before December 1 of each year, electronically report to the joint committee on capital review the amounts necessary to fulfill the requirements of section 41‑5741 for the following three fiscal years. In developing the amounts necessary for this report, the board shall use the most recent average daily membership data available. On request from the board, the department of education shall make available the most recent average daily membership data for use in calculating the amounts necessary to fulfill the requirements of section 41‑5741 for the following three fiscal years. The board shall provide copies of the report to the president of the senate, the speaker of the house of representatives and the governor.

6. Adopt minimum school facility adequacy guidelines to provide the minimum quality and quantity of school buildings and the facilities and equipment necessary and appropriate to enable pupils to achieve the educational goals of the Arizona state schools for the deaf and the blind. The board shall establish minimum school facility adequacy guidelines applicable to the Arizona state schools for the deaf and the blind.

7. On or before June 15 of each year, electronically submit to the joint committee on capital review for its review detailed information regarding demographic assumptions, a proposed construction schedule and new school construction cost estimates for individual projects approved in the current fiscal year and expected project approvals for the upcoming fiscal year. A copy of the report shall also be submitted electronically to the governor's office of strategic planning and budgeting. The joint legislative budget committee staff, the governor's office of strategic planning and budgeting staff and the board staff shall agree on the format of the report.

8. On or before December 31 of each year, report to the joint legislative budget committee on all class B bond approvals by school districts in that year. Each school district shall report to the board on or before December 1 of each year information required by the board for the report prescribed in this paragraph.

C. D. The governor director of the division shall appoint an executive serve as the director of the school facilities oversight board pursuant to section 38‑211. The executive director is eligible to receive compensation as determined pursuant to section 38‑611 and may hire and fire necessary staff subject to title 41, chapter 4, article 4 of this title and as approved by the legislature in the budget. The executive director shall have demonstrated competency in school finance, facilities design or facilities management, either in private business or government service. The executive director serves at the pleasure of the governor. The staff of the school facilities oversight board is exempt from title 41, chapter 4, articles 5 and 6 of this title. The executive director:

1. Shall analyze applications for monies submitted to the board and to the division by school districts.

2. Shall assist the board and the division in developing forms and procedures for the distribution distributing and review of reviewing applications and the distribution of distributing monies to school districts.

3. May review or audit, or both, the expenditure of monies by a school district for deficiencies corrections and new school facilities.

4. Shall assist the board and the division in the preparation of preparing the board's and division's annual report reports.

5. Shall research and provide reports on issues of general interest to the board and the division.

6. May aid school districts in the development of developing reasonable and cost‑effective school designs in order to avoid statewide duplicated efforts and unwarranted expenditures in the area of school design.

7. May assist school districts in facilitating the development of multijurisdictional facilities.

8. Shall assist the board and the division in any other appropriate matter or method as directed by the division and the members of the board.

9. Shall establish procedures to ensure compliance with the notice and hearing requirements prescribed in section 15‑905. The notice and hearing procedures adopted by the board shall include the requirement, with respect to the board's consideration of any application filed after July 1, 2001 or after December 31 of the year in which the property becomes territory in the vicinity of a military airport or ancillary military facility as defined in section 28‑8461 for monies to fund the construction of new school facilities proposed to be located in territory in the vicinity of a military airport or ancillary military facility, that the military airport receive notification of the application by first class mail at least thirty days before any hearing concerning the application.

10. May expedite any request for monies in which the local match was not obtained for a project that received preliminary approval by the state board for school capital facilities.

11. Shall expedite any request for monies in which the school district governing board submits an application that shows an immediate need for a new school facility.

12. Shall make a determination as to determine administrative completion completeness within one month after the receipt of receiving an application by from a school district for monies from the new school facilities fund.

13. Shall provide technical support to school districts as requested by school districts in connection with the construction of constructing new school facilities and the maintenance of maintaining existing school facilities and may contract directly with construction project managers pursuant to subsection B of this section. This paragraph does not restrict a school district from contracting with a construction project manager using district or state resources.

D. E. When appropriate, the school facilities board and the division shall review and use the statewide school facilities inventory and needs assessment conducted by the joint committee on capital review and issued in July, 1995.

E. F. The school facilities oversight board shall contract with one or more private building inspectors to complete an initial assessment of school facilities and equipment and shall inspect each school building in this state at least once every five years to ensure compliance with section 15‑2011 41‑5711. A copy of the inspection report, together with any recommendations for building maintenance, shall be provided to the school facilities oversight board and the governing board of the school district.

F. G. The school facilities division or the board, as applicable, may consider appropriate combinations of facilities or uses in making assessments of assessing and curing deficiencies pursuant to subsection A, paragraph 1 of this section and in certifying plans for new school facilities pursuant to subsection A C, paragraph 5 2 of this section.

G. H. The board shall not award any monies to fund new facilities that are financed by class A bonds that are issued by the school district.

H. I. The board or the division shall not distribute monies to a school district for replacement replacing or repair of repairing facilities if the costs associated with the replacement or repair are covered by insurance or a performance or payment bond.

I. J. The board division may contract for construction services and materials that are necessary to correct existing deficiencies in school district facilities. The board division may procure the construction services necessary pursuant to this subsection by any method, including construction‑manager‑at‑risk, design‑build, design‑bid‑build or job‑order‑contracting as provided by title 41, chapter 23 of this title. The construction planning and services performed pursuant to this subsection are exempt from section 41‑791.01.

J. K. The school facilities board division may enter into agreements with school districts to allow school facilities board division staff and contractors access to school property for the purposes of performing the construction services necessary pursuant to subsection I J of this section.

K. L. Each school district shall develop routine preventive maintenance guidelines for its facilities. The guidelines shall include plumbing systems, electrical systems, heating, ventilation and air conditioning systems, special equipment and other systems and for roofing systems shall recommend visual inspections performed by district staff for signs of structural stress and weakness. The guidelines shall be submitted to the school facilities board division for review and approval. If on inspection by the school facilities board division it is determined that a school district facility was inadequately maintained pursuant to the school district's routine preventive maintenance guidelines, the school district shall return the building to compliance with the school district's routine preventive maintenance guidelines.

L. M. The school facilities board and the division may temporarily transfer monies, or, if applicable, direct the division to transfer monies, between the capital reserve fund established by section 15‑2003, the emergency deficiencies correction fund established by section 15‑2022 41‑5721 and the new school facilities fund established by section 15‑2041 41‑5741 if all of the following conditions are met:

1. The transfer is necessary to avoid a temporary shortfall in the fund into which the monies are transferred.

2. The transferred monies are restored to the fund where the monies originated as soon as practicable after the temporary shortfall in the other fund has been addressed.

3. The school facilities board reports and the division report to the joint committee on capital review the amount of and the reason for any monies transferred.

M. N. After notifying each school district, and if a written objection from the school district is not received by the school facilities board or the division within thirty days of after the notification, the school facilities board or the division may access public utility company records of power, water, natural gas, telephone and broadband usage to assemble consistent and accurate data on utility consumption at school facilities to determine the effectiveness of facility design, operation and maintenance measures intended to reduce energy and water consumption and costs. Any public utility that provides service to a school district in this state shall provide the data requested by the school facilities board or the division pursuant to this subsection.

N. O. The school facilities division or the board shall not require a common school district that provides instruction to pupils in grade nine to obtain approval from the school facilities division or the board to reconfigure its school facilities. A common school district that provides instruction to pupils in grade nine is not entitled to additional monies from the school facilities division or the board for facilities to educate pupils in grade nine.

O. P. A school district may appeal the denial of a request for monies pursuant to this chapter or any other appealable agency action by the school facilities division or the board pursuant to title 41, chapter 6, article 10 of this title. For the purposes of this subsection, "appealable agency action" has the same meaning prescribed in section 41‑1092.

Q. Any project that a school district undertakes and that is authorized by the school facilities oversight board or the division pursuant to this chapter is subject to the procurement rules adopted by the state board of education pursuant to section 15‑213. except as provided in section 15-213, the school facilities oversight board or the division may not adopt any policy or procedure relating to procurement that alters, supplements or subtracts from the procurement rules adopted by the state board of education pursuant to section 15‑213. END_STATUTE

Sec. 29. Section 41-5703, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5703. School facilities oversight board lease‑to‑own; fund; expiration

A. In order to fulfill the requirements of section 15‑2041 41‑5741, the school facilities board may acquire school facilities for the use of one or more school districts by entering into one or more lease‑to‑own transactions in accordance with this section. For the purposes of this section, providing school facilities includes land acquisition, related infrastructure, fixtures, furnishings, equipment and costs of the lease‑to‑own transaction. The school facilities board may provide monies to provide school facilities in part pursuant to section 15‑2041 41‑5741 and in part through a lease‑to‑own transaction.

B. A lease‑to‑own transaction may provide for:

1. The ground lease of the land for the facilities to a private entity for the term of the lease‑to‑own transaction or for a term of up to one and one‑half times the term of the lease‑to‑own transaction, subject to earlier termination on completion of performance of the lease‑to‑own agreement. The ground lessor may either be the school district or the school facilities board, whichever holds title to the land.

2. The lease of the completed school facilities by a private entity to the school facilities board for an extended term of years pursuant to a lease‑to‑own agreement.

3. The sublease of the completed school facilities by the school facilities board to the school district during the term of the lease‑to‑own agreement. The sublease shall provide for the use, maintenance and operation of the school facilities by the school district and for the transfer of ownership of the school facilities to the school district on completion of performance of the lease‑to‑own agreement.

4. The option for the school facilities board's purchase of the school facilities and transfer of ownership of the school facilities to the school district before the expiration of the lease‑to‑own agreement.

5. The services of trustees, financial advisors, paying agents, transfer agents, underwriters, lawyers and other professional service providers, credit enhancements or liquidity facilities and all other services considered necessary by the school facilities board in connection with the lease‑to‑own transaction, and related agreements and arrangements including arrangements for the creation and sale of certificates of participation evidencing proportionate interests in the lease payments to be made by the school facilities board pursuant to the lease‑to‑own agreement.

C. The sublease of the school facilities to the school district is subject to this section and to the provisions of the lease‑to‑own agreement. Neither a ground lease by the school district as lessor nor a sublease of the school facilities to the school district is required to be authorized by a vote of the school district electors. A ground lease is not subject to any limitations or requirements applicable to leases or lease‑purchase agreements pursuant to section 15‑342 or any other section of title 15 or this title chapter.

D. Any school facility that is constructed through a lease‑to‑own agreement shall meet the minimum building adequacy standards set forth in section 15‑2011 41‑5711.

E. School districts may use local monies to exceed the minimum adequacy standards and to build athletic fields and any other capital project for leased‑to‑own facilities.

F. The school facilities board shall include any square footage of new school facilities constructed through lease‑to‑own agreements in the computations prescribed in section 15‑2011 41‑5711.

G. A The lease‑to‑own fund is established consisting of monies appropriated by the legislature. The school facilities board shall administer the fund and distribute monies in the fund to make payments pursuant to lease‑to‑own agreements entered into by the school facilities board pursuant to this section, to make payments to or for the benefit of school districts pursuant to local lease‑to‑own agreements entered into by school districts pursuant to section 15‑2005 41‑5704 and to pay costs considered necessary by the school facilities board in connection with lease‑to‑own transactions and local lease‑to‑own transactions. Payments by the school facilities board pursuant to a lease‑to‑own agreement or local lease‑to‑own agreement shall be made only from the lease‑to‑own fund. On notice from the school facilities board, the state treasurer shall invest and divest monies in the fund as provided by section 35‑313, and monies earned from investment shall be credited to the lease‑to‑own fund.

H. A lease‑to‑own agreement entered into by the school facilities board pursuant to this section shall provide that:

1. At the completion of the lease‑to‑own agreement, ownership of the school facilities and land associated with the lease‑to‑own agreement shall be transferred to the school district as specified in the agreement.

2. The obligation of the school facilities board to make any payment under the lease‑to‑own agreement is a current expense, payable exclusively from appropriated monies, and is not a general obligation indebtedness of this state or the school facilities board. The obligation of a school district to make expenditures under a sublease pursuant to subsection B, paragraph 3 of this section is a current expense, payable exclusively from budgeted monies, and is not a general obligation indebtedness of the school district.

3. If the legislature fails to appropriate monies or the school facilities board fails to allocate such monies for any periodic payment or renewal term of the lease‑to‑own agreement, the lease‑to‑own agreement terminates at the end of the current term and this state and the school facilities board are relieved of any subsequent obligation under the agreement and the school district is relieved of any subsequent obligation under the sublease.

4. The lease‑to‑own agreement shall be reviewed and approved by the attorney general before the agreement may take effect.

5. Before the agreement takes effect and after review by the attorney general, the project or projects related to the agreement shall be submitted for review by the joint committee on capital review.

I. The school facilities board may covenant to use its best efforts to budget, obtain, allocate and maintain sufficient appropriated monies to make payments under a lease‑to‑own agreement, but the lease‑to‑own agreement shall acknowledge that appropriating state monies is a legislative act and is beyond the control of the school facilities board or of any other party to the lease‑to‑own agreement.

J. The land and the school facilities on the land are exempt from taxation during the term of the lease‑to‑own agreement and during construction and subsequent occupancy by the school district pursuant to the sublease.

K. The powers prescribed in this section are in addition to the powers conferred by any other law. Without reference to any other provision of title 15, this title chapter or to any other law, this section is authority for the completion of the purposes prescribed in this section for the school facilities board to provide school facilities for use by school districts through lease‑to‑own transactions pursuant to this section without regard to the procedure required by any other law. Except as otherwise provided in this section, the provisions of title 15 and this title chapter that relate to the matters contained in this section are superseded because this section is the exclusive law on these matters.

L. The school facilities board shall not enter into lease‑to‑own transactions, including any refinancings or refundings, pursuant to this section from and after May 15, 2006. END_STATUTE

Sec. 30. Section 41-5704, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5704. Local lease‑to‑own by school districts; expiration

A. In order to fulfill the requirements of section 15‑2041 41‑5741, with the approval of the school facilities board, a school district may acquire school facilities by entering into a local lease‑to‑own transaction in accordance with this section. For purposes of this section, providing school facilities includes land acquisition, related infrastructure, fixtures, furnishings, equipment and costs of the local lease‑to‑own transaction. The school facilities board may provide monies to provide school facilities in part pursuant to section 15‑2041 41‑5741 and in part through payments to or for the benefit of a school district for a local lease‑to‑own transaction.

B. A local lease‑to‑own transaction may provide for:

1. The ground lease of the land for the facilities to a private entity for the term of the local lease‑to‑own transaction or for a term of up to one and one‑half times the term of the local lease‑to‑own transaction, subject to earlier termination on completion of performance of the local lease‑to‑own agreement. The ground lessor may either be the school district or the school facilities board, whichever holds title to the land.

2. The lease of the completed school facilities by a private entity to the school district for an extended term of years pursuant to a local lease‑to‑own agreement. The local lease‑to‑own agreement shall provide for the use, maintenance and operation of the school facilities by the school district and for the transfer of ownership of the school facilities to the school district on completion of performance of the local lease‑to‑own agreement.

3. The option for the school district's purchase of the school facilities and transfer of ownership of the school facilities to the school district before the expiration of the local lease‑to‑own agreement.

4. The services of trustees, financial advisors, paying agents, transfer agents, underwriters, lawyers and other professional service providers, credit enhancements or liquidity facilities and all other services considered necessary by the school district or the school facilities board in connection with the local lease‑to‑own transaction, and related agreements and arrangements including arrangements for the creation and sale of certificates of participation evidencing proportionate interests in the lease payments to be made by the school district pursuant to the local lease‑to‑own agreement.

C. Neither a ground lease by the school district as lessor nor a local lease‑to‑own agreement is required to be authorized by a vote of the school district electors. A ground lease is not subject to any limitations or requirements applicable to leases or lease‑purchase agreements pursuant to section 15‑342 or any other section of title 15 or this title chapter.

D. The school facilities board may make payments to or for the benefit of the school district from the lease‑to‑own fund established by section 15‑2004 41‑5703 for the payment of amounts payable under the local lease‑to‑own agreement.

E. Any school facility that is constructed through a lease‑to‑own agreement shall meet the minimum building adequacy standards set forth in section 15‑2011 41‑5711.

F. School districts may use local monies to exceed the minimum adequacy standards and to build athletic fields and any other capital project for leased‑to‑own facilities.

G. The school facilities board shall include any square footage of new school facilities constructed through lease‑to‑own agreements in the computations prescribed in section 15‑2011 41‑5711.

H. A local lease‑to‑own agreement entered into by a school district pursuant to this section shall provide that:

2. The obligation of the school district to make any payment or expenditure under the local lease‑to‑own agreement is a current expense, payable exclusively from properly budgeted monies, and is not a general obligation indebtedness of this state, the school facilities board or the school district, and that any payment by the school facilities board to or for the benefit of the school district from the lease‑to‑own fund established by section 15‑2004 41‑5703 for payments of amounts payable under the local lease‑to‑own agreement is a current expense, payable exclusively from appropriated monies, and is not a general obligation indebtedness of this state or the school facilities board.

3. If the school district fails to properly budget for payments under the local lease‑to‑own agreement or if the legislature fails to appropriate monies or the school facilities board fails to allocate monies for periodic payment to or for the benefit of the school district for payments under the local lease‑to‑own agreement, the local lease‑to‑own agreement terminates at the end of the current term and the school district, the school facilities board and this state are relieved of any subsequent obligation under the local lease‑to‑own agreement.

4. The local lease‑to‑own agreement shall be reviewed and approved by the attorney general before the agreement may take effect.

5. Before the agreement takes effect and after review by the attorney general, the project or projects related to the agreement shall be submitted for review by the joint committee on capital review.

I. The school district may covenant to use its best efforts to budget, obtain, allocate and maintain sufficient monies to make payments under a local lease‑to‑own agreement, but the local lease‑to‑own agreement shall acknowledge that budgeting school district monies is a governmental act of the school district governing board that may not be contracted away. The school facilities oversight board is not required to covenant to budget, obtain, allocate or maintain sufficient monies in the lease‑to‑own fund to make payments to or for the benefit of a school district for payments under a local lease‑to‑own agreement.

J. The land and the school facilities on the land are exempt from taxation during the term of the local lease‑to‑own agreement and during construction and subsequent occupancy by the school district pursuant to the local lease‑to‑own agreement.

K. The powers prescribed in this section are in addition to the powers conferred by any other law. Without reference to any other provision of title 15 or this title chapter or to any other law, this section is authority for the completion of the purposes prescribed in this section for school districts to provide school facilities through local lease‑to‑own transactions pursuant to this section without regard to the procedure required by any other law. Except as otherwise provided in this section, the provisions of title 15 or this title chapter that relate to the matters contained in this section are superseded because this section is the exclusive law on these matters.

L. School districts shall not enter into lease-to-own transactions, including any refinancings or refundings, pursuant to this section from and after May 15, 2006. END_STATUTE

Sec. 31. Section 41-5705, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5705. Lease‑to‑own amount; expiration

A. In order to fulfill the requirements of section 15‑2041 41‑5741, the school facilities board may enter into lease‑to‑own transactions for up to a maximum of two hundred million dollars $200,000,000 in any fiscal year.

B. The school facilities board shall not enter into lease‑to‑own transactions, including any refinancings or refundings, pursuant to this section from and after May 15, 2006. END_STATUTE

Sec. 32. Section 41-5711, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5711. Minimum school facility adequacy requirements; definition

A. The school facilities board, as determined and prescribed in this chapter, shall provide funding to school districts for new construction as the number of pupils in the district fills the existing school facilities and requires more pupil space.

B. School buildings in a school district are adequate if all of the following requirements are met:

1. The buildings contain sufficient and appropriate space and equipment that comply with the minimum school facility adequacy guidelines established pursuant to subsection F of this section. The state shall not fund facilities for elective courses that require the school district facilities to exceed minimum school facility adequacy requirements. The school facilities board shall determine whether a school building meets the requirements of this paragraph by analyzing the total square footage that is available for each pupil in conjunction with the need for specialized spaces and equipment.

2. The buildings are in compliance with federal, state and local building and fire codes and laws that are applicable apply to the particular building, except that a school with an aggregate area of less than five thousand square feet is subject to permitting and inspection by a local fire marshal and is only subject to regulation or inspection by the office of the state fire marshal if the county, city or town in which the school is located does not employ a local fire marshal. An existing school building is not required to comply with current requirements for new buildings unless this compliance is specifically mandated by law or by the building or fire code of the jurisdiction where the building is located.

3. The building systems, including roofs, plumbing, telephone systems, electrical systems, heating systems and cooling systems, are in working order and are capable of being properly maintained.

4. The buildings are structurally sound.

C. The standards that shall be used by the school facilities board to determine whether a school building meets the minimum adequate gross square footage requirements are as follows:

1. For a school district that provides instruction to pupils in programs for preschool children with disabilities, kindergarten programs and grades one through six, eighty square feet per pupil in programs for preschool children with disabilities, kindergarten programs and grades one through six.

2. For a school district that provides instruction to up to eight hundred pupils in grades seven and eight, eighty‑four square feet per pupil in grades seven and eight.

3. For a school district that provides instruction to more than eight hundred pupils in grades seven and eight, eighty square feet per pupil in grades seven and eight or sixty‑seven thousand two hundred square feet, whichever is more.

4. For a school district that provides instruction to up to four hundred pupils in grades nine through twelve, one hundred twenty‑five square feet per pupil in grades nine through twelve.

5. For a school district that provides instruction to more than four hundred and up to one thousand pupils in grades nine through twelve, one hundred twenty square feet per pupil in grades nine through twelve or fifty thousand square feet, whichever is more.

6. For a school district that provides instruction to more than one thousand and up to one thousand eight hundred pupils in grades nine through twelve, one hundred twelve square feet per pupil in grades nine through twelve or one hundred twenty thousand square feet, whichever is more.

7. For a school district that provides instruction to more than one thousand eight hundred pupils in grades nine through twelve, ninety‑four square feet per pupil in grades nine through twelve or two hundred one thousand six hundred square feet, whichever is more.

D. The school facilities board may modify the square footage requirements prescribed in subsection C of this section or modify the amount of monies awarded to cure the square footage deficiency pursuant to this section for particular school districts based on extraordinary circumstances for any of the following considerations:

1. The number of pupils served by the school district.

2. Geographic factors.

3. Grade configurations other than those prescribed in subsection C of this section.

E. In measuring the square footage per pupil requirements of subsection C of this section, the school facilities board shall:

1. Use the projected one hundredth day average daily membership for the current school year.

2. For each school, use the lesser of either:

(a) Total gross square footage.

(b) Student capacity multiplied by the appropriate square footage per pupil prescribed by subsection C of this section.

3. Consider the total space available in all schools in use in the school district, except that the school facilities board shall allow an exclusion of the square footage for certain schools and the pupils within the schools' boundaries if the school district demonstrates to the board's satisfaction unusual or excessive busing of pupils or unusual attendance boundary changes between schools.

4. Compute the gross square footage of all buildings by measuring from exterior wall to exterior wall. Square footage used solely for district administration, storage of vehicles and other nonacademic purposes shall be excluded from the net square footage.

5. Include all portable and modular buildings.

6. Include in the net square footage new construction funded wholly or partially by the school facilities board based on the square footage funded by the school facilities board. If the new construction is to exceed the square footage funded by the school facilities board, the excess square footage shall not be included in the net square footage if any of the following applies:

(a) The excess square footage was constructed before July 1, 2002 or funded by a class B bond, impact aid revenue bond or capital outlay override approved by the voters after August 1, 1998 and before June 30, 2002 or funded from unrestricted capital outlay expended before June 30, 2002.

(b) The excess square footage of new school facilities does not exceed twenty‑five percent of the minimum square footage requirements pursuant to subsection C of this section.

(c) The excess square footage of expansions to school facilities does not exceed twenty‑five percent of the minimum square footage requirements pursuant to subsection C of this section.

7. Exclude square footage built under a developer agreement according to section 15‑342, paragraph 33 until the school facilities board provides funding for the square footage under section 15‑2041 41‑5741, subsection O.

8. Include square footage that a school district has leased to another entity.

F. The school facilities board shall adopt rules establishing minimum school facility adequacy guidelines. The guidelines shall provide the minimum quality and quantity of school buildings and facilities and equipment necessary and appropriate to enable pupils to achieve the academic standards pursuant to section 15‑203, subsection A, paragraphs 12 and 13 and sections 15‑701 and 15‑701.01. At a minimum, the school facilities board shall address all of the following in developing these guidelines:

1. School sites.

2. Classrooms.

3. Libraries and media centers, or both.

4. Cafeterias.

5. Auditoriums, multipurpose rooms or other multiuse space.

6. Technology.

7. Transportation.

8. Facilities for science, arts and physical education.

9. Other facilities and equipment that are necessary and appropriate to achieve the academic standards prescribed pursuant to section 15‑203, subsection A, paragraphs 12 and 13 and sections 15‑701 and 15‑701.01.

10. Appropriate combinations of facilities or uses listed in this section.

G. The board may convene subcommittees as needed on specific issues, including school facility safety standards. Notwithstanding any other law, a school district that receives grant monies from the building renewal grant fund established by section 41‑5731 or monies from the new school facilities fund established by section 41‑5741 shall consider school facility safety standards when completing approved projects or constructing new school facilities with monies received from those funds.

G. H. The board shall consider the facilities and equipment of the schools with the highest academic productivity scores, as prescribed in section 15‑2002 41‑5702, subsection A, paragraph 9 6, subdivision (d), and the highest parent quality ratings in the establishment of the guidelines.

H. I. The school facilities board may consider appropriate combinations of facilities or uses in making assessments of assessing and curing existing deficiencies pursuant to section 15‑2002 41‑5702, subsection A, paragraph 1 and in certifying plans for new school facilities pursuant to section 15‑2002 41‑5702, subsection A C, paragraph 5 2.

I. J. If the school facilities board makes any changes to the minimum adequacy requirements prescribed in this section, the board shall provide a fiscal impact statement of the effect of the proposed changes to the joint committee on capital review for review.

J. K. For the purposes of this section, "student capacity" means the capacity adjusted to include any additions to or deletions of space, including modular or portable buildings at the school. The school facilities board shall determine the student capacity for each school in conjunction with each school district, recognizing each school's allocation of space as of July 1, 1998, to achieve the academic standards prescribed pursuant to section 15‑203, subsection A, paragraphs 12 and 13 and sections 15‑701 and 15‑701.01. END_STATUTE

Sec. 33. Section 41-5721, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5721. Emergency deficiencies correction fund; definition

A. The emergency deficiencies correction fund is established consisting of monies transferred from the new school facilities fund established by section 15‑2041 41‑5741. The school facilities board division shall administer the emergency deficiencies correction fund and distribute monies in accordance with the rules of the school facilities board division to school districts for emergency purposes. The school facilities board division shall not transfer monies from the new school facilities fund if the division, in conjunction with the school facilities oversight board, determines that the transfer will affect, interfere with, disrupt or reduce any capital projects that the school facilities board has approved pursuant to section 15‑2041 41‑5741. The school facilities board division shall transfer to the emergency deficiencies correction fund the amount necessary each fiscal year to fulfill the requirements of this section. Within thirty days after transferring monies to the emergency deficiencies correction fund, the school facilities board division shall report to the director of the joint legislative budget committee and the director of the governor's office of strategic planning and budgeting the amount and source of the transfer. Monies in the emergency deficiencies correction fund are continuously appropriated and are exempt from the provisions of section 35‑190 relating to lapsing of appropriations.

B. If the school facilities board division determines that there are insufficient monies in the emergency deficiencies correction fund to correct an emergency, the school district may correct the emergency pursuant to section 15‑907.

C. If a school district has an emergency, the school district shall apply to the school facilities board division for funding for the emergency. The school district's application shall disclose any insurance or building renewal monies available to the school district to pay for the emergency. Before applying to the division for funding for the emergency, the school district governing board shall issue an emergency declaration or resolution to be eligible for monies from the emergency deficiencies correction fund.

D. The school facilities board division staff shall acknowledge receipt of the school district's application for emergency deficiencies funding in writing within five business days after receiving the application. The school facilities board division staff shall include in the written acknowledgement of receipt to the school district any investigative, study or informational requirements from the school district, along with an estimated timeline to complete the requirements, necessary for the school facilities board division staff to make a recommendation for decision regarding funding to the school facilities board.

E. The board shall review all policies and procedures that the division develops to administer this section.

E. F. For the purposes of this section, "emergency":

1. Means a serious need for materials, services or construction or expenses in excess of that exceeds the school district's adopted budget for the current fiscal year and that seriously threatens the functioning of the school district, the preservation or protection of property or public health, welfare or safety.

2. Includes all of the following:

(a) A situation that threatens life services such as adequate water supply, energy and wastewater.

(b) A situation in which a school district is under orders from an authority having jurisdiction for an unsafe environment such as the department of environmental quality, the occupational safety and health administration or the state fire marshal.

(c) The school district receives a professional and certified assessment showing that one or more facilities or systems are structurally unsafe and directly impact the functions of the school district with no alternative option available. END_STATUTE

Sec. 34. Section 41-5731, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5731. Building renewal grant fund; rules; definitions

A. The building renewal grant fund is established consisting of monies appropriated to the fund by the legislature. The school facilities board division shall administer the fund and distribute monies to school districts for the purpose of maintaining the adequacy of existing school facilities. Monies in the fund are exempt from the provisions of section 35‑190 relating to lapsing of appropriations.

B. The school facilities board division shall distribute monies from the building renewal grant fund based on grant requests from school districts to fund primary building renewal projects. Project requests shall be prioritized by the school facilities board division, with priority given to school districts that have provided routine preventive maintenance on the facility. A school district must submit a preventive maintenance plan to the division to be eligible to receive monies from the building renewal grant fund. The school facilities board division shall approve only projects that will be completed within twelve months, unless similar projects on average take longer to complete. A grant issued under this section expires twelve months after the grant request is approved unless the division issues an extension, except that if the division approves a project and determines that similar projects on average take longer than twelve months to complete, the division shall extend the grant expiration date based on the average amount of time that similar projects take to complete. The division shall establish a process by which a school district may request an extension under this subsection. On expiration of a grant, a school district shall return any building renewal grant fund monies that the school district has not spent to the division for deposit in the building renewal grant fund.

C. School districts that receive monies from the building renewal grant fund shall use these monies on projects for buildings or any part of a building in the school facilities board's division's database for any of the following:

1. Major renovations and repairs to a building that is used for student instruction or other academic purposes.

2. Upgrading systems and areas that will maintain or extend the useful life of the building.

3. Infrastructure costs.

D. Monies received from the fund shall not be used for any of the following purposes:

1. New construction.

2. Remodeling interior space for aesthetic or preferential reasons.

3. Exterior beautification.

4. Demolition.

5. Routine preventive maintenance.

6. Any project in a building, or part of a building, that is being leased to another entity.

E. Accommodation schools are not eligible for monies from the building renewal grant fund.

F. If the school facilities board division or a court of competent jurisdiction determines that a school district received monies from the building renewal grant fund that must be reimbursed to the school facilities board division due to legal action associated with improper construction by a hired contractor, the school district shall reimburse the school facilities board division an agreed-on amount for deposit into the building renewal grant fund.

G. The school facilities board division shall categorize each project that is eligible for monies from the building renewal grant fund as either critical or noncritical. The board division shall adopt policies and procedures to prioritize critical projects and to designate critical projects as projects that immediately impact student safety or building closures or that result in operational disruptions. Critical projects have priority over any previously approved noncritical projects.

H. If the school facilities board division determines that sufficient monies are not available for a noncritical project that the board division has approved, the board division shall notify the school district that submitted the project request that monies will be distributed from the building renewal grant fund for the project only if the legislature appropriates sufficient monies. If sufficient monies are not available in the fiscal year in which the project is awarded for a noncritical project, the noncritical project does not receive priority in the next fiscal year.

I. Building renewal grants pursuant to this section shall be used only for projects that serve an academic purpose.

J. The division shall do both of the following:

1. Implement policies and procedures to require a school district to report the preventive maintenance activities completed during the previous twelve months for the facility for which the monies are being requested.

2. Submit a monthly report to the division that details how monies from the building renewal grant fund have been distributed.

K. In addition to establishing a project eligibility assessment under section 41‑5702, subsection A, paragraph 5, subdivision (b), the division shall adopt rules regarding both of the following:

1. The approval of building renewal grants pursuant to this section.

2. Time frames for the division regarding all of the following with respect to this section:

(a) Approving or denying grant requests for critical projects.

(b) Notifying an applicant if the applicant's application is incomplete.

(d) Distributing monies from the building renewal grant fund.

L. The board shall review all policies and procedures that the division develops to administer this section.

M. The division may spend monies from the fund for assessments to determine if a grant from the fund is warranted under this section.

J. N. For the purposes of this section:

1. "Primary building renewal projects" means projects that are necessary for buildings owned by school districts that are required to meet the minimum adequacy standards for student capacity and that fall below the minimum school facility adequacy guidelines, as adopted by the school facilities board pursuant to section 15‑2011 41‑5711, for school districts that have provided routine preventive maintenance to the school facility.

2. "Routine preventive maintenance" means services that are performed on a regular schedule at intervals ranging from four times a year to once every three years, or on the schedule of services recommended by the manufacturer of the specific building system or equipment, and that are intended to extend the useful life of a building system and reduce the need for major repairs.

3. "Student capacity" has the same meaning prescribed in section 15‑2011 41‑5711. END_STATUTE

Sec. 35. Section 41-5741, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5741. New school facilities fund; capital plan; reporting requirements

A. The new school facilities fund is established consisting of monies appropriated by the legislature and monies credited to the new school facilities fund pursuant to section 37‑221. The school facilities board division shall administer the new school facilities fund and, at the direction of the school facilities oversight board, shall distribute monies, as a continuing appropriation, to school districts for the purpose of constructing new school facilities and for contracted expenses pursuant to section 15‑2002 41‑5702, subsection B, paragraphs 2, 3 and 4. On June 30 of each fiscal year, any unobligated contract monies in the new school facilities fund shall be transferred to the capital reserve fund established by section 15‑2003.

B. The school facilities oversight board shall prescribe a uniform format for use by the school district governing board in developing and annually updating a capital plan that consists of each of the following:

1. Enrollment projections for the next five years for elementary schools and eight years for middle and high schools, including a description of the methods used to make the projections.

2. A description of new schools or additions to existing schools needed to meet the building adequacy standards prescribed in section 15‑2011 41‑5711. The description shall include:

(a) The grade levels and the total number of pupils that the school or addition is intended to serve.

(b) The year in which it is necessary for the school or addition to begin operations.

3. Long‑term projections of the need for land for new schools.

4. Any other necessary information required by the school facilities oversight board to evaluate a school district's capital plan.

5. If a school district pays tuition for all or a portion of the school district's high school pupils to another school district, the capital plan shall indicate the number of pupils for which the district pays tuition to another district. If a school district accepts pupils from another school district pursuant to section 15‑824, subsection A, the school district shall indicate the projections for this population separately. This paragraph does not apply to a small isolated school district as defined in section 15‑901.

C. If the capital plan indicates a need for a new school or an addition to an existing school within the next four years or a need for land within the next ten years, the school district shall submit its plan to the school facilities oversight board on or before September 1 and shall request monies from the new school facilities fund for the new construction or land. The school facilities board may require a school district to sell land that was previously purchased entirely with monies provided by the school facilities board if the school facilities board determines that the property is no longer needed within the ten‑year period specified in this subsection for a new school or no longer needed within that ten‑year period for an addition to an existing school. Monies provided for land are in addition to any monies provided pursuant to subsection D of this section.

D. At the direction of the school facilities board, the division shall distribute monies from the new school facilities fund for additional square footage as follows:

1. The school facilities board shall review and evaluate the enrollment projections. On or before December 15 of each year, following the submission of the enrollment projections, the school facilities board shall either approve the projections as submitted or revise the projections. In approving or revising the enrollment projections, the school facilities board shall use the average daily membership data available during the current school year. On request from the school facilities board, the department of education shall make available the most recent average daily membership data for use in revising the enrollment projections. In determining new construction requirements, the school facilities board shall determine the net new growth of pupils that will require additional square footage that exceeds the building adequacy standards prescribed in section 15‑2011 41‑5711. If the projected growth and the existing number of pupils exceed three hundred fifty pupils who are served in a school district other than the pupil's resident school district, the school facilities board, the receiving school district and the resident school district shall develop a capital facilities plan on how to best serve those pupils. A small isolated school district as defined in section 15‑901 is not required to develop a capital facilities plan pursuant to this paragraph.

2. If the average daily membership projections indicate that additional space will not be needed within the next two school years in order to meet the building adequacy standards prescribed in section 15‑2011 41‑5711, the request shall be held for consideration by the school facilities board for possible future funding and the school district shall annually submit an updated plan until the additional space is needed.

3. If the average daily membership projections indicate that additional space will be needed within the next two school years in order to meet the building adequacy standards prescribed in section 15‑2011 41‑5711, the school facilities board shall provide an amount as follows:

(a) Determine the number of pupils requiring additional square footage to meet building adequacy standards. This amount for elementary schools shall not be less than the number of new pupils for whom space will be needed in the next year and shall not exceed the number of new pupils for whom space will be needed in the next five years. This amount for middle and high schools shall not be less than the number of new pupils for whom space will be needed in the next four years and shall not exceed the number of new pupils for whom space will be needed in the next eight years.

(b) Multiply the number of pupils determined in subdivision (a) of this paragraph by the square footage per pupil. The square footage per pupil is ninety square feet per pupil for preschool children with disabilities, kindergarten programs and grades one through six, one hundred square feet for grades seven and eight, one hundred thirty‑four square feet for a school district that provides instruction in grades nine through twelve for fewer than one thousand eight hundred pupils and one hundred twenty‑five square feet for a school district that provides instruction in grades nine through twelve for at least one thousand eight hundred pupils. The total number of pupils in grades nine through twelve in the district shall determine the square footage factor to use for net new pupils. The school facilities board may modify the square footage requirements prescribed in this subdivision for particular schools based on any of the following factors:

(i) The number of pupils served or projected to be served by the school district.

(ii) Geographic factors.

(iii) Grade configurations other than those prescribed in this subdivision.

(iv) Compliance with minimum school facility adequacy requirements established pursuant to section 15‑2011 41‑5711.

(c) Multiply the product obtained in subdivision (b) of this paragraph by the cost per square foot. The cost per square foot is $90 for preschool children with disabilities, kindergarten programs and grades one through six, $95 for grades seven and eight and $110 for grades nine through twelve. The cost per square foot shall be adjusted annually for construction market considerations based on an index identified or developed by the joint legislative budget committee as necessary but not less than once each year. The school facilities board shall multiply the cost per square foot by 1.05 for any school district located in a rural area. The school facilities board may only modify the base cost per square foot prescribed in this subdivision for particular schools based on geographic conditions or site conditions. Any extra monies received as a result of a modification based on geographic conditions or site conditions may be used to address unforeseen costs at any stage of a project under this section. For the purposes of this subdivision, "rural area" means an area outside a thirty‑five‑mile radius of a boundary of a municipality with a population of more than fifty thousand persons.

(d) Once the school district governing board obtains approval from the school facilities board for new facility construction monies, additional portable or modular square footage created for the express purpose of providing temporary space for pupils until the completion of the new facility and any additional space funded by the school district shall not be included by the school facilities board for the purpose of new construction funding calculations. On completion of the new facility construction project, any additional space funded by the school district shall be included as prescribed by this chapter and, if the portable or modular facilities continue in use, the portable or modular facilities shall be included as prescribed by this chapter, unless the school facilities board approves their continued use for the purpose of providing temporary space for pupils until the completion of the next new facility that has been approved for funding from the new school facilities fund.

4. For projects approved after December 31, 2001, and notwithstanding paragraph 3 of this subsection, a unified school district that does not have a high school is not eligible to receive high school space as prescribed by section 15‑2011 41‑5711 and this section unless the unified district qualifies for geographic factors prescribed by paragraph 3, subdivision (b), item (ii) of this subsection.

5. If a career technical education district leases a building from a school district, that building shall be included in the school district's square footage calculation for the purposes of new construction pursuant to this section.

6. If a school district leases a building to another entity, that building shall be included in the school district's square footage calculation for purposes of new construction pursuant to this section.

7. A school district shall qualify for monies from the new school facilities fund for additional square footage in a fiscal year only if the school facilities board has approved or revised its enrollment projection under paragraph 1 of this subsection on or before December 15 of the prior fiscal year.

E. Monies for architectural and engineering fees, project management services and preconstruction services shall be distributed on the completion of the analysis by the school facilities board of the school district's request. After receiving monies pursuant to this subsection, the school district shall submit a design development plan for the school or addition to the school facilities board before any monies for construction are distributed. If the school district's request meets the building adequacy standards, the school facilities board may review and comment on the district's plan with respect to the efficiency and effectiveness of the plan in meeting state square footage and facility standards before distributing directing the distribution of the remainder of the monies. If the school facilities board modifies the cost per square foot as prescribed in subsection D, paragraph 3, subdivision (c) of this section, the school facilities board may deduct the cost of project management services and preconstruction services from the required cost per square foot. The school facilities board may decline to fund the project if the square footage is no longer required due to revised enrollment projections. The school facilities board may decline a portion of the funding if a portion of the square footage is no longer needed due to revised enrollment projections.

F. At the direction of the school facilities board, the division shall distribute the monies needed for land for new schools so that land may be purchased at a price that is less than or equal to fair market value and in advance of the construction of the new school. If necessary, the school facilities board may direct the division to distribute monies for land to be leased for new schools if the duration of the lease exceeds the life expectancy of the school facility by at least fifty percent. A school district shall not use land purchased or partially purchased with monies provided by at the direction of the school facilities board for a purpose other than a site for a school facility without obtaining prior written approval from the school facilities board. A school district shall not lease, sell or take any action that would diminish the value of land purchased or partially purchased with monies provided by at the direction of the school facilities board without obtaining prior written approval from the school facilities board. The proceeds derived through the sale of any land purchased or partially purchased, or the sale of buildings funded or partially funded, with monies provided by at the direction of the school facilities board shall be returned to the state fund from which it was appropriated and to any other participating entity on a proportional basis. Except as provided in section 15‑342, paragraph 33, if a school district acquires real property by donation at an appropriate school site approved by the school facilities board, the school facilities board shall direct the division to distribute an amount equal to twenty percent of the fair market value of the donated real property that can be used for academic purposes. The school district shall place the monies in the unrestricted capital outlay fund and increase the unrestricted capital budget limit by the amount of monies placed in the fund. Monies distributed under this subsection shall be distributed from the new school facilities fund. A school district that receives monies from the new school facilities fund for a donation of land pursuant to section 15‑342, paragraph 33 shall not receive monies from the school facilities board or the division for the donation of real property pursuant to this subsection. A school district shall not pay a consultant a percentage of the value of any of the following:

1. Donations of real property, services or cash from any of the following:

(a) Entities that have offered to provide construction services to the school district.

(b) Entities that have been contracted to provide construction services to the school district.

(d) Entities that develop land for residential use in that school district.

2. Monies received from the school facilities board under this chapter on behalf of the school district.

3. Monies paid by or at the direction of the school facilities board on behalf of the school district.

G. In addition to distributions to school districts based on pupil growth projections, a school district may submit an application to the school facilities board for monies from the new school facilities fund if one or more school buildings have outlived their useful life or have been condemned. If the school facilities board determines that the school district needs to build a new school building for these reasons, the school facilities board shall remove the square footage computations that represent the building from the computation of the school district's total square footage for purposes of this section. If the square footage recomputation reflects that the school district no longer meets building adequacy standards, the school district qualifies for a distribution of monies from the new school construction formula in an amount determined pursuant to subsection D of this section. The school facilities board may only modify the base cost per square foot prescribed in this subsection under extraordinary circumstances for geographic factors or site conditions.

H. School districts that receive monies from the new school facilities fund shall establish a district new school facilities fund and shall use the monies in the district new school facilities fund only for the purposes prescribed in this section. By October 15 of each year, each school district shall report to the school facilities board the projects funded at each school in the previous fiscal year with monies from the district new school facilities fund and shall provide an accounting of the monies remaining in the new school facilities fund at the end of the previous fiscal year.

I. If a school district has surplus monies received from the new school facilities fund, the school district may use the surplus monies only for capital purposes for the project for up to one year after completion of the project. If the school district possesses surplus monies from the new school construction project that have not been expended within one year of the completion of the project, the school district shall return the surplus monies to the school facilities board division for deposit in the new school facilities fund.

J. The board's consideration of any application filed after December 31 of the year in which the property becomes territory in the vicinity of a military airport or ancillary military facility as defined in section 28‑8461 for monies to fund the construction of new school facilities proposed to be located in territory in the vicinity of a military airport or ancillary military facility shall include, if after notice is transmitted to the military airport pursuant to section 15‑2002 41‑5702 and before the public hearing the military airport provides comments and an analysis concerning compatibility of the proposed school facilities with the high noise or accident potential generated by military airport or ancillary military facility operations that may have an adverse effect on public health and safety, consideration and an analysis of the comments and an analysis provided by the military airport before making a final determination.

K. If a school district uses its own project manager for new school construction, the members of the school district governing board and the project manager shall sign an affidavit stating that the members and the project manager understand and will follow the minimum adequacy requirements prescribed in section 15‑2011 41‑5711.

L. The school facilities board division shall establish a separate account in the new school facilities fund designated as the litigation account to pay attorney fees, expert witness fees and other costs associated with litigation in which the school facilities board pursues the recovery of damages for deficiencies correction that resulted from alleged construction defects or design defects that the school facilities board believes caused or contributed to a failure of the school building to conform to the building adequacy requirements prescribed in section 15‑2011 41‑5711. Attorney fees paid pursuant to this subsection shall not exceed the market rate for similar types of litigation. On or before December 1 of each year, the school facilities board shall report to the joint committee on capital review the costs associated with current and potential litigation that may be paid from the litigation account.

M. Until the state board of education and the auditor general adopt rules pursuant to section 15‑213, subsection J, the school facilities board may allow school districts to contract for construction services and materials through the qualified select bidders list method of project delivery for new school facilities pursuant to this section.

N. The school facilities board shall submit electronically a report on project management services and preconstruction services to the governor, the president of the senate and the speaker of the house of representatives by December 31 of each year. The report shall compare projects that use project management and preconstruction services with those that do not. The report shall address cost, schedule and other measurable components of a construction project. School districts, construction‑manager‑at‑risk firms and project management firms that participate in a school facilities board funded board‑funded project shall provide the information required by the school facilities board in relation to this report.

O. If a school district constructs new square footage according to section 15‑342, paragraph 33, the school facilities board shall review the design plans and location of any new school facility submitted by school districts and another party to determine whether the design plans comply with the adequacy standards prescribed in section 15‑2011 41‑5711 and the square footage per pupil requirements pursuant to subsection D, paragraph 3, subdivision (b) of this section. When the school district qualifies for a distribution of monies from the new school facilities fund according to this section, the school facilities board shall direct the division to distribute monies to the school district from the new school facilities fund for the square footage constructed under section 15‑342, paragraph 33 at the same cost per square foot established by this section that was in effect at the time of the beginning of the construction of the school facility. Before the school facilities board distributes directs the division to distribute any monies pursuant to this subsection, the school district shall demonstrate to the school facilities board that the facilities to be funded pursuant to this section meet the minimum adequacy standards prescribed in section 15‑2011 41‑5711. The agreement entered into pursuant to section 15‑342, paragraph 33 shall set forth the procedures for the allocation of these funds to the parties that participated in the agreement.

P. Accommodation schools are not eligible for monies from the new school facilities fund.

Q. If the school facilities board approves a school district for funding from the new school facilities fund and the full legislative appropriation is not available to the school district in the fiscal year following the approval by the school facilities board, the school district may use any legally available monies to pay for the land or the new construction project approved by the school facilities board and may reimburse the fund from which the monies were used in subsequent years with legislative appropriations when those appropriations are made available by this state. END_STATUTE

Sec. 36. Section 41-5751, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5751. Authorization of state school facilities revenue bonds

A. The school facilities board may issue negotiable revenue bonds pursuant to this article. If authorized by the legislature, bonds may be issued under this article in a principal amount not exceeding two hundred million dollars $200,000,000 in a fiscal year to:

1. Provide monies to pay the cost of:

(a) Acquiring real property and constructing new school facilities as provided by section 15‑2041 41‑5741.

(b) Bond related expenses including any expenses incurred by the school facilities board to issue and administer its bonds including underwriting fees and costs, trustee fees, financial consultant fees, printing and advertising costs, paying agent fees, transfer agent fees, legal, accounting, feasibility consultant and other professional fees and expenses, bond insurance or other credit enhancements or liquidity facilities, attorney and accounting fees and expenses related to credit enhancement, bond insurance or liquidity enhancement, remarketing fees, rating agency fees and costs, travel and telephone expenses and all other fees considered necessary by the school facilities board in order to market and administer the bonds.

2. Fully or partially fund any reserves or sinking accounts established by the bond resolution.

B. The school facilities board shall authorize the bonds by resolution. The resolution shall prescribe:

1. The fixed or variable rate or rates of interest, the date or dates on which interest is payable and the denominations of the bonds.

2. The date or dates of the bonds and maturity, within ten years after the date of issuance.

3. The form of the bonds.

4. The manner of executing the bonds.

5. The medium and place of payment.

6. The terms of redemption, which may provide for a premium for early redemption.

C. The bonds issued pursuant to this article shall be known as state school facilities revenue bonds. END_STATUTE

Sec. 37. Section 41-5752, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5752. Issuance and sale of revenue bonds

A. The school facilities board shall issue the bonds in the number and amount provided in the resolution.

B. The bonds shall be sold at public or private sale at the price and on the terms prescribed in the resolution at, above or below par.

C. The net proceeds of the sale of the bonds shall be deposited in the revenue bond proceeds fund established pursuant to section 15‑2053 41‑5753. END_STATUTE

Sec. 38. Section 41-5753, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5753. School facilities revenue bond proceeds fund; use for new school facilities

A. If the school facilities board issues revenue bonds under this article, the board shall establish a school facilities revenue bond proceeds fund consisting of the net proceeds received from the sale of the bonds.

B. The school facilities board may use monies in the school facilities revenue bond proceeds fund only for the purposes provided in section 15‑2051 41‑5751, subsection A. Monies in the revenue bond proceeds fund are exempt from lapsing under section 35‑190.

C. The state treasurer or bond trustee shall administer and account for the school facilities revenue bond proceeds fund. END_STATUTE

Sec. 39. Section 41-5754, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5754. School facilities revenue bond debt service fund

A. The school facilities board shall establish a school facilities revenue bond debt service fund consisting of monies transferred to the fund pursuant to sections 37‑521 and 42‑5030.01.

B. Monies in the school facilities revenue bond debt service fund may be used only for the purposes authorized by this article.

C. The state treasurer or bond trustee shall administer and account for the school facilities revenue bond debt service fund. END_STATUTE

Sec. 40. Section 41-5755, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5755. Securing principal and interest

A. In connection with issuing bonds authorized by this article and to secure the principal and interest on the bonds, the school facilities board by resolution may:

1. Segregate the school facilities revenue bond debt service fund into one or more accounts and subaccounts and provide that bonds issued under this article may be secured by a lien on all or part of the monies paid into the school facilities revenue bond debt service fund or into any account or subaccount in the fund.

2. Provide that the bonds issued under this article are secured by a first lien on the monies paid into the school facilities revenue bond debt service fund as provided by section 37‑521, subsection B, paragraph 1 and section 42‑5030.01, and pledge and assign to or in trust for the benefit of the holder or holders of the bonds all or part of the monies in the school facilities revenue bond debt service fund, any account or subaccount in the fund or in the school facilities revenue bond proceeds fund as is necessary to secure and pay the principal, the interest and any premium on the bonds as they come due.

3. Establish priorities among bondholders based on criteria adopted by the board.

4. Set aside, regulate and dispose of reserves and sinking accounts.

5. Prescribe the procedure, if any, by which the terms of any contract with bondholders may be amended or abrogated, the amount of bonds the holders of which must consent to and the manner in which the consent may be given.

6. Provide for payment of bond related expenses from the proceeds of the sale of the bonds or other revenues authorized by this article and available to the board.

7. Provide for the services of trustees, cotrustees, agents and consultants and other specialized services with respect to the bonds.

8. Take any other action that in any way may affect the security and protection of the bonds or interest on the bonds.

9. Refund any bonds issued by the board, if these bonds are secured from the same source of revenues as the bonds authorized by this article, by issuing new bonds.

10. Issue bonds partly to refund outstanding bonds and partly for any other purpose consistent with this article.

B. Bonds issued to refund any bonds issued by the board as provided by subsection A, paragraphs 9 and 10 of this section are not subject to legislative authorization or the two hundred million dollar limitation $200,000,000 limit prescribed by section 15‑2051 41‑5751, subsection A. END_STATUTE

Sec. 41. Section 41-5757, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5757. Bond purchase; cancellation

The school facilities board may purchase bonds for cancellation out of any monies available for the purchase, at a price of not more than either of the following:

1. If the bonds are redeemable at the time of the purchase, the applicable redemption price plus accrued interest to the next interest payment date on the bonds.

2. If the bonds are not redeemable at the time of the purchase, the applicable redemption price on the first date after the purchase on which the bonds become subject to redemption plus accrued interest to that date. END_STATUTE

Sec. 42. Section 41-5758, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5758. Payment of revenue bonds

A. The revenue bonds shall be paid solely from monies from the school facilities revenue bond debt service fund established by section 15‑2054 41‑5754 and other monies that are credited to the school facilities revenue bond debt service fund.

B. The state treasurer or the paying agent for the revenue bonds shall cancel all revenue bonds when paid. END_STATUTE

Sec. 43. Section 41-5759, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5759. Investment of monies in school facilities revenue bond proceeds fund

A. As provided by section 15‑2062 41‑5761, the school facilities board may authorize the state treasurer or bond trustee to invest monies in the school facilities revenue bond proceeds fund established by section 15‑2053 41‑5753.

B. The order directing an investment shall state a specified time when the proceeds from the sale of the bonds will be used. The state treasurer or bond trustee shall make the investment in such a way as to mature at the specified date.

C. All monies earned as interest or otherwise derived from the investment of the monies in the school facilities revenue bond proceeds fund shall be credited to the school facilities revenue bond debt service fund established by section 15‑2054 41‑5754. END_STATUTE

Sec. 44. Section 41-5760, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5760. Investment of monies in school facilities revenue bond debt service fund

A. The school facilities board may authorize the state treasurer or bond trustee to invest and reinvest any monies in the school facilities revenue bond debt service fund as provided by section 15‑2062 41‑5761.

B. All monies earned as interest or otherwise derived from the investment of the monies in the school facilities revenue bond debt service fund shall be credited to that fund. END_STATUTE

Sec. 45. Section 41-5761, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5761. Authorized investments of fund monies

A. On notice from the school facilities board, the state treasurer or bond trustee shall invest and divest monies in either the school facilities revenue bond proceeds fund or the school facilities revenue debt service fund in any of the following:

1. Obligations issued or guaranteed by the United States or any of the senior debt of its agencies, sponsored agencies, corporations, sponsored corporations or instrumentalities.

2. State, county or municipal bonds issued in this state on which the payments of interest have not been deferred.

3. Investment agreements and repurchase agreements collateralized by investments described in paragraph 1 of this subsection.

B. The purchase of the securities shall be made by the state treasurer or bond trustee on authority of a resolution of the board. The treasurer or bond trustee shall act as custodian of all securities purchased. The securities may be sold on an order of the board. END_STATUTE

Sec. 46. Section 41-5763, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5763. Effect of changing circumstances on bonds; agreement of state

A. Bonds issued under this article remain valid and binding obligations of the board notwithstanding that, before the delivery of the bonds, any of the persons whose signatures appear on the bonds cease to be members of the school facilities board.

B. An amendment of any provision of this article does not diminish or impair the validity of bonds issued under this article or the remedies and rights of bondholders.

C. This state pledges to and agrees with the holders of the bonds authorized by this article that this state will not limit, alter or impair the rights and remedies of the bondholders, until all bonds issued under this article, together with interest on the bonds, interest on any unpaid installments of principal or interest and all costs and expenses in connection with any action or proceedings by or on behalf of the bondholders, are fully met and discharged. The board, as agent for this state, may include this pledge and undertaking in its resolutions and indentures authorizing and securing the bonds. END_STATUTE

Sec. 47. Section 41-5764, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5764. Validity of bonds; certification by attorney general

A. This article constitutes full authority for authorizing and issuing bonds without reference to any other law of this state. No other law with regard to authorizing or issuing obligations or that in any way impedes or restricts performing the acts authorized by this article may be construed to apply to any proceedings taken or acts done pursuant to this article.

B. The validity of bonds issued under this article does not depend on and is not affected by the legality of any proceeding relating to any action by the school facilities board in granting or lending monies or the acquisition, construction or improvement of any facility paid with monies provided by the board.

C. The school facilities board may submit to the attorney general revenue bonds to be issued under this article after all proceedings for authorizing the bonds have been completed. Within fifteen days after submission, the attorney general shall examine the bonds and pass on the validity of the bonds and the regularity of the proceedings. If the bonds and proceedings comply with the Constitution of Arizona and this article, and if the bonds when delivered and paid for will constitute binding and legal obligations of the board, the attorney general shall certify in substance that the bonds are issued according to the constitution and laws of this state. The certificate shall also state that the bonds are also validly secured by the obligation to transfer monies from designated sources of revenue, including income on the permanent state school fund established by section 37‑521, to cover any insufficiencies.

D. The bonds shall recite that they are regularly issued pursuant to this article. That recital, together with the certification by the attorney general under subsection C of this section, constitutes prima facie evidence of the legality and validity of the bonds. From and after the sale and delivery of the bonds, they are incontestable by the school facilities board or this state. END_STATUTE

Sec. 48. Section 41-5781, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5781. Authorization of state school improvement revenue bonds; expiration

A. The school facilities board may issue revenue bonds in a principal amount not to exceed eight hundred million dollars $800,000,000 pursuant to this article. The school facilities board may also issue qualified zone academy bonds within the meaning of section 1397e of the United States internal revenue code of 1986 or successor provisions pursuant to this article in a principal amount not to exceed twenty million dollars $20,000,000. The qualified zone academy bonds shall be separately accounted for within the school improvement revenue bond proceeds fund established by section 15‑2083 41‑5783. All bonds authorized by this section may be issued for the following purposes:

1. To provide monies to pay the cost of:

(a) Correcting existing deficiencies as prescribed by section 15‑2021.

(b) Bond related bond‑related expenses, including any expenses incurred by the school facilities board to issue and administer its bonds, including underwriting fees and costs, trustee fees, financial consultant fees, printing and advertising costs, paying agent fees, transfer agent fees, legal, accounting, feasibility consultant and other professional fees and expenses, bond insurance or other credit enhancements or liquidity facilities, attorney and accounting fees and expenses related to credit enhancement, bond insurance or liquidity enhancement, remarketing fees, rating agency fees and costs, travel and telephone expenses and all other fees considered necessary by the school facilities board in order to market and administer the bonds.

2. To fully or partially fund any reserves or sinking accounts established by the bond resolution.

B. The school facilities board shall authorize the bonds by resolution. The resolution shall prescribe:

1. The fixed or variable rate or rates of interest, the date or dates on which interest is payable and the denominations of the bonds.

2. The date or dates of the bonds and maturity, within twenty years after the date of issuance.

3. The form of the bonds.

4. The manner of executing the bonds.

5. The medium and place of payment.

6. The terms of redemption, which may provide for a premium for early redemption.

C. The bonds issued pursuant to this article shall be known as state school improvement revenue bonds.

D. The authority of the school facilities board to issue school improvement revenue bonds pursuant to this article expires from and after June 30, 2003, except for bonds issued to refund any bonds issued by the board. END_STATUTE

Sec. 49. Section 41-5782, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5782. Issuance and sale of school improvement revenue bonds

A. The school facilities board shall issue the school improvement revenue bonds in the number and amount provided in the resolution.

B. The bonds shall be sold at public or private sale at the price and on the terms prescribed in the resolution at, above or below par.

C. The net proceeds of the sale of the bonds shall be deposited in the school improvement revenue bond proceeds fund established pursuant to section 15‑2083 41‑5783. END_STATUTE

Sec. 50. Section 41-5783, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5783. School improvement revenue bond proceeds fund; use for school improvements

A. If the school facilities board issues revenue bonds under this article, the board shall establish a school improvement revenue bond proceeds fund consisting of the net proceeds received from the sale of the bonds.

B. The school facilities board may use monies in the school improvement revenue bond proceeds fund only for the purposes provided in section 15‑2081 41‑5781, subsection A. Monies in the school improvement revenue bond proceeds fund are exempt from lapsing under section 35‑190.

C. The state treasurer or bond trustee shall administer and account for the school improvement revenue bond proceeds fund. END_STATUTE

Sec. 51. Section 41-5784, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5784. School improvement revenue bond debt service fund

A. The school facilities board shall establish a school improvement revenue bond debt service fund consisting of monies received by the school facilities board pursuant to section 42‑5029, subsection E, section 42‑5029.02, subsection A, paragraph 1 and section 37‑521, subsection B, paragraph 1. All monies received pursuant to section 42‑5029, subsection E and section 42‑5029.02, subsection A, paragraph 1 shall be accounted for separately and shall be used only for debt service of school improvement revenue bonds. All monies received pursuant to section 37‑521, subsection B, paragraph 1 shall be accounted for separately and shall be used only for debt service of qualified zone academy bonds.

B. Monies in the school improvement revenue bond debt service fund may be used only for the purposes authorized by this article.

C. The state treasurer or bond trustee shall administer and account for the school improvement revenue bond debt service fund. END_STATUTE

Sec. 52. Section 41-5785, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5785. Securing principal and interest

A. In connection with issuing bonds authorized by this article and to secure the principal and interest on the bonds, the school facilities board by resolution may:

1. Segregate the school improvement revenue bond debt service fund into one or more accounts and subaccounts and provide that bonds issued under this article may be secured by a lien on all or part of the monies paid into the revenue bond debt service fund or into any account or subaccount in the fund.

2. Provide that the bonds issued under this article are be secured by a first lien on the monies paid into the school improvement revenue bond debt service fund as provided by section 42‑5029, subsection E, paragraph 1 and section 42‑5029.02, subsection A, paragraph 1 and pledge and assign to or in trust for the benefit of the holder or holders of the bonds all or part of the monies in the school improvement revenue bond debt service fund, in any account or subaccount in the fund or in the school improvement revenue bond proceeds fund as is necessary to secure and pay the principal, the interest and any premium on the bonds as they come due.

3. Establish priorities among bondholders based on criteria adopted by the board.

4. Set aside, regulate and dispose of reserves and sinking accounts.

6. Provide for payment of bond related bond‑related expenses from the proceeds of the sale of the bonds or other revenues authorized by this article and available to the board.

7. Provide for the services of trustees, cotrustees, agents and consultants and other specialized services with respect to the bonds.

8. Take any other action that in any way may affect the security and protection of the bonds or interest on the bonds.

9. Refund any bonds issued by the board, if these bonds are secured from the same source of revenues as the bonds authorized by this article, by issuing new bonds, whether at or before maturity of the bonds being refunded.

10. Issue bonds partly to refund outstanding bonds and partly for any other purpose consistent with this article.

B. Bonds issued to refund any bonds that are issued by the board as provided by subsection A, paragraphs 9 and 10 of this section are not subject to legislative authorization or subject to the eight hundred million dollar limitation $800,000,000 limit prescribed by section 15‑2081 41‑5781, subsection A. END_STATUTE

Sec. 53. Section 41-5787, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5787. Bond purchase; cancellation

The school facilities board may purchase bonds for cancellation out of any monies available for the purchase at a price of not more than either of the following:

1. If the bonds are redeemable at the time of the purchase, the applicable redemption price plus accrued interest to the next interest payment date on the bonds.

Sec. 54. Section 41-5788, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5788. Payment of revenue bonds

A. The revenue bonds shall be paid solely from monies from the school improvement revenue bond debt service fund established pursuant to section 15‑2084 41‑5784 and other monies that are credited to the school improvement revenue bond debt service fund.

B. The state treasurer or the paying agent for the revenue bonds shall cancel all revenue bonds when paid. END_STATUTE

Sec. 55. Section 41-5789, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5789. Investment of monies in school improvement revenue bond proceeds fund

A. As provided by section 15‑2091 41‑5791, the school facilities board may authorize the state treasurer or bond trustee to invest monies in the school improvement revenue bond proceeds fund established pursuant to section 15‑2083 41‑5783.

C. All monies earned as interest or otherwise derived from the investment of the monies in the school improvement revenue bond proceeds fund shall be credited to the school improvement revenue bond debt service fund established by section 15‑2084 41‑5784. END_STATUTE

Sec. 56. Section 41-5790, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5790. Investment of monies in school improvement revenue bond debt service fund

A. The school facilities board may authorize the state treasurer or bond trustee to invest and reinvest any monies in the school improvement revenue bond debt service fund as provided by section 15‑2091 41‑5791.

B. All monies earned as interest or otherwise derived from the investment of the monies in the school improvement revenue bond debt service fund shall be credited to that fund. END_STATUTE

Sec. 57. Section 41-5791, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5791. Authorized investments of fund monies

A. On notice from the school facilities board, the state treasurer or bond trustee shall invest and divest monies in either the school improvement revenue bond proceeds fund or the school improvement revenue bond debt service fund in any of the following:

1. Obligations issued or guaranteed by the United States or any of the senior debt of its agencies, sponsored agencies, corporations, sponsored corporations or instrumentalities.

2. State, county or municipal bonds that are issued in this state and on which the payments of interest have not been deferred.

3. Investment agreements and repurchase agreements collateralized by investments described in paragraph 1 of this subsection.

Sec. 58. Section 41-5793, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5793. Effect of changing circumstances on bonds; agreement of state

A. Bonds issued under this article remain valid and binding obligations of the board notwithstanding that before the delivery of the bonds any of the persons whose signatures appear on the bonds cease to be members of the school facilities board.

B. An amendment of any provision of this article does not diminish or impair the validity of bonds issued under this article or the remedies and rights of bondholders.

C. This state pledges to and agrees with the holders of the bonds authorized by this article that this state will not limit, alter or impair the rights and remedies of the bondholders until all bonds issued under this article, together with interest on the bonds, interest on any unpaid installments of principal or interest and all costs and expenses in connection with any action or proceedings by or on behalf of the bondholders, are fully met and discharged. The board, as agent for this state, may include this pledge and undertaking in its resolutions and indentures authorizing and securing the bonds. END_STATUTE

Sec. 59. Section 41-5794, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5794. Validity of bonds; certification by attorney general

Sec. 60. Section 41-5805, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5805. Securing principal and interest

To secure the principal and interest on the impact aid revenue bonds, the school district governing board by resolution may:

1. Segregate the impact aid revenue bond debt service fund into one or more accounts and subaccounts and provide that bonds issued under this article may be secured by a lien on all or part of the monies paid into the impact aid revenue bond debt service fund or into any account or subaccount in the fund.

2. Provide that the bonds issued under this article are be secured by a first lien on the monies paid in the impact aid revenue bond debt service fund as provided by section 15‑2104 41‑5804 and pledge and assign to or in trust for the benefit of the holder or holders of the bonds all or part of the monies in the impact aid revenue bond debt service fund or an account or subaccount as is necessary to secure and pay the principal, the interest and any premium on the bonds as they come due.

3. Establish priorities among bondholders based on criteria adopted by the governing board.

4. Set aside, regulate and dispose of reserves and sinking accounts.

6. Provide for payment of bond related expenses from the proceeds of the sale of the bonds or other revenues authorized by this article available to the school district.

7. Provide for the services of trustees, cotrustees, agents and consultants and other specialized services with respect to the bonds.

8. Take any other action that in any way may affect the security and protection of the bonds or interest on the bonds.

9. Refund any bonds issued by the school district, if these bonds are secured from the same source of revenues as the bonds authorized by this article, by issuing new bonds.

10. Issue bonds partly to refund outstanding bonds and partly for any other purpose consistent with this article. END_STATUTE

Sec. 61. Section 41-5810, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5810. Authorized investments of fund monies

A. The monies in either the impact aid revenue bond building fund or debt service fund may be invested and reinvested at the direction of the school district governing board in any of the investments authorized by section 15‑2062 41‑5761.

B. The purchase of the securities shall be made by the county treasurer or the treasurer's designated agent on authority of a resolution of the governing board. The county treasurer shall act as custodian of all securities purchased. The securities may be sold on an order of the governing board. END_STATUTE

Sec. 62. Section 41-5832, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5832. Indoor air quality requirements

A. When the school facilities board or the division approves the construction of a school building, the school facilities board division shall conduct an environmental site assessment. The board division shall consider site assessment standards in accordance with the American society for testing and materials standard E1527, standard practice for environmental site assessments: phase I environmental site assessment process.

B. The school facilities board or the division shall not approve a school building project if any of the following conditions exist exists:

1. The environmental site assessment indicates that the site cannot meet, within reasonable expenditures, the same criteria established for residential properties.

2. The plans incorporate flat roof construction that does not have adequate pitch towards drains in order to prevent pooling of water.

3. The plans do not incorporate indoor air quality guidelines that are acceptable to the board division. The board division shall consider indoor air quality guidelines in accordance with the sheet metal and air conditioning contractors national association's publication entitled "indoor air quality guidelines for occupied buildings under construction".

C. Each school district governing board that installed or renovated its HVAC system on or after the effective date of this article August 12, 2005 shall ensure that its HVAC system meets both of the following requirements:

1. Is maintained and operated in a manner consistent with ventilation standards acceptable to the board division. The board division shall consider ventilation standards in accordance with standard 62.

2. Is operated continuously during school activity hours except during scheduled maintenance and emergency repairs and except during periods for which school officials can demonstrate to the governing board's satisfaction that the quantity of outdoor air supplied by an air supply system that is not mechanically driven meets the requirements for air changes per hour acceptable to the board.

D. Each school district governing board that installed or renovated its HVAC system before the effective date of this article August 12, 2005 shall ensure that its HVAC system is maintained and operated in accordance with the prevailing maintenance and standards at the time of the installation or renovation of the HVAC system. END_STATUTE

Sec. 63. Section 41-5841, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5841. Achievement district school application

A. The credit enhancement eligibility board established by section 15‑2152 41‑5852 shall establish an application process, application forms and selection criteria for a public school or charter school to qualify as an achievement district school for the purposes of article 11 of this chapter.

B. A public school or charter school that meets all of the following criteria is eligible to qualify as an achievement district school:

1. Has been assigned a letter grade of A, or an equivalent successor classification, pursuant to section 15‑241.

2. Has proven instructional strategies and curricula that demonstrate high academic outcomes.

3. Has a verifiable enrollment demand, including the placement of prospective pupils on a waiting list.

4. Has a sound financial plan that contemplates operational costs and future enrollment growth.

5. Has shown a commitment to provide technical assistance, including business services, curriculum development and teacher training, to an underperforming school in the state.

6. Meets any other criteria established by the credit enhancement eligibility board.

C. The credit enhancement eligibility board shall meet regularly to evaluate achievement district school applications and shall either approve or deny each application submitted. The board shall report its decision on each application to the public school or charter school within ten business days after the board's decision.

D. If a school's application is approved pursuant to this section, the school qualifies as an achievement district school and is eligible to apply for participation in the Arizona public school credit enhancement program established by section 15‑2155 41‑5855. END_STATUTE

Sec. 64. Section 41-5851, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5851. Definitions

In this article, unless the context otherwise requires:

1. "Achievement district school" means a public school or a charter school that has qualified as an achievement district school pursuant to article 10 of this chapter and that has submitted an application with the board pursuant to this article to obtain guaranteed financing.

2. "Board" means the credit enhancement eligibility board established by section 15‑2152 41‑5852.

3. "Fund" means the Arizona public school credit enhancement fund established by section 15-2154 41‑5854.

4. "Guaranteed financing" means debt obligations that are issued by or on behalf of a public school or a charter school to acquire, construct, renovate, equip, refinance or improve capital facilities and for which the board has approved a guarantee of all or a portion of the principal and interest payments pursuant to the program.

5. "Program" means the Arizona public school credit enhancement program established by section 15‑2155 41‑5855.

6. "Program funding obligations" means program funding obligations approved and issued by the board pursuant to section 15‑2157 41‑5857.

7. "Program leverage ratio" means the ratio at any time between the aggregate principal amount of guaranteed financings outstanding and the amounts on deposit in the fund. END_STATUTE

Sec. 65. Section 41-5853, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5853. Powers and duties of the board

A. The board is a body corporate and politic and may have an official seal that is judicially noticed.

B. The board may:

1. Sue and be sued in its own name.

2. Contract and enter into agreements as necessary to carry out its responsibilities under this article.

3. Contract with experts, advisers, consultants and agents, including financial experts, legal counsel and other advisers and consultants as may be necessary for services to assist the board.

4. Make and execute contracts and other instruments necessary or convenient for the performance of its duties and the exercise of its power and functions.

5. Pursuant to section 15‑2155 41‑5855, approve financing for an achievement district school as guaranteed financing under the program.

6. Do all acts, whether or not expressly authorized, that may be deemed necessary or proper for the protection of the monies in the Arizona public school credit enhancement fund, except that the board may not take any action that would create a general or moral obligation of this state or any agency of the state.

7. Contract with any entity relating to guaranteed financings.

8. Issue program funding obligations pursuant to section 15‑2157 41‑5857.

9. Adopt rules governing the operation of the program.

10. Take any other action that is necessary or appropriate to carry out this article.

C. The school facilities board division shall provide staff as requested by the board to support the activities of the credit enhancement eligibility board. END_STATUTE

Sec. 66. Section 41-5854, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5854. Arizona public school credit enhancement fund; purposes; exemption

A. The Arizona public school credit enhancement fund is established consisting of:

1. Payments of program participation fees paid by schools that have participated in guaranteed financings pursuant to section 15‑2155 41‑5855.

2. Repayments of monies of the fund that are used to make payments of principal and interest on guaranteed financings pursuant to section 15‑2156 41‑5856.

3. The proceeds of program funding obligations issued by the board pursuant to section 15‑2157 41‑5857.

4. Gifts, grants and donations received from any public or private source to carry out the purposes of this article.

5. Interest earnings and investment income earned on monies in the fund.

6. Any other monies distributed, paid or deposited to the fund by law or pursuant to contracts arising out of a guaranteed financing.

B. Monies and other assets of the fund shall be held and disbursed separate and apart from all other monies or assets of this state or political subdivisions of this state.

C. Monies in the fund shall be used for the following purposes:

1. By the state treasurer to make payments of principal or interest on guaranteed financings pursuant to section 15‑2156 41‑5856.

2. By the board at its direction:

(a) To pay any operational or administrative expenses of the board, including fees for advisers, rating agencies and professionals retained by the board.

(b) To make payments to bond insurers to provide municipal bond insurance guaranteeing the timely payment of all or a portion of any guaranteed financing.

D. The state treasurer shall administer the fund and shall disburse monies in the fund as required by subsection C, paragraph 1 of this section and as directed by the board pursuant to subsection C, paragraph 2 of this section. The state treasurer shall separately account for monies received from each source listed in subsection A of this section and may establish accounts and subaccounts as necessary to properly account for and use monies in the fund.

E. Monies received pursuant to subsection A of this section may not be used for any purpose except guaranteeing or making payments of principal and interest on guaranteed financings approved by the board and any costs and expenses of the program or the board as provided in this article.

F. The state treasurer shall invest and divest monies in the fund as provided in section 35‑313, and monies earned from investment shall be credited to the fund. Monies in the fund are exempt from the provisions of section 35‑190 relating to lapsing of appropriations. END_STATUTE

Sec. 67. Section 41-5857, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5857. Program funding obligations; immunity

A. The board may deliver nonnegotiable program funding obligations in one or more series in an aggregate principal amount of not more than eighty million dollars $80,000,000.

B. The board shall sell any program funding obligations prescribed in subsection A of this section to the state treasurer, and the state treasurer shall buy such obligations as an allowable investment of the fund. The total principal amount of program funding obligations outstanding at any one time may not exceed eighty million dollars $80,000,000. The board may reissue to the state treasurer any called program funding obligations on the same terms as the obligations that were called and in a principal amount that does not exceed the principal amount called.

C. The board shall authorize each program funding obligation by a resolution that sets forth:

1. The rate or rates of interest.

2. The date or dates of maturity.

3. The terms of redemption.

4. The form and manner of execution of the program funding obligation.

5. Any terms necessary to secure credit enhancement or other sources of payment or security.

6. Any other terms deemed necessary or advisable by the board.

D. The interest rate to be paid on program funding obligations authorized by the board pursuant to subsection C of this section shall be equal to the sum of the following:

1. The actual rate of interest earned by the state treasurer on the investment of the proceeds from the sale of the program funding obligations.

2. For any period during which guaranteed financings are outstanding, an additional interest rate of at least one hundred basis points as determined by the board.

E. The principal of and interest on the program funding obligations shall be secured by and paid from monies deposited in the fund, on the terms set forth in the resolution, and are subordinate to any payments that are necessary to be made for guaranteed financings. Principal payments shall be paid on a basis proportional to the reduction in outstanding principal of guaranteed financings under the program. Interest shall be paid on an annual or more frequent basis as set forth in the resolution of the board. The monies pledged under this section to the program funding obligations are immediately subject to the lien of the pledge without any future physical delivery or further act. A lien of any pledge is valid and binding against all parties having claims of any kind in tort, contract or otherwise against the board irrespective of whether the parties have notice of the lien. When placed in the board's records, the resolution by which the pledge is created is notice to all concerned of the creation of the pledge.

F. Program funding obligations shall be sold at private sale to the state treasurer at a price and on terms provided by the board in its resolution pursuant to this section. The proceeds from the sale of program funding obligations shall be deposited into the fund and may be used for the purposes of the fund as set forth in section 15‑2154 41‑5854.

G. Program funding obligations are:

1. Special obligations of the board.

2. Not obligations that are general, special or otherwise of this state.

3. Not a legal debt of this state.

4. Payable and enforceable only from the monies and fund pledged and assigned by the board in its resolution.

H. Any member of the board or a person executing a program funding obligation is not personally liable for the payment of the program funding obligation. END_STATUTE

Sec. 68. Section 41-5858, Arizona Revised Statutes, as transferred and renumbered, is amended to read:

START_STATUTE41-5858. Quarterly reports

Within thirty days after the last day of each calendar quarter, the school facilities board division staff, in collaboration with the credit enhancement eligibility board, shall submit to the speaker of the house of representatives, the president of the senate, the director of the joint legislative budget committee and the director of the governor's office of strategic planning and budgeting a quarterly report on the implementation of the program pursuant to this article. The quarterly report shall include at least the following information:

1. A listing of all outstanding guaranteed financings approved by the board, including the following information for each financing:

(a) The name of the public school or charter school by or on behalf of which the debt obligation was issued.

(b) The date of the issuance.

(d) The interest rate of the issuance.

(e) The term length of the issuance.

(f) The credit rating of the issuance.

(g) The amount of principal and interest due on the debt obligation in the current fiscal year.

(h) The purpose for which the debt obligation was issued, separately delineated for obligations to construct new capital facilities, renovate existing capital facilities or refinance existing debt obligations.

(i) The current outstanding principal of the debt obligation.

2. A listing of all guaranteed financings subject to section 15‑2156 41‑5856 in the prior quarter, including the amounts disbursed for payment of principal and interest for the guaranteed financing and the terms and conditions the school is subject to under section 15‑2156 41‑5856, subsections C, D and E.

3. The current balance of the Arizona public school credit enhancement fund.

4. The current program leverage ratio. END_STATUTE

Sec. 69. Subject to the requirements of article IV, part 1, section 1, Constitution of Arizona, section 42-5029, Arizona Revised Statutes, is amended to read:

START_STATUTE42-5029. Remission and distribution of monies; withholding; definition

A. The department shall deposit, pursuant to sections 35‑146 and 35‑147, all revenues collected under this article and articles 4, 5 and 8 of this chapter pursuant to section 42‑1116, separately accounting for:

1. Payments of estimated tax under section 42‑5014, subsection D.

2. Revenues collected pursuant to section 42‑5070.

3. Revenues collected under this article and article 5 of this chapter from and after June 30, 2000 from sources located on Indian reservations in this state.

4. Revenues collected pursuant to section 42‑5010, subsection G and section 42‑5155, subsection D.

5. Revenues collected pursuant to section 42‑5010.01 and section 42‑5155, subsection E.

B. The department shall credit payments of estimated tax to an estimated tax clearing account and each month shall transfer all monies in the estimated tax clearing account to a fund designated as the transaction privilege and severance tax clearing account. The department shall credit all other payments to the transaction privilege and severance tax clearing account, separately accounting for the monies designated as distribution base under sections 42‑5010, 42‑5164 and 42‑5205. Each month the department shall report to the state treasurer the amount of monies collected pursuant to this article and articles 4, 5 and 8 of this chapter.

C. On notification by the department, the state treasurer shall distribute the monies deposited in the transaction privilege and severance tax clearing account in the manner prescribed by this section and by sections 42‑5164 and 42‑5205, after deducting warrants drawn against the account pursuant to sections 42‑1118 and 42‑1254.

D. Of the monies designated as distribution base, and subject to the requirements of section 42‑5041, the department shall:

1. Pay twenty‑five percent to the various incorporated municipalities in this state in proportion to their population to be used by the municipalities for any municipal purpose.

2. Pay 38.08 percent to the counties in this state by averaging the following proportions:

(a) The proportion that the population of each county bears to the total state population.

(b) The proportion that the distribution base monies collected during the calendar month in each county under this article, section 42‑5164, subsection B and section 42‑5205, subsection B bear to the total distribution base monies collected under this article, section 42‑5164, subsection B and section 42‑5205, subsection B throughout the state for the calendar month.

3. Pay an additional 2.43 percent to the counties in this state as follows:

(a) Average the following proportions:

(i) The proportion that the assessed valuation used to determine secondary property taxes of each county, after deducting that part of the assessed valuation that is exempt from taxation at the beginning of the month for which the amount is to be paid, bears to the total assessed valuations used to determine secondary property taxes of all the counties after deducting that portion of the assessed valuations that is exempt from taxation at the beginning of the month for which the amount is to be paid. Property of a city or town that is not within or contiguous to the municipal corporate boundaries and from which water is or may be withdrawn or diverted and transported for use on other property is considered to be taxable property in the county for purposes of determining assessed valuation in the county under this item.

(ii) The proportion that the distribution base monies collected during the calendar month in each county under this article, section 42‑5164, subsection B and section 42‑5205, subsection B bear to the total distribution base monies collected under this article, section 42‑5164, subsection B and section 42‑5205, subsection B throughout the this state for the calendar month.

(b) If the proportion computed under subdivision (a) of this paragraph for any county is greater than the proportion computed under paragraph 2 of this subsection, the department shall compute the difference between the amount distributed to that county under paragraph 2 of this subsection and the amount that would have been distributed under paragraph 2 of this subsection using the proportion computed under subdivision (a) of this paragraph and shall pay that difference to the county from the amount available for distribution under this paragraph. Any monies remaining after all payments under this subdivision shall be distributed among the counties according to the proportions computed under paragraph 2 of this subsection.

4. After any distributions required by sections 42‑5030, 42‑5030.01, 42‑5031, 42‑5032, 42‑5032.01 and 42‑5032.02, and after making any transfer to the water quality assurance revolving fund as required by section 49‑282, subsection B, credit the remainder of the monies designated as distribution base to the state general fund. From this amount the legislature shall annually appropriate to:

(a) The department of revenue sufficient monies to administer and enforce this article and articles 5 and 8 of this chapter.

(b) The department of economic security monies to be used for the purposes stated in title 46, chapter 1.

(c) The firearms safety and ranges fund established by section 17‑273, fifty thousand dollars $50,000 derived from the taxes collected from the retail classification pursuant to section 42‑5061 for the current fiscal year.

E. If approved by the qualified electors voting at a statewide general election, all monies collected pursuant to section 42‑5010, subsection G and section 42‑5155, subsection D shall be distributed each fiscal year pursuant to this subsection. The monies distributed pursuant to this subsection are in addition to any other appropriation, transfer or other allocation of public or private monies from any other source and shall not supplant, replace or cause a reduction in other school district, charter school, university or community college funding sources. The monies shall be distributed as follows:

1. If there are outstanding state school facilities revenue bonds pursuant to title 15 41, chapter 16 56, article 7, each month one‑twelfth of the amount that is necessary to pay the fiscal year's debt service on outstanding state school improvement revenue bonds for the current fiscal year shall be transferred each month to the school improvement revenue bond debt service fund established by section 15‑2084 41‑5784. The total amount of bonds for which these monies may be allocated for the payment of debt service shall not exceed a principal amount of eight hundred million dollars $800,000,000 exclusive of refunding bonds and other refinancing obligations.

2. After any transfer of monies pursuant to paragraph 1 of this subsection, twelve per cent percent of the remaining monies collected during the preceding month shall be transferred to the technology and research initiative fund established by section 15‑1648 to be distributed among the universities for the purpose of investment in technology and research‑based initiatives.

3. After the transfer of monies pursuant to paragraph 1 of this subsection, three per cent percent of the remaining monies collected during the preceding month shall be transferred to the workforce development account established in each community college district pursuant to section 15‑1472 for the purpose of investment in workforce development programs.

4. After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, one‑twelfth of the amount a community college that is owned, operated or chartered by a qualifying Indian tribe on its own Indian reservation would receive pursuant to section 15‑1472, subsection D, paragraph 2 if it were a community college district shall be distributed each month to the treasurer or other designated depository of a qualifying Indian tribe. Monies distributed pursuant to this paragraph are for the exclusive purpose of providing support to one or more community colleges owned, operated or chartered by a qualifying Indian tribe and shall be used in a manner consistent with section 15‑1472, subsection B. For the purposes of this paragraph, "qualifying Indian tribe" has the same meaning as defined in section 42‑5031.01, subsection D.

5. After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, one‑twelfth of the following amounts shall be transferred each month to the department of education for the increased cost of basic state aid under section 15‑971 due to added school days and associated teacher salary increases enacted in 2000:

(a) In fiscal year 2001‑2002, $15,305,900.

(b) In fiscal year 2002‑2003, $31,530,100.

(d) In fiscal year 2004‑2005, $66,957,200.

(e) In fiscal year 2005‑2006 and each fiscal year thereafter, $86,280,500.

6. After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, seven million eight hundred thousand dollars $7,800,000 is appropriated each fiscal year, to be paid in monthly installments, to the department of education to be used for school safety as provided in section 15‑154 and two hundred thousand dollars $200,000 is appropriated each fiscal year, to be paid in monthly installments, to the department of education to be used for the character education matching grant program as provided in section 15‑154.01.

7. After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, no not more than seven million dollars $7,000,000 may be appropriated by the legislature each fiscal year to the department of education to be used for accountability purposes as described in section 15‑241 and title 15, chapter 9, article 8.

8. After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, one million five hundred thousand dollars $1,500,000 is appropriated each fiscal year, to be paid in monthly installments, to the failing schools tutoring fund established by section 15‑241.

9. After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, twenty‑five million dollars $25,000,000 shall be transferred each fiscal year to the state general fund to reimburse the state general fund for the cost of the income tax credit allowed by section 43‑1072.01.

10. After the payment of monies pursuant to paragraphs 1 through 9 of this subsection, the remaining monies collected during the preceding month shall be transferred to the classroom site fund established by section 15‑977. The monies shall be allocated as follows in the manner prescribed by section 15‑977:

(a) Forty per cent percent shall be allocated for teacher compensation based on performance.

(b) Twenty per cent percent shall be allocated for increases in teacher base compensation and employee related expenses.

F. The department shall credit the remainder of the monies in the transaction privilege and severance tax clearing account to the state general fund, subject to any distribution required by section 42‑5030.01.

G. Notwithstanding subsection D of this section, if a court of competent jurisdiction finally determines that tax monies distributed under this section were illegally collected under this article or articles 5 and 8 of this chapter and orders the monies to be refunded to the taxpayer, the department shall compute the amount of such monies that was distributed to each city, town and county under this section. Each city's, town's and county's proportionate share of the costs shall be based on the amount of the original tax payment each municipality and county received. Each month the state treasurer shall reduce the amount otherwise distributable to the city, town and county under this section by one thirty‑sixth 1/36 of the total amount to be recovered from the city, town or county until the total amount has been recovered, but the monthly reduction for any city, town or county shall not exceed ten percent of the full monthly distribution to that entity. The reduction shall begin for the first calendar month after the final disposition of the case and shall continue until the total amount, including interest and costs, has been recovered.

H. On receiving a certificate of default from the greater Arizona development authority pursuant to section 41‑2257 or 41‑2258 and to the extent not otherwise expressly prohibited by law, the state treasurer shall withhold from the next succeeding distribution of monies pursuant to this section due to the defaulting political subdivision the amount specified in the certificate of default and immediately deposit the amount withheld in the greater Arizona development authority revolving fund. The state treasurer shall continue to withhold and deposit the monies until the greater Arizona development authority certifies to the state treasurer that the default has been cured. In no event may the state treasurer withhold any amount that the defaulting political subdivision certifies to the state treasurer and the authority as being necessary to make any required deposits then due for the payment of principal and interest on bonds of the political subdivision that were issued before the date of the loan repayment agreement or bonds and that have been secured by a pledge of distributions made pursuant to this section.

I. Except as provided by sections 42‑5033 and 42‑5033.01, the population of a county, city or town as determined by the most recent United States decennial census plus any revisions to the decennial census certified by the United States bureau of the census shall be used as the basis for apportioning monies pursuant to subsection D of this section.

J. Except as otherwise provided by this subsection, on notice from the department of revenue pursuant to section 42‑6010, subsection B, the state treasurer shall withhold from the distribution of monies pursuant to this section to the affected city or town the amount of the penalty for business location municipal tax incentives provided by the city or town to a business entity that locates a retail business facility in the city or town. The state treasurer shall continue to withhold monies pursuant to this subsection until the entire amount of the penalty has been withheld. The state treasurer shall credit any monies withheld pursuant to this subsection to the state general fund as provided by subsection D, paragraph 4 of this section. The state treasurer shall not withhold any amount that the city or town certifies to the department of revenue and the state treasurer as being necessary to make any required deposits or payments for debt service on bonds or other long‑term obligations of the city or town that were issued or incurred before the location incentives provided by the city or town.

K. On notice from the auditor general pursuant to section 9‑626, subsection D, the state treasurer shall withhold from the distribution of monies pursuant to this section to the affected city the amount computed pursuant to section 9‑626, subsection D. The state treasurer shall continue to withhold monies pursuant to this subsection until the entire amount specified in the notice has been withheld. The state treasurer shall credit any monies withheld pursuant to this subsection to the state general fund as provided by subsection D, paragraph 4 of this section.

L. Except as otherwise provided by this subsection, on notice from the attorney general pursuant to section 41‑194.01, subsection B, paragraph 1 that an ordinance, regulation, order or other official action adopted or taken by the governing body of a county, city or town violates state law or the Constitution of Arizona, the state treasurer shall withhold the distribution of monies pursuant to this section to the affected county, city or town and shall continue to withhold monies pursuant to this subsection until the attorney general certifies to the state treasurer that the violation has been resolved. The state treasurer shall redistribute the monies withheld pursuant to this subsection among all other counties, cities and towns in proportion to their population as provided by subsection D of this section. The state treasurer shall not withhold any amount that the county, city or town certifies to the attorney general and the state treasurer as being necessary to make any required deposits or payments for debt service on bonds or other long‑term obligations of the county, city or town that were issued or incurred before committing the violation.

M. For the purposes of this section, "community college district" means a community college district that is established pursuant to sections 15‑1402 and 15‑1403 and that is a political subdivision of this state and, unless otherwise specified, includes a community college tuition financing district established pursuant to section 15‑1409. END_STATUTE

Sec. 70. Section 42-5030.01, Arizona Revised Statutes, is amended to read:

START_STATUTE42-5030.01. Distribution of revenues for school facilities

From and after June 30, 1999, if there are outstanding state school facilities revenue bonds pursuant to title 15 41, chapter 16 56, article 6, and if the amount of monies available under section 37‑521, subsection B, paragraph 1 is insufficient to pay the debt service due on the outstanding bonds in that fiscal year, the state treasurer shall transfer to the state school facilities revenue bond debt service fund established pursuant to section 15‑2054 41‑5754 the amount that is necessary to pay the debt service due in that fiscal year on the outstanding bonds from state general fund revenues that were collected pursuant to this chapter. END_STATUTE

Sec. 71. Section 43-1089.02, Arizona Revised Statutes, is amended to read:

START_STATUTE43-1089.02. Credit for donation of school site

A. A credit is allowed against the taxes imposed by this title in the amount of thirty percent of the value of real property and improvements donated by the taxpayer to a school district or a charter school for use as a school or as a site for the construction of a school.

B. To qualify for the credit:

1. The real property and improvements must be located in this state.

2. The real property and improvements must be conveyed unencumbered and in fee simple, except that:

(a) The conveyance must include as a deed restriction and protective covenant running with title to the land the requirement that as long as the donee holds title to the property the property shall only be used as a school or as a site for the construction of a school, subject to subsection I or J of this section.

(b) In the case of a donation to a charter school, the donor shall record a lien on the property as provided by subsection J, paragraph 3 of this section.

3. The conveyance shall not violate section 15‑341, subsection D or section 15‑183, subsection U.

C. For the purposes of this section, the value of the donated property is the property's fair market value as determined in an appraisal as defined in section 32‑3601 that is conducted by an independent party and that is paid for by the donee.

D. If the property is donated by co-owners, including individual partners in a partnership, each donor may claim only the pro rata share of the allowable credit under this section based on the ownership interest. If the property is donated by a husband and wife who file separate returns for a taxable year in which they could have filed a joint return, they may determine between them the share of the credit each will claim. The total of the credits allowed all co-owner donors may not exceed the allowable credit.

E. If the allowable tax credit exceeds the taxes otherwise due under this title on the claimant's income, or if there are no taxes due under this title, the taxpayer may carry the amount of the claim not used to offset the taxes under this title forward for not more than five consecutive taxable years' income tax liability.

F. The credit under this section is in lieu of any deduction pursuant to section 170 of the internal revenue code taken for state tax purposes.

G. On written request by the donee, the donor shall disclose in writing to the donee the amount of the credit allowed pursuant to this section with respect to the property received by the donee.

H. A school district or charter school may refuse the donation of any property for purposes of this section.

I. If the donee is a school district:

1. The district shall notify the division of school facilities board established by section 15‑2001 within the department of administration and furnish the board division with any information the board division requests regarding the donation. A school district shall not accept a donation pursuant to this section unless the school facilities board division has reviewed the proposed donation and has issued a written determination that the real property and improvements are suitable as a school site or as a school. The school facilities board division shall issue a determination that the real property and improvements are not suitable as a school site or as a school if the expenses that would be necessary to make the property suitable as a school site or as a school exceed the value of the proposed donation.

2. The district may sell any donated property pursuant to section 15‑342, but the proceeds from the sale shall only be used for capital projects. The school facilities oversight board shall direct the division of school facilities within the department of administration to withhold an amount that corresponds to the amount of the proceeds from any monies that would otherwise be due the school district from the school facilities board pursuant to section 15‑2041 41-5741.

J. If the donee is a charter school:

1. The charter school shall:

(a) Immediately notify the sponsor of the charter school by certified mail and shall furnish the sponsor with any information requested by the sponsor regarding the donation during the ten year ten‑year period after the conveyance is recorded.

(b) Notify the sponsor by certified mail, and the sponsor shall notify the state treasurer, in the event of the charter school's financial failure or if the charter school:

(i) Fails to establish a charter school on the property within forty‑eight months after the conveyance is recorded.

(ii) Fails to provide instruction to pupils on the property within forty-eight months after the conveyance is recorded.

(iii) Establishes a charter school on the property but subsequently ceases to operate the charter school on the property for twenty‑four consecutive months or fails to provide instruction to pupils on the property for twenty-four consecutive months.

2. The charter school, or a successor in interest, shall pay to the state treasurer the amount of the credit allowed under this section, or if that amount is unknown, the amount of the allowable credit under this section, if any of the circumstances listed in paragraph 1, subdivision (b) of this subsection occurs. If the amount is not paid within one year after the treasurer receives notice under paragraph 1, subdivision (b) of this subsection, a penalty and interest shall be added, determined pursuant to title 42, chapter 1, article 3.

3. A tax credit under this section constitutes a lien on the property, which the donor must record along with the title to the property to qualify for the credit. The amount of the lien is the amount of the allowable credit under this section, adjusted according to the average change in the GDP price deflator, as defined in section 41‑563, for each calendar year since the donation, but not exceeding twelve and one-half percent more than the allowable credit. The lien is subordinate to any liens securing the financing of the school construction. The lien is extinguished on the earliest of the following:

(a) Ten years after the lien is recorded. After that date, the charter school, or a successor in interest, may request the state treasurer to release the lien.

(b) On payment to the state treasurer by the donee charter school, or by a successor in interest, of the amount of the allowable credit under this section, either voluntarily or as required by paragraph 2 of this subsection. After the required amount is paid, the charter school or successor in interest may request the state treasurer to release the lien.

(d) On enforcement and satisfaction of the lien pursuant to paragraph 4 of this subsection.

4. The state treasurer shall enforce the lien by foreclosure within one year after receiving notice of any of the circumstances described in paragraph 1, subdivision (b) of this subsection.

5. Subject to paragraphs 3 and 4 of this subsection, the charter school may sell any donated property. END_STATUTE

Sec. 72. Terms of school facilities board members

Notwithstanding section 41‑5701.02, Arizona Revised Statutes, as transferred, renumbered and amended by this act, a person who is serving as a member of the school facilities board on the effective date of this act is eligible to continue to serve as a member of the school facilities oversight board until expiration of the current term of office.

Sec. 73. Succession

A. As provided by this act, the school facilities oversight board within the school facilities division within the department of administration and the school facilities division within the department of administration succeed to the authority, powers, duties and responsibilities of the school facilities board as provided in this act.

B. This act does not alter the effect of any actions that were taken or impair the valid obligations of the school facilities board in existence before the effective date of this act.

C. Administrative rules and orders that were adopted by the school facilities board continue in effect until superseded by administrative action by the school facilities oversight board or the school facilities division within the department of administration as provided in this act.

D. All administrative matters, contracts and judicial and quasi‑judicial actions, whether completed, pending or in process, of the school facilities board on the effective date of this act are transferred to and retain the same status with the school facilities oversight board or the school facilities division within the department of administration as provided in this act.

E. All certificates, licenses, registrations, permits and other indicia of qualification and authority that were issued by the school facilities board retain their validity for the duration of their terms of validity as provided by law.

F. All equipment, records, furnishings and other property, all data and investigative findings, all obligations and all appropriated monies that remain unexpended and unencumbered on the effective date of this act of the school facilities board are transferred to the school facilities oversight board or the school facilities division within the department of administration as provided in this act.

G. All personnel who are under the state personnel system and employed by the school facilities board are transferred to comparable positions and pay classifications in the respective administrative units of the school facilities oversight board on the effective date of this act.

Sec. 74. Appropriation; building renewal grant fund

The sum of $60,000,000 is appropriated from the state general fund in fiscal year 2021‑2022 to the building renewal grant fund established by section 41‑5731, Arizona Revised Statutes, as transferred, renumbered and amended by this act.

Sec. 75. Requirements for enactment; three-fourths vote

Pursuant to article IV, part 1, section 1, Constitution of Arizona, section 42-5029, Arizona Revised Statutes, as amended by this act, is effective only on the affirmative vote of at least three-fourths of the members of each house of the legislature.