Smart Schools Bond Act Update By: Stephanie M. Roebuck, Esq., & - - PDF document

Smart Schools Bond Act Update By: Stephanie M. Roebuck, Esq., & Ralph C. DeMarco, Esq. March 8, 2015 On November 4, 2014, 62% of New York State voters voted in favor of the Smart Schools Bond Act of 2014, which authorized the creation of state debt and the sale of state bonds in the amount of up to two billion dollars ($2,000,000,000.00) to finance improved educational technology and infrastructure. This outline reflects the information available at this time. We are awaiting further guidance from the New York State Education Department, the New York State Division of Budget and the New York State Smart Schools Review Board.

• 1. New York Smart Schools Commission Report
• a. Early in 2014, Governor Cuomo appointed the New York State Smart Schools

Commission (the “Commission”) to advise the state on how best to invest the proceeds of the proposed $2 billion Smart Schools Bond Act.

• b. In October 2014, the Commission filed a report (available online at

www.smartschoolsny.com) which sets forth seven (7) keys to success for achieving a “smart school,” as follows:

• i. Embrace and expand online learning which will break down geographic

barriers, provide access to the best sources of instruction in the world, and level the playing field for students in rural and smaller school districts;

• ii. Utilize transformative technologies, such as tablets, laptops, and interactive

whiteboards to deliver differentiated instruction tailored to students’ specific abilities and needs that lets them learn and advance at their own pace;

• iii. Connect every school to high-speed broadband using technology that is

capable of scaling up over time and deliver sufficient wireless capability to serve every student;

• iv. Extend connectivity beyond the four walls of the classroom so students

from all backgrounds have equal access to the information superhighway;

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• v. Provide high-quality, continuous professional development to teachers,

principals, and staff to ensure successful integration of technology into the teaching and learning experience;

• vi. Focus on in-demand Science, Technology, Engineering and Math

(“STEM”) skills to ensure that students graduate with 21st century skills; and

• vii. Plan, plan and plan again.
• c. The Commission’s report outlines recommendations to implement each key area,

and provides anecdotal narratives from different New York State school districts and how each has successfully implemented new technology which has positively impacted student achievement.

• 2. Allowable Use of Bond Proceeds
• a. As authorized by the voters, there are four (4) broad permissible capital projects

for which a school district’s bond allocation/proceeds may be used:

• i. The acquisition of learning technology equipment or facilities including,

but not limited to, interactive whiteboards, computer servers, and desktop, laptop and tablet computers;

• ii. The installation of high-speed broadband or wireless internet connectivity

for schools and communities;

• iii. The construction, enhancement, and modernization of educational

facilities to accommodate pre-kindergarten programs and the provision of instructional space to replace transportable classroom units; and

• iv. The installation of high-tech security features in school buildings and on

school campuses.

• b. The allocation may be used for the design, planning, site acquisition, demolition,

construction, reconstruction, rehabilitation, or acquisition and/or installation of equipment related to the four (4) categories of capital projects listed above.

• c. According to information provided to the New York State Council of School

Superintendents by the New York State Education Department, the allocation must be used for a bondable expense, but may not be used for purchases which have already received permanent financing.

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• i. Furthermore, there may be an issue surrounding broadband Internet. Even

though expanding broadband Internet clearly falls within the authorized uses for these bond proceeds, broadband Internet is typically leased, and leases are not bondable.

• d. The allocation will function as a reimbursement.
• i. As seen below, the statute specifies that allocated funds are to be

“reimbursed” to school districts.

• e. There is no “on or after date” for use of the allocated funds.
• i. As seen below, any amount of a school district’s allocation which is not

spent in a school year is carried over to the next succeeding school year. f. We anticipate that the forthcoming guidance from the Commissioner, the Division of Budget and/or the Smart Schools Review Board will address these issues in greater detail.

• 3. Allocation of Bond Proceeds
• a. School districts were allocated Smart Schools Bond Act funding in an amount

proportionate to the district’s share of total formula based school aid in the 2013- 2014 school year, excluding Building Aid, Universal Prekindergarten Aid, and the Gap Elimination Adjustment.

• b. Each school district’s amount has already been calculated and is available online at

http://www.governor.ny.gov/smart-schools-ny.

• 4. Pertinent Terms Defined by the Smart Schools Bond Act [N.Y. Educ. L. §3641(16)(a)]
• a. “Smart schools review board” shall mean a body comprised of the Chancellor of

the State University of New York, the Director of the Budget, and the Commissioner of Education, or their respective designees.

• b. “Smart schools investment plan” shall mean a document prepared by a school

district setting forth the “smart schools project or projects” to be undertaken with such district's smart schools allocation.

• c. “Smart schools project” shall mean one of the following capital projects:
• i. “Pre-kindergarten or transportable classroom unit (TCU) replacement

project”—A capital project which, as a primary purpose, expands the availability of adequate and appropriate instructional space for pre-

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kindergarten or provides for the expansion or construction of adequate and appropriate instructional space to replace TCUs.

• ii. “Community connectivity project”—A capital project which, as a primary

purpose, expands high-speed broadband or wireless internet connectivity in the local community, including school buildings and campuses, for enhanced educational opportunity in the state.

• iii. “Classroom technology project”—A capital project to expand high-speed

broadband or wireless internet connectivity solely for school buildings and campuses, or to acquire learning technology hardware for schools, classrooms, and student use, including but not limited to whiteboards, computer servers, desktop computers, laptop computers, and tablet computers.

• iv. “School safety and security technology project”—A capital project to

install high-tech security features in school buildings.

• 5. Implementation of the Smart Schools Bond Act
• a. Smart Schools Investment Plans [N.Y. Educ. L. §3641(16)(b)]:
• i. Under the statute, the Smart Schools Review Board must issue guidelines

setting forth required components and eligibility criteria for smart schools investment plans to be submitted by school districts.

• 1. Such guidelines shall include but not be limited to:
• a. A timeline for school district submission of smart schools

investment plans;

• b. Any requirements for the use of available state procurement
• ptions where applicable;
• c. Any limitations on the amount of a district's smart schools

allocation that may be used for assets with a short probable life; and

• d. The loan of smart schools classroom technology.
• ii. No school district shall be entitled to a smart schools grant until the

district submits a smart schools investment plan to the smart schools review board and receives the review board’s approval of the investment plan.

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• iii. To develop the investment plan, school districts must consult with

parents, teachers, students, community members and other stakeholders.

• iv. Once the investment plan is submitted and reviewed by the smart schools

review board, the smart schools review board may approve or reject such plans, or may return such plans to the school district for modifications.

• 1. Upon approval, the smart schools project or projects described in

the investment plan shall be eligible for smart schools grants.

• v. However, certain smart schools projects do require separate approval of

the Commissioner, including school construction projects which are required to be submitted for approval by the Commissioner under Education Law §408 or §3602(6).

• 1. Note: Furthermore, there may be smart schools projects which

may also require voter approval, as voter approval is required for the addition, alteration, repair or improvement to the sites of buildings belonging to the school district.

• vi. Any department, agency or public authority shall provide the smart

schools review board with any information it requires to fulfill its duties.

• b. Smart Schools Grants [N.Y. Educ. L. §3641(16)(c)]:
• i. Each school district which has an approved smart schools investment plan

including a smart schools project or projects is entitled to a grant or grants for the smart schools project or projects included therein in an amount, whether in the aggregate or otherwise, not to exceed the smart schools allocation calculated for the school district.

• 1. The amount of such allocation not expended, disbursed or

encumbered for any school year are carried over for expenditure and disbursement to the next succeeding school year.

• 2. Expenditures from the smart schools allocation are not eligible for

aid.

• ii. A school district is permitted, in a smart schools investment plan, to direct

that an amount of its allocation be transferred or suballocated to a department, agency, or public authority to be spent on behalf of the school district, upon the approval of the Director of the Budget.

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• 6. Loan of Smart Schools Classroom Technology [N.Y. Educ. L. §755]:
• a. The Smart Schools Bond Act also includes provisions regarding the loan of

classroom technology procured through smart schools funding, through the creation of a new section of the Education Law, Section 755.

• b. Under Section 755 of the Education Law, school authorities have the power and

duty to loan, upon request of an individual or a group of individual pupils, to all pupils legally attending nonpublic elementary or secondary schools located in the school district, “smart schools classroom technology” which is designated for use in any public elementary or secondary schools of the state or is approved by any school authorities.

• i. The “smart schools classroom technology” is to be loaned free to such

nonpublic school children, commencing with the 2014-15 school year, subject to such rules and regulations as are or may be prescribed by the Board of Regents and the school authorities, if such rules and regulations exist.

• 1. Smart schools classroom technology must be loaned on an

equitable basis, however, school districts are not required to loan classroom technology purchased with local, federal or state funds

• ther than smart schools funding.
• c. A school district is not required to loan smart schools classroom technology in

excess of the smart schools classroom technology it acquires through smart schools grants.

• i. Furthermore, no school district may loan smart schools classroom

technology in an aggregate amount greater than $250 multiplied by the nonpublic school enrollment.

• ii. The payment of tuition under Article 89 of the Education Law is deemed

to be an equitable loan to children for whom such tuition is paid, and the provisions of this section shall not apply.

• d. School authorities shall adopt regulations specifying the date by which requests

for the purchase and loan of smart schools classroom technology must be received by the district.

• i. For the 2014-15 school year, such date must not be earlier than the first

day of January of such school year, and for the 2015-16 school year and each year thereafter, such date must not be earlier than the first day of

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June of the school year prior to that for which such smart schools classroom technology is being requested.

• 1. However, a parent or guardian of a child not attending a particular

non-public school prior to January first or June first of the school year, as applicable, may submit a written request for smart schools classroom technology within thirty (30) days after such child is enrolled in such non-public school.

• 2. In no event, however, shall a request made later than the dates

described above be denied where a reasonable explanation is given for the delay in making the request.

• ii. This loan process is consistent with existing practices of loaning

instructional computer hardware to nonpublic students under New York State Education Law §754.

• 1. Education Law §754 requires that instructional computer hardware,

purchased with Instruction Computer Hardware Aid funds, be loaned to students legally attending nonpublic schools located in the school district on an equitable basis. For the definition of “instructional computer hardware” as well as additional information regarding the lending of instructional computer hardware, please see Sections 21.3 and 175.25 of the Rules and Regulations of the Commissioner of Education.

• 7. Smart Schools Bond Fund [N.Y.S. Finance L. §97-oooo]:
• a. The Smart Schools Bond Act also created a special fund, the “Smart Schools

Bond Fund” which is in the joint custody of the New York State Comptroller and the New York State Commissioner of Taxation and Finance.

• b. All moneys received by the State pursuant to the Smart Schools Bond Act will be

deposited in this fund, and will be available only for reimbursement of expenditures made pursuant to the Smart Schools Bond Act.

• 8. “Probable Life” of Smart Schools Projects [N.Y.S. Finance L. §61(31)]:
• a. Section 61 of the New York State Finance Law sets forth the “probable life” for

buildings, structures, improvements, acquisitions or purposes for which state debt may be contracted.

• i. A project’s “probable life” is the maximum length of time for which any

borrowing or series of borrowings for a project may be extended.

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• b. Accordingly, the Smart Schools Bond Act includes an amendment to Section 61
• f the New York State Finance Law which sets forth the probable life for smart

schools projects. Issues surrounding bonding and indebtedness of school districts can be difficult and complicated, especially where, as here, Commissioner of Education and/or the Division of Budget has yet to supply promised regulations or guidance. If you have any questions regarding the materials in this presentation, please contact your school district attorney and/or bond counsel for assistance.