H. B. 4179


(By Mr. Speaker (Mr. Chambers) and Delegate Burk)
(By Request of the Executive)
[Introduced January 28, 1994; referred to the
Committee on Education then Finance.]



A BILL to repeal section thirty-a, article fifteen, chapter eleven of the code of West Virginia, one thousand nine hundred thirty-one, as amended; to amend and reenact section thirty, article fifteen, chapter eleven of said code; to amend and reenact sections two, six and fifteen, article nine-d, chapter eighteen of said code; and to amend and reenact section eighteen, article twenty-two, chapter twenty-nine of said code, all relating to dedicating lottery proceeds toward the payment of bonds issued and to be issued by the school building authority; providing for certification of the amount needed to pay bond principal, interest and coverage ratios for each fiscal year.
Be it enacted by the Legislature of West Virginia:

That section thirty-a, article fifteen, chapter eleven of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be repealed; that section thirty, article fifteen, chapter eleven of said code be amended and reenacted; that sections two, six and fifteen, article nine-d, chapter eighteen of said code be amended and reenacted; and that section eighteen, article twenty-two, chapter twenty-nine of said code be amended and reenacted, all to read as follows:
CHAPTER 11. TAXATION.

 ARTICLE 15. CONSUMERS SALES TAX.
 § 11-15-30. Proceeds of tax; dedication of certain revenues.
 Beginning the first day of November, one thousand nine hundred ninety-three, and continuing on the first day of each succeeding month thereafter, there shall be dedicated monthly from the collections of this tax, prior to the payment or commitment of the proceeds or collections of this tax for any other purpose whatsoever, an amount equal to one eighth of the projected annual principal and interest requirements on any and all revenue bonds and refunding bonds issued, or to be issued, on or after the first day of January, one thousand nine hundred ninety-four, for which bond moneys in the school building debt service fund have been pledged, or will be pledged, for repayment pursuant to section six, article nine-d, chapter eighteen of this code, such principal and interest requirements having been certified to the tax commissioner in accordance with the provisions of said section: Provided, That in no event shall the total dedicated collections of this tax to be paid into the school building debt service fund, as provided in this section, in any fiscal year exceed the lesser of the principal and interest requirements certified to the tax commissioner as aforesaid, or twelve million dollars. The amount dedicated shall be deposited on a monthly basis into the school building debt service fund created pursuant to section six, article nine-d, chapter eighteen of this code. The proceeds from the tax imposed by this article shall be deposited in the general revenue fund of the state.
CHAPTER 18. EDUCATION.

ARTICLE 9D. SCHOOL BUILDING AUTHORITY.

§ 18-9D-2. Definitions.

The following terms, wherever used or referred to in this article, have the following meanings, unless a different meaning clearly appears from the context:
(1) "Authority" means the school building authority of West Virginia or, if said authority shall be abolished, any board or officer succeeding to the principal functions thereof, or to whom the powers given to said authority shall be given by law;
(2) "Bonds" means bonds issued by the authority pursuant to this article;
(3) "Project" or "capital improvement project" means the new construction, major renovation, repair and safety upgrading of facilities, buildings and structures for school purposes including the acquisition of land for current or future use in connection therewith, equipment, machinery, furnishings, installation of utilities and other similar items convenient in connection with placing the foregoing into operation, but may not include such items as books, fuel, supplies and other items which are customarily deemed to result in a current operating charge;
(4) "Cost of project" means the cost of construction, renovation, repair and safety upgrading of facilities, buildings and structures for school purposes; the cost of land, equipment, machinery, furnishings, installation of utilities and other similar items convenient in connection with placing the foregoing into operation; and the cost of financing, interest during construction, professional service fees and all other charges or expenses necessary, appurtenant or incidental to the foregoing, including the cost of administration of this article;
(5) "Revenue" or "revenues" means moneys deposited in the school building capital improvements fund pursuant to the operation of section ten, article nine-a of this chapter; moneys deposited in the school building debt service fund pursuant to the operation of section thirty eighteen, article fifteen twenty-two, chapter eleven twenty-nine of this code; any moneys received, directly or indirectly, from any source for the use of all or any part of any project completed pursuant to this article; and any other moneys received by the authority for the purposes of this article;
(6) "Facilities plan" means the regional plan for school facilities required prior to the distribution of state funds to any county board pursuant to section fifteen of this article; and
(7) "Region" means the area encompassed within and serviced by a regional educational service agency established pursuant to section twenty-six, article two of this chapter.
§ 18 - 9D-6. School building capital improvements fund in state treasury; school building debt service fund in the state treasury; collections to be paid into special funds; authority to pledge such collections as security for revenue bonds; authority to finance projects on a cash basis.

(a) There is continued in the state treasury a school building capital improvements fund to be expended by the authority as provided in this article.

The school building authority shall have authority to pledge all or such part of the revenues paid into the school building capital improvements fund as may be needed to meet the requirements of any revenue bond issue or issues authorized by this article prior to the first day of January, one thousand nine hundred ninety-four, or revenue bonds issued to refund revenue bonds issued prior to that date, including the payment of principal of, interest and redemption premium, if any, on such revenue bonds and the establishing and maintaining of a reserve fund or funds for the payment of the principal of, interest and redemption premium, if any, on such revenue bond issue or issues when other moneys pledged may be insufficient therefor, including such additional protective pledge of revenues as the authority in its discretion has provided by resolution authorizing the issue of such bonds or in any trust agreement made in connection therewith. The authority may further provide in such resolution and in such trust agreement for such priorities on the revenues paid into such school building capital improvements fund as may be necessary for the protection of the prior rights of the holders of bonds issued at different times under the provisions of this article.
Any balance remaining in the school building capital improvements fund after the authority has issued bonds authorized by this article, and after the requirements of all funds including reserve funds established in connection with the bonds issued pursuant to this article have been satisfied, may be used for the redemption of any of the outstanding bonds issued hereunder which by their terms are then redeemable, or for the purchase of such bonds at the market price, but not exceeding the price, if any, at which such bonds shall in the same year be redeemable, and all bonds redeemed or purchased shall forthwith be canceled and shall not again be issued.
The school building authority, in its discretion, may use the moneys in the school building capital improvements fund to finance the cost of projects on a cash basis. Any pledge of moneys in such fund for revenue bonds shall be a prior and superior charge on such fund over the use of any of the moneys in such fund to pay for the cost of any project on a cash basis: Provided, That any expenditures from such fund, other than for the retirement of revenue bonds, may only be made by the authority in accordance with the provisions of this article.
(b) There is hereby created in the state treasury a special fund named the school building debt service fund into which shall be deposited on and after the first day of November April, one thousand nine hundred ninety-three ninety-four, the amounts specified in section thirty eighteen, article fifteen twenty-two, chapter eleven twenty-nine of this code. All amounts deposited in the fund shall be pledged to the repayment of the principal, interest and redemption premium, if any, on any revenue bonds or refunding revenue bonds authorized by this article: Provided, That moneys so deposited shall not be pledged to the repayment of any revenue bonds issued prior to the first day of January, one thousand nine hundred ninety-four, or with respect to revenue bonds issued for the purpose of refunding revenue bonds issued prior to the first day of January, one thousand nine hundred ninety-four. The authority may further provide in the resolution and in the trust agreement for priorities on the revenues paid into the school building debt service fund as may be necessary for the protection of the prior rights of the holders of bonds issued at different times under the provisions of this article. On or prior to the first day of January May of each year, commencing the first day of January May, one thousand nine hundred ninety-four, the authority shall certify to the state tax commissioner lottery director the principal and interest requirements for the following fiscal year on any revenue bonds issued on or after the first day of January, one thousand nine hundred ninety-four, and for which moneys deposited in the school building debt service fund have been pledged, or will be pledged, for repayment pursuant to this section: Provided, however, That before the first day of November May, one thousand nine hundred ninety-three ninety-four, the authority shall also certify to the tax commissioner lottery director of the state the principal and interest requirements for the fiscal year ending on the thirtieth day of June, one thousand nine hundred ninety-four, on any revenue bonds issued, or to be issued, on or after the first day of January, one thousand nine hundred ninety-four.
After the authority has issued bonds authorized by this article, and after the requirements of all funds have been satisfied, including reserve funds established in connection with the bonds issued pursuant to this article, any balance remaining in the school building debt service fund may be used for the redemption of any of the outstanding bonds issued hereunder which, by their terms, are then redeemable or for the purchase of the outstanding bonds at the market price, but not to exceed the price, if any, at which redeemable, and all bonds redeemed or purchased shall be forthwith canceled and shall not again be issued.
(c) The Legislature hereby finds and declares that the supreme court of appeals of West Virginia has held that the revenue bonds authorized under the school building authority act, as enacted in this article prior to the twentieth day of July, one thousand nine hundred ninety-three, constituted an indebtedness of the state in violation of section four, article ten of the constitution of West Virginia. The Legislature further finds and declares that the financial capacity of a county to construct facilities depends on the county's bonding capacity (local property wealth) and on voter willingness to pass bond issues instead of criteria related to educational needs, or upon the ability of the school building authority created in this article to issue bonds that comply with said holding of the West Virginia supreme court of appeals. The Legislature hereby further finds and declares that this section, as well as section thirty, article fifteen, chapter eleven of this code, have been reenacted during the second extraordinary session of the West Virginia Legislature in the year one thousand nine hundred ninety-three, in an attempt to comply with said holding of the supreme court of appeals of West Virginia. The Legislature hereby further finds and declares that the continued construction and improvement of school building facilities and the dedication of the consumers sales tax lottery proceeds pursuant to said section eighteen, article twenty-two, chapter twenty-nine of this code to finance such construction and improvement are for the use and benefit of the state, its counties, its municipalities and its other political subdivisions, and such construction and improvement serves the vital public purpose of providing for a thorough and efficient system of free schools in this state. The Legislature hereby further finds and declares that it intends, through the reenactment of this section and section thirty eighteen, article fifteen twenty-two, chapter eleven twenty-nine of this code, to dedicate a source of state revenue to a special fund for the purpose of paying the debt service on bonds and refunding bonds issued subsequent to the first day of January, one thousand nine hundred ninety-four, the proceeds of which will be utilized for the construction and improvement of school building facilities. The Legislature further finds and declares that the vast majority of free schools in West Virginia are owned by the counties, and that the reenactment of this section and section thirty, article fifteen, chapter eleven of this code meets the requirements of section six-a, article ten of the constitution of West Virginia. The Legislature hereby further finds and declares that it intends, through the reenactment of this section and section thirty eighteen, article fifteen twenty-two, chapter eleven twenty-nine of this code, to comply with the provisions of section four, article ten, section six, article ten, section six-a, article ten and section one, article twelve of the constitution of West Virginia.
§ 18-9D-15. Legislative intent; distribution of money.

(a) It is the intent of the Legislature to empower the school building authority to facilitate and provide state funds for the construction and maintenance of school facilities so as to meet the educational needs of the people of this state in an efficient and economical manner. The authority shall make funding determinations in accordance with the provisions of this article and shall assess existing school facilities and each facilities plan in relation to the needs of the individual student, the general school population, the communities served by the facilities, and facility needs statewide.

(b) An amount that is no more than three percent of the sum of moneys that are determined by the authority to be available for distribution during the then current fiscal year from: (1) The increase in local share paid into the school building capital improvements fund pursuant to section ten, article nine-a of this chapter; (2) the issuance of revenue bonds for which such increase in local share is pledged as security; and (3) any other moneys received by the authority may be allocated and may be expended by the authority for projects that service the educational community statewide or, upon application by the state board, for educational programs that are under the jurisdiction of the state board.
Fifty percent of the remaining available funds shall be allocated and distributed to each county board on the basis of its net enrollment as defined in section two, article nine-a of this chapter: Provided, That such moneys shall not be distributed to any county board whose region does not have an approved region-wide facilities plan or to any county board that is not prepared to commence expenditures of such funds during the fiscal year in which the moneys are distributed: Provided, however, That any moneys allocated to a county board and not distributed to that county board shall be deposited in an account to the credit of that county board, such principal amount to remain to the credit of and available to the county board for a period of three years. Any moneys which are unexpended after a three-year period shall be redistributed on the basis of net enrollment to those county boards then eligible for the receipt of net enrollment distributions in that fiscal year.
The remaining fifty ninety-seven percent of moneys available for distribution shall be allocated and expended on the basis of need and efficient use of resources, such basis to be determined by the authority in accordance with the provisions of section sixteen of this article.
No local matching funds shall be required under the provisions of this subsection, and any county board may use the state moneys provided herein in conjunction with local funds derived from bonding or other source. Any county board may dedicate any allocations of state moneys pursuant to this subsection to the payment of local bonds used for purposes encompassed in an approved facilities plan or for the payment of bonds that are issued by the authority for the benefit of that county that are in addition to the bond moneys distributed in accordance with this subsection.
Moneys made available pursuant to this subsection that shall be expended on projects that benefit more than one district shall be apportioned among the districts in accordance with the formula encompassed in that portion of the facilities plan that addresses the project designed to benefit more than one district.
(c) To encourage regional educational service agencies and county boards to proceed promptly with facilities planning and to prepare for the expenditure of any state moneys derived from the sources described in subsection (b) of this section, any county board failing to expend money within three years of the allocation thereto shall forfeit such allocation and thereafter shall be ineligible for further net enrollment or other allocations pursuant to subsection (b) until the county board is ready to expend funds in accordance with an approved facilities plan. Any amount so forfeited shall be added to the total funds available for allocation and distribution in the next ensuing fiscal year.
(d) Distribution to the county boards may be in a lump sum or in accordance with a schedule of payments adopted by the authority pursuant to such guidelines as it shall adopt.
§ 29 - 22 - 18. State lottery fund; appropriations and deposits; not part of general revenue; no transfer of state funds after initial appropriation; use and repayment of initial appropriation; allocation of fund for prizes, net profit and expenses; surplus; state lottery education fund; state lottery senior citizens fund; allocation and appropriation of net profits.

(a) There is hereby created a special fund in the state treasury which shall be designated and known as the "state lottery fund." The fund shall consist of all appropriations to the fund and all interest earned from investment of the fund, and any gifts, grants or contributions received by the fund. All revenues received from the sale of lottery tickets, materials and games shall be deposited with the state treasurer and placed into the "state lottery fund." The revenue shall be disbursed in the manner herein provided for the purposes stated herein and shall not be treated by the auditor and treasurer as part of the general revenue of the state.

(b) No appropriation, loan or other transfer of state funds shall be made to the commission or lottery fund after the initial appropriation.
(c) A minimum annual average of forty-five percent of the gross amount received from each lottery shall be allocated and disbursed as prizes.
(d) Not more than fifteen percent of the gross amount received from each lottery shall be allocated to and may be disbursed as necessary for fund operation and administration expenses.
(e) The excess of the aggregate of the gross amount received from all lotteries over the sum of the amounts allocated by subsections (c) and (d) shall be allocated as net profit. The director is authorized to expend the necessary percentage of the amount allocated as net profit, not to exceed six percent of the gross amount received, for the purposes of entering into contractual arrangements for the acquisition, financing, lease and lease-purchase, and other financing transactions, of lottery goods and services, including tickets, equipment, machinery, electronic computer systems and terminals, and supplies and maintenance therefor, for the first thirty-six months of operation, and may apportion the costs, expenses and expenditures related thereto among the commission, vendor or vendors and licensed lottery sales agents. In the event that the percentage allotted for operations and administration generates a surplus, the surplus will be allowed to accumulate to an amount not to exceed two hundred fifty thousand dollars. On a monthly basis the director shall report to the joint committee on government and finance of the Legislature any surplus in excess of two hundred fifty thousand dollars and remit to the state treasurer, by electronic funds transfer or by other means, the entire amount of those surplus funds in excess of two hundred fifty thousand dollars which shall be allocated as net profit.
(f) Annually, the Legislature shall appropriate all of the amounts allocated as net profits above shall be disbursed, allocated, or appropriated as set forth in subsections (g) and (h) in such proportions as it deems beneficial to the citizens of this state, to (1) the lottery education fund created in subsection (g) of this section, (2) the lottery senior citizens fund created in subsection (h) of this section, and (3) the commerce division created in article one, chapter five-b of this code, in accordance with subsection (i) of this section.
(g) Beginning on or before the twenty-eighth day of July, one thousand nine hundred ninety-four, and continuing on or before the twenty-eighth day of each succeeding month thereafter, there shall be allocated monthly by the lottery director from the net profits of the lottery for the preceding month, prior to the allocation of said net profits for any other purpose whatsoever, an amount equal to one tenth of the projected annual principal, interest and coverage ratio requirements on any and all revenue bonds and refunding bonds issued, or to be issued, on or after the first day of January, one thousand nine hundred ninety-four, for which bond moneys in the school building debt service fund have been pledged, or will be pledged, for repayment pursuant to section six, article nine-d, chapter eighteen of this code, such principal, interest and coverage ratio requirements having been certified to the lottery director in accordance with the provisions of said section: Provided, That in no event shall the total allocation of said net profits to be paid into the school building debt service fund, as provided in this section, in any fiscal year exceed the lesser of the principal, interest and coverage ratio requirements certified to the lottery director as aforesaid, or twenty million dollars: Provided, however, That any amount, not to exceed ten million dollars in any fiscal year, certified to the lottery director pursuant to section six, article nine-d, chapter eighteen of this code, which amount constitutes any coverage ratio requirement certified in accordance with said section, may be reallocated by the lottery director upon receipt by the lottery director of a certification from the executive director of the school building authority that said amount for any coverage ratio requirement may be released because the principal and interest requirements certified for that fiscal year pursuant to said section have been fully satisfied. The amounts allocated by this subsection shall be deposited on a monthly basis into the school building debt service fund created pursuant to section six, article nine-d, chapter eighteen of this code. There is hereby created a special fund in the state treasury which shall be designated and known as the "lottery education fund." The fund shall consist of the amounts allocated pursuant to subsection (f) of this section, which amounts shall be deposited into the lottery education fund by the state treasurer. The lottery education fund shall also consist of all interest earned from investment of the lottery education fund, and any other appropriations, gifts, grants, contributions or moneys received by the lottery education fund from any source. The revenues received or earned by the lottery education fund shall be disbursed in the manner provided below and shall not be treated by the auditor and treasurer as part of the general revenue of the state. Annually, the Legislature shall appropriate the revenues received or earned by the lottery education fund to the state system of public and higher education for such educational programs as it considers beneficial to the citizens of this state.
(h) There is hereby created a special fund in the state treasury which shall be designated and known as the "lottery senior citizens fund." The fund shall consist of the amounts allocated from said net profits by annual appropriation of the Legislature, pursuant to subsection (f) of this section which amounts shall be deposited into the lottery senior citizens fund by the state treasurer. The lottery senior citizens fund shall also consist of all interest earned from investment of the lottery senior citizens fund, and any other appropriations, gifts, grants, contributions or moneys received by the lottery senior citizens fund from any source. The revenues received or earned by the lottery senior citizens fund shall be disbursed in the manner provided below and shall not be treated by the auditor or treasurer as part of the general revenue of the state. Annually, the Legislature shall appropriate the revenues received or earned by the lottery senior citizens fund to such senior citizens medical care and other programs as it considers beneficial to the citizens of this state.
(i) The commerce division may use the amounts allocated to it pursuant to subsection (f) of this section for one or more of the following purposes: (1) The payment of any or all of the costs incurred in the development, construction, reconstruction, maintenance or repair of any project or recreational facility, as such terms are defined in section thirteen-a, article one, chapter five-b of this code, pursuant to the authority granted to it under article one, chapter five-b of this code, (2) the payment, funding or refunding of the principal of, interest on, or redemption premiums on any bonds, security interests or notes issued by the parks and recreation section of the commerce division under article one, chapter five-b of this code, or (3) the payment of any advertising and marketing expenses for the promotion and development of tourism or any tourist facility or attraction in this state.



NOTE: The purpose of this bill is to dedicate lottery proceeds to the payment of the costs of bonds issued by the School Building Authority.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.