EDU-35-10-00019-RP Qualified School Construction Bonds (QSCB) and Qualified Zone Academy Bonds (QZAB)

1/19/11 N.Y. St. Reg. EDU-35-10-00019-RP

NEW YORK STATE REGISTER

VOLUME XXXIII, ISSUE 3

January 19, 2011

RULE MAKING ACTIVITIES

EDUCATION DEPARTMENT

REVISED RULE MAKING

NO HEARING(S) SCHEDULED

 

I.D No. EDU-35-10-00019-RP

Qualified School Construction Bonds (QSCB) and Qualified Zone Academy Bonds (QZAB)

PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following revised rule:

Proposed Action:

Amendment of section 155.22 of Title 8 NYCRR.

Statutory authority:

Education Law, sections 101, 207, 305(1) and (2); and 26 USC sections 54E and 54F

Subject:

Qualified School Construction Bonds (QSCB) and Qualified Zone Academy Bonds (QZAB).

Purpose:

Establish criteria for QSCB and to update QZAB provisions.

Substance of revised rule:

The Commissioner of Education proposes to amend section 155.22 of the Commissioner's Regulations, effective March 30, 2011, relating to Qualified School Construction Bonds issued pursuant to 26 USC section 54F and Qualified Zone Academy Bonds issued pursuant to 26 USC sections 1397E and 54E. The following is a summary of the substance of the proposed amendment.

Section 155.22 is revised to organize the regulation into subdivision (a), relating to Qualified Zone Academy Bonds, and subdivision (b), relating to Qualified School Construction Bonds. The provisions relating to Qualified Zone Academy Bonds (QZAB) are revised to provide for a separate Charter school allocation from the QZAB State limitation amount. The QZAB provisions are also updated to include QZAB issued under 26 USC 54E, as added by Pub.L. 110-343, 122 Stat. 3765, 3869. Prior to the addition of section 54E, QZAB were issued pursuant to 26 USC section 1397E.

Provisions relating to Qualified School Construction Bonds (QSCB) are established in section 155.22(b).

Section 155.22(b)(1) sets forth the purpose of the subdivision, to establish procedures for the allocation and issuance of QSCB as authorized by 26 USC section 54F.

Section 155.22(b)(2) sets forth definitions for terms used in the subdivision.

Section 155.22(b)(3) establishes procedures for allocating respective amounts of the QSCB State limitation amount to local educational agencies LEAs), including provisions for allocating to the large city school districts, charter schools, and all other LEAs.

Section 155.22(b)(4) establishes procedures for making adjustments for unused allocations.

Section 155.22(b)(5) requires QSCB to be used within three years after issuance.

Section 155.22(b)(6) requires that capital construction projects to be financed through the issuance of QSCB must be submitted for review to the Office of Facilities Planning in the State Education Department.

Section 155.22(b)(7) provides that capital construction projects funded in whole or in part with QSCB and involving the repair, renovation or alternation of public school facilities that are approved by the Commissioner, shall be eligible to receive building aid pursuant to the provisions of Education Law section 3602(6).

Revised rule making(s) were previously published in the State Register on

November 17, 2010.

Revised rule compared with proposed rule:

Substantial revisions were made in section 155.22(b)(3).

Text of revised proposed rule and any required statements and analyses may be obtained from

Chris Moore, State Education Department, Office of Counsel, State Education Building Room 148, 89 Washington Ave., Albany, NY 12234, [phone], email: [e-mail]

Data, views or arguments may be submitted to:

John B. King, Jr. Senior Deputy Commissioner P-12 Education, State Education Department, State Education Building Room 125, 89 Washington Ave., Albany, NY 12234, [phone], email: [e-mail]

Public comment will be received until:

30 days after publication of this notice.

Revised Regulatory Impact Statement

Since publication of a Notice of Revised Rule Making in the State Register on November 17, 2010, the proposed rule has been further revised in response to public comment to delete a requirement in section 155.22(b)(3)(iii)(d) that limited the QSCB charter school allocation for a given calendar year to $500,000 per charter school.

The above revision does not require any changes to the previously published Regulatory Impact Statement.

Revised Regulatory Flexibility Analysis

Since publication of a Notice of Revised Rule Making in the State Register on November 17, 2010, the proposed rule has been substantially revised as set forth in the Statement Concerning the Regulatory Impact Statement filed herewith.

The aforesaid revision does not require any changes to the previously published Regulatory Flexibility Analysis for Small Businesses and Local Government.

Revised Rural Area Flexibility Analysis

Since publication of a Notice of Revised Rule Making in the State Register on November 17, 2010, the proposed rule has been substantially revised as set forth in the Statement Concerning the Regulatory Impact Statement filed herewith.

The aforesaid revisions do not require any changes to the previously published Rural Area Flexibility Analysis.

Revised Job Impact Statement

Since publication of a Notice of Revised Rule Making in the State Register on November 17, 2010, the proposed amendment has been substantially revised as set forth in the Statement Concerning the Regulatory Impact Statement.

The proposed amendment, as so revised, will not have an adverse impact on jobs or employment opportunities. Because it is evident from the nature of the revised proposed amendment that it will have a positive impact, or no impact, on jobs or employment opportunities, no further steps were needed to ascertain those facts and none were taken. Accordingly, a job impact statement is not required and one has not been prepared.

Assessment of Public Comment

Since publication of a Notice of Revised Rule Making in the State Register on November 17, 2010, 2010, the State Education Department received the following comments:

1. COMMENT:

The $500,000 annual limitation per charter school for Qualified Zone Academy Bonds (QZAB) and Qualified School Construction Bonds (QSCB) is too small to make issuance of the bonds financially feasible, and would have the unintended consequence of effectively preventing charter schools from participating in these programs. Given that the total allocation for charter schools in the proposed rule is $5 million, it is recommended that there be no maximum allocation per charter school per school year. Should the total allocation be increased, it is recommended that the maximum allocation be $5 million per charter school per school year, which is similar to the maximum allocation for a typical school district.

DEPARTMENT RESPONSE:

The Department agrees. The proposed rule, as originally published in the September 1, 2010 State Register included provisions imposing a $500,000 annual limitation per charter school for both QZAB and QSCB. The Department was attempting through these provisions to spread the available allocation amounts as widely as possible within the Charter School community. However, the Department subsequently determined that this limitation could result in the unintended consequence of limiting the usefulness of the program to individual Charter Schools. The revised rule (published in the November 17, 2010 State Register and adopted as an emergency action effective November 23, 2010) deleted the $500,000 limitation for QZAB, but inadvertently did not delete the $500,000 limitation for QSCB. The Department has now further revised the rule to remove the $500,000 QSCB annual limitation per charter school.

2. COMMENT:

The proposed rule's separation of charter schools into a separate funding pool from school districts is unjustified.

DEPARTMENT RESPONSE:

The Department disagrees. Charter Schools are currently approved to educate a limited percentage of the students in relation to the state total and it would be inappropriate for them to gain access to significantly more program funding that would be disproportionate to their population.

3. COMMENT:

If there is a distinction to be drawn between charter schools and school districts, charter schools' share of the total allocations should be determined based on the number of students they are chartered to enroll, not their present enrollment. It is estimated that 88,500 students will be served when charter schools that are now operating reach their full growth.

DEPARTMENT RESPONSE:

The Department disagrees. The Department is providing the same funding per student for both populations. Using the allocation of $5,000,000 against the comment's estimate of 88,500 students, results in funding level of $56.50 per student. For the rest of the State, the analysis results in $169,000,000 against approximately 3 million students or $56.33 per student. A confirming calculation reveals that 88,500 students represents approximately 3% of the total state enrollment, and $5M represents approximately 3% of the total $174 Million of available funding. No change to the method of allocation is warranted.