SB 593

This bill enacts the "School District Capital Improvements Investment Trust Act, which authorizes a local board of education to establish an investment trust for the purpose of prospectively funding capital improvements for the benefit of the local board of education's LEA. In order for a local board of education to establish and maintain an investment trust, the local board of e d ucation must (i) adopt a capital improvements plan; (ii) maintain a public school fund balance that is no less than two months of expenditures from the LEA's general purpose budget; (iii) adopt, in writing, an investment policy authorizing how assets in t h e trust may be invested; (iv) ensure that the trust conforms to all applicable laws, rules, and regulations of the internal revenue service, if any; (v) ensure that the local board of education's capital improvement plan is reviewed by a third party; and (vi) ensure that the trust document is submitted to, and approved by, the state funding board. This bill provides a local board of education with all the powers necessary or convenient to carry out this bill and the purposes and objectives of the investm e nt trust. REQUIREMENTS OF THE TRUST This bill provides that such an investment trust is irrevocable, and the assets must be preserved, invested, and expended solely pursuant to, and for the purposes of, this bill and must not be loaned or otherwise tran sferred or used for any other purpose. The assets of the trust may only be expended to (i) make payments for capital improvements in accordance with the terms of the LEA's capital improvements plan; or (ii) pay the costs of administering the trust. This bill authorizes the department of the treasury to establish investment guidelines for such trusts. This bill provides that such an investment trust has the powers, privileges, and immunities of a corporation, and all of its business must be transacted; a ll of its funds must be invested; and all of its cash, securities, and other property must be held in trust for the purpose for which the trust was created. All assets, income, and distributions of the investment trust must be protected against the claim s of creditors of the LEA. Assets, income, and distributions of the trust are not subject to execution, attachment, garnishment, bankruptcy, insolvency laws, or other process whatsoever, and an assignment of any right of any such action is not enforceable against the trust in any court. ANNUAL REPORTS AND AUDITS This bill authorizes a local board of education to prepare annual financial reports, including financial statements, at the close of each fiscal year relative to the activities of the investment trust. The statements and reports must contain the information required by the state funding board and must be prepared in accordance with the governmental accounting standards board. Additionally, upon the request of the state funding board, a local bo a rd of education may file the annual report and financial statements with the chair of the funding board. The report and statements must be filed with the chair no later than 90 calendar days from the date of the request, unless the chair extends the dead l ine in writing. This bill provides that a local board of education's annual report, including financial statements, and all books, accounts, and financial records of such an investment trust are subject to audit by the comptroller of the treasury. An LE A that maintains such a trust may, with the prior approval of the comptroller, engage licensed independent public accountants to perform any required audits. An audit contract between an LEA and an independent public accountant must be on contract forms p rescribed by the comptroller. The LEA is responsible for the reimbursement of the costs of audits prepared by the comptroller and for the payment of fees for audits prepared by licensed independent public accountants."