AB468: Bill Text

LRB-3206/1

MJL/MES/RAC/PG:cmh&kmg:kjf

1999 - 2000 LEGISLATURE

1999 Assembly BILL 468

September 14, 1999 - Introduced by Representatives Krug, Riley, Urban, Krusick, Sykora, Richards, Goetsch, La Fave, Sinicki, Colon, Plale, Plouff and Wasserman, cosponsored by Senators Burke, Grobschmidt and Rosenzweig. Referred to Committee on Education.

AB468,1,11 An Act to repeal 20.255 (2) (ec), 119.71 (2), 119.75 (2) (a), 119.78 (2), 121.85 (6) (b) 1. and 121.85 (6) (f); to renumber 119.78 (1); to renumber and amend 119.75 (2) (b); to amend 20.445 (3) (md), 66.431 (5) (a) 4. c., 73.0305, 119.24, 119.71 (3), 119.72 (5), 119.74 (intro.), 119.80 (1), 119.80 (1m), 119.82 (3), 121.004 (7) (a) (intro.), 121.05 (1) (a) 11., 121.07 (6) (a) (intro.), 121.58 (5), 121.85 (6) (a) (intro.), 121.85 (6) (a) 2. and 121.85 (7); and to create 20.255 (2) (kp), 49.175 (1) (z), 66.431 (5) (a) 4. d., 66.431 (5m), 119.80 (4), 121.004 (7) (f), 121.85 (6) (am), 121.85 (6) (ar), 121.85 (6m), 121.87 (3) and 121.90 (1) (e) of the statutes; relating to: intradistrict transfer aid, bonding for construction of and capital improvements to schools in Milwaukee Public Schools and making an appropriation.

Analysis by the Legislative Reference Bureau

Under current law, Milwaukee Public Schools (MPS) must establish geographical areas (attendance areas) within MPS for designating the elementary, middle, high or other school that pupils residing in the attendance area would normally attend. Current law also requires each school in MPS to be open to pupils residing in the attendance area established for that school. A pupil may attend a school in an attendance area other than the one in which he or she resides with the written permission of the superintendent of schools.

This bill provides that, beginning in the 2000-01 school year, the MPS board must provide spaces in each school for pupils who reside outside the attendance area for the school, but must fill any unused spaces with pupils who reside in the attendance area. A pupil who attends a school may continue to attend that school until he or she graduates from the school; in addition, the MPS board must give each sibling of that pupil priority over other pupils in the process of admission for that school.

Under current law, the integration aid program (commonly known as chapter 220) transfers pupils between school districts and between schools to promote racial integration. In addition to receiving interdistrict transfer aid under chapter 220, the MPS board receives intradistrict transfer aid for each minority pupil who is transferred from an attendance area where minority pupils comprise 30% or more of the population to an attendance area that has less than a 30% minority pupil population and for each nonminority pupil who is transferred from a nonminority attendance area (less than 30% minority) to a minority attendance area (30% or more minority). The aid MPS receives is calculated by multiplying the number of eligible transfer pupils by 0.25 and then multiplying this product by MPS's equalization aid payment per pupil for the current school year.

This bill provides that the MPS board may not receive intradistrict transfer aid for a certain percentage of pupils who are transferred from one attendance area to another without the written permission of a parent or guardian. More specifically, in the 2000-01 school year, MPS may not receive aid for that percentage of intradistrict transfer pupils below 75% (target percentage) who are transferred without parental permission. In the 2001-02 school year, the target percentage is 80%, in the 2002-03 school year, the target percentage is 90% and in the 2004-5 school year and subsequent school years, the target percentage is 100%. The MPS board must report annually to the legislature the number, percentage, race, sex, grade and attendance area of pupils transferred between attendance areas without written, parental consent.

Under the current "Blight Elimination and Slum Clearance Act", a redevelopment authority is created in every city, village and town in which slum and blighted areas exist to engage in blight elimination, slum clearance and urban renewal programs. The powers of such redevelopment authorities include the power to carry out redevelopment and urban renewal projects, to acquire real or personal property for such projects and to borrow money and issue bonds in connection with such projects. Generally, a redevelopment authority's bonds are payable, with respect to interest and principal, solely from the income or revenues derived from or in connection with the authority's projects or activities.

Under the bill, the redevelopment authority in the city of Milwaukee is specifically authorized to issue up to $200,000,000 in bonds to be used to finance capital improvements at the request of the MPS board. The MPS board may use intradistrict transfer aid to pay debt service on the bonds. If the MPS board decides to use the aid to pay the debt service, it must request the department of public instruction (DPI) to remit the aid to the redevelopment authority in an annual amount agreed to by the MPS board and DPI. The bill also guarantees the MPS board the amount of intradistrict transfer aid that it received in the 1998-99 school year (adjusted for inflation for the years since the 1998-99 school year), reduced by aid for those pupils transferred without consent, or the amount of intradistrict transfer aid to which the MPS board is entitled, reduced by aid for those pupils transferred without consent, whichever is greater. This guarantee expires in the first fiscal year following the last principal and interest payment on the redevelopment authority bonds or, if no bonds are issued, within five years of the effective date of this bill.

In addition, the $200,000,000 in bonds that are authorized in the bill are subject to a "state moral obligation pledge". This pledge provides that if there are not sufficient funds in debt service reserve funds for the repayment of the bonds, "the legislature expresses its expectation and aspiration" that it will make an appropriation to restore the sufficiency of the debt service reserve funds. The bonds would be subject to the "state moral obligation pledge" only if the secretary of administration determines, among other things, that there is a reasonable likelihood that the bonds will be repaid without the necessity of drawing on funds in the debt service reserve funds.

This bill also requests the joint legislative council to conduct a study of the chapter 220 program and to report its findings, conclusions and recommendations to the legislature by January 1, 2000 and requires the MPS board to submit a report to the joint committee on finance by May 1, 2000, on the board's strategy for expanding or renovating neighborhood schools and for decreasing the percentage of intradistrict transfer pupils transferred without parental consent. The joint committee on finance must approve the report, and any modifications to the report, by September 1, 2000. DPI may not distribute any intradistrict transfer aid to the MPS board until this approval.

Under current law, a pupil who transfers from one school district to another under chapter 220 is counted as one pupil for state aid and revenue limit purposes by the school district in which the pupil resides. This bill provides that beginning in the 2001-02 school year each transfer pupil is counted by the school district in which he or she resides as one-half pupil for state aid and revenue limit purposes.

Under current law, DPI distributes funds to MPS for a variety of early childhood education programs. DPI's appropriation for this purpose is funded with general purpose revenues. This bill funds two of these programs with moneys from the federal temporary assistance for needy families block grant. No state or federal aid is directly provided for the other programs, but the bill specifies the minimum amount the MPS board must spend for each program.

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB468, s. 1 Section 1. 20.005 (3) (schedule) of the statutes: at the appropriate place, insert the following amounts for the purposes indicated: - See PDF for table

AB468, s. 2 Section 2. 20.255 (2) (ec) of the statutes is repealed.

AB468, s. 3 Section 3. 20.255 (2) (kp) of the statutes is created to read:

AB468,4,9 20.255 (2) (kp) Aid to Milwaukee Public Schools; federal block grant aids. The amounts in the schedule for aid to the school district operating under ch. 119 under ss. 119.72 and 119.82, to be distributed according to the spending plan under s. 119.80. All moneys transferred from the appropriation account under s. 20.445 (3) (md) shall be credited to this appropriation.

AB468, s. 4 Section 4. 20.445 (3) (md) of the statutes is amended to read:

AB468,4,14 20.445 (3) (md) Federal block grant aids. All block grant moneys received from the federal government or any of its agencies to be expended as aids to individuals or organizations and to be transferred to the appropriation accounts under s. ss. 20.255 (2) (kp) and 20.435 (3) (kc) and (kd), (7) (kw) and (ky) and (8) (kx).

AB468, s. 5 Section 5. 49.175 (1) (z) of the statutes is created to read:

AB468,5,2 49.175 (1) (z) Aid to Milwaukee Public Schools. For aid to the school district operating under ch. 119 under ss. 119.72 and 119.82, $1,410,000 in each fiscal year.

AB468, s. 6 Section 6. 66.431 (5) (a) 4. c. of the statutes is amended to read:

AB468,6,23 66.431 (5) (a) 4. c. To issue bonds in its discretion to finance its activities under this section, including the payment of principal and interest upon any advances for surveys and plans, and may issue refunding bonds for the payment or retirement of such bonds previously issued by it. Such Except for bonds described under subd. 4. d., such bonds shall be made payable, as to both principal and interest, solely from the income, proceeds, revenues, and funds of the authority derived from or held in connection with its undertaking and carrying out of projects or activities under this section; provided that payment of such bonds, both as to principal and interest, may be further secured by a pledge of any loan, grant or contribution from the federal government or other source, in aid of any projects or activities of the authority under this section, and by a mortgage of any such projects or activities, or any part thereof. Bonds issued under this section shall not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction of the state, city or of any public body other than the authority issuing the bonds, and shall not be subject to any other law or charter relating to the authorization, issuance or sale of bonds. Bonds issued under this section are declared to be issued for an essential public and governmental purpose and, together with interest thereon and income therefrom, shall be exempt from all taxes. Bonds issued under this section shall be authorized by resolution of the authority and may be issued in one or more series and shall bear such date, be payable upon demand or mature at such time, bear interest at such rate, be in such denomination, be in such form either with or without coupon or registered, carry such conversion or registration privileges, have such rank or priority, be payable in such medium of payment, at such place, and be subject to such terms of redemption, with or without premium, be secured in such manner, and have such other characteristics, as is provided by the resolution, trust indenture or mortgage issued pursuant thereto. Bonds issued under this section shall be executed as provided in s. 67.08 (1) and may be registered under s. 67.09. The bonds may be sold or exchanged at public sale or by private negotiation with bond underwriters as the authority may provide. The bonds may be sold or exchanged at such price or prices as the authority shall determine. If sold or exchanged at public sale, the sale shall be held after a class 2 notice, under ch. 985, published prior to such sale in a newspaper having general circulation in the city and in such other medium of publication as the authority determines. Such bonds may be sold to the federal government at private sale, without publication of any notice, at not less than par, and, if less than all of the authorized principal amount of such bonds is sold to the federal government, the balance may be sold at private sale at not less than par at an interest cost to the authority of not to exceed the interest cost to the authority of the portion of the bonds sold to the federal government. Any provision of any law to the contrary notwithstanding, any bonds issued pursuant to this section shall be fully negotiable. In any suit, action or proceeding involving the validity or enforceability of any bond issued under this section or the security therefor, any such bond reciting in substance that it has been issued by the authority in connection with a project or activity under this section shall be conclusively deemed to have been issued for such purpose and such project or activity shall be conclusively deemed to have been planned, located and carried out in accordance with this section.

AB468, s. 7 Section 7. 66.431 (5) (a) 4. d. of the statutes is created to read:

AB468,7,9 66.431 (5) (a) 4. d. Subject to sub. (5m), the authority of a 1st class city may issue up to $200,000,000 in bonds to finance capital improvements at the request of the board of school directors of the school district operating under ch. 119 to implement the report approved under 1999 Wisconsin Act .... (this act), section 38 (2) (b). Bonds issued under this subd. 4. d. may not have a maturity in excess of 20 years, and may not be issued later than the first day of the 60th month beginning after the effective date of this subdivision 4. d. .... [revisor inserts date]. Principal and interest payments on bonds issued under this subd. 4. d. may be paid by the board of school directors of the school district operating under ch. 119.

AB468, s. 8 Section 8. 66.431 (5m) of the statutes is created to read:

AB468,7,16 66.431 (5m) Special debt service reserve funds. (a) Designation of special debt service reserve funds. The authority may designate one or more accounts in funds created under s. 66.066 (2) (e) as special debt service reserve funds if, prior to each issuance of bonds to be secured by the special debt service reserve fund, the secretary of administration determines that all of the following conditions are met with respect to the bonds described under sub. (5) (a) 4. d.:

AB468,7,18 1. `Purpose.' The proceeds of the bonds, other than refunding bonds, will be used for public school facilities in the school district operating under ch. 119.

AB468,7,22 2. `Feasibility.' There is a reasonable likelihood that the bonds will be repaid without the necessity of drawing on funds in the special debt service reserve fund that secures the bonds. The secretary of administration may make this determination of reasonable likelihood only after considering all of the following:

AB468,7,24 a. Whether a pledge of the revenues of the school district operating under ch. 119 is made under the bond resolution.

AB468,8,2 b. How the revenues of the school district operating under ch. 119 are pledged to the payment of the bonds.

AB468,8,4 c. The proposed interest rates of the bonds and the resulting cash-flow requirements.

AB468,8,7 d. The projected ratio of annual revenues from the school district operating under ch. 119 to annual debt service of the authority, taking into account capitalized interest.

AB468,8,10 e. Whether an understanding exists providing for repayment by the authority to the state of all amounts appropriated to the special debt service reserve fund pursuant to par. (g).

AB468,8,13 f. Whether the authority has agreed that the department of administration will have direct and immediate access, at any time and without notice, to all records of the authority relating to the bonds.

AB468,8,16 3. `Limit on bonds issued.' The amount of all bonds, other than refunding bonds, that would be secured by all special debt service reserve funds of the authority will not exceed $200,000,000.

AB468,8,18 4. `Refunding bonds.' All refunding bonds to be secured by the special debt service reserve fund meet all of the following conditions:

AB468,8,20 a. The refunding bonds are to be issued to fund, refund or advance refund bonds secured by a special debt service reserve fund.

AB468,8,22 b. The refunding of bonds by the refunding bonds will not adversely affect the risk that the state will be called on to make a payment under par. (g).

AB468,9,3 5. `Approval of outstanding debt.' All outstanding debt of the authority relating to the bonds has been reviewed and approved by the secretary of administration. In determining whether to approve outstanding debt under this subdivision, the secretary may consider any factor which the secretary determines to have a bearing on whether the state moral obligation pledge under par. (g) should be granted with respect to an issuance of bonds.

AB468,9,6 6. `Financial reports.' The authority has agreed to provide to the department of administration all financial reports of the authority and all regular monthly statements of any trustee of the bonds on a direct and ongoing basis.

AB468,9,13 (b) Payment of funds into a special debt service reserve fund. The authority shall pay into any special debt service reserve fund of the authority any moneys appropriated and made available by the state for the purposes of the special debt service reserve fund, any proceeds of a sale of bonds described under sub. (5) (a) 4. d. to the extent provided in the bond resolution authorizing the issuance of the bonds and any other moneys that are made available to the authority for the purpose of the special debt service reserve fund from any other source.

AB468,9,25 (c) Use of moneys in the special debt service reserve fund. All moneys held in any special debt service reserve fund of the authority, except as otherwise specifically provided, shall be used solely for the payment of the principal of bonds secured in whole or in part by the special debt service reserve fund, the making of sinking fund payments with respect to these bonds, the purchase or redemption of these bonds, the payment of interest on these bonds or the payment of any redemption premium required to be paid when these bonds are redeemed prior to maturity. If moneys in a special debt service reserve fund at any time are less than the special debt service reserve fund requirement under par. (e) for the special debt service reserve fund, the authority may not use these moneys for any optional purchase or optional redemption of the bonds. Any income or interest earned by, or increment to, any special debt service reserve fund due to the investment of moneys in the special debt service reserve fund may be transferred by the authority to other funds or accounts of the authority relating to the bonds to the extent that the transfer does not reduce the amount of the special debt service reserve fund below the special debt service reserve fund requirement under par. (e) for the special debt service reserve fund.