senate Bill S1582A

Establishes the special education short-term revolving loan fund and authorizes the state comptroller to provide special education short-term revolving loans

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 10 / Jan / 2011
    • REFERRED TO FINANCE
  • 04 / Jan / 2012
    • REFERRED TO FINANCE
  • 13 / Jan / 2012
    • AMEND AND RECOMMIT TO FINANCE
  • 13 / Jan / 2012
    • PRINT NUMBER 1582A

Summary

Establishes the special education short-term revolving loan fund and authorizes the state comptroller to provide special education short-term revolving loans to certain special act school districts or approved special education providers.

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Bill Details

See Assembly Version of this Bill:
A1089A
Versions:
S1582
S1582A
Legislative Cycle:
2011-2012
Current Committee:
Senate Finance
Law Section:
State Finance Law
Laws Affected:
Add ยงยง99-u & 179-ff, St Fin L
Versions Introduced in 2009-2010 Legislative Cycle:
S7134, A10428

Sponsor Memo

BILL NUMBER:S1582A

TITLE OF BILL:
An act
to amend the state finance law, in relation to establishing the special
education short-term revolving loan fund, and in relation to authorizing
the state comptroller to provide special education short-term revolving
loans to certain special act school districts or approved special
education providers

PURPOSE:
To provide special Act school districts with an alternative to the
high cost of Revenue Anticipation Notes that are offered by banking
institutions.

SUMMARY OF PROVISIONS:
Section one amends state finance law by adding a new section 99-u,
which establishes the "Special Education Revolving Loan Fund", under
the joint custody of the comptroller and the Commissioner of Tax and
Finance.

Section two amends state finance law by adding a new section 179-ff
which authorizes the comptroller to provide short term loans from the
fund, pending tuition payments from the state.

Section three provides for the effective date, which is immediate.

EXISTING LAW:
Current law provides funding to Special Act Schools through a complex
methodology in which schools are getting reimbursed at rates set in
previous years, for students previously served. These school
districts currently rely heavily on short-term borrowing from banks
in the form of Revenue Anticipation Notes (RANs), to keep their
doors open. The state does not allow for reimbursement of interest
fees that are paid to banks.

JUSTIFICATION:
Created by special acts of the New York State Legislature, Special Act
schools provide unique educational and therapeutic opportunities to
students who have experienced failure in previous school settings.
Special Act school districts are located on the grounds of residential
childcare facilities licensed by the Department of Social Services.
Although they primarily serve a residential population, special Act
schools also accept referrals of day students who are experiencing
similar psychological, educational, or physical disabilities. Because
of the shifting needs of the students served, students can remain at
the schools for as little as one week to as long as a few years.

The Special Act schools annually provide rehabilitative and
educational services to thousands of New York State's most
challenging children - children who have been admitted into the
juvenile justice system, foster care, and the mental healthcare
system. For many of these children, these schools are their last
hope. Special Act schools are held to the same federal and state
standards that all public schools are held to, but without the same
financial infrastructure afforded other public schools. These schools


have no taxing authority and rely heavily on state aid in the form of
tuition reimbursement.

Under current law, tuition rates are established each year by the
Commissioner of Education, subject to the approval of the Division of
Budget, with final rates adjusted to reflect the actual approved
costs incurred by each provider. This reconciliation process allows
the state to evaluate and recapture State and local payments that
exceed actual costs. Given the complexity of the methodology as well
as the shifting population of Special Act schools, this process of
reconciliation can take years to sort out.

Mount Pleasant Cottage School provides an example of the problem: they
are required to comply with mandates issued by the State Education
Department's Office of Vocational and Educational Services for
Individuals with Disabilities (VESID), for example, by adding staff,
yet have not received reimbursement for such from NYSED's Rate
Setting Unit or Division of Budget to bill for the school years
2006-2007, 2007-2008, 2008-2009 and 2009-2010. They are currently
billing at 2005-2006 levels, a rate that is woefully inadequate to
pay for educational expenses related to mandated services for their
students.

This situation has forced the schools to resort to short term
borrowing from banks in the form of Revenue Anticipation Notes
(RANs). State funding does not allow for reimbursement of the cost of
borrowing, leaving these schools with the additional burden of
expensive interest fees.
The average interest rate for RANs has increased dramatically since
the recent collapse of the financial markets. In fact many Special
Act schools are finding in very difficult to find banks willing to
provide these loans at all.

During the 2008-2009 school year Special Act schools borrowed over $27
million at a cost of $1.3 million in interest, in order to meet
their obligations. If the rate setting methodology was a more timely
and efficient process, these loans would be unnecessary, however
legislation that would improve the methodology has been consistently
met with vetoes. (see Veto 156 of 2007; Veto 279 of 2006; and Veto
220 of 2004)

This bill would allow New York State to provide loans to Special Act
schools in anticipation of the school's revenue, which comes from the
State, thereby saving the schools millions in interest payments at no
cost to the State.

LEGISLATIVE HISTORY:
S.7134/A.10428 of 2009-2010 - Passed Senate.
Similar legislation has been enacted in the past.
Chapter 166 of the Laws of 1991 contained a
provision which created the "Not-for-Profit Short-Term
Revolving Loan Fund", which served a similar purpose -
to provide loans to not-for-profits contracting with the
State, in anticipation of revenue from the State.

FISCAL IMPLICATIONS:


There is no cost to the state, however this bill will save Special Act
school districts at least $1.3 million per year,

EFFECTIVE DATE:
Immediately.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 1582--A

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                            January 10, 2011
                               ___________

Introduced  by  Sen.  OPPENHEIMER -- read twice and ordered printed, and
  when printed to be committed to the Committee on Finance --  recommit-
  ted to the Committee on Finance in accordance with Senate Rule 6, sec.
  8  -- committee discharged, bill amended, ordered reprinted as amended
  and recommitted to said committee

AN ACT to amend the state finance law, in relation to  establishing  the
  special  education  short-term revolving loan fund, and in relation to
  authorizing the state comptroller to provide special education  short-
  term  revolving  loans  to  certain  special  act  school districts or
  approved special education providers

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  The  state finance law is amended by adding a new section
99-u to read as follows:
  S 99-U. SPECIAL EDUCATION SHORT-TERM REVOLVING LOAN FUND. 1.  THERE IS
HEREBY ESTABLISHED IN THE JOINT  CUSTODY  OF  THE  COMPTROLLER  AND  THE
COMMISSIONER  OF  TAXATION AND FINANCE A FUND TO BE KNOWN AS THE SPECIAL
EDUCATION SHORT-TERM REVOLVING LOAN FUND. SUCH  FUND  SHALL  CONSIST  OF
MONEYS MADE AVAILABLE PURSUANT TO APPROPRIATION AND ANY OTHER SOURCES IN
ORDER  TO  PROVIDE  SUPPORT  FOR  PROMPT CONTRACTING WITH AND PAYMENT OF
NOT-FOR-PROFIT ORGANIZATIONS.
  2. MONEYS OF THE FUND MAY BE EXPENDED PURSUANT TO SECTION ONE  HUNDRED
SEVENTY-NINE-FF OF THIS CHAPTER. MONEYS SHALL BE PAID OUT OF THE FUND ON
THE AUDIT AND WARRANT OF THE STATE COMPTROLLER PURSUANT TO SUCH SECTION.
  S  2.  The state finance law is amended by adding a new section 179-ff
to read as follows:
  S 179-FF. SPECIAL EDUCATION SHORT-TERM REVOLVING LOANS. 1.  THE  COMP-
TROLLER  IS  AUTHORIZED  TO  PROVIDE  LOANS  FROM  THE SPECIAL EDUCATION
SHORT-TERM REVOLVING LOAN FUND ESTABLISHED BY SECTION  NINETY-NINE-U  OF
THIS  CHAPTER  TO  ANY  SPECIAL  ACT SCHOOL DISTRICT OR APPROVED SPECIAL
EDUCATION PROVIDER SEEKING SHORT-TERM FINANCING FOR OPERATIONS,  PENDING

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD05308-02-2

S. 1582--A                          2

TUITION  PAYMENTS AS AUTHORIZED UNDER SECTION FORTY-FOUR HUNDRED FIVE OF
THE EDUCATION LAW. THE COMPTROLLER MAY PROVIDE SUCH A LOAN TO A  SPECIAL
ACT  SCHOOL DISTRICT OR APPROVED SPECIAL EDUCATION PROVIDER UPON RECEIPT
OF  A  WRITTEN AGREEMENT BETWEEN THE SCHOOL DISTRICT OR PROVIDER AND THE
STATE EDUCATION DEPARTMENT OUTLINING THE NEED  FOR  SUCH  LOAN  AND  THE
ANTICIPATED  TUITION PAYMENT OR TUITION RECONCILIATION THAT WILL PROVIDE
REASONABLE ASSURANCES OF REPAYMENT THAT IS  SATISFACTORY  TO  THE  COMP-
TROLLER.  SUCH  LOAN  SHALL NOT BEAR INTEREST AND REPAYMENT OF SUCH LOAN
MAY BE MADE UPON RECEIPT OF TUITION PAYMENTS AND RECONCILIATIONS, PURSU-
ANT TO THE WRITTEN AGREEMENT.
  2. THE COMPTROLLER SHALL PROMULGATE RULES AND REGULATIONS WITHIN NINE-
TY DAYS OF THE EFFECTIVE DATE OF THIS SECTION FOR THE OPERATION  OF  THE
SPECIAL  EDUCATION  SHORT-TERM  REVOLVING LOAN FUND WHICH SHALL INCLUDE,
BUT NOT BE LIMITED TO, THE CRITERIA TO BE USED  IN  DETERMINING  SCHOOLS
AND SCHOOL DISTRICTS ELIGIBLE FOR ASSISTANCE; A PROCEDURE AND ANY NECES-
SARY INFORMATION THAT SCHOOLS AND SCHOOL DISTRICTS NEED TO SUBMIT APPLI-
CATIONS  FOR A LOAN FROM THIS FUND; A SCHEDULE FOR REVIEWING SUCH APPLI-
CATIONS, NOT TO EXCEED THIRTY DAYS, AND NOTIFICATION TO AN APPLICANT  OF
APPROVAL OR DISAPPROVAL OF SUCH APPLICATION FOR INTERIM FUNDING; AND ANY
OTHER REQUIREMENTS DEEMED NECESSARY BY THE COMPTROLLER.
  S 3. This act shall take effect immediately.

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