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

                                  9485

                          I N  A S S E M B L Y

                               (PREFILED)

                             January 6, 2010
                               ___________

Introduced by M. of A. BENJAMIN -- read once and referred to the Commit-
  tee on Education

AN  ACT  to  amend  the  education law, in relation to allowing BOCES to
  enter into certain  contracts  with  charter  schools,  extending  the
  number  of charters issued for charter schools, expanding the function
  of charter schools, and the financing of charter schools; to amend the
  public authorities law, in relation to establishing the charter school
  loan and lease program;  and  to  amend  the  state  finance  law,  in
  relation to expanding the purpose of the charter school stimulus fund

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

  Section 1. Paragraph h of subdivision 4 of section 1950 of the  educa-
tion  law  is amended by adding two new subparagraphs 8 and 9 to read as
follows:
  (8) TO ENTER INTO CONTRACTS AS NECESSARY TO CARRY OUT THE PURPOSES  OF
THE  BOARD  OF  COOPERATIVE  EDUCATIONAL  SERVICES  AS  OUTLINED IN THIS
SECTION.
  (9) TO ENTER INTO CONTRACTS WITH CHARTER SCHOOLS AUTHORIZED BY ARTICLE
FIFTY-SIX OF THIS CHAPTER, TO PROVIDE SERVICES  AS  AUTHORIZED  BY  THIS
SECTION.
  S 2. Subdivision 9 of section 2852 of the education law, as amended by
section  2  of part D-2 of chapter 57 of the laws of 2007, is amended to
read as follows:
  9. The total number of charters issued pursuant to this article  shall
not  exceed [two] FOUR hundred. [One] TWO hundred of such charters shall
be issued on the recommendation of the charter entity described in para-
graph (b) of subdivision three of section twenty-eight hundred fifty-one
of this article, and [one] TWO hundred of such charters shall be  issued
on  the recommendation of the other charter entities set forth in subdi-
vision three of section twenty-eight hundred fifty-one of this  article,
provided  that  up  to fifty of the additional charters authorized to be
issued by [the] chapter FIFTY-SEVEN of the laws of  two  thousand  seven
[which  amended  this  subdivision  effective  July  first, two thousand

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
              

                      [ ] is old law to be omitted.
                                                           LBD15293-02-0

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seven] shall be reserved for a city school district of a city  having  a
population  of one million or more. The failure of any body to issue the
regulations authorized pursuant  to  this  article  shall  not  [effect]
AFFECT  the  authority  of  a charter entity to propose a charter to the
board of regents or the board of regents' authority to grant such  char-
ter.  A  conversion  of an existing public school to a charter school or
the renewal or extension of a charter shall not be  counted  toward  the
numerical limits established by this subdivision.
  S 3. Paragraph (b-1) of subdivision 1 of section 2853 of the education
law,  as  added  by chapter 4 of the laws of 1998, is amended to read as
follows:
  (b-1) An education corporation operating a charter school shall not be
authorized to operate more than one school [or] BUT MAY BE AUTHORIZED TO
house any grade at more than one site[, provided that:
  (A) a].  A CHARTER SCHOOL HOUSING TWO OR MORE GRADES AT MORE THAN  ONE
SITE SHALL HAVE EACH SUCH ADDITIONAL SITE DEEMED AS A CHARTER ISSUED FOR
THE  PURPOSES OF SUBDIVISION NINE OF SECTION TWENTY-EIGHT HUNDRED FIFTY-
TWO OF THIS ARTICLE. NOTWITHSTANDING ANY OTHER PROVISION OF  THIS  CHAP-
TER,  APPROVAL  OF  REVISIONS  TO  A CHARTER OR CHARTERS TO AUTHORIZE AN
EDUCATION CORPORATION TO HOUSE ANY GRADE OR  GRADES  AT  MORE  THAN  ONE
SITE, INCLUDING THE MERGER OR CONSOLIDATION OF EXISTING EDUCATION CORPO-
RATIONS  OPERATING  CHARTER  SCHOOLS  TO A SINGLE EDUCATION CORPORATION,
SHALL BE MADE IN ACCORDANCE WITH PARAGRAPH (A) OF SUBDIVISION  SEVEN  OF
SECTION TWENTY-EIGHT HUNDRED FIFTY-TWO OF THIS ARTICLE. UPON SUCH MERGER
OR  CONSOLIDATION,  THE SURVIVING OR CONSOLIDATED EDUCATION CORPORATION,
PLUS ANY SUCH ADDITIONAL SITES, SHALL CONTINUE TO EACH BE COUNTED  AS  A
CHARTER   ISSUED  FOR  THE  PURPOSES  OF  SUBDIVISION  NINE  OF  SECTION
TWENTY-EIGHT HUNDRED FIFTY-TWO OF THIS ARTICLE. IF A CHARTER SCHOOL  HAS
EMPLOYEES WHO ARE MEMBERS OF A COLLECTIVE BARGAINING ORGANIZATION PURSU-
ANT  TO ARTICLE FOURTEEN OF THE CIVIL SERVICE LAW THAT MERGES OR CONSOL-
IDATES WITH A CHARTER SCHOOL  WHOSE  EMPLOYEES  ARE  NOT  MEMBERS  OF  A
COLLECTIVE  BARGAINING  ORGANIZATION, EMPLOYEES OF THE MERGED OR CONSOL-
IDATED CHARTER SCHOOL SHALL BE  MEMBERS  OF  THE  COLLECTIVE  BARGAINING
ORGANIZATION THAT REPRESENTED LIKE POSITIONS, IF ANY, PRIOR TO THE MERG-
ER  OR  CONSOLIDATION.  A  charter  school  may operate in more than one
building at a single site; and
  [(B)] a charter school which provides instruction to its  students  at
different locations for a portion of their school day shall be deemed to
be  operating  at  a single site; AND A CHARTER SCHOOL OPERATING AT MORE
THAN ONE SITE BUT WHICH HOUSES EACH GRADE AT  A  SINGLE  SITE  SHALL  BE
DEEMED TO BE OPERATING AT A SINGLE SITE.
  S 3-a. Paragraph (p) of subdivision 2 of section 2851 of the education
law,  as  added  by chapter 4 of the laws of 1998, is amended to read as
follows:
  (p) The term of the proposed charter,  which  shall  not  exceed  five
SCHOOL years IN WHICH INSTRUCTION IS PROVIDED TO PUPILS, PLUS THE PERIOD
COMMENCING  WITH  THE  EFFECTIVE DATE OF THE CHARTER AND ENDING WITH THE
OPENING OF THE SCHOOL FOR INSTRUCTION.
  S 4. Paragraph (a) of subdivision 1 of section 2853 of  the  education
law,  as  added  by chapter 4 of the laws of 1998, is amended to read as
follows:
  (a) Upon the approval of a charter by the board of regents, the  board
of  regents  shall incorporate the charter school as an education corpo-
ration for a term not to exceed five SCHOOL years IN  WHICH  INSTRUCTION
IS  PROVIDED  TO  PUPILS,  PLUS THE PERIOD COMMENCING WITH THE EFFECTIVE
DATE OF THE CHARTER AND ENDING  WITH  THE  OPENING  OF  THE  SCHOOL  FOR

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INSTRUCTION.    Such  certificate  of  incorporation shall not modify or
limit any terms of the charter approved by the board  of  regents.  Upon
approval  of  an  application  to  renew a charter, the board of regents
shall  extend  the certificate of incorporation for a term not to exceed
five SCHOOL years, PLUS THE PERIOD, IF ANY, COMMENCING WITH  THE  EFFEC-
TIVE  DATE  OF  THE RENEWAL CHARTER AND ENDING WITH THE FIRST DAY OF THE
FIRST FULL SCHOOL YEAR  IN  WHICH  INSTRUCTION  IS  PROVIDED  UNDER  THE
RENEWAL  CHARTER.  Upon  termination  or  nonrenewal of the charter of a
charter school pursuant to section twenty-eight  hundred  fifty-five  of
this  article,  the  certificate  of incorporation of the charter school
shall be revoked by the board of regents pursuant to section two hundred
nineteen of this chapter, provided that compliance with the  notice  and
hearing  requirements of such section twenty-eight hundred fifty-five of
this article shall be deemed to satisfy the notice and hearing  require-
ments  of such section two hundred nineteen. It shall be the duty of the
trustees of the charter school to obtain federal  tax-exempt  status  no
later  than one year following approval of a charter school by the board
of regents. For purposes of this article, "certificate of incorporation"
shall mean the provisional charter issued by the  board  of  regents  to
form  the  charter  school  as  an  educational  corporation pursuant to
sections two hundred sixteen and two hundred seventeen of this chapter.
  S 5. Paragraph (a) of subdivision 2 of section 2854 of  the  education
law,  as  amended  by section 5 of part D-2 of chapter 57 of the laws of
2007, is amended to read as follows:
  (a) A charter school shall be nonsectarian in its programs,  admission
policies,  employment  practices, and all other operations and shall not
charge tuition or fees; provided that a charter school may  require  the
payment of fees on the same basis and to the same extent as other public
schools.  A  charter  school shall not discriminate against any student,
employee or any other person on the basis of ethnicity, national origin,
gender, or disability or any other ground that would be unlawful if done
by a school. Admission of students shall not be limited on the basis  of
intellectual  ability,  measures  of  achievement  or aptitude, athletic
ability, disability, race, creed, gender, national origin, religion,  or
ancestry;  provided,  however,  that  nothing  in  this article shall be
construed to prevent the establishment of a single-sex charter school or
a charter school designed to provide expanded learning opportunities for
students at-risk of academic failure  WHICH  MAY  INCLUDE,  BUT  NOT  BE
LIMITED  TO,  STUDENTS  WITH DISABILITIES AND LIMITED ENGLISH PROFICIENT
STUDENTS; and provided, further, that the charter  school  shall  demon-
strate  good faith efforts to attract and retain a comparable or greater
enrollment of students with disabilities and limited English  proficient
students  when  compared  to the enrollment figures for such students in
the school district in which the charter school is located.   A  charter
shall  not be issued to any school that would be wholly or in part under
the control or direction of any religious denomination, or in which  any
denominational tenet or doctrine would be taught.
  S  6.  Paragraph (c) of subdivision 2 of section 2854 of the education
law, as added by chapter 4 of the laws of 1998, is amended  to  read  as
follows:
  (c)  A  charter  school  shall  serve  one or more of the grades [one]
KINDERGARTEN through twelve, and shall limit admission to pupils  within
the  grade levels served. Nothing herein shall prohibit a charter school
from establishing a [kindergarten]  PRE-KINDERGARTEN  program,  PROVIDED
HOWEVER,  THAT  THE  STUDENTS  ENROLLED IN SUCH PRE-KINDERGARTEN PROGRAM
SHALL NOT BE INCLUDED IN THE ENROLLMENT FOR PURPOSES OF  PARAGRAPHS  (A)

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AND  (B) OF SUBDIVISION ONE OF SECTION TWENTY-EIGHT HUNDRED FIFTY-SIX OF
THIS ARTICLE; AND PROVIDED FURTHER, HOWEVER, THAT SUCH  PRE-KINDERGARTEN
PROGRAM  SHALL  BE ELIGIBLE FOR FUNDING IN ACCORDANCE WITH PARAGRAPH (D)
OF  SUBDIVISION  ONE  OF  SECTION TWENTY-EIGHT HUNDRED FIFTY-SIX OF THIS
ARTICLE.
  S 7. Subdivision 1 of section 2856 of the education law is amended  by
adding two new paragraphs (d) and (e) to read as follows:
  (D)  THE  COMMISSIONER  SHALL  PAY  EACH  CHARTER  SCHOOL  OPERATING A
PRE-KINDERGARTEN PROGRAM A GRANT AMOUNT  IN  PROPORTION  TO  THE  AMOUNT
COMPUTED  FOR THE SCHOOL DISTRICT IN WHICH THE CHARTER SCHOOL IS LOCATED
PURSUANT TO SUBDIVISION TEN OF SECTION THIRTY-SIX HUNDRED TWO-E OF  THIS
CHAPTER  BASED  ON THE PROJECTED NUMBER OF PRE-KINDERGARTEN PUPILS TO BE
SERVED BY THE CHARTER SCHOOL. PAYMENTS PURSUANT TO THIS PARAGRAPH  SHALL
BE MADE BY THE COMMISSIONER IN SIX SUBSTANTIALLY EQUAL INSTALLMENTS EACH
YEAR  BEGINNING  ON  THE FIRST BUSINESS DAY OF JULY AND EVERY TWO MONTHS
THEREAFTER. PAYMENTS MADE PURSUANT TO THIS PARAGRAPH SHALL  BE  MADE  BY
THE  COMMISSIONER  FROM MONEYS APPROPRIATED BY THE STATE LEGISLATURE FOR
THE SUPPORT OF PUBLIC SCHOOLS. AMOUNTS PAYABLE TO A  CHARTER  SCHOOL  IN
ITS FIRST YEAR OF OPERATION OF A PRE-KINDERGARTEN PROGRAM SHALL BE BASED
ON  THE  PROJECTIONS OF INITIAL-YEAR ENROLLMENT SET FORTH IN THE CHARTER
UNTIL ACTUAL ENROLLMENT DATA IS REPORTED  TO  THE  COMMISSIONER  BY  THE
CHARTER  SCHOOL.  SUCH  PROJECTIONS  SHALL BE RECONCILED WITH THE ACTUAL
ENROLLMENT AS ACTUAL ENROLLMENT DATA IS SO REPORTED AND AT  THE  END  OF
THE SCHOOL'S FIRST YEAR OF OPERATION AND EACH SUBSEQUENT YEAR BASED ON A
FINAL  REPORT OF ACTUAL ENROLLMENT BY THE CHARTER SCHOOL, AND ANY NECES-
SARY ADJUSTMENTS RESULTING FROM SUCH  FINAL  REPORT  SHALL  BE  MADE  TO
PAYMENTS DURING THE SCHOOL'S FOLLOWING YEAR OF OPERATION.
  (E)  SUBJECT  TO  APPROPRIATION  BY  THE  STATE  LEGISLATURE, FOR EACH
STUDENT ENROLLED IN A CHARTER SCHOOL, AN AMOUNT UP TO FIFTEEN PER CENTUM
OF THE AMOUNT CALCULATED PURSUANT TO PARAGRAPH (A) OF  THIS  SUBDIVISION
SHALL  BE  PAID  BY  THE  COMMISSIONER  DIRECTLY  TO EACH CHARTER SCHOOL
RECEIVING PAYMENTS IN ACCORDANCE WITH SUCH PARAGRAPH. PAYMENTS  PURSUANT
TO  THIS PARAGRAPH SHALL BE MADE BY THE COMMISSIONER FOR THE PURPOSES OF
SECURING FACILITIES INCLUDING, BUT NOT LIMITED TO, CONSTRUCTION  OF  ANY
NEW  BUILDING,  PURCHASE  OF  AN EXISTING BUILDING, OR REFINANCING OF AN
EXISTING BUILDING IN  ORDER  TO  FACILITATE  IMPROVEMENTS  THERETO;  THE
FINANCING OF REAL PROPERTY DEEMED ESSENTIAL FOR THE CONDUCT OF A CHARTER
SCHOOL,  THE EXTENSION OR PROVISION OF UTILITIES AND ANY OTHER APPURTEN-
ANT FACILITIES TO BE USED BY ANY CHARTER SCHOOL; AND  PERIODIC  PAYMENTS
CALLED FOR UNDER THE TERMS OF A LOAN WHICH MAY INCLUDE BUT IS NOT LIMIT-
ED  TO, INTEREST, INSTALLMENTS OF PRINCIPAL, TAXES AND ASSESSMENTS, LOAN
INSURANCE PREMIUMS AND HAZARD INSURANCE PREMIUMS.  PAYMENTS PURSUANT  TO
THIS  PARAGRAPH  SHALL  BE  MADE IN SIX SUBSTANTIALLY EQUAL INSTALLMENTS
EACH YEAR BEGINNING ON THE FIRST BUSINESS DAY  OF  JULY  AND  EVERY  TWO
MONTHS THEREAFTER.
  S  8.  Subdivision 1 of section 3602-e of the education law is amended
by adding a new paragraph a-1 to read as follows:
  A-1. "CHARTER SCHOOL"  SHALL  MEAN  A  SCHOOL  AUTHORIZED  BY  ARTICLE
FIFTY-SIX OF THIS CHAPTER. NOTWITHSTANDING ANY PROVISION OF THIS SECTION
TO  THE  CONTRARY,  APPROVAL  OF PRE-KINDERGARTEN PROGRAMS OPERATED BY A
CHARTER SCHOOL SHALL BE MADE IN  ACCORDANCE  WITH  SECTION  TWENTY-EIGHT
HUNDRED FIFTY-TWO OF THIS CHAPTER.
  S  9.  Paragraph a of subdivision 9 of section 3602-e of the education
law, as amended by section 21 of part B of chapter 57  of  the  laws  of
2008, is amended to read as follows:

A. 9485                             5

  a.  Each year, the commissioner shall determine the maximum allocation
that each district AND CHARTER  SCHOOL  would  be  eligible  to  receive
pursuant  to  this  section  in the following school year based on pupil
data on file with the commissioner on a date prescribed by  the  commis-
sioner,  and  applying  the formula specified in subdivision ten of this
section. No later than April thirtieth of the base year, the commission-
er shall notify districts AND CHARTER SCHOOLS of the maximum allocations
they may be eligible for pursuant  to  this  section  in  the  following
school  year, and such maximum allocations shall be deemed final and not
subject to change thereafter, EXCEPT AS PROVIDED  IN  PARAGRAPH  (D)  OF
SUBDIVISION  ONE OF SECTION TWENTY-EIGHT HUNDRED FIFTY-SIX OF THIS CHAP-
TER.
  S 10. The public authorities law is amended by adding  a  new  section
1689-j to read as follows:
  S  1689-J.  CHARTER SCHOOL LOAN AND LEASE GUARANTEE PROGRAM. 1.  DEFI-
NITIONS. (A) "AUTHORITY" SHALL MEAN THE DORMITORY AUTHORITY  CREATED  BY
SECTION SIXTEEN HUNDRED SEVENTY-SEVEN OF THIS CHAPTER.
  (B)  "CHARTER SCHOOL" SHALL MEAN A SCHOOL AUTHORIZED BY ARTICLE FIFTY-
SIX OF THE EDUCATION LAW.
  (C) "CHARTER SCHOOL PROJECT" SHALL MEAN CONSTRUCTION OF ANY NEW BUILD-
ING, PURCHASE OF AN EXISTING BUILDING, OR  REFINANCING  OF  AN  EXISTING
BUILDING  IN  ORDER  TO  FACILITATE SUBSTANTIAL IMPROVEMENT THERETO, THE
FINANCING OF REAL PROPERTY DEEMED ESSENTIAL FOR THE CONDUCT OF A CHARTER
SCHOOL, THE EXTENSION OR PROVISION OF UTILITIES AND ANY OTHER  APPURTEN-
ANT  FACILITIES  TO  BE  USED BY ANY CHARTER SCHOOL APPROVED PURSUANT TO
SECTION TWENTY-EIGHT HUNDRED FIFTY-TWO OF THE EDUCATION LAW.
  (D) "LENDING INSTITUTION" SHALL MEAN THE  ORIGINAL  LENDER  UNDER  THE
LOAN  AGREEMENT  OF PARTICIPANTS THEREIN AND ITS SUCCESSORS AND ASSIGNS,
AND MAY INCLUDE BUT IS NOT LIMITED  TO,  AN  INDIVIDUAL  LENDER,  CORPO-
RATION,  INSURANCE  COMPANY, BANK, INVESTMENT COMPANY, EXECUTOR, TRUSTEE
OR OTHER FIDUCIARY, PENSION, PROFIT SHARING, AND RETIREMENT FUND.
  (E) "PAYMENTS" SHALL MEAN PERIODIC PAYMENTS CALLED FOR UNDER THE TERMS
OF A LOAN, AND MAY INCLUDE, BUT IS NOT LIMITED  TO,  INTEREST,  INSTALL-
MENTS  OF  PRINCIPAL, TAXES AND ASSESSMENTS, LOAN INSURANCE PREMIUMS AND
HAZARD INSURANCE PREMIUMS.
  2. POWERS AND LIMITATIONS. THE AUTHORITY SHALL HAVE POWER TO:
  (A) GUARANTEE LOAN AND LEASE REPAYMENTS TO A LENDING INSTITUTION  THAT
HAS PROVIDED THE FUNDING FOR A CHARTER SCHOOL, AS DEFINED HEREIN, NOT TO
EXCEED EIGHTY PER CENTUM OF THE AMOUNT OF SUCH LOAN, UPON SUCH TERMS AND
CONDITIONS  AS  THE  FUND MAY PRESCRIBE, AND FOR SUCH PURPOSES, THE FUND
MAY ENTER INTO SUCH AGREEMENT OR AGREEMENTS WITH LENDING INSTITUTIONS OR
OTHER PERSONS AS REQUIRED.
  (B) ACCEPT GIFTS, GRANTS OR LOANS FROM, AND  ENTER  INTO  CONTRACT  OR
OTHER  TRANSACTION  WITH, ANY FEDERAL OR STATE AGENCY, ANY MUNICIPALITY,
ANY PRIVATE ORGANIZATION OR ANY OTHER SOURCE.
  (C) ENTER INTO AGREEMENTS WITH PROSPECTIVE  LENDING  INSTITUTIONS  AND
BORROWERS  FOR THE PURPOSE OF PLANNING, DESIGNING, CONSTRUCTING, ACQUIR-
ING, ALTERING AND FINANCING PROJECTS.
  (D) WHEN IT BECOMES DESIRABLE FOR THE FUND TO  SAFEGUARD  ITSELF  FROM
LOSSES,  IT  MAY ACQUIRE, PURCHASE, MANAGE AND OPERATE, HOLD AND DISPOSE
OF REAL AND PERSONAL PROPERTY, TAKE ASSIGNMENTS OF  RENTALS  AND  LEASES
AND  MAKE  AND ENTER INTO ALL CONTRACTS, LEASES, AGREEMENTS AND ARRANGE-
MENTS NECESSARY OR INCIDENTAL TO THE PERFORMANCE OF ITS DUTIES.
  (E) IN ORDER TO FURTHER THE PURPOSES OF THIS ACT, OR TO SAFEGUARD  THE
LOAN  GUARANTEE  FUND,  PURCHASE, ACQUIRE AND TAKE ASSIGNMENTS OF NOTES,
MORTGAGES, AND OTHER FORMS OF SECURITY AND  EVIDENCES  OF  INDEBTEDNESS,

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PURCHASE, ACQUIRE, ATTACH, SEIZE, ACCEPT OR TAKE TITLE TO ANY PROJECT BY
CONVEYANCE,  OR  WHEN  AN INSURED LOAN THEREON IS IN DEFAULT, FORECLOSE,
SELL, LEASE OR RENT THE SUBJECT MATTER PROVIDED FOR BY THE LOAN.
  (F)  PRESCRIBE  STANDARDS  AND CRITERIA BY WHICH APPLICATIONS FOR LOAN
GUARANTEES FOR CHARTER SCHOOLS WILL BE JUDGED, INSOFAR AS SUCH STANDARDS
AND CRITERIA ARE NOT INCONSISTENT WITH THE PURPOSES OF THIS ARTICLE.
  (G) GUARANTEE TO ANY BONDING AGENCY AUTHORIZED TO DO BUSINESS IN  THIS
STATE  ANY  BOND  NECESSARY TO THE ACTIVITY OF THE CHARTER SCHOOL OR FOR
THE UNDERTAKING OF A CHARTER SCHOOL PROJECT. SUCH  GUARANTEE  SHALL  NOT
EXCEED  EIGHTY PER CENTUM OF THE FACE AMOUNT OF ANY LOSS INCURRED BY THE
BONDING AGENCY.
  (H) ISSUE AND SELL ITS DEBENTURES, BEARING  SUCH  INTEREST  RATES  AND
HAVING  SUCH  MATURITIES AND OTHER TERMS AND PROVISIONS AS MAY BE DETER-
MINED BY THE AUTHORITY.
  (I) TO DO ANY AND ALL THINGS NECESSARY OR CONVENIENT TO CARRY OUT  ITS
PURPOSES  AND  EXERCISE THE POWERS GIVEN AND GRANTED UNDER THIS SECTION,
OR UNDER ANY OTHER LAW, SPECIAL, GENERAL OR LOCAL.
  3. LOAN AND LEASE GUARANTEE FUND. THE AUTHORITY SHALL ESTABLISH A LOAN
GUARANTEE FUND. THE LOAN GUARANTEE FUND SHALL BE A NON-LAPSING,  REVOLV-
ING  FUND  TO  BE USED FOR THE PURPOSE OF CARRYING OUT THE PROVISIONS OF
THIS SECTION. TO SUCH LOAN GUARANTEE  FUND  SHALL  BE  CHARGED  PAYMENTS
REQUIRED BY LOAN DEFAULTS. TO SUCH LOAN GUARANTEE FUND SHALL BE CREDITED
ALL  RECEIPTS OF THE FUND, OTHER THAN RECEIPTS ALLOCATED FOR THE PAYMENT
OF CURRENT OPERATING EXPENSES, INCLUDING LOAN GUARANTEE PREMIUMS, GIFTS,
GRANTS OR LOANS, PROCEEDS OF THE SALE OF DEBENTURES BY THE FUND,  TRANS-
FERS   FROM  THE  CHARTER  SCHOOLS  STIMULUS  FUND  CREATED  BY  SECTION
NINETY-SEVEN-SSS OF THE STATE FINANCE LAW, AND PROCEEDS FROM  THE  SALE,
DISPOSAL,  LEASE  OR  RENTAL OF REAL OR PERSONAL PROPERTY WHICH THE FUND
MAY RECEIVE UNDER THE PROVISIONS OF THIS SECTION.  MONIES  OF  THE  LOAN
GUARANTEE  FUND,  NOT  NEEDED  TO  MEET CURRENT OBLIGATIONS OF THE FUND,
SHALL BE DEPOSITED TO THE CREDIT OF SUCH LOAN GUARANTEE FUND AND MAY  BE
INVESTED AS THE DIRECTORS OF THE FUND SHALL DETERMINE.
  4. GUARANTEE OF LOANS AND LEASES. THE AUTHORITY IS AUTHORIZED TO GUAR-
ANTEE  REPAYMENTS  OF  A  LOAN  MADE BY A LENDING INSTITUTION TO PROVIDE
FUNDING FOR CHARTER SCHOOL PROJECTS AS DEFINED  HEREIN,  NOT  TO  EXCEED
EIGHTY  PER  CENTUM OF THE PRINCIPAL AMOUNT OF THE OBLIGATION, UPON SUCH
TERMS AND CONDITIONS AS THE AUTHORITY MAY PRESCRIBE, PROVIDED  THAT  THE
AGGREGATE  AMOUNT OF THE UNPAID BALANCE OF ALL OBLIGATIONS SO GUARANTEED
AND OUTSTANDING AT ANY ONE TIME SHALL NOT  EXCEED  TEN  MILLION  DOLLARS
DURING  THE  FIRST  FISCAL  YEAR  OF  OPERATIONS OF THE FUND, AND IN ANY
SUCCEEDING FISCAL YEAR, FIVE TIMES THE AVERAGE  ANNUAL  BALANCE  IN  THE
LOAN GUARANTEE FUND FOR THE PRECEDING FISCAL YEAR, AND PROVIDED FURTHER,
HOWEVER,  THAT  THE  TOTAL  POTENTIAL LIABILITY OF THE FUND TO A LENDING
INSTITUTION ON BEHALF OF ANY ONE BORROWER SHALL NOT EXCEED FIVE  MILLION
DOLLARS.
  5.  CONDITIONS  FOR  GUARANTEE.  IN  ORDER FOR A LOAN TO BE GUARANTEED
UNDER THE PROVISIONS OF THIS SECTION, THE LOAN TO BE GUARANTEED MUST  BE
EXECUTED  BY  A  BORROWER TO WHOM CREDIT IS NOT REASONABLY AVAILABLE AND
PROVIDE FINANCING FOR THE ACQUISITION, CONSTRUCTION,  RECONSTRUCTION  OR
REHABILITATION OF A FACILITY FOR A CHARTER SCHOOL.
  6.  LOAN  GUARANTEE  PREMIUM.  THE  AUTHORITY  IS  AUTHORIZED  BUT NOT
REQUIRED TO FIX PREMIUMS FOR THE GUARANTEE OF LOAN REPAYMENTS UNDER  THE
PROVISIONS  OF  THIS  ACT, SUCH PREMIUMS TO BE COMPUTED AS A PERCENTAGE,
WHICH SHALL NOT EXCEED ONE PER CENTUM PER ANNUM ON THAT PORTION  OF  THE
PRINCIPAL OBLIGATION GUARANTEED HEREUNDER AS THE FUND SHALL DETERMINE ON
THE  BASIS OF ALL PERTINENT AVAILABLE DATA. SUCH PREMIUMS SHALL BE PAYA-

A. 9485                             7

BLE BY THE BORROWER IN SUCH MANNER AS SHALL BE PRESCRIBED BY THE AUTHOR-
ITY. THE AMOUNT OF PREMIUM IS NOT REQUIRED TO BE UNIFORM AMONG THE VARI-
OUS LOANS INSURED.
  7. EXPENSES. THE AUTHORITY MAY IN ITS DISCRETION EXPEND SUCH MONIES AS
MAY  BE  NECESSARY  FOR  ANY  OF ITS EXPENSES, INCLUDING ADMINISTRATIVE,
LEGAL, ACTUARIAL AND OTHER SERVICES.
  8. OBLIGATIONS ELIGIBLE FOR INVESTMENT. OBLIGATIONS GUARANTEED BY  THE
AUTHORITY  UNDER THIS SECTION AND PARTICIPATIONS THEREIN ARE HEREBY MADE
LEGAL INVESTMENTS FOR ALL INSURANCE COMPANIES, TRUST  COMPANIES,  BANKS,
INVESTMENT  COMPANIES,  SAVINGS  BANKS,  BUILDING AND LOAN ASSOCIATIONS,
CREDIT UNIONS, SAVINGS AND LOAN ASSOCIATIONS, EXECUTORS, ADMINISTRATORS,
GUARDIANS,  CONSERVATORS,  TRUSTEES  AND  OTHER  FIDUCIARIES,   PENSION,
PROFIT-SHARING AND RETIREMENT FUNDS.
  9. CONTRACTS OF GUARANTEE; WAIVERS. (A) THE AUTHORITY SHALL ARRANGE BY
CONTRACT  WITH  THE LENDING INSTITUTION OR THE BORROWER OR BOTH TO SAFE-
GUARD THE INTEREST OF THE FUND IN THE EVENT OF DEFAULT BY THE  BORROWER,
INCLUDING,  AT  THE  DISCRETION OF THE FUND, PROVISION FOR NOTICE TO THE
FUND OF DEFAULT BY THE BORROWER, FOR FORECLOSURE  OR  OTHER  REALIZATION
UPON  ANY SECURITY FOR THE LOAN, FOR THE TIME AND CONDITIONS FOR PAYMENT
TO THE LENDING INSTITUTION BY THE FUND OF THE AMOUNT OF ANY LOSS TO  THE
LENDING  INSTITUTION  GUARANTEED BY THE FUND, AND FOR THE DISPOSITION OF
THE PROCEEDS REALIZED FROM ANY SECURITY FOR THE LOAN GUARANTEED. WHEN IT
APPEARS DESIRABLE FOR A TEMPORARY  PERIOD  UPON  DEFAULT  OR  THREATENED
DEFAULT  BY  THE BORROWER, THE FUND MAY ITSELF MAKE PAYMENTS OF INSTALL-
MENTS OF PRINCIPAL OR INTEREST OR BOTH, TO THE LENDING INSTITUTION,  AND
OF  TAXES  AND  INSURANCE,  WHICH  PAYMENTS  SHALL BE REPAID, UNDER SUCH
CONDITIONS AS THE FUND MAY PRESCRIBE, AND THE FUND  MAY  ALSO  AGREE  TO
REVISED TERMS OF FINANCING WHEN SUCH APPEAR PRUDENT.
  (B) UPON REQUEST OF THE LENDING INSTITUTION, THE FUND MAY AT ANY TIME,
UNDER  SUCH  EQUITABLE TERMS AND CONDITIONS AS IT MAY PRESCRIBE, CONSENT
TO THE RELEASE OF THE BORROWER FROM HIS  LIABILITY  UNDER  THE  LOAN  OR
CONSENT TO THE RELEASE OF PARTS OF ANY SECURED PROPERTY FROM THE LIEN OF
THE LENDING INSTITUTION.
  S  11.  Section 97-sss of the state finance law, as added by chapter 4
of the laws of 1998, is amended to read as follows:
  S 97-sss. Charter schools stimulus fund. 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 charter schools stimulus fund.
Such fund shall consist of all monies made available pursuant to  appro-
priation  for this purpose, all monies transferred to such fund pursuant
to law, and grants, gifts and devises and donations from any  public  or
private  source.  The  purpose  of such fund is to provide discretionary
financial support, including grants [and], loans, LOAN AND LEASE GUARAN-
TEES, AND FOR CREDIT ENHANCEMENT PURPOSES to charter  school  applicants
and  to charter schools for start-up costs and for costs associated with
the acquisition, renovation, or construction of  school  facilities  AND
COSTS ASSOCIATED WITH OPERATING PRE-KINDERGARTEN PROGRAMS.
  S 12. This act shall take effect the first of July next succeeding the
date  on  which  it  shall have become a law, provided however, that the
amendments to subdivision 1 of section 2856 of the education law made by
section seven of this act shall not affect the expiration of such subdi-
vision and shall be deemed to expire therewith.