An Act To Clarify Bonding Authority for School Management and Leadership Centers
Maine Legislature, Session 129, LD 1773
Committee: Education and Cultural Affairs
Sponsors: DODGE
Amends: 20-A MRSA §3802

Legislative Document
No. 1773
H.P. 1260
House of Representatives, May 23, 2019
An Act To Clarify Bonding Authority for School Management and 
Leadership Centers
Submitted by the Department of Education pursuant to Joint Rule 204.
Reference to the Committee on Education and Cultural Affairs suggested and ordered 
printed.
ROBERT B. HUNT
Clerk
Presented by Representative DODGE of Belfast.
Be it enacted by the People of the State of Maine as follows:
Sec. 1.  20-A MRSA §3802, sub-§12, as enacted by PL 2017, c. 284, Pt. 
VVVVV, §6, is amended to read:
12.  Bonding authority; debt limitation; allocation and payment of approved 
debt.  A school management and leadership center may issue bonds and notes for school 
construction purposes. For purposes of this section, "school construction purposes" 
includes minor capital costs relating to maintenance of a school's physical plant. The 
school management and leadership center board shall decide whether the issuance of 
bonds or notes by the school management and leadership center for school construction 
purposes is necessary. The board shall determine whether the issuance of bonds or notes 
is authorized, and, if so, the board shall issue the bonds or notes and administer the 
proceeds of, and the payment of principal of and interest on, those bonds or notes after 
issuance. A school management and leadership center may issue bonds and notes for 
school construction purposes only under the provisions of the interlocal agreement under 
section 3801, subsection 3.  Upon receiving authorization to issue bonds or notes under 
the election procedures of the interlocal agreement, the board shall follow the 
requirements of section 1490 for issuing bonds or notes of the school management and 
leadership center.
A.  Indebtedness of a school management and leadership center for school 
construction purposes may not exceed 4% of the total state valuation of the 
participating 
municipalities. 
For 
purposes 
of 
this 
section, 
"participating 
municipalities" of a school management and leadership center includes all municipal 
school units that are members of the school management and leadership center and 
the municipalities constituting the other members of the school management and 
leadership center. The debt limitation is determined as of the date the state board 
issues a project concept approval or in the case of a nonstate funded project the date 
the commissioner approves the project under section 15905-A.  Debt of a school 
management and leadership center is outside the debt limitations of its members and 
of municipalities constituting its members.
B.  For purposes of determining a debt limitation under this subsection, debt 
approved for state subsidy is excluded. However, in cases in which one or more 
participating municipalities receive an adjustment for the minimum state allocation 
pursuant to section 15689, subsection 1, each outstanding state-subsidized debt 
allocable to a participating municipality that does not receive an adjustment for the 
minimum state allocation pursuant to section 15689, subsection 1 is excluded from 
the debt limitation, but only the state reimbursable portion of each outstanding 
state-subsidized debt allocable to a participating municipality that receives an 
adjustment for the minimum state allocation pursuant to section 15689, subsection 1 
is excluded.
C.  For purposes of determining the debt limitation exclusion under paragraph B, 
when at least one participating municipality receives an adjustment for the minimum 
state allocation pursuant to section 15689, subsection 1, each issue of debt approved 
for purposes of state subsidy is allocated in proportion to the fiscal capacities of the 
school management and leadership center members. In the case of each school 
management and leadership center member that is a regional school unit, school 
administrative district or community school district, the amount of each fiscal 
capacity allocation under this subsection is allocated to the municipalities constituting 
the member in proportion to the municipalities' pupil counts in accordance with 
section 15688, subsection 2.  For each participating municipality that receives an 
adjustment for the minimum state allocation pursuant to section 15689, subsection 1, 
the state reimbursable portion of an outstanding state-subsidized debt allocable to that 
participating municipality is the product of the amount of that school management 
and leadership center's debt allocated to the participating municipality under this 
section and the member's state share percentage, as defined in section 15672, 
subsection 31.
D.  For purposes of determining a debt limitation under this subsection, a certificate 
from the commissioner that a project qualifies for state school construction aid, as to 
the amount of debt that qualifies for that aid, as to the allocation of the debt to the 
members of the school management and leadership center, as to the allocation of debt 
to any participating municipality and as to the state share percentage for any 
participating municipality that receives an adjustment for the minimum state 
allocation pursuant to section 15689, subsection 1 is conclusive evidence of the facts 
stated in the certificate.
E.  The commissioner shall determine the state allocation for debt service costs by 
allocating the principal and interest payments for each debt approved for purposes of 
state subsidy among the members of the school management and leadership center in 
proportion to the members' fiscal capacities.  The adjustment for debt service under 
section 15689, subsection 2 applies to the debt service allocated to participating 
municipalities under this subsection.  Each member's state allocation for debt service 
costs must be paid by the commissioner as provided by section 15907.  The principal 
and interest payments on debt approved for purposes of state subsidy must be shared 
by the members of the school management and leadership center in accordance with 
the commissioner's allocation under this paragraph notwithstanding the cost-sharing 
formula of the school management and leadership center.
Sec. 2.  20-A MRSA §3802, sub-§12-A is enacted to read:
12-A.  General obligation debt; assessment and collection; withdrawal.  In the 
case of a school management and leadership center authorized to issue bonds or notes 
under the terms of an interlocal agreement, the following provisions apply.
A.  Bonds and notes issued by a school management and leadership center are general 
obligations of the school management and leadership center.  The provisions of 
sections 15695 and 15695-A apply, including provisions for the assessment and 
collection of taxes, the levy of ad valorem taxes without limit as to rate or amount 
upon all taxable property within the school management and leadership center and 
the rights and protection of bondholders.
B.  A school management and leadership center board shall include in each budget an 
amount sufficient to pay debt service on approved bonds or notes.  The cost-sharing, 
assessment and payment process under section 3801, subsection 3, paragraph A, 
subparagraph (4) must include determining debt service amounts, except that the 
principal and interest payments on debt approved for purposes of state subsidy are 
shared by the members of the school management and leadership center in 
accordance with the commissioner's allocation under subsection 12.  The school 
budget of each member must include an amount that is its share of the school 
management and leadership center costs, including debt service costs.  Each member 
shall raise and assess a sufficient amount for its share of annual debt service not paid 
from other sources and may collect those amounts in the manner provided by law for 
school taxes.  If the treasurer of a member fails to timely pay any installment by the 
date required, the school management and leadership center has the same rights and 
remedies of enforcement, including interest, court costs and attorney's fees, and the 
court has the same powers, as is provided for enforcement of regional school unit 
installments under section 1489, subsection 6.
C.  Whenever a member withdraws from a school management and leadership center 
having outstanding indebtedness, including bonds, notes and lease-purchase 
agreements, the school management and leadership center remains intact for purposes 
of securing and retiring the indebtedness. A withdrawal agreement may provide for 
alternate means for retiring outstanding indebtedness.
SUMMARY
This bill amends the law governing bonding authority of school management and 
leadership centers.  The bill provides the provisions necessary to implement existing 
statutory authority of school management and leadership centers to issue bonds for school 
construction.  These provisions are comparable to existing law for school construction 
bonds issued by school administrative units or by career and technical education regions.  
The bonding provisions include a debt limit of 4% of state-adjusted valuation; a debt limit 
exclusion for state-subsidized debt; a 25-year maximum bond term; a method for debt 
allocation, assessment and collection; and the rights of bondholders to enforce the 
payment of bonds to facilitate their sale.