Title 750 KAR — School Facilities Construction Commission

Chapter 1 Procedures

750 KAR 1:010 Commission procedures {#sec-750-kar-1-010 omnilex-key=us-ky-regs-official--title-750--750 KAR 1:010}

Section 1. Definitions.

(1) "Available local revenue" is defined by KRS 157.615(1).

(2) "Daily interest" means the total interest divided by the number of days in the first coupon.

(3) "Eligible district" is defined by KRS 157.615(16).

(4) "Level repayment schedule" means a repayment schedule in which the combined annual amount of principal and interest payments for each issue of bonds remains relatively constant over the life of the issue.

(5) "Maximum annual repayment amount" means the maximum aggregate total of SFCC annual payments for all bonds issued for a particular school district in which the SFCC has participated. If a bond series has been refunded, the original issue and debt schedule shall be the one used in making this computation.

(6) "Offer of assistance" means the amount available for a school district from a current biennium along with any allocation available from a prior period which has not expired according to KRS 157.622(5) and (6).

(7) "SFCC" means the School Facilities Construction Commission.

(8) "Total interest" means the first gross interest payment of the debt service for the SFCC portion of the schedule.

Section 2. Eligibility.

(1) The SFCC shall use the statement of need and available local revenue as certified by the Kentucky Board of Education in determining the rate of participation of each school district in any given biennium. Eligibility for participation as established in KRS 157.620(1) shall be certified by the Kentucky Board of Education.

(2) A school district retaining capital outlay funds in its current expense general fund under the provisions of KRS 157.420 in the year preceding the biennium in which funds are available or during the biennium shall be ineligible to participate in the SFCC Program during that funding period.

Section 3. Rate of Participation.

(1) The rate of participation of each eligible district shall be determined by dividing the unmet needs of that district by the total unmet needs of all eligible districts and multiplying that fraction times the total new debt service budgeted for the biennium.

(2) If there are insufficient funds budgeted in the first year of the biennium to fund all the requests, bond sales shall be scheduled in the order in which the SFCC receives requests for approval of bond sales.

(3) All bond sales may proceed after January 1 of the first year of the biennium.

Section 4. Offer of Assistance. Upon certification of the rate of participation by the SFCC, the Executive Director of the SFCC shall notify each eligible district of its entitled rate of participation and the requirements to be met if it wishes to accept the offer of assistance. These requirements shall include:

(1) The amount of local revenue to be expended as certified by the Kentucky Board of Education;

(2) The priority order of facilities to be built as certified by the Kentucky Board of Education; and

(3) The sequence of events and deadlines to be met if the local school district accepts the offer of assistance.

Section 5. Acceptance of Offer of Assistance.

(1) Within thirty (30) days of receipt of the offer of assistance, the local board of education shall notify the SFCC of acceptance or rejection of the offer of assistance. The local district response shall indicate the amount of the offer it plans to commit to construction or renovation immediately and the amount it wishes to count as cumulative credit.

(2) A district not responding within thirty (30) days shall be declared ineligible and the offer of assistance shall be withdrawn and redistributed to the eligible recipients. In extenuating circumstances and upon written request within the original thirty (30) day period, a single thirty (30) day extension shall be granted by the Executive Director of the SFCC.

Section 6. Review of Building Plans. The review and approval of building plans shall be the responsibility of the Kentucky Department of Education.

Section 7. Allowable Expenditures of Funds.

(1) Funds available from available local revenue shall be expended before funds generated by bond sales authorized by the SFCC.

(2) Funds available for a project shall be expended for the purpose of major renovation or construction of the identified project except that the balance of funds remaining after the completion of the project may be expended on the next project on the approved facilities plan of the respective districts.

(3) Project costs may include site acquisition, providing architectural and engineering services, financial and legal services, and equipment.

(a) The site acquisition cost shall be limited to the lesser of:

1. The actual cost of acquiring a site; or

2. The fair market value of the site as determined by a qualified appraisal obtained by the SFCC and charged to the project account.

(b) Construction costs shall not include the cost of supplies. An item shall be considered a supply if the item:

1. Does not retain its original shape, appearance, and character with use;

2. Loses its identity through fabrication or incorporation into a different or more complex unit;

3. Is expendable. An item shall be expendable if it is more feasible to replace, rather than repair, an item that has been damaged or has lost or worn parts;

4. Is expected to serve its principal purpose for less than ten (10) years, even with reasonable care and maintenance;

5. Is not an integral part of the building. An item shall be an integral part of a building if it:

a. Is permanently fastened or attached to the building;

b. Functions as part of the building, meaning that the item is essential for the building or site to be used for its intended purpose; or

c. Will cause appreciable damage to the building if removed; or

6. Does not enhance the value of a bondholder's collateral or the project.

(4) SFCC funds or funds from the restricted account shall not be used to:

(a) Purchase a site not approved by the Kentucky Department of Education in accordance with 702 KAR 4:050; or

(b) Reimburse the local board of education for a site acquired before enactment of KRS 157.611.

Section 8. Bond Issuance Procedures.

(1) Upon acceptance of an offer of assistance by a local school district, the SFCC shall determine if the local school district or the SFCC shall issue the bonds. Local school districts may request authority from the SFCC to issue the bonds through a city, county, or other agency and instrumentality of the Board of Education.

(2) If the SFCC grants permission to issue bonds at the local level, the procedures for issuing the bonds shall be as follows:

(a) The local board of education shall obtain the services of a financial advisor;

(b) The contract with the financial advisor shall be submitted to the SFCC for final approval after signature by the local school district and the financial advisor; and

(c) The local board of education shall obtain the services of a licensed trustee, paying agent, and registrar.

(3) If the size of the bond issues is less than $1,000,000 or there is no local participation in the repayment, the SFCC may determine that it is in the best interests of the SFCC and the local school board for the SFCC to manage the bond sale procedures. If the SFCC determines that it is in the best interest of the SFCC and the local school board for the SFCC to manage the bond sale procedures:

(a) The bonds shall be sold in the name of the SFCC;

(b) The SFCC shall obtain the services of a financial advisor;

(c) The SFCC may combine multiple projects into single bond issues; and

(d) The SFCC shall obtain the services of a licensed trustee, paying agent, and registrar.

(4) The following procedures shall be followed by all participating districts in construction of SFCC debt service schedules:

(a) The SFCC's portion of the bond sale shall be limited to a twenty (20) year issue, with a level repayment schedule. The maximum annual repayment amount shall not exceed the offer of assistance from the SFCC.

1. The debt service schedule shall have twenty (20) years of payments based on six (6) month intervals or forty (40) payments. If the payments begin so that only one (1) payment is made in the first fiscal year of the schedule, payments may extend over twenty-one (21) fiscal years, if the amounts of the first and last payments combined do not exceed the amount of one (1) annual payment.

2. Annual payments shall be based on a fiscal year. The fiscal year of the SFCC shall begin on July 1 and end the following June 30. All schedules shall be prepared in a way that annual amounts based on a fiscal year are presented in a clear, easy-to-read format while each interest and principal payment is both segregated and totaled by payment period.

(b) The local school district's portion of the bond sale shall be structured to meet the unique financial needs of the district. Debt service on the bonds issued shall include the minimum amount required for eligibility to participate in the program as certified by the Kentucky Board of Education. The minimum term of the local bond issue to meet eligibility criteria shall be twenty (20) years. At the discretion of the local board of education, the bond issue may include a local contribution to debt service in excess of the minimum required, and the length of the local portion of the repayment schedule may exceed twenty (20) years.

(c) Interest collected and accrued on funds derived from the bond sale shall be allocated to the debt service schedules of the school district and the SFCC in the same proportions as its respective participation in the bond issue.

1. For allocation purposes, each month shall be calculated as thirty (30) days.

2. The accrued interest allocated to the SFCC shall be calculated by multiplying the number of days times the daily interest.

3. The number of days shall be calculated from the issue date of the bonds to the day the bonds are delivered, excluding the day of settlement.

4. If local payments are involved in the bond issue, the accrued interest available to the local district shall be calculated as required by subparagraph 2 of this paragraph.

(d) The proceeds of the bond sale shall be continually invested until expended on the project or until the project is completed. Any remaining proceeds or investment income received after completion of the project shall be applied to the debt service. Credit against the district's and the SFCC's debt service schedule shall be applied in the same percentage as the participation in the bond issue or, if permitted by the bond resolution or indenture, excess funds may be applied to an approved project next in order priority.

(e) A certificate of project completion shall be filed with the SFCC by the local school district. The certification shall summarize the application of the bond proceeds, investment earnings, and any remaining funds from either source. The certificate shall also verify the use of cash contribution as may be required for eligibility by the local school district.

(f) Fees paid to a financial advisor shall be in accordance with this paragraph. A fee that exceeds this schedule shall be paid by the local board of education.

1. The maximum fee for services and expenses of a fiscal agent shall be the highest amount according to the following schedule:

a. $7,500, for any amount of bonds issued;

b. $11 per $1,000, if the bond amount is under $1 million;

c. $10 per $1,000, if the bond amount is between $1 million and $2 million; or

d. $4 per $1,000, if the bond amount is over $2 million.

2. The fee shall:

a. Be based upon the amount of bonds actually issued;

b. Include attorney fees, printing of bonds and official statements, advertising the bond issue, travel of the fiscal agent, and other normal expenses related to the bond closing; and

c. Not include a title search or rating service.

Section 9. Cumulative Credit. Any eligible district which fails in any budget period to receive an allocation of state funds sufficient to fund the first priority project on the approved facilities plan of the district may request the approval of the SFCC to accumulate credit subject to the availability of funds, for its unused state allocation for a period not to exceed eight (8) years. Districts which receive funds in excess of those required to complete the first project may apply those funds to the next priority project on their approved facilities plan. If there are insufficient funds to complete the next project, those funds may accumulate as previously outlined. All fund credit accumulated in this manner shall be forfeited at any time that the local district fails to accept an offer of assistance tendered to the district.

Section 10. Refinancing Savings. Savings that occur as the result of a refinancing in which the SFCC was a participant shall be divided as follows and in the following order or priority:

(1) If the SFCC's amount of participation in the bond issue being refinanced is of such a level that the same amount of annual debt service can be maintained on behalf of the SFCC, it shall be maintained at the same annual amount; therefore, lowering the local district's account for annual debt service payments by the amount of the total savings on the refinancing. Consequently, the bonding capacity of the local district shall be increased allowing the district to pursue its next facility priority. Any accrued interest shall be deemed a part of the total savings.

(2) If the SFCC's amount of participation in the bond issue being refinanced is of such a level that the same amount of annual debt service paid on behalf of the SFCC is greater than the annual debt service of the refinanced bond issue debt, annual savings generated shall be added to that school district's cumulative credit with the SFCC. These credits shall not have an expiration time period for their use.

Section 11. Notwithstanding any other provision of this administrative regulation that conflict with the provisions of this section, and pursuant to the applicable provisions of the American Recovery and Reinvestment Act of 2009, (ARRA), Pub.L. 111-5, and Notices 2009-30 and 2009-35 issued by the U.S. Department of the Treasury, the SFCC shall be authorized to take advantage of any and all provisions to maximize and realize benefits and favorable treatment related to the structuring of financial bond transactions to or on behalf of the eligible school districts even if portions of the prospective financing arrangements conflict with any other provision of this administrative regulation.

History

• RELATES TO: KRS 157.420, 157.440, 157.611, 157.615, 157.617, 157.620, 157.622, Pub.L. 111-5
• STATUTORY AUTHORITY: KRS 157.617(1), 157.622(4)
• NECESSITY, FUNCTION, AND CONFORMITY: KRS 157.617(1) authorizes the School Facilities Construction Commission (SFCC) to promulgate administrative regulations for the orderly conduct of its affairs, including assisting local school districts to meet the school construction needs of the state. KRS 157.622(4) requires the SFCC to promulgate an administrative regulation governing allocations of state funds to eligible school districts. This administrative regulation establishes the procedures the SFCC utilizes in determining eligibility, determining the level of participation of each local school district, making the offer of assistance to the local school districts, determining allowable expenditure of funds, cumulating credit for those districts that maintain their eligibility, but do not have sufficient funds to complete their first priority project, and allocating savings from refinancing.
• History: 750 KAR 001:010. 12 Ky.R. 1962; eff. 7-2-1986; 17 Ky.R. 2875; eff. 5-3-1991; 22 Ky.R. 627; 906; eff. 11-2-1995; 25 Ky.R. 1959; 2369; eff. 4-5-1999; 33 Ky.R. 234; 768; eff. 10-6-2006; 36 Ky.R. 1339; 2062-M; eff. 4-2-2010; Crt eff. 7-25-2018; Crt eff. 5-29-2025.

750 KAR 1:030 Emergency and Targeted Investment Fund {#sec-750-kar-1-030 omnilex-key=us-ky-regs-official--title-750--750 KAR 1:030}

Section 1. Definitions.

(1) "Applicant" means any local public school district that has submitted an application to the authority for an offer of assistance from the emergency and targeted investment fund and meets the definition of a "common school" under KRS 158.030.

(2) "Application" means the information submitted by an applicant to obtain an offer of assistance, including the need for a specific project and financial information necessary to determine eligibility for assistance from the emergency and targeted investment fund.

(3) "Available local revenues" is defined by KRS 157.615(1).

(4) "Commission" means the School Facilities Construction Commission.

(5) "Core academic facility" means a public elementary or secondary educational institution that is under the administrative control of a principal and is not a program or part of another school, except for district-operated schools that are exclusively:

(a) Vocational-technical, special education, or preschool programs;

(b) Instructional programs operated in institutions or schools outside of the district; or

(c) Alternative schools designed to provide services to at-risk populations with unique needs.

(6) "Offer of assistance" means a direct loan or grant made to the applicant from the emergency and targeted investment fund.

Section 2. Eligible Applicants. A local public school district may submit a cover letter and the information requested in Section 3(2) of this administrative regulation for an offer of assistance from the emergency and targeted investment fund if any of the district's core academic facilities meet the criteria set forth in KRS 157.618(3).

Section 3. Submission Requirements.

(1) The commission shall accept applications for offers of assistance from the emergency and targeted investment fund from local public school districts throughout the commission's fiscal year.

(2) Applications for offers of assistance from the fund shall include:

(a) Information about the school facility to which the offer of assistance would be applied and an explanation of any events that contributed to the facility's physical condition;

(b) Certification from local officials, engineers, or the commissioner of education that the facility meets the criteria in KRS 157.618(3);

(c) A proposed timeline for bidding and awarding contracts, planning and design, construction, and equipping the facility;

(d) A copy of a motion or resolution from the local board of education approving the request for an offer of assistance from the fund;

(e) An estimate from a financial advisor hired by the applicant of the amount of funding necessary to bring the facility to the Kentucky Department of Education's current standards; and

(f) Certification from the applicant that the project shall adhere to the Kentucky Department of Education's best practice guidelines.

(3)

(a) Offers of assistance shall be limited to the total cost of the project minus the applicant's available local revenues.

(b) In addition to the provisions in Section 1(3) of this administrative regulation, available local revenues shall also include any unexpected funds in accounts for projects that have been completed when an application is submitted to receive an offer of assistance from the emergency and targeted investment fund.

(4) All information submitted as application for offers of assistance from the fund shall be submitted to the School Facilities Construction Commission at 229 West Main Street, Suite 102, Frankfort, Kentucky 40601. The supporting documentation required by this section shall be accompanied with a letter from the district's superintendent to the commission requesting assistance and summarizing the district's facility needs.

Section 4. Project Execution.

(1) Applicants that receive offers of assistance from the emergency and targeted investment fund shall follow the process established in 750 KAR 1:010, Sections 6, 7(1), (3), and (4), 8, and 10, concerning allowable expenditure of funds, bond issuance procedures, and refinancing savings. 750 KAR 1:010, Section 7(2), shall not apply to this administrative regulation. Emergency and Targeted Investment funds available for a project shall be expended for the project that is identified in the application and any balance of funds remaining after completion of the project shall be applied toward the associated bonds. If the commission's offer of assistance takes the form of a cash grant or loan, any unexpended funds shall be returned to the emergency and targeted investment fund.

(2) Applicants who wish to utilize alternative bond structures shall contact the School Facilities Construction Commission for approval. The executive director shall approve or disapprove the alternative bond structure based on the proposed structure's financial and economic viability.

(3) If a school district receives an offer of assistance from the emergency and targeted investment fund and subsequently, as a result of litigation or insurance, receives funds for the original facility, the district shall reimburse the emergency and targeted investment fund pursuant to KRS 157.618(4).

History

• RELATES TO: KRS 157.618
• STATUTORY AUTHORITY: KRS 157.617, 157.618, 157.622
• NECESSITY, FUNCTION, AND CONFORMITY: KRS 157.618(5) requires the School Facilities Construction Commission to promulgate administrative regulations to establish the process to apply for and receive funds from the Emergency and Targeted Investment Fund. This administrative regulation establishes the application procedure and requirements for the commission to determine eligibility for funding from the emergency and targeted investment fund due to an unforeseen emergency or the expectation that the facility will be rendered structurally uninhabitable.
• History: 41 Ky.R. 680; 1340; eff. 1-5-2015; 43 Ky.R. 1673; 1949; eff. 6-2-2017; Cert eff. 4-29-2024.

Chapter 2 Education Technology Funding Program

750 KAR 2:010 Education Technology Funding Program guidelines {#sec-750-kar-2-010 omnilex-key=us-ky-regs-official--title-750--750 KAR 2:010}

Section 1. Sources of Local Matching Funds. A local public school district shall match the state offer of assistance from:

(1) Available state, local district, and federal funds not otherwise restricted by the appropriate governing agency;

(2) The proceeds of a revenue bond or note that is:

(a) Issued on behalf of a district to purchase technology equipment supported by the district's general fund; and

(b) To be retired within three (3) years from the date of issuance;

(3) A vendor or third party lender lease;

(4) A grant from a private source;

(5) Interest earned by a district on a school building construction account, if the interest is not already committed for expenditure on the construction project; or

(6) Interest earned on the "Education Technology Fund" account.

Section 2. Offers of Assistance.

(1) Funds available within the Education Technology Escrow Account shall be distributed to a local school district for installation of the Kentucky Education Technology System ("KETS") through the cooperative program established by KRS 157.650 to 157.665, and as provided by this section.

(2) Upon certification of the rate of participation to the commission, the commission's executive director shall notify an eligible district in writing of:

(a) The amount the district is entitled to receive; and

(b) The conditions KRS 157.655(1) and 157.660(2) requires the district to meet if it accepts the offer of acceptance.

Section 3. Acceptance of Offers of Assistance.

(1) The local board of education shall notify the commission in writing whether it accepts an offer of assistance within sixty (60) days after receipt of the offer of assistance. The local board's response shall indicate how much of the amount of the offer the district plans to accept. If a school district does not have local matching funds available when the commission's offer of assistance is received, the district may accumulate credits for up to three (3) years from the date of the offer of assistance. If a district does not respond within sixty (60) days after receipt of the offer of assistance, it shall be deemed to have rejected the offer of assistance and the amount of the offer shall be redistributed to remaining eligible districts. Upon written request received from a district within the original sixty (60) day period, a single thirty (30) day extension in responding to an offer of assistance shall be granted by the executive director.

(2) The local school district shall provide to the commission a copy of its board's minutes reflecting acceptance of an offer of assistance. Upon acceptance of an offer of assistance, a local school district shall establish an "Education Technology Fund", which shall bear interest on the balance in the fund. The interest received on the fund shall be applied to meet educational technology needs in the school district. The district shall provide the commission evidence certifying that matching funds have been committed.

History

• RELATES TO: KRS 157.615, 157.650, 157.655, 157.660, 157.665
• STATUTORY AUTHORITY: KRS 157.615, 157.655(3), 157.660(3)
• NECESSITY, FUNCTION, AND CONFORMITY: KRS 157.617(1) authorizes the commission to promulgate administrative regulations necessary for the orderly conduct of its affairs, which includes the education technology funding program. KRS 157.660(3) requires the commission to promulgate administrative regulations by which a district that receives an offer of assistance but does not have the local match shall be able to accumulate a credit for the state offer of assistance for a period not to exceed three (3) years. This administrative regulation establishes the procedures and guidelines for determining the eligibility and level of participation for a local public school district, for making an offer of assistance to a school district, for verifying a local public school district funding match, and for the accumulation of credits by a local public school district that maintains its eligibility.
• History: 750 KAR 002:010. 20 Ky.R. 716; 967; 1617; eff. 11-4-1993; 24 Ky.R. 179; 576; eff. 9-4-1997; 25 Ky.R. 912; 1878; eff. 2-4-1999; Crt eff. 7-25-2018; Crt eff. 5-29-2025.