BILL NUMBER: S7383           Revised 08/15/18

SPONSOR: YOUNG
 
TITLE OF BILL:

An act to legalize, validate, ratify and confirm the actions of the
Panama central school district notwithstanding the failure to timely
file final building cost reports with the education department

 
PURPOSE OR GENERAL IDEA OF BILL:

Legalizes, validates, ratifies and confirms the actions of the Panama
central school district regardless of the failure of such district to
timely file final building cost reports.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section 1. Allows the Education Department to consider the final cost
report for Panama Central School as legalized, validated, ratified and
confirmed for approved building projects completed prior to December 31,
2012 recognizing that the failure to submit the report in a timely
              

manner was an inadvertent administrative or ministerial oversight.

Section 2. Provides that the Commissioner of the State Education Depart-
ment shall not recover from the Panama Central School District any
penalty arising from the late filing of a final cost report pursuant to
section 31 of part A of chapter 57 of the laws of 2012, provided that
any amounts already so recovered shall be deemed a payment for money due
for prior years pursuant to paragraph c of subdivision 5 of section 3604
of the education law and shall be paid to the Panama Central School
District pursuant to such provision.

Section 3. Establishes that the act shall take effect immediately.

 
JUSTIFICATION:

The Panama Central School District was assessed a $4.9 million penalty
as a result of a late final cost report from a 2005 capital project.  In
2005, the Panama Central School District completed a small maintenance
project that was closed out. In 2009, Panama Central School District
verified that this project was complete as shown on the state website.
Panama then started a new project in 2008.

In 2012, Panama Central School reviewed the state's website to find that
they had an "open" project with a substantial completion certificate
filed on August 28, 2002 and December 12, 2005. This information was not
previously made available to Panama Central School when they were clos-
ing out their 2005 building project. This meant that Panama Central
School neglected to file a Final Cost Report for a building project with
the Office of Facility Planning of the State Education Department (SED)
within the established time frame.

In the 2013-14 State Budget, a plan was negotiated that allowed for a
10-year repayment plan to help the school manage what remained a tremen-
dous penalty for a small rural school district. Also provided in the
2013-14 State Budget was a $500,000 Supplemental Valuation Impact Grant
through the Education Department/Aid to Localities budget bill, which
was provided for again in the 2014-15 State Budget, the 2015-16 State
Budget, the 2016-17 State Budget, the 2017-18 State Budget, and the
2018-19 State Budget. This bill would forgive the remaining amount, $1.9
million, of the assessed penalty.  Without full forgiveness of this
penalty, the students who attend Panama Central School and the
District's taxpayers will be left holding the bag for administrative
oversights made over a decade ago.

With our small, rural schools already facing the heavy burdens of limit-
ed state aid, tax revenues and loss of enrollment and tax base, Panama
Central School faces particularly significant cash flow problems that
threaten its very operations if not addressed.

Panama and Clymer Central School Districts previously laid plans to
merge but the community had voiced tremendous concern over inheriting
Panama's final cost report penalties, leading to the merger being voted
down in November 2017. As such, locally, many individuals continue to
view this overwhelming obstacle as a key factor in the merger vote's
failure.

 
PRIOR LEGISLATIVE HISTORY:

2018: S.7383/A.9730 Passed both houses
2017: S.6779/A.8302-A Vetoed Memo 170
2015,2016: S.7416/A.10045 Passed Senate

 
FISCAL IMPLICATIONS:

$1.9 million in remaining final cost report penalty

 
EFFECTIVE DATE:
This act shall take effect immediately.