BILL NUMBER: S6365

SPONSOR: GALLIVAN
 
TITLE OF BILL:  An act to legalize, validate, ratify and confirm the
actions of the Panama central school district notwithstanding the fail-
ure 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 closing 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 limited 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 Vetoed Memo 357
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.