CHAPTER 439

FORMERLY

SENATE BILL NO. 374

AS AMENDED BY

SENATE AMENDMENT NO. 1

AND

HOUSE AMENDMENT NOS. 2 & 3

AN ACT AMENDING TITLE 14 OF THE DELAWARE CODE RELATING TO PUBLIC EDUCATION FINANCIAL ACCOUNTABILITY.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE :

Section 1. Amend 14 Del. C § 1801 by deleting the phrase “means the Christina School District” and substituting in lieu thereof the phrase “shall include all school districts, including vocational-technical school districts”.

Section 2. Amend 14 Del C. §1802 (a) 1. by deleting the word “two” as it appears in said subsection and substituting in lieu thereof the word “one”.

Section 3. Amend 14 Del. C. §1802 (b) by deleting the word “with” as it appears in the second sentence and substituting in lieu thereof the word “without”. Further amend 14 Del C. §1802 (b) by inserting after “thereto,” the phrase “the right to approve district tax rates, the right to request drawdown of state financial assistance if applicable, the right to approve financial reporting to the local board of education, the right to approve accounting policies, procedures and reports, the right to require a Financial Responsibility Committee be established by the local school board comprised of one (1) or more members of the said board and/or residents of the district whose responsibility shall be to examine and report on the financial status of the district”.

Section 4. Amend 14 Del. C. §1802(b) by deleting the phrase “,except that in the case of a charter school such authority shall only extend to funds provided to the charter school either by the state or through any grant administered by the State” as it appears therein.

Section 5. Amend 14 Del C. §1802 by designating the existing subsection (d) as (e) and inserting a new subsection (d) to read:

“(d) The district shall reimburse the state for all salary and related costs of the Financial Recovery Team.”

Section 6. Amend § 1804, Title 14 of the Delaware Code by deleting said section in its entirety.

Section 7. Amend 14 Del. C §1507 by deleting said section in its entirety and substituting in lieu thereof the following:

Ҥ1507. School district financial position reports.

(a) Beginning with the fiscal year ending June 30, 1997, all public school districts, including vocational-technical school districts, both sometimes referred to herein as ‘district,’ are required to submit to the Secretary of Education, three financial position reports, one on or before February 1, one on or before May 1 and one on or before August 31 of each year. The format of the reports shall be as prescribed by the Secretary consistent with the provisions of this section, and also shall establish that the school district has sufficient year-end carryover balances, including any non-state funded share, to fund at least one month of local payroll for the next ensuing fiscal year.

The financial position report due by February 1 shall project a school district's current fiscal year ending balance in its local current expense revenue accounts after taking into consideration all remaining local operating obligations that can be reasonably estimated. To the extent that a district has General Fund balances in their Division III Equalization Accounts, Division II -- All Other Costs and Energy Accounts, or in an approved cash option account, such balances may be identified as offsets to any local obligation. If the financial position report shows a deficit occurring prior to the close of the current fiscal year, the district shall indicate what steps it will take to assure that its obligations are satisfied in the current fiscal year. If the financial position report shows a current expense deficit for the current fiscal year, or a surplus that is less than the amount required to satisfy one month's full local payroll and other operating obligations for the ensuing fiscal year, the district shall also indicate what steps it plans to take in the ensuing fiscal year to assure that its future year-end balance will be sufficient to cover at least this amount.

The financial position report due by May 1 shall project a school district's current fiscal year ending balance in its local current expense revenue accounts after taking into consideration all remaining local operating obligations that can be reasonably estimated. To the extent that a district has General Fund balances in their Division III Equalization Accounts, Division II -- All Other Costs and Energy Accounts, or in an approved cash option account, such balances may be identified as offsets to any local obligation. If the financial position report shows a deficit occurring prior to the close of the current fiscal year, the district shall indicate what steps it will take to assure that its obligations are satisfied in the current fiscal year. If the financial position report shows a current expense deficit for the current fiscal year, or a surplus that is less than the amount required to satisfy one month's full local payroll and other operating obligations for the ensuing fiscal year, the district shall also indicate what steps it plans to take in the ensuing fiscal year to assure that its future year-end balance will be sufficient to cover at least this amount.

The financial position report due on or before August 31 of the ensuing fiscal year shall be focused exclusively on local district payroll obligations through and including the October 15 payroll cycle. This report shall compare the district's year-end current expense balances from the previous fiscal year, and its preliminary Division III Equalization appropriation for the current year (which amount shall be based on 90% of the Division III amount earned in the previous fiscal year), with the district's projected local salary obligations through October 15. To the extent that this report shows a deficit, the district shall report what steps it will take to meet its payroll obligations through October 15. If the August 31 report projects an October 15 surplus that is less than the amount required to cover 1 month's full local payroll cycle, the district shall also indicate what steps it plans to take to attempt to assure that such a minimum balance will be in place in the subsequent fiscal year.

Whenever the August 31 report shows that a district will be unable to meet all or some of its payroll obligations through October 15, the district may meet those obligations by requesting from the Secretary of Education with the approval of the Secretary of Finance and the Director of the Office of Management and Budget an advance of state funds in an amount sufficient to cover the district's payroll obligations through October 15. Upon such request and approval, the Secretary of Finance shall cause to have the requested funds advanced to the district, and the district shall reimburse the State for those funds no later than November 15 of the same year.

The financial position report shall have been reviewed and approved by the school board of each reorganized school district and be made a part of the public record of that school district. Three copies of each report shall be submitted to the Secretary of Education by the dates specified above. The Secretary of Education shall provide copies of the submitted reports to the Director of the Office of Management and Budget and the Controller General within 5 working days.

(b) Notwithstanding any provision in this Code to the contrary, a minimum of 25% of all projected state funding to any school district, including a vocational-technical school district shall be withheld until the submission of the financial position report required to be filed on or before August 31st pursuant to the provisions of subsection (a) of this section, and the acceptance thereof as satisfactory in the sole discretion of the Secretary of Education, and the certification of the school district’s unit count in accordance with this Code and any rule or regulation promulgated in accordance therewith.

(c) If a school district materially alters its financial position after providing any report required by this section, the school district shall provide financial impact statements to the Department of Education, the Office of Management and Budget and the Office of the Controller General, specifying the nature of such change and its impact upon its previously filed financial position report.

(d) Any school district that fails to comply with this section or any provision herein shall be subject to review, including all of its books and financial records, by the Department of Education, the Office of Management and Budget and the Office of the Controller General in order to determine whether the school district is financially stable. ”

Section 8. Amend 14 Del C. §1507A by deleting said section in its entirety.

Section 9. The provisions of this Act shall be effective upon enactment.

Section 10. If any provision of this Act or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of the Act which can be given effect without the invalid provision or applications, and to that end the provisions of this Act are declared to be severable.

Section 11. Amend Subchapter I, Chapter 18, Title 14 of the Delaware Code, by striking the phrase “District and Charter School” as it appears in the title of Subchapter I and inserting in lieu thereof “School District”.

Section 12. It is expected that subsequent legislation will be proposed prior to January 15, 2007 to implement a plan to compensate local school board members for their service on a public school district board. Such legislation shall consider compensation limits, optional versus mandatory remuneration and expenses.

Section 13. Amend § 1803, Title 14 of the Delaware Code by deleting the phrase “and any resident members of the Financial Responsibility Committee as established in § 1804 of this Chapter”.

Approved August 17, 2006