A bill that sought to encourage private investment in building public schools has been amended into a study and passed by the House of Delegates on second reader.  HB 349 would have excluded lease payments made by a local board of education to a private entity holding title to school property from the State’s public school maintenance of effort requirement.  The bill envisions privately funded schools to be built and leased back to the county school board, with the title to the property reverting back to the county board at the end of the lease.

The amended bill requires the Department of Legislative Services to conduct a study of the use of lease payments or other alternative financing methods by local school systems for school construction. In conducting the study, the Department shall examine how lease payments and alternative financing methods affect the maintenance of effort calculation.

During the hearing on the bill, and in written testimony, Delegate Vitale, the bill’s sponsor referenced costs for construction for a new high school in Severna Park, Anne Arundel County, finding that a privately funded structure would cost less per square foot than construction performed through the typical process.  Anne Arundel County can have more than 2,000 students per school and the last high school built in Anne Arundel County in 1982, according to the Delegate.  This bill is an outside-of-the-box solution for this problem, the Delegate described.

MACo testified in favor of the original bill that would have treated lease payments to private entities the same way as debt service paid on school construction bonds.  As described in our testimony,

This bill would encourage counties to coordinate private investment in school construction, and allow for funding that might have been spent on school construction costs to be used to support school and county government operations in other ways. . . Private investment in school construction should not be impeded by rigid State funding laws, and this bill simply conforms their treatment to the obvious comparison: debt service.

For more information, see the bill information page, bill text, or the fiscal note.  If passed into law, the report required by HB 349 will be due on December 15, 2014.