HB 318 Bill Analysis

8/14/2019 HB 318 Bill Analysis

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Ohio Legislative Service CommissionFinal Analysis Daniel M. DeSantis

Sub. H.B. 318128th General Assembly

(As Passed by the General Assembly)

Reps. Sykes, Bolon, Chandler, DeBose, Foley, Hagan, Harris, Koziura, Letson, Luckie,Stewart, Szollosi, Ujvagi, B. Williams, Winburn, Yates, Yuko

Effective date: March 23, 2010; Sections 6, 7, 10, 11, and 12 and certain other provisionseffective December 22, 2009

ACT SUMMARY

Postpones for two years the last of five previously scheduled reductions in state

incometaxrates.

Exemptsaschooldistrictfromtherequirementtoprovidealldaykindergartentoall

kindergarten students in the 20102011 school year, if the board of education

submits to the Superintendent of Public Instruction (1) a resolution requesting a

delay and specifying justifications for the delay and (2) a plan for fully

implementingalldaykindergartenin2012.

Requires the Chancellor of the Ohio Board of Regents, in consultation with

representativesofstateinstitutionsofhighereducationandwithControllingBoard

approval,todesignateoneconstructionprojectateachofthreedifferentinstitutions

as a Construction Reform Demonstration Project that is to utilize alternative

methodsofconstructiondeliveryinaccordancewiththeact.

Makeschangestoeducationappropriationsforfiscalyears2010and2011.

MakeschangestoStateEmploymentRelationsBoardappropriationsforfiscalyears

2010and2011.

MakeschangestoDepartmentofMentalHealthappropriationsforfiscalyears2010

and2011.


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Legislative Service Commission -3- Sub. H.B. 318

income tax rates for each year to assist taxpayers in calculating their estimated tax

payments;theratespublishedfor2009reflectthefinal4.2%ratedecreaseprescribedby

former law. Toavoidany interest charge,a taxpayermustpayat least22.5%of the

currentyearsliabilityeachquarter. Anydeficiency inaquarterlypaymentcarriesan

interest penalty until the deficiency is paid. The rate of interest is the same rate

charged forotherunpaid income taxes,and is set eachyear; for2009, the rate is 5%

(0.42%permonth). Theinterestpenaltydoesnotapply,however,ifataxpayerpaysan

amount at least equal to 90%of the currentyears liabilityor 100%of thepreceding

yearsliability.

Theactstatesthattheinterestpenaltywillnotbechargedforunderpaymentsof

estimated taxesfor taxableyearsending in2009 if thepaymentswouldhavesatisfied

the90%ofcurrentyearliabilityor100%ofprecedingliabilitythresholdscomputedon

thebasisofthelowertaxratesthatwouldhavegoneintoeffectfor2009aspreviously

scheduled. Thewaiver of the interest penalty applies to estimated paymentsmade

beforethe

effective

date

of

the

provision

(i.e.,

before

the

effective

date

of

Section

5).

Indexing

Theactdoesnotaffectongoing laws requirement that the incomebracketsbe

adjusted to correspondwith anypercentage increase in theGrossDomesticProduct

deflatorindex,beginningin2010. (Theeffectoftheindexingadjustmentistocausea

generalreductionintaxliability,asgreaterportionsofeverytaxpayerstaxableincome

issubjecttolowermarginalrates.)

All-day kindergarten

(Section9)

The act enables a school district to obtain from the Superintendent of Public

Instruction a oneyear delay of the continuing law requirement to provide allday

kindergarten for all kindergarten students,without having to apply for awaiver as

otherwise required in that law. The delay would exempt the district from the

requirementforthe20102011schoolyearonly. Thedistrictmayseekthedelayforall

ofitskindergartenstudentsorjustaportionofthem. TheSuperintendentmustgrant

the delay if the district board of education submits to the Superintendent (1) a

resolution formallyrequesting thedelayandprovidingjustificationforseeking itand

(2) a plan for fully implementing the allday kindergarten requirement in 2012.2

2Thereferenceto 2012 withrespecttofull implementationprobablymeansfiscalyear2012(the2011

2012schoolyear),ratherthancalendaryear2012,butthatisnotclear.


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Presumably, though, the district could receive subsequent exemptions from the

requirementunderthewaiverprovisionofcontinuinglaw.

Construction Reform Demonstration Projects

(Section8)

During fiscal year 2010, the Chancellor of the Ohio Board of Regents, in

consultationwith representatives of state institutions of higher education andwith

ControllingBoardapproval,isrequiredbytheacttodesignateoneconstructionproject

ateachof threedifferent institutionsasaConstructionReformDemonstrationProject

that ispermitted toutilizealternativemethodsofconstructiondelivery inaccordance

withtheact.

Selection of the projects

In selecting projects to be designated Construction Reform Demonstration

Projects,theChancelloristoconsiderthefollowing:

(1) Thegeographicdistributionoftheprojectsthroughoutthestate;

(2) The extent to which the projects, when considered together, represent

different types of public construction projects, such as new construction, building

renovation, and infrastructure replacement;will have different uses; are of different

sizes;andwillutilizedifferentmethodsofconstructiondelivery.

Tobeeligible fordesignationby theChancellor, the state institutionofhigher

education proposing the project must demonstrate all of the following to the

Chancellor:

(1) Theproject is amenable to theuseof, andwouldmakeuseof, anyof the

alternativemethodsofconstructiondeliverydescribedbelow.

(2) Theinstitutionhasacomprehensive,crediblefundingplanthatdoesnotrely

onanysubsequentstatecapitalmoney.

(3) The institutionhas satisfiedall internal requirementsof the institution that

arenecessarytoallowbiddingontheprojecttobeginbeforetheendoffiscalyear2010.

(4) The institution has a reasonable plan formeeting or exceeding the EDGE

ContractingGoalfortheproject,asdeterminedinaccordancewiththeact,throughthe

expectedprovisionofcontractstoqualifiedEDGEbusinessenterprises.

(5) TheprojectwillqualifyforLEEDcertification.


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Authorized alternative methods of construction delivery

Each state institution of higher education undertaking aConstructionReform

DemonstrationProjectmust,notwithstanding any law to the contrary,utilizeoneor

more of the following alternativemethods of construction delivery to develop the

project:

(1) Construction manager at risk. Construction manager at risk means apersonwith substantialdiscretion and authority toplan, coordinate,manage,direct,

andconstructallphasesofaprojectfortheconstruction,demolition,alteration,repair,

or reconstruction of any publicbuilding, structure, or other improvement andwho

provides the institution aguaranteedmaximumpriceutilizing anopenbookpricing

method,wherein the constructionmanager at riskprovides the institution allbooks,

records,documents,andotherdatainitspossessionrelatedtoitself,itssubcontractors,

and material suppliers pertaining to the bidding, pricing, or performance of a

constructionmanagementcontract. Theconstructionmanageratrisk istobeselected

usingaqualificationsbasedselectionprocess,includingbestvaluecriteria. Bestvaluecriteria includes technicaldesign, technicalapproach,qualityofproposedpersonnel,

managementplan,orother factors thataredetermined toderiveoroffer thegreatest

valuetotheinstitution.

(2) Design build. Design build means services that form an integrateddeliverysystemforwhichapersonisresponsibletoaninstitutionforboththedesign

and construction, demolition, alteration, repair, or reconstruction of a public

improvement. Thedesignbuilderistobeselectedusingaqualificationsbasedselection

process,including

best

value

criteria,

and

using

abridging

design

delivery

in

which

the

institution utilizes a criteria or concept architect to develop the program of

requirements and thepreliminaryproject scope, and tovalidate that the institutions

designintentisimplemented.

(3) Generalcontracting. Generalcontracting meanscontractingthatisexemptfrom the requirement ofChapter 153.of theRevisedCode to awardmultipleprime

contractsforaprojectupto$600,000intotalprojectvalue.

(4) Design assist. Design assist means the procurementmethodbywhich,prior

to

completion

of

design,

aconstruction

contract

may

be

awarded

on

abest

value

basis pursuant towhich a contractor provides design assistance to the architect or

engineerofrecordthroughadesignprofessionalseparatelyretainedbythecontractor.

A design assist method also may be used in conjunction with any of the other

constructiondeliverymethodsdescribedabove.


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Theactspecifies,however,thatindevelopingtheirConstructionDemonstration

ReformProjects, the institutionsarenotexemptfrom theapplicableprovisionsof lawconcerningprevailingwage,bonding,EDGE,retainage,promptpay,equalemployment

opportunityandaffirmativeactionconstructioncompliance,domesticsteel,andpublic

noticeandadvertising.

EDGE contracting goals and requirements

Each institution undertaking a Construction ReformDemonstration Project is

requiredtousebesteffortstoseektomaximizeEDGEbusinessenterprisecontracting

ontheproject,baseduponpercentagegoalsdeterminedasfollows:

For each project, the Equal Opportunity Division of the Department of

AdministrativeServicesmustdeterminetheDemonstrationEDGEPercentagebytaking

into consideration the percentage goal stated in the TechnicalAssistanceGuide for

FederalConstructionContractsforthecountyinwhichtheprojectwillbelocatedand

anyotherfactorsdeemedrelevantbytheDivision.

Foreachproject,theDivisionistoapplytheDemonstrationEDGEPercentage

tothetotalprojectcosttoestablishtheprojectsEDGEContractingGoal.

Allbusinessenterprisescertifiedasminoritybusinessenterprisesunderthelaws

of this state as of the effectivedate of thisprovision of the act are tobe considered

EDGEbusiness enterprises for purposes of contracting on any of the Construction

ReformDemonstrationProjects.

Theact

requires

that

Division

to

assist

institutions

in

maximizing

the

utilization

ofEDGEcontractorsonConstructionReformDemonstrationProjects,asfollows:

At each of the following EDGE compliance check points, theDivisionmust

certifythattheprojectisinreasonableattainmentoftheEDGEcontractinggoalforthe

project:

(a) Prior to each contract being awarded, based on the submission of a

reasonable,credibleplanformeetingthegoal;

(b)Once

monthly

for

each

contract

awarded

for

work

on

the

project.

Indeterminingwhethercertification iswarranted, theDivisionmayundertake

onsite inspectionsandmayreviewanycontractorrecordsrelatedtotheprojectthat it

deems necessary. No payment to a contractor can be made in the absence of a

certification.


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TheDivisionalsomustestablishastakeholderadvisorypanelconsistingoftwo

representativesoftheOhioLegislativeBlackCaucus,twominoritycontractors,andthe

Chancellor. The panel is to consult with and advise the Division regarding its

preparationofregularreports totheGovernor,theHouseofRepresentatives,and the

SenateregardingthesatisfactionofEDGEcontractinggoalsontheConstructionReform

Demonstration Projects. The panel is also to advise the Division on strategies for

maximizing participation of EDGE contractors and ways that the Division could

provide problemsolving assistance to the institutions undertaking a Construction

Reform Demonstration Project and the contractors on the projects to advance the

achievementofEDGEcontractinggoalsonthoseprojects.

The act requires the institutions undertaking a Construction Reform

DemonstrationProject topay to theDepartmentofAdministrativeServices, for staff

andotherexpensesassociatedwiththeseresponsibilitiesoftheDivision,anaggregate

amountequal to$150,000peryear ineachyear inwhichanyof theprojects remains

uncompleted.The

portion

of

the

$150,000

to

be

paid

by

any

one

of

the

institutions

with

projectsunderwayduringthatyearistobebasedontheexpendituresofeachprojectin

thatyearcomparedwiththeotherprojects,allasdeterminedbytheDivision.

Reporting requirements

The institutions that are undertaking a Construction Reform Demonstration

Projectare required tocooperatewithandprovide theChancellorwithall requested

information in order to facilitate theChancellors study of the cost effectiveness and

efficiencies associatedwith the use of the alternative construction deliverymethods.

TheChancellor

must

prepare

semi

annual

reports

of

the

Chancellor

sfindings

and

a

finalreport. Acopyofeachreport is tobesubmitted to theGovernor, theHouseof

Representatives,andtheSenate.

Theinstitutionsmay,attheirdiscretionandinconsultationwiththeChancellor,

transferfundstotheBoardofRegentstoassistincoveringthecostsassociatedwiththe

Chancellorsstudyandthepreparationofthereports.

Expiration

TheactstatesthattheseprovisionsexpireonthedatethatalloftheConstruction

ReformDemonstrationProjectshavebeencompletedoronJanuary1,2014,whichever

islater.


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Education appropriation changes

(Sections3,4,6,7,and12)

The act decreases appropriation item 200612, Foundation Funding, by

$285,236,905 in fiscalyear 2010 andby $566,271,428 in fiscalyear 2011 and increases

appropriationitem

200550,

Foundation

Funding,

by

the

same

amount.

These

appropriationshavethesamepurposetopaystateformulaaidobligationsforschool

districts,communityschools,andjointvocationalschooldistricts. Theappropriations,

however,havedifferentrevenuesources. Item200612ispaidfromtheLotteryProfits

Education Fund (Fund 7017), which receives revenue from the profits of the state

lottery. Item200550 ispaid from theGeneralRevenueFund (GRF). The two largest

sourcesofrevenuefortheGRFarethesalesandusetaxandthepersonalincometax.

Theactalsoprovides that if theunobligatedbalanceof theGRFat theendof

fiscalyear2010exceeds$190.0million, theactreappropriates in fiscalyear2011up to

$20,761,069toGRFappropriationitem200511,AuxiliaryServices,andupto$8,971,578to GRF appropriation item 200532,Nonpublic Administrative Cost Reimbursement.

TheactalsoprovidesthatiftheunobligatedbalanceoftheGRFattheendoffiscalyear

2011exceeds$30.0million,theDirectorofBudgetandManagementmusttransferupto

$29,732,647, but not to exceed the amount of unexpended, unencumbered GRF

appropriations for theDepartment remainingat theendof fiscalyear2011, from the

GRFtotheAuxiliaryServicesStabilizationFund,which iscreatedbytheact. Theact

then requires the Superintendent of Public Instruction to seek Controlling Board

approval to expend the cash in thenewFund forAuxiliary Services andNonpublic

AdministrativeCost

Reimbursement.

Becausetheseprovisionsrelatetoappropriationsforcurrentexpenses,theyare

notsubjecttothereferendumasprovided inArticle II,Section1d,OhioConstitution.

Therefore,theappropriationchangetakesimmediateeffect.

State Employment Relations Board appropriation change

(Sections3,4,10,and12)

The act increases appropriations in the State Employment Relations Board

budgettoGRFappropriationitem125321,OperatingExpenses,by$1millioninFY2010and inFY 2011. These sameamountsare tobe transferred from theUnemployment

CompensationSpecialAdministrativeFund(Fund4A90)usedbytheOhioDepartment

of Job and Family Services to the GRF. Because this provision relates to an

appropriation forcurrentexpenses, it isnotsubject to thereferendumasprovided in

Article II, Section 1d,OhioConstitution. Therefore, the appropriation change takes

immediateeffect.


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Department of Mental Health appropriation change

(Sections3,4,and12)

Theact increasesappropriations intheDepartmentofMentalHealthbudgetto

GRFappropriation item334408,CommunityandHospitalMentalHealthServices,by

$7.35million

in

FY

2010

and

in

FY

2011.

Because

this

provision

relates

to

an

appropriation forcurrentexpenses, it isnotsubject to thereferendumasprovided in

Article II, Section 1d,OhioConstitution. Therefore, the appropriation change takes

immediateeffect.

HISTORY

ACTION DATE

Introduced 10-16-09

Reported, H. Finance & Appropriations 10-20-09Passed House (55-44) 10-21-09Reported, S. Finance & Financial Institutions 12-17-09Passed Senate (17-15) 12-17-09House concurred in Senate amendments (54-42) 12-17-09

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Documents

HB 318 Bill Analysis