O.C.G.A. § 20-2-506 (2019)
Definitions; authority to enter into multiyear lease, purchase, or lease purchase contracts
(a) As used in this Code section, the term:
(1) “Energy cost savings measure” means a facility alteration, a training program incidental to the contract, or an equipment purchase to be used in building a retrofit, addition, or renovation or in new construction which reduces energy or water consumption, wastewater production, or operating costs and includes, but is not limited to, any one of the following:
(A) Insulating the building structure or structures within the building, including caulking or weather-stripping;
(B) Installing storm windows or doors, multiglazed windows or doors, heat absorbing or heat reflective glazed and coated window or door systems, or other window or door systems designed to reduce energy consumption;
(C) Installing automated or computerized energy control systems;
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(D) Modifying or replacing heating, ventilating, or air-conditioning systems;
(E) Replacing or modifying lighting fixtures to increase the energy efficiency of the lighting system;
(F) Improving indoor air quality to conform to the applicable state or local building code requirements;
(G) Installing energy recovery systems;
(H) Installing cogeneration systems that produce steam or forms of energy such as heat and electricity for use primarily within a building or complex of buildings;
(I) Life safety measures that provide long-term operating cost reductions and are in compliance with state and local codes, and building operation programs that reduce operating costs; and
(J) Any other measure not otherwise defined in this Code section which is designed to reduce energy or water consumption, reduce wastewater production, avoid capital costs, or achieve similar efficiency gains by the county, independent, or area school system.
(2) “Guaranteed energy saving contract” means a contract for the implementation of one or more energy cost savings measures providing that all payments except obligations on termination of the contract before its expiration are to be made over time and the energy cost savings are guaranteed to the extent necessary to make payments for the contract.
(b) Except as otherwise provided in this Code section, each county, independent, or area school system in this state shall be authorized to enter into multiyear lease, purchase, or lease purchase contracts of all kinds for the acquisition of goods, materials, real and personal property, services, and supplies, provided that any such contract shall contain provisions for the following:
(1) The contract shall terminate absolutely and without further obligation on the part of the school system at the close of the calendar year in which it was executed and at the close of each succeeding calendar year for which it may be renewed as provided in this Code section;
(2) The contract may provide for automatic renewal unless positive action is taken by the school system to terminate such contract, and the nature of such action shall be determined by the school system and specified in the contract;
(3) The contract shall state the total obligation of the school system for the calendar year of execution and shall further state the total obligation which will be incurred in each calendar year renewal term, if renewed;
(4) The total combined annual payments for contracts under this Code section and contracts of such school system under Article IX, Section III, Paragraph I of the Constitution in any calendar year, excluding guaranteed energy savings contracts, shall not exceed an amount equal to 7.5 percent of the total local revenue collected for maintenance and operation of the school system in the most recently completed fiscal year; provided, however, that the foregoing limitation shall not apply to contracts with other public educational entities, including school systems in this state, for the education of students; and
(5) For each guaranteed energy savings contract, a school system shall document the historical energy cost of each structure affected for a period of at least one year prior to the date of the contract and shall document the monthly energy cost and monthly energy savings of each affected structure for the life of the contract.
(c) In addition to the provisions enumerated in subsection (b) of this Code section, any contract authorized by this Code section may include:
(1) A provision which requires that the contract will terminate immediately and absolutely at such time as appropriated and otherwise unobligated funds are no longer available to satisfy the obligations of the school system under the contract; or
(2) Any other provision reasonably necessary to protect the interests of the school system.
(d) Any contract developed under this Code section containing the provisions enumerated in subsection (b) of this Code section shall be deemed to obligate the school system only for those sums payable during the calendar year of execution or, in the event of a renewal by the school system, for those sums payable in the individual calendar year renewal term.
(e) No contract developed and executed pursuant to this Code section shall be deemed to create a debt of the school system for the payment of any sum beyond the calendar year of execution or, in the event of a renewal, beyond the calendar year of such renewal.
(f) Any such contract may provide for the payment by the school system of interest or the allocation of a portion of the contract payment to interest, provided that the contract is in compliance with this Code section.
(g) When any local board of education on or after July 1, 1990, submits to the electors of its local school district the proposed issuance
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of any bonded debt and such proposal is defeated by the electors, that school system shall be prohibited for a period of four calendar years immediately following such election from entering into any multiyear contract for the lease, purchase, or lease purchase of any goods, materials, real or personal property, services, or supplies which are the same as or substantially similar to items which were proposed to be funded through such proposed issuance of bonded debt.
(h) Nothing in this Code section shall restrict school systems from executing reasonable contracts arising out of their proprietary functions.
(i) Each school system in this state is authorized to accept the title to property subject to a contract for lease purchase or installment purchase and is authorized to transfer title back to the vendor in the name of the school district in the event that the contract is not fully consummated.
(j) Any contract developed under this Code section shall comply with the applicable provisions of the Official Code of Georgia Annotated, and regulations thereunder, relating to state allocated capital outlay funds and entitlements.
(k) A county, independent, or area school system may use proceeds from local option sales taxes collected for educational purposes for payment on a contract developed in accordance with the provisions of this Code section; provided, however, that the scope of services included in such contract are permissible according to the referendum authorizing the collection of such taxes.
(l) A county, independent, or area school system may enter into guaranteed energy savings performance contracts with each qualified energy savings provider selected in accordance with the provisions of this Code section. School systems may elect to implement the energy cost savings measure in one or more phases with the selected qualified energy services provider.
History
Code 1981, § 20-2-506, enacted by Ga. L. 1990, p. 1035, § 2; Ga. L. 1996, p. 1075, § 1; Ga. L. 1997, p. 919, § 1; Ga. L. 1998, p. 128, § 20; Ga. L. 2021, p. 266, § 1/SB 213. The 2021 amendment, effective July 1, 2021, substituted the present provisions of paragraph (a)(1) for the former provisions, which read: “‘Energy cost savings measure’ means a facility alteration designed to reduce energy consumption or
operating costs and may include one or more of the following:”; deleted “and” at the end of subparagraph (a)(1)(H); substituted “; and” for a period at the end of subparagraph (a)(1)(I); added subparagraph (a)(1)(J); and added subsections (k) and (l).
Annotations
Code Commission notes. Pursuant to Code Section 28-9-5, in 1990, a comma was inserted following “1990” in subsection (f) (now subsection (g)).
Pursuant to Code Section 28-9-5, in 1997, a semicolon was substituted for a period at the end of paragraph (b)(4). Editor’s notes. Ga. L. 1996, p. 1075, § 2, not codified by
the General Assembly, provides: “This Act shall become effective July 1, 1996. Nothing in this Act shall be construed to invalidate or impair any contract entered into prior to said effective date.”
JUDICIAL DECISIONS Editor’s note. - In light of the similarity of the statutory provisions, decisions under former Code 1933, § 32-928, which was subsequently repealed but was succeeded by provisions in this Code section, are included in the annotations for this Code section. “Appropriation” means funds received from all sources for the support of the public schools for the current fiscal year. Lewis v. Board of Educ., 183 Ga. 687, 189 S.E. 233, 1936 Ga. LEXIS 157 (1936) (decided under former Code 1933, § 32928). If indebtedness created subsequent to estimate of sums due. - If an alleged indebtedness was created subsequently to the estimate of sums due and unpaid forwarded by the county educational authorities to the State School Superintendent and was in excess of the funds appro-
priated for the current year, the obligation was void. Hicks v. Groves, 177 Ga. 574, 170 S.E. 877, 1933 Ga. LEXIS 362 (1933) (decided under former Code 1933, § 32928). When payment of indebtedness not provided for in estimated budget. - When the payment of the indebtedness due to the petitioner by the county board of education was not provided for as an estimated expenditure from the funds included in the budget filed by the county board with the State Board of Education, the petitioner was not legally entitled to compel payment out of the funds included in the budget, and equity would not impound the funds for the purpose of compelling payment. Lewis v. Board of Educ., 183 Ga. 687, 189 S.E. 233, 1936 Ga. LEXIS 157 (1936) (decided under former Code 1933, § 32-928).
OPINIONS OF THE ATTORNEY GENERAL Editor’s notes. - In light of the similarities of the statutory provisions, opinions under former Code 1933, § 32-928, which was subsequently repealed but was succeeded by provisions in this Code section, are included in the annotations for this Code section. Section was designed to prohibit a county board from binding the board’s successors. 1948-49 Ga. Op. Att’y Gen. 101 (decided under former Code 1933, § 32-928). Application of O.C.G.A. § 20-2506(b)(4). - O.C.G.A. § 20-2-506(b)(4) did not apply to a specific contract between a city and a city building authority with respect to outstanding revenue bonds of the building authority. 2002 Op. Att’y Gen. No. U2002-2. Contract extending beyond fiscal year. - O.C.G.A. § 20-2-506 does not prevent a local board of education from legally entering into a contract to employ
a school superintendent for a period which extends beyond the current fiscal year so long as that contract, along with all other obligations of the system for that year, does not exceed total appropriations for the current fiscal year; however, unless specifically permitted by local law, such a contract may be prevented by the principle established in Williams v. City Council, 68 Ga. 816 (1882), which held that a municipal corporation may not by ordinance bind itself and the municipality’s successors to a given line of policy, though the municipality may bind itself and the municipality’s successors by any contract which the municipality has the right to make under the municipality’s charter. 1986 Op. Att’y Gen. No. U86-14. In the absence of local law, the term of a teacher’s contract is limited to a single year as a matter of law. 1963-65 Ga. Op. Att’y Gen. 756 (decided under former Code 1933, § 32-928).
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Board has no responsibilities or obligations after contract fulfilled. - County school board has no further responsibilities or obligations toward an employee after the board has fulfilled all of the terms of the employee’s one-year contract. 1963-65 Ga. Op. Att’y Gen. 756 (decided under former Code 1933, § 32928). Board not authorized to sell and buy back recently erected school building. - County board of education is not authorized to sell a recently erected school building and at the same time buy back the same building, to be paid for over a period of years, to obtain funds with which to equip the building and other buildings in the school system. 1952-53 Ga. Op. Att’y Gen. 72 (decided under former Code 1933, § 32-928).
Lease agreement whereunder board leases buses for single year is not on the agreement’s face illegal merely because the agreement also gives the school board three one-year renewal options coupled with a purchase option exercisable at the end of the final renewal period; such an agreement might be subject to attack, however, if the yearly “rental payments” are so grossly in excess of what reasonably could be considered to be the “fair rental value” of the buses as to lead to a conclusion that the transaction, while disguised as a lease plus purchase option, is essentially a “conditional sale.” 1965-66 Op. Att’y Gen. No. 65-33 (decided under former Code 1933, § 32-928).
RESEARCH REFERENCES Am. Jur. 2d. 68 Am. Jur. 2d, Schools, § 136 et seq. C.J.S. 78A C.J.S., Schools and School Districts, §§ 703, 704, 712 et seq.
ARTICLE 11 PUBLIC SCHOOL PROPERTY AND FACILITIES Administrative rules and regulations. School facilities and capital outlay management, Official Compilation of the Rules
and Regulations of the State of Georgia, Georgia Department of Education, Subject 160-5-4.
PART 1 POWERS OF LOCAL BOARDS