(a) Sam Letson Honorarium and Memorium. In honor of the life and public service of Representative Sam Letson of Lawrence County, deceased, the Legislature may, from time to time, appropriate monies to the Foundation for Local Schools. The appropriated funds shall be known and may be cited as "Letson Grants."

(b) Dedication and disbursement of Letson Grants. Any funds which the Legislature may appropriate for Letson Grants shall be credited to those local school systems or trust funds according to the standards, prerequisites, and regulations which shall be adopted by the Board of Control. The disbursement of Letson Grant monies to the account of a school system or trust fund applying for a grant shall be based on average daily membership as provided in Section 16-13-231. The local superintendent of education shall be responsible for making application to the secretary of the foundation for a Letson Grant for either the school system or trust fund, or both, in compliance with the requirements, standards, and prerequisites of the Board of Control.

When used in this chapter, the following words shall have the following meanings:

(1) BOARD OF CONTROL. The Board of Control of the Foundation for Local Schools is the same as the Board of Control of the Teachers' Retirement System of Alabama.

(2) BOARDS OF EDUCATION or LOCAL BOARDS or LOCAL SCHOOL SYSTEMS. Any county or city public school system.

(3) CHIEF EXECUTIVE OFFICER OF THE TEACHERS' RETIREMENT SYSTEM. The Chief Executive Officer of the Teachers' Retirement System of Alabama, or his or her designee.

(4) COMMUNITY OR NEIGHBORHOOD SCHOOL. Any individual public school under the authority, control, and supervision of a county or city board of education.

(5) FOUNDATION. The Foundation for Local Schools.

(6) LOCAL SUPERINTENDENT. The chief executive officer of a local school system.

(7) PUBLIC SCHOOLS. Grade Kindergarten through Grade Twelve of those public county and city school systems under the auspices of the State Board of Education.

(8) STATE SUPERINTENDENT. The State Superintendent of Education for the public schools, or his or her designee.

(9) TRUST FUND. Any local trust fund or local foundation fund by whatever name established on behalf of or to the benefit of the local school system and recognized by the school board, not to exceed one recognized trust fund per school system; or, the board of trustees of the trust fund on behalf of a school system.

The Legislature finds and declares that it is necessary, desirable, and in the best interests of the future of the state that the children of Alabama receive the best education possible within the limited resources available. The Legislature also recognizes that individuals, businesses, and corporations interested in enhancing the educational programs of public schools hold considerable wealth. It is the intent of the Legislature by passage of this chapter to authorize the formation of a public corporation to encourage and promote private giving, the creation of perpetual trusts, and the prudent investment of available funds, from any source, to enhance the achievement of academic excellence in Alabama's public schools.

The foundation shall report to the Legislature annually at each regular session with respect to the balances of funds held, additions to the foundation, earnings of the foundation, and disbursements by the foundation by beneficiary since its last report and any other information requested by the Legislature.

(a) All assets and properties of the foundation, the income therefrom, and all other income of the foundation shall forever be exempt from any form of taxation in the State of Alabama whether imposed by the state, a county, or a municipality.

(b) All gifts, grants, devises, and bequests to the foundation by individuals, associations, corporations, and companies shall be exempt from all county and municipal taxes and shall be deductible from state income taxes in accordance with Section 40-18-15, as amended.

It is the intention of this chapter that the foundation be a nonprofit public corporation. No part of the net earnings of the foundation shall inure to the benefit of any private individual, firm, or corporation.

In the event of dissolution, which may be accomplished only by legislative act, the residual assets of the foundation shall be disbursed by the State Comptroller as follows:

(1) SCHOOL SYSTEMS. Those monies remaining in the accounts of the various school systems shall be given to the State Board of Education for disbursement to each designated school system and shall be expended by each local board of education per school based on the previous year's average daily membership. Funds shall be spent only on those items which are specifically enumerated in Section 16-26C-9.

(2) TRUST FUNDS. Those monies remaining in the accounts of the various participating trust funds shall be returned in whole to the treasurer of each applicable trust fund.

The Board of Control may become a corporation with the power and authority hereinafter provided by proceeding according to the provisions of this chapter. This corporation shall be known as the Foundation for Local Schools. The provisions of this section may be met by changing the name of the original corporation from "The Alabama Education Foundation for Kindergarten through Grade Twelve Public Schools" to the "Foundation for Local Schools."

(a) To become a corporation, the Governor, the Speaker, the Lieutenant Governor, and the State Superintendent of Education shall present to the Secretary of State of Alabama an application signed by them which shall set forth:

(1) The name, official designation, and official residence of each of the applicants;

(2) The dates of the beginning and ending of the term of office of each of the applicants;

(3) The name of the proposed corporation;

(4) The location of the principal office of the corporation; and

(5) Any other matter relating to the incorporation which the applicants may choose to insert and which is not inconsistent with this chapter or the laws of the State of Alabama.

(b) The application shall be subscribed and sworn to by each of the applicants before an officer authorized by the laws of this state to take acknowledgements to deeds.

(c) The Secretary of State shall examine the application; and, if he finds that it substantially complies with the requirements of this chapter, he shall receive and file it and record it in the appropriate book of records in his office.

When the application has been made, filed, and recorded as herein provided, the applicants shall constitute a corporation under the name of the Foundation for Local Schools and the Secretary of State shall make and issue to the applicants a certificate of incorporation, under the Great Seal of the State, and shall record the certificate with the application. No fees shall be paid to the Secretary of State for any work in connection with the incorporation of the corporation, which is hereinafter sometimes called "the foundation."

(a) Duties of the state superintendent. The duties of the state superintendent shall include all of the following:

(1) Serve as the secretary of the foundation.

(2) Maintain a list of the school systems and trust funds participating in the foundation.

(3) Solicit and encourage participation in the foundation from non-participating public school systems and trust funds at least once annually.

(4) Solicit appropriations as he or she may deem necessary and advisable from the Legislature or the State Board of Education, or both, or other public or private entities, or both, for the benefit and promotion of the foundation.

(5) Solicit additional support and contributions annually from participating school systems.

(6) Develop, print, and disseminate information and promotional materials as deemed appropriate and propitious for distribution to any entity, public or private, in support and promotion of the foundation.

(7) Seek contributions and other forms of support from private businesses, corporations, associations, individuals, trusts, and other private and public interests in support and promotion of the foundation.

(8) Receive applications for Letson Grants from local superintendents and trust fund presidents, when grant funds are available, determine the allocation amount for each applying school system and trust fund based on the criteria established by the Board of Control and this chapter, and transmit the report on allocation amounts to the treasurer.

(9) Work cooperatively with the Chief Executive Officer of the Teachers' Retirement System to promote the foundation.

(10) Develop the necessary forms, in conjunction with the treasurer, for deposits, withdrawals, and refunds from the foundation, as well as develop and disseminate other forms as he or she may deem appropriate.

(11) Notify the treasurer of closures and mergers of school systems and trust funds and the appropriate disposition of the account assets of these closed systems and trust funds.

(12) Perform other duties as he or she may deem appropriate for the benefit and promotion of the foundation.

(b) Duties of the Chief Executive Officer of the Teachers' Retirement System. The duties of the Chief Executive Officer of the Teachers' Retirement System of Alabama shall include all of the following:

(1) Serve as the treasurer of the foundation.

(2) Receive monies from any source for the foundation.

(3) Manage and invest the monies on deposit with the foundation.

(4) Maintain a proper accounting of the funds in the accounts of the foundation.

(5) Work cooperatively with the state superintendent to promote the foundation.

(6) Cause an annual report to be issued on the financial status and successes of the foundation, including an itemized listing of each account and its assets.

Repealed by Act 98-319, p. 535, § 13, effective October 1, 1998.

The purpose of the foundation shall be to promote academic excellence in Alabama's public schools and to aid and assist in any undertaking in connection with such promotion. The foundation shall receive, invest, maintain, and apply the investment income and principal of donated monies for educational and eleemosynary purposes, related to the promotion, development, enhancement, and growth of the public schools in Alabama.

The foundation shall have the following powers:

(1) To have succession by its corporate name in perpetuity;

(2) To sue and to be sued and to prosecute and defend in any court having jurisdiction of the subject matter and of the parties thereto;

(3) To adopt and use a corporate seal and to alter the seal at pleasure;

(4) To adopt and amend bylaws;

(5) To execute contracts and other necessary documents;

(6) To acquire by gift, grant, purchase, or otherwise, and to hold title to, real or personal property, or both, together with all rights incidental thereto;

(7) To invest and reinvest any funds of the foundation in any instrument, obligation, security, or property that constitutes a legal investment of the Teachers' Retirement System of Alabama;

(8) To solicit and accept devises, bequests, grants, and donations;

(9) To promulgate rules and regulations; and

(10) To have all other powers necessary or desirable to accomplish its corporate purposes.

The foundation may seek and accept private gifts, devises, grants, or bequests and hold or expend the same to carry out the provisions of this chapter. The foundation may also accept appropriations or grants from the state, any county, any municipality, any local board of education, any local public school under the control of a local board of education, or any organized group recognized by a local school such as a local parent-teacher organization or school booster club. The foundation may hold or expend the monies to carry out the provisions of this chapter. The state Comptroller shall transmit to the treasurer the funds which the state Legislature may from time to time appropriate to the foundation.

(a) Investment by the TRS. All gifts, grants, devises, and bequests to the foundation whether from individuals, associations, corporations, companies, or governmental entities, including local boards of education, shall be deposited by the foundation with the Teachers' Retirement System of Alabama. The retirement system shall invest and reinvest such donations and all income therefrom using the same guidelines used for its own monies. The foundation shall insure that the retirement system maintains such records as to separately account for the foundation's monies, both the principal sum deposited and investment income by school system or trust fund, as the case may be. The foundation shall be responsible for authorizing the retirement system to make disbursements of investment income to pay administrative expenses and for investment or reinvestment.

(b) Withdrawals, reinvestment of earnings, expenditure restrictions. Any school system or recognized trust fund may withdraw annually up to 80 percent of the investment income generated from any account held by the Teachers' Retirement System for the foundation in its name; however, the minimum eligible investment income distribution shall be at least five hundred dollars ($500) annually. Should a trust fund request a withdrawal of more than 80 percent of its investment income in any year, the Board of Control shall establish and charge an appropriate and reasonable administrative fee. Any monies withdrawn by a school system may be expended for classroom supplies or equipment, equipment for science or mathematics laboratories, vocational equipment, computer hardware or software, or any other equipment or supplies directly related to student instruction. Any monies withdrawn by a trust fund may be expended for the benefit of the public schools, for scholarships, or as otherwise stipulated for public education as provided by the trust fund's board of trustees. Should any question arise about a school system's expenditure, the question shall first be placed before the secretary of the foundation for his or her decision. Disagreements with the secretary's decision may be appealed to the Board of Control and the decision of the board shall be final. None of the school system's funds may be expended for salaries, maintenance of the physical plant, or the ordinary operating expenses of a school system. Twenty percent of the income for each account shall be transferred annually by the Teachers' Retirement System to the principal sum so as to create a perpetual trust for the benefit of the school system or trust fund, as the case may be. Any income eligible for disbursement which is not withdrawn at the end of the year shall be transferred to the principal sum. Any capital gains from investment shall become a part of the principal sum.

(c) Withdrawal timelines and procedures. Any school system wishing to make a withdrawal of its account's investment income shall make the request on the appropriate authorized form. The local superintendent shall have approval authority for all withdrawal requests from the school system's account, subject to review by the local school board. Requests for withdrawals from the trust fund's account shall be made by the trust fund's president or chairperson, subject to review and approval by the trust fund's board. All requests for withdrawal shall be made only once annually. The treasurer shall disburse once annually the investment income approved by the foundation as soon as practical. Investment income which is not withdrawn but carried over from year to year in the account of a school system shall be retained in the school system's account to be expended as provided in this chapter. A trust fund may, at its discretion, withdraw any or all of its investment income assets upon prior notification to the treasurer. The prior notification of the withdrawal of the trust fund's investment income from the trust fund shall be made by the chairperson of the trust fund, with proper documentation of authorization from the trust fund's board of trustees, and the prior notification shall consist of at least six months. The treasurer of the foundation may waive the notification period in unusual circumstances.

(d) Principal sum refunded to school systems upon petition. Should a local school system deposit any principal sum to the foundation, the Teachers' Retirement System shall receive and invest the monies as provided in this chapter, but the treasurer shall refund to the local school system the principal sum deposited upon petition by the board making the deposit. However, the principal sum shall be retained and invested by the Teachers' Retirement System for at least five years after initial receipt of the deposit before any petition for refund is granted by the treasurer, unless the treasurer grants a waiver due to unusual circumstances. If a petition for a refund of the principal sum is submitted by a school system, only the principal sum deposited emanating from the local school system shall be eligible to be refunded. All other deposits shall be ineligible to be refunded. The previously earned investment income shall remain in the foundation to the credit of the designated school system and remain subject to the provisions of this chapter.

(e) Principal sum and interest returned to trust funds upon petition. Should a trust fund deposit any principal sum to the foundation, the Teachers' Retirement System shall receive and invest the monies as provided in this chapter. In the event that the board of the trust fund making a deposit desires a refund of its monies, the board shall file a petition for refund with the treasurer. The principal sum deposited emanating from the trust fund, together with all investment income, shall be refunded to the trust fund at the request of the board. If the petition for refund is filed within five years from the date of the initial deposit of the principal sum, the treasurer may withhold from such refund monies an amount equal to the amount of any penalties paid by the Teachers' Retirement System for the early withdrawal of such monies. If a petition for a refund of the principal sum is submitted by a trust fund, only the principal sum deposited emanating from the trust fund shall be eligible to be refunded unless the trust fund specifically requests that part or all of the investment income also is to be withdrawn. Unless so stipulated in the request, the previously earned investment income shall remain in the trust fund's account and remain subject to the provisions of this chapter.

(f) Community schools. Community schools shall not have accounts with the foundation which are separate from the account of a school system, but may, at the local school system's discretion, be allowed to establish an account at the local school system level for investment by the foundation. Should a community school have an established account with the local school system, the account shall be separately and distinctly established by the school system for the specific community school. Monies held in the trust fund account for a community school may be included in the school system's account with the foundation, and investment income, when distributed, shall be distributed to the benefit of the community school by the local school system. It shall be the responsibility of the local school system to keep a record of the assets and disbursements of any account established for the benefit of a community school. The provisions of this chapter shall apply to the expenditure of investment income for community schools.

(g) Closures and mergers of school systems and trust funds. In the event of a closure or merger of a school system which has monies on deposit with the foundation, the local superintendent shall send written notice of such event to the foundation with a suggested disposition of the funds held for the school system. The Board of Control shall have authority to accept or reject such suggestion after due consideration. The Board of Control shall have authority to determine final disposition of the monies. The decision of the Board of Control shall be final and binding and not subject to appeal. In the event a trust fund dissolves leaving monies in the foundation, the monies remaining in the trust fund's foundation account shall inure to the credit of the school system which has given the trust fund official recognition.