Linked General Fund fiscal companion

A BILL FOR AN ACT

Relating to rural hospital access finance.

Be It Enacted by the People of the State of Oregon:

SECTION 7. (1) As used in sections 7 to 13 of this 2027 Act:

(a) “Covered district” means the health district organized under ORS 440.305 to 440.410 that is the borrower or proposed borrower in the rural hospital stabilization financing undertaken or proposed under section 2, chapter 111, Oregon Laws 2026, for the general acute inpatient hospital owned and operated by the Bay Area Health District in Coos County. The designation under sections 1 to 5 of the policy companion applies statewide according to its own criteria.

(b) “Covered transaction” means an actual restriction, withholding, investment change, payment, receipt, release, recovery or other change in the amount or timing of school resources attributable to preparation for, issuance, administration, payment, substitution, repayment or termination of the guarantee under section 2, chapter 111, Oregon Laws 2026. An action affecting the covered district only, without an effect on school resources, is not a covered loss.

(c) “Protected school resources” means money or property of the Common School Fund, including the Unclaimed Property School Fund established within the Common School Fund under ORS 273.108, an amount that applicable law would otherwise direct to either fund, and a net distribution to a school district or education service district that depends on a transfer or distribution from either fund. The term includes the effects of a covered transaction on the timing of the applicable receipts and distributions.

(d) “School protection closing” means the consummation of the settlement and release or other resolution required by sections 8 to 11 of this 2027 Act, as evidenced by the State Treasurer's written determination under section 9 of this 2027 Act.

(e) “Authority” means the Oregon Health Authority.

(f) “Policy companion” means [MISSING: EXACT ENROLLED POLICY COMPANION].

(2) The Legislative Assembly finds that preservation of regional acute inpatient and emergency access and protection of school resources against the effects of the specified public hospital financing are connected purposes of this Act. The statewide designation supplies an objective public access basis for any hospital assistance under this Act. The cost of providing the assistance or any replacement credit support shall be borne by lawful hospital-side or separately authorized state resources and may not impair protected school resources.

SECTION 8. (1) The State Treasurer, in consultation with the Department of State Lands, the Department of Education and the Legislative Fiscal Officer, shall establish a baseline showing the amount and timing of protected school resources that would have existed without the covered transactions. Use the date immediately preceding the earliest actual covered effect as the starting date, including any earlier encumbrance or withholding that produced a loss. Use contemporaneous fund and claimant records, the applicable statutory transfer dates, documented fund investment and distribution policies, actual investment return evidence reasonably applicable to the omitted cash flows, and the school distribution rules that would otherwise have applied. Hold unrelated changes in investment conditions, liabilities, receipts, appropriations, enrollment and distribution formulas constant between the actual and comparison accounts. Identify uncertainty and separate realized amounts, reasonably determinable obligations and projected exposure. If there was no covered effect, document the records supporting that determination.

(2) The treasurer shall determine separately:

(a) The protected amount not received when otherwise due, including a covered guarantee payout only to the extent the money paid would otherwise lawfully have become protected school resources. Account for realized recoveries, lawful ordinary releases and amounts already restored for the same principal or receipt.

(b) The loss in protected investment assets resulting from the timing and amount of the affected receipts, withdrawals and returns, after accounting for paragraph (a) of this subsection, actual distributions, the investment treatment of prior restorations and associated investment earnings, and recoveries. Restore the asset position that would have remained after distributions under the baseline. Do not count a reduction in the same assets a second time as a distribution loss.

(c) The net reduction or delay in a district or education service district distribution, measured against the amount and timing under the baseline after applying the formula to actual and counterfactual receipts and taking account of amounts already replaced or that will be delivered in the ordinary distribution by the due date. If a baseline distribution was due before the closing, determine the unpaid amount separately for the affected district or education service district. A replacement of fund assets shall count against the downstream loss only to the extent it results in an actual additional timely distribution of those amounts. Identify any same-period resources that will otherwise be reduced by treatment of the restoration.

(3) Before the closing, the treasurer shall settle all certified amounts due through the closing from the protection account under section 11 of this 2027 Act. Amounts under subsection (2)(a) and (b) must be deposited in the fund or subaccount that would lawfully have held the resource, taking account of its character and the required disposition under ORS 98.389, 273.105 and 273.108. The treasurer shall transfer amounts under subsection (2)(c) to the Department of Education for a separately accounted additional distribution to each affected district and education service district. The department shall pay those amounts on the ordinary distribution schedule if timely, or promptly on receipt if the ordinary due date has passed. Notwithstanding ORS 327.011, 327.013 and 327.019, a restoration paid under this subsection is in addition to the amounts otherwise payable under ORS chapter 327, is not a local revenue offset, and may not be counted to reduce a distribution otherwise payable to the recipient or another district or education service district. The identified funds and the department may receive and use the amounts solely for the purposes of this section. In determining a baseline loss, the treasurer shall apply ORS 327.410 to ordinary Common School Fund distributions and shall attribute any effect on an education service district only to an applicable downstream distribution.

(4) Before the closing, the treasurer shall establish and reserve the amount reasonably necessary for future settlements of any documented timing loss, revisions to past amounts and unresolved covered costs, using an adverse but supportable estimate, and shall identify each obligation, expected due date and accounting method. If the treasurer cannot substantiate that the estimate covers each remaining item to be borne by the account from available liquid assets, the treasurer may not issue the closing determination. The account shall retain enough liquid money to make the required payments when due. A forecast of a later appropriation or release is not an available asset.

(5) For a future due date, complete restoration before or concurrently with the time the resource would have been received or distributed under the baseline. If a previously unrecognized or subsequently revised loss is certified, pay the deficiency within 30 days of certification, subject to available lawful funds, and determine any resulting time-value or distribution correction under subsection (2). Determine and apply any later recovery first to the same compensated injury and credit recovered state restoration funds back to the protection account only to the extent the credited amount is duplicative and only from receipts lawfully available for that purpose. Do not withdraw constitutionally dedicated funds or reduce an ordinary school distribution to recover an overpayment. Report remaining excess or deficiency and its lawful resolution.

(6) Until all covered effects have ended and all required restorations and lawful recoveries have been reconciled, the treasurer shall audit the comparison annually, review any material change within 30 days of learning of it, and publish an aggregate report stating the baseline, methodology, covered receipts and dates, estimates, actual resources restored, remaining exposure, and reserve sufficiency. The report must identify data limitations and omit confidential information. Provide the report to the State Land Board, the Legislative Fiscal Officer and the interim committees of the Legislative Assembly relating to education, health care and ways and means. On a deficiency, promptly notify those recipients and the Oregon Health Authority, record its amount and timing, identify any additional expenditure authority needed, and apply the suspension under section 13 of this 2027 Act. Issue a final public reconciliation within one year after all covered obligations have ended and all certified settlements have been made.

SECTION 9. (1) The treasurer may issue a written school protection closing determination only after:

(a) Documenting the status of any guarantee issued under chapter 111, Oregon Laws 2026, and every associated restriction, contractual obligation, default payment and recovery that could affect protected school resources.

(b) Completing the applicable arrangements in subsection (2) of this section and settling every amount then due under section 8 of this 2027 Act, with protection for any future items funded as required by section 8 (4) of this 2027 Act.

(c) Verifying lawful and effective financing and expenditure authority for the payments and account deposits on which the closing depends, and receipt of the required cash. The treasurer shall verify that the funded hospital-side and school-side transactions will leave no unresolved or unprovided-for reduction of protected school resources relative to the baseline.

(d) Obtaining written concurrence from the State Land Board for the school fund assets, from the Superintendent of Public Instruction for district and education service district distributions, and from the Director of the Oregon Health Authority for agency readiness to administer the statewide class and any separately funded assistance. The treasurer shall obtain written advice from the Attorney General on source, legal authority and the effectiveness of any release. The findings required by this section are determinations of fact and existing legal authority. An officer may not waive a requirement, assume away a contractual liability, or validate an otherwise unlawful transaction.

(2) The treasurer shall establish one of the following:

(a) The issuance period under chapter 111, Oregon Laws 2026, has ended without a guarantee in force. No restriction or liability affecting protected school resources remains. All attributable past effects have been settled or provided for under section 8 of this 2027 Act.

(b) Any existing guarantee has been discharged or validly released from payment or support by the Unclaimed Property and Estates Fund, the Common School Fund and the Unclaimed Property School Fund, through repayment or the written release of all affected rights holders, including as a condition of any approved substitution under section 10 of this 2027 Act. No school-side fund or ordinarily transferable receipt remains encumbered, directly or indirectly, for the loan or guarantee. All ordinary transfers and disbursements continue under otherwise applicable law and the separate restoration terms in section 8 of this 2027 Act. On and after the closing, the treasurer may not issue or renew a guarantee payable from the Unclaimed Property and Estates Fund under chapter 111, Oregon Laws 2026. This prohibition does not impair a right or obligation accrued before the closing.

(3) The treasurer shall document whether all nonclosing requirements have been satisfied before releasing any documents or money held for simultaneous closing. Any release, substitution and protection funded through the closing shall take effect at the same consummation. After verifying that the closing was completed, publish the determination, findings, pertinent dates, aggregate amounts, covered sources, approvals and the remaining funded reconciliation obligations. Deliver the determination to the Secretary of State, State Land Board, Director of the Oregon Health Authority, Superintendent of Public Instruction, Legislative Fiscal Officer and interim committees identified in section 8 of this 2027 Act. A confidential contract term may be described in an aggregate or redacted form if necessary to comply with law.

SECTION 10. (1) The Rural Hospital Replacement Guarantee Fund is established in the State Treasury, separate and distinct from the General Fund. Interest is credited to the fund. Money in the fund is continuously appropriated to the State Treasurer solely for obligations under a substitution that meets this section. The fund may receive money only by express appropriation or deposit authorization under law or from actual recoveries on a substituted guarantee.

(2) Notwithstanding section 2 (5), chapter 111, Oregon Laws 2026, the treasurer may substitute the Rural Hospital Replacement Guarantee Fund as the sole source of payment for a valid outstanding guarantee issued under that chapter only at the school protection closing and only if:

(a) The treasurer, covered district and holders of all affected lender and guarantee rights execute a written agreement authorizing the substitution and fully releasing the Unclaimed Property and Estates Fund, the Common School Fund and the Unclaimed Property School Fund from liability, reserve restrictions and recourse. All necessary documents and instructions must make the substitution and release concurrent and conditioned on the same closing.

(b) The replacement fund first receives sufficient unrestricted liquid funds to meet the maximum remaining amount payable under the guarantee, including an accrued or pending covered obligation. The maximum may not exceed the undischarged statutory limit. The reserve for school restorations is separate and may not be counted toward this requirement.

(c) The substitution does not increase the amount guaranteed, extend the maturity, change the authorized use of credit, impair collateral or recovery rights, create general state recourse, or pledge taxes or protected school resources. Review collateral and the exact borrower and creditor documents before approving the substitution.

(3) After a substitution takes effect, an obligation on the substituted guarantee may be paid only from the replacement fund. Apply any released restriction under otherwise applicable ORS 98.389 and 273.108. Release does not make the released amounts available for a hospital payment. Nothing in this section authorizes a new guarantee, restarts the issuance window under chapter 111, Oregon Laws 2026, or impairs an existing contractual right.

(4) The treasurer shall report remaining exposure, claims and recoveries annually. After final discharge, refund unobligated balances and net recoveries to the originating source of each deposit, with earnings traced or allocated by deposit share and the time held. If law prevents return to the original source, apply the lawful alternative expressly provided in the enactment authorizing the source, or hold the balance until the Legislative Assembly authorizes a disposition.

SECTION 11. (1) The School Resource Protection Account is established in the State Treasury, separate and distinct from the General Fund. Interest is credited to the account. Money in the account is continuously appropriated to the State Treasurer solely for settlement, incremental distribution and prefunded reserve under section 8 of this 2027 Act. Money may be paid only to the lawful destination in section 8 and within the cash available for that purpose. The account may not secure or fund a hospital grant or credit obligation.

(2) For the biennium beginning July 1, 2027, in addition to and not in lieu of any other appropriation, the following amounts are appropriated out of the General Fund:

(a) To the State Treasurer, [MISSING: SCHOOL RESOURCE PROTECTION APPROPRIATION] for deposit in the account established by subsection (1) of this section.

(b) To the State Treasurer, [MISSING: OPTIONAL MAXIMUM GUARANTEE SUBSTITUTION RESERVE], for deposit in the Rural Hospital Replacement Guarantee Fund established by section 10 of this 2027 Act. The treasurer shall deposit money under this paragraph only if the remaining conditions of section 10 (2) of this 2027 Act have been met or are enforceably conditioned to take effect at the same closing.

(c) To the State Treasurer, [MISSING: TREASURY ADMINISTRATION APPROPRIATION], to administer sections 7 to 11 and 13 of this 2027 Act.

(d) To the Department of Education, [MISSING: EDUCATION ADMINISTRATION APPROPRIATION], to administer school distributions and review under sections 8 and 9 of this 2027 Act. The department may expend certified amounts received under section 8 for the supplemental distributions, within the amount deposited for that purpose.

(e) To the Oregon Health Authority, [MISSING: OHA DESIGNATION AND GRANT ADMINISTRATION APPROPRIATION], to administer sections 1 to 5 of the policy companion and section 12 of this 2027 Act.

(f) To the Oregon Health Authority, [MISSING: COVERED DISTRICT SERVICE STABILIZATION GRANT APPROPRIATION], for the one-time grant under section 12 of this 2027 Act.

(3) The treasurer may accept later appropriations expressly made for the separate purposes under subsections (1) and (2). An appropriation for one purpose does not supply funding for another. Before a closing, if the treasurer determines another appropriation is necessary for school protection, the treasurer shall report the shortfall and withhold the closing until cash is lawfully available. After the final reconciliation under section 8, return amounts no longer required in the protection account to each original source under the terms of the source authorization, retaining cash for verified unresolved obligations. Do not recover a restored school resource to fund the return.

SECTION 12. (1) Following the school protection closing, the Oregon Health Authority may make a one-time award to the covered district if the hospital owned and operated by the district is certified under section 3 of the policy companion. The authority shall issue a written finding that the district faces a material risk of reducing an identified emergency, acute inpatient or supporting regional access service, and that a funded plan will materially reduce the risk for at least 12 months. The district shall submit current audited and interim financial information, an access plan describing alternatives and expected service availability, the costs and amounts already payable for those costs, a cash forecast and evidence that the plan can be carried out.

(2) The award may not exceed the lesser of lawfully available funds and the reasonable and necessary verified net costs of the approved plan after amounts received or reasonably expected for the same costs. No award may pay preexisting debt service, capital expansion, distributions to owners or a cost otherwise funded. The award is for the district's public access obligations under a written agreement specifying services, performance, disbursement, a 90-day post-performance accounting, six years of records, and repayment of unused, unsupported and duplicate amounts. The authority shall recover amounts owed. The authority may permit equivalent service continuity on documented grounds without increasing the award.

(3) The award is state-only and may not be claimed for federal medical assistance participation, paid as a directed payment or treated as a promise of future appropriations. The authority may award and disburse only during the biennium beginning July 1, 2027, while the closing determination is in force. The authority's reporting and recovery duties and the district's contractual duties continue after that period. The authority may adopt rules necessary to implement this section.

SECTION 13. (1) Upon the effective date of this 2027 Act, the treasurer, the authority and other agencies may perform preliminary verification, rulemaking and accounting and receive appropriated deposits for designated purposes. A deposit alone establishes no authority to make a hospital payment or assume a guarantee obligation.

(2) The treasurer may complete a closing under section 9 of this 2027 Act only if the policy companion is law, its class provisions will become operative by reason of the same closing and the operative date may be determined under both Acts. The treasurer shall verify the effectiveness of the source and school protection terms and actual cash before closing. A substitution under section 10 of this 2027 Act may take effect only on the closing, including the simultaneous release of all school-side rights and restrictions. Section 12 becomes operative only when the class provisions become operative. If the conditions fail, no new hospital award, transfer or credit support may be made under this Act. Apply any required restoration of past covered losses if already authorized and funded, maintain all existing contractual rights, and return any other uncommitted source cash as provided by law.

(3) If a court order or effective veto, repeal or funding loss makes a required protection inoperative or unavailable before the closing, the treasurer shall not issue the closing determination. If a material protection becomes unlawful or unavailable after the closing, or the treasurer determines a covered shortfall has arisen and cannot be paid from lawful sources when due, the treasurer shall publish and file notice and suspend the closing determination prospectively. On suspension the authority may not issue a new class certification or make or disburse a new hospital award under this Act. An existing certification issued under the policy companion is inactive for prospective eligibility during the suspension. The treasurer may lift the suspension only on a new closing determination verifying lawful cure, restoration and adequate funds. Promptly provide affected hospitals notice and the applicable administrative review under section 3 of the policy companion. The suspension does not invalidate an earned payment, an existing lawful contractual obligation, or an authority or duty to restore school resources, audit, collect repayments or reconcile accounts. The treasurer shall carry any unpaid certified deficiency forward, notify the Legislative Assembly of the amount and source needed, and pay it when lawful funds become available. Suspension does not satisfy or discharge the deficiency.

(4) Notwithstanding any provision of this Act making certification independent of a payment or financing provision, the statewide designation enacted by the policy companion, a guarantee substitution under section 10, and an award under section 12 are subject to the closing and applicable suspension requirements in this section. For purposes of ORS 174.040, the Legislative Assembly intends the statewide designation under the policy companion and its new hospital-side authority to be essentially and inseparably connected with the operative school protection requirements in sections 7 to 11 and 13 of this 2027 Act. If a final judgment holds an indispensable protection invalid and the remaining provisions cannot lawfully provide equivalent protection under the express terms of this Act, the designation and new hospital-side authority under this Act are inoperative. The duties to preserve, restore and reconcile school resources and honor accrued lawful obligations continue to the extent lawfully executable. This subsection applies to the statutory bargain in this Act and does not alter constitutional veto authority or the power of a later Legislative Assembly to enact a law.

SECTION 16. This 2027 Act takes effect on the 91st day after the date on which the 2027 regular session of the Legislative Assembly adjourns sine die.

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