(1)The general assembly hereby finds
that school districts of this state are experiencing great need for improved school
facilities; that, although the issuance of school bonds can pave the way for
improved facilities, such bonds must be marketable and their interest rate must be
competitive in order to benefit the district; that, if the risk assumed by school bond
purchasers was diminished, interest rates would generally be reduced; that the use
of permanent school funds to guarantee payments of principal and interest, with
appropriate safeguards for the public school fund, is consistent with the purpose
for which the fund was created; and that section 3 of article IX of the state
constitution specifically authorizes the use of the public school fund of the state for
the purpos
Free access — add to your briefcase to read the full text and ask questions with AI
(1) The general assembly hereby finds
that school districts of this state are experiencing great need for improved school
facilities; that, although the issuance of school bonds can pave the way for
improved facilities, such bonds must be marketable and their interest rate must be
competitive in order to benefit the district; that, if the risk assumed by school bond
purchasers was diminished, interest rates would generally be reduced; that the use
of permanent school funds to guarantee payments of principal and interest, with
appropriate safeguards for the public school fund, is consistent with the purpose
for which the fund was created; and that section 3 of article IX of the state
constitution specifically authorizes the use of the public school fund of the state for
the purposes of this section.
(2) The state treasurer is authorized to contract with school districts in this
state for the guarantee of payments of principal and interest on the district's bonds
as such payments become due. The state treasurer shall not enter into such
contract if the guarantee would result in the total amount of outstanding
guaranteed bonds exceeding an amount equal to three times the market value of
the public school fund. Each year the state treasurer shall analyze the status of
guaranteed bonds as compared to the book value and market value of the public
school fund and shall certify whether the amount of bonds guaranteed is within the
limit prescribed by this subsection (2).
(3) The board of education of a school district desiring to enter into a
guarantee contract authorized by this section shall include, in the resolution
submitting the question of issuing bonds to the registered electors of the school
district, a statement that the school district intends to contract with the state
treasurer for the guarantee of principal and interest payments to holders of such
bonds. The resolution shall set forth, and any resulting guarantee contract shall
provide, that the district shall repay any loan of public school funds with interest as
provided in subsection (4) of this section by the end of the calendar year next
following the close of the fiscal year in which the loan was made, out of any
available funds of the school district or out of the proceeds of a levy on the taxable
property of the school district at a rate sufficient to produce the amount required to
repay the loan. No guarantee contract shall be executed pursuant to this section
unless the registered electors of the school district have approved such provisions
for the contract by their vote approving the issuance of bonds.
(4) Any guarantee contract authorized by this section shall include a
provision requiring the payment of interest on loans made pursuant to the contract
at the prevailing rate of interest being earned by investments of the public school
fund on the date the loan is made.
(5) A board of education seeking the guarantee of eligible bonds shall notify
the commissioner of education and the state treasurer indicating the name of the
school district and the principal amount of the bonds to be issued, the name and
address of the school district's paying agent for the bonds, the maturity schedule,
the estimated interest rate, and the date of the bonds.
(6) After receipt of the request for the guarantee of bonds, the commissioner
of education shall review the applicant school district regarding the school
district's accreditation category, the school district's financial status based on its
audited financial statements for the previous three years, and the total amount of
the school district's bonded indebtedness in relation to the limitation on
indebtedness provided by law. If, after the investigation, the commissioner of
education is satisfied that the school district's bonds should be guaranteed under
this section, the commissioner of education shall endorse the request for the bond
guarantee to the state treasurer.
(7) Whenever the paying agent has not received payment of principal of or
interest on bonds or other obligations to which this section applies fifteen business
days immediately prior to the date on which such payment is due, the paying agent
shall so notify the state treasurer and the school district by telephone, facsimile, or
other similar communication, followed by written verification, of such payment
status. The state treasurer shall immediately contact the school district and
determine whether the school district will make the payment by the date on which it
is due.
(8) If the school district indicates that it will not make the payment by the
date on which it is due, the state treasurer shall forward the amount in immediately
available funds necessary to make the payment of the principal of or interest on the
bonds or other obligations of the school district to the paying agent on the business
day immediately prior to the date on which payment is due. Such payment shall
constitute a loan to the school district from the public school fund in accordance
with the terms of the guarantee contract.
(9) In order to assure sufficient liquidity to meet obligations under the
provisions of this section, the state treasurer shall invest moneys in the public
school fund in an amount equal to at least ten percent of the principal amount of
bonds guaranteed under this section in interest-bearing obligations of the United
States as provided in section 22-41-104 (1)(d) with maturity dates of three years or
less.
(10) The amounts forwarded to the paying agent by the state treasurer shall
be applied to the paying agent solely to the payment of the principal of or interest
on such bonds or other obligations of the school district.
(11) Any school district to which this section applies shall file with the state
treasurer a copy of the resolution that authorizes the issuance of bonds or other
obligations, a copy of the official statement or other offering document for such
bonds or other obligations, the agreement, if any, with the paying agent for such
bonds or other obligations, and the name, address, and telephone number of such
paying agent.
(12) As provided in section 11 of article II of the state constitution, the state
hereby covenants with the purchasers and owners of bonds and other obligations
issued by school districts that the state will not repeal, revoke, or rescind the
provisions of this section or modify or amend the same so as to limit or impair the
rights and remedies granted by this section; but nothing in this subsection (11) shall
be deemed or construed to require the state to continue the payment of state
assistance to any school district or to limit or prohibit the state from repealing,
amending, or modifying any law relating to the amount of state assistance to school
districts or the manner of payment or the timing thereof. Nothing in this section
shall be deemed or construed to create a debt of the state with respect to such
bonds or other obligations within the meaning of any state constitutional provision
or to create any liability except to the extent provided in this section.
(13) Whenever the state treasurer is required by this section to make a
payment of principal of or interest on bonds or other obligations on behalf of a
school district, the department of education shall initiate an audit of the school
district to determine the reasons for the nonpayment and to assist the school
district, if necessary, in developing and implementing measures to assure that
future payments will be made when due.
(14) Whenever the state treasurer makes a payment of principal and interest
on bonds or other obligations of a school district because of the failure to collect
property taxes levied in accordance with law for the school district's bond
redemption fund, the district may transfer any such delinquent property taxes later
collected out of the school district's bond redemption fund and into its general
fund.
(15) In the event that any public school fund moneys are lost by reason of the
failure of any school district to repay a loan made pursuant to this section, the
general assembly shall restore such public school fund moneys, together with such
interest as would have accrued thereto, by an appropriation in the amount of such
loss from the general fund of the state.
(16) If two or more repayments from the public school fund are made on the
guaranteed bonds of a school district and the commissioner of education
determines that the school district is acting in bad faith under the guarantee, the
commissioner of education may request the attorney general to institute
appropriate legal action to compel the school district governing board to comply
with the duties required by law in regard to the bonds.