§ 22-41-110 — Timely payment of school district obligations

(1) (a) The state
treasurer, on behalf of a school district, shall make payment as provided in this
section of principal and interest on bonds or other obligations to which this section
applies, unless the school district board of education adopts a resolution stating it
will not accept payment on behalf of the school district of principal and interest on
bonds or other obligations as provided in this section. If a school district chooses to
adopt such a resolution, it shall be adopted prior to issuance or incurrence of the
bonds or obligations to which it applies. Following adoption of the resolution, the
school district shall provide written notice to the state treasurer of its refusal to
accept the payment. The refusal to accept payment shall take effect upon the date
the state treasurer receives the written notice and shall continue in effect until the
date the state treasurer receives written notice from the school district that the
school district board of education has adopted a resolution rescinding the refusal to
accept payment pursuant to this section. Notwithstanding any provision of
subsections (2) to (8) of this section to the contrary, the state treasurer shall not
make payment of principal or interest on bonds or other obligations on behalf of a
school district that provides written notice of its refusal to accept payment by the
state treasurer on behalf of the school district as provided in this paragraph (a),
until the state treasurer receives written notice of the rescission of refusal to
accept payment.

(b) This section applies to:

(I) General obligation bonds issued by a school district on or after July 1, 1991,
pursuant to article 42 or 43 of this title; except that this section shall not apply to
bonds issued by a school district pursuant to section 22-42-102 (2)(a)(IX);

(II) Obligations of a school district in connection with a lease agreement or
installment purchase agreement entered into by a school district under section 22-32-127 or 22-45-103 (1)(c) on or after July 1, 1991; and

(III) Refunding bonds issued by a school district pursuant to article 56 of title
11.

(IV) Repealed.

(2) Whenever the paying agent has not received payment of principal of or
interest on bonds or other obligations to which this section applies on the business
day 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 district and determine
whether the district will make the payment by the date on which it is due.

(3) If the 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. The state
treasurer shall recover the amount forwarded by withholding amounts from the
school district's payments of the state's share of the district's total program
received in accordance with article 54 of this title and from property tax and
specific ownership tax revenues collected by the county treasurer on behalf of the
school district; except that the state treasurer may not recover amounts from
property tax revenues that are pledged to pay notes or bonds issued by the school
district. The total amount withheld in a month from the state's share of total
program and the tax revenues due to the school district for each occasion on which
the treasurer forwards an amount pursuant to this section shall not exceed one-twelfth of the amount forwarded; except that the state treasurer, in one or more
months during the twelve-month withholding period, may withhold more than one-twelfth of the amount forwarded, if the school district in one or more months during
the twelve-month withholding period receives total program and tax revenues in an
amount that is less than one-twelfth of the amount forwarded. The state treasurer
shall not withhold for more than twelve consecutive months for each occasion on
which the treasurer forwards amounts pursuant to this section. The state treasurer,
in writing, shall notify the county treasurer for the school district of the amount of
tax revenues to be withheld pursuant to this subsection (3) and the period of
withholding. Notwithstanding any provision of this subsection (3) to the contrary, a
school district may elect to make early repayment of all or any portion of an amount
forwarded by the state treasurer on behalf of the school district pursuant to this
section. When a school district fully repays an amount forwarded by the state
treasurer on behalf of the school district pursuant to this section, the state
treasurer, in writing, shall notify the county treasurer for the school district to
discontinue the withholding of tax revenues.

(4) The amounts forwarded to the paying agent by the state treasurer shall
be applied by the paying agent solely to the payment of the principal of or interest
on such bonds or other obligations of the school district. The state treasurer shall
notify the department of education, the chief financial officer of the district, and the
general assembly of amounts withheld and payments made pursuant to this
section.

(5) Any school district to which this section applies shall file with the state
treasurer a copy of the resolution which 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. The failure of any school district to file such information shall not
affect the obligation of the state treasurer to withhold the state's share of the
district's total program and the district's tax revenues under this section.

(6) 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 it 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 (6) 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.

(7) 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 district to
determine the reason for the nonpayment and to assist the district, if necessary, in
developing and implementing measures to assure that future payments will be
made when due.

(8) Whenever the state treasurer makes a payment of principal and interest
on bonds or other obligations of a school district and withholds amounts from the
district's payments of the state's share of the district's total program and from the
district's unpledged tax revenues pursuant to this section because of the failure to
collect property taxes levied in accordance with law for the district's bond
redemption fund, the district may transfer, or may instruct the third-party custodian
that administers the district's bond redemption fund to transfer, any such
delinquent property taxes later collected out of the district's bond redemption fund
and into its general fund.

Legislative History

Source: L. 91: Entire section added, p. 541, � 1, effective July 1. L. 94: (3), (5), and (8) amended, p. 815, � 34, effective April 27. L. 95: (1) amended, p. 608, � 4, effective May 22. L. 2003: (1), (3), (5), and (8) amended, p. 1297, � 5, effective April 22. L. 2009: (1)(b) amended, (HB 09-1312), ch. 253, p. 1144, � 2, effective August 5. L. 2010: (1)(b)(I) amended, (SB 10-205), ch. 313, p. 1471, � 3, effective May 27. L. 2018: (1)(b)(II) and (1)(b)(III) amended and (1)(b)(IV) repealed, (SB 18-003), ch. 359, p. 2150, � 14, effective June 1.