I.The bank may create and establish one or more educational institution reserve funds, hereafter referred to as "reserve funds", and shall pay into each such reserve fund any proceeds of sale of notes or bonds to the extent provided in the resolution or resolutions of the bank authorizing the issuance thereof and any other moneys which may be or become available to the bank for the purpose of such fund from any other source or sources. All moneys held in any reserve fund are hereby pledged to, and charged with, the payment of the principal of and the interest on such bonds with respect to which such reserve fund may be established, as the same shall become due, and the redemption price or the purchase price of bonds retired by call or purchase as therein provided. The use and disposition
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I. The bank may create and establish one or more educational institution reserve funds, hereafter referred to as "reserve funds", and shall pay into each such reserve fund any proceeds of sale of notes or bonds to the extent provided in the resolution or resolutions of the bank authorizing the issuance thereof and any other moneys which may be or become available to the bank for the purpose of such fund from any other source or sources. All moneys held in any reserve fund are hereby pledged to, and charged with, the payment of the principal of and the interest on such bonds with respect to which such reserve fund may be established, as the same shall become due, and the redemption price or the purchase price of bonds retired by call or purchase as therein provided. The use and disposition of moneys to the credit of such reserve fund shall be subject to the provisions of the resolution authorizing the issuance of such bonds or of such trust agreement. Except as may otherwise be provided in such resolution or such trust agreement, such reserve fund shall be a fund for all such bonds issued pursuant to a particular resolution to provide financing for educational institutions without distinction or priority of any bond over another.
II. Moneys in any reserve fund shall not be withdrawn therefrom at any time in such amount as would reduce the amount of such fund to less than the reserve fund requirement, if any, established for such fund, as provided in paragraph IV, except for the purpose of making, with respect to bonds secured in whole or in part by such fund, payment when due, of principal, interest, redemption premiums and the sinking fund payments, if any, with respect to such bonds for the payment of which other moneys of the bank are not available. Any income or interest earned by any reserve fund resulting from the investment thereof or any other moneys therein may be transferred by the bank to other funds or accounts of the bank to the extent it does not reduce the amount of that reserve fund below the reserve fund requirements for such fund.
III. The bank shall not at any time issue bonds, secured in whole or in part by a reserve fund, if upon the issuance of such bonds, the amount in such reserve fund will be less than the reserve fund requirement for such fund, unless the bank at the time of issuance of such bonds shall deposit in such fund from the proceeds of the bonds issued, or from other sources, an amount which, together with the amount then in such fund, will not be less than the reserve fund requirement for such fund. The bank may at any time issue its bonds or notes for the purpose of providing any amount necessary to increase the amount in the reserve fund to the required debt service reserve, or to meet such higher or additional reserve as may be fixed by the bank with respect to such fund. In computing the amount of the required debt service reserve, investments, held as a part thereof shall be valued in the manner provided in the bond resolution.
IV. As used herein "reserve fund requirement" means, as of any date of computation, the amount or amounts, if any, required to be on deposit in the reserve fund as provided by resolution of the bank authorizing such bonds. The required reserve fund requirement shall be as of any date of computation, an aggregate amount of not more than 150 percent of the largest amount of money, required by the terms of all contracts between the bank and its bondholders to be raised in the then current or any succeeding calendar year for the payment of interest on and maturing principal of that portion of outstanding bonds the proceeds of which were applied solely to the purchase of educational institution bonds and sinking fund payments required by the terms of any such contracts to sinking funds established for the payment or redemption of such bonds, all calculated on the assumption that bonds shall cease to be outstanding after the date of such computation by reason of the payment of such bonds at their respective maturities and the payments of such required moneys to sinking funds and the application thereof in accordance with the terms of all such contracts to the retirement of bonds.
V. Moneys at any time in the reserve fund may be invested in the same manner as permitted for investment of funds belonging to the state or held in the treasury.