AB 2738, as introduced, Olsen. School bonds: local school bonds: investment.
The California Constitution limits the maximum amount of any ad valorem tax on real property to 1% of the full cash value of the property. The California Constitution states that the 1% limitation for ad valorem taxes does not apply to ad valorem taxes or special assessments to pay the interest and redemption charges on bonded indebtedness incurred by a school district, community college district, or county office of education for the construction, reconstruction, rehabilitation, or replacement of school facilities approved by 55% of the voters if the proposition includes specified accountability requirements. Existing law requires the proceeds of the sale of the bonds, exclusive of any premium received, to be deposited in the county treasury to the credit of the building fund of the school district, or community college district as designated by the California Community Colleges Budget and Accounting Manual.
This bill would prohibit the proceeds from the sale of bonds from being withdrawn by the school district or community college district for investment outside the county treasury. After all project costs related to the issuance of the bonds have been paid, the bill would require any remaining balance or surplus in the building fund of the school district or community college district to be applied to debt service or returned to taxpayers.
Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 15146 of the Education Code is amended
2to read:
(a) The bonds shall be issued and sold pursuant to
4Section 15140, payable out of the interest and sinking fund of the
5begin insert school district or community collegeend insert district. The governing board
6begin insert of the school district or community college districtend insert may sell the
7bonds at a negotiated sale or by competitive bidding.
8(b) (1) Before the sale, the governing boardbegin insert of the school district
9or community college districtend insert shall adopt a resolution,
as an agenda
10item at a public meeting, that includes all of the following:
11(A) Express approval of the method of sale.
12(B) Statement of the reasons for the method of sale selected.
13(C) Disclosure of the identity of the bond counsel, and the
14identities of the bond underwriter and the financial adviser if either
15or both are used for the sale, unless these individuals have not been
16selected at the time the resolution is adopted, in which case the
17governing boardbegin insert of the school district or community college districtend insert
18 shall disclose their identities at the public meeting occurring after
19they have been selected.
20(D) Estimates of the costs associated with the bond issuance.
21(E) If the sale includes bonds that allow for the compounding
22of interest, including, but not limited to, capital appreciation bonds,
23disclosure of the financing term and time of maturity, repayment
24ratio, and the estimated change in the assessed value of taxable
25property within the school district or community college district
26over the term of the bonds.
27(2) If the sale includes bonds that allow for the compounding
28of interest, including, but not limited to, capital appreciation bonds,
29the resolution shall be publicly noticed on at least two consecutive
30meeting agendas, first as an information item and second as an
31action item.
P3 1(c) If the sale includes bonds that allow for the compounding
2of interest, including, but not limited to, capital appreciation bonds,
3the agenda item shall identify that
bonds that allow for the
4compounding of interest are proposed and the governing boardbegin insert of
5the school district or community college districtend insert shall be presented
6with all of the following:
7(1) An analysis containing the total overall cost of the bonds
8that allow for the compounding of interest.
9(2) A comparison to the overall cost of current interest bonds.
10(3) The reason bonds that allow for the compounding of interest
11are being recommended.
12(4) A copy of the disclosure made by the underwriter in
13compliance with Rule G-17 adopted by the federal Municipal
14Securities Rulemaking Board.
15(d) After the sale, the governing boardbegin insert of the school district or
16community college districtend insert shall do both of the following:
17(1) Present the actual cost information for the sale at its next
18scheduled public meeting.
19(2) Submit an itemized summary of the costs of the bond sale
20to the California Debt and Investment Advisory Commission.
21(e) The governing boardbegin insert of the school district or community
22college districtend insert shall ensure that all necessary information and
23reports regarding the sale or planned sale of bonds by thebegin insert
school
24district or community collegeend insert district it governs are submitted to
25the California Debt and Investment Advisory Commission in
26compliance with Section 8855 of the Government Code.
27(f) The bonds may be sold at a discount not to exceed 5 percent
28and at an interest rate not to exceed the maximum rate permitted
29by law. If the sale is by competitive bid, the governing boardbegin insert of
30the school district or community college districtend insert shall comply with
31Sections 15147 and 15148. The bonds shall be sold by the
32governing boardbegin insert of the school district or community college districtend insert
33 no later than the date designated by the governing boardbegin insert
of the
34school district or community college districtend insert as the final date for
35the sale of the bonds.
36(g) The proceeds of the sale of the bonds, exclusive of any
37premium received, shall be deposited in the county treasury to the
38credit of the building fund of the school district, or community
39college district as designated by the California Community
40Colleges Budget and Accounting Manual. The proceeds deposited
P4 1shall be drawn out as other school moneys are drawn out. The
2bond proceeds withdrawn shall not be applied to any purposes
3other than those for which the bonds were issued.begin insert
At no time shall
4the proceeds be withdrawn by the school district or community
5college district for investment outside the county treasury. After
6all project costs related to the issuance of the bonds have been
7paid, any remaining balance or surplus in the building fund of the
8school district or community college district shall be applied to
9debt service or returned to taxpayers.end insert Any premium or accrued
10interest received from the sale of the bonds shall be deposited in
11the interest and sinking fund of the school district or community
12college district.
13(h) The governing boardbegin insert of the school district or community
14college districtend insert may cause to be deposited proceeds of sale of any
15series of the bonds in an amount not exceeding 2 percent of the
16principal amount of the bonds in a costs of issuance account,
which
17may be created in the county treasury or held by a fiscal agent
18appointed by the school district or community college district for
19this purpose, separate from the building fund and the interest and
20sinking fund of thebegin insert school district or community collegeend insert district.
21The proceeds deposited shall be drawn out on the order of the
22governing boardbegin insert of the school district or community college districtend insert
23 or an officer of thebegin insert school district or community collegeend insert district
24duly authorized by the governing boardbegin insert of the school district or
25community college districtend insert
to make the order, only to pay
26authorized costs of issuance of the bonds. Upon the order of the
27governing boardbegin insert
of the school district or community college districtend insert
28 or duly authorizedbegin delete officer,end deletebegin insert officer of the school district or
29community college district,end insert the remaining balance shall be
30transferred to the county treasury to the credit of the building fund
31of the school district or community college district. The deposit
32of bond proceeds pursuant to this subdivision shall be a proper
33charge against the building fund of the school district or community
34college district.
35(i) The governing boardbegin insert of the school district or community
36college districtend insert may cause to be deposited proceeds of sale of any
37series of the bonds in the
interest and sinking fund of thebegin insert school
38district or community collegeend insert district in the amount of the annual
39reserve permitted by Section 15250 or in any lesser amount, as the
40governing boardbegin insert of the school district or community college districtend insert
P5 1 shall determine from time to time. The deposit of bond proceeds
2pursuant to this subdivision shall be a proper charge against the
3building fund of the school district or community college district.
4(j) The governing boardbegin insert of the school district or community
5college districtend insert may cause to be deposited proceeds of sale of any
6series of the bonds in the interest and sinking fund of thebegin insert
school
7district or community collegeend insert district in the amount not exceeding
8the interest scheduled to become due on that series of bonds for a
9period of two years from the date of issuance of that series of
10bonds. The deposit of bonds proceeds pursuant to this subdivision
11shall be a proper charge against the building fund of the school
12district or community college district.
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