Amended in Assembly April 13, 2016

Amended in Assembly March 28, 2016

California Legislature—2015–16 Regular Session

Assembly BillNo. 2738


Introduced by Assembly Member Olsen

(Coauthors: Senators Bates, Huff, and Moorlach)

February 19, 2016


An act to amend Section 15146 of the Education Code, relating to school bonds.

LEGISLATIVE COUNSEL’S DIGEST

AB 2738, as amended, 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This bill would prohibit the proceeds from the sale of bonds from being withdrawn by the school district or community college district for investment outside the county treasury.begin delete After all project costs related to the issuance of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.end delete

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

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SECTION 1.  

Section 15146 of the Education Code is amended
2to read:

3

15146.  

(a) The bonds shall be issued and sold pursuant to
4Section 15140, payable out of the interest and sinking fund of the
5school district or community college district. The governing board
6of the school district or community college district may sell the
7bonds at a negotiated sale or by competitive bidding.

8(b) (1) Before the sale, the governing board of the school district
9or community college district 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 board of the school district or community college district
18shall 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
P3    1meeting agendas, first as an information item and second as an
2action item.

3(c) If the sale includes bonds that allow for the compounding
4of interest, including, but not limited to, capital appreciation bonds,
5the agenda item shall identify that bonds that allow for the
6compounding of interest are proposed and the governing board of
7the school district or community college district shall be presented
8with all of the following:

9(1) An analysis containing the total overall cost of the bonds
10that allow for the compounding of interest.

11(2) A comparison to the overall cost of current interest bonds.

12(3) The reason bonds that allow for the compounding of interest
13are being recommended.

14(4) A copy of the disclosure made by the underwriter in
15compliance with Rule G-17 adopted by the federal Municipal
16Securities Rulemaking Board.

17(d) After the sale, the governing board of the school district or
18community college district shall do both of the following:

19(1) Present the actual cost information for the sale at its next
20scheduled public meeting.

21(2) Submit an itemized summary of the costs of the bond sale
22to the California Debt and Investment Advisory Commission.

23(e) The governing board of the school district or community
24college district shall ensure that all necessary information and
25reports regarding the sale or planned sale of bonds by the school
26district or community college district it governs are submitted to
27the California Debt and Investment Advisory Commission in
28compliance with Section 8855 of the Government Code.

29(f) The bonds may be sold at a discount not to exceed 5 percent
30and at an interest rate not to exceed the maximum rate permitted
31by law. If the sale is by competitive bid, the governing board of
32the school district or community college district shall comply with
33Sections 15147 and 15148. The bonds shall be sold by the
34governing board of the school district or community college district
35no later than the date designated by the governing board of the
36school district or community college district as the final date for
37the sale of the bonds.

38(g) The proceeds of the sale of the bonds, exclusive of any
39premium received, shall be deposited in the county treasury to the
40credit of the building fund of the school district, or community
P4    1college district as designated by the California Community
2Colleges Budget and Accounting Manual. The proceeds deposited
3shall be drawn out as other school moneys are drawn out. The
4bond proceeds withdrawn shall not be applied to any purposes
5other than those for which the bonds were issued. At no time shall
6the proceeds be withdrawn by the school district or community
7college district for investment outside the county treasury.begin delete After
8all project costs related to the issuance of the bonds have been
9paid, any remaining balance or surplus in the building fund of the
10school district or community college district shall be applied to
11debt service.end delete
Any premium or accrued interest received from the
12sale of the bonds shall be deposited in the interest and sinking fund
13of the school district or community college district.

14(h) The governing board of the school district or community
15college district may cause to be deposited proceeds of sale of any
16series of the bonds in an amount not exceeding 2 percent of the
17principal amount of the bonds in a costs of issuance account, which
18may be created in the county treasury or held by a fiscal agent
19appointed by the school district or community college district for
20this purpose, separate from the building fund and the interest and
21sinking fund of the school district or community college district.
22The proceeds deposited shall be drawn out on the order of the
23governing board of the school district or community college district
24or an officer of the school district or community college district
25duly authorized by the governing board of the school district or
26community college district to make the order, only to pay
27authorized costs of issuance of the bonds. Upon the order of the
28governing board of the school district or community college district
29 or duly authorized officer of the school district or community
30college district, the remaining balance shall be transferred to the
31county treasury to the credit of the building fund of the school
32district or community college district. The deposit of bond proceeds
33pursuant to this subdivision shall be a proper charge against the
34building fund of the school district or community college district.

35(i) The governing board of the school district or community
36college district may cause to be deposited proceeds of sale of any
37series of the bonds in the interest and sinking fund of the school
38district or community college district in the amount of the annual
39reserve permitted by Section 15250 or in any lesser amount, as the
40governing board of the school district or community college district
P5    1shall 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 board of the school district or community
5college district may cause to be deposited proceeds of sale of any
6series of the bonds in the interest and sinking fund of the school
7district or community college 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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