BILL NUMBER: AB 2552 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 28, 2010
INTRODUCED BY Assembly Member Nestande
FEBRUARY 19, 2010
An act to add Section 15265 to amend
Sections 15268 and 15270 of, and to add Section 15151 to, the
Education Code, relating to education finance.
LEGISLATIVE COUNSEL'S DIGEST
AB 2552, as amended, Nestande. Education finance: cash out
refinancing.
Existing law establishes the system of public elementary and
secondary schools and public institutions of higher education in this
state. Under existing law, part of the funding for the public
institutions of elementary, secondary, and postsecondary institutions
in this state is derived from the sale of bonds whose issuance is
approved by voters either statewide or within the jurisdiction of a
local educational agency.
This bill would prohibit the proceeds of bonds issued by
a local educational agency pursuant to a measure approved by the
voters on or after January 1, 2011, from being used for cash out
refinancing unless authority for that procedure has been explicitly
included in that bond measure. The bill would define "cash out
refinancing" to mean the issuance of refunding general obligation
bonds to generate proceeds beyond the amount that would be needed to
retire the bonds outstanding prior to the refinancing
authorize a portion of the proceeds of the sale of refunding bonds to
be set aside and applied solely to the purposes for which the bonds
to be refunded were authorized to be issued by the voters and limits
that amount to the net present value if the amount by which the total
debt service to maturity on the bonds to be refunded exceeds the
total debt service to maturity on the refunding bonds .
Existing law authorizes the issuance of school district bonds
if the tax rate would not exceed $30 per $100,000, or $60 per
$100,000 in the case of a unified school district, of taxable
property when the assessed valuation is projected to increase in
accordance with specified constitutional provisions.
This bill would authorize those bonds at those rates when the
assessed valuation of the taxable property is projected to increase,
instead, at an annual rate no greater than the average annual rate of
growth in assessed value in the issuing district over a 20-year
period preceding the issuance.
Vote: majority. Appropriation: no. Fiscal committee: no
yes . State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 15151 is added to the
Education Code , to read:
15151. (a) The proceedings for issuance of refunding bonds of a
school district or community college district pursuant to Article 9
(commencing with Section 53550) of Chapter 3 of Part 1 of Division 2
of Title 5 of the Government Code may provide that a portion of the
proceeds of sale of the refunding bonds be deposited in the building
fund of the district, or a special account in that fund, as
appropriate. The amount deposited in the building fund or special
account pursuant to this subdivision shall be applied solely to the
purposes for which the bonds to be refunded were authorized to be
issued by the voters of the district.
(b) The portion of the proceeds of the sale of the refunding bonds
deposited pursuant to subdivision (a) shall be no greater than the
net present value of the amount by which the total debt service to
maturity on the bonds to be refunded exceeds the total debt service
to maturity on the refunding bonds. The net present value shall be
calculated using the discount rate equal to the yield on the
refunding bonds, as the yield is required to be calculated under the
United States Internal Revenue Code and United States Treasury
regulations promulgated under that code.
(c) The annual debt service on the refunding bonds shall be no
greater than the annual debt service on the bonds to be refunded in
each year that the refunding bonds are scheduled to be outstanding.
(d) Calculation of the amounts described in subdivisions (b) and
(c) shall be certified by a certified public accountant or accounting
firm licensed to practice in the state, by a holder of a valid
permit to practice public accountancy issued by the California Board
of Accountancy, or by a holder of a practice privilege pursuant to
Article 5.1 (commencing with Section 5096) of the Business and
Professions Code.
(e) Refunding bonds may only be issued pursuant to this section if
the tax rate that will be required to be levied to meet the
requirements of Section 18 of Article XVI of the California
Constitution with respect to the refunding bonds and all other bonds
of the district to remain outstanding would not exceed, in any year
the refunding bonds are scheduled to be outstanding, the rate levied
for all those bonds in the fiscal year the refunding bonds are
issued, when assessed valuation is projected by the district to
increase at an annual rate not greater than the average annual rate
of growth in assessed value in that district over the 20-year period
preceding the issuance.
SEC. 2. Section 15268 of the Education
Code is amended to read:
15268. The total amount of bonds issued, including bonds issued
pursuant to Chapter 1 (commencing with Section 15100), shall not
exceed 1.25 percent of the taxable property of the district as shown
by the last equalized assessment of the county or counties in which
the district is located. The bonds may only be issued if the tax rate
that will be required to be levied to meet the
requirements of Section 18 of Article XVI of the California
Constitution in the case of indebtedness incurred by a
school district with respect to indebtedness
authorized pursuant to this chapter, at a single election,
including bonds issued to refund authorized indebtedness,
would not exceed thirty dollars ($30) per year per one hundred
thousand dollars ($100,000) of taxable property when assessed
valuation is projected by the district to increase in
accordance with Article XIII A
of the California Constitution at an annual rate not
greater than the average annual rate of growth in assessed value in
that district over the 20- year period preceding the
issuance . For purposes of this section, the taxable property
of a district for any fiscal year shall be calculated to include, but
not be limited to, the assessed value of all unitary and operating
nonunitary property of the district, which shall be derived by
dividing the gross assessed value of the unitary and operating
nonunitary property within the district for the 1987-88 fiscal year
by the gross assessed value of all unitary and operating nonunitary
property within the county in which the district is located for the
1987-88 fiscal year, and multiplying that result by the gross
assessed value of all unitary and operating nonunitary property of
the county on the last equalized assessment roll.
SEC. 3. Section 15270 of the Education
Code is amended to read:
15270. (a) Notwithstanding Sections 15102 and 15268, any unified
school district may issue bonds pursuant to this article that, in
aggregation with bonds issued pursuant to Chapter 1 (commencing with
Section 15100), may not exceed 2.5 percent of the taxable property of
the district as shown by the last equalized assessment of the county
or counties in which the district is located. The bonds may only be
issued if the tax rate that will be required to be levied
to meet the requirements of Section 18 of Article XVI of the
California Constitution in the case of indebtedness incurred
with respect to indebtedness authorized
pursuant to this chapter at a single election, by a unified school
district, including bonds issued to refund authorized
indebtedness, would not exceed sixty dollars ($60) per year per
one hundred thousand dollars ($100,000) of taxable property when
assessed valuation is projected by the district to increase
in accordance with Article XIII
A of the California Constitution at an annual rate
not greater than the average annual rate of growth in assessed value
in that district over the 20- year period
preceding the issuance .
(b) Notwithstanding Sections 15102 and 15268, any community
college district may issue bonds pursuant to this article that, in
aggregation with bonds issued pursuant to Chapter 1 (commencing with
Section 15100), may not exceed 2.5 percent of the taxable property of
the district as shown by the last equalized assessment of the county
or counties in which the district is located. The bonds may only be
issued if the tax rate that will be required to be levied
to meet the requirements of Section 18 of Article XVI of the
California Constitution in the case of indebtedness incurred
with respect to indebtedness authorized
pursuant to this chapter at a single election, by a community college
district, including bonds issued to refund authorized
indebtedness, would not exceed twenty-five dollars ($25) per
year per one hundred thousand dollars ($100,000) of taxable property
when assessed valuation is projected by the district to increase
in accordance with Article XIII
A of the California Constitution at an
annual rate not greater than the average annual rate of growth in
assessed value in that district over the 20- year period
preceding the issuance .
(c) In computing the outstanding bonded indebtedness of any
unified school district or community college district for all
purposes of this section, any outstanding bonds shall be deemed to
have been issued for elementary school purposes, high school
purposes, and community college purposes, respectively, in the
respective amounts that the proceeds of the sale of those outstanding
bonds, excluding any premium and accrued interest received on that
sale, were or have been allocated by the governing board of the
unified school district or community college district to each of
those purposes respectively.
(d) For purposes of this section, the taxable property of a
district for any fiscal year shall be calculated to include, but not
be limited to, the assessed value of all unitary and operating
nonunitary property of the district, which shall be derived by
dividing the gross assessed value of the unitary and operating
nonunitary property within the district for the 1987-88 fiscal year
by the gross assessed value of all unitary and operating nonunitary
property within the county in which the district is located for the
1987-88 fiscal year, and multiplying the result by the gross assessed
value of all unitary and operating nonunitary property of the county
on the last equalized assessment roll. In the event of the
unification of If two or more school districts
are unified subsequent to the 1987-88 fiscal year, the
assessed value of all unitary and operating nonunitary property of
the unified district shall be deemed to be the total of the assessed
value of the taxable property of each of the unifying districts as
that assessed value would be determined under Section 15268.
(e) For the purposes of this article, "general obligation bonds,"
as that term is used in Section 18 of Article XVI of the California
Constitution, means bonds of a school district or community college
district the repayment of which is provided for by this chapter and
Chapter 1 (commencing with Section 15100) of Part 10, and includes
bonds of a school facilities improvement district the repayment of
which is provided for by this chapter and Chapter 2 (commencing with
Section 15300).
SECTION 1. Section 15265 is added to the
Education Code, to read:
15265. (a) This section applies to any bonds issued by a local
educational agency pursuant to a measure approved by the voters on or
after January 1, 2011.
(b) The proceeds of bonds issued by a local educational agency
shall not be used for cash out refinancing unless authority for that
procedure has been explicitly included in the bond measure approved
by the voters.
(c) As used in this section, "cash out refinancing" means the
issuance of refunding general obligation bonds to generate proceeds
beyond the amount that would be needed to retire the bonds
outstanding prior to the refinancing.