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2005 California Education Code Sections 41329.50-41329.57 Article 2.7. Emergency Apportionment Financing
EDUCATION CODESECTION 41329.50-41329.57
41329.50. The following definitions apply to this article, Article 2 (commencing with Section 41320), and Article 2.5 (commencing with Section 41325), unless the context clearly indicates or requires another or different meaning: (a) "Bank" means the California Infrastructure and Economic Development Bank. (b) "Bonds" has the same meaning specified in Section 63010 of the Government Code. (c) "Loan" and "emergency apportionments" means the financing described in Sections 41329.51, 41329.52, and 41329.53. The financing does not constitute a borrowing but an advance payment of apportionments subject to repayment with interest as described in the article. (d) "School district" means a school district that requests an emergency apportionment pursuant to Section 41320, including, as applicable, an administrator appointed pursuant to Article 2 (commencing with Section 41320) and a trustee appointed pursuant to Article 2.5 (commencing with Section 41325). 41329.51. Notwithstanding any other law, an emergency apportionment is a financing provided to a school district complying with the requirements contained in Article 2 (commencing with Section 41320) and Article 2.5 (commencing with Section 41325). The emergency apportionment shall be made pursuant to either Section 41329.52 or Section 41329.53, as determined by statute. The school district, the bank, and the Superintendent of Public Instruction shall promptly perform the duties specified in the statute making the emergency apportionment. 41329.52. (a) A school district may receive a two-part financing designed to provide an advance of apportionments owed to the district from the State School Fund. (b) The initial emergency apportionment shall be an interim loan from the General Fund to the school district. General Fund money shall not be advanced to a school district until that district agrees to obtain a lease financing as described in subdivision (c) and the bank adopts a reimbursement resolution governing the lease financing. The interim loan shall be repaid in full, with interest, from the proceeds of the lease financing pursuant to subdivision (c) within one year of the date the district receives the initial emergency apportionment disbursement. The interest rate on the interim loan shall be the rate earned by moneys in the Pooled Money Investment Account as of the date of the initial disbursement of emergency apportionments to the school district. (c) The school district shall enter into a lease financing with the bank for the purpose of financing the emergency apportionment, including a repayment to the General Fund of the amount advanced pursuant to subdivision (b). In addition to the emergency apportionment, the lease financing may include funds necessary for reserves, capitalized interest, credit enhancements and costs of issuance. The bank shall issue bonds for that purpose pursuant to the powers granted pursuant to the Bergeson-Peace Infrastructure and Economic Development Bank Act as set forth in Division 1 (commencing with Section 63000) of Part 6.7 of the Government Code. The term of the lease shall not exceed 20 years, except that if at the end of the lease term any rent payable is not fully paid, or if the rent payable has been abated, the term of the lease shall be extended for a period not to exceed 10 years. 41329.53. (a) As an alternative to the lease financing pursuant to Section 41329.52, a school district may receive an emergency apportionment from the General Fund designed to provide an advance of apportionments owed to the district from the State School Fund. The emergency apportionment shall be repaid within 20 years. The calculation of the amount of the apportionment, including implied costs, and the interest rate shall be calculated pursuant to subdivision (b). Each year the Superintendent of Public Instruction shall withhold from the apportionments to be made to the district from the State School Fund an amount equal to the emergency apportionment repayment that becomes due in the year. (b) The determination by statute as to whether the emergency apportionment shall take the form of lease financing pursuant to Section 41329.52 or an emergency apportionment from the General Fund pursuant to this section shall be based upon the availability of funds within the General Fund and not on any cost differential between the two financing mechanisms. To ensure that the two alternatives are cost neutral, if the statute does not authorize a lease financing, the bank shall commission a cost study from financial advisers under contract with the bank to determine the interest rate, costs of issuance, and if it is more cost effective, credit enhancement costs likely if the financing was a lease financing rather than an emergency apportionment from the General Fund. These implied lease costs shall be included as the fixed interest rate on the repayment of the emergency apportionment to the General Fund, repayable over 20 years. 41329.54. In furtherance of the lease financing authorized pursuant to Section 41329.52, and notwithstanding any other law, the school district may lease any property of the school district to the bank or from the bank, in connection with the bonds issued by the bank. In each case, the lease shall include any rental provision or term and any transfer, assignment, payment, security, default, remedy, and other terms or provisions agreed to by the bank and the school district. In addition, the school district may enter into any agreement for liquidity or credit enhancement, with any reimbursement, payment, interest, security, default, remedy and other terms it deems necessary or appropriate in connection with entering into the lease financing. The school district may enter into any other agreements or execute any other documents necessary or desirable to carry out the purposes of this section. This section shall be deemed to provide a complete, additional, and alternative method for accomplishing the acts authorized by this article. Any agreement entered into in connection with the lease of any property of the district pursuant to a financing pursuant to Section 41329.52, including without limitation, any agreement for liquidity or credit enhancement, need not comply with the requirements of any other law applicable to the purchase, sale, or lease of school district property or the granting of any pledge or encumbrance. 41329.55. (a) Simultaneous with the execution of the lease financing authorized pursuant to Section 41329.52, the bank shall provide to the Controller and the school district a notification of its lease financing. The notice shall include a schedule of rent payments to become due to the bank from the school district and the name of the bond trustee. The Controller shall make the apportionment to the bond trustee of those amounts on the dates shown on the schedule. The bank may further authorize the apportionments to be used to pay or reimburse the provider of any credit enhancement of bonds and other ongoing or periodic ancillary costs of the bond financing issued by the bank in connection with this article. If the amount of rent payments vary from the schedule as a result of variable interest rates on the bonds, early redemptions, or changes in expenses, the bank shall amend or supplement the schedule accordingly. The Controller shall make the apportionment only from moneys in Section A of the State School Fund designated for apportionment to the district and any apportionment authorized pursuant to this subdivision shall constitute a lien senior to any other apportionment or payment of State School Fund moneys to or for that district not made pursuant to this subdivision. (b) The amount apportioned for a school district pursuant to this section is an allocation to the district for purposes of subdivision (b) of Section 8 of Article XVI of the California Constitution. For purposes of computing revenue limits pursuant to Section 42238 for any school district, the revenue limit for any fiscal year in which funds are apportioned for the district pursuant to this section shall include any amounts apportioned by the Controller pursuant to subdivision (a) as well as Section 41329.57. (c) No party, including the school district or any of its creditors, shall have any claim to the money apportioned or to be apportioned to the bond trustee by the Controller pursuant to this section. 41329.56. (a) Chapter 57 of the Statutes of 1993 consolidated several previous emergency apportionments and a loan to the West Contra Costa Unified School District and specified the repayment terms of that apportionment. Chapter 14 of the Statutes of 2003 authorized an emergency apportionment to the Oakland Unified School District and specified the repayment terms of that apportionment. Collectively these are referred to in this section as "existing apportionments." (b) Promptly after August 23, 2004, the bank shall issue separate bonds for the West Contra Costa Unified School District and the Oakland Unified School District for lease financing pursuant to Section 41329.52. The school districts shall use the proceeds to repay the existing apportionments. The terms of the leases shall not exceed 20 years, except that if at the end of the lease term any rent payable is not fully paid, or if the rent payable has been abated, the term of the lease shall be extended for a period not to exceed 10 years. 41329.57. (a) (1) Pursuant to a schedule provided to the Controller by the bank, the Controller shall transfer from Section A of the State School Fund the amount of funds necessary to pay the warrants issued pursuant to paragraph (2) so that the effective cost of the lease financing provided to the Oakland Unified School District, the Vallejo City Unified School District, and the West Contra Costa Unified School District pursuant to this article shall be equal to the cost of the original General Fund emergency loan made to each district. (A) For the purposes of determining the cost of the original emergency loan for the West Contra Costa Unified School District, the original interest rate is the rate established pursuant to Section 41474 of 1.532 percent. (B) For the purposes of determining the cost of the original emergency loan for the Oakland Unified School District, the original interest rate is 1.778 percent. This rate shall also apply to any disbursements of the loan pursuant to Chapter 14 of the Statutes of 2003 that are subsequent to August 23, 2004. (C) For the purposes of determining the cost of the original emergency loan for the Vallejo City Unified School District, the original interest rate is 1.5 percent. This rate shall also apply to any disbursements of the loan pursuant to Chapter 53 of the Statutes of 2004 that are subsequent to August 23, 2004. (2) The executive director or chair of the bank shall periodically provide a schedule to the Controller and each school district of the actual amount of the difference between the cost of the lease financing compared to the cost of the original emergency loan for each district for each year and the Controller shall issue warrants to each school district pursuant to the schedule. Payments to a district shall occur only during the term of the loan for that district and shall be made no sooner than the corresponding payments are made to the bond trustee under the lease financing for that district. (3) For purposes of making the computations required by Section 8 of Article XVI of the California Constitution, the warrants issued pursuant to paragraph (2) are "General Fund revenues appropriated to school districts," as defined in subdivision (c) of Section 41202 for the fiscal years in which the warrants are issued and included within the "total allocations to school districts and community college districts from General Fund proceeds of taxes appropriated pursuant to Article XIII B" as defined in subdivision (e) of Section 41202, for the fiscal years in which the warrants are issued. (b) It is the intent of the Legislature that the financing cost subsidies funded in this section not be deemed precedent nor in conflict with Section 41329.53, as these districts requested loans prior to the enactment of this article.
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