2007 California Education Code Article 2.7. Emergency Apportionment Financing

CA Codes (edc:41329.50-41329.59)

41329.50.  The following definitions apply to this article, and,
except as provided in subdivision (d), apply to 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, instead, constitutes 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 an
administrator appointed pursuant to Article 2 (commencing with
Section 41320) and a trustee appointed pursuant to Article 2.5
(commencing with Section 41325), or, for the purposes of this article
only, a community college district, including a special trustee
appointed pursuant to Section 71093 or 84040.



41329.51.  Notwithstanding any other law, an emergency apportionment
is a financing provided to a community college district as
authorized by the Legislature or to a school district, other than a
community college 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, or the Board of Governors of
the California Community Colleges, as appropriate, 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) at a time
mutually agreed upon between the Department of Finance and the bank.
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
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.
   (b) Except where financing is for a community college district,
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.
   (c) If financing is for the Compton Community College District,
the Controller shall make the apportionment only from moneys in
Section B of the State School Fund. Any apportionment authorized
pursuant to this subdivision shall constitute a lien senior to any
other apportionment or payment of Section B State School Fund moneys.

   (d) 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
subdivisions (a), (b), and (c), as well as Section 41329.57.
   (e) 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.



41329.58.  The sum of thirty million dollars (,000,000) is hereby
appropriated, without regard to fiscal year, from the General Fund
to the Board of Governors of the California Community Colleges for
apportionment to the Compton Community College District as an
emergency apportionment to finance, among other things, the
activities described in Article 5 (commencing with Section 74292) of
Chapter 5 of Part 46.



41329.59.  (a) On or before October 30, 2006, the Fiscal Crisis and
Management Assistance Team (FCMAT) shall conduct an extraordinary
audit of the Compton Community College District, to be delivered to
the Board of Governors of the California Community Colleges and the
Director of Finance, focused upon an examination of alleged fraud,
misappropriation of funds, or other illegal fiscal practices. The
audit shall be conducted in a timely and efficient manner.
   (b) On or before January 31, 2007, the FCMAT shall conduct a
comprehensive assessment and prepare a recovery plan, to be delivered
to the Board of Governors of the California Community Colleges and
the Department of Finance, for the Compton Community College District
addressing the five operational areas: financial management,
academic achievement, personnel management, facilities management,
and governance/community relations.
   (c) The FCMAT shall file a written status report at regular
intervals with the appropriate fiscal and policy committees of the
Legislature, the advisory committee to the special trustee, the Board
of Governors of the California Community Colleges, the Director of
Finance, and the Secretary for Education. The status reports shall
include the progress that the Compton Community College District is
making in meeting the recommendations of the FCMAT comprehensive
assessment and addressing the deficiencies identified by the
Accrediting Commission for Community and Junior Colleges.
   (d) Notwithstanding any other provision of law, an amount of up to
five hundred thousand dollars (0,000) shall be provided to the
Compton Community College District from any funds budgeted for FCMAT
in Item 6110-107-0001 of Section 2.00 of the annual Budget Act or any
other funds available from prior budget years for FCMAT for the
purpose of funding the audit described in subdivision (a) of this
section.