2015 Indiana Code TITLE 20. EDUCATION ARTICLE 48. BORROWING AND BONDS CHAPTER 1. BORROWING AND BONDS
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IC 20-48
ARTICLE 48. BORROWING AND BONDS
IC 20-48-1
Chapter 1. Borrowing and Bonds
IC 20-48-1-1
Powers; issuance of bonds; improvement of real estate
Sec. 1. (a) As used in this section, "improvement of real estate"
includes:
(1) construction, reconstruction, remodeling, alteration, or repair
of buildings or additions to buildings;
(2) equipment related to activities specified in subdivision (1);
and
(3) auxiliary facilities related to activities specified in
subdivision (1), including facilities for:
(A) furnishing water, gas, and electricity;
(B) carrying and disposing of sewage and storm and surface
water drainage;
(C) housing of school owned buses;
(D) landscaping of grounds; and
(E) construction of walks, drives, parking areas,
playgrounds, or facilities for physical training.
(b) Subject to IC 5-3-1-3(h), a school corporation is authorized to
issue bonds to pay the:
(1) cost of acquisition and improvement of real estate for school
purposes;
(2) funding of judgments;
(3) cost of the purchase of school buses; and
(4) incidental expenses incurred in connection with and on
account of the issuance of the bonds.
As added by P.L.2-2006, SEC.171. Amended by P.L.184-2015,
SEC.11.
IC 20-48-1-2
Powers; issuance of bonds; retirement or severance liability
Sec. 2. (a) As used in this section, "retirement or severance
liability" means the payments anticipated to be required to be made
to employees of a school corporation upon or after termination of the
employment of the employees by the school corporation under an
existing or previous employment agreement.
(b) This section applies to each school corporation that:
(1) did not issue bonds under IC 20-5-4-1.7 before its repeal; or
(2) issued bonds under IC 20-5-4-1.7 (repealed):
(A) before April 14, 2003; or
(B) after April 13, 2003, if an order approving the issuance
of the bonds was issued by the department of local
government finance before April 14, 2003.
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(c) In addition to the purposes set forth in section 1 of this chapter,
a school corporation described in subsection (b) may issue bonds to
implement solutions to contractual retirement or severance liability.
The issuance of bonds for this purpose is subject to the following
conditions:
(1) The school corporation may issue bonds under this section
only one (1) time.
(2) A school corporation described in subsection (b)(1) or
(b)(2)(A) must issue the bonds before July 1, 2006.
(3) The solution to which the bonds are contributing must be
reasonably expected to reduce the school corporation's unfunded
contractual liability for retirement or severance payments as it
existed on June 30, 2001.
(4) The amount of the bonds that may be issued for the purpose
described in this section may not exceed:
(A) two percent (2%) of the true tax value of property in the
school corporation, for a school corporation that did not issue
bonds under IC 20-5-4-1.7 (before its repeal); or
(B) the remainder of:
(i) two percent (2%) of the true tax value of property in the
school corporation as of the date that the school
corporation issued bonds under IC 20-5-4-1.7 (before its
repeal); minus
(ii) the amount of bonds that the school corporation issued
under IC 20-5-4-1.7 (before its repeal);
for a school corporation that issued bonds under
IC 20-5-4-1.7 (repealed) as described in subsection (b)(2).
(5) Each year that a debt service levy is needed under this
section, the school corporation shall reduce the total property
tax levy for the school corporation's transportation, school bus
replacement, capital projects, and art association and historical
society funds, as appropriate, in an amount equal to:
(A) the property tax levy needed for the debt service under
this section; multiplied by
(B) the adjustment percentage set forth in subsection (f) or
(g), as applicable.
The property tax rate for each of these funds shall be reduced
each year until the bonds are retired.
(6) The school corporation shall establish a separate debt service
fund for repayment of the bonds issued under this section.
(d) Bonds issued for the purpose described in this section shall be
issued in the same manner as other bonds of the school corporation.
(e) Bonds issued under this section are not subject to the petition
and remonstrance process under IC 6-1.1-20 or to the limitations
contained in IC 36-1-15.
(f) This subsection applies only if the governing body of a school
corporation adopts a resolution specifying that the adjustment
percentages under this subsection apply to the school corporation.
The adjustment percentage under this subsection is the following:
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(1) For property taxes first due and payable in 2013, twenty-five
percent (25%).
(2) For property taxes first due and payable in 2014, fifty
percent (50%).
(3) For property taxes first due and payable in 2015,
seventy-five percent (75%).
(4) For property taxes first due and payable after 2015, one
hundred percent (100%).
(g) If the governing body of a school corporation does not adopt
a resolution specifying that the adjustment percentages under
subsection (f) apply to the school corporation, the adjustment
percentage is one hundred percent (100%).
As added by P.L.2-2006, SEC.171. Amended by P.L.1-2007,
SEC.155; P.L.1-2010, SEC.83; P.L.145-2012, SEC.27.
IC 20-48-1-2.5
Status of bonds issued under prior statute; debt service levies,
property tax levies
Sec. 2.5. Notwithstanding the repeal of IC 20-5-4-1.7, as added by
P.L.253-2001, the following provisions apply to bonds issued under
IC 20-5-4-1.7, as added by P.L.253-2001, before December 31, 2004:
(1) The bonds remain valid and binding obligations of the
school corporation that issued them, as if IC 20-5-4-1.7 had not
been repealed.
(2) Each year that a debt service levy is needed for the bonds,
the school corporation that issued the bonds shall reduce its total
property tax levy for the school corporation's other funds in an
amount equal to the property tax levy needed for the debt
service on the bonds.
As added by P.L.220-2011, SEC.340.
IC 20-48-1-3
Payment schedule; maximum term; designee of paying agent
Sec. 3. (a) Bonds authorized by this article and IC 20-26-1 through
IC 20-26-5 must be payable in the amounts and at the times and
places determined by the governing body.
(b) Bonds issued for the funding of judgments or for the purchase
of school buses shall mature not more than five (5) years from the
date of the bonds. Bonds issued for other purposes must mature not
more than twenty-five (25) years from the date of the bonds.
(c) The governing body may provide that principal and interest of
the bonds are payable at a bank in Indiana and may also be payable
at the option of the holder at another bank designated by the
governing body, either before or after the sale.
(d) The governing body may pay the fees of the bank paying agent
and shall deposit with the paying agent, if any, within a reasonable
period before the date that principal and interest become due
sufficient money for the payment of the principal and interest on the
due date.
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As added by P.L.2-2006, SEC.171.
IC 20-48-1-4
Conditions of sale; par value; public sale; interest rate; approval
required for certain bonds
Sec. 4. (a) Bonds issued by a school corporation must be sold at:
(1) not less than par value;
(2) public sale as provided by IC 5-1-11; and
(3) any rate or rates of interest determined by the bidding.
(b) This subsection does not apply to bonds for which a school
corporation:
(1) after June 30, 2008, makes a preliminary determination as
described in IC 6-1.1-20-3.1 or IC 6-1.1-20-3.5 or a decision as
described in IC 6-1.1-20-5; or
(2) in the case of bonds not subject to IC 6-1.1-20-3.1,
IC 6-1.1-20-3.5, or IC 6-1.1-20-5, adopts a resolution or
ordinance authorizing the bonds after June 30, 2008.
If the net interest cost exceeds eight percent (8%) per year, the bonds
must not be issued until the issuance is approved by the department
of local government finance.
As added by P.L.2-2006, SEC.171. Amended by P.L.146-2008,
SEC.522.
IC 20-48-1-5
Signatures; issuing party
Sec. 5. (a) Bonds shall be executed in the name and on behalf of
the school corporation by the president and secretary of the
governing body. One (1) of the signatures may be by facsimile
imprinted on a bond instrument, but at least one (1) of the signatures
shall be manually affixed. The secretary of the governing body shall
cause the seal of the school corporation to be impressed or a facsimile
of the seal printed on each bond. Interest coupons, if any, shall be
executed by the facsimile signature of the treasurer of the governing
body.
(b) If the president, secretary, or treasurer of the governing body
ceases to be the president, secretary, or treasurer for any reason after
the officer has executed bonds under this section but before the bonds
have been delivered to the purchaser or purchasers of the bonds, the
bonds are binding and valid obligations as if the officer were in office
at the time of delivery. The treasurer of the governing body shall
cause the bonds to be delivered to the purchaser or purchasers and
shall receive payment for the bonds.
As added by P.L.2-2006, SEC.171.
IC 20-48-1-6
Required levy; payment of obligations
Sec. 6. (a) The governing body shall provide for the payment of
principal and interest on bonds executed under section 5 of this
chapter by levying annually a tax that is sufficient to pay the
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principal and interest as the bonds become due.
(b) The bodies charged with the review of budgets and tax levies
shall review a levy for principal and interest described in subsection
(a) to determine whether the levy is sufficient.
As added by P.L.2-2006, SEC.171.
IC 20-48-1-7
Emergency loans
Sec. 7. (a) This section applies if a governing body finds by
written resolution that an emergency exists that requires the
expenditure of money for a lawful corporate purpose that was not
included in the school corporation's existing budget and tax levy.
(b) If a governing body makes a finding specified in subsection
(a), the governing body may authorize making an emergency loan
that may be evidenced by the issuance of the school corporation's
note in the same manner and subject to the same procedure and
restrictions as provided for the issuance of the school corporation's
bonds, except as to purpose.
(c) If a governing body authorizes an emergency loan as specified
in subsection (b), the governing body shall, at the time for making the
next annual budget and tax levy for the school corporation, make a
levy to the credit of the fund for which the expenditure is made
sufficient to pay the loan and the interest on the loan. However, the
interest on the loan may be paid from the debt service fund.
As added by P.L.2-2006, SEC.171.
IC 20-48-1-8
Bonds; emergency loans; compliance with other laws
Sec. 8. The provisions of all general statutes and rules relating to:
(1) filing petitions requesting the issuance of bonds and giving
notice of the issuance of bonds;
(2) giving notice of determination to issue bonds;
(3) giving notice of a hearing on the appropriation of the
proceeds of the bonds and the right of taxpayers to appear and
be heard on the proposed appropriation; and
(4) the right of taxpayers and voters to remonstrate against or
vote on, as applicable, the issuance of bonds;
apply to proceedings for the issuance of bonds and the making of an
emergency loan under this article and IC 20-26-1 through IC 20-26-5.
An action to contest the validity of the bonds or emergency loans
may not be brought later than five (5) days after the acceptance of a
bid for the sale of the bonds.
As added by P.L.2-2006, SEC.171. Amended by P.L.219-2007,
SEC.99; P.L.146-2008, SEC.523.
IC 20-48-1-9
Anticipation warrants
Sec. 9. (a) If the governing body of a school corporation finds and
declares that an emergency exists to borrow money with which to pay
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current expenses from a particular fund before the receipt of revenues
from taxes levied or state tuition support distributions for the fund,
the governing body may issue warrants in anticipation of the receipt
of the revenues.
(b) The principal of warrants issued under subsection (a) is
payable solely from the fund for which the taxes are levied or from
the school corporation's general fund in the case of anticipated state
tuition support distributions. However, the interest on the warrants
may be paid from the debt service fund, from the fund for which the
taxes are levied, or the general fund in the case of anticipated state
tuition support distributions.
(c) The amount of principal of temporary loans maturing on or
before June 30 for any fund may not exceed eighty percent (80%) of
the amount of taxes and state tuition support distributions estimated
to be collected or received for and distributed to the fund at the June
settlement.
(d) The amount of principal of temporary loans maturing after
June 30 and on or before December 31 may not exceed eighty percent
(80%) of the amount of taxes and state tuition support distributions
estimated to be collected or received for and distributed to the fund
at the December settlement.
(e) The county auditor or the auditor's deputy shall determine the
estimated amount of taxes and state tuition support distributions to be
collected or received and distributed. The warrants evidencing a loan
in anticipation of tax revenue or state tuition support distributions
may not be delivered to the purchaser of the warrant and payment
may not be made on the warrant before January 1 of the year the loan
is to be repaid. However, the proceedings necessary for the loan may
be held and carried out before January 1 and before the approval. The
loan may be made even though a part of the last preceding June or
December settlement has not been received.
(f) Proceedings for the issuance and sale of warrants for more than
one (1) fund may be combined. Separate warrants for each fund must
be issued, and each warrant must state on the face of the warrant the
fund from which the warrant's principal is payable. An action to
contest the validity of a warrant may not be brought later than fifteen
(15) days after the first publication of notice of sale.
(g) An issue of tax or state tuition support anticipation warrants
may not be made if the total of all tax or state tuition support
anticipation warrants exceeds twenty thousand dollars ($20,000) until
the issuance is advertised for sale, bids are received, and an award is
made by the governing body as required for the sale of bonds, except
that the publication of notice of the sale is not necessary:
(1) outside the county; or
(2) more than ten (10) days before the date of sale.
As added by P.L.2-2006, SEC.171. Amended by P.L.146-2008,
SEC.524.
IC 20-48-1-10
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Temporary transfers among funds
Sec. 10. Temporary transfers of funds by a school corporation may
be made as authorized under IC 36-1-8-4.
As added by P.L.2-2006, SEC.171.
IC 20-48-1-11
Annual review of obligations; department of local government
finance; increase in levy to pay obligations; intercept of state
distributions to pay obligations
Sec. 11. (a) As used in this section, "debt service obligations"
refers to the principal and interest payable during a calendar year on
a school corporation's general obligation bonds and lease rentals
under IC 20-47-2 and IC 20-47-3.
(b) Before the end of each calendar year, the department of local
government finance shall review the bond and lease rental levies, or
any levies that replace bond and lease rental levies, of each school
corporation that are payable in the next succeeding year and the
appropriations from the levies from which the school corporation is
to pay the amount, if any, of the school corporation's debt service
obligations. If the levies and appropriations of the school corporation
are not sufficient to pay the debt service obligations, the department
of local government finance shall establish for each school
corporation:
(1) bond or lease rental levies, or any levies that replace the
bond and lease rental levies; and
(2) appropriations;
that are sufficient to pay the debt service obligations.
(c) Upon the failure of a school corporation to pay any of the
school corporation's debt service obligations during a calendar year
when due, the treasurer of state, upon being notified of the failure by
a claimant, shall pay the unpaid debt service obligations that are due
from the funds of the state only to the extent of the amounts
appropriated by the general assembly for the calendar year for
distribution to the school corporation from state funds, deducting the
payment from the appropriated amounts. A deduction under this
subsection must be made:
(1) first from all funds except state tuition support; and
(2) second from state tuition support.
(d) This section shall be interpreted liberally so that the state shall
to the extent legally valid ensure that the debt service obligations of
each school corporation are paid. However, this section does not
create a debt of the state.
As added by P.L.2-2006, SEC.171. Amended by P.L.146-2008,
SEC.525.
IC 20-48-1-12
Status of bonds issued under prior statute; debt service levies,
property tax levies
Sec. 12. Notwithstanding the repeal of IC 20-5-4-1.5, the
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following provisions apply to bonds issued under IC 20-5-4-1.5,
before December 2, 2000:
(1) The bonds remain valid and binding obligations of the
school corporation that issued them, as if IC 20-5-4-1.5 had not
been repealed.
(2) Each year that a debt service levy is needed for the bonds,
the school corporation that issued the bonds shall reduce its total
property tax levy for the school corporation's other funds in an
amount equal to the property tax levy needed for the debt
service on the bonds.
As added by P.L.220-2011, SEC.341.
IC 20-48-1-13
Sale of certain refunding bonds
Sec. 13. A school corporation may:
(1) issue bonds to refund bonds or other obligations that were
issued or entered into by a school corporation before that school
corporation completed a consolidation or merger under IC 20-23
or any other law; and
(2) sell the bonds at a negotiated, private sale to the Indiana
bond bank.
As added by P.L.140-2014, SEC.2.
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