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(Parenthesis
( ) Indicate Expenditure Decreases)
State Department of Education (SDE)
SUMMARY
Synopsis
of Bill
Senate Bill 847 provides for the timely payment of school district general obligation bonds by the State Treasurer on behalf of the school districts. It also allows the State Treasurer to withhold the state equalization guarantee (SEG) distribution of a school district in order to repay the State Treasurer.
Significant
Issues
The legislation provides that whenever a paying agent has not received payment of principal and interest on school district general obligation bonds on the business day prior to the payment date, the paying agent must notify the State Treasurer, the Department of Finance and Administration, the SDE and school district.
If the school district
will not make payment by the due date, the State Treasurer will then forward
the amount needed to make the payment to the paying agent. The State Treasurer
will then withhold an equal amount from the next succeeding payment of the SEG
distribution.
The State Treasurer
will notify the SDE, the chief financial officer of the school district, the Legislative
Finance Committee (LFC) and the
Legislative Education Study Committee (LESC) of the amounts withheld and
payments made on behalf of the school district.
The bill requires that
whenever the State Treasurer is required to make a payment on behalf of the
school district , the SDE must initiate an internal audit of the school
district to determine the reason for the nonpayment and to assist the school
district in resolving the issue.
FISCAL IMPLICATIONS
According to SDE, the
provisions in this bill would contribute toward school districts maintaining
ratings for their general obligation bonds. However, should state equalization
payments be withheld, a district might be
unable to meet its contractual obligations to teachers and other certified
staff.
ADMINISTRATIVE IMPLICATIONS
The SDE would be
required to initiate an internal audit, and assist the school district.
RS/ls