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AN ACT

RELATING TO EDUCATION; PROVIDING FOR THE TIMELY PAYMENT OF

SCHOOL DISTRICT GENERAL OBLIGATIONS BY WITHHOLDING STATE

EQUALIZATION GUARANTEE DISTRIBUTIONS; DECLARING AN EMERGENCY.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. Section 22-18-13 NMSA 1978 (being Laws 2003,

Chapter 46, Section 1) is amended to read:

"22-18-13. TIMELY PAYMENT OF SCHOOL DISTRICT

OBLIGATIONS.--

A. Whenever a paying agent has not received

payment of principal or interest on school district general

obligation bonds on the business day immediately prior to the

date on which the payment is due, the paying agent shall so

notify the department of finance and administration, the

department and the school district by telephone, facsimile or

other similar communication, followed by written verification,

of the payment status. The department of finance and

administration shall immediately contact the school district

and determine whether the school district will make the

payment by the date on which it is due.

B. Except as provided in Subsection C of this

section, if the school district indicates that it will not

make the payment by the date on which it is due, the

department of finance and administration shall forward the

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amount in immediately available funds necessary to make the

payment due on the bonds to the paying agent and shall

withhold an equal amount from the next succeeding payment of

the state equalization guarantee distribution. If the amount

of the next succeeding payment is insufficient to pay the

amount due, the department of finance and administration shall

withhold amounts from each succeeding payment of the state

equalization guarantee distribution, including payments to be

made in succeeding fiscal years but not more than twelve

consecutive months of payments, until the total payment of

principal and interest due has been withheld.

C. For a payment due on a bond issued on or after

the effective date of this 2007 act, if the school district

indicates that it will not make the payment by the date on

which it is due, the department of finance and administration

shall forward the amount in immediately available funds

necessary to make the payment due on the bonds to the paying

agent from the current fiscal year's undistributed state

equalization guarantee distribution to that school district

and, if not otherwise repaid by the school district from other

legally available funds, withhold the distributions from the

school district until the amount has been recouped by the

department of finance and administration, provided that, if

the amount of the undistributed state equalization guarantee

distribution in the current fiscal year is less than the

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payment due on the bond, the department of finance and

administration shall:

(1) forward in immediately available funds

to the paying agent an amount equal to the total amount of the

school district's undistributed state equalization guarantee

distribution and, if not otherwise repaid by the school

district from other legally available funds, withhold all

distributions to the school district for the remainder of the

fiscal year; and

(2) on July 1 of the following fiscal year,

forward in immediately available funds an amount equal to the

remaining amount due to the paying agent from that year's

state equalization guarantee distribution and, if not

otherwise repaid by the school district from other legally

available funds, withhold an equal amount from the

distribution to the school district until the amount paid has

been recouped in full.

D. The amounts forwarded to the paying agent by

the department of finance and administration shall be applied

by the paying agent solely to the payment of the principal or

interest due on the general obligation bonds of the school

district. The department of finance and administration shall

notify the department, the chief financial officer of the

school district, the department of finance and administration,

the legislative finance committee and the legislative

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education study committee of amounts withheld and payments

made pursuant to this section.

E. Upon the issuance of general obligation bonds

by a school district, the school district shall file with the

department of finance and administration a copy of the

resolution that authorizes the issuance of the bonds, a copy

of the official statement or other offering document for the

bonds, the agreement, if any, with the paying agent for the

bonds and the name, address and telephone number of the paying

agent; provided, however, that the failure of a school

district to file the information shall not affect the

obligation of the department of finance and administration to

withhold the state equalization guarantee distribution

pursuant to this section.

F. The state hereby covenants with the purchasers

and holders of general obligation bonds issued by school

districts that it will not repeal, revoke or rescind the

provisions of this section or modify or amend the same so as

to limit or impair the rights and remedies granted by this

section; provided that nothing in this subsection shall be

deemed or construed to require the state to continue the

payment of a state equalization guarantee distribution to any

school district or to limit or prohibit the state from

repealing, amending or modifying any law relating to the

amount of state equalization guarantee distributions to school

districts or the manner of payment or the timing thereof.

Nothing in this section shall be deemed or construed to create

a debt of the state with respect to the bonds within the

meaning of any state constitutional provision or to create any

liability except to the extent provided in this section.

G. Whenever the department of finance and

administration is required by this section to make a payment

of principal or interest on bonds on behalf of a school

district, the department shall initiate an audit of the school

district to determine the reason for the nonpayment and to

assist the school district, if necessary, in developing and

implementing measures to ensure that future payments will be

made when due.

H. Whenever the department of finance and

administration makes a payment of principal and interest on

bonds or other obligations of a school district and withholds

amounts from the state equalization guarantee distribution

pursuant to this section because of the failure to collect

property taxes, the school district may transfer delinquent

property taxes later collected out of the school district's

bond redemption fund and into its general fund.

I. This section applies to general obligation

bonds issued by a school district on or after July 1, 2003."

Section 2. EMERGENCY.--It is necessary for the public

peace, health and safety that this act take effect

immediately.

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