MISSISSIPPI LEGISLATURE
2010 Regular Session
To: Education
By: Representative Brown
AN ACT TO AUTHORIZE THE SCHOOL BOARD OF A LOCAL SCHOOL DISTRICT IN AN EXTREME EMERGENCY FINANCIAL SITUATION TO REQUEST AUTHORITY FROM THE STATE BOARD OF EDUCATION TO BORROW FROM THE DISTRICT'S SIXTEENTH SECTION PRINCIPAL FUND IN THE 2010, 2011 AND 2012 FISCAL YEARS; TO REQUIRE THE STATE BOARD OF EDUCATION TO ADOPT RULES AND REGULATIONS GOVERNING THE BORROWING OF SIXTEENTH SECTION PRINCIPAL FUNDS BY SCHOOL BOARDS, AND TO PRESCRIBE CERTAIN MATTERS THAT MUST BE ADDRESSED IN THE RULES AND REGULATIONS; TO AMEND SECTION 29-3-113, MISSISSIPPI CODE OF 1972, IN CONFORMITY TO THE PROVISIONS OF THIS ACT; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. (1) During the 2010, 2011 and 2012 fiscal years, the school board of a local school district that is in an extreme emergency financial situation that jeopardizes the safety, security or educational interests of the students enrolled in the schools in that district may submit a request to the State Board of Education seeking the authority to borrow funds from the district's sixteenth section principal fund.
(2) The State Board of Education shall adopt rules and regulations governing the borrowing of sixteenth section principal funds by school boards under this section. The rules and regulations must include provisions addressing the following matters:
(a) The procedure by which a school board may submit a request to the State Board of Education requesting the authority to borrow funds from the district's sixteenth section principal fund, including a description of the financial data or documents that a district must submit to the state board in order to demonstrate the district's extreme emergency financial situation;
(b) The objective criteria to be used by the State Board of Education in analyzing each request to borrow funds from the district's sixteenth section principal fund, including the parameters under which the board determines if a school district is, in fact, in an extreme emergency financial situation and a description of the findings that must be made by the board in support of a decision to grant a request;
(c) The manner in which the State Board of Education shall determine the maximum amount that a local school board may borrow from the district's sixteenth section principal fund, which, in the discretion of the state board, may be uniform for all school districts (for example, a percentage of a sixteenth section principal fund balance or a specified dollar amount) or a case-by-case determination depending on the school district's financial situation;
(d) The terms of repayment for funds borrowed from a school district's sixteenth section principal fund, including the interest rate which rate shall not be less than the rate paid on AA rated taxable bonds of similar maturity, a schedule for the repayment of principal and interest to the fund, the maximum number of years allowed for repayment, and any other provisions specifically relating to the repayment which term shall not exceed one hundred twenty (120) months deemed relevant by the State Board of Education. The State Board of Education may adopt uniform rules and regulations applicable to all school districts under this paragraph or, in its discretion, may provide that the terms of repayment shall be determined on a case-by-case basis, depending on the school district's financial situation;
(e) A requirement that the school district pledge all or a portion of its anticipated adequate education program allocations, local tax revenues or other sources of income, as determined by the State Board of Education, as collateral for the borrowed funds;
(f) A requirement that each school district requesting authority to borrow sixteenth section principal funds submit to the board an attainable plan by which the district intends to achieve savings in costs, which plan must be assessed by the State Board of Education; and
(g) All other matters deemed necessary by the State Board of Education in governing the borrowing of sixteenth section principal funds by school boards under this section.
(3) This section shall stand repealed on July 1, 2012.
SECTION 2. Section 29-3-113, Mississippi Code of 1972, is amended as follows:
29-3-113. The principal fund shall be a permanent township fund which shall consist of funds heretofore or hereafter derived from certain uses or for certain resources of school trust lands which shall be invested and, except as otherwise provided in this section, only the interest and income derived from such funds shall be expendable by the school district.
The principal fund shall consist of:
(a) Funds received for easements and rights-of-way pursuant to Section 29-3-91;
(b) Funds received for sales of lieu land pursuant to Sections 29-3-15 through 29-3-25;
(c) Funds received from any permanent damage to the school trust land;
(d) Funds received from the sale of nonrenewable resources, including, but not limited to, the sale of sand, gravel, dirt, clays and royalties received from the sale of mineral ores, coal, oil and gas;
(e) Funds received from the sale of buildings pursuant to Section 29-3-77;
(f) Funds received from the sale of timber; and
(g) Funds received pursuant to Section 29-3-23(2).
It shall be the duty of the Board of Education to keep the principal fund invested in any direct obligation issued by or guaranteed in full as to principal and interest by the United States of America or in certificates of deposit issued by a qualified depository of the State of Mississippi as approved by the State Treasurer. The certificates of deposit may bear interest at any rate per annum which may be mutually agreed upon but in no case shall the rate be less than that paid on passbook savings.
The Board of Education is authorized to invest the funds in interest bearing deposits or other obligations of the types described in Section 27-105-33 or in any other type investment in which any other political subdivision of the State of Mississippi may invest, except that one hundred percent (100%) of the funds are authorized to be invested. For the purposes of investment, the principal fund of each township may be combined into one or more district accounts; however, the docket book of the county superintendent shall at all times reflect the proper source of such funds. However, funds received from the sale of timber shall be placed in a separate principal fund account, and may be expended for any of the purposes authorized by law.
The Board of Education shall have authority to borrow such funds at a rate of interest not less than four percent (4%) per annum and for a term not exceeding twenty (20) years, for the erection, equipment or repair of the district schools, to provide local funds for any building project approved by the State Board of Education or to provide additional funds for forest stand improvement as set forth in Section 29-3-47. In addition, the board may borrow the funds under the same interest restrictions for a term not exceeding ten (10) years to provide funds for the purchase of school buses. Subject to the provisions of Section 1 of House Bill No. , 2010 Regular Session, the board of education of a school district in an extreme emergency financial situation may borrow from the principal fund to support the operations of the school district. The Board of Education of any school district in any county that has an aggregate amount of assets in its principal fund in excess of Five Million Dollars ($5,000,000.00), may deduct an amount not to exceed Five Hundred Thousand Dollars ($500,000.00) for the purpose of covering the cost of asbestos removal from school district buildings. Such asbestos removal shall be construed to constitute the repair of school district facilities as prescribed in Section 29-3-115.
No school land trust funds may be expended after the annual payment date until the payment is made on such loan. The annual payment can be made from any funds available to the school district except adequate education program funds.
It shall be unlawful for the Board of Education to borrow any sixteenth section school funds in any other manner than that prescribed in this section, and if any such funds shall be borrowed or invested in any other manner, any officer concerned in making such loan and investment or suffering the same to be made in violation of the provisions of this section, shall be liable personally and on his official bond for the safety of the funds so loaned.
SECTION 3. This act shall take effect and be in force from and after its passage.