MISSISSIPPI LEGISLATURE
2025 Regular Session
To: Education; Ways and Means
By: Representative McCarty
AN ACT TO ESTABLISH A CREDIT ENHANCEMENT PROGRAM FOR MISSISSIPPI SCHOOL DISTRICT BONDS TO LOWER BORROWING COSTS THROUGH STATE GUARANTEES; TO DEFINE THE ROLES AND RESPONSIBILITIES OF SCHOOL DISTRICTS, TAX COLLECTORS, PAYING AGENTS, AND THE STATE TREASURER IN ADMINISTERING THE PROGRAM; TO OUTLINE CONDITIONS FOR STATE PAYMENTS AND DISTRICT REIMBURSEMENTS, INCLUDING PENALTIES AND LEGAL REMEDIES; TO PROVIDE FOR THE APPROPRIATION OF FUNDS TO SUPPORT THE PROGRAM; TO AUTHORIZE THE STATE BOND COMMISSION TO ADOPT RULES FOR IMPLEMENTATION; TO BRING FORWARD SECTIONS 37-59-101, 37-59-103, 37-59-105, 37-59-107, 37-59-109, 37-59-111, 37-59-113 AND 37-59-115, MISSISSIPPI CODE OF 1972, FOR PURPOSES OF POSSIBLE AMENDMENTS; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. The Legislature finds that implementation of the credit enhancement program provided for in this chapter can provide substantial savings to the taxpayers of the State of Mississippi with minimal cost or risk to the state government. The guaranty provided by pledging the credit of the state to the payment of voter-approved school district general obligation bonds will encourage lower interest rates, and therefore lower taxes, for such bonds than school districts alone can command, despite the excellent credit history of such obligations. Any such guarantee does not remove the debt obligation of the school district and is not state debt.
SECTION 2. As used in this act, the followings terms shall have the meanings ascribed herein, unless the context of uses clearly requires otherwise.
(a) "Bond" means any voted general obligation bond issued by a school district, holding a certificate issued pursuant to this chapter for such a bond.
(b) "Credit enhancement program" means the school district bond guaranty established by this chapter.
(c) "General obligation bond" means any bond, note, warrant, certificate of indebtedness, or other obligation of a district that constitutes an indebtedness within the meaning of any applicable constitutional or statutory debt limitations.
(d) "Paying agent" means the paying agent selected, from time to time, for a bond issue pursuant to state law.
(e) "Refunding bond" means any general obligation bond issued by a district for the purpose of refunding its outstanding general obligation bonds.
(f) "School district" or "district" means any school district existing now or later under the laws of the state.
SECTION 3. (1) (a) The full faith, credit, and taxing power of the state is pledged to guarantee full and timely payment of the principal of and interest on bonds as such payments become due. However, in the event of any acceleration of the due date of the principal by reason of mandatory redemption or acceleration resulting from default, the payments guaranteed shall be made in the amounts and at the times as payments of principal would have been due had there not been any acceleration.
(b) This guaranty does not extend to the payment of any redemption premium.
(c) Reference to this act by its title on the face of any bond conclusively establishes the guaranty provided to that bond under the provisions of this chapter.
(2) (a) The state pledges to and agrees with the owners of any bonds that the state will not alter, impair, or limit the rights vested by the credit enhancement program with respect to the bonds until the bonds, together with applicable interest, are fully paid and discharged. However, this act does not preclude an alteration, impairment, or limitation if full provision is made by law for the payment of the bonds.
(b) Each district may refer to this pledge and undertaking by the state in its bonds.
(3) Only valid bonds issued after January 1, 2026, may be guaranteed under this act.
SECTION 4. (1) (a) Any district, by resolution of its board of directors, may request that the State Treasurer issue a certificate evidencing the state's guaranty, under this chapter, of its bonds.
(b) After reviewing the request, if the State Treasurer determines that the district is eligible under rules adopted by the State Bond Commission, the State Treasurer shall promptly issue the certificate as to specific bonds of the district and provide it to the requesting district.
(c) (i) The district receiving the certificate and all other persons may rely on the certificate as evidencing the guaranty for bonds issued within one (1) year from and after the date of the certificate, without making further inquiry during that year.
(ii) The certificate of eligibility is valid for one (1) year even if the State Treasurer later determines that the school district is ineligible.
(2) Any district that chooses to forego the benefits of the guaranty provided by this chapter for a particular issue of bonds may do so by not referring to this act on the face of its bonds.
(3) Any district that has bonds, the principal of or interest on which has been paid, in whole or in part, by the state under this act, may not issue any additional bonds guaranteed by this act until:
(a) All payment obligations of the district to the state under the credit enhancement program are satisfied; and
(b) The State Treasurer and the State Superintendent of Public Education each certify in writing, to be kept on file by the State Treasurer and the State Superintendent of Public Education, that the district is fiscally solvent.
(4) The State Bond Commission may establish by rule fees sufficient to cover the costs of administering this chapter.
SECTION 5. (1) (a) The county tax collector for each district with outstanding, unpaid bonds shall transfer money sufficient for each scheduled debt service payment to its paying agent on or before any principal or interest payment date for the bonds.
(b) A county tax collector who is unable to transfer a scheduled debt service payment to the paying agent on the transfer date shall immediately notify the paying agent and the State Treasurer by:
(i) Telephone;
(ii) A writing sent by facsimile or electronic transmission; or
(iii) A writing sent by first class United States mail.
(2) If sufficient funds are not transferred to the paying agent as required by subsection (1) of this section, the paying agent shall immediately notify the State Treasurer of that failure by:
(a) Telephone;
(b) A writing sent by facsimile or electronic transmission; or
(c) A writing sent by first class United States mail.
(3) (a) If sufficient money to pay the scheduled debt service payment have not been so transferred to the paying agent, the State Treasurer shall, forthwith, transfer sufficient money to the paying agent to make the scheduled debt service payment.
(b) The payment by the State Treasurer:
(i) Discharges the obligation of the issuing district to its bond owners for the payment, but does not retire any bond that has matured. The terms of that bond remain in effect until the state is repaid; and
(ii) Transfers the rights represented by the general obligation of the district from the bond owners to the state.
(c) The district shall repay to the state the money so transferred as provided in this act.
SECTION 6. (1) Any district that has issued bonds for which the state has made all or part of a debt service payment shall:
(a) Reimburse all money drawn by the State Treasurer on its behalf;
(b) Pay interest to the state on all money paid by the state from the date that money was drawn to the date the state is repaid at a rate to be prescribed by rule by the State Bond Commission; and
(c) Pay all penalties required by this act.
(2) (a) The State Treasurer shall establish the reimbursement interest rate after considering the circumstances of any prior draws by the district on the state, market interest and penalty rates, and the cost of funds or opportunity cost of investments, if any, that were required to be borrowed or liquidated by the state to make payment on the bonds.
(b) The State Treasurer may, after considering the circumstances giving rise to the failure of the district to make payment on its bonds in a timely manner, impose on the district a penalty of not more than five percent (5%) of the amount paid by the state pursuant to its guaranty for each instance in which a payment by the state is made.
(3) (a) (i) If the State Treasurer determines that amounts obtained under this chapter will not reimburse the state in full within one (1) year from the state's payment of a district's scheduled debt service payment, the State Treasurer may pursue any legal action, including mandamus, against the district to compel it to meet its repayment obligations to the state.
(ii) In pursuing its rights under paragraph (a)(i) of this subsection, the state shall have the same substantive and procedural rights as would a holder of the bonds of a district. If and to the extent that the state has made payments to the holders of bonds of a district under Section 5 of this act and has not been reimbursed by the district, the state shall be subrogated to the rights of those bond holders.
(iii) The State Treasurer may also direct the district and the appropriate county officials to restructure and revise the collection of taxes for the payment of bonds on which the State Treasurer has made payments under this act and, to the extent permitted by law, may require that the proceeds of such taxes be applied to the district's obligations to the state if all outstanding obligations of the school district payable from such taxes are fully paid or their payment is fully provided for.
(b) The district shall pay the fees, expenses, and costs incurred by the state in recovering amounts paid under the guaranty authorized by this act.
SECTION 7. The Legislature shall make provision for such amounts as may be required to make timely payments under the state school district credit enhancement program under this act in every appropriations act.
SECTION 8. The State Bond Commission may adopt any rules necessary and appropriate for the implementation and administration of this act.
SECTION 9. Section 37-59-101, Mississippi Code of 1972, is brought forward as follows:
37-59-101. The school board of any school district in the county is authorized and empowered, in its discretion, to borrow money under the terms and conditions specified in this article for the purpose of making repairs, alterations and additions to school buildings of such school districts, for the purpose of erecting school buildings and other buildings used for school purposes, for the purpose of purchasing heating plants, air conditioning, fixtures and equipment for such buildings, for the purpose of purchasing land for school purposes, school buses and transportation equipment, and for the purpose of improving and equipping such lands for school recreational and athletic purposes.
SECTION 10. Section 37-59-103, Mississippi Code of 1972, is brought forward as follows:
37-59-103. Before any money shall be borrowed under the provisions of this article, the school board of the school district shall adopt a resolution declaring the necessity for and its intention of borrowing such money, specifying the amount to be so borrowed, the date or dates of the maturity thereof, and how such indebtedness is to be evidenced. Such resolution shall also set forth the nature and approximate cost of the alterations, additions, and repairs to be made, or of the erections contemplated, or of the heating plant, fixtures and equipment necessary to be purchased, or of the land to be purchased, improved or equipped, or of the school buses and transportation equipment to be purchased, as the case may be, and shall declare in said resolution that no funds are available in the school funds of the district or from any other source with which to make such repairs, alterations, additions, purchases, erections or improvements.
SECTION 11. Section 37-59-105, Mississippi Code of 1972, is brought forward as follows:
37-59-105. The said resolution adopted by the school board pursuant to Section 37-59-103 shall be published once each week for two (2) consecutive weeks in a newspaper having a general circulation in the school district involved, with the first publication thereof to be made not less than fifteen (15) days prior to the date upon which the school board is to take final action upon the question of authorizing the borrowing of said money. If no petition requesting an election is filed prior to such meeting, then the school board shall, at said meeting, by resolution spread upon its minutes, give final approval to the borrowing of said money and shall authorize the issuance of negotiable notes or certificates of indebtedness of the school district therefor in accordance with the provisions of this article.
If at any time prior to said meeting a petition signed by not less than twenty percent (20%) of the qualified electors of the school district involved shall be filed with the school board requesting that an election be called on the question of incurring said indebtedness, then the school board shall, not later than the next regular meeting, adopt a resolution calling an election to be held within such school district upon the question of the incurring of said indebtedness for the purposes and in the amount requested. Such election shall be called and held, and notice thereof shall be given, in the same manner provided in Article 1 of this chapter for elections upon the question of the issuance of the bonds of school districts, and the results thereof shall be certified to the school board. If three-fifths (3/5) of the qualified electors voting in said election shall vote in favor of incurring said indebtedness, then the school board shall proceed to issue said negotiable notes or certificates of indebtedness as prayed for in the original resolution of the school board; however, if less than three-fifths (3/5) of the qualified electors voting in said election vote in favor of incurring said indebtedness, then said notes or certificates of indebtedness shall not be issued.
Money may be borrowed under the provisions of this article and the negotiable notes or certificates of indebtedness evidencing same may be issued as provided in this article (1) without the necessity of being authorized in an election called for that purpose, except where a petition requesting an election is filed as provided herein and (2) without the necessity of giving notice thereof except as specifically provided herein, and specifically without the necessity of complying with the requirements of Section 31-19-25.
SECTION 12. Section 37-59-107, Mississippi Code of 1972, is brought forward as follows:
37-59-107. The levying authority for the school district shall annually levy a special tax on all of the taxable property of the school district on whose behalf the notes or certificates of indebtedness are issued, except as provided in Section 37-7-104.3(7), in an amount which shall be sufficient to pay the principal of and interest upon such negotiable notes or certificates of indebtedness as the same shall respectively mature and accrue, including any notes issued under the direction of a conservator of a school district pursuant to the authority of Section 37-7-104.3(7). Said tax shall be levied and collected at the same time and in the same manner as other taxes are collected and said tax shall be in addition to all other taxes authorized by law. It is expressly provided, however, that, except as provided in Section 37-7-104.3(7), such annual tax levy shall not exceed three (3) mills on the dollar for the payment of all notes issued under the provisions of this article and all notes previously issued under the statutes hereby repealed. The special tax so levied shall be collected by the tax collector of the county at the same time and in the same manner as other taxes are collected, and the proceeds thereof shall be paid to the school district and shall be used exclusively for the payment of principal of and interest upon such negotiable notes or certificates of indebtedness.
SECTION 13. Section 37-59-109, Mississippi Code of 1972, is brought forward as follows:
37-59-109. If the school district on whose behalf money is to be borrowed under the provisions of this article shall lie in two (2) or more counties, said school board shall take all steps required by this article in the issuance of the negotiable notes or certificates of indebtedness of the district without regard to county lines. The negotiable notes or certificates of indebtedness shall be general obligations of the entire school district without regard to county lines and shall constitute a lien upon all of the taxable property thereof.
The board of supervisors of the county which furnishes the largest assessed valuation of the property in the district shall annually certify to the board of supervisors of each county in which the district is located the amount of the annual tax levy required for the payment of the principal of and interest upon said notes or certificates of indebtedness, and each such board of supervisors shall annually levy such tax at the same time and in the same manner as other taxes are levied by such board in the amount so fixed. The taxes so levied shall be collected by the tax collector of each county in the same manner as other taxes are collected and shall be remitted to the school district depository. Such school district depository shall deposit said funds to the credit of the special fund provided for in Section 37-59-107 for the payment of the principal of and interest upon such notes or certificates of indebtedness.
SECTION 14. Section 37-59-111, Mississippi Code of 1972, is brought forward as follows:
37-59-111. All indebtedness incurred under the provisions of this article shall be evidenced by the negotiable notes or certificates of indebtedness of the school district on whose behalf the money is borrowed. Said notes or certificates of indebtedness shall be signed by the president of the school board and superintendent of schools of such school district. Such notes or certificates of indebtedness shall not bear a greater overall maximum interest rate to maturity than the rates now or hereafter authorized under the provisions of Section 19-9-19. No such notes or certificates of indebtedness shall be issued and sold for less than par and accrued interest. All such notes or certificates of indebtedness shall mature according to the following:
(a) All notes or certificates of indebtedness issued for purposes authorized under Section 37-59-101, with the exception of the financing of school buses and transportation equipment, shall mature in approximately equal installments of principal and interest over a period not to exceed twenty (20) years from the date of issuance thereof. Provided, however, that if negotiable notes used to finance other such capital improvements are outstanding from not more than one (1) previous issue authorized under the provisions of this article, then the schedule of payments for a new or supplementary issue may be so adjusted that the schedule of maturities of all notes or series of notes hereunder shall, when combined, mature in approximately equal installments of principal and interest over a period of twenty (20) years from the date of the new or supplementary issue, or if a lower interest rate will be secured on notes previously issued and outstanding, a portion of the proceeds of any issue authorized hereunder may be used to refund the balance of the indebtedness previously issued under the authority of this article.
(b) All notes or certificates of indebtedness for purposes of financing of school buses and transportation equipment shall mature in approximately equal installments of principal and interest over a period not to exceed ten (10) years from the date of issuance thereof. Provided, however, that if negotiable notes used to finance such noncapital improvements are outstanding from not more than one (1) previous issue authorized under the provisions of this article, then the schedule of payments for a new or supplementary issue may be so adjusted that the schedule of maturities of all notes or series of notes hereunder shall, when combined, mature in approximately equal installments of principal and interest over a period of ten (10) years from the date of the new or supplementary issue, or if a lower interest rate will thereby be secured on notes previously issued and outstanding, a portion of the proceeds of any issue authorized hereunder may be used to refund the balance of the indebtedness previously issued under the authority of this article.
Such notes or certificates of indebtedness shall be issued in such form and in such denominations as may be determined by the school board, and same may be made payable at the office of any bank or trust company selected by the school board, and, in such case, funds for the payment of principal and interest due thereon shall be provided in the same manner provided by law for the payment of the principal and interest due on bonds issued by the taxing districts of this state.
Any school district in Mississippi may borrow money from the United States Department of Agriculture Rural Development agency under any provision of state or federal law that provides for the borrowing of money by school districts.
SECTION 15. Section 37-59-113, Mississippi Code of 1972, is brought forward as follows:
37-59-113. The proceeds of any negotiable notes or certificates of indebtedness issued under the provisions of this article shall be placed in a special fund and shall be expended only for the purpose or purposes for which they were issued as shown by the resolution authorizing the issuance thereof. If a balance shall remain of the proceeds of such notes or certificates of indebtedness after the purpose or purposes for which same were issued shall be accomplished, such balance shall forthwith be transferred to the special fund set up for the payment thereof in Section 37-59-107.
SECTION 16. Section 37-59-115, Mississippi Code of 1972, is brought forward as follows:
37-59-115. The indebtedness incurred under the authority of this article shall not be included in computing the statutory limitation upon the indebtedness which may be incurred by school districts as provided in Article 1 of this chapter, or any other statute, but shall be in addition thereto. The only limitation upon the amount of indebtedness which may be incurred under the provisions of this article shall be that provided in Section 37-59-107.
SECTION 17. This act shall take effect and be in force from and after January 1, 2026.