Code Section Group

Education Code - EDC

TITLE 2. ELEMENTARY AND SECONDARY EDUCATION [33000 - 64100]

  ( Title 2 enacted by Stats. 1976, Ch. 1010. )

DIVISION 3. LOCAL ADMINISTRATION [35000 - 45460]

  ( Division 3 enacted by Stats. 1976, Ch. 1010. )

PART 24. SCHOOL FINANCE [41000 - 43052]

  ( Part 24 enacted by Stats. 1976, Ch. 1010. )

CHAPTER 3. State School Fund [41300 - 41455]

  ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. )

ARTICLE 2.7. Emergency Apportionment Financing [41329.50 - 41329.60]
  ( Article 2.7 added by Stats. 2004, Ch. 263, Sec. 8. )

41329.50.
  

The following definitions apply to this article, and, except as provided in subdivision (d), apply to Article 2 (commencing with Section 41320) and Article 2.5 (commencing with Section 41325), unless the context clearly indicates or requires another or different meaning:

(a) “Bank” means the California Infrastructure and Economic Development Bank.

(b) “Bonds” has the same meaning specified in Section 63010 of the Government Code.

(c) “Loan” and “emergency apportionments” means the financing described in Sections 41329.51, 41329.52, and 41329.53. The financing does not constitute a borrowing, but, instead, constitutes an advance payment of apportionments subject to repayment with interest as described in the article.

(d) “School district” means a school district that requests an emergency apportionment pursuant to Section 41320, including an administrator appointed pursuant to Article 2 (commencing with Section 41320) and a trustee appointed pursuant to Article 2.5 (commencing with Section 41325), or, for the purposes of this article only, a community college district, including a special trustee appointed pursuant to Section 71093 or 84040.

(Amended by Stats. 2006, Ch. 50, Sec. 4. Effective June 30, 2006.)

41329.51.
  

Notwithstanding any other law, an emergency apportionment is a financing provided to a community college district as authorized by the Legislature or to a school district, other than a community college district, complying with the requirements contained in Article 2 (commencing with Section 41320) and Article 2.5 (commencing with Section 41325). The emergency apportionment shall be made pursuant to either Section 41329.52 or Section 41329.53, as determined by statute. The school district, the bank, and the Superintendent of Public Instruction, or the Board of Governors of the California Community Colleges, as appropriate, shall promptly perform the duties specified in the statute making the emergency apportionment.

(Amended by Stats. 2006, Ch. 50, Sec. 5. Effective June 30, 2006.)

41329.52.
  

(a) A school district may receive a two-part financing designed to provide an advance of apportionments owed to the district from the State School Fund and the Education Protection Account.

(b) The initial emergency apportionment shall be an interim loan from the General Fund to the school district. General Fund money shall not be advanced to a school district until that district agrees to obtain a lease financing as described in subdivision (c) and the bank adopts a reimbursement resolution governing the lease financing. The interim loan shall be repaid in full, with interest, from the proceeds of the lease financing pursuant to subdivision (c) at a time mutually agreed upon between the Department of Finance and the bank. The interest rate on the interim loan shall be the rate earned by moneys in the Pooled Money Investment Account as of the date of the initial disbursement of emergency apportionments to the school district.

(c) The school district shall enter into a lease financing with the bank for the purpose of financing the emergency apportionment, including a repayment to the General Fund of the amount advanced pursuant to subdivision (b). In addition to the emergency apportionment, the lease financing may include funds necessary for reserves, capitalized interest, credit enhancements, and costs of issuance. The bank shall issue bonds for that purpose pursuant to the powers granted pursuant to the Bergeson-Peace Infrastructure and Economic Development Bank Act as set forth in Division 1 (commencing with Section 63000) of Part 6.7 of the Government Code. The term of the lease shall not exceed 20 years, except that if at the end of the lease term any rent payable is not fully paid, or if the rent payable has been abated, the term of the lease shall be extended for a period not to exceed 10 years.

(Amended by Stats. 2013, Ch. 48, Sec. 28. Effective July 1, 2013.)

41329.53.
  

(a) As an alternative to the lease financing pursuant to Section 41329.52, a school district may receive an emergency apportionment from the General Fund designed to provide an advance of apportionments owed to the district from the State School Fund and the Education Protection Account. The emergency apportionment shall be repaid within 20 years. The calculation of the amount of the apportionment, including implied costs, and the interest rate shall be calculated pursuant to subdivision (b). Each year the Superintendent shall withhold from the apportionments to be made to the school district from the State School Fund and the Education Protection Account an amount equal to the emergency apportionment repayment that becomes due in the year.

(b) The determination by statute as to whether the emergency apportionment shall take the form of lease financing pursuant to Section 41329.52 or an emergency apportionment from the General Fund pursuant to this section shall be based upon the availability of funds within the General Fund and not on any cost differential between the two financing mechanisms. To ensure that the two alternatives are cost neutral, if the statute does not authorize a lease financing, the bank shall commission a cost study from financial advisers under contract with the bank to determine the interest rate, costs of issuance, and if it is more cost effective, credit enhancement costs likely if the financing was a lease financing rather than an emergency apportionment from the General Fund. These implied lease costs shall be included as the fixed interest rate on the repayment of the emergency apportionment to the General Fund, repayable over 20 years.

(Amended by Stats. 2013, Ch. 48, Sec. 29. Effective July 1, 2013.)

41329.54.
  

In furtherance of the lease financing authorized pursuant to Section 41329.52, and notwithstanding any other law, the school district may lease any property of the school district to the bank or from the bank, in connection with the bonds issued by the bank. In each case, the lease shall include any rental provision or term and any transfer, assignment, payment, security, default, remedy, and other terms or provisions agreed to by the bank and the school district. In addition, the school district may enter into any agreement for liquidity or credit enhancement, with any reimbursement, payment, interest, security, default, remedy and other terms it deems necessary or appropriate in connection with entering into the lease financing. The school district may enter into any other agreements or execute any other documents necessary or desirable to carry out the purposes of this section. This section shall be deemed to provide a complete, additional, and alternative method for accomplishing the acts authorized by this article. Any agreement entered into in connection with the lease of any property of the district pursuant to a financing pursuant to Section 41329.52, including without limitation, any agreement for liquidity or credit enhancement, need not comply with the requirements of any other law applicable to the purchase, sale, or lease of school district property or the granting of any pledge or encumbrance.

(Added by Stats. 2004, Ch. 263, Sec. 8. Effective August 23, 2004.)

41329.55.
  

(a) Simultaneous with the execution of the lease financing authorized pursuant to Section 41329.52, the bank shall provide to the Controller and the school district a notification of its lease financing. The notice shall include a schedule of rent payments to become due to the bank from the school district and the bond trustee. The Controller shall make the apportionment to the bond trustee of those amounts on the dates shown on the schedule. The bank may further authorize the apportionments to be used to pay or reimburse the provider of any credit enhancement of bonds and other ongoing or periodic ancillary costs of the bond financing issued by the bank in connection with this article. If the amount of rent payments vary from the schedule as a result of variable interest rates on the bonds, early redemptions, or changes in expenses, the bank shall amend or supplement the schedule accordingly.

(b) Except where financing is for a community college district, the Controller shall make the apportionment only from moneys in Section A of the State School Fund and the Education Protection Account designated for apportionment to the district and any apportionment authorized pursuant to this subdivision shall constitute a lien senior to any other apportionment or payment of State School Fund and the Education Protection Account moneys to or for that district not made pursuant to this subdivision.

(c) If financing is for the Compton Community College District, the Controller shall make the apportionment only from moneys in Section B of the State School Fund. Any apportionment authorized pursuant to this subdivision shall constitute a lien senior to any other apportionment or payment of Section B State School Fund moneys.

(d) The amount apportioned for a school district pursuant to this section is an allocation to the school district for purposes of subdivision (b) of Section 8 of Article XVI of the California Constitution. For purposes of computing the local control funding formula allocation pursuant to Section 42238.02, as implemented by Section 42238.03, for any school district, the local control funding formula allocation for any fiscal year in which funds are apportioned for the school district pursuant to this section shall include any amounts apportioned by the Controller pursuant to subdivisions (a), (b), and (c), and Section 41329.57.

(e) No party, including the school district or any of its creditors, shall have any claim to the money apportioned or to be apportioned to the bond trustee by the Controller pursuant to this section.

(Amended by Stats. 2015, Ch. 19, Sec. 35. Effective June 24, 2015.)

41329.56.
  

(a) Chapter 57 of the Statutes of 1993 consolidated several previous emergency apportionments and a loan to the West Contra Costa Unified School District and specified the repayment terms of that apportionment. Chapter 14 of the Statutes of 2003 authorized an emergency apportionment to the Oakland Unified School District and specified the repayment terms of that apportionment. Collectively these are referred to in this section as “existing apportionments.”

(b) Promptly after August 23, 2004, the bank shall issue separate bonds for the West Contra Costa Unified School District and the Oakland Unified School District for lease financing pursuant to Section 41329.52. The school districts shall use the proceeds to repay the existing apportionments. The terms of the leases shall not exceed 20 years, except that if at the end of the lease term any rent payable is not fully paid, or if the rent payable has been abated, the term of the lease shall be extended for a period not to exceed 10 years.

(Amended by Stats. 2005, Ch. 97, Sec. 3. Effective July 21, 2005.)

41329.57.
  

(a) (1)  Pursuant to a schedule provided to the Controller by the bank, the Controller shall transfer from Section A of the State School Fund and the Education Protection Account the amount of funds necessary to pay the warrants issued pursuant to paragraph (2) so that the effective cost of the lease financing provided to the Oakland Unified School District, the Vallejo City Unified School District, and the West Contra Costa Unified School District pursuant to this article shall be equal to the cost of the original General Fund emergency loan made to each school district.

(A) For purposes of determining the cost of the original emergency loan for the West Contra Costa Unified School District, the original interest rate is the rate established pursuant to Section 41474 of 1.532 percent.

(B) For purposes of determining the cost of the original emergency loan for the Oakland Unified School District, the original interest rate is 1.778 percent. This rate shall also apply to any disbursements of the loan pursuant to Chapter 14 of the Statutes of 2003 that are subsequent to August 23, 2004.

(C) For purposes of determining the cost of the original emergency loan for the Vallejo City Unified School District, the original interest rate is 1.5 percent. This rate shall also apply to any disbursements of the loan pursuant to Chapter 53 of the Statutes of 2004 that are subsequent to August 23, 2004.

(2) The executive director or chair of the bank shall periodically provide a schedule to the Controller and each school district of the actual amount of the difference between the cost of the lease financing compared to the cost of the original emergency loan for each school district for each year and the Controller shall issue warrants to each school district pursuant to the schedule. Payments to a school district shall occur only during the term of the loan for that district and shall be made no sooner than the corresponding payments are made to the bond trustee under the lease financing for that district.

(3) For purposes of making the computations required by Section 8 of Article XVI of the California Constitution, the warrants issued pursuant to paragraph (2) are “General Fund revenues appropriated for school districts,” as defined in subdivision (c) of Section 41202 for the fiscal years in which the warrants are issued and included within the “total allocations to school districts and community college districts from General Fund proceeds of taxes appropriated pursuant to Article XIII B,” as defined in subdivision (e) of Section 41202, for the fiscal years in which the warrants are issued.

(b) It is the intent of the Legislature that the financing cost subsidies funded in this section not be deemed precedent nor in conflict with Section 41329.53, as these school districts requested loans before the enactment of this article.

(Amended by Stats. 2013, Ch. 48, Sec. 31. Effective July 1, 2013.)

41329.575.
  

(a) (1) Pursuant to a schedule provided to the Controller by the bank, commencing with the 2013–14 fiscal year, the Controller shall transfer from Section A of the State School Fund and the Education Protection Account the amount of funds necessary to pay the warrants issued pursuant to paragraph (3) so that the effective cost of the lease financing for each fiscal year from 2013–14 to 2029–30, inclusive, provided to the South Monterey County Joint Union High School District pursuant to Chapter 20 of the Statutes of 2009 shall be equal to the cost of providing an emergency General Fund cashflow loan to the South Monterey County Joint Union High School District for each fiscal year from 2013–14 to 2029–30, inclusive.

(2) For purposes of determining the cost of providing an emergency General Fund cashflow loan to the South Monterey County Joint Union High School District for fiscal years 2013–14 to 2029–30, inclusive, for the South Monterey County Joint Union High School District, the original interest rate is equal to the annual rate of return earned by the Pooled Money Investment Account for the applicable fiscal year, plus an additional 2 percent. This rate shall also apply to disbursements of the loan pursuant to Chapter 20 of the Statutes of 2009 that are subsequent to September 15, 2013.

(3) The executive director or chair of the bank shall periodically provide a schedule to the Controller and the South Monterey County Joint Union High School District of the actual amount of the difference between the annual cost of the lease financing compared to the annual cost of providing the South Monterey County Joint Union High School District with an emergency General Fund cashflow loan for each applicable fiscal year and the Controller shall issue warrants to the South Monterey County Joint Union High School District pursuant to the schedule. Payments to the South Monterey County Joint Union High School District shall occur only during the term of the loan for the South Monterey County Joint Union High School District and shall be made no sooner than the corresponding payments are made to the bond trustee under the lease financing for the South Monterey County Joint Union High School District.

(4) For purposes of making the computations required by Section 8 of Article XVI of the California Constitution, the warrants issued pursuant to paragraph (3) are “General Fund revenues appropriated for school districts,” as defined in subdivision (c) of Section 41202 for the fiscal years in which the warrants are issued and included within the “total allocations to school districts and community college districts from General Fund proceeds of taxes appropriated pursuant to Article XIII B,” as defined in subdivision (e) of Section 41202, for the fiscal years in which the warrants are issued.

(b) It is the intent of the Legislature that the financing cost subsidies funded in this section not be deemed precedent nor in conflict with Chapter 20 of the Statutes of 2009.

(Amended by Stats. 2014, Ch. 71, Sec. 34. Effective January 1, 2015.)

41329.58.
  

The sum of thirty million dollars ($30,000,000) is hereby appropriated, without regard to fiscal year, from the General Fund to the Board of Governors of the California Community Colleges for apportionment to the Compton Community College District as an emergency apportionment to finance, among other things, the activities described in Article 5 (commencing with Section 74292) of Chapter 5 of Part 46.

(Added by Stats. 2006, Ch. 50, Sec. 8. Effective June 30, 2006.)

41329.59.
  

(a) On or before October 30, 2006, the Fiscal Crisis and Management Assistance Team (FCMAT) shall conduct an extraordinary audit of the Compton Community College District, to be delivered to the Board of Governors of the California Community Colleges and the Director of Finance, focused upon an examination of alleged fraud, misappropriation of funds, or other illegal fiscal practices. The audit shall be conducted in a timely and efficient manner.

(b) On or before January 31, 2007, the FCMAT shall conduct a comprehensive assessment and prepare a recovery plan, to be delivered to the Board of Governors of the California Community Colleges and the Department of Finance, for the Compton Community College District addressing the five operational areas: financial management, academic achievement, personnel management, facilities management, and governance/community relations.

(c) The FCMAT shall file a written status report at regular intervals with the appropriate fiscal and policy committees of the Legislature, the advisory committee to the special trustee, the Board of Governors of the California Community Colleges, the Director of Finance, and the Governor. The status reports shall include the progress that the Compton Community College District is making in meeting the recommendations of the FCMAT comprehensive assessment and addressing the deficiencies identified by the Accrediting Commission for Community and Junior Colleges.

(d) Notwithstanding any other provision of law, an amount of up to five hundred thousand dollars ($500,000) shall be provided to the Compton Community College District from any funds budgeted for FCMAT in Item 6110-107-0001 of Section 2.00 of the annual Budget Act or any other funds available from prior budget years for FCMAT for the purpose of funding the audit described in subdivision (a) of this section.

(Amended by Stats. 2011, Ch. 349, Sec. 1. Effective January 1, 2012.)

41329.60.
  

Notwithstanding any other law, beginning July 1, 2016, the interest rate on any outstanding General Fund emergency apportionments made to the Compton Community College District pursuant to Section 41329.52 or 41329.58 shall be 2.307 percent. All other terms of those emergency apportionments shall remain the same.

(Added by Stats. 2016, Ch. 24, Sec. 13. Effective June 27, 2016.)

EDCEducation Code - EDC2.7.