ARIZONA STATE SENATE
Phoenix, Arizona
schools; impact
aid revenue bonds
(NOW: school
districts; revenue bonds)
Purpose
Allows school districts to issue revenue bonds that are secured by the district’s federal impact aid.
Under Students FIRST, the state is required to provide funding to school districts to ensure that school facilities meet the state’s minimum guidelines. School districts may fund projects not included under the guidelines or to exceed the guidelines by issuing capital overrides or class “B” general obligation bonds. These options require an election and result in a secondary property tax levy.
Federal land is not subject to property taxes, so in school districts with mainly federal lands such as Indian reservations or Military lands, there is low or no property valuation. Exceeding the state guidelines through secondary property tax levies may subject proportionately smaller areas to a large levy. However, these districts receive annual Federal Impact Aid (P.L. 81-874) payments in lieu of property tax monies. Federal Impact Aid is federal funding received by school districts that have a lower property tax base because the property base includes federal land. H.B. 2440 allows these school districts to issue revenue bonds for capital projects using Federal Impact Aid as the revenue source to secure the bonds.
According to the Joint Legislative Budget Committee's fiscal note there is no fiscal impact to the state general fund associated with this measure.
1. Allows a school district governing board to issue negotiable impact aid revenue bonds on voter approval.
2. Prohibits proceeds of impact aid-backed revenue bonds from being used for soft capital purposes except for pupil transportation vehicles.
3. Raises the single family home value from $80,000 to $100,000 for estimating the cost of each capital improvement per home owner in the school district publicity pamphlet issued before a Class B bond election.
4. Establishes ballot requirements for elections conducted to decide whether impact aid revenue bonds should be issued which are identical to those for a Class B bond election.
5. Establishes publicity pamphlet requirements for impact aid revenue bond elections and specifies information to be included in the pamphlet.
6. Stipulates that if the voters approve the issuance of school district impact aid revenue bonds, the school district must not use the bond proceeds for any purposes other than the proposed capital improvements as listed in the publicity pamphlet.
7. Provides for a method for computing the federal impact adjustment to the unrestricted capital budget limit as it may relate to impact aid revenue bonds.
8. Allows the governing board of a school district to calculate the federal impact adjustment to the unrestricted capital budget limit by subtracting the amount budgeted for principal and interest on impact id revenue bonds for the current year.
9. Prohibits a school district from issuing or selling class B general obligation bonds if the district currently sells or has any existing indebtedness from impact aid revenue bonds, except for bonds issued to refund any bonds issued by the governing board.
10. Stipulates that the bonds may be issued in a total combined amount that does not exceed three times the average of the school district’s annual impact aid revenues for the previous five years.
11. Allows the proceeds from impact aid revenue bonds to be used for the following:
· Capital projects authorized by a bond election.
· Bond related expenses including any expenses incurred by the school district to issue and administer its bonds such as legal printing consulting and advertising fees.
· Full or partial funding of reserves or sinking accounts established by the bond resolution.
12. Requires the governing board to authorize the bonds by resolution and prescribes the following information to be included in the resolution:
· The fixed or variable rate in interest, payable semiannually.
· The denomination of the bonds.
· The date or dates of the bonds and maturity, within 20 years after the date of issuance.
· The form of the bonds.
· The manner of executing the bonds.
· The medium and place of payment.
· The terms of redemption, which may allow for a premium for early redemption.
13. Stipulates that the bonds issued according to these provisions must be known as impact aid revenue bonds.
14. Prohibits an accommodation school from issuing impact aid revenue bonds.
15. Defines “impact aid revenues.”
16. Requires that the bonds be sold at public or private sale at the price and at the terms prescribed in the resolution.
17. Stipulates that the proceeds from the sale of impact aid revenue bonds be deposited in the county treasury to the credit of the school district’s impact aid revenue bond building fund.
18. Allows the proceeds to be drawn out for the same purposes as for general obligation bond proceeds.
19. Prohibits revenue bonds from being expended for items whose useful life is less than the average life of the bonds issued and never for less than five years.
20. Requires a district issuing impact aid revenue bonds to establish an impact aid revenue bond building fund consisting of the net proceeds received for the sale of the bonds. Specifies this fund must be a continuing fund that is not subject to reversion.
21. Requires a district issuing impact aid revenue bonds to establish an impact aid revenue bond debt service fund consisting of monies received by the district from impact aid revenues.
22. Requires the school district to provide the county treasurer with an impact aid revenue bond debt service schedule.
23. Requires the county treasurer to keep an account of all school district debt service funds and to credit to the fund an amount from impact id revenues equal to the principal and interest that will become due on the bonds during the current year.
24. Requires the county treasurer to receive and credit any interest or income earned by the debt service fund.
25. Stipulates that the annual payment of principal and interest on impact aid revenue bonds each year must not exceed 75 percent of the net impact aid revenues of the school district for the current year.
26. Provides for a method of calculating net impact aid revenues.
27. Provides methods the governing board may use by resolution to secure principal and interest.
28. Provides a method to cancel unsold bonds.
29. Stipulates that any surplus funds remaining after bonds have been paid and any acquisition or construction of facilities is complete must be transferred to the district’s capital outlay fund.
30. Allows monies in the impact aid revenue bond building fund and the impact aid and revenue bond debt service fund to be invested and stipulates that proceeds from investments must be credited to the impact aid revenue bond debt service fund.
31. Requires the impact aid revenue bond debt service fund and the impact aid revenue bond building fund be audited annually and a report of the audit filed with the Auditor General’s office.
32. Specifies that impact aid revenue bonds are fully negotiable and tax-free.
33. Stipulates that impact aid revenue bonds are obligations of the school district and members of the governing board ad persons executing the bonds are not personally liable for payment of the bonds.
34. States that impact aid revenue bonds are not obligations of the county or the state.
35. Provides for certification of the bonds by the Attorney General and secures the validity of bonds in spite of changes in circumstance associated with persons whose signatures appear on the bonds or amendments of statute relating to the bonds.
36. Makes technical and conforming changes.
37. Provides for a general effective date.
Amendments
Adopted by the Education Committee
1. Clarifies that while a district has outstanding indebtedness from impact aid revenue bonds, the district may not issue or sell general obligation bonds.
2. Makes technical and conforming changes.
WM 2/20/01 DP 10-0-0-0 FIN 4/2/01 DP 7-0-1-0
APPROP 3/6/01 DPA/SE 11-2-0-3
3rd Read 3/19/01 50-6-4-0
Prepared by Senate Staff
April 4, 2001