20-9-466. School district bonds -- state loan -- qualifications for state loan. (1) The department of administration shall make a loan from the coal severance tax school bond contingency loan fund, established in 17-5-703, to a school district in an amount equal to the principal and interest payment on qualifying bonds when due in accordance with the provisions contained in the bonds. In order to receive a loan, the school district must:
     (a) have issued bonds between January 21, 1992, and January 1, 1993, pursuant to 20-9-421 through 20-9-464;
     (b) be prevented from making principal and interest payments on the bonds because the debt service levy for the bonds:
     (i) has been declared invalid or unenforceable under Article II, section 4, or Article X, section 1, of the Montana constitution by a final court order; or
     (ii) is prevented by an injunction;
     (c) have exhausted the debt service reserve for the bonds; and
     (d) have complied with all the requirements for the bonds contained in 20-9-467 and this section.
     (2) To qualify for the state loan described in subsection (1), a school district, before issuing its bonds, must have:
     (a) received voter approval for bonds pursuant to 20-9-421;
     (b) following voter approval, received a certificate of eligibility from the board of public education stating that after consultation with the superintendent of public instruction, the board has determined that a minimum of 75% of the principal amount of the proposed bonds will be used to:
     (i) restore, rebuild, or replace a destroyed or severely damaged school building;
     (ii) correct one or more building deficiencies that affect the health and safety of school children;
     (iii) correct one or more deficiencies that prevent the school district from meeting current accreditation standards; or
     (iv) address any combination of circumstances described under subsections (2)(b)(i) through (2)(b)(iii); and
     (c) received a final certificate of allocation from the department of administration pursuant to subsection (5).
     (3) The board of public education shall:
     (a) maintain a record of the total principal amount of bonds for which certification has been issued; and
     (b) immediately furnish to the department a copy of each certificate issued.
     (4) Upon receipt of a copy of the certificate from the board of public education, the department shall temporarily allocate loan authority to the school district equal to the principal amount of bonds indicated in the board's certificate. The principal amount of bonds for which final certification is issued may be less than the principal amount of bonds approved by the voters pursuant to subsection (2)(a).
     (5) To obtain a final certificate of allocation, a school district shall provide the department, on a form provided by the department, the following information:
     (a) the tentative date of sale of the school district's bonds;
     (b) the principal amount of the bonds to be issued;
     (c) the name and addresses of bond counsel and the financial advisor; and
     (d) other information as requested by the department.
     (6) Upon issuance of the bonds, a school district shall forward to the department a copy of the district's bond resolution, the final opinion of bond counsel on the bonds, and a schedule of principal and interest payments on the bonds to maturity. The bond resolution must include a covenant agreeing to:
     (a) defend any lawsuit challenging the school district's authority to sell and issue the bonds and to levy a tax for payment of the principal of and interest on the bonds;
     (b) provide to the department before August 1 of each year a report of the school district's outstanding principal balance as of the preceding June 30 on the bonds secured by state loans;
     (c) refund the bonds on any normal call date if, during the term of the bonds, the school district can refund its bonds without the state loan security and without increasing its total debt service costs on the bonds; and
     (d) enter into a contract with the department establishing a schedule to repay the state if the state loans the school district money to make payments on district bonds. Notwithstanding other provisions of law, the loan must be repaid by the school district at a rate equivalent to the average yield of the pooled investment fund established in 17-6-203(3), commonly known as the short-term investment pool, for the period of the loan. The loan must be repaid in full within 10 years from the date the first loan is issued to a school district. Repayment must be paid from the sources designated for repayment of the bonds or from any other revenue and assets of the school district, including state equalization funds currently distributed or which may be distributed to the district. Loan repayments received by the department must be deposited in the coal severance tax school bond contingency loan fund.
     (7) The department shall maintain a record of the total principal amount of bonds secured by state loans.
     (8) A school district issuing bonds subject to 20-9-467 and this section may apply to the attorney general for a determination as to whether its bonds are affected by a court order declaring that the bonds of another district are invalid or unenforceable.
     (9) A school district whose authority to levy a property tax to pay principal of and interest on bonds has been challenged shall, upon notification of the challenge, immediately notify the attorney general and the department.

     History: En. Sec. 1, Ch. 12, Sp. L. January 1992; amd. Sec. 39, Ch. 18, L. 1995; amd. Sec. 115, Ch. 42, L. 1997.