HF 3731

as introduced - 86th Legislature (2009 - 2010) Posted on 03/23/2010 11:20am

A bill for an act
relating to education finance; lengthening the time when school district lines
of credit must be repaid; allowing tax or aid anticipation of credit certificates
to be issued for up to two years; amending Minnesota Statutes 2008, sections
123B.12; 126C.54.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2008, section 123B.12, is amended to read:

123B.12 INSUFFICIENT FUNDS TO PAY ORDERS.

(a) In the event that a district or a cooperative unit defined in section 123A.24,
subdivision 2, has insufficient funds to pay its usual lawful current obligations, subject to
section 471.69, the board may enter into agreements with banks or any person to take its
orders. Any order drawn, after having been presented to the treasurer for payment and not
paid for want of funds shall be endorsed by the treasurer by putting on the back thereof
the words "not paid for want of funds," giving the date of endorsement and signed by the
treasurer. A record of such presentment, nonpayment and endorsement shall be made by
the treasurer. The treasurer shall serve a written notice upon the payee or the payee's
assignee, personally, or by mail, when the treasurer is prepared to pay such orders. The
notice may be directed to the payee or the payee's assignee at the address given in writing
by such payee or assignee to such treasurer, at any time prior to the service of such notice.
No order shall draw any interest if such address is not given when the same is unknown to
the treasurer, and no order shall draw any interest after the service of such notice.

(b) A district may enter, subject to section 471.69, into a line of credit agreement
with a financial institution. The amount of credit available must not exceed new text begin four times
new text end 95 percent of average expenditure per month of operating expenditures in the previous
fiscal year. Any amount advanced must be repaid no later than deleted text begin 45 deleted text end new text begin 120 new text end days after the
day of advancement.

Sec. 2.

Minnesota Statutes 2008, section 126C.54, is amended to read:

126C.54 REPAYMENT; MATURITY DATE OF CERTIFICATES; INTEREST.

new text begin (a) new text end The proceeds of the current tax levies and future state aid receipts or other school
funds which may become available must be applied to the extent necessary to repay
such certificates and the full faith and credit of the district shall be pledged to payment
of the certificates. Certificates issued in anticipation of receipt of aids shall mature not
later than the anticipated date of receipt of the aids as estimated by the commissioner, but
in no event later than three months after the close of the school year in which issued.
Certificates issued in anticipation of receipt of taxes shall mature not later than the
anticipated date of receipt in full of the taxes, but in no event later than three months after
the close of the calendar year in which issued. The certificates must be sold at not less
than par. The certificates must bear interest after maturity until paid at the rate they bore
before maturity and any interest accruing before or after maturity must be paid from
any available school funds.

new text begin (b) Notwithstanding paragraph (a), if the certificates in anticipation of receipt of aids
are issued as taxable obligations and the interest on those obligations is taxable for federal
income tax purposes, the certificates shall mature not later than 12 months after the close
of the school year in which issued. Notwithstanding paragraph (a), if the certificates issued
in anticipation of receipt of taxes are issued as taxable obligations and the interest on those
obligations is taxable for federal income tax purposes, the certificates shall mature not
later than 12 months after the close of the calendar year in which issued.
new text end