§ 101028 School Bond Fund Withdrawal

This law lets the finance director take money out of the General Fund (but no more than the amount of unsold school bonds) and put it into the State School Facilities Fund, and then requires that the money be paid back later with the interest it would have earned if it had stayed in the investment account.

Key Takeaways

•The finance director can only borrow up to the amount of unsold bonds approved for the project.
•Borrowed money must go into the State School Facilities Fund, not any other place.
•When the money is paid back, it must include the interest it would have earned if it had stayed in the investment account.

Example

A school district needs cash to start building a new classroom, but the bonds they planned to sell haven't been sold yet.

The finance director can borrow up to the amount of those unsold bonds from the General Fund, move the cash into the school facilities fund to pay for the building, and later must pay back the same amount plus the interest the money would have earned if it had stayed invested.

How to Calculate

Return Amount = Withdrawn Amount + (Withdrawn Amount × Interest Rate × Time)

Find out how much money was withdrawn from the General Fund.
Determine the interest rate that the Pooled Money Investment Account would have paid (e.g., 3% per year).
Figure out how long the money was out of the account (in years).
Multiply the withdrawn amount by the interest rate and the time to get the interest that would have been earned.
Add that interest to the original withdrawn amount. That total is what must be returned to the General Fund.

The director withdraws $1,000,000 for a school project. The investment account pays 3% interest per year, and the money is used for 2 years before the bonds are sold.

Result: Interest = $1,000,000 × 0.03 × 2 = $60,000. Return Amount = $1,000,000 + $60,000 = $1,060,000.

For the purposes of carrying out this chapter, the Director of Finance may authorize the withdrawal from the General Fund of an amount not to exceed the amount of the unsold bonds that have been authorized by the State School Building Finance Committee to be sold for the purpose of carrying out this chapter. Any amounts withdrawn shall be deposited in the 2006 State School Facilities Fund consistent with this chapter. Any money made available under this section shall be returned to the General Fund, plus an amount equal to the interest that the money would have earned in the Pooled Money Investment Account, from proceeds received from the sale of bonds for the purpose of carrying out this chapter. (Added by Stats. 2006, Ch. 35, Sec. 16. Approved in Proposition 1D at the November 7, 2006, election.)

Key Takeaways

•The finance director can only borrow up to the amount of unsold bonds approved for the project.
•Borrowed money must go into the State School Facilities Fund, not any other place.
•When the money is paid back, it must include the interest it would have earned if it had stayed in the investment account.

Example

A school district needs cash to start building a new classroom, but the bonds they planned to sell haven't been sold yet.

How to Calculate

Return Amount = Withdrawn Amount + (Withdrawn Amount × Interest Rate × Time)

Find out how much money was withdrawn from the General Fund.
Determine the interest rate that the Pooled Money Investment Account would have paid (e.g., 3% per year).
Figure out how long the money was out of the account (in years).
Multiply the withdrawn amount by the interest rate and the time to get the interest that would have been earned.
Add that interest to the original withdrawn amount. That total is what must be returned to the General Fund.

The director withdraws $1,000,000 for a school project. The investment account pays 3% interest per year, and the money is used for 2 years before the bonds are sold.

Result: Interest = $1,000,000 × 0.03 × 2 = $60,000. Return Amount = $1,000,000 + $60,000 = $1,060,000.

Key Takeaways

Example

How to Calculate

Key Terms

References

§ 101028 School Bond Fund Withdrawal

Key Takeaways

Example

How to Calculate

Key Terms

References

Key Takeaways

Example

How to Calculate

Key Terms

Related Statutes

References

Key Takeaways

Example

How to Calculate

Key Terms

Related Statutes

References