§ 101138 School Bond Fund Withdrawal

This law lets the Director of Finance take money out of the General Fund—up to the amount of unsold school bonds—to put into the State School Facilities Fund, and then requires that the money be paid back with the interest it would have earned.

Key Takeaways

•The Director can only withdraw up to the amount of unsold school bonds.
•Withdrawn money must be put into the 2016 State School Facilities Fund.
•When the money is paid back, it must include the interest it would have earned in the Pooled Money Investment Account.

Example

A school district needs cash to start building a new school. The Director of Finance withdraws $5 million from the General Fund, uses it for the project, and later returns the $5 million plus the interest it would have earned if it had stayed in the investment account.

The withdrawal is allowed because it does not exceed the amount of unsold bonds. After the money is used, the district must give back the original $5 million and also add the interest that the money would have earned in the Pooled Money Investment Account.

How to Calculate

Return = Withdrawn + Interest, where Interest = Withdrawn × InterestRate × Time

Find the amount of money that was withdrawn (the principal).
Find the interest rate that the Pooled Money Investment Account would have earned.
Determine how long the money was out of the General Fund (in years).
Multiply the principal by the interest rate and the number of years to get the interest amount.
Add the interest amount to the principal to get the total amount that must be returned.

The Director withdraws $2,000,000 for a school project. The Pooled Money Investment Account earns 2% per year. The money is out of the General Fund for 3 years.

Result: Interest = $2,000,000 × 0.02 × 3 = $120,000. Return = $2,000,000 + $120,000 = $2,120,000.

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 (exclusive of refunding 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 Any amounts withdrawn shall be deposited in the 2016 State School Facilities Fund consistent with this chapter.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 November 8, 2016, by initiative Proposition 51, Sec. 3.)

Key Takeaways

•The Director can only withdraw up to the amount of unsold school bonds.
•Withdrawn money must be put into the 2016 State School Facilities Fund.
•When the money is paid back, it must include the interest it would have earned in the Pooled Money Investment Account.

Example

How to Calculate

Return = Withdrawn + Interest, where Interest = Withdrawn × InterestRate × Time

Find the amount of money that was withdrawn (the principal).
Find the interest rate that the Pooled Money Investment Account would have earned.
Determine how long the money was out of the General Fund (in years).
Multiply the principal by the interest rate and the number of years to get the interest amount.
Add the interest amount to the principal to get the total amount that must be returned.

The Director withdraws $2,000,000 for a school project. The Pooled Money Investment Account earns 2% per year. The money is out of the General Fund for 3 years.

Result: Interest = $2,000,000 × 0.02 × 3 = $120,000. Return = $2,000,000 + $120,000 = $2,120,000.

Key Takeaways

Example

How to Calculate

Key Terms

References

§ 101138 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