Bill S5692-2011

Authorizes the Patchogue-Medford Union Free School District to establish a reserve fund to liquidate serial bonds

Authorizes the Patchogue-Medford Union Free School District to establish a reserve fund to liquidate serial bonds.

Details

Actions

  • Jan 4, 2012: REFERRED TO EDUCATION
  • Jun 10, 2011: REFERRED TO EDUCATION

Memo

BILL NUMBER:S5692

TITLE OF BILL: An act in relation to establishing a reserve fund to liquidate certain serial bonds issued to the Patchogue-Medford Union Free School District

PURPOSE OR GENERAL IDEA OF BILL: To authorize Patchogue-Medford Union Free School District to establish a reserve fund to liquidate serial bonds.

SUMMARY OF PROVISIONS: Section One authorizes the Patchogue-Medford Union Free School District to establish a reserve fund for the purpose of liquidating any serial bonds issued pursuant to chapter 109 of the law of 2006.

Section Two allows the Patchogue-Medford Union Free School District to transfer monies from the general fund of such school district to the reserve fund created by this act, provided that the amount transferred from the general fund shall not exceed the amount necessary to liquidate the serial bonds issued pursuant to chapter 109 of the laws of 2006.

Section Three requires that before the reserve fund may be established, a majority of qualified voters must approve a proposition at a special or regular school district meeting and this section also requires that notice of the meeting shall state that this proposition would be submitted and other information regarding the proposition. This section also provides that voters may direct school authorities to pay monies derived from another source into this fund.

Section Four is the effective date.

JUSTIFICATION: In June 2006, Governor Pataki signed Section 109 of the Laws of 2006 which allowed Patchogue-Medford Schools to issue bonds in order to finance a $6 million deficit. The District issued the bonds and has been faithfully paying them down since then. The bonds which were issued contain no provision for pre-payment. The current administration has led the district with prudent financial management and is in a position to liquidate the bonds by paying them off. Establishing a reserve fund would enable the District to pay off the bonds in a one-shot transaction and take the debt service on these bonds out of the annual budget. This would allow more of the current resources to fund the day to day operations of the district while paying the bonds from savings.

However, the terms of the bonds do not contain the mechanism, with which this can be achieved. This legislation would allow the District to legally establish a reserve fund. Certain guidelines are outlined in the bill that require a majority of qualified voters to vote in favor of a proposition at a special or regular school board meeting. Notice of the meeting must state that this proposition would be up for a vote at the meeting in addition to the purpose of the fund, the amount of the fund, as well as the probable term and the source. The purpose of

the fund, the ultimate amount, the probable term and the source from which the funds will be obtained shall be specified in the proposition. An annual amount that is sufficient to meet the requirements set forth in the proposition shall be paid into the fund and voters from time to time may direct school authorities to pay monies into the fund derived from some other source.

LEGISLATIVE HISTORY: 2009-2010 A.10600/S.7415

FISCAL IMPLICATIONS: To Be Determined.

EFFECTIVE DATE: This act shall take effect immediately.


Text

STATE OF NEW YORK ________________________________________________________________________ 5692 2011-2012 Regular Sessions IN SENATE June 10, 2011 ___________
Introduced by Sen. ZELDIN -- read twice and ordered printed, and when printed to be committed to the Committee on Education AN ACT in relation to establishing a reserve fund to liquidate certain serial bonds issued to the Patchogue-Medford Union Free School District THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Notwithstanding the provisions of article 74 of the educa- tion law, the Patchogue-Medford union free school district is hereby authorized to establish a reserve fund for the purpose of liquidating any serial bonds issued pursuant to chapter 109 of the laws of 2006. S 2. Notwithstanding any other provision of law, rule or regulation to the contrary, the Patchogue-Medford union free school district may transfer monies from the general fund of such school district to the reserve fund created by this act, provided however, that the amount transferred from the general fund shall not exceed the amount necessary to liquidate the serial bonds issued pursuant to chapter 109 of the laws of 2006. S 3. The reserve fund authorized by this act shall not be established (a) until approved by a majority vote of the qualified voters of the district voting on a proposition therefor submitted at a regular or special school district meeting and (b) unless the notice of such meet- ing shall have stated that a proposition to establish a reserve fund would be so submitted, the purpose of the fund, the ultimate amount thereof, its probable term and the source from which the funds would be obtained. The proposition shall specify the purpose for which the fund is established, the ultimate amount, the probable term and the source from which the funds are to be obtained. There shall be paid into any such fund an annual amount sufficient to meet the requirements of the proposition. In addition, the voters may from time to time direct the
school authorities to pay into such fund moneys derived from any other source. S 4. This act shall take effect immediately.

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