702 KAR 3:020 - Bond issue approval
RELATES TO: KRS 58.150, 156.070, 156.200, 156.210, 162.080, 162.090, 162.100, 162.120-162.290, 162.300, 162.385
Section 1. The Commissioner of Education
shall determine the financial soundness of all school revenue bond issues. He
shall supervise all phases of school revenue and voted bonds.
Section 2. The Commissioner of Education
shall disapprove the sale of any school revenue or school voted bond issue
which he deems to be not in accord with Kentucky Board of Education
administrative regulations or financially unsound for the district in
question.
Section 3. Fiscal agents
shall be registered with the Department of Financial Institutions in the
Commonwealth of Kentucky. The local board of education shall select the fiscal
agent for the proposed revenue bond issue. The fiscal agent shall employ
appropriate bond counsel subject to approval of the local board of education.
The allowable discount on bonds shall not exceed two (2) percent of the par
value of the issue under contract.
Section
4. Twenty (20) percent of the fund to Support Education Excellence
in Kentucky (SEEK) capital outlay funds shall be set aside as a safety factor
in determining the initial bonding potential of a local district. The
Commissioner of Education may allow safety factors below twenty (20) percent to
a minimum of ten (10) percent on a case by case basis dependent upon the
financial stability of the individual school district. The following sources of
revenue shall be eligible as annual revenues in support of school building
revenue bonds or notes:
(1) SEEK capital
outlay funds (KRS
157.420);
(2) Facilities Support Program of Kentucky
funds (KRS
157.440);
(3) School building funds (KRS
160.476); and
(4) Special trust funds (if a legal opinion
is provided by bond counsel).
Section 5.
(1) Revenue bond anticipation notes or the
reissuance (roll over) of bond anticipation notes shall be issued only upon
approval of the Kentucky Board of Education on a case by case basis and in
accord with
KRS
58.150.
(2) Prior to submittal to the Kentucky Board
of Education for approval, the local school district shall provide the
Department of Education the following financial information:
(a) Sources and annual amounts of revenue
available for debt service;
(b)
Projected debt service of a comparably-sized bond issue using maximum interest
rates that the district could support with current available revenues as
reflected in paragraph (a) of this subsection; and
(c) Projected debt service on a
comparably-sized bond issue based on the then-current market.
(3) The following criteria shall
apply to determining the approval of bond anticipation notes or the reissuance
(roll over) of bond anticipation notes:
(a)
The district shall show evidence that the available fiscal resources could
support a twenty (20) year revenue bond issue at the then-current market rates
plus one and five-tenths (1.5) percent;
(b) The district shall agree to escrow the
difference between a regular revenue bond issue at the then-current market rate
twenty (20) year amortization schedule, level principal redemption, and the
annual net interest cost of the bond anticipation notes. The escrow account
shall be used to reduce the principal of the note at the call date, the
termination date, or as is stipulated in the terms and conditions of the issue
note;
(c) Notes shall be issued for
a period not less than two (2) nor more than four (4) years with a one (1) year
call provision; and
(d) Bonds may
be required to be issued to replace callable notes if market conditions change
so that permanent financing is advisable and warranted.
Section 6. The maximum
net interest cost for the sale of school revenue bonds established by the
Kentucky Board of Education shall be a rate no greater than the most current
Bond Buyer's 20 -Bond Index plus one and five-tenths (1.5) percent. If a bid on
an issue of bonds exceeds the maximum interest rate, the Commissioner of
Education may declare an emergency to exist and request the chairman to convene
the Kentucky Board of Education for the purpose of approving or disapproving
his recommendation that the bonds be sold.
Notes
STATUTORY AUTHORITY: KRS 58.150(1), 156.070(1), 160.160, 162.160, 162.170, 162.180
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