§ 100640 School Bond Fund Withdrawal

This law lets the Director of Finance take money out of the General Fund, but only up to the amount of unsold school bonds, and requires that the money be put back later with the interest it would have earned.

Key Takeaways

•The Director can only withdraw up to the amount of unsold school bonds approved for the project.
•All withdrawn money must go into the State School Facilities Fund while it’s being used.
•When the money comes back, it must include the interest it would have earned in the state’s investment account.

Example

A school district needs cash to start building a new classroom. The Director of Finance pulls $2 million from the General Fund because there are $2 million worth of unsold bonds approved for school building projects.

The $2 million is used for the construction, then after the project is finished the same $2 million must be returned to the General Fund, plus the interest it would have earned if it had stayed in the state’s investment account.

How to Calculate

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

Find the amount of money withdrawn (the principal).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

The Director withdraws $1,000,000 and holds it for 2 years. The Pooled Money Investment Account pays 3% interest per year.

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 Any amounts withdrawn shall be deposited in the 2002 State School Facilities Fund consistent with this chapter.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. 2002, Ch. 33, Sec. 30. Approved in Proposition 47 at the November 5, 2002, election.)

Key Takeaways

•The Director can only withdraw up to the amount of unsold school bonds approved for the project.
•All withdrawn money must go into the State School Facilities Fund while it’s being used.
•When the money comes back, it must include the interest it would have earned in the state’s investment account.

Example

How to Calculate

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

Find the amount of money withdrawn (the principal).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

The Director withdraws $1,000,000 and holds it for 2 years. The Pooled Money Investment Account pays 3% interest per year.

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

§ 100640 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