§ 100840 School Bond Fund Withdrawal

This law lets the finance director borrow money from the General Fund, but only up to the amount of unsold school bonds, put that money into the State School Facilities Fund, and later pay it back plus the interest it would have earned if it stayed in the investment account.

Key Takeaways

•The Director can only borrow up to the amount of unsold bonds approved for sale.
•All borrowed money must be put into the 2004 State School Facilities Fund.
•When the money is paid back, it must include the interest it would have earned in the investment account.

Example

The state has $12 million in school bonds that haven’t been sold yet. The Director of Finance can take $12 million out of the General Fund, move it into the school facilities fund, and later return the $12 million plus the interest it would have earned.

The borrowed money is used for school projects, but the state must give back the same amount plus the interest it missed out on.

How to Calculate

Return = Withdrawal + (Withdrawal × InterestRate × TimeHeld)

Find the amount taken out (the Withdrawal).
Find the interest rate that the Pooled Money Investment Account would have earned.
Determine how long the money was held (in years).
Multiply Withdrawal × InterestRate × TimeHeld to get the interest that would have been earned.
Add that interest to the original Withdrawal to get the total amount that must be returned.

The Director withdraws $5 million for one year. The Pooled Money Investment Account earns 2% per year.

Result: Interest = $5,000,000 × 0.02 × 1 = $100,000; Return = $5,000,000 + $100,000 = $5,100,000

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 Any amounts withdrawn shall be deposited in the 2004 State School Facilities Fund consistent with this chapter.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. 31. Approved in Proposition 55 at the March 2, 2004, election.)

Key Takeaways

•The Director can only borrow up to the amount of unsold bonds approved for sale.
•All borrowed money must be put into the 2004 State School Facilities Fund.
•When the money is paid back, it must include the interest it would have earned in the investment account.

Example

The borrowed money is used for school projects, but the state must give back the same amount plus the interest it missed out on.

How to Calculate

Return = Withdrawal + (Withdrawal × InterestRate × TimeHeld)

Find the amount taken out (the Withdrawal).
Find the interest rate that the Pooled Money Investment Account would have earned.
Determine how long the money was held (in years).
Multiply Withdrawal × InterestRate × TimeHeld to get the interest that would have been earned.
Add that interest to the original Withdrawal to get the total amount that must be returned.

The Director withdraws $5 million for one year. The Pooled Money Investment Account earns 2% per year.

Result: Interest = $5,000,000 × 0.02 × 1 = $100,000; Return = $5,000,000 + $100,000 = $5,100,000

Key Takeaways

Example

How to Calculate

Key Terms

References

§ 100840 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