§ 19259 Bond Fund Withdrawal Authority

This law lets the finance director take money out of the General Fund, but only up to the amount of bonds that haven’t been sold yet, and the board has to put that money (plus any interest it could have earned) back into the General Fund.

Key Takeaways

•The finance director can only withdraw up to the amount of bonds that haven’t been sold yet.
•Any money taken out must be put back into the General Fund later.
•The board must also pay back the interest the money would have earned if it had stayed invested.

Example

A city plans to sell $10 million in bonds. Only $4 million of those bonds have been sold so far, leaving $6 million unsold. The Director of Finance takes $2 million from the General Fund to start a road project.

Because $2 million is less than the $6 million of unsold bonds, the withdrawal is allowed. After the road project is done, the board must return the $2 million plus any interest the $2 million would have earned if it had stayed in the investment account.

How to Calculate

Total to return = Withdrawal + (Withdrawal × interest rate × time)

Find the amount withdrawn (it can’t be more than the unsold bonds).
Find the interest rate that the Pooled Money Investment Account pays (e.g., 3% per year).
Determine how long the money was out of the fund (e.g., 6 months = 0.5 years).
Calculate interest = Withdrawal × rate × time.
Add the interest to the original withdrawal to get the total amount that must be returned.

The board borrowed $2 million for 6 months and the investment account pays 3% per year.

Result: Interest = 2,000,000 × 0.03 × 0.5 = $30,000. Total to return = $2,000,000 + $30,000 = $2,030,000.

For purposes of this article, the Director of Finance may, by executive order, authorize the withdrawal from the General Fund of a sum of money not to exceed the amount of the unsold bonds that have been authorized by the committee to be sold pursuant to this article. Any sums withdrawn shall be deposited in the fund. All moneys made available under this section to the board shall be returned by the board to the General Fund, plus the interest that the amounts would have earned in the Pooled Money Investment Account, from the sale of bonds for the purpose of carrying out this article. (Added by renumbering Section 19238 by Stats. 2013, Ch. 602, Sec. 57. (SB 360) Effective January 1, 2014. Note: This section (as originally numbered) was added by Stats. 2001, Ch. 902, and approved in Prop. 41 on March 5, 2002.)

Key Takeaways

•The finance director can only withdraw up to the amount of bonds that haven’t been sold yet.
•Any money taken out must be put back into the General Fund later.
•The board must also pay back the interest the money would have earned if it had stayed invested.

Example

How to Calculate

Total to return = Withdrawal + (Withdrawal × interest rate × time)

Find the amount withdrawn (it can’t be more than the unsold bonds).
Find the interest rate that the Pooled Money Investment Account pays (e.g., 3% per year).
Determine how long the money was out of the fund (e.g., 6 months = 0.5 years).
Calculate interest = Withdrawal × rate × time.
Add the interest to the original withdrawal to get the total amount that must be returned.

The board borrowed $2 million for 6 months and the investment account pays 3% per year.

Result: Interest = 2,000,000 × 0.03 × 0.5 = $30,000. Total to return = $2,000,000 + $30,000 = $2,030,000.

Key Takeaways

Example

How to Calculate

Key Terms

References

§ 19259 Bond Fund Withdrawal Authority

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