B.1.3.1.1 Process for Approval of Local School District GO Bonds
EDUCATION CODE VS. GOVERNMENT CODE. For districts there are two separate statutory options when issuing GO bonds: Education Code Section 15100 et seq. or Government Code Section 53506 et seq. Each statutory option outlines the parameters districts must follow to comply with the authority conferred in statute. Each section contains information regarding redemption requirements, maximum maturity, and maximum interest rate, as well as other limitations. The main difference in authorization between the Education and Government Codes is the maximum maturity.
Under Education Code Section 15100 et seq., bonds can be issued by the district or on behalf of the district by the county in which the county superintendent has jurisdiction over the district. Bonds under the Education Code have a maximum maturity of 25 years and may be subject to a maximum interest rate of 8%. In addition, bonds can be sold either through a negotiated sale or competitive bid.197 Before the sale of the bonds, the district must adopt a resolution that among other things indicates the reasons for the selected method of sale.198
GO bonds issued under Government Code Section 53506 are generally issued by the district. They, subject to certain limitations, have a maximum maturity of 40 years and a maximum interest rate of 12%. Districts can issue bonds through both a negotiated or competitive sale. However, in a negotiated sale, the district must adopt a resolution that contains among other things, the reasons for selecting the negotiated method of sale.199
Regardless of the statutory option used to issue GO debt, districts need to communicate with the county about their debt issuance activity in order to ensure that the county can levy and collect taxes, pay bonds, and hold bond proceeds and tax funds for the GO bonds issued and sold under their voter-approved authority. Education Code Section 15140(c) requires that, whenever the governing board of a school district or community college district issues bonds or refunding bonds payable from ad valorem taxes, the governing board must transmit the authorizing resolution and debt service schedule, including the debt service schedule for the bonds to be refunded, to the county auditor and county treasurer in sufficient time to permit the county to establish tax rates and necessary funds or accounts for the bonds.