(a) The funds derived from the sale of surplus property shall be used for capital outlay or for costs of maintenance of school district property that the governing board of the school district determines will not recur within a five-year period. Proceeds from a lease of school district property with an option to purchase may be deposited into a restricted fund for the routine repair of district facilities, as defined by the State Allocation Board, for up to a five-year period. In addition, the proceeds from the sale or lease with option to purchase may be deposited in the general fund of the district if the school district governing board and the State Allocation Board have determined that the district has no anticipated need for additional sites or building construction for the ten-year period following the sale or lease with option to purchase, and the district has no major deferred maintenance requirements. Proceeds from the sale or lease with option to purchase of school district property shall be used for one-time expenditures, and may not be used for ongoing expenditures including, but not limited to, salaries and other general operating expenses.

(b) The proceeds may also be deposited into a special reserve fund for capital outlay, for costs of maintenance of school district property that the governing board determines will not recur within a five-year period, or for the future maintenance and renovation of schoolsites if the district governing board and the State Allocation Board have determined that the district has no anticipated need for schoolsites or building construction or major deferred maintenance projects for a ten-year period following the sale or lease with option to purchase. Proceeds deposited in the special reserve fund shall not be available for general operating expenses as provided in Section 42842.

(c) The State Allocation Board, in consultation with the department, shall adopt regulations that govern the use of proceeds pursuant to this section for one-time expenditures and define ongoing expenditures for purposes of subdivision (a).

(d) Notwithstanding a determination by the State Allocation Board pursuant to subdivision (a) that a school district has no anticipated need for additional sites or building construction for the ten-year period following the sale or lease with option to purchase of surplus school property, the district may apply for new construction or modernization funding pursuant to this chapter if both of the following conditions are satisfied:

(1) Five years have elapsed since the date upon which the sale or lease with option to purchase was executed.

(2) The State Allocation Board determines that the district has demonstrated enrollment growth or a need for additional sites or building construction that the district could not have easily anticipated at the time the board made its original determination that the district had no anticipated need for the ten-year period following the sale or lease with option to purchase.

(Amended by Stats. 2006, Ch. 810, Sec. 1. Effective January 1, 2007.)