(1) The general assembly hereby finds that school districts of this state are experiencing great need for improved school facilities; that, although the issuance of school bonds can pave the way for improved facilities, such bonds must be marketable and their interest rate must be competitive in order to benefit the district; that, if the risk assumed by school bond purchasers was diminished, interest rates would generally be reduced; that the use of permanent school funds to guarantee payments of principal and interest, with appropriate safeguards for the public school fund, is consistent with the purpose for which the fund was created; and that section 3 of article IX of the state constitution specifically authorizes the use of the public school fund of the state for the purposes of this section.

(2) The state treasurer is authorized to contract with school districts in this state for the guarantee of payments of principal and interest on the district's bonds as such payments become due. The state treasurer shall not enter into such contract if the guarantee would result in the total amount of outstanding guaranteed bonds exceeding an amount equal to three times the market value of the public school fund. Each year the state treasurer shall analyze the status of guaranteed bonds as compared to the book value and market value of the public school fund and shall certify whether the amount of bonds guaranteed is within the limit prescribed by this subsection (2).

(3) The board of education of a school district desiring to enter into a guarantee contract authorized by this section shall include, in the resolution submitting the question of issuing bonds to the registered electors of the school district, a statement that the school district intends to contract with the state treasurer for the guarantee of principal and interest payments to holders of such bonds. The resolution shall set forth, and any resulting guarantee contract shall provide, that the district shall repay any loan of public school funds with interest as provided in subsection (4) of this section by the end of the calendar year next following the close of the fiscal year in which the loan was made, out of any available funds of the school district or out of the proceeds of a levy on the taxable property of the school district at a rate sufficient to produce the amount required to repay the loan. No guarantee contract shall be executed pursuant to this section unless the registered electors of the school district have approved such provisions for the contract by their vote approving the issuance of bonds.

(4) Any guarantee contract authorized by this section shall include a provision requiring the payment of interest on loans made pursuant to the contract at the prevailing rate of interest being earned by investments of the public school fund on the date the loan is made.

(5) A board of education seeking the guarantee of eligible bonds shall notify the commissioner of education and the state treasurer indicating the name of the school district and the principal amount of the bonds to be issued, the name and address of the school district's paying agent for the bonds, the maturity schedule, the estimated interest rate, and the date of the bonds.

(6) After receipt of the request for the guarantee of bonds, the commissioner of education shall review the applicant school district regarding the school district's accreditation category, the school district's financial status based on its audited financial statements for the previous three years, and the total amount of the school district's bonded indebtedness in relation to the limitation on indebtedness provided by law. If, after the investigation, the commissioner of education is satisfied that the school district's bonds should be guaranteed under this section, the commissioner of education shall endorse the request for the bond guarantee to the state treasurer.

(7) Whenever the paying agent has not received payment of principal of or interest on bonds or other obligations to which this section applies fifteen business days immediately prior to the date on which such payment is due, the paying agent shall so notify the state treasurer and the school district by telephone, facsimile, or other similar communication, followed by written verification, of such payment status. The state treasurer shall immediately contact the school district and determine whether the school district will make the payment by the date on which it is due.

(8) If the school district indicates that it will not make the payment by the date on which it is due, the state treasurer shall forward the amount in immediately available funds necessary to make the payment of the principal of or interest on the bonds or other obligations of the school district to the paying agent on the business day immediately prior to the date on which payment is due. Such payment shall constitute a loan to the school district from the public school fund in accordance with the terms of the guarantee contract.

(9) In order to assure sufficient liquidity to meet obligations under the provisions of this section, the state treasurer shall invest moneys in the public school fund in an amount equal to at least ten percent of the principal amount of bonds guaranteed under this section in interest-bearing obligations of the United States as provided in section 22-41-104 (1)(d) with maturity dates of three years or less.

(10) The amounts forwarded to the paying agent by the state treasurer shall be applied to the paying agent solely to the payment of the principal of or interest on such bonds or other obligations of the school district.

(11) Any school district to which this section applies shall file with the state treasurer a copy of the resolution that authorizes the issuance of bonds or other obligations, a copy of the official statement or other offering document for such bonds or other obligations, the agreement, if any, with the paying agent for such bonds or other obligations, and the name, address, and telephone number of such paying agent.

(12) As provided in section 11 of article II of the state constitution, the state hereby covenants with the purchasers and owners of bonds and other obligations issued by school districts that the state will not repeal, revoke, or rescind the provisions of this section or modify or amend the same so as to limit or impair the rights and remedies granted by this section; but nothing in this subsection (11) shall be deemed or construed to require the state to continue the payment of state assistance to any school district or to limit or prohibit the state from repealing, amending, or modifying any law relating to the amount of state assistance to school districts or the manner of payment or the timing thereof. Nothing in this section shall be deemed or construed to create a debt of the state with respect to such bonds or other obligations within the meaning of any state constitutional provision or to create any liability except to the extent provided in this section.

(13) Whenever the state treasurer is required by this section to make a payment of principal of or interest on bonds or other obligations on behalf of a school district, the department of education shall initiate an audit of the school district to determine the reasons for the nonpayment and to assist the school district, if necessary, in developing and implementing measures to assure that future payments will be made when due.

(14) Whenever the state treasurer makes a payment of principal and interest on bonds or other obligations of a school district because of the failure to collect property taxes levied in accordance with law for the school district's bond redemption fund, the district may transfer any such delinquent property taxes later collected out of the school district's bond redemption fund and into its general fund.

(15) In the event that any public school fund moneys are lost by reason of the failure of any school district to repay a loan made pursuant to this section, the general assembly shall restore such public school fund moneys, together with such interest as would have accrued thereto, by an appropriation in the amount of such loss from the general fund of the state.

(16) If two or more repayments from the public school fund are made on the guaranteed bonds of a school district and the commissioner of education determines that the school district is acting in bad faith under the guarantee, the commissioner of education may request the attorney general to institute appropriate legal action to compel the school district governing board to comply with the duties required by law in regard to the bonds.