(1) (a) The state treasurer, on behalf of a school district, shall make payment as provided in this section of principal and interest on bonds or other obligations to which this section applies, unless the school district board of education adopts a resolution stating it will not accept payment on behalf of the school district of principal and interest on bonds or other obligations as provided in this section. If a school district chooses to adopt such a resolution, it shall be adopted prior to issuance or incurrence of the bonds or obligations to which it applies. Following adoption of the resolution, the school district shall provide written notice to the state treasurer of its refusal to accept the payment. The refusal to accept payment shall take effect upon the date the state treasurer receives the written notice and shall continue in effect until the date the state treasurer receives written notice from the school district that the school district board of education has adopted a resolution rescinding the refusal to accept payment pursuant to this section. Notwithstanding any provision of subsections (2) to (8) of this section to the contrary, the state treasurer shall not make payment of principal or interest on bonds or other obligations on behalf of a school district that provides written notice of its refusal to accept payment by the state treasurer on behalf of the school district as provided in this paragraph (a), until the state treasurer receives written notice of the rescission of refusal to accept payment.

(b) This section applies to:

(I) General obligation bonds issued by a school district on or after July 1, 1991, pursuant to article 42 or 43 of this title; except that this section shall not apply to bonds issued by a school district pursuant to section 22-42-102 (2)(a)(IX);

(II) Obligations of a school district in connection with a lease agreement or installment purchase agreement entered into by a school district under section 22-32-127 or 22-45-103 (1)(c) on or after July 1, 1991; and

(III) Refunding bonds issued by a school district pursuant to article 56 of title 11.

(IV) Repealed.

(2) Whenever the paying agent has not received payment of principal of or interest on bonds or other obligations to which this section applies on the business day 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 district and determine whether the district will make the payment by the date on which it is due.

(3) If the 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. The state treasurer shall recover the amount forwarded by withholding amounts from the school district's payments of the state's share of the district's total program received in accordance with article 54 of this title and from property tax and specific ownership tax revenues collected by the county treasurer on behalf of the school district; except that the state treasurer may not recover amounts from property tax revenues that are pledged to pay notes or bonds issued by the school district. The total amount withheld in a month from the state's share of total program and the tax revenues due to the school district for each occasion on which the treasurer forwards an amount pursuant to this section shall not exceed one-twelfth of the amount forwarded; except that the state treasurer, in one or more months during the twelve-month withholding period, may withhold more than one-twelfth of the amount forwarded, if the school district in one or more months during the twelve-month withholding period receives total program and tax revenues in an amount that is less than one-twelfth of the amount forwarded. The state treasurer shall not withhold for more than twelve consecutive months for each occasion on which the treasurer forwards amounts pursuant to this section. The state treasurer, in writing, shall notify the county treasurer for the school district of the amount of tax revenues to be withheld pursuant to this subsection (3) and the period of withholding. Notwithstanding any provision of this subsection (3) to the contrary, a school district may elect to make early repayment of all or any portion of an amount forwarded by the state treasurer on behalf of the school district pursuant to this section. When a school district fully repays an amount forwarded by the state treasurer on behalf of the school district pursuant to this section, the state treasurer, in writing, shall notify the county treasurer for the school district to discontinue the withholding of tax revenues.

(4) The amounts forwarded to the paying agent by the state treasurer shall be applied by the paying agent solely to the payment of the principal of or interest on such bonds or other obligations of the school district. The state treasurer shall notify the department of education, the chief financial officer of the district, and the general assembly of amounts withheld and payments made pursuant to this section.

(5) Any school district to which this section applies shall file with the state treasurer a copy of the resolution which 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. The failure of any school district to file such information shall not affect the obligation of the state treasurer to withhold the state's share of the district's total program and the district's tax revenues under this section.

(6) 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 it 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 (6) 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.

(7) 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 district to determine the reason for the nonpayment and to assist the district, if necessary, in developing and implementing measures to assure that future payments will be made when due.

(8) Whenever the state treasurer makes a payment of principal and interest on bonds or other obligations of a school district and withholds amounts from the district's payments of the state's share of the district's total program and from the district's unpledged tax revenues pursuant to this section because of the failure to collect property taxes levied in accordance with law for the district's bond redemption fund, the district may transfer, or may instruct the third-party custodian that administers the district's bond redemption fund to transfer, any such delinquent property taxes later collected out of the district's bond redemption fund and into its general fund.