57-728. CREDIT ENHANCEMENT PROGRAM FOR SCHOOL DISTRICT BONDS. (1) The endowment fund investment board shall administer a school district bond credit enhancement program in accordance with this section and in conjunction with chapter 53, title 33, Idaho Code. This program applies to voter approved bonds issued by school districts. The program is intended to benefit school districts by authorizing the board to purchase notes issued by the state of Idaho for the purpose of making debt service payments under the Idaho school bond guaranty program established in chapter 53, title 33, Idaho Code.

(2) The board shall promulgate rules to implement the program. Rules may include the imposition of guaranty and administrative fees upon school districts participating in the program. Rules shall include:

(a) The application materials school districts must provide to the board; and

(b) The application procedures, submission deadlines, and the time periods for review and approval or denial of an application.

(3) A school district that seeks credit enhancement under this program shall first apply to the state treasurer to participate in the Idaho school bond guaranty program established in chapter 53, title 33, Idaho Code. If approved to participate in the Idaho school bond guaranty program, a school district may apply for credit enhancement, as provided in section 33-5310, Idaho Code. The board shall approve or deny applications as set forth in rule but not longer than twenty (20) days following the submission of a complete application to the board. Nothing contained herein shall prohibit a school district from reapplying following a rejected application.

(4) Upon approval of a school district’s application to participate in the credit enhancement program, the following shall be in effect in the event moneys from the sales tax account or from the provisions of section 33-5309, Idaho Code, are insufficient to pay a debt service payment under the Idaho school bond guaranty program:

(a) The board may purchase on behalf of the public school endowment fund, or from other funds administered by the board, notes from the state issued by the state treasurer, in accordance with section 33-5308, Idaho Code, under such terms as are negotiated between the board and the state treasurer; or

(b) Upon the request of the state treasurer pursuant to section 33-5308, Idaho Code, the board shall purchase on behalf of the public school endowment fund notes issued by the state treasurer, the proceeds of which shall be sufficient to pay the debt service payments as they become due.

(5) Notes purchased by the board pursuant to subsection (4)(b) of this section shall be subject to the following terms and conditions:

(a) The notes shall bear interest at a rate equal to the annual rate of one (1) year treasury bills, as published by the federal reserve board as of the date of the request of the state treasurer, plus four hundred (400) basis points, plus, for the first six (6) months of the term of the note, an amount, as determined by the board, up to a maximum of fifty (50) basis points, to cover all additional administrative and transaction costs related to the purchase of the notes;

(b) The notes will have a maximum term of one (1) year, and may be renewed at the request of the state treasurer;

(c) The notes, including principal and interest, shall be repaid from the school district’s next payments pursuant to section 33-5307, Idaho Code, as collected by the state treasurer;

(d) The state may make additional payments on the note;

(e) The board may require the state treasurer to compel the school district to modify its fiscal practices and its general operations if the board determines that there is a substantial likelihood that the school district will not be able to make future payments required under this section.

(6) The provisions of this section shall not be deemed to interfere with the state treasurer’s ability in chapter 53, title 33, Idaho Code, to obtain repayment of a delinquent obligation.

(7) For purposes of administering the provisions of this section, the board shall make available the sum of three hundred million dollars ($300,000,000) from the public school endowment fund, for purposes of purchasing notes as authorized by this section. Nothing in this section shall require the board to hold at any time in excess of three hundred million dollars ($300,000,000) in notes issued pursuant to the credit enhancement program. The principal amount of bonds guaranteed by the credit enhancement program shall not be greater than four (4) times the amount made available by the board from the public school endowment fund for the purpose of purchasing notes.

(8) The aggregate principal amount of school district bonds outstanding that may be guaranteed by the credit enhancement program shall not exceed forty million dollars ($40,000,000) per school district. In the event school districts consolidate, the maximum credit enhancement of the bonds of the newly consolidated school district shall be the sum of the maximum limit of each school district participating in the consolidation. The state treasurer shall monitor the principal amounts of each school district participating in the credit enhancement program and provide such information to the board.

(9) Any bond originally guaranteed under this chapter shall no longer be considered guaranteed from and after the date on which that bond no longer has the benefit of the Idaho school bond guaranty program established in chapter 53, title 33, Idaho Code.

History:

[57-728, added 1999, ch. 328, sec. 3, p. 850; am. 2002, ch. 147, sec. 1, p. 424; am. 2003, ch. 269, sec. 1, p. 719; am. 2007, ch. 89, sec. 1, p. 243; am. 2009, ch. 185, sec. 6, p. 605; am. 2016, ch. 136, sec. 1, p. 400.]