AB750: Bill Text

LRB-3697/1

PG:mfd:lp

1997 - 1998 LEGISLATURE

1997 Assembly BILL 750

January 27, 1998 - Introduced by Representatives Harsdorf, Plouff, Brandemuehl, Springer, Johnsrud, Dueholm, M. Lehman, Reynolds and Olsen, cosponsored by Senators C. Potter, Darling, Shibilski, Fitzgerald, Grobschmidt, Welch and Clausing, by request of Wisconsin Department of Public Instruction and Wisconsin Association of School Boards. Referred to Committee on Ways and Means.

AB750,1,4 An Act to amend 67.11 (2) (intro.) and 121.15 (3m) (a) 2.; and to create 20.255 (2) (ds) and 121.095 of the statutes; relating to: requiring the state to make debt service payments on behalf of school districts under certain conditions and making an appropriation.

Analysis by the Legislative Reference Bureau

This bill provides that if a school board is unable to make a timely debt service payment on long-term debt, it may request the department of public instruction (DPI) to make the payment on behalf of the school district. The bill creates a sum sufficient appropriation to DPI for this purpose. The payment made by DPI may not exceed the amount of state school aids due the school district in the balance of the fiscal year less the loss in earnings to the state as a result of the payment and any interest the state pays on money borrowed to make the payment. DPI must reduce the school district's state aids by the amount of the payment plus any loss in earnings and interest costs.

The bill also provides that a school board for whom a payment is made must implement a plan, approved by DPI, that specifies how the school board will resolve the issues that led to its inability to make the payment and prevent future defaults.

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB750, s. 1 Section 1. 20.255 (2) (ds) of the statutes is created to read:

AB750,2,2 20.255 (2) (ds) Debt service payments. A sum sufficient to make debt service payments on behalf of school districts under s. 121.095.

AB750, s. 2 Section 2. 67.11 (2) (intro.) of the statutes is amended to read:

AB750,2,12 67.11 (2) (intro.)  Debt Except as provided under s. 121.095, debt service for municipal obligations issued under this chapter shall be paid from the appropriate debt service fund account created in sub. (1). All investments shall mature in time to make required debt service payments. If invested, the funds to provide for debt service payments due prior to the scheduled receipt of taxes from the next succeeding tax levy shall be invested in direct obligations of the federal government or, if authorized under s. 25.50, in the local government pooled-investment fund under that section. Thereafter, any balance in an account created in sub. (1) may be loaned or invested under the direction of the municipality's governing body as follows:

AB750, s. 3 Section 3. 121.095 of the statutes is created to read:

AB750,2,15 121.095 State payment of school district debt service. (1) In this section, "state school aids" has the meaning given in s. 121.15 (3m) (a) 2.

AB750,2,20 (2) If a school board determines that it is unable to make a timely debt service payment, other than on an obligation that matures within 12 months, it may adopt a resolution requesting the department to make the payment on behalf of the school district. The school board shall submit a copy of the resolution to the department at least 10 days before the payment is due.

AB750,2,24 (3) (a) Upon receipt of a request under sub. (2), the department shall make a payment to the lender on behalf of the school district from the appropriation under s. 20.255 (2) (ds). Except as provided in par. (b), the payment shall be equal to the amount necessary to make the debt service payment.

AB750,3,3 (b) The payment under par. (a) may not exceed an amount equal to the total amount of state school aids due the school district in the balance of the school year in which the payment is made less all of the following:

AB750,3,5 1. An amount equal to the loss in earnings to the state as a result of the payment.

AB750,3,7 2. An amount equal to any interest that the state pays on moneys it borrows in order to make the payment.

AB750,3,9 (4) (a) The department shall reduce the school district's state school aids by the following amount:

AB750,3,13 1. If the amount necessary to make the debt service payment is less than the amount of state school aids due the school district in the balance of the school year in which the payment is made, an amount equal to the amount paid the lender under sub. (3) plus an amount equal to the total of the amounts under sub. (3) (b) 1. and 2.

AB750,3,17 2. If the amount necessary to make the debt service payment is equal to or greater than the amount of state school aids due the school district in the balance of the school year in which the payment is made, an amount equal to the amount of such school aids.

AB750,3,20 (b) The department may reduce state school aids other than aid under s. 20.255 (2) (ac) only if aid to the school district under s. 20.255 (2) (ac) is insufficient to cover the full reduction.

AB750,3,24 (c) The department shall ensure that the amount of the reduction in state school aids under par. (a) lapses to the fund from which appropriated and that it does not affect the amount determined to be received by a school district as state school aids for any other purpose.

AB750,4,5 (5) If the department makes a payment on behalf of a school district under this section, the school board shall submit to the department for its approval a plan specifying the measures that the school board intends to take to resolve the issues that led to its inability to make the payment and to prevent future defaults. Upon receiving the department's approval, the school board shall implement the plan.

AB750, s. 4 Section 4. 121.15 (3m) (a) 2. of the statutes, as affected by 1997 Wisconsin Act 27, is amended to read:

AB750,4,12 121.15 (3m) (a) 2. "State school aids" means those aids appropriated under s. 20.255 (2), other than s. 20.255 (2) (ds), (fm), (fu), (k) and (m), and under ss. 20.275 (1) (d), (es), (et), (f), (fs) and (u) and 20.285 (1) (ee), (r) and (rc) and those aids appropriated under s. 20.275 (1) (s) that are used to provide grants or educational telecommunications access to school districts under s. 196.218 (4r).

AB750,4,13 (End)