Alabama Administrative Code
Title 290 - ALABAMA STATE BOARD OF EDUCATION
Chapter 290-1-2 - REVIEW BY THE STATE SUPERINTENDENT OF EDUCATION OF ACTIONS BY COUNTY AND CITY BOARDS OF EDUCATION
Section 290-1-2-.01.02 - Authorization To Intercept State Funds For Debt Payments
Universal Citation: AL Admin Code R 290-1-2-.01.02
Current through Register Vol. 42, No. 5, February 29, 2024
A local board of education may enter into a binding agreement to authorize the State Comptroller to intercept and direct certain state allocated funds to satisfy a debt payment that is due and unpaid in accordance with the provisions of Ala. Act No. 2003-384.
(1) Debt Eligible for Intercept. A debt obligation requiring the approval of the State Superintendent by state laws or Rule 290-1-2-.01.01 may be eligible for payment by intercept of state funds allocated to the local board of education.
(a) The State
Superintendent shall not approve a debt obligation of a local board of
education which would jeopardize the Foundation Program of education
established by state law and by rules and regulations of the State Board of
Education.
(b) A debt obligation
shall not be eligible for intercept of state allocated funds unless the debt
instrument provides for reserved funds for debt payments by one of the
following methods:
1. A debt service reserve
fund is funded to provide for the maximum amount of principal and interest
coming due in any fiscal year for the term of the debt obligation.
2. A restricted fund, consisting of cash or
other instruments legally available under state law for the investment of board
funds, is funded to provide for the maximum amount of principal and interest
coming due in any fiscal year for the term of the debt obligation.
(c) The State Superintendent may
reduce the amount of the reserve fund requirement only if a lesser amount is
required by the rules of the Internal Revenue Service.
(2) Procedures for Authorization to Intercept State Funds.
(a) Consent for Intercept.
Before the issuance of a debt obligation requiring the approval of the State
Superintendent, a local board of education may approve a binding agreement
authorizing the State Comptroller to intercept and direct certain state
allocated funds to satisfy a debt payment that is due and unpaid. In the
binding agreement the local board of education shall agree to replace the funds
withheld to satisfy the debt payment by providing funds legally available for
replacement. The binding agreement shall be submitted to the State Department
of Education in a form required by the State Superintendent.
(b) Withdrawal of Consent for Intercept. A
local board of education may not withdraw the consent to intercept state
allocated funds for a debt obligation unless one of the following conditions
are met:
1. The debt obligation has not been
issued.
2. The debt obligation has
matured.
3. The local board of
education has issued refunding bonds to legally defease the debt
obligation.
4. The local board of
education, the paying agent, and holders of the debt obligation agree that
consent to intercept state allocated funds is no longer required.
5. The debt obligation has been satisfied by
other means.
(3) Approval by State Superintendent.
(a) The State Superintendent shall approve
the issuance of a debt obligation before the State Comptroller can intercept
and direct certain state allocated funds to satisfy a debt payment that is due
and unpaid.
(b) The State
Superintendent shall approve the intercept of state allocated funds directed to
the satisfaction of a debt payment that is due and unpaid after determining
that the procedures to intercept state allocated funds have been met.
(4) Procedures to Intercept State Allocated Funds.
(a) The State Superintendent
shall not approve the intercept of state allocated funds for the satisfaction
of a debt payment that is due and unpaid unless the following conditions have
been met:
1. The paying agent for a debt
obligation approved by the State Superintendent, notifies the State Department
of Education by telephone, e-mail, or facsimile that the local board of
education has not made the debt payment within two business days after the due
date for debt payments specified in the debt instrument.
2. The initial notification of the unpaid
debt by the paying agent to the State Department of Education is followed by
written notification through U.S. Postal Service, return receipt requested, or
by other legal means of official notification.
3. The State Department of Education has
notified the local board of education that a payment on a debt obligation is
due and unpaid.
4. The State
Department of Education has attempted to locate legally available funds for the
local board of education to provide payment for the unpaid debt.
5. The State Department of Education has
determined that the intercept of state funds allocated to the local board of
education is the only source of funds available to make the scheduled debt
payment in a timely manner.
(b) The State Superintendent shall then
provide documentation and instructions to the State Comptroller, no later than
two business days prior to the debt obligation payment date, to pay state
allocated funds directly to the paying agent in order to satisfy the debt
obligation payment, and to withhold monthly allocations of state funds from the
local board of education to equal the amount of debt obligation payment made by
the State Comptroller.
Author: Dr. Ed Richardson
Statutory Authority: Code of Ala. 1975, §§ 16-3-13; 16-13-4.
Disclaimer: These regulations may not be the most recent version. Alabama may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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