Enrolled Bill Summary

            The Education Code authorizes school districts to issue bonds to finance school facilities and to levy debt service property taxes to pay the principal and interest on those bonds, but before issuing such bonds, a district must demonstrate to the attorney general that it has the projected ability to service its proposed new debt plus the debt from certain previously issued bonds with a total debt service tax rate not to exceed $0.50 per $100 valuation. House Bill 2888 amends the Education Code to allow a district to demonstrate that ability by using either the most recent taxable property value or a projected future taxable property value anticipated for either the fifth tax year after the current tax year or the tax year in which the final bond payment is due, whichever is earlier, and combining that taxable value with the state aid to which it is entitled for the financing of school facilities.

            A district whose demonstration of its ability to service its bond debt relies on the receipt of state aid may not adopt a tax rate for a year for debt service on those bonds unless it credits a sufficient amount of state aid to the account of its interest and sinking fund for payment of those bonds. If a district demonstrates its debt service ability based on a projected taxable property value and then imposes a debt service tax rate that exceeds the $0.50 per $100 valuation limit, the attorney general may not approve a subsequent bond issue without a finding that the district can service the debt on those proposed bonds and other previously issued bonds with a debt service property tax rate not to exceed $0.45 per $100 valuation.