§ 6-20-1204 - Form of bonds -- Security.
6-20-1204. Form of bonds -- Security.
(a) School bonds shall be issued by a school district in such form as the directors of the district shall prescribe.
(b) School bonds may be secured by debt service millage.
(c) (1) As additional security for the payment of any bond of a school district, the State Board of Education shall cure any delinquencies in payment by withholding state aid due the district.
(2) (A) (i) Whenever the designated paying agent for receipt of the district's payments does not receive a payment when due pursuant to the authorizing documents, the paying agent will be entitled to payment from the withheld state aid in any amount sufficient to cure the payment deficiency upon notifying the Commissioner of Education and the superintendent of the school district by telephone, facsimile, or other similar communication followed by written verification.
(ii) Unless the commissioner determines that payment has been made by the school district and that there is no longer a payment deficiency, the commissioner shall withhold from the next distribution of state aid and remit to the paying agent an amount sufficient to cure the deficiency.
(B) In the event that the amount next due to be distributed to the delinquent school district is not sufficient to cure the delinquency, the commissioner shall continue to withhold state aid as due and remit it to the paying agent until the payment deficiency has been cured.
(C) If the commissioner is notified that a school district is delinquent on two (2) or more obligations, the commissioner shall make payment to paying agents in the order of receipt of notices of the delinquencies.
(3) If the state board withholds state aid from a school district pursuant to this subsection (c), the school district shall be classified as a Phase III school district in distress as described in 6-20-1609 [repealed].
(d) Holders of bonds of the school district shall have a first and prior right and security interest in the revenue produced by the debt service millage pledged by the school district to the payment of its bonds.