Monday, October 24, 2011

AG Says Funds From Sale of School Property Financed by Bonds Cannot be Diverted

In an opinion by Attorney General Scott Pruitt released last week schools are told that they cannot divert funds derived from the sale of school property, if the property was purchased with bond funds, to another purpose. 
The request for an official Opinion of the Attorney General was requested by Rep. Jabar Shumate, D-Tulsa. Rep. Shumate asked two questions: 
1.) When a school district sells or disposes of property that was financed in whole or in part by the issuance of bonds, how may the proceeds be used?; and, 
2.) Is there a time limitation past which a governmental bond issuer need not account for proceeds from the sale or disposal of property financed in whole or part by the issuance of bonds?
The opinion states: 
“When a school district borrows funds by the issuance of bonds for a specific purpose and the school district later sells the property, it must either use the sale proceeds representing the funds borrowed and applicable interest paid for the same specific purpose stated in the bond measure, if possible, or it must pay back the proceeds into the sinking fund.”
The opinion says there is no time limit on the requirement to use the funds appropriately saying, "the use of the borrowed funds [being] applicable to subsequent uses as well as to the first use thereof."
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