School Laws of Oklahoma

Chapter 1 - Oklahoma School Code
Article XIV: Bonds

Section 313. School Buildings - Bonds. (70 O.S. § 15-101)

Whenever it shall become necessary for the board of education of any school district to raise sufficient funds for the purchase of a school site or sites, or to erect or purchase and equip a suitable school building or buildings, either or both, or for the purpose of making repairs to an existing school building or buildings, or for the purchase of school furniture and fixtures, or for making improvements to any school site or sites, either or both, it shall be lawful for such board of education to borrow money for which it is hereby authorized and empowered to issue bonds bearing a rate of interest not exceeding seven percent (7%) per annum, payable semiannually, at such place as may be shown on the face of such bonds, which bonds shall be payable serially as otherwise provided by law in not more than twenty-five (25) years from date; and the board of education is hereby authorized and empowered to sell such bonds at not less than their par value; provided, before any bonds shall be issued, the board of education shall cause an election to be held in such district as herein provided; provided, further, bonds may be voted in one issue and at the same election for any or all of the purposes hereinbefore enumerated.

See also: Sections 592-598 and 599-619.

Taxpayers concerned with legality of bond election may bring suit either before bond commissioner approves issuance of bonds or within thirty days of bond commissioner’s approval. Dean v. Wes Watkins Area Vocational-Technical School District, 782 P.2d 116 (Okla. 1989)

If a bond proposition differs substantially from previous one in terms of potential tax incidence and in character of improvements proposed, it does not fall under the resubmission restriction provision that no school bond election shall be called on the same proposition within four months after such proposition has been defeated. Baird v. ISD No. 3, 622 P.2d 1072 (Okla. 1981)

Purpose of resubmission restriction which prohibits successive school bond elections on the same proposition within a four-month period is to protect the electorate from harassment and coercion through repeated attempts to pass a previously defeated proposal by resubmitting it in altered form. Baird v. ISD No. 3, 622 P.2d 1072 (Okla. 1981)

Bonded indebtedness represents long-term debt. General fund revenues may not be used to pay off bonded indebtedness or as a substitute for the statutory process to retire bonded indebtedness. April 5, 2002 (AG Op. No. 02-14)

School district does not have authority to execute note and mortgage covering school property. AG Op. July 3, 1970

When a board of education determines that the projects for which a bond issue was voted have been completed, the money remaining in the bond fund must be transferred to the sinking fund, which may be used to pay judgments against the school district if there is a compliance with statutory requirements. AG Op. March 8, 1967

School district may vote bonds to construct teacherage. AG Op. February 28, 1963

Proceeds of bonds issued to purchase school furniture and fixtures may be used to purchase window blinds, flooring material, rain gutters, plastic tile, etc. AG Op. December, 1953

Proceeds of bonds issued for making improvements to school sites may be used to pay for drilling a water well. AG Op. July 9, 1952

Proceeds of bonds issued for construction of a new building cannot be used for repairs to an old building, nor can such bonds be revoted to authorize repairs to the old buildings. AG Op. July 7, 1949

Section 314. Election - Notice - Cost - Election on Same Proposition within Four Months after Defeat Prohibited. (70 O.S. § 15-102)

The board of education shall call an election, to be conducted by the county election board in all respects as other elections, for the purpose of taking the sense of the district upon the question of issuing such bonds, naming in the proclamation of such election the amount of bonds to be voted on and the purpose for which they are to be issued; and it shall cause to be published in a newspaper of general circulation in said district the time and place of such election, such notices to be given at least ten (10) days before such election. In all instances where proclamations for elections for boards of education are required by statute of the mayor of a city, and in all instances where elections for boards of education are provided for by statute wherein the mayor and city clerk are denominated, the president of the board of education shall be substituted for the mayor and the clerk of the board of education shall be substituted for the city clerk. Boards of education are hereby declared to be free and independent of cities in all matters relating to school elections legally called upon all school matters, and presidents of boards of education shall have full power to issue proclamations calling school elections; provided, that no election shall be called on the same proposition within four (4) months after such proposition has been defeated at an election by the school district electors. The provisions of this act as to the waiting period shall not apply where the school facilities have been destroyed by an act of God. The cost of such elections, together with the cost of such proclamations, publication, notices or other expenses required, shall be legal costs of boards of education.

If a bond proposition differs substantially from previous one in terms of potential tax incidence and in character of improvements proposed, it does not fall under the resubmission restriction provision that no school bond election shall be called on the same proposition within four months after such proposition has been defeated. Baird v. ISD No. 3, 622 P.2d 1072 (Okla. 1981)

Purpose of resubmission restriction which prohibits successive school bond elections on the same proposition within a four-month period is to protect the electorate from harassment and coercion through repeated attempts to pass a previously defeated proposal by resubmitting it in altered form. Baird v. ISD No. 3, 622 P.2d 1072 (Okla. 1981)

Where cause of destruction of school facilities is undetermined and no further information is available, cause cannot be attributed to an “Act of God”. AG Op. April 23, 1971

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Section 315. Electors - Qualifications. (70 O.S. § 15-103)

On the question of issuance of said bonds, no person shall be qualified to vote unless he be in all respects a school district elector of such district. In case three-fifths (3/5) of the voters thereof voting at such election shall vote affirmatively for the issuance of said bonds, then the said board of education shall issue the same and not otherwise. The amount of the bonds so voted upon and issued shall not cause the school district to become indebted in an amount, including existing indebtedness, in the aggregate exceeding five percent (5%) of the valuation of the taxable property therein, to be ascertained from the last assessment for state and county purposes previous to the incurring of such indebtedness; but if the school district has an absolute need therefor, such district may, with the assent of three-fifths (3/5) of the voters thereof, voting at such election, incur indebtedness to an amount, including existing indebtedness, in the aggregate exceeding five percent (5%) but not exceeding ten percent (10%) of the valuation of the taxable property therein, to be ascertained from the last assessment for state and county purposes previous to the incurring of such indebtedness, for the purpose of acquiring or improving school sites, constructing, repairing, remodeling or equipping buildings or acquiring school furniture, fixtures or equipment or more than one or all of such purposes; and such assent to such indebtedness shall be deemed to be a sufficient showing of such absolute need. Section 26, Article X, of the Oklahoma Constitution, as amended on April 5, 1955, shall hereafter be in full force and effect. Provided, that any bond election that shall have heretofore been called or held in accordance with the provisions of Section 26, Article X, of the Oklahoma Constitution, as amended on April 5, 1955, is hereby validated if the bonds so authorized at such election have not yet been sold and delivered.

Indebtedness incurred when bonds voted, issued, approved and delivered, and not when election is held. Morrison v. Board of Education of ISD No. 6, 424 P.2d 963 (Okla. 1967)

Section 316. Form - Provision for Collection of Annual Tax. (70 O.S. § 15-104)

The said bonds shall contain all necessary provisions as to form; and such school district shall, before or at the time of the issuance of the same, provide for the collection of an annual tax sufficient to pay the interest on such indebtedness as it falls due, and also to constitute a sinking fund for the payment of the principal thereof.

Bonded indebtedness represents long-term debt. General fund revenues may not be used to pay off bonded indebtedness or as a substitute for the statutory process to retire bonded indebtedness. April 5, 2002 (AG Op. No. 02-14)

Section 317. Signatures - Registration - Certificate. (70 O.S. § 15-105)

The bonds, the issuance of which is provided in the preceding sections, shall be signed by the president, attested by the clerk and registered by the treasurer of the board of education, and shall have endorsed thereon a certificate signed by the county clerk and the district attorney of the county wherein such district is located, stating that said bonds or evidence of debt are issued pursuant to law and that said issue is within debt limit.

First Assistant District Attorney may sign certificate required of County Attorney. AG Op. December 20, 1973

Section 318. Transportation Equipment- Bonds. (70 O.S. § 15-106)

Any school district that is authorized by law to provide transportation for pupils to and from school may become indebted for the purpose of purchasing transportation equipment and may issue its bonds, as provided for by law, in any amount not exceeding, with existing indebtedness, ten percent (10%) of the valuation of the taxable property within the school district, as shown by the last preceding assessment for state and county purposes previous to the incurring of indebtedness. The bonds shall be made to mature within a period not to exceed five (5) years from their date. It is hereby declared that the use of the word “equipment” in Section 26, Article X of the Oklahoma Constitution was intended to include the “transportation equipment” referred to in this section.

Bond revenues derived under this Section cannot be used to maintain or repair existing transportation equipment. May 10, 1978 (AG Op. No. 78-101)

Section 318.1. Equipment Purchased Through Bonds Defined. (70 O.S. § 15-106.1)

Any school district may become indebted for the purpose of purchasing equipment and may issue its bonds, as provided for by law, in any amount not exceeding, with existing indebtedness, ten percent (10%) of the valuation of the taxable property within the school district, as shown by the last incurring of indebtedness. The bonds shall be made to mature within a period not to exceed five (5) years from their date. It is hereby declared that the use of the word “equipment” in Section 26, Article X of the Oklahoma Constitution was intended to include: library books, textbooks, school-owned uniforms, computer software, electronic media content, perpetual or continuous district software license agreements and web-based software subscriptions with a term of more than one (1) year but not more than five (5) years, the acquisition of telecommunications devices and components to be used to enhance classroom instruction and maintenance/service contracts which are included as a part of the equipment purchase price and any associated hardware and software necessary for implementation and training and any maintenance agreements. This provision shall not restrict a school district from issuing bonds with a maturity of greater than five (5) years for the purchase of equipment not listed in this section. If the maturity of the bond is greater than five (5) years, the maturity of the bond shall not exceed the effective life of any equipment purchased with the proceeds.

Section 319. Expenses. (70 O.S. § 15-107)

All expenses incident to the issuance of school district bonds, including the expense of holding the bond election, may be paid from the proceeds of such bonds.

Section 320. Investment in Government Bonds. (70 O.S. § 15-108)

The proceeds of any school bonds or any portion thereof, or the sinking fund for the payment of any school bonds, may be invested by the issuing board in any type or series of United States Government Bonds.

Section 321. Bond Issues of Area School Districts. (70 O.S. § 15-109)

Area school districts may, in accordance with the provisions of Section 9B, Article X of the Oklahoma Constitution, issue bonds in the same manner as bonds are issued by other school districts.

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Section 321.1. Definitions. (70 O.S. § 15-201)

For the purposes of this act:

1. “School bonds” means bonds issued pursuant to the provisions of Sections 15-101 through 15-109 of Title 70 of the Oklahoma Statutes;

2. “Commissioners” means Commissioners of the Land Office of the State of Oklahoma; and

3. “Fund” means permanent school fund for the support of common schools of the State of Oklahoma.

Section 321.2. Guarantee of Bonds Issued. (70 O.S. § 15-202)

On approval by the Commissioners, bonds issued pursuant to Sections 15-101 through 15-109 of Title 70 of Oklahoma Statutes are guaranteed by the corpus of the permanent school fund for the support of common schools.

The principal of the permanent school fund can be used to guarantee bonds issued by school districts according to the conditions set forth in 70 O.S. §§ 201 et seq. Thus, bond guarantees issued by the Commissioners of the Land Office are binding legal obligations which pledge the permanent school fund to guarantee bond issues of school districts. November 8, 1996 (AG Op. No. 96-77)

Section 321.3. Restriction on Guarantee of Bonds. (70 O.S. § 15-203)

The Commissioners shall not approve bonds for guarantee if the approval would result in the total amount of outstanding guaranteed bonds to exceed an amount equal to twice the cost value or twice the market value of the assets of the permanent school fund whichever is lower, exclusive of real estate as calculated by the annual audit of the Commissioners of the Land Office.

Section 321.4. Application by School Districts for Bond Guarantee Program. (70 O.S. § 15-204)

A school district seeking the guarantee of eligible bonds shall apply to the Commissioners on an application which must include:

1. The name of the school district and the principal amount of the bonds to be issued;

2. The maturity schedule, estimated interest rate and date of the bonds; and

3. Any other information as deemed necessary and appropriate by the Commissioners of the Land Office.

The application must be accompanied by a fee set by the Commissioners in an amount to cover costs of administering the guarantee program. The Commissioners and the State Bond Advisor shall enter into an interagency agreement in order to administer their responsibilities pursuant to the provisions of this act.

From the fees collected, the Commissioners shall enter into a cooperative agreement with the State Bond Advisor to defray any administrative costs of his office in carrying out the provisions of this act.

Section 321.5. Duty of State Bond Advisor. (70 O.S. § 15-205)

It shall be the duty of the State Bond Advisor to review the bond applications and to advise the Commissioners of the validity of the guarantee application.

Section 321.6. Requirements for Districts Applying for Guarantee. (70 O.S. § 15-206)

A. Any district applying to utilize the provisions of this act for its bonded indebtedness shall:

1. Be certified to be in good standing and be accredited without probation by the State Board of Education;

2. Verify to the Commissioners that the bond issue involved is within any limitation provided by law;

3. Comply with such criteria or other requirements deemed necessary by the Commissioners; and

4. Fully comply with all provisions of the rules promulgated by the Commissioners pursuant to this act.

B. No guarantee of bonds shall be effective unless approved by a majority of the Commissioners.

Section 321.7. Inability to Pay on Guaranteed Bond – Notice. (70 O.S. § 15-207)

Immediately following a determination that a school district will be or is unable to pay maturing or matured principal or interest on a guaranteed bond, but not later than the fifth business day before the maturity date, the district shall notify the State Bond Advisor and the Commissioners of the Land Office.

Section 321.8. Transfer of Funds to Pay Maturing or Matured Bond – Cancellation of Bond – Reimbursement by School District. (70 O.S. § 15-208)

A. Following receipt of notice, the Commissioners shall cause to be transferred from the permanent school fund the necessary funding to pay the maturing or matured principal or interest.

B. Immediately following receipt of the funds for payment of the principal or interest, the district treasurer shall pay the amount due and forward the canceled bond or coupon to the Commissioners of the Land Office.

C. Following full reimbursement to the fund with interest, the Commissioners shall forward the canceled bond to the school district for which the payment was made.

Section 321.9. No Acceleration of Remaining Bonds Due to Default. (70 O.S. § 15-209)

If a school district fails to pay principal or interest on a bond guaranteed by the fund when it matures, other amounts not yet mature are not accelerated and do not become due by virtue of the school district default.

Section 321.10. Collection of Deficient Payments from School Districts. (70 O.S. § 15-210)

A. If the Commissioners make payment from the fund on behalf of a school district, the Commissioners shall withhold from any trust fund apportionment payable to the school district until the amount paid, plus interest, is repaid in full or the Commissioners may proceed to collect the deficient payments plus interest and reasonable attorney fees as provided by Section 365.5 of Title 62 of the Oklahoma Statutes. Monies collected from said school district for deficient payments shall be forwarded to the Commissioners within thirty (30) days of collection. In the determination of State Aid pursuant to Section 18-200 of Title 70 of the Oklahoma Statutes the State Apportionment component of the Foundation Program Income shall be determined as if the school district had received all state apportionment funds withheld pursuant to this section.

B. The amount withheld shall be deposited to the credit of the permanent school fund.

C. Immediately following any payments from the fund on behalf of a school district pursuant to this section, the Commissioners shall notify the State Treasurer of the payment for purposes of taking any action as is required by Section 8 of this act.

Section 321.11. Implementation. (70 O.S. § 15-211)

The Commissioners of the Land Office shall adopt rules necessary to implement the provisions of this act.

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