Senate Bill S5328

                                BILL NUMBER:S5328

TITLE OF BILL:
An act
to authorize the Monroe-Woodbury central school district to establish a
reserve fund for the specific purpose of liquidating any serial bonds
issued by the Monroe-Woodbury central school district pursuant to
chapter 158 of the laws of 2003 to finance accumulated operating
deficits in its general fund for the fiscal year ended June 30, 2003,
and providing for other matters in connection therewith

PURPOSE:
Under existing law, the Monroe-Woodbury Central School is not
authorized to establish a reserve fund for the purpose of liquidating
serial bonds issued by the Monroe-Woodbury Central School District.
The purpose of the bill is to permit the Monroe- Woodbury Central
School District to establish such a reserve fund for the purpose of
liquidating serial bonds issued in 2004 by the Monroe- Woodbury
Central School District to finance accumulated operating deficits in
its General Fund for the fiscal year ended June 30,2003.

SUMMARY OF PROVISIONS:
Section 1 authorizes the establishment of the reserve funds by the
Monroe-Woodbury Central School District. Section 2 authorizes the
transfer of monies from the general fund of the Monroe- Woodbury
Central School District to the reserve fund created by this act,
              

provided that the amount so transferred does not exceed the amount
necessary to liquidate the serial bonds issued in 2004 by the Monroe-
Woodbury Central School District pursuant to chapter 158 of the laws
of 2003. Section 3 restricts the use of the monies deposited in the
fund to the payment of the principal of and interest on said serial
bonds and provides for the in vestment of monies deposited in the
fund in accordance with the provisions of the General Municipal Law.
Section 4 removes the fiscal oversight measures imposed on the
Monroe-Woodbury Central School District by Chapter 158 of the Laws
of 2003.

JUSTIFICATION:
In the seven years since the District issued bonds to finance an
operating deficit in its General fund, the District's financial
condition has vastly improved. This is clearly evident upon review of
the independent auditor's report for the fiscal year ended June 30,
2011 and the recent rating reports released by Moody's Investor
Services.

Currently, the District has approximately $80 million of outstanding
debt. The annual budgetary appropriation needed to pay the principal
of and interest on such indebtedness is $9.2 million, which equates
to over 6% of the District's annual spending. The Board of Education
and the administration of the District have embarked on a multi-year
plan to restructure and reduce the District's liabilities, thus
allowing the District to dedicate more of its resources to the
education of the students of the District. As a part of this effort,
the District would like to lower the outstanding debt burden of the
District.


During the past twelve months the District has retired existing
indebtedness, and refinanced several of its outstanding debt
obligations at significantly lower interest rates. As a result of
such transactions, the District has saved its taxpayers significant
dollars in debt service costs. The bonds issued by the District to
finance it deficit are not callable prior to maturity, which prevents
the District from retiring such debt now with available funds or
refinancing it at lower interest rates. In addition, under existing
law the District is not authorized to establish a reserve or escrow
fund with available funds for the specific purpose of liquidating the
deficit bonds. As such, special legislation is required to permit the
District to liquidate the bonds issued to finance its deficit. The
benefits associated with such action are as follows:

The liquidation of the District's deficit bonds will serve to
advance the District's effort to restructure and reduce the
District's liabilities.

The liquidation of the deficit bonds will relieve the District of
future budgetary appropriations of $2.1 million that would be needed
to pay the debt service on the deficit bonds.

The liquidation will reduce the overall debt burden on the Monroe-
Woodbury community and also eliminate the costly and time-consuming
reporting requirements required by Chapter 158 of the Laws of2003. As
demonstrated by improved financial condition of the District since
the issuance of the bonds discussed above, the District is no longer
in need of fiscal oversight.

While credit ratings are not judged by anyone single factor, the
liquidation of the District's deficit bond would be viewed positively
by the credit rating agencies and may serve to move the District's
credit rating even higher.

This legislation would allow the Monroe-Woodbury community to close
the door on a dark chapter in the District's financial history.

LEGISLATIVE HISTORY:
New Bill.

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
This act shall take effect immediately.