Senate Bill S5692

                                BILL NUMBER:S5692

TITLE OF BILL:
An act
in relation to establishing a reserve fund to liquidate certain serial
bonds issued to the Patchogue-Medford Union Free School District

PURPOSE OR GENERAL IDEA OF BILL:
To authorize Patchogue-Medford Union Free School District to establish
a reserve fund to liquidate serial bonds.

SUMMARY OF PROVISIONS:
Section One authorizes the Patchogue-Medford Union Free School
District to establish a reserve fund for the purpose of liquidating
any serial bonds issued pursuant to chapter 109 of the law of 2006.

Section Two allows the Patchogue-Medford Union Free School District to
transfer monies from the general fund of such school district to the
reserve fund created by this act, provided that the amount
transferred from the general fund shall not exceed the amount
necessary to liquidate the serial bonds issued pursuant to chapter
109 of the laws of 2006.

Section Three requires that before the reserve fund may be
established, a majority of qualified voters must approve a
proposition at a special or regular school district meeting and this
              

section also requires that notice of the meeting shall state that
this proposition would be submitted and other information regarding
the proposition. This section also provides that voters may direct
school authorities to pay monies derived from another source into
this fund.

Section Four is the effective date.

JUSTIFICATION:
In June 2006, Governor Pataki signed Section 109 of the Laws of 2006
which allowed Patchogue-Medford Schools to issue bonds in order to
finance a $6 million deficit. The District issued the bonds and has
been faithfully paying them down since then. The bonds which were
issued contain no provision for pre-payment. The current
administration has led the district with prudent financial management
and is in a position to liquidate the bonds by paying them off.
Establishing a reserve fund would enable the District to pay off the
bonds in a one-shot transaction and take the debt service on these
bonds out of the annual budget. This would allow more of the current
resources to fund the day to day operations of the district while
paying the bonds from savings.

However, the terms of the bonds do not contain the mechanism, with
which this can be achieved. This legislation would allow the District
to legally establish a reserve fund. Certain guidelines are outlined
in the bill that require a majority of qualified voters to vote in
favor of a proposition at a special or regular school board meeting.
Notice of the meeting must state that this proposition would be up
for a vote
at the meeting in addition to the purpose of the fund, the amount of
the fund, as well as the probable term and the source. The purpose of


the fund, the ultimate amount, the probable term and the source from
which the funds will be obtained shall be specified in the
proposition. An annual amount that is sufficient to meet the
requirements set forth in the proposition shall be paid into the fund
and voters from time to time may direct school authorities to pay
monies into the fund derived from some other source.

LEGISLATIVE HISTORY: 2009-2010 A.10600/S.7415

FISCAL IMPLICATIONS: To Be Determined.

EFFECTIVE DATE:
This act shall take effect immediately.