Credit Enhancement Program; establish to improve credit worthiness of schools.

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To: Education; Ways and
Means
MISSISSIPPI LEGISLATURE REGULAR SESSION 2026

By: Representative McCarty

HOUSE BILL NO. 1214

AN ACT TO ESTABLISH A CREDIT ENHANCEMENT PROGRAM FOR 1
MISSISSIPPI SCHOOL DISTRICT BONDS TO LOWER BORROWING COSTS THROUGH 2
STATE GUARANTEES; TO DEFINE THE ROLES AND RESPONSIBILITIES OF 3
SCHOOL DISTRICTS, TAX COLLECTORS, PAYING AGENTS, AND THE STATE 4
TREASURER IN ADMINISTERING THE PROGRAM; TO OUTLINE CONDITIONS FOR 5
STATE PAYMENTS AND DISTRICT REIMBURSEMENTS, INCLUDING PENALTIES 6
AND LEGAL REMEDIES; TO PROVIDE FOR THE APPROPRIATION OF FUNDS TO 7
SUPPORT THE PROGRAM; TO AUTHORIZE THE STATE BOND COMMISSION TO 8
ADOPT RULES FOR IMPLEMENTATION; TO BRING FORWARD SECTIONS 9
37-59-101, 37-59-103, 37-59-105, 37-59-107, 37-59-109, 37-59-111, 10
37-59-113 AND 37-59-115, MISSISSIPPI CODE OF 1972, FOR PURPOSES OF 11
POSSIBLE AMENDMENTS; AND FOR RELATED PURPOSES. 12
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI: 13
SECTION 1. The Legislature finds that implementation of the 14
credit enhancement program provided for in this chapter can 15
provide substantial savings to the taxpayers of the State of 16
Mississippi with minimal cost or risk to the state government. 17
The guaranty provided by pledging the credit of the state to the 18
payment of voter-approved school district general obligation bonds 19
will encourage lower interest rates, and therefore lower taxes, 20
for such bonds than school districts alone can command, despite 21
the excellent credit history of such obligations. Any such 22
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guarantee does not remove the debt obligation of the school 23
district and is not state debt. 24
SECTION 2. As used in this act, the followings terms shall 25
have the meanings ascribed herein, unless the context of uses 26
clearly requires otherwise. 27
(a) "Bond" means any voted general obligation bond 28
issued by a school district, holding a certificate issued pursuant 29
to this chapter for such a bond. 30
(b) "Credit enhancement program" means the school 31
district bond guaranty established by this chapter. 32
(c) "General obligation bond" means any bond, note, 33
warrant, certificate of indebtedness, or other obligation of a 34
district that constitutes an indebtedness within the meaning of 35
any applicable constitutional or statutory debt limitations. 36
(d) "Paying agent" means the paying agent selected, 37
from time to time, for a bond issue pursuant to state law. 38
(e) "Refunding bond" means any general obligation bond 39
issued by a district for the purpose of refunding its outstanding 40
general obligation bonds. 41
(f) "School district" or "district" means any school 42
district existing now or later under the laws of the state. 43
SECTION 3. (1) (a) The full faith, credit, and taxing 44
power of the state is pledged to guarantee full and timely payment 45
of the principal of and interest on bonds as such payments become 46
due. However, in the event of any acceleration of the due date of 47
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the principal by reason of mandatory redemption or acceleration 48
resulting from default, the payments guaranteed shall be made in 49
the amounts and at the times as payments of principal would have 50
been due had there not been any acceleration. 51
(b) This guaranty does not extend to the payment of any 52
redemption premium. 53
(c) Reference to this act by its title on the face of 54
any bond conclusively establishes the guaranty provided to that 55
bond under the provisions of this chapter. 56
(2) (a) The state pledges to and agrees with the owners of 57
any bonds that the state will not alter, impair, or limit the 58
rights vested by the credit enhancement program with respect to 59
the bonds until the bonds, together with applicable interest, are 60
fully paid and discharged. However, this act does not preclude an 61
alteration, impairment, or limitation if full provision is made by 62
law for the payment of the bonds. 63
(b) Each district may refer to this pledge and 64
undertaking by the state in its bonds. 65
(3) Only valid bonds issued after January 1, 2027, may be 66
guaranteed under this act. 67
SECTION 4. (1) (a) Any district, by resolution of its 68
board of directors, may request that the State Treasurer issue a 69
certificate evidencing the state's guaranty, under this chapter, 70
of its bonds. 71
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(b) After reviewing the request, if the State Treasurer 72
determines that the district is eligible under rules adopted by 73
the State Bond Commission, the State Treasurer shall promptly 74
issue the certificate as to specific bonds of the district and 75
provide it to the requesting district. 76
(c) (i) The district receiving the certificate and all 77
other persons may rely on the certificate as evidencing the 78
guaranty for bonds issued within one (1) year from and after the 79
date of the certificate, without making further inquiry during 80
that year. 81
(ii) The certificate of eligibility is valid for 82
one (1) year even if the State Treasurer later determines that the 83
school district is ineligible. 84
(2) Any district that chooses to forego the benefits of the 85
guaranty provided by this chapter for a particular issue of bonds 86
may do so by not referring to this act on the face of its bonds. 87
(3) Any district that has bonds, the principal of or 88
interest on which has been paid, in whole or in part, by the state 89
under this act, may not issue any additional bonds guaranteed by 90
this act until: 91
(a) All payment obligations of the district to the 92
state under the credit enhancement program are satisfied; and 93
(b) The State Treasurer and the State Superintendent of 94
Public Education each certify in writing, to be kept on file by 95
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the State Treasurer and the State Superintendent of Public 96
Education, that the district is fiscally solvent. 97
(4) The State Bond Commission may establish by rule fees 98
sufficient to cover the costs of administering this chapter. 99
SECTION 5. (1) (a) The county tax collector for each 100
district with outstanding, unpaid bonds shall transfer money 101
sufficient for each scheduled debt service payment to its paying 102
agent on or before any principal or interest payment date for the 103
bonds. 104
(b) A county tax collector who is unable to transfer a 105
scheduled debt service payment to the paying agent on the transfer 106
date shall immediately notify the paying agent and the State 107
Treasurer by: 108
(i) Telephone; 109
(ii) A writing sent by facsimile or electronic 110
transmission; or 111
(iii) A writing sent by first class United States 112
mail. 113
(2) If sufficient funds are not transferred to the paying 114
agent as required by subsection (1) of this section, the paying 115
agent shall immediately notify the State Treasurer of that failure 116
by: 117
(a) Telephone; 118
(b) A writing sent by facsimile or electronic 119
transmission; or 120
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(c) A writing sent by first class United States mail. 121
(3) (a) If sufficient money to pay the scheduled debt 122
service payment have not been so transferred to the paying agent, 123
the State Treasurer shall, forthwith, transfer sufficient money to 124
the paying agent to make the scheduled debt service payment. 125
(b) The payment by the State Treasurer: 126
(i) Discharges the obligation of the issuing 127
district to its bond owners for the payment, but does not retire 128
any bond that has matured. The terms of that bond remain in 129
effect until the state is repaid; and 130
(ii) Transfers the rights represented by the 131
general obligation of the district from the bond owners to the 132
state. 133
(c) The district shall repay to the state the money so 134
transferred as provided in this act. 135
SECTION 6. (1) Any district that has issued bonds for which 136
the state has made all or part of a debt service payment shall: 137
(a) Reimburse all money drawn by the State Treasurer on 138
its behalf; 139
(b) Pay interest to the state on all money paid by the 140
state from the date that money was drawn to the date the state is 141
repaid at a rate to be prescribed by rule by the State Bond 142
Commission; and 143
(c) Pay all penalties required by this act. 144
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(2) (a) The State Treasurer shall establish the 145
reimbursement interest rate after considering the circumstances of 146
any prior draws by the district on the state, market interest and 147
penalty rates, and the cost of funds or opportunity cost of 148
investments, if any, that were required to be borrowed or 149
liquidated by the state to make payment on the bonds. 150
(b) The State Treasurer may, after considering the 151
circumstances giving rise to the failure of the district to make 152
payment on its bonds in a timely manner, impose on the district a 153
penalty of not more than five percent (5%) of the amount paid by 154
the state pursuant to its guaranty for each instance in which a 155
payment by the state is made. 156
(3) (a) (i) If the State Treasurer determines that amounts 157
obtained under this chapter will not reimburse the state in full 158
within one (1) year from the state's payment of a district's 159
scheduled debt service payment, the State Treasurer may pursue any 160
legal action, including mandamus, against the district to compel 161
it to meet its repayment obligations to the state. 162
(ii) In pursuing its rights under paragraph (a)(i) 163
of this subsection, the state shall have the same substantive and 164
procedural rights as would a holder of the bonds of a district. 165
If and to the extent that the state has made payments to the 166
holders of bonds of a district under Section 5 of this act and has 167
not been reimbursed by the district, the state shall be subrogated 168
to the rights of those bond holders. 169
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(iii) The State Treasurer may also direct the 170
district and the appropriate county officials to restructure and 171
revise the collection of taxes for the payment of bonds on which 172
the State Treasurer has made payments under this act and, to the 173
extent permitted by law, may require that the proceeds of such 174
taxes be applied to the district's obligations to the state if all 175
outstanding obligations of the school district payable from such 176
taxes are fully paid or their payment is fully provided for. 177
(b) The district shall pay the fees, expenses, and 178
costs incurred by the state in recovering amounts paid under the 179
guaranty authorized by this act. 180
SECTION 7. The Legislature shall make provision for such 181
amounts as may be required to make timely payments under the state 182
school district credit enhancement program under this act in every 183
appropriations act. 184
SECTION 8. The State Bond Commission may adopt any rules 185
necessary and appropriate for the implementation and 186
administration of this act. 187
SECTION 9. Section 37-59-101, Mississippi Code of 1972, is 188
brought forward as follows: 189
37-59-101. The school board of any school district in the 190
county is authorized and empowered, in its discretion, to borrow 191
money under the terms and conditions specified in this article for 192
the purpose of making repairs, alterations and additions to school 193
buildings of such school districts, for the purpose of erecting 194
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school buildings and other buildings used for school purposes, for 195
the purpose of purchasing heating plants, air conditioning, 196
fixtures and equipment for such buildings, for the purpose of 197
purchasing land for school purposes, school buses and 198
transportation equipment, and for the purpose of improving and 199
equipping such lands for school recreational and athletic 200
purposes. 201
SECTION 10. Section 37-59-103, Mississippi Code of 1972, is 202
brought forward as follows: 203
37-59-103. Before any money shall be borrowed under the 204
provisions of this article, the school board of the school 205
district shall adopt a resolution declaring the necessity for and 206
its intention of borrowing such money, specifying the amount to be 207
so borrowed, the date or dates of the maturity thereof, and how 208
such indebtedness is to be evidenced. Such resolution shall also 209
set forth the nature and approximate cost of the alterations, 210
additions, and repairs to be made, or of the erections 211
contemplated, or of the heating plant, fixtures and equipment 212
necessary to be purchased, or of the land to be purchased, 213
improved or equipped, or of the school buses and transportation 214
equipment to be purchased, as the case may be, and shall declare 215
in said resolution that no funds are available in the school funds 216
of the district or from any other source with which to make such 217
repairs, alterations, additions, purchases, erections or 218
improvements. 219
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SECTION 11. Section 37-59-105, Mississippi Code of 1972, is 220
brought forward as follows: 221
37-59-105. The said resolution adopted by the school board 222
pursuant to Section 37-59-103 shall be published once each week 223
for two (2) consecutive weeks in a newspaper having a general 224
circulation in the school district involved, with the first 225
publication thereof to be made not less than fifteen (15) days 226
prior to the date upon which the school board is to take final 227
action upon the question of authorizing the borrowing of said 228
money. If no petition requesting an election is filed prior to 229
such meeting, then the school board shall, at said meeting, by 230
resolution spread upon its minutes, give final approval to the 231
borrowing of said money and shall authorize the issuance of 232
negotiable notes or certificates of indebtedness of the school 233
district therefor in accordance with the provisions of this 234
article. 235
If at any time prior to said meeting a petition signed by not 236
less than twenty percent (20%) of the qualified electors of the 237
school district involved shall be filed with the school board 238
requesting that an election be called on the question of incurring 239
said indebtedness, then the school board shall, not later than the 240
next regular meeting, adopt a resolution calling an election to be 241
held within such school district upon the question of the 242
incurring of said indebtedness for the purposes and in the amount 243
requested. Such election shall be called and held, and notice 244
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thereof shall be given, in the same manner provided in Article 1 245
of this chapter for elections upon the question of the issuance of 246
the bonds of school districts, and the results thereof shall be 247
certified to the school board. If three-fifths (3/5) of the 248
qualified electors voting in said election shall vote in favor of 249
incurring said indebtedness, then the school board shall proceed 250
to issue said negotiable notes or certificates of indebtedness as 251
prayed for in the original resolution of the school board; 252
however, if less than three-fifths (3/5) of the qualified electors 253
voting in said election vote in favor of incurring said 254
indebtedness, then said notes or certificates of indebtedness 255
shall not be issued. 256
Money may be borrowed under the provisions of this article 257
and the negotiable notes or certificates of indebtedness 258
evidencing same may be issued as provided in this article (1) 259
without the necessity of being authorized in an election called 260
for that purpose, except where a petition requesting an election 261
is filed as provided herein and (2) without the necessity of 262
giving notice thereof except as specifically provided herein, and 263
specifically without the necessity of complying with the 264
requirements of Section 31-19-25. 265
SECTION 12. Section 37-59-107, Mississippi Code of 1972, is 266
brought forward as follows: 267
37-59-107. The levying authority for the school district 268
shall annually levy a special tax on all of the taxable property 269
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of the school district on whose behalf the notes or certificates 270
of indebtedness are issued, except as provided in Section 271
37-7-104.3(7), in an amount which shall be sufficient to pay the 272
principal of and interest upon such negotiable notes or 273
certificates of indebtedness as the same shall respectively mature 274
and accrue, including any notes issued under the direction of a 275
conservator of a school district pursuant to the authority of 276
Section 37-7-104.3(7). Said tax shall be levied and collected at 277
the same time and in the same manner as other taxes are collected 278
and said tax shall be in addition to all other taxes authorized by 279
law. It is expressly provided, however, that, except as provided 280
in Section 37-7-104.3(7), such annual tax levy shall not exceed 281
three (3) mills on the dollar for the payment of all notes issued 282
under the provisions of this article and all notes previously 283
issued under the statutes hereby repealed. The special tax so 284
levied shall be collected by the tax collector of the county at 285
the same time and in the same manner as other taxes are collected, 286
and the proceeds thereof shall be paid to the school district and 287
shall be used exclusively for the payment of principal of and 288
interest upon such negotiable notes or certificates of 289
indebtedness. 290
SECTION 13. Section 37-59-109, Mississippi Code of 1972, is 291
brought forward as follows: 292
37-59-109. If the school district on whose behalf money is 293
to be borrowed under the provisions of this article shall lie in 294
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two (2) or more counties, said school board shall take all steps 295
required by this article in the issuance of the negotiable notes 296
or certificates of indebtedness of the district without regard to 297
county lines. The negotiable notes or certificates of 298
indebtedness shall be general obligations of the entire school 299
district without regard to county lines and shall constitute a 300
lien upon all of the taxable property thereof. 301
The board of supervisors of the county which furnishes the 302
largest assessed valuation of the property in the district shall 303
annually certify to the board of supervisors of each county in 304
which the district is located the amount of the annual tax levy 305
required for the payment of the principal of and interest upon 306
said notes or certificates of indebtedness, and each such board of 307
supervisors shall annually levy such tax at the same time and in 308
the same manner as other taxes are levied by such board in the 309
amount so fixed. The taxes so levied shall be collected by the 310
tax collector of each county in the same manner as other taxes are 311
collected and shall be remitted to the school district depository. 312
Such school district depository shall deposit said funds to the 313
credit of the special fund provided for in Section 37-59-107 for 314
the payment of the principal of and interest upon such notes or 315
certificates of indebtedness. 316
SECTION 14. Section 37-59-111, Mississippi Code of 1972, is 317
brought forward as follows: 318
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37-59-111. All indebtedness incurred under the provisions of 319
this article shall be evidenced by the negotiable notes or 320
certificates of indebtedness of the school district on whose 321
behalf the money is borrowed. Said notes or certificates of 322
indebtedness shall be signed by the president of the school board 323
and superintendent of schools of such school district. Such notes 324
or certificates of indebtedness shall not bear a greater overall 325
maximum interest rate to maturity than the rates now or hereafter 326
authorized under the provisions of Section 19-9-19. No such notes 327
or certificates of indebtedness shall be issued and sold for less 328
than par and accrued interest. All such notes or certificates of 329
indebtedness shall mature according to the following: 330
(a) All notes or certificates of indebtedness issued 331
for purposes authorized under Section 37-59-101, with the 332
exception of the financing of school buses and transportation 333
equipment, shall mature in approximately equal installments of 334
principal and interest over a period not to exceed twenty (20) 335
years from the date of issuance thereof. Provided, however, that 336
if negotiable notes used to finance other such capital 337
improvements are outstanding from not more than one (1) previous 338
issue authorized under the provisions of this article, then the 339
schedule of payments for a new or supplementary issue may be so 340
adjusted that the schedule of maturities of all notes or series of 341
notes hereunder shall, when combined, mature in approximately 342
equal installments of principal and interest over a period of 343
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twenty (20) years from the date of the new or supplementary issue, 344
or if a lower interest rate will be secured on notes previously 345
issued and outstanding, a portion of the proceeds of any issue 346
authorized hereunder may be used to refund the balance of the 347
indebtedness previously issued under the authority of this 348
article. 349
(b) All notes or certificates of indebtedness for 350
purposes of financing of school buses and transportation equipment 351
shall mature in approximately equal installments of principal and 352
interest over a period not to exceed ten (10) years from the date 353
of issuance thereof. Provided, however, that if negotiable notes 354
used to finance such noncapital improvements are outstanding from 355
not more than one (1) previous issue authorized under the 356
provisions of this article, then the schedule of payments for a 357
new or supplementary issue may be so adjusted that the schedule of 358
maturities of all notes or series of notes hereunder shall, when 359
combined, mature in approximately equal installments of principal 360
and interest over a period of ten (10) years from the date of the 361
new or supplementary issue, or if a lower interest rate will 362
thereby be secured on notes previously issued and outstanding, a 363
portion of the proceeds of any issue authorized hereunder may be 364
used to refund the balance of the indebtedness previously issued 365
under the authority of this article. 366
Such notes or certificates of indebtedness shall be issued in 367
such form and in such denominations as may be determined by the 368
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school board, and same may be made payable at the office of any 369
bank or trust company selected by the school board, and, in such 370
case, funds for the payment of principal and interest due thereon 371
shall be provided in the same manner provided by law for the 372
payment of the principal and interest due on bonds issued by the 373
taxing districts of this state. 374
Any school district in Mississippi may borrow money from the 375
United States Department of Agriculture Rural Development agency 376
under any provision of state or federal law that provides for the 377
borrowing of money by school districts. 378
SECTION 15. Section 37-59-113, Mississippi Code of 1972, is 379
brought forward as follows: 380
37-59-113. The proceeds of any negotiable notes or 381
certificates of indebtedness issued under the provisions of this 382
article shall be placed in a special fund and shall be expended 383
only for the purpose or purposes for which they were issued as 384
shown by the resolution authorizing the issuance thereof. If a 385
balance shall remain of the proceeds of such notes or certificates 386
of indebtedness after the purpose or purposes for which same were 387
issued shall be accomplished, such balance shall forthwith be 388
transferred to the special fund set up for the payment thereof in 389
Section 37-59-107. 390
SECTION 16. Section 37-59-115, Mississippi Code of 1972, is 391
brought forward as follows: 392
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ST: Credit Enhancement Program; establish to
improve credit worthiness of schools.
37-59-115. The indebtedness incurred under the authority of 393
this article shall not be included in computing the statutory 394
limitation upon the indebtedness which may be incurred by school 395
districts as provided in Article 1 of this chapter, or any other 396
statute, but shall be in addition thereto. The only limitation 397
upon the amount of indebtedness which may be incurred under the 398
provisions of this article shall be that provided in Section 399
37-59-107. 400
SECTION 17. This act shall take effect and be in force from 401
and after January 1, 2027. 402