Article 2Higher Education Fiscal Provisions

Section § 100500

Explanation

This law allows California to issue and sell bonds totaling up to $2.5 billion to fund projects under a specified chapter. These bonds are considered a solid financial obligation of the state, backed by California's commitment to return both the principal and interest as they come due. The state's Treasurer is responsible for selling these bonds as needed to cover expenditures laid out by the Higher Education Facilities Finance Committee.

(a)CA Education Code § 100500(a) Bonds in the total amount of two billion five hundred million dollars ($2,500,000,000), not including the amount of any refunding bonds issued in accordance with Section 100555, or so much thereof as is necessary, may be issued and sold to provide a fund to be used for carrying out the purposes expressed in this chapter and to reimburse the General Obligation Bond Expense Revolving Fund pursuant to Section 16724.5 of the Government Code. The bonds, when sold, shall be and constitute a valid and binding obligation of the State of California, and the full faith and credit of the State of California is hereby pledged for the punctual payment of the principal of, and interest on, the bonds as the principal and interest become due and payable.
(b)CA Education Code § 100500(b) Pursuant to this section, the Treasurer shall sell the bonds authorized by the Higher Education Facilities Finance Committee established pursuant to Section 67353 at any different times necessary to service expenditures required by the apportionments.
bonds two billion five hundred million dollars bond issuance funding projects state obligation state treasurer Higher Education Facilities Finance Committee bond sale principal and interest payment General Obligation Bond Expense Revolving Fund financial obligation California bonds education funding state credit bond reimbursement
(Added by Stats. 1998, Ch. 407, Sec. 16. Approved in Proposition 1A at the November 3, 1998, election.)

Section § 100510

Explanation

This law explains how bonds are handled for construction projects at public colleges and universities in California. These bonds follow the general rules for state bonds, except for one specific section. Each state agency that manages money from the 1998 Higher Education Capital Outlay Bond Fund acts as the responsible party for their own projects. The money from the bonds is used for building and renovating campuses and their facilities, acquiring lands for new constructions, and equipping those facilities with items that last at least 10 years. It also covers costs for planning and drawings before construction begins.

(a)CA Education Code § 100510(a) The bonds authorized by this chapter shall be prepared, executed, issued, sold, paid, and redeemed as provided in the State General Obligation Bond Law (Chapter 4 (commencing with Section 16720) of Part 3 of Division 4 of Title 2 of the Government Code), and all of the provisions of that law, except Section 16727 of the Government Code, apply to the bonds and to this chapter and are hereby incorporated in this chapter as though set forth in full in this chapter.
(b)CA Education Code § 100510(b) For the purposes of the State General Obligation Bond Law, each state agency administering an appropriation of the 1998 Higher Education Capital Outlay Bond Fund is designated as the “board” for projects funded pursuant to this chapter.
(c)CA Education Code § 100510(c) The proceeds of the bonds issued and sold pursuant to this chapter shall be available for the purpose of funding aid to the University of California, the college named in Section 92200, the California State University, and the California Community Colleges, for the construction on existing or new campuses, and their respective off-campus centers, including the construction of buildings and the acquisition of related fixtures, renovation, and reconstruction of facilities, for the acquisition of sites upon which these facilities are to be constructed, for the equipping of new, renovated, or reconstructed facilities, which equipment shall have a useful life of at least 10 years, to provide funds for payment of preconstruction costs, including, but not limited to, preliminary plans and working drawings.
state bonds California public colleges higher education funding university construction campus renovation bond proceeds equipment useful life preconstruction costs construction funding State General Obligation Bond Law Higher Education Capital Outlay Bond Fund University of California California State University California Community Colleges facility acquisition
(Amended by Stats. 2022, Ch. 478, Sec. 35. (AB 1936) Effective January 1, 2023.)

Section § 100520

Explanation

This section describes how the Higher Education Facilities Finance Committee can only authorize bonds to fund specific projects if the California Legislature approves it in the annual Budget Act. The committee evaluates if issuing these bonds is required or beneficial, and decides how much to sell if needed. They can also issue and sell the bonds in stages, rather than all at once.

The Higher Education Facilities Finance Committee established pursuant to Section 67353 shall authorize the issuance of bonds under this chapter only to the extent necessary to fund the apportionments for the purposes described in this chapter that are expressly authorized by the Legislature in the annual Budget Act. Pursuant to that legislative direction, the committee shall determine whether or not it is necessary or desirable to issue bonds authorized pursuant to this chapter in order to carry out the purposes described in this chapter and, if so, the amount of bonds to be issued and sold. Successive issues of bonds may be authorized and sold to carry out those actions progressively, and it is not necessary that all of the bonds authorized to be issued be sold at any one time.
Higher Education Facilities Finance Committee bond issuance annual Budget Act apportionments legislative authorization progressive bond sales determine necessity bond funding educational facilities successive bond issues bond sale process financial authorization funding projects committee evaluation desirable issuance
(Added by Stats. 1998, Ch. 407, Sec. 16. Approved in Proposition 1A at the November 3, 1998, election.)

Section § 100525

Explanation

Each year, a specific amount of money must be collected along with other state revenues to pay off both the principal and interest on state bonds. All officials responsible for revenue collection must do everything needed to gather this additional money.

There shall be collected each year and in the same manner and at the same time as other state revenue is collected, in addition to the ordinary revenues of the state, a sum in an amount required to pay the principal of, and interest on, the bonds each year. It is the duty of all officers charged by law with any duty in regard to the collection of the revenue to do and perform each and every act which is necessary to collect that additional sum.
revenue collection state bonds principal payment interest payment annual collection state revenue officers additional sum collection debt servicing bond repayment mandatory collection procedure
(Added by Stats. 1998, Ch. 407, Sec. 16. Approved in Proposition 1A at the November 3, 1998, election.)

Section § 100530

Explanation

This law states that a specific amount of money will be set aside from California's General Fund to cover two main expenses related to bonds. First, it will pay for the annual principal and interest on bonds that are issued under this chapter as they become due. Second, it will fund Section 100545, with no restrictions on fiscal years.

Notwithstanding Section 13340 of the Government Code, there is hereby appropriated from the General Fund in the State Treasury, for the purposes of this chapter, an amount that will equal the total of the following:
(a)CA Education Code § 100530(a) The sum annually necessary to pay the principal of, and interest on, bonds issued and sold pursuant to this chapter, as the principal and interest become due and payable.
(b)CA Education Code § 100530(b) The sum necessary to carry out Section 100545, appropriated without regard to fiscal years.
General Fund appropriation bond principal payment bond interest payment bond issuance California State Treasury Section 100545 annual bond payment fiscal year funding state bonds financial appropriation public finance California education funding
(Added by Stats. 1998, Ch. 407, Sec. 16. Approved in Proposition 1A at the November 3, 1998, election.)

Section § 100535

Explanation

This law allows a specific board to request a loan from the Pooled Money Investment Board to help fund projects outlined in this chapter. The loan must not be more than the value of unsold bonds that are authorized for sale. The board must complete any necessary paperwork to obtain and repay this loan. Any loaned money will be placed in a fund and used according to this chapter's guidelines.

The board, as defined in subdivision (b) of Section 100510, may request the Pooled Money Investment Board to make a loan from the Pooled Money Investment Account or any other approved form of interim financing, in accordance with Section 16312 of the Government Code, for the purpose of carrying out this chapter. The amount of the request shall not exceed the amount of the unsold bonds that the committee, by resolution, has authorized to be sold for the purpose of carrying out this chapter. The board, as defined in subdivision (b) of Section 100510, shall execute any documents required by the Pooled Money Investment Board to obtain and repay the loan. Any amounts loaned shall be deposited in the fund to be allocated by the board in accordance with this chapter.
Pooled Money Investment Account interim financing unsold bonds loan request investment board fund allocation project funding loan documentation repayment Government Code Section 16312 financial management bond authorization board execution money deposit Chapter financing
(Added by Stats. 1998, Ch. 407, Sec. 16. Approved in Proposition 1A at the November 3, 1998, election.)

Section § 100540

Explanation

If bonds are sold, and a bond counsel states the interest is tax-exempt federally, the Treasurer can manage separate accounts for the bond money and its earnings. The Treasurer can also handle the funds to ensure compliance with federal laws to keep the tax-exempt status and secure other federal benefits.

Notwithstanding any other provision of this chapter, or of the State General Obligation Bond Law, if the Treasurer sells bonds pursuant to this chapter that include a bond counsel opinion to the effect that the interest on the bonds is excluded from gross income for federal tax purposes, subject to designated conditions, the Treasurer may maintain separate accounts for the investment of bond proceeds and for the investment earnings on those proceeds. The Treasurer may use or direct the use of those proceeds or earnings to pay any rebate, penalty, or other payment required under federal law or take any other action with respect to the investment and use of those bond proceeds required or desirable under federal law to maintain the tax-exempt status of those bonds and to obtain any other advantage under federal law on behalf of the funds of this state.
Treasurer bond sales bond counsel opinion federal tax exemption separate accounts bond proceeds investment earnings rebate payments federal compliance tax-exempt status state funds advantages interest exclusion bond management bond investment federal law requirements
(Added by Stats. 1998, Ch. 407, Sec. 16. Approved in Proposition 1A at the November 3, 1998, election.)

Section § 100545

Explanation

This law involves the financial management of funds related to higher education construction projects in California. If bonds are authorized to be sold for these projects, the Director of Finance can temporarily pull money from the General Fund, but that money has to be returned with interest from the bond sale proceeds. Additionally, when universities or community colleges request these funds, they must submit a detailed five-year plan. These plans should prioritize projects, especially focusing on reducing seismic hazards in older buildings by the 2002-03 fiscal year, reflecting the urgent needs of each institution or the community college system as a whole.

(a)CA Education Code § 100545(a) For the purposes of carrying out this chapter, the Director of Finance may authorize the withdrawal from the General Fund of an amount not to exceed the amount of the unsold bonds that have been authorized by the Higher Education Facilities Finance Committee to be sold for the purpose of carrying out this chapter. Any amounts withdrawn shall be deposited in the 1998 Higher Education Capital Outlay Bond Fund consistent with this chapter. Any money made available under this section shall be returned to the General Fund, plus an amount equal to the interest that the money would have earned in the Pooled Money Investment Account, from proceeds received from the sale of bonds for the purpose of carrying out this chapter.
(b)CA Education Code § 100545(b) Any request forwarded to the Legislature and the Department of Finance for funds from this bond issue for expenditure for the purposes described in this chapter by the University of California, the California State University, or the California Community Colleges shall be accompanied by the five-year capital outlay plan. Requests forwarded by a university or college shall include a schedule that prioritizes the seismic retrofitting needed to significantly reduce, by the 2002–03 fiscal year, in the judgment of the particular university or college, seismic hazards in buildings identified as high priority by the university or college. Requests forwarded by the California Community Colleges shall be accompanied by a five-year capital outlay plan reflecting the needs and priorities of the community college system, prioritized on a statewide basis.
General Fund withdrawal Higher Education Facilities Finance Committee 1998 Higher Education Capital Outlay Bond Fund seismic retrofitting five-year capital outlay plan University of California California State University California Community Colleges bond sale proceeds seismic hazards capital projects community college system priorities
(Added by Stats. 1998, Ch. 407, Sec. 16. Approved in Proposition 1A at the November 3, 1998, election.)

Section § 100550

Explanation

This law specifies that any extra money made from selling bonds, like premiums and interest, must stay in the 1998 Higher Education Capital Outlay Bond Fund. This money can then be transferred to the General Fund to help cover bond interest costs.

All money deposited in the 1998 Higher Education Capital Outlay Bond Fund that is derived from premium and accrued interest on bonds sold shall be reserved in the fund and shall be available for transfer to the General Fund as a credit to expenditures for bond interest.
1998 Higher Education Capital Outlay Bond Fund bond premiums accrued interest bond sales General Fund transfer credit to expenditures bond interest costs financial management fund allocation revenue from bonds fiscal policy interest payments budgeting for bonds state finance bond fund usage
(Added by Stats. 1998, Ch. 407, Sec. 16. Approved in Proposition 1A at the November 3, 1998, election.)

Section § 100555

Explanation

This section explains that bonds issued under this chapter can be refinanced or replaced according to a specific section of California's government code. Basically, if the state voters approved the original bonds, they also approved any future bonds used to refinance or replace those bonds.

The bonds may be refunded in accordance with Article 6 (commencing with Section 16780) of Chapter 4 of Part 3 of Division 4 of Title 2 of the Government Code, which is a part of the State General Obligation Bond Law. Approval by the voters of the state for the issuance of the bonds described in this chapter includes the approval of the issuance of any bonds issued to refund any bonds originally issued under this chapter or any previously issued refunding bonds.
bond refinancing refunding bonds state general obligation bonds voter approval refinancing approval bond issuance government code compliance state bonds finance law public finance California bonds refunding process bond law
(Added by Stats. 1998, Ch. 407, Sec. 16. Approved in Proposition 1A at the November 3, 1998, election.)

Section § 100560

Explanation

This law explains that the money gained from selling specific bonds isn't considered tax money according to the California Constitution. Because of this, there are no limits on how this money can be spent based on the usual rules that apply to tax money.

The Legislature hereby finds and declares that, inasmuch as the proceeds from the sale of bonds authorized by this chapter are not “proceeds of taxes” as that term is used in Article XIII B of the California Constitution, the disbursement of these proceeds is not subject to the limitations imposed by that article.
bond proceeds tax exemptions California Constitution Article XIII B disbursement limitations sale of bonds financial limitations government spending bond authorization proceeds of taxes legislative findings California government finance constitutional interpretation fiscal policy bond sale revenue
(Added by Stats. 1998, Ch. 407, Sec. 16. Approved in Proposition 1A at the November 3, 1998, election.)