Sec. 5. (a) The board may, if the school corporation’s operations fund is exhausted or in the board’s judgment is in danger of exhaustion, make temporary loans for the use of the operations fund to be paid out of the proceeds of taxes levied by the school city for the operations fund. The amount borrowed for the operations fund must be paid into the operations fund and may be used for any purpose for which the board’s operations fund lawfully may be used. A temporary loan must:
(1) be evidenced by the promissory note or notes of the school city;
(2) bear interest that is payable, according to the note or notes, periodically or at the maturity of the note or notes and at not more than seven percent (7%) per annum; and
(3) mature at a time or times determined by the board, but not later than one (1) year after the date of the note or notes.
Loans made in a calendar year may not be for a sum greater than the amount estimated by the board as proceeds to be received by the board from the levy of taxes made by the school city for the board’s operations fund. Successive loans may be made to aid the operations fund in a calendar year, but the total amount of successive loans outstanding at any time may not exceed the estimated proceeds of taxes levied for the board’s operations fund.
(b) A loan under this section may not be made until notice asking for bids is given by newspaper publication. Notice must be made one (1) time in a newspaper published in the school city at least seven (7) days before the time the bids for the loans will be opened. A bidder shall name the amount of interest the bidder agrees to accept, not exceeding seven percent (7%) per annum. The loan shall be made to the bidder or bidders bidding the lowest rate of interest. The note, notes, or warrants may not be delivered until the full price of the face of the loan is paid to the treasurer of the school city, and interest does not accrue on the loan until delivery.
(c) The board may not impose a levy to pay for the interest on the loan from a debt service fund as provided by IC 20-40-9-6 unless:
(1) the loan has been issued; and
(2) the school corporation has received the loan proceeds.
The board may not authorize a temporary loan for the purpose of increasing the school city’s property tax rate for the ensuing budget year.
[Pre-2006 Recodification Citation: 20-25-4-7.]As added by P.L.2-2006, SEC.171. Amended by P.L.244-2017, SEC.117; P.L.38-2021, SEC.73.