Section 6-09.4-23 - Evidences of indebtedness - Authority to withhold school district state aid1. If the public finance authority or a paying agent notifies the superintendent of public instruction, in writing, that a school district has failed to pay when due the principal or interest on any evidences of indebtedness issued after July 31, 1999, or that the public finance authority, school district, or the paying agent has reason to believe a school district will not be able to make a full payment of the principal and interest when the payment is due, the superintendent of public instruction shall withhold any funds that are due or payable or appropriated to the school district under chapter 15.1-27 until the payment of the principal or interest has been made to the public finance authority or the paying agent, or until the public finance authority, school district, or the paying agent notifies the superintendent of public instruction that arrangements satisfactory to the public finance authority or the paying agent have been made for the payment of the principal and interest then due and owing. The notification must include information required by the superintendent of public instruction. State funds available to a school district under chapter 15.1-27 are not subject to withholding under this section unless the withholding is authorized by resolution of the district's school board.2. If the public finance authority or a paying agent notifies the state treasurer, in writing, that a school district has failed to pay when due the principal or interest on any evidence of indebtedness issued after July 31, 2023, or that the public finance authority, school district, or the paying agent has reason to believe a school district will not be able to make a full payment of the principal and interest when the payment is due, the state treasurer shall withhold any funds that are due or payable or appropriated to the school district under chapter 57-51 until the payment of the principal or interest has been made to the public finance authority or the paying agent, or until the public finance authority, school district, or the paying agent notifies the state treasurer that arrangements satisfactory to the public finance authority or the paying agent have been made for the payment of the principal and interest then due and owing. The notification must include information required by the state treasurer. State funds available to a school district under chapter 57-51 are not subject to withholding under this section unless the withholding is authorized by resolution of the district's school board.3. If the public finance authority or a paying agent notifies the county auditor, in writing, that a school district has failed to pay when due the principal or interest on any evidence of indebtedness issued after July 31, 2023, or that the public finance authority, school district, or the paying agent has reason to believe a school district will not be able to make a full payment of the principal and interest when the payment is due, the county auditor shall withhold any funds that are due or payable or appropriated to the school district under chapters 57-33.2, 57-34, and 57-55 and section 21-06-10 until the payment of the principal or interest has been made to the public finance authority or the paying agent, or until the public finance authority, school district, or the paying agent notifies the county auditor that arrangements satisfactory to the public finance authority or the paying agent have been made for the payment of the principal and interest then due and owing. The notification must include information required by the county auditor. State funds available to a school district under chapters 57-33.2, 57-34, and 57-55 and section 21-06-10 are not subject to withholding under this section unless the withholding is authorized by resolution of the district's school board.4. Notification by the public finance authority, school district, or the paying agent that satisfactory arrangements have been made for the payment of the principal and interest then due and owing under subsection 1, 2, or 3 must be made at least fifteen working days before the principal or interest is due. The notice must be in writing and include the name of the school district, an identification of the debt obligation issue, the date the payment is due, the amount of principal and interest due on the payment date, the amount of principal or interest the school district will be unable to pay, the paying agent for the debt obligation, the wire transfer instructions to transfer funds to the paying agent, and an indication that payment is requested under this section. A paying agent shall notify the superintendent of public instruction, the state treasurer, and the appropriate county auditor if the paying agent becomes aware of a potential default. If the superintendent, state treasurer, or the county auditor receives notice of a requested payment under this section, the superintendent of public instruction, state treasurer, or county auditor shall withhold and transfer funds due or payable or appropriated to the school district under chapter 15.1-27 or 57-51 to the paying agent after:a. Consulting with the school district and the paying agent; andb. Verifying the accuracy of the provided request information.5. Notwithstanding any withholding of state funds under section 15-39.1-23 or any other law, the superintendent of public instruction, state treasurer, and county auditor shall make available any funds withheld under subsection 1, 2, or 3 to the public finance authority or the paying agent. The public finance authority or the paying agent shall apply the funds to payments that the school district is required to make to the public finance authority or the paying agent.6. If funds are withheld from a school district and made available to the public finance authority or a paying agent under this section and if tax revenues are received by the school district during the fiscal year in which the funds are withheld and are deposited in the district's sinking fund established in accordance with section 21-03-42, the district, with the consent of the public finance authority or the paying agent, may withdraw from its sinking fund an amount equal to that withheld and made available to the public finance authority or a paying agent under this section.7. The superintendent of public instruction, state treasurer, and county auditor shall develop detailed procedures for a school district to notify the superintendent of public instruction, state treasurer, and the county auditor that the school district has obligated the district to be bound by this section; procedures for a school district, paying agent, and the public finance authority to notify the superintendent of public instruction, state treasurer, or county auditors of potential defaults and to request payment under this section; and procedures for the state to expedite payments to prevent defaults.Amended by S.L. 2023 , ch. 99( HB 1125 ), § 1, eff. 8/1/2023.Amended by S.L. 2017 , ch. 78( HB 1192 ), § 1, eff. 8/1/2017.Amended by S.L. 2011 , ch. 80( HB 1428 ), § 1, eff. 8/1/2011.