N.Y. Education Law § 462: Reserve funds, appropriations and other funds and accounts

§ 462. Reserve funds, appropriations and other funds and accounts. 1.

(a) The fund shall create and establish a special fund (herein referred

to as capital reserve fund), and, to secure bonds of the fund issued

prior to the twenty-fourth day of July, nineteen hundred seventy-six,

shall pay into such capital reserve fund (1) any monies appropriated and

made available by the state or the city of New York for the purposes of

such fund, (2) any proceeds of sale of notes or bonds to the extent

provided in the resolution of the fund authorizing the issuance thereof,

and (3) any other monies which may be made available to the fund for the

purpose of such capital reserve fund from any other source or sources.

All moneys held in the capital reserve fund, established for bonds of

the fund secured by such capital reserve fund except as hereinafter

provided, shall be used solely for the payment of the principal of such

bonds as the same mature, required payments to any sinking fund

established for the amortization of such term bonds (hereinafter

referred to as "sinking fund payments"), the purchase or redemption of

such bonds, the payment of interest on such bonds or the payment of any

redemption premium required to be paid when such bonds are redeemed

prior to maturity; provided, however, that moneys in such capital

reserve fund shall not be withdrawn therefrom at any time in such amount

as would reduce the amount of such fund to less than the maximum amount

of principal and interest maturing and becoming due and sinking fund

payments required to be made in any succeeding fiscal year on all bonds

of the fund secured by the capital reserve fund then outstanding, except

for the purpose of paying principal, interest and sinking fund payments

becoming due on such bonds of the fund maturing and becoming due and for

the payment of which other monies of the fund are not available. For the

purposes of this subdivision, in computing the maximum amount of

principal maturing in any succeeding calendar year, the principal amount

of any term bonds which are to be amortized by sinking fund payments

shall not be included in the computation. Any income or interest earned

by, or increment to, the capital reserve fund due to the investment

thereof may be transferred to other funds or accounts to the extent it

does not reduce the amount of the capital reserve fund below the maximum

amount of principal and interest maturing and becoming due and sinking

fund payments required to be made in any succeeding calendar year on all

bonds of the fund then outstanding secured by the capital reserve fund.

(b) The fund shall not issue bonds secured by the capital reserve fund

at any time if the maximum amount of principal and interest maturing and

becoming due and sinking fund payments required to be made in a

succeeding fiscal year on the bonds then to be issued and on all other

bonds of the fund then outstanding secured by the capital reserve fund

will exceed the amount of the capital reserve fund at the time of

issuance unless the fund, at the time of issuance of such bonds, shall

deposit in the capital reserve fund from the proceeds of the bonds so to

be issued, or otherwise, an amount which, together with the amount then

in such fund, will be not less than the maximum amount of principal and

interest maturing and becoming due and sinking fund payments required to

be made in any succeeding fiscal year on such bonds then to be issued

and on all other bonds of the fund then outstanding secured by the

capital reserve fund.

(c) To assure the continued operation and solvency of the capital

reserve fund for the carrying out of the public purposes of this

article, provision is made in paragraph (a) of this subdivision for the

accumulation in the capital reserve fund of an amount equal to the

maximum amount of principal and interest maturing and becoming due and

sinking fund payments required to be made in any succeeding fiscal year

on all bonds of the fund then outstanding secured by the capital reserve

fund. In order further to assure such maintenance of the capital reserve

fund, the board of education shall annually request from the city of New

York and pay over to the fund, for deposit in the capital reserve fund,

such sum, if any, as shall be certified by the chairman of the fund to

the board, the mayor and the director of management and budget of the

city of New York as necessary to restore the capital reserve fund to an

amount equal to the maximum amount of principal and interest maturing

and becoming due and sinking fund payments required to be made in the

next succeeding fiscal year on the bonds of the fund then outstanding

secured by the capital reserve fund; provided, however, that such sum

shall have been first appropriated by the city to the board or shall

otherwise have been made lawfully available to the board for such

purpose. The chairman of the fund shall annually, not later than the

fifteenth day of February in each year, make and deliver to the board,

the mayor and the director of management and budget his certificate

stating the amount, if any, required to restore the capital reserve fund

to the amount aforesaid and the amount so stated, if any, shall be paid

to the fund by the board during the then current fiscal year of the

fund. In the event of the failure or inability of the board to pay over

the stated amount to the fund on or before August first of the same

year, the chairman of the fund shall forthwith make and deliver to the

comptroller of the state of New York a further certificate restating the

amount so required and, after the comptroller of the state of New York

shall have given written notice to the commissioner of education, the

mayor and director of management and budget, such amount shall be paid

over to the fund by the comptroller of the state of New York out of the

next payment of state aid apportioned to the city of New York on behalf

of the city school district of the city of New York for the support of

common schools or such other aid or assistance payable in support of

common schools as shall supersede or supplement such state aid for the

support of common schools, including federal moneys apportioned by the

state to the city of New York on behalf of the city school district for

the support of common schools. Any amount so paid over to the fund shall

be deducted from the corresponding apportionment of state education aid

or other aid or assistance for education otherwise credited to the board

of education for its purposes and shall not obligate the state to make

or entitle the city or the board of education to receive any additional

or increased apportionment or payment of state aid for school purposes.

(d) In computing the amount of the capital reserve fund for the

purposes of this section, securities in which all or a portion of such

fund shall be invested shall be valued at par, or if purchased at less

than par, at their cost to the fund.

2. The fund may create and establish with the comptroller or with a

trustee one or more additional funds or accounts and, subject to

agreements with bondholders and noteholders, may pay into such funds or

accounts (i) fees and charges collected by the fund, (ii) monies which

shall be transferred from the capital reserve fund pursuant to the

provisions of paragraph (a) of subdivision one of this section, and

(iii) any other monies which may be made available to the fund from any

other source or sources. The monies held in or credited to any such

reserve fund or account may, in the discretion of the fund but subject

to agreements with bondholders and noteholders, be used by the fund (a)

for the repayment of advances from the city of New York, (b) to

reimburse the board of education of the city of New York the reasonable

costs of services performed by the board for the fund pursuant to

section four hundred fifty-five of this article, (c) to pay all costs,

expenses and charges of financing, including fees and expenses of

trustees and paying agents, (d) for transfers to the capital reserve

fund, (e) for the payment of principal of and interest on bonds or notes

issued by the fund when the same shall become due, whether at maturity

or on call for redemption, and for the payment of any redemption premium

required to be paid where such bonds or notes are redeemed prior to

their stated maturities, and to purchase bonds or notes issued by the

fund, (f) for such other corporate purposes as the fund in its

discretion shall determine and provide, or (g) for payment to the board

of education for school purposes.

3. (a) The fund may create and establish one or more special funds

(herein referred to as debt service reserve funds), and, to secure bonds

of the fund issued on or after the twenty-fourth day of July, nineteen

hundred seventy-six, shall pay into each such debt service reserve fund

(1) any monies appropriated and made available by the state or city of

New York for the purposes of such fund, (2) any proceeds of sale of

notes or bonds to the extent provided in the resolution of the fund

authorizing the issuance thereof, and (3) any other monies which may be

made available to the fund for the purposes of any such debt service

reserve fund from any other source or sources. All moneys held in a debt

service reserve fund, except as hereinafter provided, shall be used

solely for the payment of the principal of bonds of the fund as the same

mature, required payments to any sinking fund established for the

amortization of term bonds (hereinafter referred to as "sinking fund

payments"), so secured, the purchase or redemption of bonds of the fund

so secured, the payment of interest on such bonds of the fund so secured

or the payment of any redemption premium required to be paid when such

bonds secured by a debt service reserve fund are redeemed prior to

maturity; provided, however, that moneys in a debt service reserve fund

shall not be withdrawn therefrom at any time in such amount as would

reduce the amount of such fund to less than the debt service reserve

fund requirement established pursuant to the agreement with the holders

of the bonds of the fund secured by such debt service reserve fund,

except for the purpose of paying principal of, interest and sinking fund

payments becoming due on such bonds of the fund maturing and becoming

due and for the payment of which other monies of the fund are not

available. Any income or interest earned by, or increment to, a debt

service reserve fund due to the investment thereof may be transferred to

other funds or accounts to the extent it does not reduce the amount of a

debt service reserve fund below the debt service reserve fund

requirement.

(b) The fund shall not issue bonds secured by a debt service reserve

fund at any time if the amount in such debt service reserve fund is less

than the debt service reserve fund requirement at the time of issuance

unless the fund, at the time of issuance of such bonds, shall deposit in

the debt service reserve fund from the proceeds of the bonds so to be

issued, or otherwise, an amount which, together with the amount then in

such fund, will be not less than the debt service reserve fund

requirement established by the agreement with the holders of the bonds

of the fund secured thereby.

(c) To assure the continued operation and solvency of the fund for the

carrying out of the public purposes of this article, provision is made

in paragraph (a) of this subdivision for the accumulation in a debt

service reserve fund of an amount equal to the debt service reserve fund

requirement on all bonds of the fund then outstanding secured by a debt

service or debt service reserve fund. In order further to assure such

maintenance of a debt service reserve fund, the board of education shall

annually request from the city of New York and pay over to the fund

after making the payment required by paragraph (c) of subdivision one of

this section for deposit in a debt service reserve fund, such sum, if

any, as shall be certified by the chairman of the fund to the board, the

mayor and the director of the budget of the city of New York as

necessary to restore such debt service reserve fund to an amount equal

to the debt service reserve fund requirement for the bonds of the fund

secured by such debt service reserve fund; provided, however, that such

sum shall have been first appropriated by the city to the board or shall

otherwise have been made lawfully available to the board for such

purpose. The chairman of the fund shall annually, not later than the

fifteenth day of February in each year, make and deliver to the board,

the mayor and the director of the budget his certificate stating the

amount, if any, required to restore a debt service reserve fund to the

amount aforesaid and the amount so stated after making the payment

required by paragraph (c) of subdivision one of this section if any,

shall be paid to the fund by the board during the then current fiscal

year of the fund. In the event of the failure or inability of the board

to pay over the stated amount to the fund on or before August first of

the same year, the chairman of the fund shall forthwith make and deliver

to the comptroller of the state of New York a further certificate

restating the amount so required and, after the comptroller of the state

of New York shall have given written notice to the commissioner, the

mayor and director of the budget, such amount after making the payment

required by paragraph (c) of subdivision one of this section shall be

paid over to the fund by the comptroller of the state of New York out of

the next payment of state aid apportioned to the city of New York on

behalf of the city school district of the city of New York for the

support of common schools or such other aid or assistance payable in

support of common schools as shall supersede or supplement such state

aid for the support of common schools, including federal moneys

apportioned by the state to the city of New York on behalf of the city

school district for the support of common schools. Any amount so paid

over to the fund under paragraph (c) of subdivision one of this section

shall be deducted from the corresponding apportionment of state

education aid or other aid or assistance for education otherwise

credited to the board of education for its purposes and shall not

obligate the state to make or entitle the city or the board of education

to receive any additional or increased apportionment or payment of state

aid for school purposes.

(d) In computing the amount of any debt service reserve fund for the

purposes of this section, securities in which all or a portion of such

fund shall be invested shall be valued at par, or if purchased at less

than par, at their cost to the fund.

(e) The maximum debt service reserve fund requirement for any debt

service reserve fund created pursuant to this subdivision shall not

exceed the amount of principal and interest maturing and becoming due

and sinking fund payments required to be made in any year on all bonds

of the fund secured by such debt service reserve fund. For purposes of

this subdivision, in computing the maximum amount of principal maturing

in any year, the principal amount of any term bonds which are to be

amortized by sinking fund payments shall not be included in the

computation.

4. In addition to the funds permitted to be established pursuant to

subdivision two hereof, the fund may create and establish with the

comptroller or with a trustee one or more additional funds or accounts

and, subject to agreements with bondholders and noteholders, may pay

into such funds or accounts (i) fees and charges collected by the fund,

(ii) monies which shall be transferred from a debt service or reserve

fund pursuant to the provisions of paragraph (a) of subdivision one of

this section, and (iii) any other monies which may be made available to

the fund from any other source or sources. The monies held in or

credited to any such fund may, in the discretion of the fund but subject

to agreements with bondholders and noteholders, be used by the fund (a)

for the repayment of advances from the city of New York, (b) to

reimburse the board of education of the city of New York the reasonable

costs of services performed by the board for the fund pursuant to

section four hundred fifty-five of this article, (c) to pay all costs,

expenses and charges of financing, including fees and expenses of

trustees and paying agents, (d) for transfers to a debt service or a

debt service reserve fund, (e) for the payment of principal, interest

and sinking fund payments for any bonds or notes issued by the fund when

the same shall become due, whether at maturity or on call for

redemption, and for the payment of any redemption premium required to be

paid where such bonds or notes are redeemed prior to their stated

maturities, and to purchase bonds or notes issued by the fund, (f) for

such other corporate purposes as the fund in its discretion shall

determine and provide, or (g) for payment to the board of education for

school purposes.