§89.1. Pledge and deposit of Minimum Foundation Equalization Distribution Funds

A. As used in this Section the following words and phrases shall have the following meaning unless the context otherwise requires.

(1) "Minimum Foundation Equalization Distribution Funds" shall mean such funds appropriated to parish school boards under the authority of Article VIII, Section 13(B) of the Louisiana Constitution of 1974.

(2) "Note" or "notes" shall mean any note, certificate, or other evidence of indebtedness issued by a parish school board pursuant to the authority of R.S. 17:89.

(3) "Public trust" shall mean any public trust and public corporation organized pursuant to state law having for its beneficiary the state.

(4) "Restricted account" shall mean the sinking fund subaccount for the notes established by any parish school board pursuant to this Section to receive directly from the state its allocation of the Minimum Foundation Equalization Distribution Funds.

B. In connection with the issuance of any note or notes, a parish school board may direct its treasurer to create restricted accounts for the segregation of the Minimum Foundation Equalization Distribution Funds and revenue income therefrom, or other sums, and parish school boards may pledge any such accounts to and create liens thereon in favor of the public trust as the registered owner or holder of the note or notes which pledge or lien shall have such priority of lien on the revenues of such account as is provided for statutory charges pursuant to R.S. 33:2922.

C. Notwithstanding the provisions of R.S. 33:2928 et seq., R.S. 39:1211 et seq. or any other provision of law to the contrary, parish school boards are empowered to establish restricted accounts in any bank domiciled in the state. A parish school board may direct the Department of Education to direct the state treasurer to make payment of the Minimum Foundation Equalization Distribution Funds allocated to such parish school board for its then current fiscal year directly to such restricted account.

D. The state, through the office of the state treasurer, is hereby authorized to accept the irrevocable direction of a parish school board made through the Department of Education to deposit its respective allocation of the Minimum Foundation Equalization Distribution Funds directly to a restricted account, and thereupon the state treasurer shall be required to make payments of all remaining Minimum Foundation Equalization Distribution Funds for the then current fiscal year allocable to such parish school board directly to such restricted account.

E. A parish school board shall direct the bank at which it is maintaining its restricted account to apply monies in the restricted account to satisfy any scheduled sinking fund payment obligation created by a parish school board in connection with the sale of its note; provided however, upon satisfaction of such sinking fund payment obligation a parish school board may direct the bank to remit Minimum Foundation Equalization Distribution Funds received by it directly to said parish school board or to otherwise accept and remit funds to and from the restricted account.

F. Any pledge made by parish school boards pursuant to this Section shall be valid and binding from the time the pledge is made. The revenues and monies so pledged and thereafter deposited in the restricted account shall immediately be subject to the lien of such pledge without any physical delivery or further act, and the act of such pledge shall be valid and binding against all parties having claims of any kind in tort, by contract or otherwise against such pledging parties, irrespective of whether such claiming parties have notice of such lien. The resolution, ordinance, or other instrument by which a pledge is created need not be recorded.

G. Any agreements between the state and the public trust necessary or convenient to effect the pledge of the Minimum Foundation Equalization Distribution Funds or otherwise provide for the security or repayment of the notes are authorized and approved and may be entered into without the approval of any governmental board, commission, agency, office, or instrumentality other than the State Bond Commission, notwithstanding the provisions of R.S. 9:2347(J) or any other provision of law to the contrary.

H. The security procedure authorized by this Section is an alternative method for securing notes and its use is within the complete discretion of a parish school board. The alternate procedure for securing notes authorized by this Section may be utilized by a parish school board only if such parish school board has no previously issued and outstanding notes which are not secured by said alternate security procedure.

Acts 1987, No. 861, §1, eff. July 20, 1987.