74th OREGON LEGISLATIVE ASSEMBLY--2007 Regular Session
 
NOTE:  Matter within  { +  braces and plus signs + } in an
amended section is new. Matter within  { -  braces and minus
signs - } is existing law to be omitted. New sections are within
 { +  braces and plus signs + } .
 
LC 798
 
                         House Bill 2199
 
Ordered printed by the Speaker pursuant to House Rule 12.00A (5).
  Presession filed (at the request of Governor Theodore R.
  Kulongoski for Department of Higher Education)
 
 
                             SUMMARY
 
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
 
  Allows State Board of Higher Education or State Treasurer to
enter into financial agreements for bonds issued under Article
XI-F(1) of Oregon Constitution and to pay amounts due under
financial agreements from available funds authorized by
Legislative Assembly.
  Establishes subfund in Higher Education Bond Sinking Fund to
provide for payment of amounts due under financial agreements.
  Declares emergency, effective July 1, 2007.
 
                        A BILL FOR AN ACT
Relating to bonds issued under Article XI-F(1) of the Oregon
  Constitution; creating new provisions; amending ORS 351.460;
  and declaring an emergency.
Be It Enacted by the People of the State of Oregon:
  SECTION 1.  { + Section 2 of this 2007 Act is added to and made
a part of ORS chapter 351. + }
  SECTION 2. { +  (1) As used in this section:
  (a) 'Available funds' means funds appropriated or otherwise
made available by the Legislative Assembly for a biennium to pay
amounts due during that biennium in connection with a financial
agreement.
  (b) 'Bond' means a bond issued under Article XI-F(1) of the
Oregon Constitution.
  (c) 'Credit enhancement device' means a letter of credit, line
of credit, bond insurance policy, standby purchase agreement,
surety bond or other device or facility used to enhance the
creditworthiness, liquidity or marketability of a bond.
  (d) 'Financial agreement' means an agreement for exchange of
interest rates, as defined in ORS 287.025, a credit enhancement
device or an agreement made in connection with a credit
enhancement device, that is executed for one or more bonds.
  (2) The State of Oregon, acting through the State Board of
Higher Education or the State Treasurer, may:
  (a) Enter into financial agreements.
  (b) Identify, segregate and agree to pay amounts due under
financial agreements entered into under this section from:
  (A) The revenues, gifts, grants or building fees that are
described in section 2, Article XI-F(1) of the Oregon
Constitution;
  (B) The unexpended proceeds of the bonds for which financial
agreements are executed; or
  (C) Other available funds.
  (c) To the extent permitted by Article XI-F(1) of the Oregon
Constitution, issue bonds to secure the state's obligation to
make payments under a financial agreement. If a bond is issued
under this paragraph, the bond amount shall count toward the
limit described in section 1, Article XI-F(1) of the Oregon
Constitution, only to the extent that it increases the amount the
state is obligated to pay under other bonds.
  (3) If the State of Oregon agrees to pay amounts due under
financial agreements from available funds:
  (a) The Chancellor of the Oregon University System shall notify
the Director of the Oregon Department of Administrative Services
not later than five business days after a financial agreement is
executed.
  (b) Prior to the beginning of each biennium, the chancellor
shall notify the director of any amounts that the chancellor
reasonably expects will be needed to be paid from available funds
during that biennium for financial agreements.
  (c) The Oregon Department of Administrative Services shall
include in the Governor's budget request to the Legislative
Assembly for each biennium amounts sufficient to permit the
payment of all amounts that are described in the notice given by
the chancellor under paragraph (b) of this subsection.
  (d)(A) If any amounts due under financial agreements are
payable from available funds and the Oregon University System
does not have funds that may be lawfully expended to pay those
amounts, the chancellor shall promptly certify the amounts needed
to the Legislative Assembly or, if the Legislative Assembly is
not then in session, to the Emergency Board. The Legislative
Assembly or the Emergency Board may appropriate or otherwise
provide available funds in the amounts certified by the
chancellor. Any available funds so provided shall be used
immediately to pay the amounts that are due under the financial
agreements.
  (B) The State of Oregon may enter into covenants in financial
agreements that specify the timing and content of the
chancellor's certification.
  (e) The Legislative Assembly acknowledges its intention to
provide available funds in the amounts included in the Governor's
budget request pursuant to paragraph (c) of this subsection and
in the amounts certified by the chancellor pursuant to paragraph
(d) of this subsection. However, a commitment of the State of
Oregon in a financial agreement to pay amounts due from available
funds does not obligate the Legislative Assembly or the Emergency
Board to provide available funds to pay the amounts due. A
commitment of the State of Oregon in a financial agreement to
make payments of amounts due from available funds may not be
construed to be a debt or liability that is prohibited by section
7, Article XI of the Oregon Constitution. + }
  SECTION 3. ORS 351.460 is amended to read:
  351.460. (1) The State Board of Higher Education shall maintain
with the State Treasurer  { - , - }  a Higher Education Bond
Sinking Fund, separate and distinct from the General Fund. The
Higher Education Bond Sinking Fund shall comprise   { - three - }
 { + four + } separate subfunds to provide for the payment of the
principal of and the interest upon the bonds issued under
authority of Article XI-F(1) of the Oregon Constitution and ORS
351.350, under authority of Article XI-G of the Oregon
Constitution and ORS 351.345,   { - and - }  revenue bonds issued
under authority of ORS 288.855 { + , and amounts due under
financial agreements entered into under section 2 of this 2007
Act + }. The moneys in the sinking fund are continuously
appropriated to the board for such purposes. The fund may be
invested by the State Treasurer, and the earnings from such
investments shall be credited to the appropriate subfunds of the
fund.
  (2) The Higher Education Bond Sinking Fund shall consist of all
moneys received from ad valorem taxes levied pursuant to ORS
291.445, all moneys that the Legislative Assembly may provide in
lieu of such taxes, all of the net revenues received from the
projects or undertakings for the financing of which the bonds
were issued, including gifts, grants and building fees, such
unpledged revenues of buildings and projects of like character as
shall be allocated by the board, all moneys received as accrued
interest upon bonds sold, all earnings from investments of the
fund { + , all + }
  { - and the - }  proceeds of the sale of refunding bonds { +
and all moneys that the State of Oregon has agreed to hold in the
Higher Education Bond Sinking Fund to pay amounts due under
financial agreements entered into under section 2 of this 2007
Act + }. Moneys credited to the Higher Education Bond Sinking
Fund shall be credited to the appropriate subfunds of the fund.
  (3) The board may credit the Higher Education Bond Sinking Fund
with moneys received from either a sale or interfund transfer of
land, buildings and facilities. When the land, buildings or
facilities are sold, or the use thereof is rededicated so that a
transfer from one subfund to the other is appropriate, the moneys
received shall be credited to the appropriate subfund.
  (4) The board shall apply student building fees, revenues,
gifts and grants for the payment of the principal of and the
interest upon the bonds issued under authority of Article XI-F(1)
of the Oregon Constitution and ORS 351.350 and under authority of
ORS 288.855 until such time as the proper subfund of the sinking
fund and investments thereof, as supplemented by expected future
income will, in the judgment of the board, be sufficient to meet
in full the principal of and the interest upon all such
outstanding bonds. Except for student building fees, income not
thus required for the sinking fund shall be transferred to such
other fund and account as the board shall designate. Student
building fees for buildings constructed from the proceeds of
bonds issued under Article XI-F(1) of the Oregon Constitution or
ORS 288.855 shall be applied only to those projects authorized
under Article XI-F(1) of the Oregon Constitution or ORS 288.855.
   { +  (5) The board may create a subfund in the Higher
Education Bond Sinking Fund to pay amounts due under financial
agreements entered into under section 2 of this 2007 Act and may
credit to that subfund any moneys that the State of Oregon is
obligated to use to pay those amounts due. + }
    { - (5)(a) - }   { + (6)(a) + } The board may not use the
sinking fund for any purpose other than the purposes for which
the fund was created.
  (b) Notwithstanding paragraph (a) of this subsection, the board
may transfer any surplus in the sinking fund to other funds
designated by the board if a balance remains in the sinking fund
from sources other than student building fees for buildings
constructed from the proceeds of bonds issued under Article
XI-F(1) of the Oregon Constitution and:
  (A) The purposes for which the fund was created have been
fulfilled; or
  (B) A reserve sufficient to meet all existing and future
obligations and liabilities of the fund has been set aside.
  SECTION 4.  { + This 2007 Act being necessary for the immediate
preservation of the public peace, health and safety, an emergency
is declared to exist, and this 2007 Act takes effect July 1,
2007. + }
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