Proposed Amendment to the Constitution of the State of Idaho:
Section 2, Article VIII
Meaning and Purpose of Proposed Amendment:
If adopted, the proposed amendment would:
Create a fund to guarantee the debt of school districts in accordance with statute;
Allow the state to guarantee the debt of school districts and guarantee debt incurred to refund school districts bonds;
Provide that the state's obligation under any debt guarantee shall not be considered debt for purposes of the state constitution; and
Allow the legislature to provide by law that reimbursement to the state shall be obtained from moneys that would be used for educational support from the state to the school district which incurred the debt and which is being guaranteed by the state.
Effect of Adoption:
The repayment provisions should substantially decrease interest rates on bonds issued by school districts for construction of new buildings because it would provide eligible school districts a rating of "AAA" for its bonds on the bond market. The repayment provisions would only be applicable if a local school district passes a bond issue and then does not make payments to the bond holders from its property tax proceeds. The school district will still be liable in the event of a default. The amendment would not affect the current constitutional requirement that two-thirds of the votes cast for a bond proposal are needed for it to be adopted.