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COUNTY OF SAN MATEO
Inter-Departmental Correspondence
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County Counsel
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DATE:
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March 20, 2009
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BOARD MEETING DATE:
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March 31, 2009
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SPECIAL NOTICE/HEARING:
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None
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VOTE REQUIRED:
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Majority
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TO:
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Honorable Board of Supervisors
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FROM:
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County Counsel
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SUBJECT:
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Authorization regarding notifications of Non-action in connection with Pooled Tax and Revenue Anticipation Notes
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RECOMMENDATION:
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Adopt a resolution authorizing the County Manager to Execute Notifications of Non-action in connection with Pooled Tax and Revenue Anticipation Notes, including one for the San Mateo-Foster City School District regarding its participation in the California Education Notes Financing Program
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VISION ALIGNMENT:
Commitment: Sow the seeds of our future prosperity.
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Goal 19: The skill level of new workers rises with improved K-12 education and training options.
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The issuance and sale of Tax and Revenue Anticipation Notes by a school district increases the funds currently available to the district and thereby support the district’s operating budget.
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BACKGROUND:
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Pursuant to state statute, a school district may borrow money by issuing Tax and Revenue Anticipation Notes (TRANS) for any purpose for which the school district is authorized to expend moneys, including but not limited to current expenses, capital expenditures, and the discharge of any obligation or indebtedness of the school district. The district pledges any taxes, income or revenue for payment of the Notes, which are solely an obligation of the school district. When issued by the school district individually, such notes must be issued in the name of the school district by the Board of Supervisors.
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Section 53853 of the California Government Code provides an alternative program for issuance, under which qualifying school districts, community college districts and county boards of education participate in the simultaneous issuance of TRANS, with the proceeds pooled for sale and investment. Under such a program (a “Pooled TRANS”), the participating school districts themselves may issue the Notes in their own name without action of the Board of Supervisors if the County notifies the District that it will not be passing a resolution issuing the TRANS or does not adopt a resolution authorizing the issuance of the Notes within a specified time period of 45 days. In recent years, it has been the County’s practice to not take any action and allow the 45-day period to run, thereby permitting the schools districts to issue the notes in their own name after the expiration of such period.
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DISCUSSION:
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In order to allow a school district participating in a Pooled TRANS the opportunity to move forward without waiting for the 45-day period to expire, the County could notify the school district that it will not be passing a resolution regarding the issuance of the TRANS. Often the participating school districts take it upon themselves to ask the County for a letter acknowledging that the Board of Supervisors will not act to authorize the TRANS within the 45-day period. County Counsel, the Treasurer, and the County Manager recommend that this process of notification of non-action be used in connection with the current request of the San Mateo-Foster City School District regarding its participation in the California Education Notes Financing Program, and in connection with all future Pooled TRANS which this Board of Supervisors is asked to act upon. Subsection 53853(b) also provides: “No county board of supervisors, county treasurer, or county auditor shall be deemed to have any fiduciary responsibility with regard to any note or notes issued pursuant to this subdivision.”
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This action would authorize the County Manager to execute notifications of non-action by the Board
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FISCAL IMPACT:
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TRANS are not an obligation of the County and have no fiscal impact on the County.
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