Pennsylvania Statutes Title 24 P.S. Education § 6-636.1. Approval of unfunded debt in certain distressed school districts

(a) Notwithstanding any other provision of law, the governing body of a distressed school district may approve the issuance of bonds or notes to fund unfunded debt of the school district if the governing body finds all of the following:

(b) In addition to the requirements of 53 Pa.C.S. § 8111 (relating to submission to department), a governing body authorizing bonds or notes under subsection (a) shall include certified copies of the findings of the governing body made pursuant to subsection (a) with the copy of the proceedings certified to the Department of Community and Economic Development under 53 Pa.C.S. § 8201 (relating to certification to department of bond or note transcript or lease, guaranty, subsidy contract or other agreement).

(c) Bonds or notes authorized in accordance with subsection (a) shall be stated to mature or be subject to mandatory redemption in the principal amounts and over the number of years, not to exceed thirty (30) years, as the governing body finds will allow for the payment of the bonds or notes without endangering student health or safety and public education or requiring the levying of excessive taxes.

(d) Except as provided in this section, bonds or notes authorized in accordance with subsection (a) shall be issued and sold by a distressed school district in accordance with provisions of 53 Pa.C.S. Pt. VII Subpt. B  1 (relating to indebtedness and borrowing).

(e) The amount by which payments appropriated and paid by a city of the first class to a distressed school district in the fiscal year in which the declaration of distress was issued exceed the payments appropriated and paid by the city to the distressed school district in the immediately preceding fiscal year shall be excluded in determining the obligations of the city to make payments to the distressed school district under section 696(h). 2

(f) Subsections (a) and (b) of 53 Pa.C.S. § 8022 (relating to limitations on incurring of other debt) shall not apply to bonds or notes authorized in accordance with subsection (a).

(g) This section shall provide the exclusive method for the issuance of bonds and notes to fund unfunded debt of a distressed school district.

(h) The Pennsylvania Supreme Court shall have exclusive jurisdiction to hear any challenge to or to render a declaratory judgment concerning this section. The Supreme Court is authorized to take any action it deems appropriate, consistent with the Supreme Court retaining jurisdiction over the matter, to find facts or to expedite a final judgment in connection with a challenge or request for declaratory relief.

(i) Subsections (a) and (g) shall expire July 1, 2003.

(j) The following words and phrases when used in this section shall have the meanings given to them in this subsection unless the context clearly indicates otherwise:

“Distressed school district.”A school district of the first class which has been declared to be distressed by the Secretary of Education under section 691. 3

“Governing body.”A school reform commission established in accordance with section 696(a) or the commission's successor.

“Unfunded debt.”Obligations, including tax anticipation notes, of a distressed school district incurred for current expenses; obligations of a distressed school district for expenses included in a budget adopted on or before June 30, 2003, which are to become due and owing; or judgments against a distressed school district entered by a court after adversary proceedings; if the taxes and other revenues remaining to be collected in the current fiscal year or to be collected in the ensuing fiscal years and the funds on hand will not be sufficient for payment of the obligations or judgments without endangering student health or safety and public education and the distressed school district either may not legally levy a sufficient tax for the balance of the fiscal year or a sufficient tax, if legally leviable, would not be in the public interest. The term excludes debt incurred under or obligations in respect of a project or part of a project as incurred in respect of the cost of a project as defined in 53 Pa.C.S. Pt. VII Subpt. B.