Measure No. 54

Explanatory Statement

Legislative Argument

Arguments in Favor

Arguments in Opposition

Measure Contents Page

House Joint Resolution 71--Referred to the Electorate of Oregon by the 1997 Legislature to be voted on at the General Election, November 3, 1998.

BALLOT TITLE

54

AMENDS CONSTITUTION: AUTHORIZES STATE TO GUARANTEE BONDED INDEBTEDNESS OF CERTAIN EDUCATION DISTRICTS

RESULT OF "YES" VOTE: "Yes" vote authorizes state to guarantee general obligation bonds issued by certain education districts.
RESULT OF "NO" VOTE: "No" vote retains prohibition against state guarantee of general obligation bonds issued by education districts.
SUMMARY: Constitution now generally prohibits state from creating debt over $50,000 or lending its credit. Measure amends constitution permitting state to guarantee general obligation bonded indebtedness of school districts, education service districts, community college districts. Limits amount state can guarantee to 1/2 of one percent of true cash value of taxable property in state. State may issue bonds, borrow from Common School Fund to satisfy obligation. Legislature must enact statutes authorizing state to recover from district payments made to satisfy state's guarantee of district debt.
ESTIMATE OF FINANCIAL IMPACT: Reduced interest and issuance costs on indebtedness by participating school districts, education service districts and community college districts are estimated to be $70 million over the next 20 years under this measure. This estimate is based on current levels of bond issuance. There is no financial effect on state government revenues or expenditures.

TEXT OF MEASURE

Be It Resolved by the Legislative Assembly of the State of Oregon:

PARAGRAPH 1. The Constitution of the State of Oregon is amended by creating a new Article to be known as Article XI-K and to read:

ARTICLE XI-K

SECTION 1. To secure lower interest costs on the general obligation bonds of school districts, education service districts and community college districts, the State of Oregon may guarantee the general obligation bonded indebtedness of those districts as provided in sections 2 to 6 of this Article and laws enacted pursuant to this Article.

SECTION 2. In the manner provided by law and notwithstanding the limitations contained in sections 7 and 8, Article XI of this Constitution, the credit of the State of Oregon may be loaned and indebtedness incurred, in an amount not to exceed, at any one time, one-half of one percent of the true cash value of all taxable property in the state, to provide funds as necessary to satisfy the state guaranty of the bonded general obligation indebtedness of school districts, education service districts and community college districts that qualify, under procedures that shall be established by law, to issue general obligation bonds that are guaranteed by the full faith and credit of this state. The state may guarantee the general obligation debt of qualified school districts, education service districts and community college districts and may guarantee general obligation bonded indebtedness incurred to refund the school district, education service district or community college district general obligation bonded indebtedness.

SECTION 3. The Legislative Assembly may provide that reimbursement to the state shall be obtained from, but shall not be limited to, moneys that otherwise would be used for the support of the educational programs of the school district, the education service district or the community college district that incurred the bonded indebtedness with respect to which any payment under the state's guaranty is made.

SECTION 4. The State of Oregon may issue bonds if and as necessary to provide funding to satisfy the state's guaranty obligations undertaken pursuant to this Article. In addition, notwithstanding anything to the contrary in Article VIII of this Constitution, the state may borrow available moneys from the Common School Fund if such borrowing is reasonably necessary to satisfy the state's guaranty obligations undertaken pursuant to this Article. The State of Oregon also may issue bonds if and as necessary to provide funding to repay the borrowed moneys, and any interest thereon, to the Common School Fund. The bonds shall be payable from any moneys reimbursed to the state under section 3 of this Article, from any moneys recoverable from the school district, the education service district or the community college district that incurred the bonded indebtedness with respect to which any payment under the state's guaranty is made, any other funds available for these purposes and, if necessary, from state ad valorem taxes.

SECTION 5. Bonds of the state issued pursuant to this Article shall be the direct obligations of the state and shall be in such form, run for such periods of time and bear such rates of interest as shall be provided by law. The bonds may be refunded with bonds of like obligation.

SECTION 6. The Legislative Assembly shall enact legislation to carry out the provisions of this Article, including provisions that authorize the state's recovery, from any school district, education service district or community college district that incurred the bonded indebtedness with respect to which any payment under the state's guaranty is made, any amounts necessary to make the state whole. This Article shall supersede all conflicting constitutional provisions and shall supersede any conflicting provision of any law, ordinance or charter pertaining to any school district, education service district or community college district.

PARAGRAPH 2. The amendment proposed by this resolution shall be submitted to the people for their approval or rejection at the next regular general election held throughout this state.

NOTE: Boldfaced type indicates new language; [brackets and italic] type indicates deletions or comments.


EXPLANATORY STATEMENT

Measure 54 amends the Oregon Constitution by creating Article XI-K related to the state's guarantee of general obligation bonds issued by local education districts for the purpose of securing lower interest costs on the bonds.

Measure 54 allows the state to guarantee the payment of general obligation bonds issued by qualified school districts, community college districts and education service districts. The state's guarantee would not alter a district's responsibility to repay its own bonds. The measure would not change voter approval or other requirements districts currently have to meet to issue general obligation bonds.

The Oregon Constitution generally prohibits the state from lending its credit or creating debt or liabilities that exceed $50,000. The measure creates an exception to these prohibitions.

Measure 54 allows the state to pay the guaranteed indebtedness by using available state funds, borrowing from the Common School Fund or issuing state bonds. The measure further allows the state to issue bonds to reimburse moneys borrowed from the Common School Fund. The measure limits the amount of the state bonds that may be issued to one-half of one percent of state taxable property value.

Measure 54 allows for reimbursement to the state for any state or district bond payments from:

  1. State funds allocated to the district education programs;
  2. Recoverable district funds;
  3. Any other funds available for these purposes; and
  4. If necessary, a state property tax.

Measure 54 directs the Legislative Assembly to enact legislation to carry out the provisions of the Article.
Committee Members:Appointed By:
Senator Verne DuncanPresident of the Senate
Representative Randall EdwardsSpeaker of the House
Bridget BartonSecretary of State Senator
Lenn HannonSecretary of State
Kathleen BeaufaitMembers of the Committee

(This committee was appointed to provide an impartial explanation of the ballot measure pursuant to ORS 251.215.)


LEGISLATIVE ARGUMENT IN SUPPORT

VOTE YES TO BENEFIT SCHOOLS AND TAXPAYERS

Measure 54 gives qualified districts the same bond rate as the state to:

Measure 54 applies to new voter approved bonds issued by

Measure 54

MEASURE 54 LOWERS SCHOOL BOND INTEREST RATES

VOTE YES ON MEASURE 54
Committee Members:Appointed By:
Senator Verne DuncanPresident of the Senate
Representative Randall EdwardsSpeaker of the House
Representative Ken StrobeckSpeaker of the House

(This Joint Legislative Committee was appointed to provide the legislative argument in support of the ballot measure pursuant to ORS 251.245.)

ARGUMENT IN FAVOR

Ballot Measure 54 Saves Schools and
Community Colleges Money

As Oregon school districts and community colleges attempt to deliver cost-effective services in an increasingly difficult revenue-raising environment, they are eagerly seeking savings and
efficiencies. One example of increased efficiency is the Oregon School Bond Guaranty Act, which I introduced and was passed during the 1997 Legislative session.

In my capacity as State Treasurer I have the opportunity to interact with other states and glean the best of the best in ideas from other states. Measure 54 is one of those ideas. If Measure 54 is approved, Treasury estimates Oregon school districts and community colleges could save over $69 million in the next 20 years by allowing the state to pledge its full faith and credit to guarantee, voter approved, qualified general obligation bonds of participating school districts, education service districts and community colleges.

The Legislative Revenue office says: The Oregon School Bond Guaranty Act "Reduces property taxes due to savings on bond interest."

This Measure is before voters because the State Constitution must be amended to obtain the legal authority to allow the state to guarantee school districts', voter approved, general obligation bonds with the state's AA credit rating. The state's guarantee would not alter a district's responsibility to pay it's own bonds or would it change voter approval or other requirements districts currently need to issue general obligation bonds. Treasury has no record of any school district or community college in Oregon ever defaulting on a general obligation bond.

This program is purely optional on the part of the district. It is a sound and responsible program to use voter approved tax dollars more efficiently. I urge your support.

(This information furnished by Jim Hill, Oregon State Treasurer

(This space purchased for $300 in accordance with ORS 251.255.)
The printing of this argument does not constitute an endorsement by the State of Oregon, nor does the state warrant the accuracy or truth of any statement made in the argument.

ARGUMENT IN OPPOSITION

NO ARGUMENTS IN OPPOSITION TO THIS BALLOT
MEASURE WERE FILED WITH THE SECRETARY OF STATE.