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Purd y, Taryn 112.G323 Update on school 73usbl bonding Issues 991 332.6323 L73usbi 1991 STATE OF MONTANA LJffLcs oj tns -J^£gLiLatL'Js J'ii.caL c/rnaLtjiLt STATE CAPITOL HELENA. MONTANA 59620 "'> ~i I.. 406/444-2986 ^. r \J i\i\ TERESAOLCOTTCOHEA i LEGISLATIVE FISCALANALYST Septembers, 1991 STATT DOCUMEiJTS COLLECTION JAN 1 ;: -[99^ MONTANA STATE LlfiRARY TO: Legislative Finance Committee 1515 E. 6th AVE. HELENA, MONTANA 59620 FROM: Taryn Purdy "^Wv^J Senior Fiscal Analyst RE: Update on School Bonding Issues This short memo is to update the committee on recent developments in the school bonding issue. In May 1991, a reprcsentativp of Dorspy and Whitney, a major bond counsel firm, slated that the firm could not give an unqualified opinion on school bond issuer! sold under current statutes after June 30, 1991 (the expiration date of the court's suj^plementary ruling) without a declaratory judgement by the Montana Suprdite Court that the bonds were valid under current statutes. At its June 14 meeting, the Legislative Finance Committee unanimously passed a motion requesting the Governor and the Attorney General to "...proceed with all speed to take the appropriate actions necessary to resolve this issue." On June 28, the Attorney General and the Office of Public Instruction filed a motion requesting the Montana Supreme Court to declare bonds issued after July 1, 1991 valid obligations of the school districts. Two responses to the state's request have been filed with the court: 1) James Goetz on behalf of a coalition of school districts opposing the request, stating that a court of competent jurisdiction had already declared the method of funding capital outlay unconstitutional and that if the court took no action on the request it might "...press the Montana Legislature to deal with the problem"; and 2) the Plentywood elementary and high school districts, which did not oppose the state's request but asked that the court state that districts may "seek state reimbursement of all or part of any instruments issued after July 1, 1991 by filing appropriate action therefor." The Plentywood high school burned last winter and the district has been unable to secure financing to replace the structure. The state's supplemental memorandum to the court in answer to both responses is attached, with key passages marked. The court has not yet announced a decision. When the committee last met, there was a possibility that other covinsel might render an opinion on the validity of proposed bond issues. However, the firm in question has indicated they will not provide this service. Consequently, the firm of Dorsey and Whitney remains the only counsel in the state offering opinions on the validity of school bonds. TP3:pe:LFC9-3.mem