CHAPTER 1. ADMINISTRATION OF COMMON SCHOOL FUND BY COUNTY
IC 20-42
ARTICLE 42. FIDUCIARY FUNDS AND ACCOUNTS
IC 20-42-1
Chapter 1. Administration of Common School Fund by County
IC 20-42-1-1
Application
Sec. 1. This chapter applies to a county that has not:
(1) transferred the money in the county's fund to the debtservice funds of the school corporations in the county undersection 5 of this chapter, IC 21-2-4-5 (before its repeal), or apredecessor law; or
(2) surrendered the money in the county's fund to the treasurerof state under section 6 of this chapter, IC 21-1-3-1 (before itsrepeal), or a predecessor law.
As added by P.L.2-2006, SEC.165.
IC 20-42-1-2
"Fund"
Sec. 2. As used in this chapter, "fund" refers to a common schoolfund administered by a county.
As added by P.L.2-2006, SEC.165.
IC 20-42-1-3
Sources of fund
Sec. 3. The funds that:
(1) before March 6, 1865, were:
(A) known and designated as the surplus revenue funds;
(B) appropriated to common schools;
(C) known and designated as the saline fund;
(D) known and designated as the bank-tax fund;
(E) derived from the sale of county seminaries and propertybelonging to county seminaries or after March 5, 1865, arederived from the sale of county seminaries and propertybelonging to county seminaries; or
(F) money and property held for county seminaries;
(2) are derived from fines assessed for breaches of the penallaws of the state;
(3) are derived from forfeitures that accrue;
(4) are derived from lands and other estate that escheat to thestate for want of heirs or kindred entitled to the inheritance ofthe lands or other estate;
(5) are derived from lands that:
(A) were granted before March 6, 1865; or
(B) are granted after March 5, 1865;
to the state, if no special object is expressed in the grant;
(6) are derived from the proceeds of the sales of the swamplands granted to the state of Indiana by the act of Congress ofSeptember 1850; (7) are derived from the taxes that are assessed periodicallyupon the property of corporations for common school purposes;and
(8) are derived from the one hundred and fourteenth section ofthe charter of the state bank of Indiana;
constitute the common school fund.
As added by P.L.2-2006, SEC.165.
IC 20-42-1-4
Prohibition on reducing principal of fund
Sec. 4. Subject to sections 5, 6 and 9 of this chapter, the fund shallnever be diminished in amount.
As added by P.L.2-2006, SEC.165.
IC 20-42-1-5
Transfer of fund balance to debt service fund
Sec. 5. Any balance remaining in a fund shall be transferred to thedebt service funds of the school corporations in the county. Theamount transferred may be appropriated and paid to a schoolcorporation's general fund.
As added by P.L.2-2006, SEC.165.
IC 20-42-1-6
Transfer of custody of fund balance to state
Sec. 6. (a) A county council may adopt a resolution to:
(1) elect to surrender the custody of the fund; and
(2) order the board of county commissioners, the countyauditor, and the county treasurer to take any and all stepsnecessary to surrender the custody of a fund held in trust by thecounty.
If the county council adopts a resolution under this section, theamount of money distributed to and held in trust by the county is dueand payable to the treasurer of state. A county council may electwhether the county shall surrender all or any part of the fund. If thecounty retains custody of any money in the fund, the county shallloan the money as otherwise provided by law. Any part of the moneyin the fund surrendered by the county shall be paid to the treasurerof state immediately after the election by the county council.
(b) Within ten (10) days after the passage of the resolution by acounty council of a county electing to surrender the custody of thefund, the county auditor shall prepare and file with the board ofcommissioners of the county a report showing the following:
(1) The total amount of the fund that has been entrusted to andis held in trust by the county.
(2) The total amount of the funds that is loaned as provided bylaw.
(3) The total amount of the fund, if any, loaned to the countyand which loans are unpaid.
(4) The total amount of the fund held in cash in the possessionand custody of the county and that is not loaned. (5) A separate schedule of past due loans. The schedule mustshow the unpaid balance of principal and the amount ofdelinquent interest due and unpaid on each delinquent loan.
(c) The board of county commissioners shall examine the reports,and, if found correct, the board of county commissioners shall order:
(1) that the report be entered on its records; and
(2) the county auditor to draw the county auditor's warrant,payable to the treasurer of state, for the amount of the fund thatis not loaned and is held in cash in the custody and possessionof the county as shown by the report.
The county auditor shall forward the warrants to the auditor of statetogether with a certified copy of the report. The county auditor shallalso forward with the payment a certified copy of the resolution ofthe county council electing to surrender the custody of the fund orany part of the fund.
(d) After passage by the county council of a resolution electing tosurrender the custody of the funds, no part of the fund that is in thecustody of the county may be loaned by the county or by any officialof the county. Except as provided in this subsection, all outstandingloans of the fund at the time of the passage of the resolution shall becollected when due. Any loan that comes due and payable after thepassage of the resolution may be renewed for one (1) additional five(5) year period, on the application of the person owing the loan asprovided by law. However, a loan that is more than one (1) yeardelinquent in payment of principal or interest at the time of thepassage of the resolution of the county council may not be renewed.
(e) On:
(1) May 1 or November 1 immediately after the passage of theresolution electing to surrender the fund; and
(2) each May 1 and November 1 thereafter;
all the money collected and on hand that belongs to the fund shall bepaid to the treasurer of state. If at the time for a semiannual paymentthe amount collected and paid to the treasurer of state when added tothe amounts previously paid to the treasurer of state is less than theresult determined by multiplying one-fortieth (1/40) of the amount ofthe fund held in trust at the time of the passage of the resolution bythe number of semiannual payments that have occurred after thepassage of the resolution, the county auditor shall draw the countyauditor's warrant on the general fund of the county for an amountsufficient to pay to the treasurer of state the difference between theamount paid and the amount equal to the result of multiplyingone-fortieth (1/40) of the amount of the fund held in trust at the timeof the passage of the resolution by the number of semiannualpayments that have occurred after the passage of the resolution.
(f) At the same time and in the same manner, there shall be paidto the treasurer of state interest to the date of the semiannual paymenton the balance of the funds held in trust by the county from theimmediately preceding October 31 or April 30 at the rate fixed bylaw. Whenever within the preceding six (6) months any payment ofthe fund has been made by the county to the treasurer of state, the
county shall also pay interest at the rate fixed by law on the amountof the payment to the date of receipt of the payment by the treasurerof state. If the amount collected as interest on the fund is notsufficient to make payment of interest to the treasurer of state, thecounty auditor shall draw the county auditor's warrant on the generalfund of the county for an amount sufficient when added to theamount collected as interest on the fund to pay the interest due to thestate.
(g) The board of county commissioners shall, in its annual budgetestimate, include an estimate of the amount necessary to make thepayments from the county general fund as required by this section,and the county council shall appropriate the amount of the estimate.
(h) A county is subrogated to all the rights and remedies of thestate with respect to loans made from a fund held in trust by thecounty to the extent of any and all payments made from the countygeneral fund under this chapter.
As added by P.L.2-2006, SEC.165.
IC 20-42-1-7
County liability for fund
Sec. 7. A county shall be held liable for the:
(1) preservation of the part of the fund as is entrusted or hasbeen entrusted to the county; and
(2) payment of the annual interest on the fund at the rateestablished by law.
As added by P.L.2-2006, SEC.165.
IC 20-42-1-8
Deposit of interest in fund
Sec. 8. The payment of annual interest must be full and completeevery year. The payment must appear in the county auditor's reportto the state superintendent. The state superintendent shall, at anytime when the state superintendent discovers from the report, orotherwise, that there is a deficit in the amount collected, for want ofprompt collection or otherwise, direct the attention of the board ofcounty commissioners and the county auditor to the fact. The boardof commissioners shall provide for the deficit in their respectivecounties.
As added by P.L.2-2006, SEC.165.
IC 20-42-1-9
Required transfer of revenue to state
Sec. 9. (a) This section does not apply to a fund entrusted to acounty before November 1, 1851.
(b) Loans may not be made of the principal of the common schoolfunds held in trust by the several counties of the state. Each countyauditor and treasurer shall forward semiannually all payments madeand all interest collected on any loan made before March 7, 1953, byany county from the fund, to the treasurer of state. The amounttransferred to the treasurer of state must be held under IC 20-49-3.As added by P.L.2-2006, SEC.165.
IC 20-42-1-10
Loans; required interest rate
Sec. 10. Subject to section 9 of this chapter, the:
(1) principal belonging to a fund; and
(2) accumulations to the principal of a fund held by a county;
must be loaned at four percent (4%) per annum. Loans made beforeJune 1, 1943, with a rate of interest higher than four percent (4%) perannum must have an interest rate of four percent (4%) per annum.
As added by P.L.2-2006, SEC.165.
IC 20-42-1-11
Minimum balance; loans; maximum term
Sec. 11. In a county where the total amount in the:
(1) fund; or
(2) congressional township school fund;
accumulates to the amount of at least one thousand dollars ($1,000),a county may borrow and use the funds or any part of the funds forany lawful purpose for a period not exceeding five (5) years.
As added by P.L.2-2006, SEC.165. Amended by P.L.162-2006,SEC.40.
IC 20-42-1-12
Form of loan agreement
Sec. 12. (a) If a county council borrows funds under this chapter,the county council shall adopt an ordinance specifying the amount ofthe funds to be borrowed and specify the time for which the loan willbe made. The board of county commissioners shall execute to thestate of Indiana for the use of the funds a written obligation, executedby the board of county commissioners and attested by the countyauditor, that specifies the following:
(1) The facts under which the written obligation is executed.
(2) The sum of money borrowed.
(3) The time when the money will be repaid to the fund by thecounty.
(b) The obligation must be deposited with the county auditor ofthe county. The county auditor shall retain the obligation and recordentries concerning the loans. The provisions of IC 6-1.1-20concerning the loan to the county from the school funds apply to thissection.
As added by P.L.2-2006, SEC.165.
IC 20-42-1-13
Distribution of loaned amount from fund
Sec. 13. After the obligation is deposited with the county auditorunder section 12 of this chapter, the county auditor shall issue awarrant to the county treasurer, to be paid to the county for theamount of money specified in the ordinance and obligation. Whenthe warrant is presented to the county treasurer, the treasurer shall
transfer from the fund the amount contained in the warrant from theprincipal sum of the fund to the credit of the county revenue of thecounty. Funds transferred under this section become a part of thegeneral revenue funds of the county.
As added by P.L.2-2006, SEC.165.
IC 20-42-1-14
Investments
Sec. 14. (a) If the funds remain in the county treasury of thecounty for four (4) months without having been loaned under thischapter, upon the request of the county auditor, the board of countycommissioners may, by an order entered of record, direct the countytreasurer to invest the funds in:
(1) bonds, notes, certificates, and other valid obligations of theUnited States; and
(2) bonds, notes, debentures, and other securities issued by anyfederal instrumentality that are fully guaranteed by the UnitedStates.
(b) If it becomes necessary to obtain the funds invested in thegovernment bonds under subsection (a) to be able to make a loan toany borrower, whose application has been approved and granted, thetreasurer shall sell, at the earliest opportunity, a sufficient amount ofthe government bonds to make the loan.
As added by P.L.2-2006, SEC.165.
IC 20-42-1-15
Receipts for payment of principal or interest on loan
Sec. 15. (a) All payments of principal or interest must be paid tothe county treasurer. The:
(1) county treasurer shall file a receipt with the county auditor;and
(2) county auditor shall give the payor a receipt and record thepayment.
(b) The county auditor may accept payment of principal or interestif the county auditor can immediately transmit and pay the paymentto the county treasurer.
As added by P.L.2-2006, SEC.165.