Opinion Letter No. 9-76

"Is a board of education that has authorized the borrowing of funds for the use of the district under provisions of section 165.131, RSMo, required to repay the loan within the calendar year in which the loan was made?

"Prior to July 1, 1974, school districts, other than urban districts, had no statutory authority to issue tax anticipation notes. However, the Missouri Supreme Court held in First National Bank of Stoutland v.Stoutland School District R-II (319 S.W. 2d570) that all districts not authorized to issue tax anticipation notes could borrow money by virtue of a self-enforcing provision of the Missouri Constitution. However, such a loan would have to be repaid during the calendar year in which the loanwas made."

"The board of education of any school district in this state, upon a vote of a)majority of the members of the board, may borrow funds for the use of the various funds of the district, including the debt service fund, and may issue negotiable notes in evidence thereof, payable out of the rewenues derived from school taxes, for the purposes of the funds of any year in which the notes are issued. The notes may be issued at anytime or from time to time between June thirtieth and December thirty first in any year. A separate note shall be issued to evidence the borrowing for the benefit of each fund, and shall bear on its face appropriate reference to or designation of the fund for the use of which the funds evidenced by the note are borrowed. The aggregate principal amountof the notes issued in any year for the use or benefit of any fund shall not exceed fifty percent of the amount of the school board's estimate of the requirements for the fund and of the tax required to be levied for -'[the pur-poses made for such year, including,, } however,the amount to be derived from any increases in rate of levy authorized by the electors of the district. The notes shall be payable in not to exceed six months from date of issue, and may bear interest at a rate not to exceed four percent per annum, payable at maturity. The proceeds of the notes shall be placed to the credit of the respective funds for the use and benefit of which the borrowing was made, as evidenced by the notes, and subject to the right to make transfers from and to funds as otherwise permitted by law, the proceeds of the notes shall be used and expended only in payment of the expenses and obligations properly payable from the funds respectively, and incurred or to be incurred against the funds during the year for the expenses of the year, or in payment of principal and interest on the notes. The notes may be payable to bearer or to the order of a named payee, and may be in substantially the following form:

TAX ANTICIPATION NOTE FOR FUND

School District ________ of County ________, State of Missouri No. ________ Date of issue ________ $________ The ________ School District of ________ County, Missouri, will pay on ________ at the office of the Treasurer of said School District, or at the ________ Bank in ________ to (bearer; or ________ or order), the sum of ________ with interest thereon from date of issue at the rate of ________ % per annum, payable at maturity, out of funds derived from taxes for school purposes for the ________ fund, for the school year beginning July 1, 19,upon due and proper endorsement and presentment hereof.

THE ________ SCHOOL DISTRICT BY ________ President

ATTEST: ________
Clerk or Secretary"