2 Under Article 7, the following sections are set forth:
-- ¤ 35560 - Allocation of Funds, Property, and Obligations of Former District
-- ¤ 35561 - Fund Derived from Sale of School Bonds Issued by Former District
-- ¤ 35562 - Records of the Original District
-- ¤ 35563 - Responsibilities of County Superintendent of Schools Having
Jurisdiction Over the Original District; Aid of Employees
-- ¤ 35564 - Property, Funds, and Obligations of Student Body
-- ¤ 35565 - Disputes between Districts; Arbitration
-- ¤ 35566 - Exchanges of Property Tax Revenues between School Districts
3 For a detailed analysis of the Hayden Bill (SB 699), see the accompanying briefing papers on Equal Educational Opportunity Issues and Employment Issues.
4 See Cal. Const., art. I, section 9.
5 See generally E. Reutter, The Law of Public Education 107-111 (4th ed. 1994).
6 See id. at 108. See generally infra.
7 See, e.g., People ex rel. Raymond Community High School Dist., v. Bartlett, 304 Ill. 283, 136 N.E. 654 (1922). Reutter explains that this doctrine is based on the theory that "no district owns property in the true sense of the word and when it binds itself to pay for such property it incurs liability for state and not local purposes." See Reutter, supra note (4), at 109. See also Pass School Dist. v. Hollywood City School Dist., 156 Cal. 416, 105 P. 122 (1909).
8 See Reutter, supra note 5, at 109-110.
9 School Dist. No. 3 of Bloomfield Tp. v. School Dist. of Pontiac, 261 Mich. 352, 246 N.W. 145 (1933). See generally Amendment V, U.S. Constitution.
10 Protest of Missouri-Kansas-Texas Railroad Co., 181 Okl. 229, 73 P.2d 173 (1937).
11 See Reutter, supra note 5, at 110.
12 Lanpher v. Glenn, 37 Minn. 4, 33 N.W. 10.
13 Elkton Electric Co. v. Perkins, 145 Md. 224, 125 A. 851, 858.
14 Boyd v. Selma, 96 Ala. 144, 11 So. 393.
15 School district ledgers thus do not typically include real estate as a listed f outstanding bonded indebtedness, exclusive of interest, of the divided districts which is equal to the liability incurred by the acquiring district pursuant to Section 35576 shall be considered a liability of the acquiring district for purposes of computing bonding capacity of the district asset.
16 See supra.
17 18 Cal. 3d 728, 557 P.2d 929 (1976).
18 Interview with California State Department of Education officials Dan Reibson, Pat Chladek, and Mary Chenier, October 1996 [hereinafter Reibson, Chladek, and Chenier].
19 Id.
20 Cal. Educ. Code Section 35736.
21 Cal. Educ. Code Section 35561.
22 Reibson, Chladek, and Chenier, supra note 18.
23 See Cal. Educ. Code, Title 2, Division 3, Article 8, Chapter 3 (Sections 35570-35579).
24 Cal. Educ. Code Section 35570.
25 The framework of this statutory scheme is set forth in Section 35571, which provides:
When a school district is created, annexed, or abolished, or the boundaries thereof changed,
the liability to taxation for the outstanding bonded indebtedness of the district or the territory
affected thereby is as provided in this article. The authorities whose duty it is to levy taxes
for the payment of principal and interest on the outstanding bonds shall levy the taxes upon the
districts affected in such proportions as are provided in, or are determined under, the authority
of this article.
Note that this document does not address Section 35573, which provides a general rule regarding
mergers of districts. Such a rule which is not likely to apply in the event of either a breakup
pursuant to a master plan or a break-off.
26 Cal. Educ. Code Section 35572 provides, in pertinent, part:
No territory shall be taken from any school district having any outstanding bonded indebtedness
and made a part of another district where the action, if taken, would so reduce the last equalized
assessed valuation of a district from which the territory was taken that the outstanding bonded
indebtedness of the district would exceed 5 percent of the assessed valuation remaining in the
district for each level maintained, on the date the reorganization is effective...
27 Cal. Educ. Code Section 35574 provides:
Notwithstanding any other provision of this code, for the purposes of applying the State School
Building Aid Law of 1952, Chapter 8 (commencing with Section 16000) of Part 10, the amount of
outstanding bonded indebtedness, exclusive of interest, of the divided districts which is equal
to the liability incurred by the acquiring district pursuant to Section 35576 shall be considered a
liability of the acquiring district for purposes of computing bonding capacity of the district..
28 Cal. Educ. Code Section 35575.
29 Under Cal. Educ. Code Section 35576, the following detailed statutory framework is set forth for
the division of bonded indebtedness when territory transferred from one district to another
contains public school buildings or property:
[T]he district to which the territory is annexed shall take possession of the building and equipment
on the day when the annexation becomes effective for all purposes. The territory transferred shall
cease to be liable for the bonded indebtedness of the district of which it was formerly a part and
shall automatically assume its proportionate share of the outstanding bonded indebtedness of any
district of which it becomes a part.
(b) The acquiring district shall pay the original district the greatest of the amounts determined
under provisions of paragraphs (1) or (2) or the amount determined pursuant to a method
prescribed under Section 35738.
(1) The proportionate share of the outstanding bonded indebtedness of the original district,
which proportionate share shall be in the ratio which the total assessed valuation of the
transferring territory bears to the total assessed valuation of the original district in the
year immediately preceding the date on which the annexation is effective for all purposes.
This ratio shall be used each year until the bonded indebtedness for which the acquiring district
is liable has been repaid.
(2) That portion of the outstanding bonded indebtedness of the original district which was
incurred for the acquisition or improvement of school lots or buildings, or fixtures located
therein, and situated in the territory transferred....
30 Cal. Educ. Code Section 35577 provides:
Whenever an existing school district having authorized but unsold bonds is completely divided
between two or more districts so that the existing district ceases to exist, pursuant to any
provision of this chapter, the board of supervisors shall, prior to the date the action is effective
for the purposes of Section 35534, make and enter an order in the minutes of its proceedings that
the authorization to issue the unsold bonds be divided between the districts in the ratio which the
assessed valuation of the territory transferred to the districts bears to the total assessed
valuation of the former district. The bonds, if issued by any new district, shall be considered
a liability of the new district for purposes of computing the bonding capacity of the new district
when applying the State School Building Aid Law of 1952, Chapter 8 (commencing with Section 16000)
of Part 10.
31 Cal. Educ. Code Section 35578 provides:
Any unsold bonds of an elementary, high, or unified school district which is included as a whole in
a new school district through any kind of reorganization may be issued by the board of supervisors
in the name of the new district and the proceeds derived upon the sale thereof shall be the
funds of the new district. However, the proceeds derived upon the sale thereof shall be expended
only for the purpose, or purposes, for which such bonds were authorized.
32 See attached document addressing employment issues for more details in this regard.
33 See generally U.S. Const., Art. I, Section 10. See also Cal. Const., art. I, section 9.
34 For this rule to apply, the unanticipated event must be one whose nonoccurrence was a basic assumption on which the contract was made, and performance must have been rendered highly impracticable. See, e.g., Uniform Commercial Code Section 2-615.
35 See, e.g., Rest. 1st of Contracts, Section 460.
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