455G.7  Security for bonds — capital reserve fund — irrevocable contracts.
  1.  a.  For the purpose of securing one or more issues of bonds for the fund, the treasurer of state, with the approval of the board, may authorize the establishment of one or more special funds, called “capital reserve funds”. The treasurer of state may pay into the capital reserve funds the proceeds of the sale of its bonds and other money which may be made available to the treasurer of state from other sources for the purposes of the capital reserve funds. Except as provided in this section, money in a capital reserve fund shall be used only as required for any of the following:
  (1)  The payment of the principal of and interest on bonds or of the sinking fund payments with respect to those bonds.
  (2)  The purchase or redemption of the bonds.
  (3)  The payment of a redemption premium required to be paid when the bonds are redeemed before maturity.
  b.  However, money in a capital reserve fund shall not be withdrawn if the withdrawal would reduce the amount in the capital reserve fund to less than the capital reserve fund requirement, except for the purpose of making payment, when due, of principal, interest, redemption premiums on the bonds, and making sinking fund payments when other money pledged to the payment of the bonds is not available for the payments. Income or interest earned by, or increment to, a capital reserve fund from the investment of all or part of the capital reserve fund may be transferred by the treasurer of state to other accounts of the fund if the transfer does not reduce the amount of the capital reserve fund below the capital reserve fund requirement.
  2.  If the treasurer of state decides to issue bonds secured by a capital reserve fund, the bonds shall not be issued if the amount in the capital reserve fund is less than the capital reserve fund requirement, unless at the time of issuance of the bonds the treasurer of state deposits in the capital reserve fund from the proceeds of the bonds to be issued or from other sources, an amount which, together with the amount then in the capital reserve fund, is not less than the capital reserve fund requirement.
  3.  In computing the amount of a capital reserve fund for the purpose of this section, securities in which all or a portion of the capital reserve fund is invested shall be valued by a reasonable method established by the treasurer of state. Valuation shall include the amount of interest earned or accrued as of the date of valuation.
  4.  In this section, “capital reserve fund requirement” means the amount required to be on deposit in the capital reserve fund as of the date of computation.
  5.  To assure maintenance of the capital reserve funds, the treasurer of state shall, on or before July 1 of each calendar year, make and deliver to the governor the treasurer of state’s certificate stating the sum, if any, required to restore each capital reserve fund to the capital reserve fund requirement for that fund. Within thirty days after the beginning of the session of the general assembly next following the delivery of the certificate, the governor may submit to both houses printed copies of a budget including the sum, if any, required to restore each capital reserve fund to the capital reserve fund requirement for that fund. Any sums appropriated by the general assembly and paid to the treasurer of state pursuant to this section shall be deposited in the applicable capital reserve fund.
  6.  All amounts paid by the state pursuant to this section shall be considered advances by the state and, subject to the rights of the holders of any bonds of the treasurer of state that have previously been issued or will be issued, shall be repaid to the state without interest from all available revenues of the fund in excess of amounts required for the payment of bonds of the treasurer of state, the capital reserve fund, and operating expenses.
  7.  If any amount deposited in a capital reserve fund is withdrawn for payment of principal, premium, or interest on the bonds or sinking fund payments with respect to bonds thus reducing the amount of that fund to less than the capital reserve fund requirement, the treasurer of state shall immediately notify the governor and the general assembly of this event and shall take steps to restore the capital reserve fund to the capital reserve fund requirement for that fund from any amounts designated as being available for such purpose.
89 Acts, ch 131, §48; 2010 Acts, ch 1193, §191, 195