Section 35561 Of Article 7. Disposition Of Records, Funds, Property, And Obligations When Reorganized From California Education Code >> Division 3. >> Title 2. >> Part 21. >> Chapter 3. >> Article 7.

. Any funds derived from the sale of the school bonds issued by the former district shall be used for the acquisition, construction, or improvement of school property only in the territory which comprised the former district or to discharge bonded indebtedness of the former district, except that if the bonded indebtedness is assumed by the new district, the funds may be used in any area of the new district for the purposes for which the bonds were originally voted.