Article 2. Issuance Of Bonds To Finance The Program of California Government Code >> Division 4. >> Title 2. >> Part 3. >> Chapter 8. >> Article 2.

The committee is authorized and empowered, for and in the name and on behalf of the state, to do all of the following:
  (a) Upon the request of the Director of Finance, and following receipt of the determination of the Director of Finance pursuant to Section 16941, issue taxable or tax-exempt bonds for the purpose of funding or refunding pension obligations, paying related costs and ancillary obligations, or refunding any bonds previously issued pursuant to this chapter.
  (b) Execute debentures or other instruments evidencing the pension obligations.
  (c) Enter into ancillary obligations and other contracts deemed necessary by the committee in connection with any bonds issued under this chapter.
  (d) Establish the terms and conditions for the program undertaken pursuant to this chapter.
  (e) Employ or contract for legal, consulting, underwriting, or other services in connection with the program as may be necessary in the judgment of the committee, as approved by the Treasurer, as agent for sale of the bonds, for the successful financing of the program and the issuance and sale of bonds.
  (f) In addition to the powers specifically granted in this chapter, do all things necessary or convenient, including delegation of necessary duties to the Director of Finance, as chairperson, and to the Treasurer, as agent for sale of the bonds, to carry out the purposes of this chapter.

Every issue of bonds, and any ancillary obligation entered into with respect to those bonds, shall be a debt and liability of the state payable from the General Fund of the state or, in the case of bond anticipation notes, payable from the proceeds of bonds to be issued pursuant to this chapter.

(a) The cumulative amount of outstanding bonds issued pursuant to this chapter may not exceed the lesser of (1) the sum of two billion dollars ($2,000,000,000); or (2) the amount which, when added to all anticipated interest and related costs of the bonds, does not exceed the anticipated reduction of the state's pension obligations as a result of changes in the retirement law that reduce contributions to the retirement system, as determined by the Director of Finance.
  (b) Notwithstanding subdivision (a), the cumulative amount of bonds issued pursuant to this chapter in any one fiscal year may not exceed the total unpaid amount of the state's pension obligations for that fiscal year.
  (c) Bonds may be issued pursuant to this chapter in any two fiscal years after June 30, 2004, but may not be issued in any more than two fiscal years.

(a) The resolution, certificate, or other instrument of the committee authorizing the issuance of the bonds may provide, or the committee may delegate to the Treasurer, as agent for sale of the bonds, responsibility to determine, any or all of the following for the bonds:
  (1) The form of the bonds, which may be issued as serial bonds, term bonds, or installment bonds, or any combination of those.
  (2) The date to be borne by any bonds.
  (3) The time of maturity of any bonds, which maturities may be before or after the term of the related pension obligation to be funded or refunded.
  (4) The interest, fixed or variable, to be borne by the bonds.
  (5) The time that the bonds shall be payable.
  (6) The denominations, form, and registration privileges of the bonds.
  (7) The manner of execution of the bonds.
  (8) The place the bonds are payable, which may include any paying agent within or outside of the state.
  (9) The terms of redemption of the bonds.
  (10) The establishment of funds and accounts to be held by a trustee to provide for payment or security for the bonds or ancillary obligations or related costs.
  (11) Any other terms and conditions deemed necessary by the committee.
  (b) Pursuant to Section 5702, the Treasurer shall serve as agent for the offer and sale of the bonds. The bonds may be sold at either a competitive or negotiated sale, at times and at prices, for consideration, and with all other terms and conditions as the Treasurer, in his or her capacity as agent for sale of the bonds, shall determine.
  (c) The Treasurer is authorized to invest or direct the investment of any amounts held in trust for payment of the bonds in any securities or obligations authorized pursuant to Chapter 3 (commencing with Section 16430) of Part 2, as amended from time to time.

The proceeds of the bonds shall be applied to the funding or refunding of pension obligations, or refunding of bonds previously issued under this chapter, together with all costs of issuing the bonds and refunding pension obligations or prior bonds and the costs of any ancillary obligation. Notwithstanding Sections 20822 and 20824, or any other provision of law, the proceeds of the bonds may be applied to the prepayment of pension obligations.

When proceeds of bonds issued pursuant to this chapter are used to pay the state's pension obligations to the retirement system for members whose compensation is paid from a fund other than the General Fund, the Controller shall, notwithstanding any other provision of law, transfer quarterly from the special fund or nongovernmental cost fund to the General Fund an amount equal to the quarterly pension obligations paid from bond proceeds with respect to those members, as certified by the Director of Finance and authorized in any appropriation item or in any category thereof.

When proceeds of bonds issued pursuant to this chapter are used to pay the state's pension obligations to the retirement system for members whose compensation is paid from the General Fund, the Controller shall, notwithstanding any other provision of law, abate quarterly to the General Fund an amount equal to the quarterly pension obligations paid from bond proceeds with respect to those members, as certified by the Director of Finance and authorized in any General Fund appropriation item or in any category thereof.

In the discretion of the committee, any bonds issued under this chapter may be secured by a trust agreement, indenture, or resolution between the state and any trustee, which may be the Treasurer or any trust company or bank having the powers of a trust company chartered under the laws of any state or the United States and designated by the Treasurer. The trust agreement, indenture, or resolution may contain provisions for protecting and enforcing the rights and remedies of the bond owners as may be reasonable and not in violation of law. Any trust agreement, indenture, or resolution may set forth the rights and remedies of the bond owners and of the trustee and may restrict the individual right of action by bond owners. In addition to the foregoing, any trust agreement, indenture, or resolution may contain other provisions as the committee may deem reasonable for the security of the bond owners, including, but not limited to, provisions specifying the date or dates on which debt service payments on the bonds shall be transferred to the trustee. Any trust accounts created by the trust agreement, indenture, or resolution may be held outside the State Treasury.

The committee may provide for the issuance of bonds any portion of which is to be used for the purpose of refunding outstanding bonds issued to fund or refund pension obligations, including the payment of the principal thereof and interest and redemption premiums, if any. The proceeds of bonds issued to refund any outstanding bonds may be applied to the retirement of those outstanding bonds at maturity, or the redemption, on any redemption date, or purchase of those outstanding bonds prior to maturity, subject to the terms and conditions as the committee deems advisable.

The net proceeds of bonds issued and sold pursuant to this chapter shall be deposited in the Pension Obligation Bond Fund established pursuant to Section 16929.