Code of Virginia

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Code of Virginia
Title 22.1. Education
Chapter 10. Literary Fund
12/6/2021

Chapter 10. Literary Fund.

§ 22.1-142. How Fund constituted; management.

There shall be set apart as a permanent and perpetual fund, to be known as the "Literary Fund," the present Literary Fund of the Commonwealth, donations to the Literary Fund, sums appropriated to the Literary Fund, all funds received by the State Treasurer and required to be deposited in the Literary Fund pursuant to Chapter 25 (§ 55.1-2500 et seq.) of Title 55.1 and the proceeds of (i) all public lands donated by Congress for public school purposes, (ii) all escheated property, (iii) all waste and unappropriated lands, (iv) all property accruing to the Commonwealth by forfeiture except those items specifically exempted, (v) all fines collected for offenses committed against the Commonwealth, and (vi) the annual interest on the Literary Fund. The Literary Fund shall be invested and managed by the Board of Education as prescribed by § 22.1-145.

Code 1950, § 22-101; 1971, Ex. Sess., c. 128; 1980, c. 559; 2012, cc. 283, 756.

§ 22.1-143. Money belonging to Fund received in treasury; accountant.

All moneys belonging to the Literary Fund shall be paid into the State Treasury to the credit of the Literary Fund and shall be used for no other purpose whatsoever. The State Treasurer shall be the accountant of the Fund.

Code 1950, §§ 22-101, 22-103; 1971, Ex. Sess., c. 128; 1980, c. 559.

§ 22.1-144. Recovery of moneys due Fund.

Any funds which ought to be paid into the State Treasury to the credit of the Literary Fund shall, unless otherwise provided, be recoverable with interest. Proceedings to recover such funds shall be instituted by the Board of Education in the name of the Commonwealth in the appropriate circuit court.

The Board may appoint agents for the collection of its debts or claims and authorize them to secure payment thereof on such terms as it may approve.

When the estate of any person that is taken under execution or that is for sale under any decree or deed of trust for any debt or claim due the Literary Fund or for any fine will not sell for the amount of such debt, claim or fine, such agent may, under the direction of the Board as to the price, purchase such estate for the Board. He shall immediately report to it every such purchase and the terms thereof. The Board may sell, or appoint an agent to sell, any estate so purchased. Such agent shall sell at such time and on such terms as the Board may authorize. The Board shall take bond from such agent if any money is to come into his hands. Any agent selling land under this section shall, when directed so to do by the Board, execute a deed, with the resolution giving such direction thereto annexed, conveying to the purchaser all the interest which the Board may have in such land. For the service of any agent under this section, the Board may allow compensation, not exceeding in any case ten per centum of the money actually paid into the State Treasury.

Code 1950, § 22-104; 1980, c. 559.

§ 22.1-145. Investment of Fund.

The Board of Education shall invest the Literary Fund in securities that are legal investments under the laws of the Commonwealth for public funds. The Board may call in any such investment and reinvest the same whenever it deems proper for the preservation, security or improvement of the Literary Fund. Whenever the Board shall invest in bonds of this Commonwealth, no premium shall be required or paid on such investment. All securities for money belonging to the Literary Fund shall be deposited with the State Treasurer for safekeeping, who shall return with his annual report a list thereof with a statement of their value.

Code 1950, § 22-102; 1956, c. 184; 1971, Ex. Sess., c. 128; 1980, c. 559; 1985, c. 139.

§ 22.1-146. Power of Board to make loans from fund for erection, etc., of school buildings and fueling facilities for school buses.

The Board of Education may make loans or, subject to the approval of the General Assembly, loan interest rate subsidy payments from the Literary Fund to the school boards of the several school divisions making application therefor in the manner prescribed by law, authorized by the governing body and the school board, for the purposes of (i) erecting, altering or enlarging school buildings in such school divisions; (ii) purchasing and installing educational technology equipment and infrastructure; (iii) equipping school buses for alternative fuel conversions and for construction of school bus fueling facilities for supplying compressed natural gas or other alternative fuels; and (iv) refinancing or redemption of negotiable notes, bonds, and other evidences of indebtedness or obligations incurred by a locality on behalf of a school division which has an application for a Literary Fund loan for an approved school project pending before the Board of Education. For the purpose of this section, "alternative fuels" means motor fuels other than gasoline and diesel fuel.

Code 1950, § 22-105; 1980, c. 559; 1988, c. 88; 1991, c. 682; 1994, c. 689; 1997, c. 372; 2007, c. 121.

§ 22.1-146.1. School modernization loan interest rate subsidy payments.

A. The Board of Education shall establish a program to subsidize interest payments on certain loans made by the Virginia Public School Authority to local governing bodies and school boards for the design and construction of new school buildings and facilities or the modernization and maintenance of existing school buildings and facilities as follows:

1. For school divisions with a composite index of local ability-to-pay that is greater than 0.2500 but less than 0.4000 at the time an application to the program is made, the Board may subsidize up to 50 percent of the interest due on such loan; or

2. For school divisions with a composite index of local ability-to-pay that is 0.2500 or less at the time an application to the program is made, the Board may subsidize up to 100 percent of the interest rate on such loan.

B. The aggregate amount of subsidies provided pursuant to this section shall not exceed the allocation specified in the general appropriation act for each fiscal year.

C. For each loan, the annual subsidy amount shall not include both:

1. Interest or other loan-related costs related to any part of the loan that exceed $7.5 million in loan value; and

2. Interest on any part of the loan that exceeds the rate that the local governing body or school board would have obtained for such loan under the provisions of §§ 22.1-146 and 22.1-150.

2019, c. 807.

§ 22.1-147. Distribution of funds.

The Board of Education shall provide for an equitable distribution of the funds loaned or provided as loan interest rate subsidy payments from the Literary Fund among the several school divisions. In providing for such equitable distribution, the Board shall impose a maximum limit of not more than $7.5 million on the amount of any loan from the Literary Fund.

Code 1950, § 22-106; 1977, c. 157; 1980, c. 559; 1988, c. 88; 1997, c. 384; 1998, c. 70.

§ 22.1-148. Restrictions upon making loans; retirement of previous loans.

A. No loan from the Literary Fund shall exceed 100% of the cost of the building, addition thereto, and site on account of which such loan is made. No loan shall be made from the Literary Fund to aid in the erection of a building or addition to cost less than $500. Whenever a loan is made from the Literary Fund for the purpose of enlarging a building, any part of the proceeds of such loan may, in the discretion of the Board, be used to retire any previous loan or loans on such building although not matured at the time of such additional loan. The Board may refuse to make any loan from the Literary Fund to any school board which is in default in the payment of any part of the principal of any previous loan from the Literary Fund or which for the two years next preceding the loan has been more than six months in default in the payment of interest due on any loan from the Literary Fund.

B. Any school division which has an application for a Literary Fund loan for an approved school project pending before the Board of Education shall not be denied or delayed in obtaining such loan solely for the reason that alternative financing had been obtained to begin or complete construction on such project.

Code 1950, § 22-111; 1980, c. 559; 1985, c. 226; 1994, c. 689; 2007, c. 121.

§ 22.1-149. Additional funds for loans.

When loans have been approved by the Board from time to time in such amounts that no sufficient balance is left in the Literary Fund from which to make additional loans, the Board is authorized to sell the bonds, notes or other evidences of debt of the school boards for which such loans are approved for investment of the trust funds of the Virginia Retirement System in such amount as may be approved by the Board of Trustees of the Virginia Retirement System in accordance with the provisions of § 51.1-124.30, in order to make such additional loans.

Code 1950, § 22-112; 1954, c. 476; 1958, c. 162; 1980, c. 559.

§ 22.1-150. Rate of interest.

The Board of Education is authorized in its discretion to fix the interest rate on all loans made from the Literary Fund at not less than two per centum per annum and not more than six per centum per annum, payable annually. Every loan made under the provisions of this chapter by selling the bonds, notes or other evidences of debt of school boards for investment of the trust funds of the Virginia Retirement System shall bear interest at a rate not to exceed six per centum per year.

Code 1950, § 22-112; 1954, c. 476; 1958, c. 162; 1980, c. 559.

§ 22.1-151. Evidence of loan.

A. A loan from the Literary Fund shall be evidenced by bonds or notes payable to the Commonwealth of Virginia for the benefit of the Literary Fund, executed or signed by the mayor or the chairman of the governing body and the chairman of the school board and attested by the clerk thereof. Evidence of debt taken for such loans shall be deposited with the State Treasurer and kept by him.

B. Upon the request of a locality, any memorandum of lien held on behalf of the Literary Fund prior to July 1, 2007, and deposited with the State Treasurer or recorded in the appropriate circuit court shall be marked as released. The release of such lien shall in no way affect the obligations of the locality under the loan.

Code 1950, § 22-112; 1954, c. 476; 1958, c. 162; 1980, c. 559; 2007, c. 121; 2008, c. 365.

§ 22.1-152. Payment of principal and interest.

Payments of interest and principal shall be made to the State Treasurer. A loan from the Literary Fund shall be repayable in annual installments from five to thirty years. The time of payment may be extended in the discretion of the Board of Education; but if the Board of Education has assigned any of the bonds, notes or other evidences of the loan to the Board of Trustees of the Virginia Retirement System under the provisions of § 51.1-124.30 and the same are held by the Board of Trustees of the Virginia Retirement System, the time of payment thereof may not be extended by the Board of Education but may be extended by the Board of Trustees of the Virginia Retirement System, in its discretion.

Code 1950, § 22-112; 1954, c. 476; 1958, c. 162; 1980, c. 559.

§ 22.1-153. School boards authorized to borrow from Fund; form of application.

The school boards of the several school divisions are authorized to borrow money belonging to the Literary Fund, and any school board desiring to borrow from the Fund shall make written application to the Board of Education for such loan on a form to be prescribed by the Board. In the case of a regional or joint school, the school boards of the school divisions participating in such school may jointly apply to borrow money for the benefit of the regional or joint school.

The Board shall not disburse any proceeds of any approved loan prior to its receipt of the concurrent approval of the governing body at the time of initial disbursement and an acceptable opinion of bond counsel obtained by the governing body as to the validity of the loan.

Code 1950, § 22-107; 1980, c. 559; 2007, c. 121; 2018, c. 591.

§ 22.1-154. Repealed.

Repealed by Acts 2007, c. 121, cl. 2.

§ 22.1-158. Provisions for payment.

The governing body of any county, city or town, if the town constitutes the school division, in which the school board has borrowed money from the Literary Fund shall include in its levies and appropriate to the school board a fund sufficient to meet the liabilities of the school board on such loan for the construction or renovation or enlarging of any school building, regardless of whether the title to the site is held by the school board, the local governing body or by a third party with whom the school board has entered into a long-term lease. The governing body of any county in which the school board thereof has borrowed money from the Literary Fund for construction of school facilities located in a town in such county constituting a separate school division shall have authority to include in its levies for such town, a levy sufficient to meet the liabilities of the school board on such loan and shall levy a separate tax in the rest of the county to meet its liabilities on any contract for school facilities constructed outside such town. In the event that such school board shall fail to pay any installment of interest or principal promptly, upon notice in writing to that effect from the State Treasurer, the county, city or town treasurer shall pay to the State Treasurer any such past-due installment of interest or principal, out of the funds in his hands belonging to such county, city or town. The failure of such governing body to provide for the payment of such loan or the interest thereon when and as due shall be deemed a cause for removal of the members thereof from office on motion before the circuit court having jurisdiction in such county, city or town, instituted by the attorney for the Commonwealth of such county or city or by the Attorney General where the attorney for the Commonwealth refuses or neglects to act after demand is made on him to proceed.

For the purposes of this section, "long-term lease" means a lease for a term of twenty-five years or more.

Code 1950, § 22-113; 1976, c. 334; 1980, c. 559; 1998, c. 719.

§ 22.1-159. Loans for construction of school facilities to serve portions of counties; levy of taxes for purpose of repaying such loans.

Notwithstanding any other provision of law to the contrary, the school board of any school division composed of part or all of a county, with the approval of the governing body of the county, is authorized to borrow from the Literary Fund for the purpose of constructing school facilities in such county to serve a portion of such county. Taxes on property in the magisterial districts served by such facilities shall be levied by the governing body of the county and collected for the purpose of repaying such loan; provided that, for the purposes of this section, a magisterial district shall not include a town constituting a separate school division but the governing body of the county may levy a separate tax on property in a town in such county constituting a separate school division to repay money borrowed by such county from the Literary Fund for the purpose of constructing school facilities in such town. Except as otherwise provided by this section all other provisions of law relating to Literary Fund loans shall apply to a loan authorized by this section.

Code 1950, § 22-107.3; 1962, c. 177; 1976, c. 334; 1980, c. 559.

§ 22.1-160. School boards authorized to anticipate payment of loans.

Any school board which is indebted for any money borrowed from the Literary Fund may anticipate the payment of the principal amount of any such loan or loans, or any part thereof, by the payment of such principal amount with interest thereon to the date of such anticipated payment and may borrow money and issue bonds for the purpose of raising funds to pay any notes or other obligations of the school board now and hereafter held by the Literary Fund.

Code 1950, § 22-115; 1980, c. 559.

§ 22.1-161. Loan declared indebtedness of the county, city or town; lien on locality's funds created.

Any bonds or notes of a school board held by the Literary Fund are hereby declared to be valid and legally binding indebtedness of the county, city or combination thereof constituting the school division or of the town if the town constitutes the school division. There shall be a lien in favor of the Literary Fund on all funds and income of the county, city or town for the amount of such bonds and notes. Therefore, Literary Fund loans are considered to be general obligation debt of the governing body as defined in § 15.2-2602, and are subject to the provisions of §§ 15.2-2638 and 15.2-2659. The provisions of this section shall not be affected by the release of any memorandum of lien pursuant to subsection B of § 22.1-151.

Code 1950, §§ 22-102, 22-115; 1956, c. 184; 1971, Ex. Sess., c. 128; 1980, c. 559; 2007, c. 121; 2008, c. 365.