Sec. 10-58a. Default of district in payment on bonds or notes. Withholding of state aid.
Sec. 10-58a. Default of district in payment on bonds or notes. Withholding of
state aid. Whenever it is established as herein provided that a regional school district,
including Regional School District Number 1 of Litchfield County, has defaulted in the
payment of the principal or interest, or both, on its bonds or notes, the payment of state
aid and assistance to such regional school district pursuant to any statute then in existence
shall be withheld by the state. If a holder or owner of any such bond or note of such
regional school district files with the State Comptroller a verified statement describing
such bond or note and alleging default in the payment thereof or the interest thereon,
or both, the Comptroller shall immediately investigate the circumstances of the alleged
default, prepare and file in his office a certificate setting forth his finding with respect
thereto and serve a copy of such finding, by registered or certified mail, upon the treasurer
or chief fiscal officer of such regional school district. Such investigation shall cover the
current status with respect to the payment of principal of and interest on all outstanding
bonds and notes of such regional school district, and the statement prepared and filed
by the Comptroller pursuant to this section shall set forth a description of all bonds and
notes of such regional school district found to be in default and the amount of principal
and interest thereon past due. Upon the filing of such a certificate in the office of the
Comptroller, the Comptroller shall thereafter deduct and withhold from the next succeeding payment of state aid or assistance otherwise due such regional school district
such amount as is necessary to pay the principal of and interest on such bonds and notes
of such regional school district then in default. If such amount is insufficient to pay all
of such principal and interest, said Comptroller shall similarly deduct and withhold from
the next succeeding payment of state aid and assistance, otherwise due to any town in
such district which is currently in default of its annual payments to such district, such
amount as is necessary to pay the principal of and interest on such bonds or notes remaining in default. If all such amounts withheld are insufficient to pay all such principal
and interest, the Comptroller shall similarly deduct and withhold from each succeeding
payment of state aid or assistance otherwise due such regional school district and such
towns such amount or amounts thereof as may be required to pay all of the principal of
and interest on such bonds and notes then in default. Payments of state aid or assistance
so deducted and withheld shall be forwarded promptly by the Comptroller to the paying
agent or agents for the bonds and notes in default for the sole purpose of payment of
defaulted principal of and interest on such bonds or notes; provided, if any such payment
of state aid or assistance so deducted or withheld is less than the total amount of all
principal and interest on such bonds and notes, then the Comptroller shall forward to
each paying agent an amount in the proportion that the amount of such bonds and notes
in default payable by such paying agent bears to the total amount of the principal of and
interest then in default on such bonds and notes of such regional school district. The
Comptroller shall promptly notify the treasurer or the chief fiscal officer of such regional
school district of any payment or payments made to any paying agent or paying agents
of defaulted bonds or notes pursuant to this section. The state of Connecticut hereby
covenants with the purchasers, holders and owners from time to time of bonds and
notes issued by regional school districts for school purposes that it will not repeal the
provisions of this section or amend or modify the same so as to limit or impair the rights
and remedies granted hereby; provided nothing herein contained shall be deemed or
construed as requiring the state to continue the payment of state aid or assistance to any
regional school district or town or as limiting or prohibiting the state from repealing or
amending any law relating to state aid or assistance, the manner and time of payment
or apportionment thereof, or the amount thereof.
(1961, P.A. 114, S. 2.)