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ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
AMENDED
school districts; bonds; financial advisors
Purpose
Requires a school district governing board (governing board), before calling an election to issue school district bonds, to hire an independent municipal advisor on a contingency fee basis to assist the governing board with the election and any issuance of school district bonds, with certain exceptions. Outlines requirements and duties for an independent municipal advisor who is hired by a school district.
Background
A governing board may, and on petition of 15 percent of the school
district electors must, hold an election to: 1) locate or change the location
of school buildings; 2) purchase, sell or construct school sites or buildings
as prescribed; 3) decide whether school district bonds be issued and sold for
specified purposes; 4) lease school buildings or grounds for a period of more
than 20 years; or 5) change the list of capital projects or purposes authorized
by prior voter approval to issue bonds. School district bonds must be issued
and sold to: 1) purchase or lease school lots;
2) build or renovate school buildings; 3) supply school buildings with
furniture, equipment and technology; 4) improve school grounds; 5) purchase
pupil transportation vehicles; or 6) liquidate any indebtedness already
incurred for such purposes. Bond counsel, financial advisory, printing cost and
paying agent fees associated with the issuance of school district bonds must be
paid from the amount authorized by the electors or current operating funds.
School district bond election expenses must be paid only from current operating
funds (A.R.S.
§ 15-491).
A municipal advisor means a person who provides advice to, or on behalf of, a municipal entity or obligated person with respect to municipal financial products or the issuance of municipal securities, including advice with respect to the structure, timing, terms and other matters concerning such financial projects or issues. A municipal advisor includes financial advisors, guaranteed investment contract brokers, third-party marketers, placement agents, solicitors and swap advisors. Federal law requires a municipal advisor to register with the U.S. Securities and Exchange Commission (U.S. SEC) to provide advice relating to municipal financial products or the issuance of municipal securities (15 U.S.C. § 78o-4).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Stipulates that, before calling an election to decide whether to issue and sell school district bonds, a governing board must hire, on a contingency fee basis, an independent municipal advisor who is registered and in good standing with the U.S. SEC, or its successor, to advise and assist the governing board and school district with:
a) the election; and
b) if a majority of votes cast at a school district bond election favors issuing the bonds, each bond issue authorized by the election.
2. Requires an independent municipal advisor who is hired by a school district to:
a) assist the governing board and school district in preparing the school district bond election informational pamphlet;
b) receive compensation from the school district only if voters authorize the school district to issue bonds in the election for which the independent municipal advisor provides advice and assistance;
c) act in the best interests of the school district; and
d) advise the governing board and school district on all aspects of issuing school district bonds to assist the school district in achieving the most effective cost of borrowing, including:
i. determining the repayment structure of school district bonds;
ii. if necessary, obtaining ratings on school district bonds;
iii. hiring other professionals necessary to sell and issue school district bonds; and
iv. assisting in any other matter that is related to school district bond issuance.
3. Prohibits an independent municipal advisor who is hired by a school district from:
a) colluding in advising on the selection of other professionals to assist the school district; or
b) if the person served as the independent municipal advisor for the issuance of the school district bonds, purchasing or underwriting any issue of school district bonds.
4. Determines that a school district is not required to hire an independent municipal advisor if the school district is unable, after reasonable effort, to hire a qualified independent municipal advisor on a contingency fee basis.
5. Becomes effective on the general effective date.
Amendments Adopted by Committee of the Whole
1. Specifies that the requirement to hire an independent municipal advisor before calling an election only applies to elections relating to the issuance of school district bonds.
2. Specifies that a school district governing board must hire the independent municipal advisor as prescribed on a contingency fee basis.
3. Determines that a school district is not required to hire an independent municipal advisor if the school district is unable, after reasonable effort, to hire a qualified independent municipal advisor on a contingency fee basis.
4. Stipulates that an independent municipal advisor must receive compensation from the school district only if voters authorize the issuance of school district bonds in the election for which the independent municipal advisor provides advice and assistance.
House Action Senate Action
ED 2/3/26 DP 7-3-2-0 FIN 3/23/26 DP 4-2-1
3rd Read 2/24/26 35-21-4
Prepared by Senate Research
June 11, 2026
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