The governing board of any county, city, town, township, board of education, school district or any other municipal corporation of this state, holding in its sinking fund either warrants, judgments or bonds, is authorized to enter into an agreement with the governing board of the municipality against which said warrants, judgments or bonds are an obligation thereof, to accept funding or refunding bonds in lieu of said obligations. Said agreement shall provide for the rate of interest said funding or refunding bonds shall bear, which may be less than the rate of interest the indebtedness to be funded bears.
Laws 1937, p. 152, § 1.