(a) The Vermont State Colleges may create and establish one or more special funds, herein referred to as "debt service reserve funds," and shall pay into each debt service reserve fund:

(b) All monies held in any debt service reserve fund, except as hereinafter provided, shall be used, as required, solely for the payment of the principal or purchase or redemption price of or interest or redemption premium on bonds or notes secured in whole or in part by the fund or of sinking fund payments with respect to the bonds or notes; provided, however, that monies in any fund shall not be withdrawn therefrom at any time in an amount as would reduce the amount of the fund to less than the debt service reserve requirement established by resolution of the Vermont State Colleges for the fund as hereafter provided except for the purpose of making payments, when due, of principal, interest, redemption premiums, and sinking fund payments with respect to bonds and notes secured in whole or in part by the fund for the payment of which other monies of the Vermont State Colleges are not available. Any income or interest earned by any debt service reserve fund may be transferred to other funds or accounts of the Vermont State Colleges to the extent that it does not reduce the amount of the fund below the requirement for the fund.

(c) The Vermont State Colleges shall not at any time issue bonds or notes secured in whole or in part by a debt service reserve fund if upon the issuance of the bonds or notes the amount in the debt service reserve fund will be less than the debt service reserve requirement established by resolution of the Vermont State Colleges for the fund, unless the Vermont State Colleges at the time of issuance of the bonds or notes shall deposit in the fund from the proceeds of the bonds or notes so to be issued, or from other sources, an amount that, together with the amount then in the fund, will not be less than the debt service reserve requirement established for the fund. The debt service reserve requirement for any debt service reserve fund shall be established by resolution of the Vermont State Colleges prior to the issuance of any bonds or notes secured in whole or in part by the fund and shall not be required to exceed "maximum debt service," which shall mean, as of any particular date of computation, an amount equal to the greatest of the respective amounts, for the then-current or any future fiscal year of the Vermont State Colleges, of annual debt service on the bonds and notes of the Vermont State Colleges secured or to be secured in whole or in part by the debt service reserve fund.

(d) In the computation of the amount of the debt service reserve funds for the purpose of this section, securities in which any of the funds shall be invested shall be valued at par if purchased at par or at amortized value, as the term is defined by resolution of the Vermont State Colleges, if purchased at other than par.

(e) In order to assure the maintenance of the debt service reserve requirement in each debt service reserve fund established by the Vermont State Colleges, there may be appropriated annually and paid to the Vermont State Colleges for deposit in each fund the sum as shall be certified by the Chair of the Board of Trustees of the Vermont State Colleges to the Governor, the President of the Senate, and the Speaker of the House as is necessary to restore each such debt service reserve fund to an amount equal to the debt service reserve requirement for the fund. The Chair shall annually, on or about February 1, make and deliver to the Governor, the President of the Senate, and the Speaker of the House his or her certificate stating the sum required to restore each debt service reserve fund to the amount aforesaid, and the sum so certified may be appropriated, and if appropriated, shall be paid to the Vermont State Colleges during the then-current State fiscal year. The principal amount of bonds or notes outstanding at any one time and secured in whole or in part by a debt service reserve fund to which State funds may be appropriated pursuant to this subsection shall not exceed $34,000,000.00, provided that the foregoing shall not impair the obligation of any contract or contracts entered into by the Vermont State Colleges in contravention of the Constitution of the United States of America.

(f) The proceeds of any bonds or notes secured by a debt service reserve fund to which State funds may be appropriated pursuant to this section shall be applied solely to costs of reconstruction, rehabilitation, or improvement of existing facilities or property of the Vermont State Colleges. (Added 2007, No. 200 (Adj. Sess.), § 48.)