Chap. 231.—An ACT to authorize and empower the State Board of Education to
make loans from the literary fund to counties, cities and towns, and to au-
thorize and empower boards of supervisors, ‘councils and other governing
bodies of counties, cities and towns for and on behalf of such counties, cities
and towns to borrow such moneys from the State Board of Education, for
the purpose of maintaining and operating the public free schools in ‘such
counties, cities and towns for terms of eight months; to provide for making
such loans, the payment of the principal of and interest on the same, and the
pledging of certain unpaid local levies to secure such payment; ahd to repeal
all acts and parts of acts inconsistent with the provisions of this act.

[H B 394]
Approved March 27, 1934

1. Be it enacted by the General Assembly of Virginia, as follows:

Section 1. The State Board of Education is hereby authorized and
empowered, with the consent of the Governor, to lend to counties,
cities and towns that constitute a separate school district in the Com-
monwealth making application therefor as herein provided, money
belonging to the literary fund and in hand for investment, for the
purpose of enabling such counties and cities to maintain and operate
their public free schools for terms of eight months during the fiscal
years ending June thirtieth, nineteen hundred and thirty-four, and the
board of supervisors, council or other governing body of each such
county, city and town is hereby authorized to borrow for and on behalf
of its respective county, city or town, such money for such purpose, on
the terms and conditions hereinafter set forth.

Section 2. The board of supervisors, council or other governing
body of the county, city or town, desiring to borrow such money shall
make a written application to the State Board of Education for such
loan on a form to be prescribed by the State Board of Education. A
resolution of the school board of such county, city or town, approving
the making of such application shall accompany such application.

Section 3. The amount of such money which may be loaned to any
county, city or town, for any of the said fiscal years shall not exceed
either (1) that part of the total amount of the levies laid on real estate
by such county, city or town, during the fiscal year immediately pre-
ceding that for which such loan is applied for, for the maintenance and
operation of the public free schools thereof for such year and remaining
unpaid at the time such loan is made, or (2) such amount as in the
opinion of the State Board of Education will be required by such
county, city or town, in addition to moneys provided by local levies

and State appropriations, to enable such county, city or town, to main-
tain and operate its public free schools for a term of eight months
during such fiscal year, whichever amount shall be the lesser.

Section 4. Each such loan shall bear interest at the rate of four
per centum per annum, payable semi-annually. The principal amount
of such loan shall be payable at such time or times as shall be agreed
upon, provided no such loan shall be for a period longer than ten years.

Section 5. Before any such money shall be loaned to any county,
city or town, under the provisions of this act, the board of supervisors,
council or other governing body thereof, shall agree for and on behalf
of such county, city or town, to repay the same upon such terms and
conditions as shall be fixed and shall pledge as collateral security for
the payment of the principal of such loan and interest thereon all the
then unpaid levies laid on real estate by such county, city or town,
during the fiscal year, next preceding the year for which such loan
is made, for the maintenance and operation of the public free schools
thereof. Thereafter, all collections of such levies, together with the
interest and penalties thereon, shall be set apart as a special fund and
shall be paid monthly into the State treasury and credited to the lit-
erary fund until the principal of such loan and interest thereon shall
have been paid in full. All contracts and agreements of such board of
supervisors, council, or other governing body pertaining to said loan
and the pledging of said collateral shall be ratified and approved by the
school board of such county, city or town, before being acted upon by
the State Board of Education.

Section 6. Loans herein provided for may be made and such
moneys borrowed without regard to any requirement for the approval
by vote of the qualified voters of any county, city or town, of the
contracting of a debt, the borrowing of money or the authorizing of
issuing bonds or other obligations. The board of supervisors, council
or other governing body of any county, city or town may, however,
require that such matter be submitted to the qualified voters thereof
for approval or rejection, and if so, the procedure if in a county shall
be as provided in sections twenty-seven hundred and thirty-eight and
twenty-seven hundred and thirty-nine, and if in a city as provided in
chapter one hundred and twenty-two of the Code of Virginia, the words
“bonds” and “bond issues” therein being considered, for the purpose
of this act to mean loans herein provided for.

Section 7. The board of supervisors, council or other governing
body of any county, city or town borrowing any money pursuant to
the provisions of this act may thereafter include in its levies, or ap-
propriate funds sufficient, as the case may be, to meet the liabilities of
such county, city or town, on such contract and shall apply moneys
derived pursuant thereto for such purpose.

Section 8. In the event any county, city or town, shall default in
the payment of the principal of or interest on any such loan, the Comp-
troller shall, when such default has continued for a period of six
months, transfer or cause to be transferred to the said literary fund
all funds appropriated and payable by the Commonwealth to the said
county, city or town, for public school purposes, except the amount re-
quired by section one hundred and thirty-five of the Constitution of
Virginia to be applied to the schools of the primary and grammar
orades in'the said county, city or town and the amount payable to the
said county, city or town, from the collection of the State capitation
tax, until the principal of and interest on such loan shall have been
paid in full, and all such funds so transferred to the literary fund shall
be treated for all intents and purposes as if paid by the said county,
city or town on its loan (made pursuant to the provisions of this act).

Section 9. All acts and parts of acts, general, special, private and
local, including charter provisions of cities or towns inconsistent with
any of the provisions of this act, are hereby repealed to the extent of
such inconsistency.

2. An emergency existing, this act shall be in force from its passage.