Ed. Code, § 17463

Notwithstanding Section 17462, a school district having an average daily attendance of less than 10,001 in any fiscal year may deposit any and all interest earned on the funds derived from the sale in that fiscal year of surplus property into the general fund of the school district for any general fund purpose, subject to the following conditions:

(a) Before that deposit, the school district shall submit to the State Allocation Board a capital outlay plan for the school district for a period of five years following that sale, together with a declaration of the finding by the governing board of the school district that the school facilities needs of the school district can be met over that five-year period without funding or other assistance from any state school facilities funding program. No later than the date upon which that initial five-year period concludes, the school district shall submit to the State Allocation Board a capital outlay plan for the school district for the subsequent five-year period.

(b) Before the decision to place that interest money into the school district’s general fund, the governing board of the school district shall consider the extent to which it is necessary or appropriate to expend that money to meet the school district’s needs relative to capital outlay, facilities, modernization, and deferred maintenance. In addition, as to any interest money deposited into the school district’s general fund pursuant to this section, the governing board of the school district shall consider the extent to which it is necessary or appropriate to expend the money to meet the school district’s needs relative to ongoing maintenance before expending that money for any other purpose.

(c) A school district that deposits interest into its general fund pursuant to the authority set forth in this section shall not be eligible during the 10-year period described in subdivision (a) for funding or other assistance under Chapter 12 (commencing with Section 17000) or Chapter 14 (commencing with Section 17085) of Part 10, or any other state school facilities funding program.

(d) If a school district seeks state funding pursuant to Chapter 12 (commencing with Section 17000) of Part 10, Chapter 14 (commencing with Section 17085) of Part 10, or any other state school facilities funding program, on or after the expiration of the 10-year period specified in subdivision (c), any state funding received by the school district from the program shall be reduced by any remaining funds derived from the sale of that surplus property by the school district and any unencumbered interest earned on those funds.