Source and use of district interest and sinking fund.

The district interest and sinking fund of any school district shall comprise the proceeds of the tax levied for the purpose of paying the principal and interest of bonds outstanding against the district as provided in this chapter and in addition such funds as may accrue to the credit of the district interest and sinking fund from interest on deposits, investments or other sources. The district interest and sinking fund in each district shall be used to pay the principal and interest on bonds legally issued against the district and other proper items of debt service against such district, including any necessary refunding expense as prescribed by rules of the State Board of Education. The district school board shall, before the maturity of bonds and before interest due dates, deposit with the paying agent or make available, as designated in the resolution authorizing the issuance of bonds, sufficient money of the district interest and sinking fund with which to pay all principal and interest when due; provided, that when such money has been so deposited with the paying agent or made available, all interest on the indebtedness represented by the maturing bonds or coupons shall cease as of their maturity dates; and provided, further, that if any such bonds or coupons are not presented for payment within 6 months after the date on which they mature, the money shall be returned to the district school board and shall be held by the board as a reserve fund in the account of the district interest and sinking fund until the bonds and coupons are presented for payment. Any holder of bonds or coupons claiming interest after maturity shall be required to produce evidence in the form of a letter from the paying agent or the district school board of the district, respectively, acknowledging that the bonds or coupons upon which interest is claimed were presented for payment upon maturity, that no funds were available for the payment thereof, that such bonds or coupons were presented for payment at least annually thereafter and that no funds were available to pay such bonds or coupons. The paying agent or the district school board, whichever has the duty of holding the money, shall, upon request of the holder of defaulted bonds or coupons, furnish to such holder the letter required herein. When such evidence is presented, the district interest and sinking fund shall be liable for the payment of principal and interest on the bonds and coupons from maturity until paid at the rate prescribed on the face of the bonds. If at any time any bonds or coupons are reduced to judgment, the district interest and sinking fund shall be responsible for past due interest only at the rate prescribed by the bonds and any rate of interest in excess of that amount shall be illegal and invalid. Such judgments shall bear interest at the rate of 5 percent per annum until paid. When any proposal for refunding the indebtedness against any district has been prepared and approved by the Department of Education, as required by law, and when the holders of at least 80 percent of the outstanding indebtedness represented by the bond issue have agreed in writing to the refunding plan, the district school board shall be authorized to pay, from and after that date on the original and refunding bonds from the district interest and sinking fund, only the rate of interest which has been agreed upon for the refunding bonds and no owner or holder of a bond or coupon shall be entitled to a higher rate of interest after that date; provided, that such owner or holder shall be given the option by the school board of receiving payment in cash for all principal and interest due on the bonds and coupons he or she holds at the same rate at which the remaining bonds and coupons have been refunded.