SECTION 1. Sections 35-8.1-2 and 35-8.1-13 of the General Laws in Chapter 35-8.1 entitled "Rhode Island Refunding Bond Authority" are hereby amended to read as follows:

{ADD 35-8.1-2. Legislative findings. -- ADD} The general assembly hereby finds, declares, and observes that:

(a) The state issued its general obligation bonds dated May 1, 1984, in the aggregate principal amount of thirty million dollars ($30,000,000.) pursuant to statutory authorities approved by the electorate of the state, and the state issued its general obligation bonds dated June 28, 1985, in the aggregate principal amount of ninety million dollars ($90,000,000) pursuant to statutory authorities approved by the electorate of the state;

(b) The 1984 and 1985 bonds bear interest at a rate in excess of current interest rates and the general assembly has determined that it would be in the best interests of the people of the state to obtain funds to pay, redeem, or retire the 1984 and 1985 bonds with bonds bearing a lower rate of interest;

(c) The statutory authorities previously approved do not provide authorization for the issuance of general obligation refunding bonds of the state; and

(d) The general assembly desires to create an authority with the power to issue bonds to provide funds to loan to the state so that the state can pay, redeem, or retire the 1984 and 1985 bonds.

{ADD (e) The general assembly desires further to grant the refunding bond authority the power during the fiscal year ending June 30, 1995 to issue bonds to provide funds to lend to the state so the state may pay, redeem, or retire a portion of the unfunded liabilities of the state retirement system not to exceed three hundred million dollars ($300,000,000) ADD} .

{ADD 35-8.1-13. Bonds of the authority -- Issuance -- Purposes. -- ADD} (a) The authority shall have the power and is authorized to provide by resolution for the issuance of bonds upon the request of the governor and a finding of a financial benefit to the state in such principal amounts as it shall deem necessary to provide funds for the purposes of:

(1) Loaning money to the state to provide funds to pay, redeem or retire

{ADD (a) ADD} all or a part of the 1984 or 1985 bonds or

{ADD (b) a portion of the unfunded liability of the state retirement system not to exceed three hundred million dollars ($300,000,000); provided, however, that the authority conferred hereby, as it relates to the refunded liability of the state retirement system, shall expire on June 30, 1995 ADD} ;

(2) Funding or refunding the principal of, or interest or redemption premium on, any bonds issued by it, whether the bonds or interest to be paid, funded, or refunded have or have not become due or are subject to redemption prior to maturity in accordance with their terms;

(3) Establishing or increasing reserves to secure or to pay such bonds or interest thereon as are reasonably required and permitted by law; and

(4) Paying all other costs or expenses of the authority incident to and necessary or convenient to carry out its purposes and powers.

(b) In the event that the authority issues refunding bonds pursuant to this subsection (a)(2), the proceeds of the refunding bonds may be applied, in the discretion of the authority, to the purchase, retirement at maturity, or redemption of the outstanding bonds either at their earliest or a subsequent redemption date, and may, pending that application, be placed in escrow with a suitable trustee. While the proceeds are held in trust, they may be invested in obligations of the United States of America or the state or any other state.

(c) If the authority shall deposit the proceeds of refunding bonds with a suitable trustee in such an amount that, when invested in and combined with income expected to be derived from obligations of the United States of America or the state or any other state, are sufficient to pay all principal, interest, and premium, if any, on any of its outstanding bonds, then, until the outstanding bonds are called for prepayment or otherwise paid, the outstanding bonds shall not be considered debts of the authority, for any purpose, from the date of deposit of the moneys with the trustee.

SECTION 2. This act shall take effect upon its passage, and shall be retroactive to the effective date of 94-H-9326, Substitute A, As Amended, entitled "An Act Making Appropriations for the Support of the State for the Fiscal Year Ending June 30, 1995".