Ala. officials ask court to clarify bond contract

MONTGOMERY, Ala. (AP) - State officials have decided to ask a federal judge to determine if Alabama must follow a contract that calls for the refinancing of bonds approved in 1998 for school construction.

State officials says refinancing the bonds during the current financial crisis would be difficult, and it would violate a state law that prohibits refinancing bond issues unless the transaction saves the state 3 percent.

The Alabama Public School and College Authority voted Wednesday to ask a federal judge to give the state guidance on how to deal with a requirement in a contract with JPMorgan Chase Bank to refinance $300 million in bonds.

The bonds were part of a $550 million bond issue approved by the Legislature in 1998 and later used to remove portable classrooms from the grounds of Alabama schools.

(Copyright 2008 by The Associated Press. All Rights Reserved.) AP-NY-10-22-08 1426EDT