Ala. Code § 16-16-14
The proceeds derived from the sale of any bonds issued pursuant to subsection (b) of Section 3 of Act 98-373 shall be deposited in the State Treasury and shall be carried in a separate fund therein for the account of the authority, which shall pay therefrom the expenses of issuance thereof. The proceeds from the sale of the bonds remaining after payment of the expenses of issuance thereof shall be retained in such fund and, until they are paid out, shall be invested by the State Treasurer at the direction of the authority in permitted investments which mature at such time or times as the authority shall direct. Monies in the fund (whether original proceeds from the sale of the bonds or principal proceeds of matured permitted investments) shall be available for loan by the authority. The authority is hereby authorized to loan, and each local board of education is hereby authorized to borrow, such monies under terms and procedures to be established by the authority. Each such loan shall be evidenced by a warrant or warrants issued by the local board of education and may include such terms and provisions as are consistent with Act 98-373 and subsequent acts of the Alabama Legislature, and otherwise as shall be agreed by the authority and the local board of education. The issuance of any warrant or warrants hereunder and the terms thereof shall be subject to the prior approval of the State Superintendent of Education. Warrants issued to the authority by any local board of education hereunder shall be sold to the authority at a price determined by the authority and shall bear interest at such rate or rates and shall have such maturity or maturities as shall be agreed by the authority and local board of education and approved by the State Superintendent of Education as aforesaid. No such warrant shall be a general obligation of the local board of education but shall be payable solely from any and all local funds or from distributions of capital funds made to such local board of education from the public school fund pursuant to Section 16-13-234. Notwithstanding any existing statute or provision of law to the contrary, any local board of education is hereby empowered to pledge to the authority as security for such warrants, and to pay over to the authority to the extent of its payment obligations thereunder, any and all local funds or monies derived from distributions of capital funds from the public school fund, as to which such local board of education shall thereafter be entitled for the fiscal year in which such payment shall be due. Amounts derived by local boards of education from the issuance of such warrants as aforesaid shall be used to acquire capital improvements approved by the authority and by the State Superintendent of Education. The State Treasurer, the Comptroller, and the State Superintendent of Education are hereby authorized and directed to take such actions as shall be necessary to facilitate the terms of any loan agreement between a board of education and the authority respecting the direct payment from time to time to the authority of funds due such board from the state, including funds from the public school fund, to the extent necessary to fund such board's obligations evidenced by its warrant or warrants issued to the authority pursuant hereto.
Ala. Code § 16-16-14 (1975)