1.  If a loan is made from the State Permanent School Fund pursuant to NRS 387.526, the loan must be repaid by the school district from the money that is available to the school district to pay the debt service on the bonds that are guaranteed pursuant to the provisions of NRS 387.513 to 387.528, inclusive, unless payment from that money would cause the school district to default on other outstanding bonds, medium-term obligations or installment-purchase agreements entered into pursuant to the provisions of NRS 350.087 to 350.095, inclusive.

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2.  If the school district is not able to repay fully the loan, including any accrued interest, in a timely manner pursuant to subsection 1 or by any other lawful means, the State Treasurer shall withhold the payments of money that would otherwise be distributed to the school district from:

(a) The interest earned on the State Permanent School Fund that is distributed among the various school districts; and

(b) Distributions from the State Education Fund, until the loan is repaid, including any accrued interest on the loan. The State Treasurer shall apply the money first to the interest on the loan and, when the interest is paid in full, then to the balance. When the interest and balance on the loan are repaid, the State Treasurer shall resume making the distributions that would otherwise be due to the school district.