(b) In the case of default on principal or interest payments on a bond, depending on the circumstances, one (1) of the following shall occur:

1. (1) If the school district board of directors has passed a resolution as authorized under Arkansas Code § 6-20-1212, the first unrestricted moneys coming to the school district from any source other than the uniform rate of tax shall be paid into the debt service fund and applied on past due principal or interest on the bonds until paid in full;
2. (2) If the school district board of directors has passed a resolution as authorized under Arkansas Code § 6-20-1212 but is still unable to cure the default under subdivision (b)(1) of this section, the Commissioner of Elementary and Secondary Education shall withhold state foundation funding due to the district in an amount sufficient to cure the default and use those funds to cure the default as authorized under Arkansas Code § 6-20-1204; or
3. (3) If a school district board of directors has not passed a resolution as authorized under Arkansas Code § 6-20-1212, the commissioner, after notification as required under Arkansas Code § 6-20-1204, shall continue to withhold state foundation funding as due to the district and remit to the paying agent until the payment deficiency has been cured as authorized under Arkansas Code § 6-20-1204.