81R8487 CAS-D
By: Hochberg H.B. No. 2894
A BILL TO BE ENTITLED
AN ACT
relating to additional guarantees for certain bonds issued by
school districts.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 45, Education Code, is amended by adding
Subchapter I to read as follows:
SUBCHAPTER I. ADDITIONAL GUARANTEE FOR BONDS
Sec. 45.251. DEFINITIONS. In this subchapter:
(1) "Board" means the State Board of Education.
(2) "Paying agent" means the financial institution
that is designated by a school district as the district's agent for
the payment of the principal of and interest on guaranteed bonds.
Sec. 45.252. GUARANTEE. (a) If a school district's
application for guarantee of district bonds by the corpus and
income of the permanent school fund as provided by Subchapter C is
rejected, the district may apply under this subchapter for
guarantee of bonds issued under Subchapter A, including refunding
bonds, by money appropriated for the Foundation School Program that
may be used for the purpose, other than money that:
(1) is appropriated for the school facilities
assistance program under Chapter 46;
(2) is necessary for purposes of Section 46.009(b)(1)
or 46.035; or
(3) is appropriated from the available school fund.
(b) School district bonds may not be guaranteed under both
Subchapter C and this subchapter.
Sec. 45.253. ELIGIBILITY. To be eligible for approval by
the commissioner under this subchapter, bonds must be:
(1) issued in the manner provided by Section 45.054;
and
(2) payable from an ad valorem tax under Section
45.003.
Sec. 45.254. USE OF FOUNDATION SCHOOL PROGRAM
APPROPRIATIONS AS GUARANTEE. Money appropriated for the Foundation
School Program that may be used for the purpose under this
subchapter and under any other law, rule, or regulation shall be
used to guarantee eligible bonds as provided by this subchapter,
the General Appropriations Act, and board rule if using the
permanent school fund to guarantee particular bonds would result
in:
(1) a total amount of outstanding bonds guaranteed by
the permanent school fund exceeding the amount authorized under:
(A) Section 45.053; or
(B) federal law or regulations; or
(2) the use of a portion of the cost value of the
permanent school fund reserved under Section 45.0531, as determined
by the board and certified by the state auditor.
Sec. 45.255. APPLICATION FOR GUARANTEE. (a) A school
district seeking the guarantee of eligible bonds shall apply to the
commissioner using a form adopted by the commissioner for the
purpose. The commissioner may adopt a single form on which a
district seeking the guarantee of eligible bonds may apply
simultaneously for a guarantee first under Subchapter C, and then,
if that guarantee is rejected, for a guarantee under this
subchapter.
(b) An application under Subsection (a) must:
(1) include the information required by Section
45.055(b); and
(2) be accompanied by a fee set by board rule in an
amount designed to cover the costs of administering the guarantee
of the bonds.
Sec. 45.256. INVESTIGATION. (a) Following receipt of an
application for the guarantee of bonds, the commissioner shall
conduct an investigation of the applicant school district as
provided for an investigation under Section 45.056(a).
(b) If following the investigation under Subsection (a) the
commissioner is satisfied that the school district's bonds should
be guaranteed under Subchapter C or this subchapter, as applicable,
the commissioner shall endorse the bonds.
Sec. 45.257. GUARANTEE ENDORSEMENT. (a) The commissioner
shall endorse bonds approved for guarantee under this subchapter in
the manner provided under Section 45.057 for endorsing bonds
approved under Subchapter C.
(b) The guarantee is not effective unless the attorney
general approves the bonds under Section 45.005.
Sec. 45.258. NOTICE OF DEFAULT. Immediately following a
determination that a school district will be or is unable to pay
maturing or matured principal or interest on a guaranteed bond, but
not later than the fifth day before maturity date, the school
district shall notify the commissioner.
Sec. 45.259. PAYMENT FROM GUARANTEE FUNDS. (a)
Immediately following receipt of notice under Section 45.258, the
commissioner shall instruct the comptroller to transfer to the
district's paying agent from appropriations to the Foundation
School Program that may be used for the purpose under Section 45.252
and other law the amount necessary to pay the maturing or matured
principal or interest.
(b) Immediately following receipt of the funds for payment
of the principal or interest, the paying agent shall pay the amount
due and forward the canceled bond or coupon to the comptroller. The
comptroller shall hold the canceled bond or coupon on behalf of the
Foundation School Program.
(c) Following full reimbursement to the Foundation School
Program, with interest, the comptroller shall further cancel the
bond or coupon and forward it to the school district for which
payment was made.
(d) If money appropriated for the Foundation School Program
is used for purposes of this subchapter and, as a result there is
insufficient money to fully fund the Foundation School Program, the
commissioner shall, to the extent necessary, reduce each school
district's foundation school fund allocations in the same manner
provided by Section 42.253(h) for a case in which school district
entitlements exceed the amount appropriated.
Sec. 45.260. BONDS NOT ACCELERATED ON DEFAULT. If a school
district fails to pay principal or interest on a guaranteed bond
when the bond matures, other amounts not yet mature are not
accelerated and do not become due by virtue of the district's
default.
Sec. 45.261. REIMBURSEMENT OF FOUNDATION SCHOOL
FUND. (a) If the commissioner orders payment from the money
appropriated to the Foundation School Program on behalf of a school
district, the commissioner shall direct the comptroller to withhold
the amount paid, plus interest, from the first state money payable
to the district. The amount withheld shall be deposited to the
credit of the foundation school fund.
(b) In accordance with commissioner rules, the commissioner
may authorize reimbursement to the foundation school fund with
interest in a manner other than that provided by this section.
(c) The commissioner may order a school district to set an
ad valorem tax rate capable of producing an amount of revenue
sufficient to enable the district to:
(1) provide reimbursement under this section; and
(2) pay the remaining principal of and interest on the
bonds as the principal and interest become due.
(d) If a school district fails to comply with the
commissioner's order under Subsection (c), the commissioner may
impose any sanction on the district authorized to be imposed on a
district under Subchapter G, Chapter 39, including appointment of
a board of managers or annexation to another district, regardless
of the district's accreditation status or the duration of a
particular accreditation status.
(e) Any part of a school district's tax rate attributable to
producing revenue for purposes of Subsection (c)(1):
(1) is not considered part of the district's tax rate
for purposes of the tax rate limit under Section 45.0031; and
(2) is considered part of the district's:
(A) current debt rate for purposes of computing a
rollback tax rate under Section 26.08, Tax Code; and
(B) interest and sinking fund tax rate.
Sec. 45.262. REPEATED DEFAULTS. (a) If a total of two or
more payments are made under Subchapter C or this subchapter on the
guaranteed bonds of a school district and the commissioner
determines that the district is acting in bad faith under the
guarantee, the commissioner may request the attorney general to
institute appropriate legal action to compel the district and the
district's officers, agents, and employees to comply with the
duties required of them by law in regard to the bonds.
(b) Jurisdiction of proceedings under this section is in
district court in Travis County.
Sec. 45.263. RULES. The commissioner may adopt rules
necessary for the administration of the bond guarantee program
under this subchapter.
SECTION 2. Sections 45.053(a), (b), and (c), Education
Code, are amended to read as follows:
(a) Except as provided by Subsection (d), the commissioner
may not approve bonds for guarantee under this subchapter if the
approval would result in the total amount of outstanding guaranteed
bonds under this subchapter exceeding an amount equal to 2-1/2
times the cost value of the permanent school fund, as estimated by
the board and certified by the state auditor.
(b) Each year, the state auditor shall analyze the status of
guaranteed bonds under this subchapter as compared to the cost
value of the permanent school fund. Based on that analysis, the
state auditor shall certify whether the amount of bonds guaranteed
under this subchapter is within the limit prescribed by this
section.
(c) The commissioner shall prepare and the board shall adopt
an annual report on the status of the guaranteed bond program under
this subchapter.
SECTION 3. Subchapter C, Chapter 45, Education Code, is
amended by adding Section 45.0531 to read as follows:
Sec. 45.0531. ADDITIONAL LIMITATION: RESERVATION OF
PERCENTAGE OF PERMANENT SCHOOL FUND VALUE. (a) In addition to the
limitation on the approval of bonds for guarantee under Section
45.053, the board by rule may establish a percentage of the cost
value of the permanent school fund to be reserved from use in
guaranteeing bonds under this subchapter.
(b) If the board has reserved a portion of the permanent
school fund under Subsection (a), each year, the state auditor
shall analyze the status of the reserved portion compared to the
cost value of the permanent school fund. Based on that analysis,
the state auditor shall certify whether the portion of the
permanent school fund reserved from use in guaranteeing bonds under
this subchapter satisfies the reserve percentage established.
(c) If the board has reserved a portion of the permanent
school fund under Subsection (a), the board shall at least annually
consider whether to change the reserve percentage established to
ensure that the reserve percentage allows compliance with federal
law and regulations and serves to enable bonds guaranteed under
this subchapter to receive the highest available credit rating, as
determined by the board.
(d) This section may not be construed in a manner that
impairs, limits, or removes the guarantee of bonds that have been
approved by the commissioner.
SECTION 4. Section 45.054, Education Code, is amended to
read as follows:
Sec. 45.054. ELIGIBILITY. To be eligible for approval by
the commissioner, bonds must be:
(1) issued under Subchapter A of this chapter or under
Subchapter A, Chapter 1207, Government Code, to make a deposit
under Subchapter B or C of that chapter, by an accredited school
district; and
(2) payable from an ad valorem tax under Section
45.003.
SECTION 5. Section 45.055, Education Code, is amended to
read as follows:
Sec. 45.055. APPLICATION FOR GUARANTEE. (a) A school
district seeking the guarantee of eligible bonds shall apply to the
commissioner using a form adopted by the commissioner for the
purpose. The commissioner may adopt a single form on which a
district seeking the guarantee of eligible bonds may apply
simultaneously first for a guarantee under this subchapter and
then, if that guarantee is rejected, for a guarantee under
Subchapter I.
(b) An [The] application under Subsection (a) must include:
(1) the name of the school district and the principal
amount of the bonds to be issued;
(2) the name and address of the district's paying agent
for those bonds; and
(3) the maturity schedule, estimated interest rate,
and date of the bonds.
(c) An [The] application under Subsection (a) must be
accompanied by a fee set by rule of the board in an amount designed
to cover the costs of administering the guarantee of the bonds
[program].
SECTION 6. Section 45.056(b), Education Code, is amended to
read as follows:
(b) If following the investigation the commissioner is
satisfied that the school district's bonds should be guaranteed
under this subchapter or Subchapter I, as applicable, the
commissioner shall endorse the bonds.
SECTION 7. Section 45.061, Education Code, is amended by
adding Subsections (c) and (d) to read as follows:
(c) The commissioner may order a school district to set an
ad valorem tax rate capable of producing an amount of revenue
sufficient to enable the district to:
(1) provide reimbursement under this section; and
(2) pay the principal of and interest on district
bonds as the principal and interest become due.
(d) If a school district fails to comply with the
commissioner's order under Subsection (c), the commissioner may
impose any sanction on the district authorized to be imposed on a
district under Subchapter G, Chapter 39, including appointment of
a board of managers or annexation to another district, regardless
of the district's accreditation status or the duration of a
particular accreditation status.
SECTION 8. Section 45.062(a), Education Code, is amended to
read as follows:
(a) If a total of two or more payments [from the permanent
school fund] are made under this subchapter or Subchapter I on the
guaranteed bonds of a school district and the commissioner
determines that the school district is acting in bad faith under the
guarantee, the commissioner may request the attorney general to
institute appropriate legal action to compel the school district
and its officers, agents, and employees to comply with the duties
required of them by law in regard to the bonds.
SECTION 9. Section 45.001(a), Education Code, is amended to
read as follows:
(a) The governing board of an independent school district,
including the city council or commission that has jurisdiction over
a municipally controlled independent school district, the
governing board of a rural high school district, and the
commissioners court of a county, on behalf of each common school
district under its jurisdiction, may:
(1) issue bonds for:
(A) the construction, acquisition, and equipment
of school buildings in the district;
(B) the acquisition of property or the
refinancing of property financed under a contract entered under
Subchapter A, Chapter 271, Local Government Code, regardless of
whether payment obligations under the contract are due in the
current year or a future year;
(C) the purchase of the necessary sites for
school buildings; and
(D) the purchase of new school buses; and
(2) may levy, pledge, assess, and collect annual ad
valorem taxes sufficient to pay:
(A) the principal of and interest on the bonds as
the principal and interest become due, subject to Section 45.003;
and
(B) any reimbursement under Section 45.061 or
45.261.
SECTION 10. This Act takes effect immediately if it
receives a vote of two-thirds of all the members elected to each
house, as provided by Section 39, Article III, Texas Constitution.
If this Act does not receive the vote necessary for immediate
effect, this Act takes effect September 1, 2009.