Texas 2009 - 81st Regular

Texas Senate Bill SB1255 Compare Versions

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1	1	81R31089 CAS-F
2	2	By: Shapiro S.B. No. 1255
3	3	Substitute the following for S.B. No. 1255:
4	4	By: Aycock C.S.S.B. No. 1255
5	5
6	6
7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to a state intercept credit enhancement program for
10	10	certain bonds issued by school districts.
11	11	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
12	12	SECTION 1. Chapter 45, Education Code, is amended by adding
13	13	Subchapter I to read as follows:
14	14	SUBCHAPTER I. INTERCEPT PROGRAM TO PROVIDE CREDIT ENHANCEMENT FOR
15	15	BONDS
16	16	Sec. 45.251. DEFINITIONS. In this subchapter:
17	17	(1) "Board" means the State Board of Education.
18	18	(2) "Foundation School Program" means the program
19	19	established under Chapters 41, 42, and 46, or any successor program
20	20	of state appropriated funding for school districts in this state.
21	21	(3) "Paying agent" means the financial institution
22	22	that is designated by a school district as the district's agent for
23	23	the payment of the principal of and interest on bonds for which
24	24	credit enhancement is provided under this subchapter.
25	25	Sec. 45.252. INTERCEPT CREDIT ENHANCEMENT PROGRAM. (a) If
26	26	a school district's application for guarantee of district bonds by
27	27	the corpus and income of the permanent school fund as provided by
28	28	Subchapter C is rejected, the district may apply under this
29	29	subchapter for credit enhancement of bonds described by Section
30	30	45.054 by money appropriated for the Foundation School Program,
31	31	other than money that is appropriated to school districts
32	32	specifically:
33	33	(1) as required under the Texas Constitution; or
34	34	(2) for assistance in paying debt service.
35	35	(b) The same school district bonds may not benefit under
36	36	both Subchapter C and this subchapter.
37	37	(c) Notwithstanding any amendment of this subchapter or
38	38	other law, the credit enhancement provided under this subchapter
39	39	for school district bonds remains in effect until the date those
40	40	bonds mature or are defeased in accordance with state law.
41	41	Sec. 45.253. LIMITATION ON INTERCEPT CREDIT ENHANCEMENT.
42	42	(a) In each month of each fiscal year, the commissioner shall
43	43	determine the amount of funds available to make payments under this
44	44	subchapter from the Foundation School Program through the end of
45	45	the fiscal year and the amounts due under this code to public
46	46	schools from the Foundation School Program through the end of the
47	47	fiscal year. The commissioner may revise a determination under
48	48	this subsection during the fiscal year as appropriate.
49	49	(b) The commissioner may not endorse particular bonds for
50	50	credit enhancement under this subchapter until the commissioner
51	51	has:
52	52	(1) made the determinations required under Subsection
53	53	(a); and
54	54	(2) determined that the endorsement will not cause the
55	55	projected debt service coming due during the remainder of the
56	56	fiscal year for bonds provided credit enhancement under this
57	57	subchapter to exceed the lesser of:
58	58	(A) one-half of the amount of funds due to public
59	59	schools from the Foundation School Program for the remainder of the
60	60	fiscal year; or
61	61	(B) one-half of the amount of funds anticipated
62	62	to be on hand in the Foundation School Program to make payments for
63	63	the remainder of the fiscal year.
64	64	(c) The commissioner may not endorse particular bonds for
65	65	credit enhancement under this subchapter unless the commissioner
66	66	has determined that the maximum annual debt service on the bonds
67	67	during any state fiscal year will not exceed the lesser of:
68	68	(1) one-half of the amount of funds due to public
69	69	schools from the Foundation School Program for the current fiscal
70	70	year; or
71	71	(2) one-half of the amount of funds anticipated to be
72	72	on hand in the Foundation School Program to make payments for the
73	73	current fiscal year.
74	74	Sec. 45.254. ELIGIBILITY. To be eligible for approval by
75	75	the commissioner for credit enhancement under this subchapter:
76	76	(1) bonds must be issued in the manner provided by
77	77	Section 45.054; and
78	78	(2) payments of all of the principal of the bonds must
79	79	be scheduled during the first six months of the state fiscal year.
80	80	Sec. 45.2541. INTERCEPT OF FOUNDATION SCHOOL PROGRAM
81	81	APPROPRIATIONS AS CREDIT ENHANCEMENT. (a) Money appropriated for
82	82	the Foundation School Program that may be used for the purpose under
83	83	this subchapter and under any other law, rule, or regulation shall
84	84	be used to provide credit enhancement for eligible bonds as
85	85	provided by this subchapter, the General Appropriations Act, and
86	86	board rule if using the permanent school fund to guarantee
87	87	particular bonds would result in:
88	88	(1) a total amount of outstanding bonds guaranteed by
89	89	the permanent school fund exceeding the amount authorized under:
90	90	(A) Section 45.053; or
91	91	(B) federal law or regulations; or
92	92	(2) the use of a portion of the cost value of the
93	93	permanent school fund reserved under Section 45.0531, as determined
94	94	by the board.
95	95	(b) If Foundation School Program appropriations are not
96	96	sufficient in any year to pay principal or interest that becomes due
97	97	on bonds for which credit enhancement is provided under this
98	98	subchapter, the payment shall be made from the following year's
99	99	Foundation School Program appropriations that may be used for the
100	100	purpose under this subchapter before those appropriations are used
101	101	for any other Foundation School Program purpose.
102	102	Sec. 45.255. APPLICATION FOR CREDIT ENHANCEMENT. (a) A
103	103	school district seeking credit enhancement of eligible bonds under
104	104	this subchapter shall apply to the commissioner using a form
105	105	adopted by the commissioner for the purpose. The commissioner may
106	106	adopt a single form on which a district seeking guarantee or credit
107	107	enhancement of eligible bonds may apply simultaneously first for a
108	108	guarantee under Subchapter C and then, if that guarantee is
109	109	rejected, for credit enhancement under this subchapter.
110	110	(b) An application under Subsection (a) must:
111	111	(1) include the information required by Section
112	112	45.055(b); and
113	113	(2) be accompanied by a fee set by board rule in an
114	114	amount designed to cover the costs of administering the programs to
115	115	provide the guarantee or credit enhancement of eligible bonds.
116	116	Sec. 45.256. INVESTIGATION. (a) Following receipt of an
117	117	application under Section 45.255, the commissioner shall conduct an
118	118	investigation of the applicant school district as provided for an
119	119	investigation under Section 45.056(a).
120	120	(b) If following the investigation under Subsection (a) the
121	121	commissioner is satisfied that the school district's bonds should
122	122	be guaranteed under Subchapter C or provided credit enhancement
123	123	under this subchapter, as applicable, the commissioner shall
124	124	endorse the bonds.
125	125	Sec. 45.257. CREDIT ENHANCEMENT ENDORSEMENT. (a) The
126	126	commissioner shall endorse bonds approved for credit enhancement
127	127	under this subchapter in substantially the same manner provided
128	128	under Section 45.057 for endorsing bonds approved under Subchapter
129	129	C.
130	130	(b) The credit enhancement is not effective unless the
131	131	attorney general approves the bonds under Section 45.005.
132	132	Sec. 45.258. NOTICE OF FAILURE OR INABILITY TO PAY.
133	133	Immediately following a determination that a school district will
134	134	be or is unable to pay maturing or matured principal or interest on
135	135	a bond for which credit enhancement is provided under this
136	136	subchapter, but not later than the 10th day before maturity date,
137	137	the school district shall notify the commissioner.
138	138	Sec. 45.259. PAYMENT FROM INTERCEPTED FUNDS.
139	139	(a) Immediately following receipt of notice under Section 45.258,
140	140	the commissioner shall instruct the comptroller to transfer to the
141	141	district's paying agent from appropriations to the Foundation
142	142	School Program that may be used for the purpose under Section 45.252
143	143	and other law the amount necessary to pay the maturing or matured
144	144	principal or interest.
145	145	(b) Immediately following receipt of the funds for payment
146	146	of the principal or interest, the paying agent shall pay the amount
147	147	due.
148	148	(c) The procedures prescribed by Subsections (a) and (b)
149	149	apply to each payment of principal or interest on bonds as the
150	150	payment becomes due until the bonds mature or are defeased in
151	151	accordance with state law.
152	152	(d) If money appropriated for the Foundation School Program
153	153	is used for purposes of this subchapter and as a result there is
154	154	insufficient money to fully fund the Foundation School Program, the
155	155	commissioner shall, to the extent necessary, reduce each school
156	156	district's foundation school fund allocations, other than any
157	157	portion appropriated from the available school fund, in the same
158	158	manner provided by Section 42.253(h) for a case in which school
159	159	district entitlements exceed the amount appropriated. The
160	160	following fiscal year, a district's entitlement under Section
161	161	42.253 is increased by an amount equal to the reduction under this
162	162	subsection.
163	163	(e) A payment made under this section by the state on behalf
164	164	of a school district of funds the district owes on bonds for which
165	165	credit enhancement is provided under this subchapter creates a
166	166	repayment obligation of the district to the state regardless of the
167	167	maturity date of, or any payment of interest on, the bonds.
168	168	(f) This section does not create a debt of the state under
169	169	the Texas Constitution or, except to the extent provided by this
170	170	subchapter, create a payment obligation.
171	171	Sec. 45.260. BONDS NOT ACCELERATED ON FAILURE TO PAY. If a
172	172	school district fails to pay principal or interest on a bond for
173	173	which credit enhancement is provided under this subchapter when the
174	174	amount matures, other amounts not yet mature are not accelerated
175	175	and do not become due by virtue of the district's failure to pay
176	176	amounts matured.
177	177	Sec. 45.261. REIMBURSEMENT OF FOUNDATION SCHOOL PROGRAM.
178	178	(a) If the commissioner orders payment from the money appropriated
179	179	to the Foundation School Program on behalf of a school district that
180	180	is not required to reduce its wealth per student under Chapter 41,
181	181	the commissioner shall direct the comptroller to withhold the
182	182	amount paid from the first state money payable to the district. If
183	183	the commissioner orders payment from the money appropriated to the
184	184	Foundation School Program on behalf of a school district that is
185	185	required to reduce its wealth per student under Chapter 41, the
186	186	commissioner shall increase amounts due from the district under
187	187	that chapter in a total amount equal to the amount of payments made
188	188	on behalf of the district under this subchapter. Amounts withheld
189	189	or received under this subsection shall be used for the Foundation
190	190	School Program.
191	191	(b) In accordance with commissioner rules, the commissioner
192	192	may authorize reimbursement of the Foundation School Program in a
193	193	manner other than that provided by this section.
194	194	(c) The commissioner may order a school district to set an
195	195	ad valorem tax rate capable of producing an amount of revenue
196	196	sufficient to enable the district to:
197	197	(1) provide reimbursement under this section; and
198	198	(2) pay the remaining principal of and interest on the
199	199	bonds as the principal and interest become due.
200	200	(d) If a school district fails to comply with the
201	201	commissioner's order under Subsection (c), the commissioner may
202	202	impose any sanction on the district authorized to be imposed on a
203	203	district under Subchapter G, Chapter 39, including appointment of a
204	204	board of managers or annexation to another district, regardless of
205	205	the district's accreditation status or the duration of a particular
206	206	accreditation status.
207	207	(e) Any part of a school district's tax rate attributable to
208	208	producing revenue for purposes of Subsection (c)(1) is considered
209	209	part of the district's:
210	210	(1) current debt rate for purposes of computing a
211	211	rollback tax rate under Section 26.08, Tax Code; and
212	212	(2) interest and sinking fund tax rate.
213	213	(f) On reimbursement by a school district as required by
214	214	this section, the commissioner shall pay to the district any amount
215	215	withheld under this section.
216	216	Sec. 45.262. REPEATED FAILURE TO PAY. (a) If a total of
217	217	two or more payments are made under Subchapter C or this subchapter
218	218	on the bonds of a school district and the commissioner determines
219	219	that the district is acting in bad faith under the guarantee program
220	220	under Subchapter C or the credit enhancement program under this
221	221	subchapter, the commissioner may request the attorney general to
222	222	institute appropriate legal action to compel the district and the
223	223	district's officers, agents, and employees to comply with the
224	224	duties required of them by law in regard to the bonds.
225	225	(b) Jurisdiction of proceedings under this section is in
226	226	district court in Travis County.
227	227	Sec. 45.263. RULES. (a) The commissioner shall adopt
228	228	rules necessary for the administration of the bond credit
229	229	enhancement program under this subchapter.
230	230	(b) In adopting rules under Subsection (a), the
231	231	commissioner shall establish an annual deadline by which a school
232	232	district must pay the debt service on bonds for which credit
233	233	enhancement is provided under this subchapter. The deadline
234	234	established may not be later than the 10th day before the date
235	235	specified under Section 42.259 for payment to school districts of
236	236	the final Foundation School Program installment for a state fiscal
237	237	year.
238	238	SECTION 2. Section 45.052, Education Code, is amended to
239	239	read as follows:
240	240	Sec. 45.052. GUARANTEE. (a) On approval by the
241	241	commissioner, bonds issued under Subchapter A, including refunding
242	242	bonds, are guaranteed by the corpus and income of the permanent
243	243	school fund.
244	244	(b) Notwithstanding any amendment of this subchapter or
245	245	other law, the guarantee under this subchapter of school district
246	246	bonds remains in effect until the date those bonds mature or are
247	247	defeased in accordance with state law.
248	248	SECTION 3. Subsections (a), (b), and (c), Section 45.053,
249	249	Education Code, are amended to read as follows:
250	250	(a) Except as provided by Subsection (d), the commissioner
251	251	may not approve bonds for guarantee under this subchapter if the
252	252	approval would result in the total amount of outstanding guaranteed
253	253	bonds under this subchapter exceeding an amount equal to 2-1/2
254	254	times the cost value of the permanent school fund, as estimated by
255	255	the board and certified by the state auditor.
256	256	(b) Each year, the state auditor shall analyze the status of
257	257	guaranteed bonds under this subchapter as compared to the cost
258	258	value of the permanent school fund. Based on that analysis, the
259	259	state auditor shall certify whether the amount of bonds guaranteed
260	260	under this subchapter is within the limit prescribed by this
261	261	section.
262	262	(c) The commissioner shall prepare and the board shall adopt
263	263	an annual report on the status of the guaranteed bond program under
264	264	this subchapter.
265	265	SECTION 4. Subchapter C, Chapter 45, Education Code, is
266	266	amended by adding Section 45.0531 to read as follows:
267	267	Sec. 45.0531. ADDITIONAL LIMITATION: RESERVATION OF
268	268	PERCENTAGE OF PERMANENT SCHOOL FUND VALUE. (a) In addition to the
269	269	limitation on the approval of bonds for guarantee under Section
270	270	45.053, the board by rule may establish a percentage of the cost
271	271	value of the permanent school fund to be reserved from use in
272	272	guaranteeing bonds under this subchapter.
273	273	(b) If the board has reserved a portion of the permanent
274	274	school fund under Subsection (a), each year, the state auditor
275	275	shall analyze the status of the reserved portion compared to the
276	276	cost value of the permanent school fund. Based on that analysis,
277	277	the state auditor shall certify whether the portion of the
278	278	permanent school fund reserved from use in guaranteeing bonds under
279	279	this subchapter satisfies the reserve percentage established.
280	280	(c) If the board has reserved a portion of the permanent
281	281	school fund under Subsection (a), the board shall at least annually
282	282	consider whether to change the reserve percentage established to
283	283	ensure that the reserve percentage allows compliance with federal
284	284	law and regulations and serves to enable bonds guaranteed under
285	285	this subchapter to receive the highest available credit rating, as
286	286	determined by the board.
287	287	(d) This section may not be construed in a manner that
288	288	impairs, limits, or removes the guarantee of bonds that have been
289	289	approved by the commissioner.
290	290	SECTION 5. Section 45.055, Education Code, is amended to
291	291	read as follows:
292	292	Sec. 45.055. APPLICATION FOR GUARANTEE. (a) A school
293	293	district seeking [the] guarantee of eligible bonds under this
294	294	subchapter shall apply to the commissioner using a form adopted by
295	295	the commissioner for the purpose. The commissioner may adopt a
296	296	single form on which a district seeking guarantee or credit
297	297	enhancement of eligible bonds may apply simultaneously first for
298	298	guarantee under this subchapter and then, if that guarantee is
299	299	rejected, for credit enhancement under Subchapter I.
300	300	(b) An [The] application under Subsection (a) must include:
301	301	(1) the name of the school district and the principal
302	302	amount of the bonds to be issued;
303	303	(2) the name and address of the district's paying agent
304	304	for those bonds; and
305	305	(3) the maturity schedule, estimated interest rate,
306	306	and date of the bonds.
307	307	(c) An [The] application under Subsection (a) must be
308	308	accompanied by a fee set by rule of the board in an amount designed
309	309	to cover the costs of administering the programs to provide the
310	310	guarantee or credit enhancement of eligible bonds [program].
311	311	SECTION 6. Subsection (b), Section 45.056, Education Code,
312	312	is amended to read as follows:
313	313	(b) If following the investigation the commissioner is
314	314	satisfied that the school district's bonds should be guaranteed
315	315	under this subchapter or provided credit enhancement under
316	316	Subchapter I, as applicable, the commissioner shall endorse the
317	317	bonds.
318	318	SECTION 7. Section 45.061, Education Code, is amended by
319	319	adding Subsections (c) and (d) to read as follows:
320	320	(c) The commissioner may order a school district to set an
321	321	ad valorem tax rate capable of producing an amount of revenue
322	322	sufficient to enable the district to:
323	323	(1) provide reimbursement under this section; and
324	324	(2) pay the principal of and interest on district
325	325	bonds as the principal and interest become due.
326	326	(d) If a school district fails to comply with the
327	327	commissioner's order under Subsection (c), the commissioner may
328	328	impose any sanction on the district authorized to be imposed on a
329	329	district under Subchapter G, Chapter 39, including appointment of a
330	330	board of managers or annexation to another district, regardless of
331	331	the district's accreditation status or the duration of a particular
332	332	accreditation status.
333	333	SECTION 8. Subsection (a), Section 45.062, Education Code,
334	334	is amended to read as follows:
335	335	(a) If a total of two or more payments [from the permanent
336	336	school fund] are made under this subchapter or Subchapter I on the
337	337	[guaranteed] bonds of a school district and the commissioner
338	338	determines that the school district is acting in bad faith under the
339	339	guarantee program under this subchapter or the credit enhancement
340	340	program under Subchapter I, the commissioner may request the
341	341	attorney general to institute appropriate legal action to compel
342	342	the school district and its officers, agents, and employees to
343	343	comply with the duties required of them by law in regard to the
344	344	bonds.
345	345	SECTION 9. Section 42.259, Education Code, is amended by
346	346	adding Subsection (g) to read as follows:
347	347	(g) The commissioner shall make all annual Foundation
348	348	School Program payments under this section for purposes described
349	349	by Sections 45.252(a)(1) and (2) before the deadline established
350	350	under Section 45.263(b) for payment of debt service on bonds.
351	351	Notwithstanding any other provision of this section, the
352	352	commissioner may make Foundation School Program payments under this
353	353	section after the deadline established under Section 45.263(b) only
354	354	if the commissioner has not received notice under Section 45.258
355	355	concerning a district's failure or inability to pay matured
356	356	principal or interest on bonds.
357	357	SECTION 10. This Act takes effect immediately if it
358	358	receives a vote of two-thirds of all the members elected to each
359	359	house, as provided by Section 39, Article III, Texas Constitution.
360	360	If this Act does not receive the vote necessary for immediate
361	361	effect, this Act takes effect September 1, 2009.