82R8849 KSD-F
By: Patrick S.B. No. 1822
A BILL TO BE ENTITLED
AN ACT
relating to the administration of certain supplemental student loan
programs and the issuance of private activity bonds by qualified
nonprofit corporations.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The legislature, giving due consideration to the
historical and continuing interest of the people of Texas in
encouraging deserving and qualified persons to realize their
aspirations for education beyond high school, finds and declares
that postsecondary education for qualified Texans who desire to
pursue such education is important to the welfare and security of
this state and the nation and, consequently, is an important public
purpose. The legislature finds and declares that the state can
achieve its full economic and social potential only if every
individual Texan has the opportunity to contribute to the full
extent of the individual's capabilities and only when financial
barriers to the individual's economic, social, and educational
goals are removed. It is, therefore, the policy of the legislature
and the purpose of this Act to assist and permit qualified nonprofit
corporations to carry out one or more supplemental programs to
assist qualified students by making financial and other assistance
available to borrowers or institutions to finance the cost of
attendance at an accredited postsecondary educational institution.
SECTION 2. Chapter 53B, Education Code, is amended by
adding Subchapter D to read as follows:
SUBCHAPTER D. ADMINISTRATION OF SUPPLEMENTAL LOAN PROGRAMS AND
ISSUANCE OF PRIVATE ACTIVITY BONDS BY QUALIFIED
NONPROFIT CORPORATIONS
Sec. 53B.61. DEFINITIONS. In this subchapter:
(1) "Closing" means the issuance and delivery of a
supplemental program bond by a qualified nonprofit corporation in
exchange for the required payment for the supplemental program
bond.
(2) "Internal Revenue Code" means the Internal Revenue
Code of 1986 and its subsequent amendments.
(3) "Nationally recognized statistical rating
organization" has the meaning assigned by Section 3(a)(62),
Securities Exchange Act of 1934 (15 U.S.C. Section 78c(a)(62)).
(4) "Private activity bond" has the meaning assigned
by Section 141(a), Internal Revenue Code.
(5) "Qualified student loan bond" has the meaning
assigned by Section 144(b), Internal Revenue Code.
(6) "Supplemental program" means a program
established, implemented, administered, and financed by a
qualified nonprofit corporation under Section 53B.63 to provide
supplemental program education loans.
(7) "Supplemental program bonds" includes bonds,
notes, refunding bonds, commercial paper, pass-through
instruments, or any other evidences of obligations of a qualified
nonprofit corporation secured by a capital reserve fund established
under Section 53B.65 and issued under this subchapter for the
purpose of originating, acquiring, or financing supplemental
program education loans.
(8) "Supplemental program education loan" means an
alternative education loan made by a qualified nonprofit
corporation under a supplemental program or by or on behalf of an
accredited institution to a student or to parents of a student, or
both, in amounts not to exceed the maximum amounts specified by a
qualified nonprofit corporation under its supplemental program to
finance part or all of the student's cost of attendance.
Sec. 53B.62. DETERMINATION BY COMPTROLLER OF QUALIFIED
NONPROFIT CORPORATION AUTHORITY TO ISSUE PRIVATE ACTIVITY BONDS.
The comptroller shall determine whether the definition of a
qualified scholarship funding corporation under Section 150(d),
Internal Revenue Code, allows a qualified nonprofit corporation to
issue private activity bonds consisting of qualified student loan
bonds in accordance with Section 144(b)(1)(B), Internal Revenue
Code. On the making by the comptroller of a determination that the
issuance is permissible:
(1) the comptroller shall provide notice of its
determination to the Legislative Budget Board; and
(2) each qualified nonprofit corporation may apply for
a student loan bond allocation in compliance with Chapter 1372,
Government Code, with respect to its supplemental program bonds
under this subchapter.
Sec. 53B.63. SUPPLEMENTAL PROGRAM. (a) A qualified
nonprofit corporation may administer one or more supplemental
programs approved by the comptroller under Section 53B.64 under
which the qualified nonprofit corporation makes financial and other
assistance available to borrowers or accredited institutions to
finance the cost of attendance, issues supplemental program bonds,
lends the proceeds of supplemental program bonds, and exercises any
other powers authorized by this subchapter.
(b) Each qualified nonprofit corporation administering a
supplemental program approved by the comptroller shall establish
rules pertaining to participation in its supplemental programs,
including rules relating to issuing supplemental program bonds,
borrowing money, servicing and collection of supplemental program
education loans, and other policies governing the operation of its
supplemental programs.
(c) A qualified nonprofit corporation that has issued
supplemental program bonds to support a supplemental program may
continue to exercise the powers granted by the Texas Nonprofit
Corporation Law, including the power to issue bonds or otherwise
incur debt that does constitute a supplemental program bond and is
not secured by a capital reserve fund created and established under
Section 53B.65 for the purpose of financing or purchasing
alternative education loans or guaranteed student loans.
Sec. 53B.64. COMPTROLLER APPROVAL OF SUPPLEMENTAL
PROGRAMS. (a) Pursuant to Section 144(b)(1)(B), Internal Revenue
Code, the comptroller on behalf of the state may approve
supplemental programs administered by a qualified nonprofit
corporation and shall establish procedures for that approval. The
procedures established by the comptroller shall require that:
(1) the comptroller permit qualified nonprofit
corporations to submit the terms of any proposed supplemental
programs to the comptroller for approval on or after January 1 and
before June 1 of each calendar year;
(2) the comptroller, after providing notice of the
time, place, and purpose of the public hearing by publishing notice
in a newspaper of general circulation earlier than the 10th day
before the date of the hearing, conduct a public hearing before July
2 of each calendar year to consider the approval of proposed
supplemental programs;
(3) a proposed supplemental program submitted by a
qualified nonprofit corporation be accompanied by a nonrefundable
application fee in the amount of $500 that the comptroller shall
retain to offset the costs of holding the related public hearing;
(4) the approval of a supplemental program be
memorialized in a written resolution adopted by the comptroller;
(5) any supplemental program bonds issued to support
an approved supplemental program receive, on or before the closing
date, an initial unenhanced credit rating of not less than an "A"
category or the equivalent of that rating as rated by a nationally
recognized statistical rating organization; and
(6) the comptroller not approve any supplemental
program that discriminates on the basis of the location of the
accredited institutions in which the students enroll.
(b) The comptroller may charge a qualified nonprofit
corporation an annual capital reserve fund maintenance fee in an
amount not to exceed 0.50 percent of the capital reserve
requirement relating to a capital reserve fund created and
established under Section 53B.65 that secures supplemental program
bonds issued under a supplemental program. Any required capital
reserve fund maintenance fee must be established in the written
resolution approving the supplemental program. The payment of any
required capital reserve fund maintenance fee by the related
qualified nonprofit corporation shall commence on the closing date
of the related supplemental program bonds and is payable annually
in arrears on each anniversary date after the closing date of the
related supplemental program bonds.
(c) Following the initial approval of a supplemental
program by the comptroller, the comptroller shall establish:
(1) a process for the approval of any material changes
in terms with respect to an approved supplemental program; and
(2) procedures allowing a qualified nonprofit
corporation to petition for a special hearing for the approval of
material changes in the terms with respect to an approved
supplemental program.
Sec. 53B.65. CAPITAL RESERVE FUNDS; OBLIGATION OF THE STATE.
(a) As part of a supplemental program administered under Section
53B.63, a qualified nonprofit corporation may create and establish
one or more capital reserve funds and may pay into the capital
reserve fund any money appropriated and made available by the state
for the purposes of that fund, any proceeds of the sale by the
qualified nonprofit corporation of supplemental program bonds to
the extent determined by the qualified nonprofit corporation, and
any other money available to the qualified nonprofit corporation.
A qualified nonprofit corporation may not create or establish any
capital reserve fund under this section to secure supplemental
program bonds issued as qualified student loan bonds until the
determination described by Section 53B.62 has been made by the
comptroller.
(b) Except as otherwise provided by this section, money held
in any capital reserve fund must be used solely with respect to
supplemental program bonds, the repayment of which is secured by
any such fund and solely for the payment of principal of
supplemental program bonds, the purchase or redemption of those
supplemental program bonds, including any fees or premiums, and the
payment of interest on those supplemental program bonds. In
addition, if a qualified nonprofit corporation obtains a letter of
credit, insurance contract, surety bond, or similar financial
undertaking to establish and fund a capital reserve fund under this
section, money in that capital reserve fund may be used to pay all
reimbursement obligations of the qualified nonprofit corporation
established in connection with that letter of credit, insurance
contract, surety bond, or other financial undertaking, including
all fees, expenses, indemnities, and commissions. Money in excess
of the reserve requirement established by Subsection (c) may be
transferred to other funds and accounts of the qualified nonprofit
corporation.
(c) A qualified nonprofit corporation may establish a
capital reserve requirement for a capital reserve fund by providing
that money in the fund may not be withdrawn at any time in an amount
that would reduce the amount of the fund to less than the maximum
amount of principal and interest becoming due by reason of maturity
or a required sinking fund payment in the next succeeding period not
exceeding 24 months within which any such maturity occurs or any
such payment is required, except for the purpose of paying the
amount due on any interest payment date or on maturity or making a
sinking fund payment with respect to supplemental program bonds
secured by the capital reserve fund.
(d) A qualified nonprofit corporation may provide that it
will not issue supplemental program bonds if the capital reserve
requirement established under Subsection (c) with respect to
supplemental program bonds outstanding and to be issued that are
secured by the capital reserve fund will exceed the amount of the
capital reserve fund at the time of issuance, unless the qualified
nonprofit corporation, at the time of issuance of the supplemental
program bonds, deposits in the capital reserve fund from proceeds
of the supplemental program bonds to be issued, or from other
sources, an amount that, together with the amount in the capital
reserve fund, is not less than the capital reserve requirement.
(e) On or before September 1 of each year, a qualified
nonprofit corporation shall certify to the comptroller and the
Legislative Budget Board the amount, if any, necessary to restore
the amount in any capital reserve fund to which this subsection
applies, as stated in the trust indenture or other document, to the
capital reserve requirement. The comptroller shall cause to be
paid directly from legislative appropriations or from other funds
designated by the Legislative Budget Board under its budget
execution authority to the qualified nonprofit corporation during
the current state fiscal year the amount necessary to restore the
amount in the capital reserve fund to the capital reserve
requirement.
(f) Neither this state nor any political subdivision of this
state is obligated to pay the principal of or the interest on
supplemental program bonds, except from amounts on deposit in the
applicable capital reserve funds, and neither the faith and credit
nor the taxing power of this state or of any political subdivision
of this state is pledged to the payment of the principal of, premium
if any, or interest on supplemental program bonds. The issuance of
supplemental program bonds does not directly, indirectly, or
contingently obligate this state or any political subdivision of
this state to levy or pledge any form of taxation whatsoever or to
make any appropriation for the payment of supplemental program
bonds.
(g) The aggregate sum of capital reserve requirements
relating to capital reserve funds securing supplemental program
bonds may not at any time exceed $98 million.
SECTION 3. This Act takes effect September 1, 2011.