Texas 2011 - 82nd 1st C.S.

Texas Senate Bill SB31 Compare Versions

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1	1	By: Shapiro S.B. No. 31
2	2	(In the Senate - Filed June 2, 2011; June 3, 2011, read
3	3	first time and referred to Committee on Education; June 6, 2011,
4	4	reported favorably by the following vote: Yeas 8, Nays 0;
5	5	June 6, 2011, sent to printer.)
6	6
7	7
8	8	A BILL TO BE ENTITLED
9	9	AN ACT
10	10	relating to the guarantee of open-enrollment charter school bonds
11	11	by the permanent school fund.
12	12	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
13	13	SECTION 1. Subchapter D, Chapter 12, Education Code, is
14	14	amended by adding Section 12.135 to read as follows:
15	15	Sec. 12.135. DESIGNATION AS CHARTER DISTRICT FOR PURPOSES
16	16	OF BOND GUARANTEE. (a) On the application of the charter holder,
17	17	the commissioner may grant designation as a charter district to an
18	18	open-enrollment charter school that meets financial standards
19	19	adopted by the commissioner. The financial standards must require
20	20	an open-enrollment charter school to have an investment grade
21	21	credit rating as specified by Section 45.0541.
22	22	(b) A charter district may apply for bonds issued under
23	23	Chapter 53 for the open-enrollment charter school to be guaranteed
24	24	by the permanent school fund as provided by Chapter 45.
25	25	SECTION 2. Section 45.051, Education Code, is amended by
26	26	adding Subdivision (1-a) and amending Subdivision (2) to read as
27	27	follows:
28	28	(1-a) "Charter district" means an open-enrollment
29	29	charter school designated as a charter district under Section
30	30	12.135.
31	31	(2) "Paying agent" means the financial institution
32	32	that is designated by a school district or charter district as its
33	33	agent for the payment of the principal of and interest on guaranteed
34	34	bonds.
35	35	SECTION 3. Section 45.052, Education Code, is amended to
36	36	read as follows:
37	37	Sec. 45.052. GUARANTEE. (a) On approval by the
38	38	commissioner, bonds issued under Subchapter A by a school district
39	39	or Chapter 53 for a charter district, including refunding bonds,
40	40	are guaranteed by the corpus and income of the permanent school
41	41	fund.
42	42	(b) Notwithstanding any amendment of this subchapter or
43	43	other law, the guarantee under this subchapter of school district
44	44	or charter district bonds remains in effect until the date those
45	45	bonds mature or are defeased in accordance with state law.
46	46	SECTION 4. Subchapter C, Chapter 45, Education Code, is
47	47	amended by adding Section 45.0532 to read as follows:
48	48	Sec. 45.0532. LIMITATION ON GUARANTEE OF CHARTER DISTRICT
49	49	BONDS. (a) In addition to the general limitation under Section
50	50	45.053, the commissioner may not approve charter district bonds for
51	51	guarantee under this subchapter in a total amount that exceeds the
52	52	percentage of the total available capacity of the guaranteed bond
53	53	program that is equal to the percentage of the number of students
54	54	enrolled in open-enrollment charter schools in this state compared
55	55	to the total number of students enrolled in all public schools in
56	56	this state, as determined by the commissioner.
57	57	(b) For purposes of Subsection (a), the total available
58	58	capacity of the guaranteed bond program is the limit established by
59	59	the board under Sections 45.053(d) and 45.0531 minus the total
60	60	amount of outstanding guaranteed bonds. Each time the board
61	61	increases the limit under Section 45.053(d), the total amount of
62	62	charter district bonds that may be guaranteed increases accordingly
63	63	under Subsection (a).
64	64	(c) Notwithstanding Subsections (a) and (b), the
65	65	commissioner may not approve charter district bonds for guarantee
66	66	under this subchapter if the guarantee will result in lower bond
67	67	ratings for school district bonds for which a guarantee is
68	68	requested under this subchapter.
69	69	(d) The commissioner may request that the comptroller place
70	70	the portion of the permanent school fund committed to the guarantee
71	71	of charter district bonds in a segregated account if the
72	72	commissioner determines that a separate account is needed to avoid
73	73	any negative impact on the bond ratings of school district bonds for
74	74	which a guarantee is requested under this subchapter.
75	75	(e) A guarantee of charter district bonds must be made in
76	76	accordance with this chapter and any applicable federal law.
77	77	SECTION 5. Section 45.054, Education Code, is amended to
78	78	read as follows:
79	79	Sec. 45.054. ELIGIBILITY OF SCHOOL DISTRICT BONDS. To be
80	80	eligible for approval by the commissioner, school district bonds
81	81	must be issued under Subchapter A of this chapter or under
82	82	Subchapter A, Chapter 1207, Government Code, to make a deposit
83	83	under Subchapter B or C of that chapter, by an accredited school
84	84	district.
85	85	SECTION 6. Subchapter C, Chapter 45, Education Code, is
86	86	amended by adding Section 45.0541 to read as follows:
87	87	Sec. 45.0541. ELIGIBILITY OF CHARTER DISTRICT BONDS. To be
88	88	eligible for approval by the commissioner, charter district bonds
89	89	must:
90	90	(1) without the guarantee, be rated as investment
91	91	grade by a nationally recognized investment rating firm; and
92	92	(2) be issued under Chapter 53.
93	93	SECTION 7. Subsections (a) and (b), Section 45.055,
94	94	Education Code, are amended to read as follows:
95	95	(a) A school district or charter district seeking guarantee
96	96	of eligible bonds under this subchapter shall apply to the
97	97	commissioner using a form adopted by the commissioner for the
98	98	purpose. The commissioner may adopt a single form on which a school
99	99	district seeking guarantee or credit enhancement of eligible bonds
100	100	may apply simultaneously first for guarantee under this subchapter
101	101	and then, if that guarantee is rejected, for credit enhancement
102	102	under Subchapter I.
103	103	(b) An application under Subsection (a) must include:
104	104	(1) the name of the school district or charter
105	105	district and the principal amount of the bonds to be issued;
106	106	(2) the name and address of the district's paying agent
107	107	for those bonds; and
108	108	(3) the maturity schedule, estimated interest rate,
109	109	and date of the bonds.
110	110	SECTION 8. Section 45.056, Education Code, is amended to
111	111	read as follows:
112	112	Sec. 45.056. INVESTIGATION. (a) Following receipt of an
113	113	application for the guarantee of bonds, the commissioner shall
114	114	conduct an investigation of the applicant school district or
115	115	charter district in regard to:
116	116	(1) the status of the district's accreditation; and
117	117	(2) the total amount of outstanding guaranteed bonds.
118	118	(b) If following the investigation the commissioner is
119	119	satisfied that the school district's bonds should be guaranteed
120	120	under this subchapter or provided credit enhancement under
121	121	Subchapter I, as applicable, or the charter district's bonds should
122	122	be guaranteed under this subchapter, the commissioner shall endorse
123	123	the bonds.
124	124	SECTION 9. Subsection (b), Section 45.057, Education Code,
125	125	is amended to read as follows:
126	126	(b) The guarantee is not effective unless the attorney
127	127	general approves the bonds under Section 45.005 or 53.40, as
128	128	applicable.
129	129	SECTION 10. Subchapter C, Chapter 45, Education Code, is
130	130	amended by adding Section 45.0571 to read as follows:
131	131	Sec. 45.0571. CHARTER DISTRICT BOND GUARANTEE RESERVE FUND.
132	132	(a) The charter district bond guarantee reserve fund is a special
133	133	fund in the state treasury outside the general revenue fund. The
134	134	following amounts shall be deposited in the fund:
135	135	(1) money due from a charter district as provided by
136	136	Subsection (b); and
137	137	(2) interest earned on balances in the fund.
138	138	(b) A charter district that has a bond guaranteed as
139	139	provided by this subchapter must annually remit to the
140	140	commissioner, for deposit in the charter district bond guarantee
141	141	reserve fund, an amount equal to 10 percent of the savings to the
142	142	charter district that is a result of the lower interest rate on the
143	143	bond due to the guarantee by the permanent school fund. The amount
144	144	due under this section shall be amortized and paid over the duration
145	145	of the bond. Each payment is due on the anniversary of the date the
146	146	bond was issued. The commissioner shall adopt rules to determine
147	147	the total and annual amounts due under this section.
148	148	(c) The commissioner may direct the comptroller to annually
149	149	withhold the amount due to the charter district bond guarantee
150	150	reserve fund under Subsection (b) for that year from the state funds
151	151	otherwise payable to the charter district.
152	152	(d) Each year, the commissioner shall:
153	153	(1) review the condition of the bond guarantee program
154	154	and the amount that must be deposited in the charter district bond
155	155	guarantee reserve fund from charter districts; and
156	156	(2) determine if charter districts should be required
157	157	to submit a greater percentage of the savings resulting from the
158	158	guarantee.
159	159	(e) The commissioner shall make recommendations to the
160	160	legislature based on the review under Subsection (d).
161	161	SECTION 11. Section 45.058, Education Code, is amended to
162	162	read as follows:
163	163	Sec. 45.058. NOTICE OF DEFAULT. Immediately following a
164	164	determination that a school district or charter district will be or
165	165	is unable to pay maturing or matured principal or interest on a
166	166	guaranteed bond, but not later than the fifth day before maturity
167	167	date, the school district or charter district shall notify the
168	168	commissioner.
169	169	SECTION 12. The heading to Section 45.059, Education Code,
170	170	is amended to read as follows:
171	171	Sec. 45.059. PAYMENT OF SCHOOL DISTRICT BOND ON DEFAULT
172	172	[FROM PERMANENT SCHOOL FUND].
173	173	SECTION 13. Subsection (a), Section 45.059, Education Code,
174	174	is amended to read as follows:
175	175	(a) Immediately following receipt of notice under Section
176	176	45.058 that a school district will be or is unable to pay maturing
177	177	or matured principal or interest on a guaranteed bond, the
178	178	commissioner shall instruct the comptroller to transfer from the
179	179	appropriate account in the permanent school fund to the district's
180	180	paying agent the amount necessary to pay the maturing or matured
181	181	principal or interest.
182	182	SECTION 14. Subchapter C, Chapter 45, Education Code, is
183	183	amended by adding Section 45.0591 to read as follows:
184	184	Sec. 45.0591. PAYMENT OF CHARTER DISTRICT BOND ON DEFAULT.
185	185	(a) Immediately following receipt of notice under Section 45.058
186	186	that a charter district will be or is unable to pay maturing or
187	187	matured principal or interest on a guaranteed bond, the
188	188	commissioner shall instruct the comptroller to transfer from the
189	189	charter district bond guarantee reserve fund created under Section
190	190	45.0571 to the district's paying agent the amount necessary to pay
191	191	the maturing or matured principal or interest.
192	192	(b) If money in the charter district bond guarantee reserve
193	193	fund is insufficient to pay the amount due on a bond under
194	194	Subsection (a), the commissioner shall instruct the comptroller to
195	195	transfer from the appropriate account in the permanent school fund
196	196	to the district's paying agent the amount necessary to pay the
197	197	balance of the unpaid maturing or matured principal or interest.
198	198	(c) Immediately following receipt of the funds for payment
199	199	of the principal or interest, the paying agent shall pay the amount
200	200	due and forward the canceled bond or coupon to the comptroller. The
201	201	comptroller shall hold the canceled bond or coupon on behalf of the
202	202	fund or funds from which payment was made.
203	203	(d) Following full reimbursement to the charter district
204	204	bond guarantee reserve fund and the permanent school fund, if
205	205	applicable, with interest, the comptroller shall further cancel the
206	206	bond or coupon and forward it to the charter district for which
207	207	payment was made.
208	208	SECTION 15. Section 45.060, Education Code, is amended to
209	209	read as follows:
210	210	Sec. 45.060. BONDS NOT ACCELERATED ON DEFAULT. If a school
211	211	district or charter district fails to pay principal or interest on a
212	212	guaranteed bond when it matures, other amounts not yet mature are
213	213	not accelerated and do not become due by virtue of the school
214	214	district's or charter district's default.
215	215	SECTION 16. The heading to Section 45.061, Education Code,
216	216	is amended to read as follows:
217	217	Sec. 45.061. REIMBURSEMENT OF FUNDS [PERMANENT SCHOOL
218	218	FUND].
219	219	SECTION 17. Section 45.061, Education Code, is amended by
220	220	amending Subsections (a) and (b) and adding Subsection (a-1) to
221	221	read as follows:
222	222	(a) If the commissioner orders payment from the permanent
223	223	school fund or the charter district bond guarantee reserve fund on
224	224	behalf of a school district or charter district, the commissioner
225	225	shall direct the comptroller to withhold the amount paid, plus
226	226	interest, from the first state money payable to the school district
227	227	or charter district. Except as provided by Subsection (a-1), the
228	228	[The] amount withheld shall be deposited to the credit of the
229	229	permanent school fund.
230	230	(a-1) After the permanent school fund has been reimbursed
231	231	for all money paid from the fund as the result of a default of a
232	232	charter district bond guaranteed under this subchapter, any
233	233	remaining amounts withheld under Subsection (a) shall be deposited
234	234	to the credit of the charter district bond guarantee reserve fund.
235	235	(b) In accordance with the rules of the board, the
236	236	commissioner may authorize reimbursement to the permanent school
237	237	fund or charter district bond guarantee reserve fund with interest
238	238	in a manner other than that provided by this section.
239	239	SECTION 18. Section 45.062, Education Code, is amended by
240	240	adding Subsection (a-1) to read as follows:
241	241	(a-1) If a total of two or more payments are made under this
242	242	subchapter on charter district bonds and the commissioner
243	243	determines that the charter district is acting in bad faith under
244	244	the guarantee program under this subchapter, the commissioner may
245	245	request the attorney general to institute appropriate legal action
246	246	to compel the charter district and its officers, agents, and
247	247	employees to comply with the duties required of them by law in
248	248	regard to the bonds.
249	249	SECTION 19. Subdivision (10), Section 53.02, Education
250	250	Code, is amended to read as follows:
251	251	(10) "Authorized charter school" means an
252	252	open-enrollment charter school that holds a charter granted under
253	253	Subchapter D, Chapter 12, and includes an open-enrollment charter
254	254	school designated as a charter district as provided by Section
255	255	12.135.
256	256	SECTION 20. Section 53.351, Education Code, is amended by
257	257	amending Subsection (f) and adding Subsection (f-1) to read as
258	258	follows:
259	259	(f) Except as provided by Subsection (f-1), a [A] revenue
260	260	bond issued under this section is not a debt of the state or any
261	261	state agency, political corporation, or political subdivision of
262	262	the state and is not a pledge of the faith and credit of any of these
263	263	entities. A revenue bond is payable solely from the revenue of the
264	264	authorized open-enrollment charter school on whose behalf the bond
265	265	is issued. A revenue bond issued under this section must contain on
266	266	its face a statement to the effect that:
267	267	(1) neither the state nor a state agency, political
268	268	corporation, or political subdivision of the state is obligated to
269	269	pay the principal of or interest on the bond; and
270	270	(2) neither the faith and credit nor the taxing power
271	271	of the state or any state agency, political corporation, or
272	272	political subdivision of the state is pledged to the payment of the
273	273	principal of or interest on the bond.
274	274	(f-1) Subsection (f) does not apply to a revenue bond issued
275	275	under this section for a charter district if the bond is approved
276	276	for guarantee by the permanent school fund under Subchapter C,
277	277	Chapter 45.
278	278	SECTION 21. This Act applies only to a bond issued or
279	279	refunded on or after the effective date of this Act by an
280	280	open-enrollment charter school designated as a charter district
281	281	under Section 12.135, Education Code, as added by this Act. A bond
282	282	issued or refunded by an open-enrollment charter school before the
283	283	effective date of this Act is governed by the law in effect
284	284	immediately before that date, and that law is continued in effect
285	285	for that purpose.
286	286	SECTION 22. This Act takes effect on the 91st day after the
287	287	last day of the legislative session.
288	288	* * * * *