By: Hancock S.B. No. 1384
A BILL TO BE ENTITLED
AN ACT
relating to the authority of an independent school district to
invest in local water projects.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 2256.0204, Government Code, is amended
by amending Subsections (a), (d), (e), (f), and (g) and adding
Subsection (c-1) to read as follows:
(a) In this section:
(1) "Corporate[, "corporate] bond" means a senior
secured debt obligation issued by a domestic business entity and
rated not lower than "AA-" or the equivalent by a nationally
recognized investment rating firm. The term does not include a debt
obligation that:
(A) [(1)] on conversion, would result in the
holder becoming a stockholder or shareholder in the entity, or any
affiliate or subsidiary of the entity, that issued the debt
obligation; or
(B) [(2)] is an unsecured debt obligation.
(2) "Governing body" means the commissioners court of
a county or the governing body of a municipality.
(3) "Local water bond" means a secured debt obligation
issued by a municipality or county in which the investing school
district is located and that is:
(A) rated not lower than "AA-" or the equivalent
by a nationally recognized investment rating firm; and
(B) issued to finance a local water project.
(4) "Local water project" means the acquisition,
design, construction, improvement, repair, or maintenance of land,
buildings, equipment, facilities, or improvements found by the
governing body to be required or suitable for the promotion of water
development, including water supply facilities, wastewater
treatment facilities, water distribution and wastewater conveyance
facilities, and storm drainage, flood control, watershed
protection, and water conservation projects, regardless of whether
the land, buildings, equipment, facilities, or improvements are in
existence or are to be acquired or constructed after the finding is
made.
(c-1) In addition to authorized investments permitted by
this subchapter, an independent school district subject to this
section may purchase, sell, and invest its funds and funds under its
control in local water bonds that, at the time of purchase, are
rated by a nationally recognized investment rating firm "AA-" or
the equivalent and have a stated final maturity date that is not
later than the 10th anniversary of the date the local water bonds
were purchased.
(d) An independent school district subject to this section
is not authorized by this section to:
(1) invest in the aggregate more than 15 percent of its
monthly average fund balance, excluding bond proceeds, reserves,
and other funds held for the payment of debt service, in corporate
bonds or local water bonds; or
(2) invest more than 25 percent of the funds invested
in corporate bonds in any one domestic business entity, including
subsidiaries and affiliates of the entity.
(e) An independent school district subject to this section
may purchase, sell, and invest its funds and funds under its control
in corporate bonds or local water bonds if the governing body of the
district:
(1) amends its investment policy to authorize
corporate bonds or local water bonds as an eligible investment;
(2) adopts procedures to provide for:
(A) monitoring rating changes in corporate bonds
or local water bonds acquired with public funds; and
(B) liquidating the investment in corporate
bonds or local water bonds; and
(3) identifies the funds eligible to be invested in
corporate bonds or local water bonds.
(f) The investment officer of an independent school
district, acting on behalf of the district, shall sell corporate
bonds or local water bonds in which the district has invested its
funds not later than the seventh day after the date a nationally
recognized investment rating firm:
(1) issues a release that places the corporate bonds
or the domestic business entity that issued the corporate bonds, or
the local water bonds or the municipality or county that issued the
local water bonds, on negative credit watch or the equivalent, if
the corporate bonds or local water bonds are rated "AA-" or the
equivalent at the time the release is issued; or
(2) changes the rating on the corporate bonds or local
water bonds to a rating lower than "AA-" or the equivalent.
(g) Corporate bonds or local water bonds are not an eligible
investment for a public funds investment pool.
SECTION 2. 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, 2013.