Texas 2017 - 85th Regular

Texas House Bill HB3604 Compare Versions

Only one version of the bill is available at this time.

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1	1	85R12195 CAE-D
2	2	By: Shine H.B. No. 3604
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the guarantee by the permanent school fund of bonds
8	8	issued by a charter district on the approval of the Bond Review
9	9	Board.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. Section 12.135(a), Education Code, is amended to
12	12	read as follows:
13	13	(a) On the application of the charter holder, the
14	14	commissioner may grant designation as a charter district to an
15	15	open-enrollment charter school that meets financial standards
16	16	adopted by the Bond Review Board [commissioner]. The financial
17	17	standards must require an open-enrollment charter school to have an
18	18	investment grade credit rating as specified by Section 45.0541.
19	19	SECTION 2. Section 45.052, Education Code, is amended by
20	20	amending Subsection (a) and adding Subsection (a-1) to read as
21	21	follows:
22	22	(a) On approval by the commissioner, bonds issued under
23	23	Subchapter A by a school district [or Chapter 53 for a charter
24	24	district], including refunding and refinanced bonds, are
25	25	guaranteed by the corpus and income of the permanent school fund.
26	26	(a-1) On approval by the Bond Review Board, bonds issued
27	27	under Chapter 53 for a charter district, including refunding and
28	28	refinanced bonds, are guaranteed by the corpus and income of the
29	29	permanent school fund. The Bond Review Board must impose an
30	30	appropriate debt limit for a charter district seeking the guarantee
31	31	of bonds under this section. A bond may not be guaranteed under
32	32	this section unless:
33	33	(1) the charter district produces an independent
34	34	feasibility study documenting the student demand and corresponding
35	35	revenues of the open-enrollment charter school that will benefit
36	36	from the bond proceeds;
37	37	(2) the charter district demonstrates the manner in
38	38	which the open-enrollment charter school will benefit from the bond
39	39	proceeds;
40	40	(3) the charter district demonstrates that the
41	41	open-enrollment charter school attained a minimum student
42	42	retention rate in each of the last three school years, as determined
43	43	by the Bond Review Board; and
44	44	(4) the charter district establishes that the
45	45	open-enrollment charter school will maintain an acceptable
46	46	academic accountability rating under Chapter 39.
47	47	SECTION 3. Sections 45.053(a), (c), and (d), Education
48	48	Code, are amended to read as follows:
49	49	(a) Except as provided by Subsection (d), the commissioner
50	50	and the Bond Review Board may not approve bonds for guarantee under
51	51	this subchapter if the approval would result in the total amount of
52	52	outstanding guaranteed bonds under this subchapter exceeding an
53	53	amount equal to 2-1/2 times the cost value of the permanent school
54	54	fund, as estimated by the board and certified by the state auditor.
55	55	(c) The commissioner, with assistance from the Bond Review
56	56	Board, shall prepare and the board shall adopt an annual report on
57	57	the status of the guaranteed bond program under this subchapter.
58	58	(d) The board by rule may increase the limit prescribed by
59	59	Subsection (a) to an amount not to exceed five times the cost value
60	60	of the permanent school fund, provided that the increased limit is
61	61	consistent with federal law and regulations and does not prevent
62	62	the bonds to be guaranteed from receiving the highest available
63	63	credit rating, as determined by the board. The board shall at least
64	64	annually consider whether to change any limit in accordance with
65	65	this subsection. This subsection may not be construed in a manner
66	66	that impairs, limits, or removes the guarantee of bonds that have
67	67	been approved by the commissioner or the Bond Review Board.
68	68	SECTION 4. Sections 45.0532(a), (a-1), (c), and (d),
69	69	Education Code, are amended to read as follows:
70	70	(a) In addition to the general limitation under Section
71	71	45.053, the Bond Review Board [commissioner] may not approve
72	72	charter district bonds for guarantee under this subchapter in a
73	73	total amount that exceeds the percentage of the total available
74	74	capacity of the guaranteed bond program that is equal to the
75	75	percentage of the number of students enrolled in open-enrollment
76	76	charter schools in this state compared to the total number of
77	77	students enrolled in all public schools in this state, as
78	78	determined by the Bond Review Board [commissioner].
79	79	(a-1) The Bond Review Board [commissioner] may not approve
80	80	charter district refunding or refinanced bonds for guarantee under
81	81	this subchapter in a total amount that exceeds one-half of the total
82	82	amount available for the guarantee of charter district bonds under
83	83	Subsection (a).
84	84	(c) Notwithstanding Subsections (a) and (b), the Bond
85	85	Review Board [commissioner] may not approve charter district bonds
86	86	for guarantee under this subchapter if the guarantee will result in
87	87	lower bond ratings for school district bonds for which a guarantee
88	88	is requested under this subchapter.
89	89	(d) The Bond Review Board [commissioner] may request that
90	90	the comptroller place the portion of the permanent school fund
91	91	committed to the guarantee of charter district bonds in a
92	92	segregated account if the Bond Review Board [commissioner]
93	93	determines that a separate account is needed to avoid any negative
94	94	impact on the bond ratings of school district bonds for which a
95	95	guarantee is requested under this subchapter.
96	96	SECTION 5. Section 45.0541, Education Code, is amended to
97	97	read as follows:
98	98	Sec. 45.0541. ELIGIBILITY OF CHARTER DISTRICT BONDS. (a)
99	99	To be eligible for approval by the Bond Review Board
100	100	[commissioner], charter district bonds must:
101	101	(1) without the guarantee, be rated as investment
102	102	grade by a nationally recognized investment rating firm; and
103	103	(2) be issued under Chapter 53.
104	104	(b) For purposes of Subsection (a)(1), a bond is rated as
105	105	investment grade if it receives a rating of at least BBB- or the
106	106	equivalent.
107	107	SECTION 6. Section 45.055, Education Code, is amended by
108	108	amending Subsections (a) and (b) and adding Subsections (a-1) and
109	109	(d) to read as follows:
110	110	(a) A school district [or charter district] seeking
111	111	guarantee of eligible bonds under this subchapter shall apply to
112	112	the commissioner using a form adopted by the commissioner for the
113	113	purpose. The commissioner may adopt a single form on which a school
114	114	district seeking guarantee or credit enhancement of eligible bonds
115	115	may apply simultaneously first for guarantee under this subchapter
116	116	and then, if that guarantee is rejected, for credit enhancement
117	117	under Subchapter I.
118	118	(a-1) A charter district seeking guarantee of eligible
119	119	bonds under this subchapter shall apply to the Bond Review Board
120	120	using a form adopted by the Bond Review Board for that purpose.
121	121	(b) An application under Subsection (a) or (a-1) must
122	122	include:
123	123	(1) the name of the school district or charter
124	124	district and the principal amount of the bonds to be issued;
125	125	(2) the name and address of the district's paying agent
126	126	for those bonds; and
127	127	(3) the maturity schedule, estimated interest rate,
128	128	and date of the bonds.
129	129	(d) An application under Subsection (a-1) must be
130	130	accompanied by a fee set by rule of the Bond Review Board in an
131	131	amount designed to cover the costs of administering the program to
132	132	provide the guarantee of eligible bonds.
133	133	SECTION 7. Section 45.056, Education Code, is amended to
134	134	read as follows:
135	135	Sec. 45.056. INVESTIGATION. (a) Following receipt of an
136	136	application for the guarantee of bonds, the commissioner shall
137	137	conduct an investigation of the applicant school district [or
138	138	charter district] in regard to:
139	139	(1) the status of the district's accreditation; and
140	140	(2) the total amount of outstanding guaranteed bonds.
141	141	(a-1) Following receipt of an application for the guarantee
142	142	of bonds, the Bond Review Board shall conduct an investigation of
143	143	the applicant charter district in regard to:
144	144	(1) the status of the charter district's
145	145	accreditation; and
146	146	(2) the total amount of outstanding guaranteed bonds.
147	147	(b) If following the investigation the commissioner is
148	148	satisfied that the school district's bonds should be guaranteed
149	149	under this subchapter or provided credit enhancement under
150	150	Subchapter I, as applicable, [or the charter district's bonds
151	151	should be guaranteed under this subchapter,] the commissioner shall
152	152	endorse the bonds.
153	153	(c) If following the investigation the Bond Review Board is
154	154	satisfied that the charter district's bonds should be guaranteed
155	155	under this subchapter, the Bond Review Board shall endorse the
156	156	bonds.
157	157	SECTION 8. Section 45.057, Education Code, is amended by
158	158	adding Subsection (a-1) to read as follows:
159	159	(a-1) The Bond Review Board shall endorse bonds approved for
160	160	guarantee with:
161	161	(1) the Bond Review Board stamp; and
162	162	(2) a statement relating the Bond Review Board's
163	163	statutory authority for the guarantee.
164	164	SECTION 9. Sections 45.0571(b), (c), (d), and (e),
165	165	Education Code, are amended to read as follows:
166	166	(b) A charter district that has a bond guaranteed as
167	167	provided by this subchapter must annually remit to the Bond Review
168	168	Board [commissioner], for deposit in the charter district bond
169	169	guarantee reserve fund, an amount equal to 10 percent of the savings
170	170	to the charter district that is a result of the lower interest rate
171	171	on the bond due to the guarantee by the permanent school fund. The
172	172	amount due under this section shall be amortized and paid over the
173	173	duration of the bond. Each payment is due on the anniversary of the
174	174	date the bond was issued. The Bond Review Board [commissioner]
175	175	shall adopt rules to determine the total and annual amounts due
176	176	under this section.
177	177	(c) The Bond Review Board [commissioner] may direct the
178	178	comptroller to annually withhold the amount due to the charter
179	179	district bond guarantee reserve fund under Subsection (b) for that
180	180	year from the state funds otherwise payable to the charter
181	181	district.
182	182	(d) Each year, the Bond Review Board [commissioner] shall:
183	183	(1) review the condition of the bond guarantee program
184	184	and the amount that must be deposited in the charter district bond
185	185	guarantee reserve fund from charter districts; and
186	186	(2) determine if charter districts should be required
187	187	to submit a greater percentage of the savings resulting from the
188	188	guarantee.
189	189	(e) The Bond Review Board [commissioner] shall make
190	190	recommendations to the legislature based on the review under
191	191	Subsection (d).
192	192	SECTION 10. Section 45.058, Education Code, is amended to
193	193	read as follows:
194	194	Sec. 45.058. NOTICE OF DEFAULT. Immediately following a
195	195	determination that a school district or charter district will be or
196	196	is unable to pay maturing or matured principal or interest on a
197	197	guaranteed bond, but not later than the fifth day before maturity
198	198	date:
199	199	(1)[,] the school district [or charter district] shall
200	200	notify the commissioner; and
201	201	(2) the charter district shall notify the Bond Review
202	202	Board.
203	203	SECTION 11. Sections 45.0591(a), (b), and (d), Education
204	204	Code, are amended to read as follows:
205	205	(a) Immediately following receipt of notice under Section
206	206	45.058 that a charter district will be or is unable to pay maturing
207	207	or matured principal or interest on a guaranteed bond, the Bond
208	208	Review Board [commissioner] shall instruct the comptroller to
209	209	transfer from the charter district bond guarantee reserve fund
210	210	created under Section 45.0571 to the district's paying agent the
211	211	amount necessary to pay the maturing or matured principal or
212	212	interest.
213	213	(b) If money in the charter district bond guarantee reserve
214	214	fund is insufficient to pay the amount due on a bond under
215	215	Subsection (a), the Bond Review Board [commissioner] shall instruct
216	216	the comptroller to transfer from the appropriate account in the
217	217	permanent school fund to the district's paying agent the amount
218	218	necessary to pay the balance of the unpaid maturing or matured
219	219	principal or interest.
220	220	(d) Following full reimbursement to the charter district
221	221	bond guarantee reserve fund and the permanent school fund, if
222	222	applicable, with interest, the Bond Review Board [comptroller]
223	223	shall further cancel the bond or coupon and forward it to the
224	224	charter district for which payment was made.
225	225	SECTION 12. Section 45.061, Education Code, is amended by
226	226	amending Subsections (a) and (b) and adding Subsections (a-2) and
227	227	(b-1) to read as follows:
228	228	(a) If the commissioner orders payment from the permanent
229	229	school fund [or the charter district bond guarantee reserve fund]
230	230	on behalf of a school district [or charter district], the
231	231	commissioner shall direct the comptroller to withhold the amount
232	232	paid, plus interest, from the first state money payable to the
233	233	school district [or charter district]. The [Except as provided by
234	234	Subsection (a-1), the] amount withheld shall be deposited to the
235	235	credit of the permanent school fund.
236	236	(a-2) If the Bond Review Board orders payment from the
237	237	permanent school fund or the charter district bond guarantee
238	238	reserve fund on behalf of a charter district, the Bond Review Board
239	239	shall direct the comptroller to withhold the amount paid, plus
240	240	interest, from the first state money payable to the charter
241	241	district. Except as provided by Subsection (a-1), the amount
242	242	withheld shall be deposited to the credit of the permanent school
243	243	fund.
244	244	(b) In accordance with the rules of the board, the
245	245	commissioner may authorize reimbursement to the permanent school
246	246	fund [or charter district bond guarantee reserve fund] with
247	247	interest in a manner other than that provided by this section.
248	248	(b-1) In accordance with the rules of the Bond Review Board,
249	249	the Bond Review Board may authorize reimbursement to the permanent
250	250	school fund or charter district bond guarantee reserve fund with
251	251	interest in a manner other than that provided by this section.
252	252	SECTION 13. Section 45.062(a-1), Education Code, is amended
253	253	to read as follows:
254	254	(a-1) If a total of two or more payments are made under this
255	255	subchapter on charter district bonds and the Bond Review Board
256	256	[commissioner] determines that the charter district is acting in
257	257	bad faith under the guarantee program under this subchapter, the
258	258	Bond Review Board [commissioner] may request the attorney general
259	259	to institute appropriate legal action to compel the charter
260	260	district and its officers, agents, and employees to comply with the
261	261	duties required of them by law in regard to the bonds.
262	262	SECTION 14. Section 45.063, Education Code, is amended to
263	263	read as follows:
264	264	Sec. 45.063. RULES. (a) The board may adopt rules
265	265	necessary for the administration of the bond guarantee program.
266	266	(b) The Bond Review Board may adopt rules necessary for the
267	267	administration of the bond guarantee program for charter districts.
268	268	SECTION 15. This Act takes effect September 1, 2017.