By: Hughes S.B. No. 1480
A BILL TO BE ENTITLED
AN ACT
relating to the guarantee of school district and charter district
bonds by the permanent school fund.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 45.0532, Education Code, is amended by
amending Subsections (a), (a-1), and (b) and adding Subsections
(b-1), (b-2), (b-3), and (b-4) to read as follows:
(a) In addition to the general limitation under Section
45.053, the commissioner may not approve charter district bonds for
guarantee under this subchapter in a total amount that exceeds the
charter capacity [percentage of the total available capacity] of
the guaranteed bond program [that is equal to the percentage of the
number of students enrolled in open-enrollment charter schools in
this state compared to the total number of students enrolled in all
public schools in this state, as determined by the commissioner].
(a-1) The commissioner may not approve charter district
refunding or refinanced bonds for guarantee under this subchapter
in a total amount that exceeds one-half of the charter capacity
[total amount available for the guarantee of charter district bonds
under Subsection (a)].
(b) For purposes of this section [Subsection (a)], the
charter [total available] capacity of the guaranteed bond program
is the percentage of the total capacity of the guaranteed bond
program [limit] established by the board under Sections 45.053(d)
and 45.0531 that is equal to the percentage of the number of
students enrolled in open-enrollment charter schools in this state
compared to the total number of students enrolled in all public
schools in this state, as determined by the commissioner [minus the
total amount of outstanding guaranteed bonds]. Each time the board
increases the limit under Section 45.053(d), the total amount of
charter district bonds that may be guaranteed increases accordingly
under Subsection (a).
(b-1) The charter capacity provided by Subsection (b)
applies beginning with the state fiscal year that begins September
1, 2021. Subject to Subsections (b-2) and (b-3), the board shall
establish a charter capacity for the preceding state fiscal years
by increasing the total limitation on the amount of charter
district bonds that could be guaranteed under the law in effect on
January 1, 2017, by the following amount:
(1) for the state fiscal year that begins September 1,
2017, 20 percent of the difference between the charter capacity
provided by Subsection (b) and the charter capacity in effect on
January 1, 2017;
(2) for the state fiscal year that begins September 1,
2018, 40 percent of the difference between the charter capacity
provided by Subsection (b) and the charter capacity in effect on
January 1, 2017;
(3) for the state fiscal year that begins September 1,
2019, 60 percent of the difference between the charter capacity
provided by Subsection (b) and the charter capacity in effect on
January 1, 2017; and
(4) for the state fiscal year that begins September 1,
2020, 80 percent of the difference between the charter capacity
provided by Subsection (b) and the charter capacity in effect on
January 1, 2017.
(b-2) For any year, the board may increase the charter
capacity by less than the amount provided by Subsection (b-1) or may
decline to increase the charter capacity by any amount if:
(1) the board determines that increasing the charter
capacity by the amount provided by Subsection (b-1) would likely
result in a negative impact on the bond ratings provided by one or
more nationally recognized investment rating firms for school
district or charter district bonds for which a guarantee is
requested under this subchapter; or
(2) one or more charter districts default on payment
of maturing or matured principal or interest on a guaranteed bond,
resulting in a negative impact on the bond ratings provided by one
or more nationally recognized investment rating firms for school
district or charter district bonds for which a guarantee is
requested under this subchapter.
(b-3) If the board makes a determination described by
Subsection (b-2) for any year and modifies the schedule provided by
Subsection (b-1) for that year, the board may also make appropriate
adjustments to the schedule for subsequent years to reflect the
modification, provided that the charter capacity for any year may
not exceed the limit provided for that year by the schedule.
(b-4) Subsections (b-1), (b-2), and (b-3) and this
subsection expire September 1, 2022.
SECTION 2. Subchapter C, Chapter 45, Education Code, is
amended by adding Section 45.0533 to read as follows:
Sec. 45.0533. COMMUNICATION WITH NATIONALLY RECOGNIZED
INVESTMENT RATING FIRM. Information obtained from a nationally
recognized investment rating firm relating to Section 45.053,
45.0531, or 45.0532 that concerns a hypothetical or actual scenario
relating to the credit rating of the permanent school fund or the
bond guarantee program of the permanent school fund, and any
communications from, or information generated by, the agency, the
board, the commissioner, or their employees relating to that
information, is confidential and not subject to disclosure under
Chapter 552, Government Code.
SECTION 3. Section 45.056, Education Code, is amended by
adding Subsection (a-1) to read as follows:
(a-1) For purposes of this subsection, "bond security
documents" include the resolution, trust agreement, indenture,
ordinance, loan agreement, deed of trust, bond, note, and any
additional document executed in connection with the issuance of a
charter district bond for which a guarantee is requested under this
subchapter. The commissioner's investigation of an application
submitted by a charter district may include evaluation of whether
the charter district bond security documents provide a security
interest in real property pledged as collateral for the bond and the
repayment obligation under the proposed guarantee. The
commissioner may decline to approve the application if the
commissioner determines that sufficient security is not provided.
SECTION 4. Subchapter C, Chapter 45, Education Code, is
amended by adding Section 45.0561 to read as follows:
Sec. 45.0561. COMMISSIONER CONSIDERATION OF ADDITIONAL
FACTORS FOR CHARTER DISTRICT BONDS. (a) In addition to
considering all other applicable requirements under this
subchapter, in determining whether to approve charter district
bonds for guarantee the commissioner may consider any additional
reasonable factor that the commissioner determines necessary to
protect the guarantee program or minimize risk to the permanent
school fund, including:
(1) whether the charter district had an average daily
attendance of more than 75 percent of its student capacity for each
of the preceding three school years, or for each school year of
operation if the charter district has not been in operation for the
preceding three school years;
(2) the performance of the charter district under
Sections 39.053 and 39.054; and
(3) any other indicator of performance that could
affect the charter district's financial performance.
(b) This section expires September 1, 2019.
SECTION 5. Section 45.0571, Education Code, is amended by
adding Subsections (a-1) and (a-2) and amending Subsections (b) and
(c) to read as follows:
(a-1) Notwithstanding Chapter 404, Government Code, the
charter district bond guarantee reserve fund is managed by the
board in the same manner that the permanent school fund is managed
by the board. The board may invest money in the charter district
bond guarantee reserve fund in accordance with the investment
standard described by Section 404.024(j), Government Code, and the
board's investment is not subject to any other limitation or
requirement provided by Section 404.024, Government Code.
(a-2) The board shall adjust the investment portfolio of
charter district bond guarantee reserve fund money periodically to
ensure that the balance of the fund is sufficient to meet the cash
flow requirements of the fund.
(b) Subject to Subsection (c), a [A] charter district that
has a bond guaranteed as provided by this subchapter must
[annually] remit to the commissioner, for deposit in the charter
district bond guarantee reserve fund, an amount equal to 20 [10]
percent of the savings to the charter district that is a result of
the lower interest rate on the bond due to the guarantee by the
permanent school fund. The amount due under this section shall be
[amortized and] paid on receipt by the charter district of the bond
proceeds [over the duration of the bond. Each payment is due on the
anniversary of the date the bond was issued]. The commissioner
shall adopt rules to determine the amount [total and annual
amounts] due under this section.
(c) Subsection (b) does not apply if, at the time the
charter district receives the proceeds of the bond guaranteed as
provided by this subchapter, the balance of the charter district
bond guarantee reserve fund is at least equal to three percent of
the total amount of outstanding guaranteed bonds issued by charter
districts. [The commissioner may direct the comptroller to
annually withhold the amount due to the charter district bond
guarantee reserve fund under Subsection (b) for that year from the
state funds otherwise payable to the charter district.]
SECTION 6. Section 45.0571, Education Code, as amended by
this Act, applies only to a charter district bond that is approved
by the commissioner of education for guarantee under Subchapter C,
Chapter 45, Education Code, on or after the effective date of this
Act. A charter district bond that is approved by the commissioner
of education for guarantee under Subchapter C, Chapter 45,
Education Code, before the effective date of this Act is governed by
the law in effect on the date the bond is approved for guarantee,
and the former law is continued in effect for that purpose.
SECTION 7. This Act takes effect September 1, 2017.