Bill Text: TX HB3604 | 2017-2018 | 85th Legislature | Introduced
Bill Title: Relating to the guarantee by the permanent school fund of bonds issued by a charter district on the approval of the Bond Review Board.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2017-05-02 - Withdrawn from schedule [HB3604 Detail]
Download: Texas-2017-HB3604-Introduced.html
85R12195 CAE-D | ||
By: Shine | H.B. No. 3604 |
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relating to the guarantee by the permanent school fund of bonds | ||
issued by a charter district on the approval of the Bond Review | ||
Board. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 12.135(a), Education Code, is amended to | ||
read as follows: | ||
(a) On the application of the charter holder, the | ||
commissioner may grant designation as a charter district to an | ||
open-enrollment charter school that meets financial standards | ||
adopted by the Bond Review Board [ |
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standards must require an open-enrollment charter school to have an | ||
investment grade credit rating as specified by Section 45.0541. | ||
SECTION 2. Section 45.052, Education Code, is amended by | ||
amending Subsection (a) and adding Subsection (a-1) to read as | ||
follows: | ||
(a) On approval by the commissioner, bonds issued under | ||
Subchapter A by a school district [ |
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guaranteed by the corpus and income of the permanent school fund. | ||
(a-1) On approval by the Bond Review Board, bonds issued | ||
under Chapter 53 for a charter district, including refunding and | ||
refinanced bonds, are guaranteed by the corpus and income of the | ||
permanent school fund. The Bond Review Board must impose an | ||
appropriate debt limit for a charter district seeking the guarantee | ||
of bonds under this section. A bond may not be guaranteed under | ||
this section unless: | ||
(1) the charter district produces an independent | ||
feasibility study documenting the student demand and corresponding | ||
revenues of the open-enrollment charter school that will benefit | ||
from the bond proceeds; | ||
(2) the charter district demonstrates the manner in | ||
which the open-enrollment charter school will benefit from the bond | ||
proceeds; | ||
(3) the charter district demonstrates that the | ||
open-enrollment charter school attained a minimum student | ||
retention rate in each of the last three school years, as determined | ||
by the Bond Review Board; and | ||
(4) the charter district establishes that the | ||
open-enrollment charter school will maintain an acceptable | ||
academic accountability rating under Chapter 39. | ||
SECTION 3. Sections 45.053(a), (c), and (d), Education | ||
Code, are amended to read as follows: | ||
(a) Except as provided by Subsection (d), the commissioner | ||
and the Bond Review Board may not approve bonds for guarantee under | ||
this subchapter if the approval would result in the total amount of | ||
outstanding guaranteed bonds under this subchapter exceeding an | ||
amount equal to 2-1/2 times the cost value of the permanent school | ||
fund, as estimated by the board and certified by the state auditor. | ||
(c) The commissioner, with assistance from the Bond Review | ||
Board, shall prepare and the board shall adopt an annual report on | ||
the status of the guaranteed bond program under this subchapter. | ||
(d) The board by rule may increase the limit prescribed by | ||
Subsection (a) to an amount not to exceed five times the cost value | ||
of the permanent school fund, provided that the increased limit is | ||
consistent with federal law and regulations and does not prevent | ||
the bonds to be guaranteed from receiving the highest available | ||
credit rating, as determined by the board. The board shall at least | ||
annually consider whether to change any limit in accordance with | ||
this subsection. This subsection may not be construed in a manner | ||
that impairs, limits, or removes the guarantee of bonds that have | ||
been approved by the commissioner or the Bond Review Board. | ||
SECTION 4. Sections 45.0532(a), (a-1), (c), and (d), | ||
Education Code, are amended to read as follows: | ||
(a) In addition to the general limitation under Section | ||
45.053, the Bond Review Board [ |
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charter district bonds for guarantee under this subchapter in a | ||
total amount that exceeds the 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 Bond Review Board [ |
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(a-1) The Bond Review Board [ |
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charter district refunding or refinanced bonds for guarantee under | ||
this subchapter in a total amount that exceeds one-half of the total | ||
amount available for the guarantee of charter district bonds under | ||
Subsection (a). | ||
(c) Notwithstanding Subsections (a) and (b), the Bond | ||
Review Board [ |
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for guarantee under this subchapter if the guarantee will result in | ||
lower bond ratings for school district bonds for which a guarantee | ||
is requested under this subchapter. | ||
(d) The Bond Review Board [ |
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the comptroller place the portion of the permanent school fund | ||
committed to the guarantee of charter district bonds in a | ||
segregated account if the Bond Review Board [ |
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determines that a separate account is needed to avoid any negative | ||
impact on the bond ratings of school district bonds for which a | ||
guarantee is requested under this subchapter. | ||
SECTION 5. Section 45.0541, Education Code, is amended to | ||
read as follows: | ||
Sec. 45.0541. ELIGIBILITY OF CHARTER DISTRICT BONDS. (a) | ||
To be eligible for approval by the Bond Review Board | ||
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(1) without the guarantee, be rated as investment | ||
grade by a nationally recognized investment rating firm; and | ||
(2) be issued under Chapter 53. | ||
(b) For purposes of Subsection (a)(1), a bond is rated as | ||
investment grade if it receives a rating of at least BBB- or the | ||
equivalent. | ||
SECTION 6. Section 45.055, Education Code, is amended by | ||
amending Subsections (a) and (b) and adding Subsections (a-1) and | ||
(d) to read as follows: | ||
(a) A school district [ |
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guarantee of eligible bonds under this subchapter shall apply to | ||
the commissioner using a form adopted by the commissioner for the | ||
purpose. The commissioner may adopt a single form on which a school | ||
district seeking guarantee or credit enhancement of eligible bonds | ||
may apply simultaneously first for guarantee under this subchapter | ||
and then, if that guarantee is rejected, for credit enhancement | ||
under Subchapter I. | ||
(a-1) A charter district seeking guarantee of eligible | ||
bonds under this subchapter shall apply to the Bond Review Board | ||
using a form adopted by the Bond Review Board for that purpose. | ||
(b) An application under Subsection (a) or (a-1) must | ||
include: | ||
(1) the name of the school district or charter | ||
district and the principal amount of the bonds to be issued; | ||
(2) the name and address of the district's paying agent | ||
for those bonds; and | ||
(3) the maturity schedule, estimated interest rate, | ||
and date of the bonds. | ||
(d) An application under Subsection (a-1) must be | ||
accompanied by a fee set by rule of the Bond Review Board in an | ||
amount designed to cover the costs of administering the program to | ||
provide the guarantee of eligible bonds. | ||
SECTION 7. Section 45.056, Education Code, is amended to | ||
read as follows: | ||
Sec. 45.056. INVESTIGATION. (a) Following receipt of an | ||
application for the guarantee of bonds, the commissioner shall | ||
conduct an investigation of the applicant school district [ |
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(1) the status of the district's accreditation; and | ||
(2) the total amount of outstanding guaranteed bonds. | ||
(a-1) Following receipt of an application for the guarantee | ||
of bonds, the Bond Review Board shall conduct an investigation of | ||
the applicant charter district in regard to: | ||
(1) the status of the charter district's | ||
accreditation; and | ||
(2) the total amount of outstanding guaranteed bonds. | ||
(b) If following the investigation the commissioner is | ||
satisfied that the school district's bonds should be guaranteed | ||
under this subchapter or provided credit enhancement under | ||
Subchapter I, as applicable, [ |
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endorse the bonds. | ||
(c) If following the investigation the Bond Review Board is | ||
satisfied that the charter district's bonds should be guaranteed | ||
under this subchapter, the Bond Review Board shall endorse the | ||
bonds. | ||
SECTION 8. Section 45.057, Education Code, is amended by | ||
adding Subsection (a-1) to read as follows: | ||
(a-1) The Bond Review Board shall endorse bonds approved for | ||
guarantee with: | ||
(1) the Bond Review Board stamp; and | ||
(2) a statement relating the Bond Review Board's | ||
statutory authority for the guarantee. | ||
SECTION 9. Sections 45.0571(b), (c), (d), and (e), | ||
Education Code, are amended to read as follows: | ||
(b) A charter district that has a bond guaranteed as | ||
provided by this subchapter must annually remit to the Bond Review | ||
Board [ |
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guarantee reserve fund, an amount equal to 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 over the | ||
duration of the bond. Each payment is due on the anniversary of the | ||
date the bond was issued. The Bond Review Board [ |
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shall adopt rules to determine the total and annual amounts due | ||
under this section. | ||
(c) The Bond Review Board [ |
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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. | ||
(d) Each year, the Bond Review Board [ |
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(1) review the condition of the bond guarantee program | ||
and the amount that must be deposited in the charter district bond | ||
guarantee reserve fund from charter districts; and | ||
(2) determine if charter districts should be required | ||
to submit a greater percentage of the savings resulting from the | ||
guarantee. | ||
(e) The Bond Review Board [ |
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recommendations to the legislature based on the review under | ||
Subsection (d). | ||
SECTION 10. Section 45.058, Education Code, is amended to | ||
read as follows: | ||
Sec. 45.058. NOTICE OF DEFAULT. Immediately following a | ||
determination that a school district or charter district will be or | ||
is unable to pay maturing or matured principal or interest on a | ||
guaranteed bond, but not later than the fifth day before maturity | ||
date: | ||
(1)[ |
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notify the commissioner; and | ||
(2) the charter district shall notify the Bond Review | ||
Board. | ||
SECTION 11. Sections 45.0591(a), (b), and (d), Education | ||
Code, are amended to read as follows: | ||
(a) Immediately following receipt of notice under Section | ||
45.058 that a charter district will be or is unable to pay maturing | ||
or matured principal or interest on a guaranteed bond, the Bond | ||
Review Board [ |
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transfer from the charter district bond guarantee reserve fund | ||
created under Section 45.0571 to the district's paying agent the | ||
amount necessary to pay the maturing or matured principal or | ||
interest. | ||
(b) If money in the charter district bond guarantee reserve | ||
fund is insufficient to pay the amount due on a bond under | ||
Subsection (a), the Bond Review Board [ |
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the comptroller to transfer from the appropriate account in the | ||
permanent school fund to the district's paying agent the amount | ||
necessary to pay the balance of the unpaid maturing or matured | ||
principal or interest. | ||
(d) Following full reimbursement to the charter district | ||
bond guarantee reserve fund and the permanent school fund, if | ||
applicable, with interest, the Bond Review Board [ |
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shall further cancel the bond or coupon and forward it to the | ||
charter district for which payment was made. | ||
SECTION 12. Section 45.061, Education Code, is amended by | ||
amending Subsections (a) and (b) and adding Subsections (a-2) and | ||
(b-1) to read as follows: | ||
(a) If the commissioner orders payment from the permanent | ||
school fund [ |
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on behalf of a school district [ |
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commissioner shall direct the comptroller to withhold the amount | ||
paid, plus interest, from the first state money payable to the | ||
school district [ |
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credit of the permanent school fund. | ||
(a-2) If the Bond Review Board orders payment from the | ||
permanent school fund or the charter district bond guarantee | ||
reserve fund on behalf of a charter district, the Bond Review Board | ||
shall direct the comptroller to withhold the amount paid, plus | ||
interest, from the first state money payable to the charter | ||
district. Except as provided by Subsection (a-1), the amount | ||
withheld shall be deposited to the credit of the permanent school | ||
fund. | ||
(b) In accordance with the rules of the board, the | ||
commissioner may authorize reimbursement to the permanent school | ||
fund [ |
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interest in a manner other than that provided by this section. | ||
(b-1) In accordance with the rules of the Bond Review Board, | ||
the Bond Review Board may authorize reimbursement to the permanent | ||
school fund or charter district bond guarantee reserve fund with | ||
interest in a manner other than that provided by this section. | ||
SECTION 13. Section 45.062(a-1), Education Code, is amended | ||
to read as follows: | ||
(a-1) If a total of two or more payments are made under this | ||
subchapter on charter district bonds and the Bond Review Board | ||
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bad faith under the guarantee program under this subchapter, the | ||
Bond Review Board [ |
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to institute appropriate legal action to compel the charter | ||
district and its officers, agents, and employees to comply with the | ||
duties required of them by law in regard to the bonds. | ||
SECTION 14. Section 45.063, Education Code, is amended to | ||
read as follows: | ||
Sec. 45.063. RULES. (a) The board may adopt rules | ||
necessary for the administration of the bond guarantee program. | ||
(b) The Bond Review Board may adopt rules necessary for the | ||
administration of the bond guarantee program for charter districts. | ||
SECTION 15. This Act takes effect September 1, 2017. |