85R21398 KKA-F
	By: Murphy, Shine, et al.	H.B. No. 467
	Substitute the following for H.B. No. 467:
	By:  Gooden	C.S.H.B. No. 467

	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.