Bill Text: TX SB40 | 2011-2012 | 82nd Legislature | Comm Sub

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Bill Title: Relating to the composition and functions of the Texas Guaranteed Student Loan Corporation.

Spectrum: Bipartisan Bill

Status: (Vetoed) 2011-06-17 - Vetoed by the Governor [SB40 Detail]

Download: Texas-2011-SB40-Comm_Sub.html

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82R29001 KSD-D
By: Zaffirini S.B. No. 40
(Callegari)
Substitute the following for S.B. No. 40: No.

A BILL TO BE ENTITLED
AN ACT
relating to the composition and functions of the Texas Guaranteed
Student Loan Corporation.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Sections 57.01 and 57.11, Education Code, are
amended to read as follows:
Sec. 57.01. DECLARATION OF POLICY. The legislature, giving
due consideration to the historical and continuing interest of the
people of the State of Texas in encouraging deserving and qualified
persons to realize their aspirations for education beyond high
school, finds and declares that postsecondary education for
qualified Texans [those] who desire to pursue such [an] education
[and are properly qualified therefor] is important to the welfare
and security of this state and the nation and, consequently, is an
important public purpose. The legislature finds and declares that
the state can achieve its full economic and social potential only if
every individual has the opportunity to contribute to the full
extent of the individual's [his or her] capabilities and only when
financial barriers to the individual's [his or her] economic,
social, and educational goals are removed. It is, therefore, the
purpose of this chapter to establish the Texas Guaranteed Student
Loan Corporation to:
(1) administer a guaranteed student loan program,
student financial aid programs, and other student loan programs to
assist qualified [Texas] students in this state and across the
nation in receiving a postsecondary education in this state or
elsewhere in the nation; [and]
(2) assist institutions of higher education by
providing [provide] necessary and desirable services related to
financial aid and student [the] loan programs; and
(3) participate in revenue-generating activities
related to higher education student financial aid and student loan
programs to the extent the activities support the corporation's
primary purposes under Subdivisions (1) and (2) [program, including
cooperative awareness efforts with appropriate educational and
civic associations designed to disseminate postsecondary education
awareness information, including information regarding student
financial aid and the Federal Family Education Loan Program, and
other relevant topics including the prevention of student loan
default].
Sec. 57.11. TEXAS GUARANTEED STUDENT LOAN CORPORATION. (a)
The Texas Guaranteed Student Loan Corporation is created to
administer the programs authorized by this chapter.
(b) The corporation is a public nonprofit corporation and,
except as otherwise provided in this chapter, has all the powers and
duties incident to a nonprofit corporation under Chapter 22,
Business Organizations Code [the Texas Non-Profit Corporation Act
(Article 1396-1.01 et seq., Vernon's Texas Civil Statutes)].
(c) [(b)] Except as otherwise provided by law, all expenses
of the corporation shall be paid from revenue [income] of the
corporation.
(d) [(c)] The corporation is subject to Chapters [Chapter]
551 and 552, Government Code.
(e) [(d)] Student loan borrower information collected,
assembled, or maintained by the corporation is confidential and is
not subject to disclosure under Chapter 552, Government Code.
SECTION 2. Section 57.12(a), Education Code, is amended to
read as follows:
(a) The Texas Guaranteed Student Loan Corporation is
subject to Chapter 325, Government Code (Texas Sunset Act). Unless
continued in existence as provided by that chapter, the corporation
is abolished and this chapter expires September 1, 2013 [2017].
SECTION 3. Section 57.1311(b), Education Code, is amended
to read as follows:
(b) The training program must provide the person with
information regarding:
(1) the provisions of this chapter, including the
policies developed under Section 57.19(i) regarding the separation
of policymaking and management responsibilities, and the
corporation's programs, functions, rules, and budget;
(2) the results of the most recent formal audit of the
corporation;
(3) the requirements of laws relating to open
meetings, public information, and conflicts of interest; and
(4) any applicable ethics policies adopted by the
corporation or the Texas Ethics Commission.
SECTION 4. Sections 57.13(a) and (b), Education Code, are
amended to read as follows:
(a) The corporation is governed by a board of nine [11]
directors in accordance with this section.
(b) The governor, with the advice and consent of the senate,
shall appoint the [10] members of [to] the board as follows:
(1) four [five] members who must have knowledge of or
experience in finance, including management of funds or business
operations;
(2) one member who must be a student enrolled at a
postsecondary educational institution for the number of credit
hours required by the institution to be classified as a full-time
student of the institution; and
(3) four members who must be members the faculty or
administration of a [an eligible] postsecondary educational
institution that is an eligible institution for purposes of the
Higher Education Act of 1965, as amended[, as defined by Section
57.46].
SECTION 5. Section 57.131(d), Education Code, is amended to
read as follows:
(d) A person may not be one of the members of the board
required by Section 57.13(b) to have knowledge of or experience in
finance if the person:
(1) is a member of the board of directors or an
employee of a [an eligible] lender that:
(A) participates in a [the guaranteed] student
loan program; or
(B) originates, makes, holds, services, or has a
pecuniary interest of any kind in higher education student loans of
any nature; or
(2) owns:
(A) 10 percent or more of the voting stock or
shares of a business entity that engages in an activity described by
Subdivision (1); or
(B) $15,000 or more of the fair market value of a
business entity that engages in an activity described by
Subdivision (1).
SECTION 6. Section 57.14, Education Code, is amended to
read as follows:
Sec. 57.14. DIRECTORS' TERMS OF OFFICE. Members of the
board [appointed by the governor] serve for terms of six years, with
the terms of three [or four] members[, as applicable,] expiring on
January 31 of each odd-numbered year.
SECTION 7. Section 57.17, Education Code, is amended to
read as follows:
Sec. 57.17. OFFICERS. The governor shall designate the
chairman from among the board's membership. The board shall elect
from among its members a [chairman,] vice-chairman[,] and other
officers that the board considers necessary. The chairman and
vice-chairman serve for a term of one year and may be redesignated
or reelected, as applicable.
SECTION 8. Subchapter B, Chapter 57, Education Code, is
amended by adding Section 57.181 to read as follows:
Sec. 57.181. MEETING BY TELEPHONE CONFERENCE CALL; QUORUM
PRESENT AT ONE LOCATION REQUIRED. (a) Notwithstanding Chapter
551, Government Code, the board or a board committee may hold a
meeting by telephone conference call only if a quorum of the board
or board committee, as applicable, is physically present at one
location of the meeting.
(b) A telephone conference call meeting is subject to the
notice requirements applicable to other meetings, except that the
meeting notice must also specify:
(1) the location of the meeting where a quorum of the
board or board committee, as applicable, will be physically
present; and
(2) the intent to have a quorum present at that
location.
(c) The meeting location where a quorum is physically
present must be open to the public during the open portions of a
telephone conference call meeting. The open portions of the
meeting must be audible to the public at the location where the
quorum is present and be tape-recorded at that location. The tape
recording must be made available to the public.
(d) The meeting location where a quorum is physically
present must provide two-way communication during the entire
telephone conference call meeting, and the identification of each
party to the telephone conference call must be clearly stated
before the party speaks.
(e) A member of the board who participates in a board or
board committee meeting by telephone conference call but is not
physically present at the meeting location where a quorum is
physically present is not considered to be absent from the meeting
for any purpose. The vote of a member of the board who participates
in a board or board committee meeting by telephone conference call
is counted for the purpose of determining the number of votes cast
on a motion or other proposition before the board or board
committee.
(f) A member of the board may participate remotely by
telephone conference call instead of by being physically present at
the location of a board meeting for not more than one board meeting
per calendar year. A board member who participates remotely in any
portion of a board meeting by telephone conference call is
considered to have participated in the entire board meeting by
telephone conference call. For purposes of this subsection, remote
participation by telephone conference call in a meeting of a board
committee does not count as remote participation by telephone
conference call in a board meeting regardless of whether:
(1) a quorum of the full board attends the board
committee meeting; or
(2) notice of the board committee meeting is also
posted as notice of a board meeting.
(g) A person who is not a member of the board may not speak
at the board or board committee meeting from a remote location by
telephone conference call, except as provided by Section 551.129,
Government Code.
(h) The authority provided by this section is in addition to
the authority provided by Section 551.125, Government Code.
SECTION 9. Section 57.19(d), Education Code, is amended to
read as follows:
(d) The president or the president's designee shall develop
a [an intra-agency] career ladder program for the corporation. The
program shall require internal corporate [intra-agency] postings
of all nonentry level positions concurrently with any public
posting.
SECTION 10. Section 57.20(a), Education Code, is amended to
read as follows:
(a) The corporation shall appoint an ombudsman [maintain a
system] to promptly and efficiently act on complaints filed with
the corporation. The ombudsman [corporation] shall maintain
information about parties to the complaint, the subject matter of
the complaint, a summary of the results of the review or
investigation of the complaint, and its disposition.
SECTION 11. Sections 57.21(a) and (c), Education Code, are
amended to read as follows:
(a) The corporation shall take an active role in
coordinating, facilitating, promoting, and providing assistance
and support to:
(1) programs that focus on and disseminate [designed
to make available to the residents of this state] information
regarding [concerning] postsecondary education awareness and the
availability of student financial aid[, including the Federal
Family Education Loan Program,] and that [to] assist families in
obtaining [needed] postsecondary education financing;
(2) programs designed to assist students, families,
borrowers, and schools in preventing [prevent] student loan default
throughout the life of the loan, provided that such programs are
required as a part of a guaranty agency's obligation under the
Federal Family Education Loan Program established by the Higher
Education Act of 1965 (20 U.S.C. Section 1071 et seq.), or are
funded by statutory or regulatory mandate, compensation, grant,
contract, award, or other appropriate means; and
(3) programs designed to increase student retention
and graduation rates in postsecondary education.
(c) To the extent practicable, each [Each] state agency
that conducts higher education and financial aid outreach
activities shall enter into a memorandum of understanding with the
corporation. The memorandum of understanding may [must] outline
how the corporation and the state agency will coordinate outreach
activities to maximize resources and avoid duplication.
SECTION 12. The heading to Section 57.22, Education Code,
is amended to read as follows:
Sec. 57.22. APPLICATION OF BUSINESS ORGANIZATIONS CODE [THE
TEXAS NON-PROFIT CORPORATION ACT].
SECTION 13. Section 57.22(a), Education Code, is amended to
read as follows:
(a) The corporation is subject to Chapter 22, Business
Organizations Code [the Texas Non-Profit Corporation Act (Article
1396-1.01 et seq., Vernon's Texas Civil Statutes)], except that:
(1) the corporation may not make donations for the
public welfare or for charitable or scientific purposes or in aid of
war activities;
(2) the corporation is not required to file articles
of incorporation;
(3) the corporation is not subject to voluntary or
involuntary dissolution;
(4) the corporation may not be placed in receivership;
and
(5) the corporation is not required to make reports to
the secretary of state under Section 22.357, Business Organizations
Code [Article 9.01 of that Act].
SECTION 14. Section 57.24, Education Code, is amended to
read as follows:
Sec. 57.24. AUTHORITY TO PARTICIPATE IN OTHER
REVENUE-GENERATING ACTIVITIES; LIMITATIONS. (a) The corporation
may participate in a revenue-generating activity by entering into a
contract with the United States Department of Education, with this
state or any agency, instrumentality, or political subdivision of
this state, with any eligible institution as defined by Section 435
of the Higher Education Act of 1965 (20 U.S.C. Section 1085), as
amended, that is eligible to participate in a program under Title IV
of that Act, with any guaranty agency as defined by Section 435 of
that Act (20 U.S.C. Section 1085), or with any entity to which the
United States Department of Education has awarded one or more
contracts to provide services under Title IV of that Act [that is
consistent with the corporation's purposes] if the board determines
that [the revenue from the activity]:
(1) [is sufficient to cover the costs of] the activity
is consistent with the corporation's purposes described by Section
57.01; [and]
(2) revenue from the activity is sufficient to cover
the costs of the activity, including the opportunity costs of any
invested capital, within a defined period of time determined by the
board for purposes of this section; and
(3) revenue from the activity will enable the
corporation to support educational purposes under Section 57.211
[may contribute to a reduction in the insurance premium paid by
students under Section 57.43 of this code].
(b) The corporation may enter into a contract with the
United States Department of Education under Subsection (a) alone or
in concert with any of the entities with which the corporation may
enter into a contract under that subsection.
(c) If, under Subsection (a) [of this section], the board
authorizes the corporation to perform additional services, the
corporation may not require postsecondary educational institutions
or students to use those services unless required by state or
federal law.
(d) If, under Subsection (a), the board authorizes the
corporation to perform debt collection, default aversion,
financial literacy, exit counseling, or loan servicing, the
corporation may perform those services only in relation to higher
education student loans.
(e) The corporation shall submit a written report to the
legislature and the Legislative Budget Board not later than
December 1 of each even-numbered year regarding the corporation's
participation in revenue-generating activities under this section.
The report must:
(1) include the amounts of revenue from and expenses
associated with the activities;
(2) demonstrate how that revenue is used for the
support of educational purposes under Section 57.211; and
(3) certify:
(A) the reasonable and necessary amount of
operating funds under Section 57.71 required to fulfill the
corporation's responsibilities under Section 57.41(a); and
(B) the amount of excess operating funds under
Section 57.71.
(f) Contracts entered into by the corporation in pursuit of
the corporation's primary purposes described by Sections 57.01(1)
and (2) do not constitute revenue-generating activities under this
section and are not subject to the requirements prescribed by this
section.
SECTION 15. Section 57.41(a), Education Code, is amended to
read as follows:
(a) The corporation shall serve as the designated guarantee
agency under the Federal Family Education Loan Program in
accordance with [loans made to eligible borrowers by eligible
lenders as provided by the federal guaranteed student loan program
under] the Higher Education Act of 1965, 20 U.S.C. Section [Sec.]
1001 et seq., as amended, regulations adopted under that Act, and
other applicable federal law.
SECTION 16. Section 57.461, Education Code, is amended to
read as follows:
Sec. 57.461. [POSTSECONDARY EDUCATIONAL INSTITUTIONS AND
LENDER] ADVISORY COMMITTEES. [(a)] The corporation shall
establish advisory committees as the board considers appropriate [:
[(1) an advisory committee that is composed of 15
members who represent the postsecondary educational institutions
that participate in the corporation's guaranteed student loan
program; and
[(2) an advisory committee that is composed of 12
members including:
[(A) one member who represents the Texas Higher
Education Coordinating Board; and
[(B) 11 members who represent lenders that
participate in the corporation's guaranteed student loan program].
[(b) The board shall appoint advisory committee members on
the recommendation of the president.
[(c) The board may establish other advisory committees as
the board considers necessary.
[(d) The board shall:
[(1) specify each advisory committee's purpose and
duties; and
[(2) require each committee to report to the board in a
manner specified by the board relating to each committee's
activities and work results.]
SECTION 17. Sections 57.47(a), (b), and (d), Education
Code, are amended to read as follows:
(a) If a student borrower defaults on a loan and the
corporation is required to honor the guarantee, the corporation may
[or the Texas Higher Education Coordinating Board shall] bring suit
against the defaulting party in accordance with the requirements of
the Higher Education Act of 1965, 20 U.S.C. Section [Sec.] 1001 et
seq., as amended.
(b) A suit against a defaulting party under this section may
be brought in the county in which the defaulting person resides, in
which the lender is located, or in Travis or Williamson County.
(d) Notwithstanding any other law, if the corporation [or
the Texas Higher Education Coordinating Board] brings suit against
a defaulting party under this section, the corporation [or the
coordinating board, as appropriate,] shall pay 50 percent of the
filing fee or other costs of court taxed and collected in advance
that are in effect on the date on which the suit is filed. If the
defaulting borrower prevails in the suit filed under this section,
the corporation [or the coordinating board, as appropriate,] shall
pay the remaining 50 percent of the statutory filing fee on the date
of the final disposition of the suit. If the corporation [or
coordinating board] prevails in the suit:
(1) the judgment shall find the defaulting borrower
liable to the corporation [or the coordinating board, as
appropriate,] for the amount of the filing fee; and
(2) the corporation [or coordinating board, as
appropriate,] shall pay the remaining 50 percent of the statutory
filing fee not later than one week after the date on which the
defaulting borrower pays to the corporation [or coordinating board,
as appropriate,] the full amount, including the filing fee, for
which the borrower is liable to the corporation [or coordinating
board].
SECTION 18. Sections 57.481(a), (b), and (c), Education
Code, are amended to read as follows:
(a) [In this section, "loan default rate" means the rate at
which student borrowers default on loans guaranteed by the
corporation as determined by the corporation in compliance with
federal guidelines.
[(b)] The corporation shall take a comprehensive and [an]
active role in coordinating, facilitating, and providing technical
assistance on guaranteed student loan default prevention and
reduction initiatives and programs that promote responsible
borrowing, financial literacy, debt management, research, and
informed policymaking [in the state] and shall work with the
appropriate state agencies and other entities inside and outside
this state, including eligible postsecondary educational
institutions, eligible lenders, servicers, secondary markets, the
Texas Higher Education Coordinating Board, the Texas [Central]
Education Agency, [and] state professional and occupational
licensing agencies, and the United States Department of Education.
(b) [(c)] The corporation shall maintain a system of
communication among the appropriate state agencies and entities to
address student [reduce] loan default prevention issues [claims].
SECTION 19. Section 57.49, Education Code, is amended to
read as follows:
Sec. 57.49. COOPERATION OF STATE AGENCIES AND SUBDIVISIONS.
Each agency and political subdivision of the state shall cooperate
with the corporation in providing information to the agency's or
political subdivision's clients concerning student financial aid,
including information about delinquency, default prevention, and
life-of-loan issues. Each agency and political subdivision shall
provide information to the corporation on request to assist the
corporation in curing delinquent loans, [and] collecting defaulted
loans, and developing information and reports concerning
responsible borrowing.
SECTION 20. Sections 57.50 and 57.71, Education Code, are
amended to read as follows:
Sec. 57.50. NONDISCRIMINATION. Neither the corporation nor
an eligible lender may discriminate against an eligible student in
making a loan or loan guarantee on the basis of race, age, religion,
or sex or any other basis prohibited by applicable law.
Sec. 57.71. FEDERAL [RESERVE] AND OPERATING FUNDS. The
corporation shall maintain a federal fund [establish reserve] and
operating fund [funds] in accordance with Sections [Section] 422,
422A, and 422B of the Higher Education Act of 1965 (20 U.S.C.
Sections [Section] 1072, 1072a, and 1072b), as amended.
SECTION 21. Subchapter D, Chapter 57, Education Code, is
amended by adding Section 57.762 to read as follows:
Sec. 57.762. REVIEW BY STATE AUDITOR. In addition to any
other audit required by law, the state auditor shall periodically
review the corporation's activities in a manner consistent with the
state auditor's audit plan under Chapter 321, Government Code. The
corporation shall reimburse the state auditor for all reasonable
costs incurred by the state auditor in conducting a review under
this section.
SECTION 22. Section 57.78, Education Code, is amended to
read as follows:
Sec. 57.78. INVESTMENTS. The federal fund maintained by
the corporation under Section 57.71 shall [All money of the
corporation may] be invested in accordance with Section 422A of the
Higher Education Act of 1965 (20 U.S.C. Section 1072a), as amended.
The operating fund maintained by the corporation under Section
57.71 may be invested only in accordance with Chapter 2256,
Government Code. Authority to invest the operating fund in
accordance with Chapter 2256, Government Code, complies with
Section 422B of the Higher Education Act of 1965 (20 U.S.C. Section
1072b), as amended.
SECTION 23. The following provisions of the Education Code
are repealed:
(1) Section 57.13(d);
(2) Sections 57.19(c), (g), and (h);
(3) Sections 57.41(c) and (d);
(4) Section 57.42;
(5) Section 57.43;
(6) Section 57.44;
(7) Section 57.45;
(8) Section 57.46; and
(9) Sections 57.481(d), (e), (f), (g), and (h).
SECTION 24. (a) Notwithstanding any other law, to comply
with the requirements of Section 57.13, Education Code, as amended
by this Act, and Section 30a, Article XVI, Texas Constitution:
(1) the term of the member of the board of directors of
the Texas Guaranteed Student Loan Corporation appointed under
Section 57.13(b)(1), Education Code, for a term to expire January
31, 2017, expires September 1, 2011; and
(2) that board position ceases to exist on September
1, 2011.
(b) Subsection (a) of this section does not prohibit the
member of the board of directors of the Texas Guaranteed Student
Loan Corporation serving in the board position that ceases to exist
under that subsection from being appointed as a member of the board
under Section 57.13(b), Education Code, for any other term if the
person is otherwise qualified to serve in that position.
SECTION 25. This Act takes effect September 1, 2011.