Bill Text: TX SB740 | 2019-2020 | 86th Legislature | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Relating to the creation of a state financing program administered by the Texas Public Finance Authority to assist school districts with certain expenses; granting authority to issue bonds or other obligations.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Engrossed - Dead) 2019-05-14 - Referred to Public Education [SB740 Detail]

Download: Texas-2019-SB740-Introduced.html

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By: Hughes S.B. No. 740

A BILL TO BE ENTITLED
AN ACT
relating to the creation of a state financing program administered
by the Texas Public Finance Authority to assist certain school
districts with certain expenses; granting authority to issue bonds
or other obligations.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter E, Chapter 45, Education Code, is
amended by adding Sections 45.114 and 45.115 to read as follows:
Sec. 45.114. ASSISTANCE FROM TEXAS PUBLIC FINANCE
AUTHORITY. (a) In this section, "eligible school district" means a
school district that has not more than 1,600 students in average
daily attendance.
(b) An eligible school district may:
(1) borrow money from the Texas Public Finance
Authority made available in accordance with Section 1232.1031,
Government Code;
(2) as necessary in connection with obtaining loans or
other financial assistance from the Texas Public Finance Authority
in accordance with Section 1232.1031, Government Code:
(A) issue bonds and notes, provided that the term
of an obligation issued for this purpose may not exceed 15 years;
and
(B) enter into loan agreements, lease
agreements, lease purchase agreements, or other appropriate
financing agreements with the Texas Public Finance Authority;
(3) make payments on an obligation or agreement issued
or executed under Subsection (a) using any available funds,
including maintenance and operations tax revenue; and
(4) secure the payment of an obligation or agreement
issued or executed under Subsection (a) through:
(A) creating a lien against equipment obtained
using the proceeds of the obligation;
(B) imposing an ad valorem tax otherwise
authorized by law; or
(C) obtaining credit enhancement under
Subchapter I.
Sec. 45.115. PAYMENT PROTECTIONS FOR TEXAS PUBLIC FINANCE
AUTHORITY. (a) In this section:
(1) "Obligation" means an obligation issued by the
Texas Public Finance Authority under Section 1232.1031, Government
Code, for the benefit of an eligible school district.
(2) "Eligible school district" means a school district
that has not more than 1,600 students in average daily attendance.
(b) Immediately following a determination that an eligible
school district will be or is unable to pay maturing or matured
principal or interest on an obligation, but not later than the fifth
day before maturity date, the district shall notify the
commissioner.
(c) Immediately following receipt of notice from an
eligible school district under Subsection (b), the commissioner
shall instruct the comptroller to transfer to the Texas Public
Finance Authority from the next payment of state money payable to
the district from appropriations to the Foundation School Program
the amount necessary to pay the maturing or matured principal or
interest.
(d) Immediately following receipt of the funds for payment
of the principal or interest, the Texas Public Finance Authority
shall forward the canceled obligation to the comptroller. The
comptroller shall hold the canceled obligation on behalf of the
Texas Public Finance Authority.
(e) Following full reimbursement to the Texas Public
Finance Authority with interest, the comptroller shall cancel the
obligation and forward it to the eligible school district.
(f) If an eligible school district fails to pay principal or
interest on an obligation at maturity, other obligations not yet
mature are not accelerated and are not due by virtue of the
district's default.
(g) If a total of two or more payments are made using state
money otherwise payable to an eligible school district from
appropriations to the Foundation School Program and the
commissioner determines that the district is acting in bad faith,
the commissioner may request the attorney general to institute
appropriate legal action to compel the eligible school district and
the district's officers, agents, and employees to comply with the
duties required by law in regard to the appropriate obligations.
Jurisdiction of proceedings under this subsection is in district
court in Travis County.
(h) The Texas Public Finance Authority may adopt rules
necessary for the administration of obligations issued on behalf
eligible of school districts.
SECTION 2. Section 45.252, Education Code, is amended by
adding Subsection (a-1) to read as follows:
(a-1) A school district that has not more than 1,600
students in average daily attendance may apply for credit
enhancement under this subchapter of obligations issued under
Section 45.114.
SECTION 3. Subchapter C, Chapter 1232, Government Code, is
amended by adding Section 1232.1031 to read as follows:
Sec. 1232.1031. ISSUANCE OF OBLIGATIONS TO ASSIST SCHOOL
DISTRICTS. (a) In this section, "eligible school district" means a
school district that has not more than 1,600 students in average
daily attendance.
(b) The authority may issue and sell obligations to finance:
(1) loans to eligible school districts for eligible
purposes;
(2) the purchase by the authority of vehicles,
equipment, or appliances for sale, lease, or lease purchase to
eligible school districts;
(3) a lease or other agreement that concerns equipment
that an eligible school district has purchased or leased or intends
to purchase or lease; and
(4) costs associated with maintenance, repair,
rehabilitation, or renovation of eligible school district
facilities.
(c) The authority may use proceeds of obligations issued
under this section to pay costs of administering this section,
including costs of issuing obligations.
(d) In connection with a purchase or project financed with
the proceeds of obligations issued under this section, the
authority may:
(1) enter into loan agreements, lease agreements,
lease purchase agreements, or other appropriate financing
agreements with eligible school districts;
(2) purchase obligations issued by eligible school
districts; and
(3) enter into credit agreements and exercise other
powers granted to issuers under Chapter 1371.
(e) The authority may secure payment of authority
obligations issued under this section with the pledge of money in
the school district equipment and improvement fund established
under Subsection (f).
(f) The school district equipment and improvement fund is
established outside the treasury as a trust fund and is
administered by the comptroller on behalf of the authority as
directed or agreed to by the board. The fund consists of proceeds
of obligations issued by the authority under this section and
obligations and agreements issued or executed by eligible school
districts and purchased or funded by the authority with proceeds of
authority obligations. Money in the fund may be spent without
appropriation and may be used only to fund activities under this
section or to secure repayment of authority obligations. Interest
and income from the assets of the fund shall be credited to and
deposited in the fund.
(g) The board may establish funds and accounts determined to
be necessary or appropriate in connection with the activities of
the authority under this section.
(h) The aggregate amount of obligations issued by the
authority under this section outstanding at one time may not exceed
$100 million.
(i) The board shall adopt rules necessary to implement this
section, including rules prescribing eligibility requirements for
school districts seeking assistance under this section, rules
identifying eligible purposes for purposes of Subsection (a)(1),
and rules identifying eligible school district facilities for
purposes of Subsection (a)(4). Before adopting or modifying a rule
under this subsection, the board shall consult with the
commissioner of education.
(j) Rules adopted under Subsection (h) may establish a
process under which an eligible school district must obtain
approval by the commissioner of education in order to be eligible
for assistance under this section.
(k) The authority may not issue an obligation under this
section on or after September 1, 2023. The prohibition imposed by
this subsection does not apply to:
(1) refunding bonds issued by the authority in
accordance with Chapter 1207; or
(2) other obligations issued by the authority to
refinance obligations incurred under this section before September
1, 2023.
SECTION 4. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect on the 91st day after the last day of the
legislative session.