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

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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-Engrossed.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 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 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 this section using any available funds, including
maintenance and operations tax revenue; and
(4) secure the payment of an obligation or agreement
issued or executed under this section through:
(A) creating a lien against equipment obtained
using the proceeds of the obligation;
(B) creating a lien against and pledging any
funds of the district available for that purpose, including
maintenance and operations tax revenue; or
(C) obtaining credit enhancement under
Subchapter I.
Sec. 45.115. PAYMENT PROTECTIONS FOR TEXAS PUBLIC FINANCE
AUTHORITY. (a) In this section, "obligation" means an obligation
issued by the Texas Public Finance Authority under Section
1232.1031, Government Code, for the benefit of a school district.
(b) Immediately following a determination that a 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 a 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 school district.
(f) If a 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 a 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 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 and the agency may
enter into a memorandum of understanding governing the duties of
the authority and the agency under this section, Section 45.114,
and Section 1232.1031, Government Code.
(i) The Texas Public Finance Authority may adopt rules
necessary for the administration of obligations issued on behalf 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 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 CERTAIN
SCHOOL DISTRICTS. (a) The authority may issue and sell
obligations to finance:
(1) loans to school districts for eligible purposes;
(2) the purchase by the authority of vehicles,
equipment, or appliances for sale, lease, or lease purchase to
school districts;
(3) a lease or other agreement that concerns equipment
that a 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.
(a-1) The amount of obligations issued by the authority
under this section must be for the benefit of school districts with
an average daily attendance of 1,600 students or fewer, as
determined under Section 42.005, Education Code. Not more than two
percent of the obligations issued under this section may be for the
benefit of a single school district.
(b) The authority may use proceeds of obligations issued
under this section to pay costs of administering this section,
including costs of issuing obligations.
(c) 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 school districts;
(2) purchase obligations issued by school districts;
and
(3) enter into credit agreements and exercise other
powers granted to issuers under Chapter 1371.
(d) 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 (e).
(e) 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 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.
(f) The board may establish funds and accounts determined to
be necessary or appropriate in connection with the activities of
the authority under this section.
(g) The aggregate amount of obligations issued by the
authority under this section outstanding at one time may not exceed
$100 million.
(h) The board shall adopt rules necessary to implement this
section, including rules prescribing 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.
(i) Rules adopted under Subsection (h) may establish a
process under which a school district must obtain approval by the
commissioner of education before the district may receive
assistance under this section.
(j) 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.