S.B. No. 1640

AN ACT

relating to the student loan program administered by the Texas Higher Education Coordinating Board and to the exemption from fees and tuition of certain persons at institutions of higher education; authorizing the issuance of bonds.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 52.01, Education Code, is amended to read as follows:

Sec. 52.01. ADMINISTRATION. The Texas Higher Education Coordinating Board, or its successors, shall administer the student loan program authorized by this chapter pursuant to [Article III,] Sections [50b, 50b-1, 50b-2, 50b-3,] 50b-4, [and] 50b-5, and 50b-6, Article III, [of the] Texas Constitution, and any former provision of the Texas Constitution authorizing bonds to finance educational loans to students. Personnel and other expenses required to properly administer this chapter shall be funded by:

(1) the general appropriations acts; or

(2) any other source of revenue received by the board in connection with the operation of the student loan program.

SECTION 2. Subdivision (4), Section 52.501, Education Code, is amended to read as follows:

(4) "Bond" means a general obligation bond issued by the board under [Article III,] Section [50b, 50b-1, 50b-2, 50b-3,] 50b-4, [or] 50b-5, or 50b-6, Article III, [of the] Texas Constitution, or any former provision of the Texas Constitution authorizing bonds to finance educational loans to students.

SECTION 3. Subdivision (2), Section 52.81, Education Code, is amended to read as follows:

(2) "Bond" means a general obligation bond issued by the board under former [Article III,] Section 50b-3[,] or Section 50b-4, [or] 50b-5, or 50b-6, Article III, [of the] Texas Constitution.

SECTION 4. Subsection (a), Section 52.82, Education Code, is amended to read as follows:

(a) The board may by resolution authorize the issuance of general obligation bonds in total aggregate amounts not to exceed:

(1) $300 million under former Section 50b-3, Article III, Texas Constitution;

(2) $300 million under Section 50b-4, Article III, Texas Constitution; [and]

(3) $400 million under Section 50b-5, Article III, Texas Constitution; and

(4) $500 million under Section 50b-6, Article III, Texas Constitution.

SECTION 5. Section 52.87, Education Code, is amended to read as follows:

Sec. 52.87. MANDAMUS. The performance of official duties prescribed by this subchapter and by former Section [Article III, Sections] 50b-3[,] and Sections 50b-4, [and] 50b-5, and 50b-6, Article III, [of the] Texas Constitution, in reference to the payment of the bonds, may be enforced in a court of competent jurisdiction by mandamus or other appropriate proceedings.

SECTION 6. (a) Section 52.17, Education Code, is amended by amending Subsections (a), (c), and (d) and adding Subsection (a-1) to read as follows:

(a) Each fiscal year a sufficient portion of the funds received by the board as repayment of student loans granted under this chapter, as interest on the loans, and as other available funds relating to the student loan program shall be deposited in the state treasury in the Texas college interest and sinking fund or a board interest and sinking fund to:

(1) pay the interest and principal coming due during the next [ensuing] fiscal year on [and to establish and maintain a reserve in the interest and sinking fund equal to the average annual principal and interest requirements of] all outstanding bonds issued under this chapter that are secured by money [funds] in, as applicable, the Texas college interest and sinking fund or a board interest and sinking fund; and

(2) establish and maintain any reserves required by the board resolution authorizing the issuance of the bonds.

(a-1) With respect to any bonds that remain outstanding under this chapter, the board may, subject to the terms of the applicable board resolution authorizing the issuance of those bonds:

(1) reduce, eliminate, or replace any reserve portion of the Texas college interest and sinking fund or a board interest and sinking fund; and

(2) apply any excess money in accordance with Subsection (b).

(c) If [In the event that] funds received by the board in any fiscal year as repayment of student loans and as interest on the loans are insufficient to pay the interest coming due and the principal maturing on the bonds during the next [ensuing] fiscal year as described by Subsection (a), the comptroller shall transfer into the Texas college interest and sinking fund and each board interest and sinking fund out of the first money coming into the treasury that[, which] is not otherwise appropriated by the constitution[,] an additional amount sufficient to pay that [the] interest [coming due] and [the] principal [maturing on the bonds during the ensuing fiscal year].

(d) The resolution authorizing the issuance of the bonds may provide for the deposit, from bond proceeds, of not more than 36 [24] months' interest, and may provide for the use of bond proceeds as a reserve for the payment of principal of and interest on the bonds.

(b) Section 52.19, Education Code, is amended to read as follows:

Sec. 52.19. INVESTMENT OF FUNDS. All money in the Texas college interest and sinking fund and in each board interest and sinking fund, including any [the] reserve portion, and all money in the Texas Opportunity Plan Fund and in the student loan auxiliary fund in excess of the amount necessary for student loans, and all money in each board student loan fund shall be invested by the comptroller in the investments prescribed by board resolution. The board shall furnish to the comptroller a copy of the resolution prescribing authorized investments. The board may sell any instruments owned in the Texas college interest and sinking fund, a board interest and sinking fund, the Texas Opportunity Plan Fund, the student loan auxiliary fund, or a board student loan fund at the prevailing market price. Income from these investments may be deposited in any of those funds.

(c) Subsection (c), Section 52.541, Education Code, is amended to read as follows:

(c) The board may transfer funds between the Texas Opportunity Plan Fund and the student loan auxiliary fund and among the separate accounts established under this section within those funds if:

(1) the transfer is approved by the board and is necessary to administer the Texas Opportunity Plan Fund or the student loan auxiliary fund; and

(2) the reason for the transfer is documented in the accounting of the funds.

(d) Subsection (c), Section 52.82, Education Code, is amended to read as follows:

(c) The board may sell the bonds at a negotiated sale if the board determines that a negotiated sale is a more efficient and economical method of selling the bonds. If the board has determined that the bonds will be sold by competitive bid, the board by resolution shall prescribe the manner of giving notice of the sale.

(e) The following statutes are repealed:

(1) Sections 52.14 and 52.15, Education Code; and

(2) Subsection (d), Section 52.32, Education Code.

(f) Notwithstanding any other provision of this Act, this section takes effect September 1, 2007.

SECTION 7. Section 54.203, Education Code, is amended by amending Subsection (e) and adding Subsection (e-1) to read as follows:

(e) The exemption from fees provided for in Subsection (a) [of this section] does not apply to a person who [if] at the time of [his] registration [he] is entitled to receive [eligible for] educational benefits under federal legislation [in effect at the time of his registration] if the value of those benefits received in a semester or other term is equal to or exceeds the value of the exemption for the same semester or other term. If the value of federal benefits received in a semester or other term does not equal or exceed the value of the exemption for the same semester or other term, [except that] the person [must first utilize the federal benefit for which he] is entitled to receive both the federal benefit and the exemption in the same semester or other term. The [eligible and the] combined amount of the federal benefit plus the amount of the exemption received in a semester or other term may [this waiver shall] not exceed the cost of tuition and fees for that semester or other term [maximum value of the waiver]. A person is covered by the exemption [exemptions] if the person's [his] right to benefits under federal legislation is extinguished at the time of the person's [his] registration, except that a person may [is] not receive [eligible for] an exemption from fees under this section if the person's right to benefits under federal legislation is extinguished because the person is in default of repayment of a loan made to the person under a federal program to provide or guarantee loans for educational purposes.

(e-1) A person may [is] not receive an [eligible for the] exemption under this section if the person is in default on a loan made or guaranteed for educational purposes by the State of Texas.

SECTION 8. Subsection (e), Section 54.203, Education Code, as amended by this Act, and Subsection (e-1), Section 54.203, Education Code, as added by this Act, apply beginning with tuition and fees for the 2007 fall semester. Tuition and fees for a term or semester before the 2007 fall semester are covered by the law in effect immediately before the effective date of this Act, and the former law is continued in effect for that purpose.

SECTION 9. Sections 1 through 5 of this Act takes effect on the date on which the constitutional amendment proposed by the 80th Legislature, Regular Session, 2007, providing for the issuance of $500 million in general obligation bonds to finance educational loans to students and authorizing bond enhancement agreements with respect to general obligation bonds issued for that purpose takes effect. If that amendment is not approved by the voters, then Sections 1 through 5 of this Act have no effect.

______________________________ ______________________________

President of the Senate Speaker of the House

I hereby certify that S.B. No. 1640 passed the Senate on May 17, 2007, by the following vote: Yeas 31, Nays 0; and that the Senate concurred in House amendments on May 25, 2007, by the following vote: Yeas 30, Nays 0.

______________________________ Secretary of the Senate

I hereby certify that S.B. No. 1640 passed the House, with amendments, on May 23, 2007, by the following vote: Yeas 139, Nays 0, one present not voting.

______________________________ Chief Clerk of the House

Approved:

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Date

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Governor