By: Bivins S.B. No. 131
A BILL TO BE ENTITLED
AN ACT
1-1 relating to facilities equalization for public schools; authorizing
1-2 the issuance and guarantee of bonds and facilities certificates and
1-3 the levy of taxes.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Chapter 20, Education Code, is amended by adding
1-6 Subchapter H to read as follows:
1-7 SUBCHAPTER H. SCHOOL FACILITIES EQUALIZATION PROGRAM
1-8 Sec. 20.961. DEFINITIONS. In this subchapter:
1-9 (1) "Agency" means the Central Education Agency.
1-10 (2) "Basic program" means the basic facilities
1-11 equalization program.
1-12 (3) "Facilities certificate" means a debt instrument
1-13 issued by a school district under Section 20.970 of this code.
1-14 (4) "Instructional facility" means real property, an
1-15 improvement to real property, or a necessary fixture of an
1-16 improvement to real property that is used predominantly for
1-17 teaching the curriculum required under Section 21.101 of this code.
1-18 (5) "Level of local participation" means the ratio
1-19 that the dollar amount of bonds issued under Section 20.968 of this
1-20 code or of cash provided by a school district under Section 20.969
1-21 of this code bears to the total dollar amount of bonds, cash, and
1-22 facilities certificates to be sold to finance a project, expressed
1-23 as a percentage.
1-24 (6) "Repayment period" means a four-year period for
2-1 which a school district's level of local participation has been
2-2 established as provided by Section 20.966 or 20.967 of this code.
2-3 (7) "School district" means any public school district
2-4 in this state.
2-5 (8) "Supplemental program" means the supplemental
2-6 facilities equalization program.
2-7 (9) "Wealth per student" means the taxable property
2-8 values reported by the comptroller to the commissioner of education
2-9 under Section 11.86 of this code divided by the number of students
2-10 in regular average daily attendance as determined under Section
2-11 16.006 of this code.
2-12 Sec. 20.962. PROJECTS FINANCED THROUGH BASIC FACILITIES
2-13 EQUALIZATION PROGRAM OR SUPPLEMENTAL FACILITIES EQUALIZATION
2-14 PROGRAM. (a) A project that is financed through the basic program
2-15 or the supplemental program is financed by:
2-16 (1) the issuance and sale of bonds as provided by
2-17 Section 20.968 of this code or the provision in cash of the school
2-18 district's level of local participation as provided by Section
2-19 20.969 of this code; and
2-20 (2) the issuance and sale to the state of facilities
2-21 certificates as provided by Section 20.970 of this code.
2-22 (b) The state may forgive the payment of principal and
2-23 interest on facilities certificates as provided by Section
2-24 20.971(c) of this code.
2-25 (c) The state may issue and sell bonds as provided by
2-26 Article 717w, Revised Statutes, to finance the state's share of the
2-27 basic program and the supplemental program.
3-1 (d) To be eligible for assistance through the basic program
3-2 or the supplemental program, a school district must submit an
3-3 application to the agency. A district may not apply for more than
3-4 $9 million in assistance under this subchapter in a state fiscal
3-5 biennium.
3-6 (e) The agency may determine the costs that are eligible for
3-7 state assistance under this subchapter. Those costs:
3-8 (1) may include costs necessary for construction of
3-9 necessary technology infrastructure; and
3-10 (2) may not exceed the cost index applicable to the
3-11 district under Subsection (h) of this section.
3-12 (f) A cost that permits a district to construct a facility
3-13 that exceeds a standard for the adequacy of school facilities
3-14 adopted by the State Board of Education under Section 16.402 of
3-15 this code is not eligible for state assistance under this
3-16 subchapter, but may be paid for by the district.
3-17 (g) A school district may not receive more than $9 million
3-18 in assistance under this subchapter in a state fiscal biennium.
3-19 (h) The agency may adopt regional cost indexes for
3-20 acquisition of land and construction, renovation, and improvement
3-21 of instructional facilities for use in determining costs that are
3-22 eligible for state assistance.
3-23 Sec. 20.963. BASIC PROGRAM. (a) A school district may
3-24 finance an instructional facility through the basic program.
3-25 (b) A school district may apply for assistance through the
3-26 basic program if:
3-27 (1) the district has conducted a bond election as
4-1 provided by Section 20.974 of this code; and
4-2 (2) the voters have approved the issuance of bonds
4-3 sufficient to pay the entire cost of the project for which the
4-4 district is applying for assistance.
4-5 (c) The agency shall rank each school district to determine
4-6 the district's priority for participation in the basic program,
4-7 with the rankings determined as follows:
4-8 (1) a district's wealth per student in the preceding
4-9 year accounts for 80 percent of the district's ranking; and
4-10 (2) a district's average debt service tax rate in the
4-11 preceding three years accounts for 20 percent of the district's
4-12 ranking.
4-13 Sec. 20.964. SUPPLEMENTAL PROGRAM. (a) A school district
4-14 may finance an instructional facility through the supplemental
4-15 program.
4-16 (b) A school district may apply for assistance through the
4-17 supplemental program if:
4-18 (1) the district has conducted a bond election as
4-19 provided by Section 20.974 of this code; and
4-20 (2) the voters have approved the issuance of bonds
4-21 sufficient to pay the entire cost of the project for which the
4-22 district is applying for assistance.
4-23 (c) The agency shall rank each school district to determine
4-24 the district's priority for participation in the supplemental
4-25 program, with the rankings determined as follows:
4-26 (1) a district's wealth per student in the preceding
4-27 year accounts for 10 percent of the district's ranking;
5-1 (2) the average aggregate rate of taxes levied by a
5-2 district in the preceding three years accounts for 50 percent of
5-3 the district's ranking; and
5-4 (3) a district's growth in student population over the
5-5 past five years accounts for 40 percent of the district's ranking.
5-6 Sec. 20.965. PERCENTILE OF WEALTH PER STUDENT. In this
5-7 subchapter, a school district's percentile of wealth per student is
5-8 determined by:
5-9 (1) ranking all the school districts in the state in
5-10 ascending order according to each district's wealth per student;
5-11 (2) beginning with the district with the lowest wealth
5-12 per student, adding the number of students in each district to the
5-13 sum of the number of students in all lower ranked districts until
5-14 the district for which a percentile is being computed is reached;
5-15 and
5-16 (3) determining the percent the sum of students
5-17 represents in relation to the total number of students in the
5-18 state.
5-19 Sec. 20.966. INITIAL LEVEL OF LOCAL PARTICIPATION; MINIMUM
5-20 LEVEL OF LOCAL PARTICIPATION. (a) The State Board of Education
5-21 shall determine the initial level of local participation for a
5-22 school district that applies for assistance under the basic program
5-23 or the supplemental program. The initial level of local
5-24 participation is equal to the district's percentile of wealth per
5-25 student. If a district's percentile of wealth per student is less
5-26 than the minimum level of local participation under Subsection (c)
5-27 or (d) of this section, the minimum level applies.
6-1 (b) A school district may appeal the State Board of
6-2 Education's determination of the level of local participation to
6-3 the commissioner of education.
6-4 (c) The level of local participation for a project financed
6-5 through the basic program may not be less than 20 percent.
6-6 (d) After considering the needs of school districts and the
6-7 availability of state funds, the agency shall determine for all
6-8 school districts a minimum level of local participation for
6-9 projects financed through the supplemental program.
6-10 (e) If the agency determines that the level of local
6-11 participation for a project is so great that the cost of the
6-12 state's participation in financing the project outweighs the
6-13 benefit to be obtained by the school district, the agency shall
6-14 assign the project a level of local participation of 100 percent.
6-15 Sec. 20.967. REPAYMENT PERIOD; CHANGE IN LEVEL OF LOCAL
6-16 PARTICIPATION. (a) The initial repayment period for a project
6-17 begins the date the first bond or facilities certificate is sold to
6-18 finance the project and ends on the fourth anniversary of the date
6-19 the period began. A new repayment period for a project begins the
6-20 day after the previous repayment period ends and ends on the fourth
6-21 anniversary of the date the new period began.
6-22 (b) Before the end of each repayment period, the agency
6-23 shall determine if there has been a change in the school district's
6-24 percentile of wealth per student.
6-25 (c) The agency shall assign a new level of local
6-26 participation for the subsequent repayment period if the agency
6-27 determines that the district is at a higher percentile of wealth
7-1 per student. A new level of local participation may not be less
7-2 than the highest previous level of local participation.
7-3 Sec. 20.968. ISSUANCE AND SALE OF BONDS. (a) Except as
7-4 provided by Section 20.969 of this code, a school district that has
7-5 contracted with the agency under the basic program or the
7-6 supplemental program shall issue and sell bonds as provided by this
7-7 subchapter.
7-8 (b) Proceeds from the sale of bonds issued under this
7-9 subchapter may be used only for:
7-10 (1) the acquisition, construction, renovation, or
7-11 improvement of the asset for which the bonds were issued; and
7-12 (2) payment of costs of issuance of the bonds.
7-13 (c) The agency issuing the bonds shall attempt to include
7-14 minority-owned businesses in the issuance of at least 20 percent of
7-15 the bonds.
7-16 (d) The school districts which engage in facilities
7-17 construction as a result of the issuance of these bonds shall
7-18 attempt to include minority-owned businesses in at least 20 percent
7-19 of the total value of construction contracts awarded.
7-20 Sec. 20.969. PROVISION OF CASH IN LIEU OF BONDS. In lieu of
7-21 issuing bonds as provided by Section 20.968 of this code, a school
7-22 district may provide its level of local participation on a project
7-23 in cash. A school district that provides its level of local
7-24 participation in cash must nonetheless conduct an election under
7-25 Section 20.974 of this code authorizing the issuance of bonds to
7-26 provide its level of local participation.
7-27 Sec. 20.970. ISSUANCE AND SALE OF FACILITIES CERTIFICATES.
8-1 (a) A school district that has contracted with the agency under
8-2 the basic program or the supplemental program shall issue
8-3 facilities certificates.
8-4 (b) The Texas Public Finance Authority shall prescribe the
8-5 form of facilities certificates to meet the goals of the basic
8-6 program or the supplemental program. A facilities certificate must
8-7 provide for payment by the issuing district of the principal and
8-8 interest of the certificate. A facilities certificate must provide
8-9 for the forgiveness of principal and interest payments as provided
8-10 by Section 20.971(c) of this code. The agency shall prescribe the
8-11 interest rate and maturity dates of facilities certificates.
8-12 (c) A school district may sell facilities certificates to
8-13 the state only.
8-14 (d) Proceeds from the sale of facilities certificates may be
8-15 used only for:
8-16 (1) the acquisition, construction, renovation, or
8-17 improvement of the asset for which the certificates were issued;
8-18 and
8-19 (2) payment of costs of issuance of the certificates.
8-20 Sec. 20.971. PAYMENT OF FACILITIES CERTIFICATES.
8-21 (a) During the initial repayment period, a school district is not
8-22 obligated to make scheduled payments of principal or interest on
8-23 facilities certificates.
8-24 (b) A school district shall begin making scheduled payments
8-25 of principal and interest on facilities certificates in any
8-26 subsequent repayment period in which the agency assigns the
8-27 district a higher level of local participation under Section 20.967
9-1 of this code. The percentage of principal and interest that a
9-2 district must pay during a repayment period must equal the
9-3 difference between the district's current level of local
9-4 participation and the district's level of local participation in
9-5 the initial repayment period.
9-6 (c) Principal and interest payments on facilities
9-7 certificates are forgiven except for payments required under
9-8 Subsection (b) of this section.
9-9 Sec. 20.972. SUDDEN DECLINE IN PROPERTY VALUES. If a
9-10 natural or economic disaster occurs in a school district, the
9-11 agency may waive all or part of a scheduled payment on a facilities
9-12 certificate that is required under Section 20.971 of this code if
9-13 the agency finds that:
9-14 (1) the total of property values in the school
9-15 district has declined by 25 percent or more since the preceding tax
9-16 year; and
9-17 (2) the decline is not primarily due to:
9-18 (A) an increase in the amount of property that:
9-19 (i) is exempt from taxation; or
9-20 (ii) qualifies for special appraisal under
9-21 Chapter 23, Tax Code; or
9-22 (B) detachment of territory from the district.
9-23 Sec. 20.973. BOND TAXES. (a) The governing body of a
9-24 school district that issues bonds under the basic program or the
9-25 supplemental program shall levy, pledge, assess, and collect annual
9-26 ad valorem taxes sufficient to pay the principal and interest on
9-27 the bonds as they become due.
10-1 (b) The governing body of a school district that issues
10-2 facilities certificates under the basic program or the supplemental
10-3 program shall levy, pledge, assess, and collect annual ad valorem
10-4 taxes sufficient to pay the principal and interest on facilities
10-5 certificates as they become due, if required to do so under Section
10-6 20.971 of this code.
10-7 Sec. 20.974. BOND AND TAX ELECTIONS. (a) A school district
10-8 may not issue bonds or facilities certificates or levy taxes under
10-9 the basic program or the supplemental program unless authorized by
10-10 a majority of the qualified voters of the district voting at an
10-11 election:
10-12 (1) held for that purpose; or
10-13 (2) held before the effective date of this subchapter
10-14 to authorize the issuance of bonds.
10-15 (b) A proposition to authorize the issuance of bonds or
10-16 facilities certificates under the basic program or the supplemental
10-17 program must include the question of whether the governing body of
10-18 the district may levy, pledge, and collect annual ad valorem taxes
10-19 on all taxable property in the district sufficient, without limit
10-20 as to rate or amount, to pay the principal and interest on the
10-21 bonds or facilities certificates.
10-22 SECTION 2. Section 20.04, Education Code, is amended by
10-23 adding Subsection (f) to read as follows:
10-24 (f) For purposes of the limitation on the amount of tax bond
10-25 indebtedness of a district under Subsection (c) of this section, a
10-26 facilities certificate issued under Section 20.970 of this code is
10-27 not considered a bond.
11-1 SECTION 3. Sections 20.902 and 20.904, Education Code, are
11-2 amended to read as follows:
11-3 Sec. 20.902. GUARANTEE. On approval by the commissioner,
11-4 bonds issued under Subchapter A or H of this chapter, including
11-5 refunding bonds, are guaranteed by the corpus and income of the
11-6 permanent school fund.
11-7 Sec. 20.904. ELIGIBILITY. To be eligible for approval by
11-8 the commissioner, bonds must be issued under Subchapter A or H of
11-9 this chapter or under Chapter 503, Acts of the 54th Legislature,
11-10 1955 (Article 717k, Vernon's Texas Civil Statutes), by an
11-11 accredited school district.
11-12 SECTION 4. Chapter 1, Title 22, Revised Statutes, is amended
11-13 by adding Article 717w to read as follows:
11-14 Art. 717w. PUBLIC SCHOOL FACILITIES EQUALIZATION FUNDING
11-15 Sec. 1. DEFINITIONS. In this article:
11-16 (1) "Authority" means the Texas Public Finance
11-17 Authority. The Texas Public Finance Authority is created and has
11-18 all statutory authority contained in the Texas Public Finance
11-19 Authority Act (Article 601d, Vernon's Texas Civil Statutes).
11-20 (2) "Basic program" means the basic facilities
11-21 equalization program under Section 20.963, Education Code.
11-22 (3) "Instructional facility" has the meaning assigned
11-23 by Section 20.961, Education Code.
11-24 (4) "Supplemental program" means the supplemental
11-25 facilities equalization program under Section 20.964, Education
11-26 Code.
11-27 Sec. 2. BONDS. (a) The authority shall issue general
12-1 obligation bonds to finance the basic program and the supplemental
12-2 program in the amount specified in the General Appropriations Act.
12-3 The amount of outstanding bonds issued under this article may not
12-4 exceed $750 million at any one time. Bonds that are or have been
12-5 refunded do not count against the limit on outstanding bonds.
12-6 (b) In connection with the issuance and administration of
12-7 bonds, the authority may exercise the rights and powers granted to
12-8 an issuer by:
12-9 (1) Chapter 503, Acts of the 54th Legislature, 1955
12-10 (Article 717k, Vernon's Texas Civil Statutes); and
12-11 (2) the Bond Procedures Act of 1981 (Article 717k-6,
12-12 Vernon's Texas Civil Statutes).
12-13 Sec. 3. FUND. (a) The school facilities equalization fund
12-14 is in the authority. The fund shall be administered by the
12-15 authority as directed by the Central Education Agency. The
12-16 authority may create accounts in the fund as the authority
12-17 considers necessary.
12-18 (b) The authority shall deposit in the fund:
12-19 (1) the proceeds of all bonds sold under this article,
12-20 less the costs of issuance;
12-21 (2) all payments on facilities certificates under
12-22 Section 20.971, Education Code;
12-23 (3) any federal or private funds received and
12-24 designated for assisting school districts in acquiring,
12-25 constructing, renovating, or improving instructional facilities;
12-26 (4) any investment securities purchased by the fund;
12-27 (5) interest or other earnings derived from the
13-1 amounts described in Subdivisions (1) through (4) of this
13-2 subsection; and
13-3 (6) any amounts transferred for deposit into the fund.
13-4 (c) Money in the fund may be used only to:
13-5 (1) provide aid to qualifying school districts under
13-6 the basic program or the supplemental program; or
13-7 (2) administer the basic program or the supplemental
13-8 program.
13-9 Sec. 4. ALLOCATION BETWEEN PROGRAMS. The authority shall
13-10 allocate the proceeds of bonds sold under this article, less the
13-11 costs of issuance and the estimated cost of administering the basic
13-12 program and the supplemental program for the period for which the
13-13 bonds were issued, as follows:
13-14 (1) 75 percent shall be allocated to the basic
13-15 program; and
13-16 (2) 25 percent shall be allocated to the supplemental
13-17 program.
13-18 Sec. 5. LIMIT ON ADMINISTRATIVE COSTS. The cost of
13-19 administering the basic program and the supplemental program in a
13-20 fiscal biennium may not exceed 0.1 percent of the amount of bonds
13-21 issued under this article in that biennium.
13-22 SECTION 5. The Public School Facilities Funding Act (Article
13-23 717t, Vernon's Texas Civil Statutes) is repealed.
13-24 SECTION 6. This Act takes effect only if the constitutional
13-25 amendment proposed by S.J.R. No. 4, 73rd Legislature, Regular
13-26 Session, 1993, authorizing state general obligation bonds to assist
13-27 school districts in financing facilities is approved by the voters.
14-1 If the proposed constitutional amendment is not approved by the
14-2 voters, this Act has no effect.
14-3 SECTION 7. The importance of this legislation and the
14-4 crowded condition of the calendars in both houses create an
14-5 emergency and an imperative public necessity that the
14-6 constitutional rule requiring bills to be read on three several
14-7 days in each house be suspended, and this rule is hereby suspended.