1-1 By: Bivins S.B. No. 131
1-2 (In the Senate - Filed January 18, 1993; January 19, 1993,
1-3 read first time and referred to Committee on Education; January 26,
1-4 1993, reported adversely, with favorable Committee Substitute by
1-5 the following vote: Yeas 10, Nays 1; January 26, 1993, sent to
1-6 printer.)
1-7 COMMITTEE VOTE
1-8 Yea Nay PNV Absent
1-9 Ratliff x
1-10 Haley x
1-11 Barrientos x
1-12 Bivins x
1-13 Harris of Tarrant x
1-14 Luna x
1-15 Montford x
1-16 Shapiro x
1-17 Sibley x
1-18 Turner x
1-19 Zaffirini x
1-20 COMMITTEE SUBSTITUTE FOR S.B. No. 131 By: Bivins
1-21 A BILL TO BE ENTITLED
1-22 AN ACT
1-23 relating to facilities equalization for public schools; authorizing
1-24 the issuance of bonds and facilities certificates and the levy of
1-25 taxes.
1-26 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-27 SECTION 1. Chapter 20, Education Code, is amended by adding
1-28 Subchapter H to read as follows:
1-29 SUBCHAPTER H. SCHOOL FACILITIES EQUALIZATION PROGRAM
1-30 Sec. 20.961. DEFINITIONS. In this subchapter:
1-31 (1) "Agency" means the Central Education Agency.
1-32 (2) "Basic program" means the basic facilities
1-33 equalization program.
1-34 (3) "Facilities certificate" means a debt instrument
1-35 issued by a school district under Section 20.970 of this code.
1-36 (4) "Instructional facility" means real property, an
1-37 improvement to real property, or a necessary fixture of an
1-38 improvement to real property that is used predominantly for
1-39 teaching the curriculum required under Section 21.101 of this code.
1-40 (5) "Level of local participation" means the ratio
1-41 that the dollar amount of bonds issued under Section 20.968 of this
1-42 code or of cash provided by a school district under Section 20.969
1-43 of this code bears to the total dollar amount of bonds, cash, and
1-44 facilities certificates to be sold to finance a project, expressed
1-45 as a percentage.
1-46 (6) "Repayment period" means a four-year period for
1-47 which a school district's level of local participation has been
1-48 established as provided by Section 20.966 or 20.967 of this code.
1-49 (7) "School district" means any public school district
1-50 in this state.
1-51 (8) "Supplemental program" means the supplemental
1-52 facilities equalization program.
1-53 (9) "Wealth per student" means the taxable property
1-54 values reported by the comptroller to the commissioner of education
1-55 under Section 11.86 of this code divided by the number of students
1-56 in regular average daily attendance as determined under Section
1-57 16.006 of this code.
1-58 Sec. 20.962. PROJECTS FINANCED THROUGH BASIC FACILITIES
1-59 EQUALIZATION PROGRAM OR SUPPLEMENTAL FACILITIES EQUALIZATION
1-60 PROGRAM. (a) A project that is financed through the basic program
1-61 or the supplemental program is financed by:
1-62 (1) the issuance and sale of bonds as provided by
1-63 Section 20.968 of this code or the provision in cash of the school
1-64 district's level of local participation as provided by Section
1-65 20.969 of this code; and
1-66 (2) the issuance and sale to the state of facilities
1-67 certificates as provided by Section 20.970 of this code.
1-68 (b) The state may forgive the payment of principal and
2-1 interest on facilities certificates as provided by Section
2-2 20.971(c) of this code.
2-3 (c) The state may issue and sell bonds as provided by
2-4 Article 717w, Revised Statutes, to finance the state's share of the
2-5 basic program and the supplemental program.
2-6 (d) To be eligible for assistance through the basic program
2-7 or the supplemental program, a school district must submit an
2-8 application to the agency. A district may not apply for more than
2-9 $9 million in assistance under this subchapter in a state fiscal
2-10 biennium.
2-11 (e) The agency shall determine the costs that are eligible
2-12 for state assistance under this subchapter. Those costs:
2-13 (1) may include costs necessary for construction of
2-14 necessary technology infrastructure; and
2-15 (2) may not exceed the cost index applicable to the
2-16 district under Subsection (h) of this section.
2-17 (f) A cost that permits a district to construct a facility
2-18 that exceeds a standard for the adequacy of school facilities
2-19 adopted by the State Board of Education under Section 16.402 of
2-20 this code is not eligible for state assistance under this
2-21 subchapter, but may be paid for by the district.
2-22 (g) A school district may not receive more than $9 million
2-23 in assistance under this subchapter in a state fiscal biennium.
2-24 (h) The agency shall adopt regional cost indexes for
2-25 acquisition of land and construction, renovation, and improvement
2-26 of instructional facilities for use in determining costs that are
2-27 eligible for state assistance.
2-28 Sec. 20.963. BASIC PROGRAM. (a) A school district may
2-29 finance an instructional facility through the basic program.
2-30 (b) A school district may apply for assistance through the
2-31 basic program if:
2-32 (1) the district has conducted a bond election as
2-33 provided by Section 20.974 of this code; and
2-34 (2) the voters have approved the issuance of bonds
2-35 sufficient to pay the entire cost of the project for which the
2-36 district is applying for assistance.
2-37 (c) The agency shall rank each school district to determine
2-38 the district's priority for participation in the basic program,
2-39 with the rankings determined as follows:
2-40 (1) a district's wealth per student in the preceding
2-41 year accounts for 80 percent of the district's ranking; and
2-42 (2) a district's average debt service tax rate in the
2-43 preceding three years accounts for 20 percent of the district's
2-44 ranking.
2-45 Sec. 20.964. SUPPLEMENTAL PROGRAM. (a) A school district
2-46 may finance an instructional facility through the supplemental
2-47 program.
2-48 (b) A school district may apply for assistance through the
2-49 supplemental program if:
2-50 (1) the district has conducted a bond election as
2-51 provided by Section 20.974 of this code; and
2-52 (2) the voters have approved the issuance of bonds
2-53 sufficient to pay the entire cost of the project for which the
2-54 district is applying for assistance.
2-55 (c) The agency shall rank each school district to determine
2-56 the district's priority for participation in the supplemental
2-57 program, with the rankings determined as follows:
2-58 (1) a district's wealth per student in the preceding
2-59 year accounts for 10 percent of the district's ranking;
2-60 (2) the average aggregate rate of taxes levied by a
2-61 district in the preceding three years accounts for 50 percent of
2-62 the district's ranking; and
2-63 (3) a district's growth in student population over the
2-64 past five years accounts for 40 percent of the district's ranking.
2-65 Sec. 20.965. PERCENTILE OF WEALTH PER STUDENT. In this
2-66 subchapter, a school district's percentile of wealth per student is
2-67 determined by:
2-68 (1) ranking all the school districts in the state in
2-69 ascending order according to each district's wealth per student;
2-70 (2) beginning with the district with the lowest wealth
3-1 per student, adding the number of students in each district to the
3-2 sum of the number of students in all lower ranked districts until
3-3 the district for which a percentile is being computed is reached;
3-4 and
3-5 (3) determining the percent the sum of students
3-6 represents in relation to the total number of students in the
3-7 state.
3-8 Sec. 20.966. INITIAL LEVEL OF LOCAL PARTICIPATION; MINIMUM
3-9 LEVEL OF LOCAL PARTICIPATION. (a) The commissioner of education
3-10 shall determine the initial level of local participation for a
3-11 school district that applies for assistance under the basic program
3-12 or the supplemental program. The initial level of local
3-13 participation is equal to the district's percentile of wealth per
3-14 student. If a district's percentile of wealth per student is less
3-15 than the minimum level of local participation under Subsection (c)
3-16 or (d) of this section, the minimum level applies.
3-17 (b) A school district may appeal the commissioner of
3-18 education's determination of the level of local participation to
3-19 the State Board of Education.
3-20 (c) The level of local participation for a project financed
3-21 through the basic program may not be less than 20 percent.
3-22 (d) After considering the needs of school districts and the
3-23 availability of state funds, the agency shall determine for all
3-24 school districts a minimum level of local participation for
3-25 projects financed through the supplemental program.
3-26 (e) If the agency determines that the level of local
3-27 participation for a project is so great that the cost of the
3-28 state's participation in financing the project outweighs the
3-29 benefit to be obtained by the school district, the agency shall
3-30 assign the project a level of local participation of 100 percent.
3-31 Sec. 20.967. REPAYMENT PERIOD; CHANGE IN LEVEL OF LOCAL
3-32 PARTICIPATION. (a) The initial repayment period for a project
3-33 begins the date the first bond or facilities certificate is sold to
3-34 finance the project and ends on the fourth anniversary of the date
3-35 the period began. A new repayment period for a project begins the
3-36 day after the previous repayment period ends and ends on the fourth
3-37 anniversary of the date the new period began.
3-38 (b) Before the end of each repayment period, the agency
3-39 shall determine if there has been a change in the school district's
3-40 percentile of wealth per student.
3-41 (c) The agency shall assign a new level of local
3-42 participation for the subsequent repayment period if the agency
3-43 determines that the district is at a higher percentile of wealth
3-44 per student. A new level of local participation may not be less
3-45 than the highest previous level of local participation.
3-46 Sec. 20.968. ISSUANCE AND SALE OF BONDS. (a) Except as
3-47 provided by Section 20.969 of this code, a school district that has
3-48 contracted with the agency under the basic program or the
3-49 supplemental program shall issue and sell bonds as provided by this
3-50 subchapter.
3-51 (b) Proceeds from the sale of bonds issued under this
3-52 subchapter may be used only for:
3-53 (1) the acquisition, construction, renovation, or
3-54 improvement of the asset for which the bonds were issued; and
3-55 (2) payment of costs of issuance of the bonds.
3-56 Sec. 20.969. PROVISION OF CASH IN LIEU OF BONDS. In lieu of
3-57 issuing bonds as provided by Section 20.968 of this code, a school
3-58 district may provide its level of local participation on a project
3-59 in cash. A school district that provides its level of local
3-60 participation in cash must nonetheless conduct an election under
3-61 Section 20.974 of this code authorizing the issuance of bonds to
3-62 provide its level of local participation.
3-63 Sec. 20.970. ISSUANCE AND SALE OF FACILITIES CERTIFICATES.
3-64 (a) A school district that has contracted with the agency under
3-65 the basic program or the supplemental program shall issue
3-66 facilities certificates.
3-67 (b) The state treasurer shall prescribe the form of
3-68 facilities certificates to meet the goals of the basic program or
3-69 the supplemental program. A facilities certificate must provide
3-70 for payment by the issuing district of the principal and interest
4-1 of the certificate. A facilities certificate must provide for the
4-2 forgiveness of principal and interest payments as provided by
4-3 Section 20.971(c) of this code. The agency shall prescribe the
4-4 interest rate and maturity dates of facilities certificates.
4-5 (c) A school district may sell facilities certificates to
4-6 the state only.
4-7 (d) Proceeds from the sale of facilities certificates may be
4-8 used only for:
4-9 (1) the acquisition, construction, renovation, or
4-10 improvement of the asset for which the certificates were issued;
4-11 and
4-12 (2) payment of costs of issuance of the certificates.
4-13 Sec. 20.971. PAYMENT OF FACILITIES CERTIFICATES.
4-14 (a) During the initial repayment period, a school district is not
4-15 obligated to make scheduled payments of principal or interest on
4-16 facilities certificates.
4-17 (b) A school district shall begin making scheduled payments
4-18 of principal and interest on facilities certificates in any
4-19 subsequent repayment period in which the agency assigns the
4-20 district a higher level of local participation under Section 20.967
4-21 of this code. The percentage of principal and interest that a
4-22 district must pay during a repayment period must equal the
4-23 difference between the district's current level of local
4-24 participation and the district's level of local participation in
4-25 the initial repayment period.
4-26 (c) Principal and interest payments on facilities
4-27 certificates are forgiven except for payments required under
4-28 Subsection (b) of this section.
4-29 Sec. 20.972. SUDDEN DECLINE IN PROPERTY VALUES. If a
4-30 natural or economic disaster occurs in a school district, the
4-31 agency may waive all or part of a scheduled payment on a facilities
4-32 certificate that is required under Section 20.971 of this code if
4-33 the agency finds that:
4-34 (1) the total of property values in the school
4-35 district has declined by 25 percent or more since the preceding tax
4-36 year; and
4-37 (2) the decline is not primarily due to:
4-38 (A) an increase in the amount of property that:
4-39 (i) is exempt from taxation; or
4-40 (ii) qualifies for special appraisal under
4-41 Chapter 23, Tax Code; or
4-42 (B) detachment of territory from the district.
4-43 Sec. 20.973. BOND TAXES. (a) The governing body of a
4-44 school district that issues bonds under the basic program or the
4-45 supplemental program shall levy, pledge, assess, and collect annual
4-46 ad valorem taxes sufficient to pay the principal and interest on
4-47 the bonds as they become due.
4-48 (b) The governing body of a school district that issues
4-49 facilities certificates under the basic program or the supplemental
4-50 program shall levy, pledge, assess, and collect annual ad valorem
4-51 taxes sufficient to pay the principal and interest on facilities
4-52 certificates as they become due, if required to do so under Section
4-53 20.971 of this code.
4-54 Sec. 20.974. BOND AND TAX ELECTIONS. (a) A school district
4-55 may not issue bonds or facilities certificates or levy taxes under
4-56 the basic program or the supplemental program unless authorized by
4-57 a majority of the qualified voters of the district voting at an
4-58 election:
4-59 (1) held for that purpose; or
4-60 (2) held before the effective date of this subchapter
4-61 to authorize the issuance of bonds.
4-62 (b) A proposition to authorize the issuance of bonds or
4-63 facilities certificates under the basic program or the supplemental
4-64 program must include the question of whether the governing body of
4-65 the district may levy, pledge, and collect annual ad valorem taxes
4-66 on all taxable property in the district sufficient, without limit
4-67 as to rate or amount, to pay the principal and interest on the
4-68 bonds or facilities certificates.
4-69 SECTION 2. Section 20.04, Education Code, is amended by
4-70 adding Subsection (f) to read as follows:
5-1 (f) For purposes of the limitation on the amount of tax bond
5-2 indebtedness of a district under Subsection (c) of this section, a
5-3 facilities certificate issued under Section 20.970 of this code is
5-4 not considered a bond.
5-5 SECTION 3. Sections 20.902 and 20.904, Education Code, are
5-6 amended to read as follows:
5-7 Sec. 20.902. GUARANTEE. On approval by the commissioner,
5-8 bonds issued under Subchapter A or H of this chapter, including
5-9 refunding bonds, are guaranteed by the corpus and income of the
5-10 permanent school fund.
5-11 Sec. 20.904. ELIGIBILITY. To be eligible for approval by
5-12 the commissioner, bonds must be issued under Subchapter A or H of
5-13 this chapter or under Chapter 503, Acts of the 54th Legislature,
5-14 1955 (Article 717k, Vernon's Texas Civil Statutes), by an
5-15 accredited school district.
5-16 SECTION 4. Chapter 1, Title 22, Revised Statutes, is amended
5-17 by adding Article 717w to read as follows:
5-18 Art. 717w. PUBLIC SCHOOL FACILITIES EQUALIZATION FUNDING
5-19 Sec. 1. DEFINITIONS. In this article:
5-20 (1) "Basic program" means the basic facilities
5-21 equalization program under Section 20.963, Education Code.
5-22 (2) "Instructional facility" has the meaning assigned
5-23 by Section 20.961, Education Code.
5-24 (3) "Supplemental program" means the supplemental
5-25 facilities equalization program under Section 20.964, Education
5-26 Code.
5-27 Sec. 2. BONDS. (a) The state treasurer shall issue general
5-28 obligation bonds to finance the basic program and the supplemental
5-29 program in the amount specified in the General Appropriations Act.
5-30 The amount of outstanding bonds issued under this article may not
5-31 exceed $750 million at any one time. Bonds that are or have been
5-32 refunded do not count against the limit on outstanding bonds.
5-33 (b) In connection with the issuance and administration of
5-34 bonds, the state treasurer may exercise the rights and powers
5-35 granted to an issuer by:
5-36 (1) Chapter 503, Acts of the 54th Legislature, 1955
5-37 (Article 717k, Vernon's Texas Civil Statutes); and
5-38 (2) the Bond Procedures Act of 1981 (Article 717k-6,
5-39 Vernon's Texas Civil Statutes).
5-40 Sec. 3. FUND. (a) The school facilities equalization fund
5-41 is in the state treasury. The fund shall be administered by the
5-42 state treasurer as directed by the Central Education Agency. The
5-43 state treasurer may create accounts in the fund as the state
5-44 treasurer considers necessary.
5-45 (b) The state treasurer shall deposit in the fund:
5-46 (1) the proceeds of all bonds sold under this article,
5-47 less the costs of issuance;
5-48 (2) all payments on facilities certificates under
5-49 Section 20.971, Education Code;
5-50 (3) any federal or private funds received and
5-51 designated for assisting school districts in acquiring,
5-52 constructing, renovating, or improving instructional facilities;
5-53 (4) any investment securities purchased by the fund;
5-54 (5) interest or other earnings derived from the
5-55 amounts described in Subdivisions (1) through (4) of this
5-56 subsection; and
5-57 (6) any amounts transferred for deposit into the fund.
5-58 (c) Money in the fund may be used only to provide aid to
5-59 qualifying school districts under the basic program or the
5-60 supplemental program.
5-61 Sec. 4. ALLOCATION BETWEEN PROGRAMS. The state treasurer
5-62 shall allocate the proceeds of bonds sold under this article, less
5-63 the costs of issuance, as follows:
5-64 (1) 75 percent shall be allocated to the basic
5-65 program; and
5-66 (2) 25 percent shall be allocated to the supplemental
5-67 program.
5-68 SECTION 5. The Public School Facilities Funding Act (Article
5-69 717t, Vernon's Texas Civil Statutes) is repealed.
5-70 SECTION 6. This Act takes effect only if the constitutional
6-1 amendment proposed by S.J.R. No. 4, 73rd Legislature, Regular
6-2 Session, 1993, authorizing state general obligation bonds to assist
6-3 school districts in financing facilities is approved by the voters.
6-4 If the proposed constitutional amendment is not approved by the
6-5 voters, this Act has no effect.
6-6 SECTION 7. The importance of this legislation and the
6-7 crowded condition of the calendars in both houses create an
6-8 emergency and an imperative public necessity that the
6-9 constitutional rule requiring bills to be read on three several
6-10 days in each house be suspended, and this rule is hereby suspended.
6-11 * * * * *
6-12 Austin,
6-13 Texas
6-14 January 26,
6-15 1993
6-16 Hon. Bob Bullock
6-17 President of the Senate
6-18 Sir:
6-19 We, your Committee on Education to which was referred S.B. No. 131,
6-20 have had the same under consideration, and I am instructed to
6-21 report it back to the Senate with the recommendation that it do not
6-22 pass, but that the Committee Substitute adopted in lieu thereof do
6-23 pass and be printed.
6-24 Ratliff,
6-25 Chairman
6-26 * * * * *
6-27 WITNESSES
6-28 FOR AGAINST ON
6-29 ___________________________________________________________________
6-30 Name: Ann Dixon
6-31 Representing: Somerset ISD
6-32 City: Somerset x
6-33 Name: Lonnie Hollingsworth, Jr.
6-34 Representing: Tx Classroom Teachers Assn
6-35 City: Austin x
6-36 Name: Debra Haas
6-37 Representing: Legislative Education Board
6-38 City: Austin x