S.B. No. 511
                                        AN ACT
    1-1  relating to the student loan program administered by the Texas
    1-2  Higher Education Coordinating Board.
    1-3        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-4        SECTION 1.  Subchapter D, Chapter 52, Education Code, is
    1-5  amended by adding Section 52.501 to read as follows:
    1-6        Sec. 52.501.  DEFINITIONS.  In this chapter:
    1-7              (1)  "Board" means the Texas Higher Education
    1-8  Coordinating Board.
    1-9              (2)  "Board interest and sinking fund" means an
   1-10  interest and sinking fund established by the board under Section
   1-11  52.03 of this code.
   1-12              (3)  "Board student loan fund" means a student loan
   1-13  fund established by the board under Section 52.04 of this code.
   1-14              (4)  "Bond" means a general obligation bond issued by
   1-15  the board under Article III, Section 50b, 50b-1, 50b-2, or 50b-3,
   1-16  of the Texas Constitution.
   1-17              (5)  "Student loan program" means the student loan
   1-18  program administered by the board under this chapter.
   1-19        SECTION 2.  Section 52.01, Education Code, is amended to read
   1-20  as follows:
   1-21        Sec. 52.01.  ADMINISTRATION.  The Texas Higher Education
   1-22  Coordinating Board, <Texas College and University System,> or its
   1-23  successors, shall administer the student loan program authorized by
   1-24  this chapter pursuant to Article III, Sections <Section> 50b,
    2-1  50b-1, 50b-2, and 50b-3, of the Texas Constitution.  Personnel and
    2-2  other expenses required to properly administer this chapter shall
    2-3  be funded by:
    2-4              (1)  <provided in> the general appropriations acts; or
    2-5              (2)  any other source of revenue received by the board
    2-6  in connection with the operation of the student loan program.
    2-7        SECTION 3.  Subchapter A, Chapter 52, Education Code, is
    2-8  amended by adding Section 52.011 to read as follows:
    2-9        Sec. 52.011.  ADMINISTRATIVE EXPENSES FROM REPAYMENT OF
   2-10  LOANS.  If there are insufficient funds from Sections 52.01(1) and
   2-11  (2) of Section 52.01 to cover annual costs to administer the
   2-12  program, revenues received from repayment of student loans issued
   2-13  under this chapter may be used to administer this chapter, provided
   2-14  that the amount used from loan repayments may not exceed 0.5
   2-15  percent of the total outstanding student loans.  This section
   2-16  expires September 1, 1995.
   2-17        SECTION 4.  Subchapter A, Chapter 52, Education Code, is
   2-18  amended by adding Sections 52.03 and 52.04 to read as follows:
   2-19        Sec. 52.03.  BOARD INTEREST AND SINKING FUNDS.  (a)  The
   2-20  board by resolution may establish one or more interest and sinking
   2-21  funds as accounts in the state treasury.
   2-22        (b)  A board interest and sinking fund established under this
   2-23  section consists of deposits made by the board as provided by this
   2-24  chapter.
   2-25        (c)  A board interest and sinking fund established under this
   2-26  section may be used for any purpose related to the student loan
   2-27  program.
    3-1        (d)  The board by resolution may create and provide the terms
    3-2  of administration and use of one or more accounts in a board
    3-3  interest and sinking fund established under this section.
    3-4        Sec. 52.04.  BOARD STUDENT LOAN FUNDS.  (a)  The board by
    3-5  resolution may establish one or more board student loan funds as
    3-6  accounts in the state treasury.
    3-7        (b)  A board student loan fund established under this section
    3-8  consists of deposits made by the board as provided by this chapter.
    3-9        (c)  A board student loan fund established under this section
   3-10  may be used for any purpose related to the student loan program.
   3-11        (d)  The board by resolution may create and provide the terms
   3-12  of administration and use of one or more accounts in a board
   3-13  student loan fund established under this section.
   3-14        SECTION 5.  Section 52.11, Education Code, is amended by
   3-15  adding Subsection (n) to read as follows:
   3-16        (n)  This section applies only to bonds issued under Article
   3-17  III, Section 50b, of the Texas Constitution.
   3-18        SECTION 6.  Section 52.16, Education Code, is amended to read
   3-19  as follows:
   3-20        Sec. 52.16.  PROCEEDS FROM BOND SALE.  All proceeds from the
   3-21  sale of bonds authorized by Article III, Section 50b, 50b-1, or
   3-22  50b-2 of the Texas Constitution shall be deposited in the state
   3-23  treasury in the Texas Opportunity Plan Fund.
   3-24        SECTION 7.  Section 52.17, Education Code, is amended to read
   3-25  as follows:
   3-26        Sec. 52.17.  INTEREST AND SINKING FUNDS <FUND>.  (a)  Each
   3-27  fiscal year a sufficient portion of the funds received by the board
    4-1  as repayment of student loans granted under this chapter, <and> as
    4-2  interest on the loans, and as other available funds relating to the
    4-3  student loan program shall be deposited in the state treasury in
    4-4  the Texas college interest and sinking fund or a board interest and
    4-5  sinking fund <College Student Loan Bonds Interest and Sinking Fund,
    4-6  referred to in this chapter as the interest and sinking fund,> to
    4-7  pay the interest and principal coming due during the ensuing fiscal
    4-8  year and to establish and maintain a reserve in the interest and
    4-9  sinking fund equal to the average annual principal and interest
   4-10  requirements of all outstanding bonds issued under this chapter
   4-11  that are secured by funds in the Texas college interest and sinking
   4-12  fund or a board interest and sinking fund.
   4-13        (b)  If in any year funds are received in excess of the
   4-14  foregoing requirements, then the excess may <shall> be:
   4-15              (1)  deposited in the Texas Opportunity Plan Fund, the
   4-16  student loan auxiliary fund, or a board interest and sinking fund;
   4-17              (2)  used to pay any costs of the board related to the
   4-18  operation of the student loan program;
   4-19              (3)  used for any lawful purpose related to the student
   4-20  loan program; or
   4-21              (4)  <and may be> used for the same purposes and upon
   4-22  the same terms and conditions prescribed for the proceeds derived
   4-23  from the sale of the bonds <Texas College Student Loan Bonds>.
   4-24        (c)  In the event that funds received by the board in any
   4-25  fiscal year as repayment of student loans and as interest on the
   4-26  loans are insufficient to pay the interest coming due and the
   4-27  principal maturing on the bonds during the ensuing fiscal year, the
    5-1  state treasurer shall transfer into the Texas college interest and
    5-2  sinking fund and each board interest and sinking fund out of the
    5-3  first money coming into the treasury, which is not otherwise
    5-4  appropriated by the constitution, an additional amount sufficient
    5-5  to pay the interest coming due and the principal maturing on the
    5-6  bonds during the ensuing fiscal year.
    5-7        (d)  The resolution authorizing the issuance of the bonds may
    5-8  provide for the deposit, from bond proceeds, of not more than 24
    5-9  months' interest, and may provide for the use of bond proceeds as a
   5-10  reserve for the payment of principal of and interest on the bonds.
   5-11        (e)  Amounts paid to the board by the federal Lender's
   5-12  Special Allowance program may be deposited in the Texas college
   5-13  interest and sinking fund, a board interest and sinking fund,  or
   5-14  used for the administration of student loan and grant programs and
   5-15  the Teacher Loan Program and Future Teacher Loan Program authorized
   5-16  under House Bill 72, 68th Legislature, 2nd Called Session, 1984, or
   5-17  other programs administered by the board as specified by the
   5-18  legislature in the General Appropriations Act.
   5-19        (f)  With respect to loans granted under this chapter, the
   5-20  board shall file semiannually with the bond review board
   5-21  established under Chapter 1078, Acts of the 70th Legislature,
   5-22  Regular Session, 1987 (Article 717k-7, Vernon's Texas Civil
   5-23  Statutes), a report on the performance of the loans, <and> the
   5-24  Texas college interest and sinking fund, and each board interest
   5-25  and sinking fund.  The bond review board shall review the reports
   5-26  filed by the board under this subsection to assess the performance
   5-27  of the loans under this chapter, <and> the Texas college interest
    6-1  and sinking fund, and each board interest and sinking fund.  The
    6-2  filing dates and the contents of the reports must comply with any
    6-3  rules adopted by the bond review board.
    6-4        SECTION 8.  Section 52.19, Education Code, is amended to read
    6-5  as follows:
    6-6        Sec. 52.19.  INVESTMENT OF FUNDS.  All money in the Texas
    6-7  college <reserve portion of the> interest and sinking fund and in
    6-8  each board interest and sinking fund, including the reserve
    6-9  portion, and all money in the Texas Opportunity Plan Fund and in
   6-10  the student loan auxiliary fund in excess of the amount necessary
   6-11  for student loans, and all money in each board student loan fund
   6-12  shall be invested by the state treasurer in the investments
   6-13  prescribed by board resolution.  The board shall furnish to the
   6-14  state treasurer a copy of the resolution prescribing authorized
   6-15  investments.  The board may sell any instruments owned in the Texas
   6-16  college interest and sinking fund, a board interest and sinking
   6-17  fund, <or in> the Texas Opportunity Plan Fund, the student loan
   6-18  auxiliary fund, or a board student loan fund at the prevailing
   6-19  market price.  Income from these investments may <shall> be
   6-20  deposited in any of those funds <the interest and sinking fund>.
   6-21        SECTION 9.  Subchapter B, Chapter 52, Education Code, is
   6-22  amended by adding Section 52.20 to read as follows:
   6-23        Sec. 52.20.  STUDENT LOAN NOTES.  (a)  Promissory notes
   6-24  evidencing student loans made by the board with proceeds from bonds
   6-25  may be deposited and held in any fund as directed by the board
   6-26  resolution that authorized the issuance of the bonds.
   6-27        (b)  The board may pledge and grant a security interest in
    7-1  all or any portion of those promissory notes to any person to
    7-2  further secure the payment of principal and interest on bonds
    7-3  issued under this chapter or of obligations under any contracts
    7-4  entered into by the board relating to the issuance of a series of
    7-5  bonds.
    7-6        SECTION 10.  Subsection (a), Section 52.36, Education Code,
    7-7  is amended to read as follows:
    7-8        (a)  The board shall from time to time fix the interest to be
    7-9  charged for any student loan at a rate sufficient to pay the
   7-10  interest on outstanding bonds, <plus> any expenses incident to
   7-11  their issuance, sale, and retirement, and all or a portion of the
   7-12  board's expenses related to the operation of the student loan
   7-13  program.  Interest shall be postponed by the board as long as a
   7-14  student is enrolled at a participating institution and may be
   7-15  postponed at the board's discretion as long as a student is
   7-16  enrolled at any other higher educational institution, provided that
   7-17  the total interest paid is to be equal to that fixed at the time
   7-18  the note evidencing the loan is executed.
   7-19        SECTION 11.  Subsection (d), Section 52.52, Education Code,
   7-20  is amended to read as follows:
   7-21        (d)  The board may approve and enter into agreements that are
   7-22  necessary for the operation of the student loan program or that
   7-23  relate to the issuance of bonds <On or before September 1, 1995,
   7-24  the board shall terminate the contract referenced in Subsection (c)
   7-25  of this section.  After that date, the board may not make an
   7-26  agreement with a guarantor concerning any insured student loans the
   7-27  board authorizes that requires the board to file suit or take other
    8-1  action to collect on a defaulted loan if the guarantor does not
    8-2  impose that requirement on other lenders making the same kind of
    8-3  insured student loans>.
    8-4        SECTION 12.  Subsection (b), Section 52.83, Education Code,
    8-5  is amended to read as follows:
    8-6        (b)  The bonds must be dated and bear interest at a rate or
    8-7  rates prescribed by the board in accordance with the resolution for
    8-8  the issuance of the bonds, except that the rate may not exceed the
    8-9  maximum net effective rate allowed by law.  The resolution may
   8-10  provide for:
   8-11              (1)  any type of rate, including a fixed, variable,
   8-12  floating, or adjustable rate; and
   8-13              (2)  any arrangement for the periodic determination of
   8-14  interest rates, including a formula, index, or contract.
   8-15        SECTION 13.  Subsections (b) and (c), Section 52.89,
   8-16  Education Code, are amended to read as follows:
   8-17        (b)  The fund consists of proceeds from the sale of the bonds
   8-18  deposited in accordance with this section, <and> gifts or grants
   8-19  made to the board for purposes of the fund, and deposits made as
   8-20  authorized by this chapter.
   8-21        (c)  The board shall deposit the proceeds from the sale of
   8-22  bonds in the fund, excluding any accrued interest on the bonds
   8-23  which shall be deposited in the board interest and sinking fund
   8-24  relating to the bonds.
   8-25        SECTION 14.  Not later than December 31, 1994, the Texas
   8-26  Higher Education Coordinating Board shall prepare and submit to the
   8-27  Legislative Budget Board, the State Auditor, the Senate Finance
    9-1  Committee, and the House Appropriations Committee a cost and
    9-2  efficiency management study of the administration and the
    9-3  administrative costs of the student loan program authorized by
    9-4  Chapter 52, Education Code.
    9-5        SECTION 15.  The importance of this legislation and the
    9-6  crowded condition of the calendars in both houses create an
    9-7  emergency and an imperative public necessity that the
    9-8  constitutional rule requiring bills to be read on three several
    9-9  days in each house be suspended, and this rule is hereby suspended,
   9-10  and that this Act take effect and be in force from and after its
   9-11  passage, and it is so enacted.