1-1 By: Barrientos S.B. No. 511
1-2 (In the Senate - Filed February 26, 1993; March 1, 1993, read
1-3 first time and referred to Committee on Education; March 10, 1993,
1-4 reported favorably by the following vote: Yeas 8, Nays 0;
1-5 March 10, 1993, sent to printer.)
1-6 COMMITTEE VOTE
1-7 Yea Nay PNV Absent
1-8 Ratliff x
1-9 Haley x
1-10 Barrientos x
1-11 Bivins x
1-12 Harris of Tarrant x
1-13 Luna x
1-14 Montford x
1-15 Shapiro x
1-16 Sibley x
1-17 Turner x
1-18 Zaffirini x
1-19 A BILL TO BE ENTITLED
1-20 AN ACT
1-21 relating to the student loan program administered by the Texas
1-22 Higher Education Coordinating Board.
1-23 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-24 SECTION 1. Subchapter D, Chapter 52, Education Code, is
1-25 amended by adding Section 52.501 to read as follows:
1-26 Sec. 52.501. DEFINITIONS. In this chapter:
1-27 (1) "Board" means the Texas Higher Education
1-28 Coordinating Board.
1-29 (2) "Board interest and sinking fund" means an
1-30 interest and sinking fund established by the board under Section
1-31 52.03 of this code.
1-32 (3) "Board student loan fund" means a student loan
1-33 fund established by the board under Section 52.04 of this code.
1-34 (4) "Bond" means a general obligation bond issued by
1-35 the board under Article III, Section 50b, 50b-1, 50b-2, or 50b-3,
1-36 of the Texas Constitution.
1-37 (5) "Student loan program" means the student loan
1-38 program administered by the board under this chapter.
1-39 SECTION 2. Section 52.01, Education Code, is amended to read
1-40 as follows:
1-41 Sec. 52.01. ADMINISTRATION. The Texas Higher Education
1-42 Coordinating Board, <Texas College and University System,> or its
1-43 successors, shall administer the student loan program authorized by
1-44 this chapter pursuant to Article III, Sections <Section> 50b,
1-45 50b-1, 50b-2, and 50b-3, of the Texas Constitution. Personnel and
1-46 other expenses required to properly administer this chapter shall
1-47 be funded by:
1-48 (1) <provided in> the general appropriations acts;
1-49 (2) revenues received by the board from repayment of
1-50 student loans issued under this chapter; or
1-51 (3) any other source of revenue received by the board
1-52 in connection with the operation of the student loan program.
1-53 SECTION 3. Subchapter A, Chapter 52, Education Code, is
1-54 amended by adding Sections 52.03 and 52.04 to read as follows:
1-55 Sec. 52.03. BOARD INTEREST AND SINKING FUNDS. (a) The
1-56 board by resolution may establish one or more interest and sinking
1-57 funds as accounts in the state treasury.
1-58 (b) A board interest and sinking fund established under this
1-59 section consists of deposits made by the board as provided by this
1-60 chapter.
1-61 (c) A board interest and sinking fund established under this
1-62 section may be used for any purpose related to the student loan
1-63 program.
1-64 (d) The board by resolution may create and provide the terms
1-65 of administration and use of one or more accounts in a board
1-66 interest and sinking fund established under this section.
1-67 Sec. 52.04. BOARD STUDENT LOAN FUNDS. (a) The board by
1-68 resolution may establish one or more board student loan funds as
2-1 accounts in the state treasury.
2-2 (b) A board student loan fund established under this section
2-3 consists of deposits made by the board as provided by this chapter.
2-4 (c) A board student loan fund established under this section
2-5 may be used for any purpose related to the student loan program.
2-6 (d) The board by resolution may create and provide the terms
2-7 of administration and use of one or more accounts in a board
2-8 student loan fund established under this section.
2-9 SECTION 4. Section 52.11, Education Code, is amended by
2-10 adding Subsection (n) to read as follows:
2-11 (n) This section applies only to bonds issued under Article
2-12 III, Section 50b, of the Texas Constitution.
2-13 SECTION 5. Section 52.16, Education Code, is amended to read
2-14 as follows:
2-15 Sec. 52.16. PROCEEDS FROM BOND SALE. All proceeds from the
2-16 sale of bonds authorized by Article III, Section 50b, 50b-1, or
2-17 50b-2 of the Texas Constitution shall be deposited in the state
2-18 treasury in the Texas Opportunity Plan Fund.
2-19 SECTION 6. Section 52.17, Education Code, is amended to read
2-20 as follows:
2-21 Sec. 52.17. INTEREST AND SINKING FUNDS <FUND>. (a) Each
2-22 fiscal year a sufficient portion of the funds received by the board
2-23 as repayment of student loans granted under this chapter, <and> as
2-24 interest on the loans, and as other available funds relating to the
2-25 student loan program shall be deposited in the state treasury in
2-26 the Texas college interest and sinking fund or a board interest and
2-27 sinking fund <College Student Loan Bonds Interest and Sinking Fund,
2-28 referred to in this chapter as the interest and sinking fund,> to
2-29 pay the interest and principal coming due during the ensuing fiscal
2-30 year and to establish and maintain a reserve in the interest and
2-31 sinking fund equal to the average annual principal and interest
2-32 requirements of all outstanding bonds issued under this chapter
2-33 that are secured by funds in the Texas college interest and sinking
2-34 fund or a board interest and sinking fund.
2-35 (b) If in any year funds are received in excess of the
2-36 foregoing requirements, then the excess may <shall> be:
2-37 (1) deposited in the Texas Opportunity Plan Fund, the
2-38 student loan auxiliary fund, or a board interest and sinking fund;
2-39 (2) used to pay any costs of the board related to the
2-40 operation of the student loan program;
2-41 (3) used for any lawful purpose related to the student
2-42 loan program; or
2-43 (4) <and may be> used for the same purposes and upon
2-44 the same terms and conditions prescribed for the proceeds derived
2-45 from the sale of the bonds <Texas College Student Loan Bonds>.
2-46 (c) In the event that funds received by the board in any
2-47 fiscal year as repayment of student loans and as interest on the
2-48 loans are insufficient to pay the interest coming due and the
2-49 principal maturing on the bonds during the ensuing fiscal year, the
2-50 state treasurer shall transfer into the Texas college interest and
2-51 sinking fund and each board interest and sinking fund out of the
2-52 first money coming into the treasury, which is not otherwise
2-53 appropriated by the constitution, an additional amount sufficient
2-54 to pay the interest coming due and the principal maturing on the
2-55 bonds during the ensuing fiscal year.
2-56 (d) The resolution authorizing the issuance of the bonds may
2-57 provide for the deposit, from bond proceeds, of not more than 24
2-58 months' interest, and may provide for the use of bond proceeds as a
2-59 reserve for the payment of principal of and interest on the bonds.
2-60 (e) Amounts paid to the board by the federal Lender's
2-61 Special Allowance program may be deposited in the Texas college
2-62 interest and sinking fund, a board interest and sinking fund, or
2-63 used for the administration of student loan and grant programs and
2-64 the Teacher Loan Program and Future Teacher Loan Program authorized
2-65 under House Bill 72, 68th Legislature, 2nd Called Session, 1984, or
2-66 other programs administered by the board as specified by the
2-67 legislature in the General Appropriations Act.
2-68 (f) With respect to loans granted under this chapter, the
2-69 board shall file semiannually with the bond review board
2-70 established under Chapter 1078, Acts of the 70th Legislature,
3-1 Regular Session, 1987 (Article 717k-7, Vernon's Texas Civil
3-2 Statutes), a report on the performance of the loans, <and> the
3-3 Texas college interest and sinking fund, and each board interest
3-4 and sinking fund. The bond review board shall review the reports
3-5 filed by the board under this subsection to assess the performance
3-6 of the loans under this chapter, <and> the Texas college interest
3-7 and sinking fund, and each board interest and sinking fund. The
3-8 filing dates and the contents of the reports must comply with any
3-9 rules adopted by the bond review board.
3-10 SECTION 7. Section 52.19, Education Code, is amended to read
3-11 as follows:
3-12 Sec. 52.19. INVESTMENT OF FUNDS. All money in the Texas
3-13 college <reserve portion of the> interest and sinking fund and in
3-14 each board interest and sinking fund, including the reserve
3-15 portion, and all money in the Texas Opportunity Plan Fund and in
3-16 the student loan auxiliary fund in excess of the amount necessary
3-17 for student loans, and all money in each board student loan fund
3-18 shall be invested by the state treasurer in the investments
3-19 prescribed by board resolution. The board shall furnish to the
3-20 state treasurer a copy of the resolution prescribing authorized
3-21 investments. The board may sell any instruments owned in the Texas
3-22 college interest and sinking fund, a board interest and sinking
3-23 fund, <or in> the Texas Opportunity Plan Fund, the student loan
3-24 auxiliary fund, or a board student loan fund at the prevailing
3-25 market price. Income from these investments may <shall> be
3-26 deposited in any of those funds <the interest and sinking fund>.
3-27 SECTION 8. Subchapter B, Chapter 52, Education Code, is
3-28 amended by adding Section 52.20 to read as follows:
3-29 Sec. 52.20. STUDENT LOAN NOTES. (a) Promissory notes
3-30 evidencing student loans made by the board with proceeds from bonds
3-31 may be deposited and held in any fund as directed by the board
3-32 resolution that authorized the issuance of the bonds.
3-33 (b) The board may pledge and grant a security interest in
3-34 all or any portion of those promissory notes to any person to
3-35 further secure the payment of principal and interest on bonds
3-36 issued under this chapter or of obligations under any contracts
3-37 entered into by the board relating to the issuance of a series of
3-38 bonds.
3-39 SECTION 9. Subsection (a), Section 52.36, Education Code, is
3-40 amended to read as follows:
3-41 (a) The board shall from time to time fix the interest to be
3-42 charged for any student loan at a rate sufficient to pay the
3-43 interest on outstanding bonds, <plus> any expenses incident to
3-44 their issuance, sale, and retirement, and all or a portion of the
3-45 board's expenses related to the operation of the student loan
3-46 program. Interest shall be postponed by the board as long as a
3-47 student is enrolled at a participating institution and may be
3-48 postponed at the board's discretion as long as a student is
3-49 enrolled at any other higher educational institution, provided that
3-50 the total interest paid is to be equal to that fixed at the time
3-51 the note evidencing the loan is executed.
3-52 SECTION 10. Subsection (d), Section 52.52, Education Code,
3-53 is amended to read as follows:
3-54 (d) The board may approve and enter into agreements that are
3-55 necessary for the operation of the student loan program or that
3-56 relate to the issuance of bonds <On or before September 1, 1995,
3-57 the board shall terminate the contract referenced in Subsection (c)
3-58 of this section. After that date, the board may not make an
3-59 agreement with a guarantor concerning any insured student loans the
3-60 board authorizes that requires the board to file suit or take other
3-61 action to collect on a defaulted loan if the guarantor does not
3-62 impose that requirement on other lenders making the same kind of
3-63 insured student loans>.
3-64 SECTION 11. Subsection (b), Section 52.83, Education Code,
3-65 is amended to read as follows:
3-66 (b) The bonds must be dated and bear interest at a rate or
3-67 rates prescribed by the board in accordance with the resolution for
3-68 the issuance of the bonds, except that the rate may not exceed the
3-69 maximum net effective rate allowed by law. The resolution may
3-70 provide for:
4-1 (1) any type of rate, including a fixed, variable,
4-2 floating, or adjustable rate; and
4-3 (2) any arrangement for the periodic determination of
4-4 interest rates, including a formula, index, or contract.
4-5 SECTION 12. Subsection (b) and (c), Section 52.89, Education
4-6 Code, are amended to read as follows:
4-7 (b) The fund consists of proceeds from the sale of the bonds
4-8 deposited in accordance with this section, <and> gifts or grants
4-9 made to the board for purposes of the fund, and deposits made as
4-10 authorized by this chapter.
4-11 (c) The board shall deposit the proceeds from the sale of
4-12 bonds in the fund, excluding any accrued interest on the bonds
4-13 which shall be deposited in the board interest and sinking fund
4-14 relating to the bonds.
4-15 SECTION 13. The importance of this legislation and the
4-16 crowded condition of the calendars in both houses create an
4-17 emergency and an imperative public necessity that the
4-18 constitutional rule requiring bills to be read on three several
4-19 days in each house be suspended, and this rule is hereby suspended,
4-20 and that this Act take effect and be in force from and after its
4-21 passage, and it is so enacted.
4-22 * * * * *
4-23 Austin,
4-24 Texas
4-25 March 10, 1993
4-26 Hon. Bob Bullock
4-27 President of the Senate
4-28 Sir:
4-29 We, your Committee on Education to which was referred S.B. No. 511,
4-30 have had the same under consideration, and I am instructed to
4-31 report it back to the Senate with the recommendation that it do
4-32 pass and be printed.
4-33 Ratliff,
4-34 Chairman
4-35 * * * * *
4-36 WITNESSES
4-37 FOR AGAINST ON
4-38 ___________________________________________________________________
4-39 Name: Mack C. Adams x
4-40 Representing: Coord. Bd.
4-41 City: Austin
4-42 -------------------------------------------------------------------
4-43 Name: Don Brown x
4-44 Representing: Tx Higher Educ Coor Board
4-45 City: Austin
4-46 -------------------------------------------------------------------
4-47 Name: Thomas K. Spurgeon x
4-48 Representing: Tx Higher Educ Coord Board
4-49 City: San Antonio
4-50 -------------------------------------------------------------------
4-51 Name: James McWhorter x
4-52 Representing: Tx Higher Educ Coor Board
4-53 City: Austin
4-54 -------------------------------------------------------------------