BILL ANALYSIS
C.S.S.B. 5
By: Bivins
Education
03-24-95
Committee Report (Substituted)
BACKGROUND
School facilities have traditionally been the responsibility of
local school districts. The amount of direct state assistance for
public school facilities has been a point of contention for a
number of years. The Texas Legislature attempted to authorize
general obligation bonds to be used for school facilities, but the
bond proposition was rejected by the voters and school districts
continue to draw from locally generated ad valorem tax revenues to
fund construction of school buildings.
In January 1994, Judge Scott McCown ordered the legislature to find
a way for the state to equalize funding for school construction and
equipment needs. While the Texas Supreme Court vacated this order,
it left the directive for the state to address facilities funding.
PURPOSE
As proposed, C.S.S.B. 5 provides state assistance in financing
public school facilities.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not grant any
additional rulemaking authority to a state officer, institution, or
agency.
SECTION BY SECTION ANALYSIS
SECTION 2. Amends Title 2, Education Code, by adding Chapter 37,
as follows:
CHAPTER 37. SCHOOL FACILITIES
Sec. 37.001. SCHOOL FACILITIES ALLOTMENT. (a) Provides for
each year, a school district is guaranteed a specified amount
per student in state and local funds for each cent of tax
effort to pay principal and interest on eligible bonds.
Provides that the amount of state support is determined by a
specific formula.
(b) Prohibits, for purposes of this section, the bond tax
rate under Subsection (a) from exceeding the lesser of the
rate necessary for the current year, using state funds under
Subsection (a), to make payments of principal and interest
on the bonds for which the tax is pledged, or $0.25 per $100
of valuation.
(c) Provides that bonds are eligible to be paid with state
and local funds if the taxes to pay the principal of and
interest on the bonds were levied in the 1995-1996 school
year or a later school year; the bonds are guaranteed by the
permanent school fund; the bonds do not have a weighted
average maturity of less than eight years and may not be
called for redemption earlier than 10 years after the date
of issuance; and the bonds are not issued to refund bonds.
(d) Authorizes a district to use state funds received under
this section only to pay the principal of and interest on
the bonds for which the district received the funds.
(e) Requires the board of trustees and voters of a school
district to determine district needs concerning
construction, acquisition, renovation, or improvement of
school facilities.
Sec. 37.002. EXISTING SCHOOL FACILITIES ALLOTMENT. (a)
Provides that for each year, a school district is guaranteed
a specific amount per student in state and local funds for
each cent of tax effort, up to a maximum rate, to pay the
principal of and interest on eligible bonds. Provides that
the amount of state support is determined by a specific
formula.
(b) Provides that the statewide average property value per
student is the quotient of the total taxable value of
property in the state divided by the total average daily
attendance.
(c) Prohibits the bond tax rate from exceeding the necessary
rate for the current year, using state funds under
Subsection (a), to make payments of principal and interest
on the bonds for which the tax is pledged.
(d) Requires a school district to have imposed a tax for
payment of principal and interest on bonds at an effective
rate in excess of $0.25 per $100 of valuation in the final
year of the state fiscal biennium.
(e) Provides that bonds are eligible to be paid with state
and local funds only if taxes to pay the principal of and
interest on the bonds were first levied in 1994-1995 school
year or an earlier school year; or the bonds are issued to
refund bonds.
(f) Authorizes a district to use state funds received under
this section only to pay the principal of and interest on
the bonds for which the district received funds.
Sec. 37.003. REFUNDING BONDS. Authorizes a district to use
state funds to pay the principal of and interest on refund
bonds that are issued to refund certain bonds; do not mature
later than the bonds being refunded; may not be called for
redemption earlier than the earliest call date of the bonds
being refunded; and result in a net present value savings
computed by a specific method.
Sec. 37.004. PAYMENT OF SCHOOL FACILITIES ALLOTMENTS. (a)
Requires the commissioner of education (commissioner) to
determine the amount of money to which each school district is
entitled for each school year.
(b) Requires the commissioner to transfer money from the
foundation school program to the school facilities program;
reduce each district's foundation school fund allocation if
the amount appropriated for Sections 37.001 and 37.002 is
less than the total amount determined under Subsection (a)
for that year.
(c) Requires warrants for payments to be approved and
transmitted to the school district treasurers or
depositories in the same manner as warrants for payments
under Chapter 16.
(d) Requires payments to be made semiannually on dates
selected by the school district and approved by the
commissioner to enable the school district to meet scheduled
bond payments.
(e) Provides that Section 16.259 applies to payments under
this chapter.
Sec. 37.005. SALE OF SCHOOL FACILITY FINANCED WITH SCHOOL
FACILITIES ALLOTMENT. (a) Requires the school district, if a
school facility financed by bonds paid with state and local
funds is sold before the bonds are fully paid, to remit to the
comptroller an amount determined by a specific formula.
(b) Defines "net proceeds."
SECTION 2. Amends and transfers Sections 16.401 and 16.402,
Education Code, to Chapter 37, Education Code, as added by this
Act, and are redesignated as Sections 37.006 and 37.007,
respectively, as follows:
Sec. 37.006. INVENTORY OF SCHOOL FACILITIES. Redesignates
existing Section 16.401.
37.007. STANDARDS. Redesignates existing Section 16.402.
SECTION 3. Amends Section 16.256(e), Education Code, to delete
existing Subdivision (6) regarding funding elements.
SECTION 4. Amends Section 16.302, Education Code, to redefine
"WADA" and "DTR."
SECTION 5. Amends Section 20.04, Education Code, by amending
Subsection (c) and adding Subsections (f) and (g), as follows:
(c) Authorizes a district to issue bonds resulting in an
aggregate principal amount of tax bond indebtedness in excess
of 10 percent of the district's assessed valuation if the
bonds are eligible to be paid with state and local funds, and
the aggregate principal amount of tax bond indebtedness after
issuance, counting only the estimated local share of the
principal of the bonds to be issued, does not exceed 10
percent of the district's assessed valuation.
(f) Provides that the estimated local share of the principal
of bonds is that portion of the principal for which the
district must provide funds assuming that the amount of
principal of the bonds to be paid by the district equals the
amount that would be paid by the district if the district were
amortized on an equal annual basis through final maturity; and
the guaranteed facilities yield amount of the state were
constant each year.
(g) Requires a district to demonstrate to the attorney general
a projected ability to pay the principal of and interest on
the proposed bond and all previously issued bonds, other than
specific bonds.
SECTION 6. Repealer: Section 20.09, Education Code (Tax
Limitations).
SECTION 7. Amends Section 20.911, Education Code, as follows:
Sec. 20.911. REIMBURSEMENT OF FUND. Requires the commissioner
to direct the comptroller to withhold the amount paid, plus
interest, from the first state money payable to the school
district, other than money to which the school district is
entitled under Section 16.403. Sets forth requirements for the
commissioner if the commissioner orders payment from the
permanent school fund in connection with bonds that were,
before default, being paid with state and local funds, and the
commissioner finds the default is caused by the failure to
appropriate sufficient funds to make payment to the district
under Section 37.004. Makes conforming changes.
SECTION 8. Effective date: September 1, 1995.
SECTION 9. Emergency clause.