BILL ANALYSIS


                                                     C.S.S.B. 405
                                                       By: Bivins
                                                          Finance
                                                          4-28-95
                                   Committee Report (Substituted)
BACKGROUND

Currently, school districts' expenditures are evenly divided over
the year, but the revenue they receive, is not distributed evenly. 
Consequently, school districts either maintain undesignated
unreserved fund balances or borrow to remedy the imbalance that
occurs when the cash on hand is not enough to pay the bills.  Most
school districts run a cash deficit during the first two or three
months of the school year.  In November, as local property taxes
are received, cash receipts begin to meet the amount required to
finance operations.

PURPOSE

As proposed, C.S.S.B. 405 requires annual entitlement to the school
districts to be made at certain times and amends the percentages to
be paid.

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 1. Amends Sections 16.260(b)-(d), Education Code, to set
forth the required annual entitlement to the school districts to be
made in installments at certain times and amends the percentages to
be paid.

SECTION 2. Amends Section 404.121, Government Code, as follows:

     Sec. 404.121.  DEFINITIONS.  Defines "cash flow deficit." 
     Redefines "temporary cash shortfall."
     
     SECTION 3.     Amends Section 404.123(d), Government Code, to delete
requirements regarding the interest rate on notes.

SECTION 4. Amends Section 404.124, Government Code, as follows:

     (a)  Makes a nonsubstantive change.
     
     (b)  Authorizes the committee to approve the issuance of notes
     and the maximum outstanding balance of notes in any fiscal
     year.  Prohibits the outstanding balance from exceeding the
     maximum temporary cash shortfall forecast by the treasurer for
     any period in the fiscal year.  Prohibits the treasurer from
     issuing notes in excess of the amount approved.  Deletes
     existing text.
     
     (c)  Authorizes the committee to determine whether the notes
     shall be sold on a negotiated or competitive or competitive
     bid basis.  Requires the underwriter of any notes issued under
     this section to be selected by the solicitation of sealed bids
     and an appropriate bid notice to be published in at least one
     time in one or more recognized financial publications of
     general circulation published within the state and one or more
     recognized financial publications of general circulation
     published outside the state.  Requires the underwriter to be
     selected from the bids received, unless all bids are rejected. 
     Prohibits the treasurer from selling the notes in a manner not
     approved.  Deletes existing text.
SECTION 5. Effective date: September 1, 1995.

SECTION 6. Emergency clause.