1-1  By:  Bivins                                              S.B. No. 5
    1-2        (In the Senate - Filed January 31, 1995; February 1, 1995,
    1-3  read first time and referred to Committee on Education;
    1-4  March 23, 1995, reported adversely, with favorable Committee
    1-5  Substitute by the following vote:  Yeas 8, Nays 2; March 23, 1995,
    1-6  sent to printer.)
    1-7  COMMITTEE SUBSTITUTE FOR S.B. No. 5                     By:  Bivins
    1-8                         A BILL TO BE ENTITLED
    1-9                                AN ACT
   1-10  relating to state financing of public school facilities.
   1-11        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
   1-12        SECTION 1.  Title 2, Education Code, is amended by adding
   1-13  Chapter 37 to read as follows:
   1-14                    CHAPTER 37.  SCHOOL FACILITIES
   1-15        Sec. 37.001.  SCHOOL FACILITIES ALLOTMENT.  (a)  For each
   1-16  year, a school district is guaranteed a specified amount per
   1-17  student in state and local funds for each cent of tax effort, up to
   1-18  the maximum rate under Subsection (b), to pay the principal of and
   1-19  interest on eligible bonds.  The amount of state support is
   1-20  determined by the formula:
   1-21  where:
   1-22        "FYA" is the guaranteed facilities yield amount of state
   1-23  funds allocated to the district for the year;
   1-24        "FYL" is the dollar amount guaranteed level of state and
   1-25  local funds per student per cent of tax effort, which is $28 or a
   1-26  greater amount for any year provided by appropriation;
   1-27        "ADA" is the number of students in average daily attendance
   1-28  in the district;
   1-29        "BTR" is the district's bond tax rate for the current year,
   1-30  which is determined by dividing the amount of taxes budgeted to be
   1-31  collected by the district for payment of eligible bonds by the
   1-32  quotient of the district's taxable value of property as determined
   1-33  under Section 11.86 divided by 100; and
   1-34        "DPV" is the district's taxable value of property as
   1-35  determined under Section 11.86.
   1-36        (b)  For purposes of this section, the bond tax rate under
   1-37  Subsection (a) may not exceed the lesser of:
   1-38              (1)  the rate necessary for the current year, using
   1-39  state funds under Subsection (a), to make payments of principal and
   1-40  interest on the bonds for which the tax is pledged; or
   1-41              (2)  $0.25 per $100 of valuation.
   1-42        (c)  Bonds are eligible to be paid with state and local funds
   1-43  under this section if:
   1-44              (1)  taxes to pay the principal of and interest on the
   1-45  bonds were first levied in the 1995-1996 school year or a later
   1-46  school year;
   1-47              (2)  the bonds are guaranteed by the permanent school
   1-48  fund as provided by Subchapter E, Chapter 20;
   1-49              (3)  the bonds do not have a weighted average maturity
   1-50  of less than eight years and may not be called for redemption
   1-51  earlier than 10 years after the date of issuance; and
   1-52              (4)  the bonds are not issued to refund bonds described
   1-53  by Section 37.002(e)(1).
   1-54        (d)  A district may use state funds received under this
   1-55  section only to pay the principal of and interest on the bonds for
   1-56  which the district received the funds.
   1-57        (e)  The board of trustees and voters of a school district
   1-58  shall determine district needs concerning construction,
   1-59  acquisition, renovation, or improvement of school facilities.
   1-60        Sec. 37.002.  EXISTING SCHOOL FACILITIES ALLOTMENT.  (a)  For
   1-61  each year, a school district is guaranteed a specified amount per
   1-62  student in state and local funds for each cent of tax effort, up to
   1-63  the maximum rate under Subsection (c), to pay the principal of and
   1-64  interest on eligible bonds.  The amount of state support is
   1-65  determined by the formula:
   1-66  where:
   1-67        "EFYA" is the guaranteed yield amount of state funds
   1-68  allocated to the district for the year;
    2-1        "EFYL" is the dollar amount guaranteed level of state and
    2-2  local funds per student per cent of tax  effort, which is equal to
    2-3  the quotient of the statewide average property value per student
    2-4  for the final fiscal year of the preceding state fiscal biennium
    2-5  divided by 10,000;
    2-6        "GR" is the district's growth rate, which is the greater of
    2-7  one or the quotient of the district's enrollment, as of a date
    2-8  determined by the commissioner, in the preceding school year
    2-9  divided by the district's enrollment in the school year that began
   2-10  five years before the preceding school year;
   2-11        "ADA" is the number of students in average daily attendance
   2-12  in the district;
   2-13        "EBTR" is the district's bond tax rate for the current year,
   2-14  which is determined by subtracting the amount of taxes collected by
   2-15  the district for payment of eligible bonds at an effective tax rate
   2-16  of $0.25 per $100 of valuation from the total amount of taxes
   2-17  collected by the district for payment of eligible bonds and
   2-18  dividing the difference by the quotient of the district's taxable
   2-19  value of property as determined under Section 11.86 divided by 100;
   2-20  and
   2-21        "DPV" is the district's taxable value of property as
   2-22  determined under Section 11.86 for the final fiscal year of the
   2-23  preceding state fiscal biennium.
   2-24        (b)  For purposes of Subsection (a), the statewide average
   2-25  property value per student is the quotient of the total taxable
   2-26  value of property in the state as determined under Section 11.86
   2-27  divided by the total average daily attendance in the state.
   2-28        (c)  The bond tax rate under Subsection (a) may not exceed
   2-29  the rate necessary for the current year, using state funds under
   2-30  Subsection (a),  to make payments of principal and interest on the
   2-31  bonds for which the tax is pledged.
   2-32        (d)  To be entitled to funds under this section, a school
   2-33  district must have imposed a tax for payment of principal and
   2-34  interest on bonds at an effective rate in excess of $0.25 per $100
   2-35  of valuation in the final year of the preceding state fiscal
   2-36  biennium.
   2-37        (e)  Bonds are eligible to be paid with state and local funds
   2-38  under this section only if:
   2-39              (1)  taxes to pay the principal of and interest on the
   2-40  bonds were first levied in the 1994-1995 school year or an earlier
   2-41  school year; or
   2-42              (2)  the bonds are issued to refund bonds described by
   2-43  Subdivision (1).
   2-44        (f)  A district may use state funds received under this
   2-45  section only to pay the principal of and interest on the bonds for
   2-46  which the district received the funds.
   2-47        Sec. 37.003.  REFUNDING BONDS.  A school district may use
   2-48  state funds received under this chapter to pay the principal of and
   2-49  interest on refunding bonds that:
   2-50              (1)  are issued to refund bonds eligible under Section
   2-51  37.001 or 37.002;
   2-52              (2)  do not have a final maturity date later than the
   2-53  final maturity date of the bonds being refunded;
   2-54              (3)  may not be called for redemption earlier than the
   2-55  earliest call date of the bonds being refunded; and
   2-56              (4)  result in a present value savings, which is
   2-57  determined by computing the net present value of the difference
   2-58  between each scheduled payment on the original bonds and each
   2-59  scheduled payment on the refunding bonds.
   2-60        Sec. 37.004.  PAYMENT OF SCHOOL FACILITIES ALLOTMENTS.
   2-61  (a)  For each school year, the commissioner of education shall
   2-62  determine the amount of money to which each school district is
   2-63  entitled under Sections 37.001 and 37.002.
   2-64        (b)  If the amount appropriated for purposes of Sections
   2-65  37.001 and 37.002 for a year is less than the total amount
   2-66  determined under Subsection (a) for that year, the commissioner
   2-67  shall:
   2-68              (1)  transfer from the foundation school program to the
   2-69  school facilities program the amount by which the total amount
   2-70  determined under Subsection (a) exceeds the amount appropriated;
    3-1  and
    3-2              (2)  reduce each district's foundation school fund
    3-3  allocations in the manner provided by Section 16.254.
    3-4        (c)  Warrants for payments under this chapter shall be
    3-5  approved and transmitted to school district treasurers or
    3-6  depositories in the same manner as warrants for payments under
    3-7  Chapter 16.
    3-8        (d)  Payments under this chapter shall be made semiannually
    3-9  on dates selected by the school district and approved by the
   3-10  commissioner to enable the district to meet scheduled bond
   3-11  payments.
   3-12        (e)  Section 16.259 applies to payments under this chapter.
   3-13        Sec. 37.005.  SALE OF SCHOOL FACILITY FINANCED WITH SCHOOL
   3-14  FACILITIES ALLOTMENT.  (a)  If a school facility financed by bonds
   3-15  paid with state and local funds under Section 37.001 is sold before
   3-16  the bonds are fully paid, the school district shall remit to the
   3-17  comptroller an amount equal to the district's net proceeds from the
   3-18  sale multiplied by a percentage determined by dividing the amount
   3-19  of state funds under this section used to pay the principal of and
   3-20  interest on the bonds by the total amount of principal and interest
   3-21  paid on the bonds with funds other than the proceeds of the sale.
   3-22        (b)  In this section, "net proceeds" means the difference
   3-23  between the total amount received from the sale less:
   3-24              (1)  the amount necessary to fully pay the outstanding
   3-25  principal of and interest on the bonds; and
   3-26              (2)  the school district's costs of the sale, as
   3-27  approved by the commissioner of education.
   3-28        SECTION 2.  Sections 16.401 and 16.402, Education Code, are
   3-29  transferred to Chapter 37, Education Code, as added by this Act,
   3-30  are redesignated as Sections 37.006 and 37.007, respectively, and
   3-31  are amended to read as follows:
   3-32        Sec. 37.006 <16.401>.  Inventory of School Facilities.
   3-33  (a)  The State Board of Education shall establish a statewide
   3-34  inventory of school facilities and shall update the inventory on a
   3-35  periodic basis.
   3-36        (b)  The inventory shall include information on the
   3-37  condition, use, type, and replacement cost of public school
   3-38  facilities in this state.
   3-39        Sec. 37.007 <16.402>.  Standards.  The State Board of
   3-40  Education shall establish standards for adequacy of school
   3-41  facilities.  The standards shall include requirements related to
   3-42  space, educational adequacy, and construction quality.  All
   3-43  facilities constructed after September 1, 1992, must meet the
   3-44  standards in order to be financed with state or local tax funds.
   3-45        SECTION 3.  Subsection (e), Section 16.256, Education Code,
   3-46  is amended to read as follows:
   3-47        (e)  The funding elements shall include:
   3-48              (1)  a basic allotment for the purposes of Section
   3-49  16.101 of this code that represents the cost per student of a
   3-50  regular education program that meets the basic criteria for an
   3-51  accredited program including all mandates of law and regulation;
   3-52              (2)  adjustments designed to reflect the variation in
   3-53  known resource costs and costs of education beyond the control of
   3-54  school districts;
   3-55              (3)  appropriate program cost differentials and other
   3-56  funding elements for the programs authorized under Subchapter D of
   3-57  this chapter, with the program funding level expressed as dollar
   3-58  amounts and as weights applied to the adjusted basic allotment for
   3-59  the appropriate year;
   3-60              (4)  the maximum guaranteed level of qualified state
   3-61  and local funds per student for the purposes of Subchapter H of
   3-62  this chapter;
   3-63              (5)  the enrichment and facilities tax rate under
   3-64  Subchapter H of this chapter; and
   3-65              (6)  <the formula elements for the funding formulas for
   3-66  capital outlay and debt service under the provision of Subchapter I
   3-67  of this chapter; and>
   3-68              <(7)>  the calculation of weighted students in average
   3-69  daily attendance under Section 16.302 of this code.
   3-70        SECTION 4.  Section 16.302, Education Code, is amended to
    4-1  read as follows:
    4-2        Sec. 16.302.  Allotment.  Each school district is guaranteed
    4-3  a specified amount per weighted student in state and local funds
    4-4  for each cent of tax effort over that required for the district's
    4-5  local fund assignment up to the maximum level specified in this
    4-6  subchapter.  The amount of state support, subject only to the
    4-7  maximum amount under Section 16.303 of this code, is determined by
    4-8  the formula:
    4-9  where:
   4-10        "GYA" is the guaranteed yield amount of state funds to be
   4-11  allocated to the district;
   4-12        "GL" is the dollar amount guaranteed level of state and local
   4-13  funds per weighted student per cent of tax effort, which is $20.55
   4-14  or a greater amount for any year provided by appropriation, or a
   4-15  greater amount adopted by the foundation school fund budget
   4-16  committee under Section 16.256(d);
   4-17        "WADA"<, except as provided by Section 16.206 of this code,>
   4-18  is the number of weighted students in average daily attendance,
   4-19  which is calculated by dividing the sum of the school district's
   4-20  allotments under Subchapters C and D of this chapter, less any
   4-21  allotments to the district for transportation, teacher
   4-22  compensation, or technology and 50 percent of the adjustment under
   4-23  Section 16.102 of this code, by the basic allotment for the
   4-24  applicable year;
   4-25        "DTR" is the district enrichment and facilities tax rate of
   4-26  the school district, which is determined by subtracting the sum of
   4-27  the district's local fund assignment and the amount of taxes
   4-28  collected by the school district for the applicable school year for
   4-29  payment of bonds that are being paid with state and local funds
   4-30  under Section 37.001 of this code from the total amount of taxes
   4-31  collected by the school district for the applicable school year and
   4-32  dividing the difference by the quotient of the district's taxable
   4-33  value of property as determined under Section 11.86 of this code
   4-34  divided by 100; and
   4-35        "LR" is the local revenue, which is determined by multiplying
   4-36  "DTR" by the quotient of the district's taxable value of property
   4-37  as determined under Section 11.86 of this code divided by 100.
   4-38        SECTION 5.  Section 20.04, Education Code, is amended by
   4-39  amending Subsection (c) and by adding Subsections (f) and (g) to
   4-40  read as follows:
   4-41        (c)  If bonds are ever voted in a district pursuant to
   4-42  Subsection (b)(1) of this section, then all bonds thereafter
   4-43  proposed shall be submitted pursuant to that subsection, and
   4-44  Subsection (b)(2) of this section shall not be applicable to such
   4-45  district.  Except as otherwise provided by this section, no bonds
   4-46  shall be issued pursuant to Subsection (b)(1) of this section if
   4-47  the aggregate principal amount of tax bond indebtedness of the
   4-48  district after such issuance would be in excess of 10 percent of
   4-49  the assessed valuation of taxable property in the district
   4-50  according to the then last completed and approved ad valorem tax
   4-51  rolls of the district.  A district may issue bonds resulting in an
   4-52  aggregate principal amount of tax bond indebtedness in excess of 10
   4-53  percent of the district's assessed valuation if:
   4-54              (1)  the bonds are issued for the purpose of
   4-55  constructing and equipping a replacement for a building lost to
   4-56  fire or natural disaster and:<;>
   4-57                    (A) <(2)>  the bonds are issued in an amount
   4-58  necessary for that purpose, less the amount paid by insurance
   4-59  covering the loss; and
   4-60                    (B) <(3)>  the resulting aggregate principal
   4-61  amount of tax bond indebtedness does not exceed 16 percent of the
   4-62  district's assessed valuation; or
   4-63              (2)  the bonds are eligible to be paid with state and
   4-64  local funds under Section 37.001 of this code, and the aggregate
   4-65  principal amount of tax bond indebtedness after issuance, counting
   4-66  only the estimated local share as determined under Subsection (f)
   4-67  of this section of the principal of the bonds to be issued, does
   4-68  not exceed 10 percent of the district's assessed valuation.
   4-69        (f)  For purposes of Subsection (c) of this section, the
   4-70  estimated local share of the principal of bonds is that portion of
    5-1  the principal for which the district must provide funds under
    5-2  Section 37.001 of this code, assuming that:
    5-3              (1)  the amount of the principal of the bonds to be
    5-4  paid by the district equals the amount that would be paid by the
    5-5  district if the principal were amortized on an equal annual basis
    5-6  through final maturity; and
    5-7              (2)  the guaranteed facilities yield amount of state
    5-8  funds provided by Section 37.001 of this code, computed on the date
    5-9  of issuance, were constant for each year.
   5-10        (g)  Prior to the issuance of bonds, a district shall
   5-11  demonstrate to the attorney general with respect to the proposed
   5-12  bond issue a projected ability to pay the principal of and interest
   5-13  on the proposed bonds and all previously issued bonds, other than
   5-14  bonds issued prior to September 1, 1992, from a tax at a debt rate
   5-15  not to exceed $0.50 per $100 of valuation.
   5-16        SECTION 6.  Section 20.09, Education Code, is repealed.
   5-17        SECTION 7.  Section 20.911, Education Code, is amended to
   5-18  read as follows:
   5-19        Sec. 20.911.  Reimbursement of Fund.  (a)  If the
   5-20  commissioner orders payment from the fund on behalf of a school
   5-21  district, the commissioner <he> shall direct the comptroller <of
   5-22  public accounts> to withhold the amount paid, plus interest, from
   5-23  the first state money payable to the school district, other than
   5-24  money to which the school district is entitled under Section
   5-25  37.001.  The amount withheld shall be deposited to the credit of
   5-26  the fund.
   5-27        (b)  If the commissioner orders payment from the permanent
   5-28  school fund in connection with bonds that were, before default,
   5-29  being paid with state and local funds under Section 37.001 and the
   5-30  commissioner finds the default is caused by the failure to
   5-31  appropriate sufficient funds to make a payment to the district
   5-32  under Section 37.004, the commissioner shall:
   5-33              (1)  withhold under Subsection (a) only that portion of
   5-34  the amount paid from the permanent school fund that is
   5-35  proportionate to the school district's local share under Section
   5-36  37.001; and
   5-37              (2)  transfer from the foundation school fund to the
   5-38  permanent school fund that portion of the amount paid from the
   5-39  permanent school fund that is proportionate to the state's share
   5-40  under Section 37.001.
   5-41        (c)  In accordance with the rules of the board, the
   5-42  commissioner may authorize reimbursement to the fund with interest
   5-43  in a manner other than that provided by this section.
   5-44        SECTION 8.  This Act takes effect September 1, 1995.
   5-45        SECTION 9.  The importance of this legislation and the
   5-46  crowded condition of the calendars in both houses create an
   5-47  emergency and an imperative public necessity that the
   5-48  constitutional rule requiring bills to be read on three several
   5-49  days in each house be suspended, and this rule is hereby suspended.
   5-50                               * * * * *