By Ellis S.B. No. 212
75R509 KKA-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to a state program of loan guarantees to promote child
1-3 care services.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Chapter 481, Government Code, is amended by
1-6 adding Subchapter BB to read as follows:
1-7 SUBCHAPTER BB. CHILD CARE
1-8 Sec. 481.401. SHORT TITLE. This subchapter may be cited as
1-9 the Texas Child Care Loan Guarantee Act.
1-10 Sec. 481.402. LEGISLATIVE FINDINGS AND PURPOSE. (a) The
1-11 legislature finds that:
1-12 (1) a strong workforce is essential to a healthy state
1-13 economy;
1-14 (2) the availability of affordable, quality child care
1-15 is essential to the full development of a strong workforce in this
1-16 state; and
1-17 (3) legislative action is necessary to improve the
1-18 availability of affordable, quality child care in this state.
1-19 (b) The purpose of this subchapter is to support the
1-20 development of a strong workforce in this state with low levels of
1-21 unemployment and underemployment by promoting the availability of
1-22 affordable, quality child care.
1-23 Sec. 481.403. DEFINITIONS. In this subchapter:
1-24 (1) "Child care provider" or "provider" means a person
2-1 who operates or proposes to operate a day-care center or group
2-2 day-care home, as those terms are defined by Section 42.002, Human
2-3 Resources Code.
2-4 (2) "Fund" means the Texas child care guarantee fund.
2-5 (3) "Private lender" means a bank, savings bank,
2-6 savings and loan association, trust company, municipal corporation,
2-7 or insurance company, or an individual that the department
2-8 determines has experience in handling sophisticated investments.
2-9 Sec. 481.404. TEXAS CHILD CARE GUARANTEE FUND. (a) The
2-10 Texas child care guarantee fund is a revolving fund in the state
2-11 treasury.
2-12 (b) Appropriations for the implementation and administration
2-13 of this subchapter, interest paid on money in the fund, investment
2-14 earnings, any fees charged under this subchapter, and any other
2-15 amounts received by the state for loan guarantees made under this
2-16 subchapter shall be deposited in the fund.
2-17 (c) Appropriated money in the fund may be used and reused
2-18 for the purposes of this subchapter.
2-19 Sec. 481.405. LOAN GUARANTEE PROGRAM. (a) The department
2-20 may use money in the fund to guarantee a low-interest loan, as
2-21 defined by policy board rule, made to a child care provider by a
2-22 private lender to finance a child care activity authorized by this
2-23 subchapter.
2-24 (b) The department may not make a loan guarantee except on
2-25 approval of a qualified application submitted by a child care
2-26 provider or private lender.
2-27 (c) The activity financed by the loan guaranteed by the
3-1 department must be intended to improve the quality of child care
3-2 provided in this state. Eligible activities include:
3-3 (1) improving the child-to-staff ratio;
3-4 (2) improving training and salaries of child care
3-5 staff;
3-6 (3) expanding or improving facilities to meet national
3-7 standards;
3-8 (4) making child care more affordable for low-income
3-9 families;
3-10 (5) purchasing or improving land;
3-11 (6) constructing, purchasing, leasing, or improving
3-12 buildings or other facilities;
3-13 (7) purchasing or leasing equipment, including
3-14 vehicles;
3-15 (8) paying initial start-up and operating expenses;
3-16 and
3-17 (9) marketing.
3-18 (d) The department may not:
3-19 (1) provide loan guarantees in an aggregate amount of
3-20 more than $30,000 to a single child care provider; or
3-21 (2) guarantee more than 80 percent of a loan made to a
3-22 child care provider by a private lender.
3-23 Sec. 481.406. PRIORITY. In making loan guarantees under
3-24 this subchapter, the department shall give priority to a child care
3-25 provider who:
3-26 (1) is located in a community with a demonstrated
3-27 shortage of child care services; or
4-1 (2) serves or intends to serve low-income families.
4-2 Sec. 481.407. RULEMAKING AUTHORITY. The policy board shall
4-3 adopt rules necessary to implement the loan guarantee program under
4-4 this subchapter, including rules necessary to receive and approve
4-5 applications for loan guarantees relating to eligible child care
4-6 activities. The rules must include provisions governing security
4-7 requirements and default and remedy provisions. The rules may
4-8 provide for an application fee or other reasonable fees necessary
4-9 for the operation of this subchapter.
4-10 Sec. 481.408. APPLICATIONS. An applicant for a loan
4-11 guarantee must provide:
4-12 (1) a detailed description of the proposed activity;
4-13 (2) credit references, if available;
4-14 (3) a two-year projected budget for the operation of
4-15 the child care facility;
4-16 (4) a comprehensive, two-year business plan that
4-17 includes the applicant's plans regarding:
4-18 (A) debt reduction;
4-19 (B) marketing;
4-20 (C) staff training;
4-21 (D) facility improvement; and
4-22 (E) program improvement; and
4-23 (5) any other information required by the policy
4-24 board's rules.
4-25 Sec. 481.409. GUARANTEE-TO-RESERVE RATIO. (a) The
4-26 department may guarantee loans as provided by Section 481.405 in an
4-27 amount that exceeds the amount available in the fund. Loan
5-1 guarantees may not exceed the guarantee-to-reserve ratio set by the
5-2 policy board under Subsection (b).
5-3 (b) The policy board by rule shall adopt a
5-4 guarantee-to-reserve ratio that determines the amount of loan
5-5 guarantees that may be made that exceed the amount available in the
5-6 fund. The ratio of guarantees to the amount of money in the fund
5-7 may not exceed two to one.
5-8 (c) The policy board shall review the guarantee-to-reserve
5-9 ratio annually and adjust the ratio as appropriate. In reviewing
5-10 the guarantee-to-reserve ratio, the policy board shall consider the
5-11 payment experience of the loans and any recommendations of the
5-12 state auditor as provided by Subsection (d).
5-13 (d) The state auditor shall review the loan guarantee
5-14 program and payment activity and make recommendations based on that
5-15 review to the policy board about the program and the
5-16 guarantee-to-reserve ratio. A recommendation to the policy board
5-17 shall be made not later than September 1 of each year.
5-18 Sec. 481.410. PAYMENTS NOT TO BE MADE TO DEFAULTING CHILD
5-19 CARE PROVIDERS. (a) The department shall report to the
5-20 comptroller the name of any child care provider who is in default
5-21 on a loan guaranteed under this subchapter and with respect to
5-22 which the department has been required to honor the guarantee. The
5-23 comptroller may not issue a warrant or initiate an electronic funds
5-24 transfer to the provider while the provider is in default.
5-25 (b) A state agency may not use funds inside or outside the
5-26 state treasury to pay a child care provider if the agency knows
5-27 that the provider is in default on a loan guaranteed under this
6-1 subchapter and with respect to which the department has been
6-2 required to honor a guarantee.
6-3 (c) The comptroller may issue a warrant or a state agency
6-4 may pay money to the assignee of a child care provider who is in
6-5 default only if the assignment became effective before the provider
6-6 defaulted.
6-7 (d) This section does not prohibit the comptroller from
6-8 issuing a warrant or initiating an electronic funds transfer or a
6-9 state agency from using funds to pay the compensation of a state
6-10 officer or employee.
6-11 (e) The comptroller may not reimburse a state agency for a
6-12 payment that is made in violation of Subsection (b).
6-13 (f) In this section:
6-14 (1) "Compensation" includes wages, salaries, longevity
6-15 pay, hazardous duty pay, and emoluments that are provided in lieu
6-16 of wages or salaries. The term does not include expense
6-17 reimbursements.
6-18 (2) "State agency" means a board, commission, council,
6-19 committee, department, office, agency, or other governmental entity
6-20 in the executive, legislative, or judicial branch of state
6-21 government. The term includes an institution of higher education
6-22 as defined by Section 61.003, Education Code.
6-23 (3) "State officer or employee" means an officer or
6-24 employee of a state agency.
6-25 Sec. 481.411. TECHNICAL ASSISTANCE. The department shall
6-26 provide technical assistance within the department's areas of
6-27 expertise as needed to a child care provider who receives a loan
7-1 guarantee under this subchapter.
7-2 Sec. 481.412. GIFTS AND GRANTS. The department may accept
7-3 gifts, grants, and donations from any source for the purposes of
7-4 this subchapter.
7-5 SECTION 2. The policy board to the Texas Department of
7-6 Commerce shall adopt rules required by Section 481.407, Government
7-7 Code, as added by this Act, not later than December 1, 1997.
7-8 SECTION 3. This Act takes effect September 1, 1997.
7-9 SECTION 4. The importance of this legislation and the
7-10 crowded condition of the calendars in both houses create an
7-11 emergency and an imperative public necessity that the
7-12 constitutional rule requiring bills to be read on three several
7-13 days in each house be suspended, and this rule is hereby suspended.