SRC-DPW S.B. 1089 76(R)   BILL ANALYSIS


Senate Research Center   S.B. 1089
76R5981 ESH-FBy: Duncan
Education
4/12/1999
As Filed


DIGEST 

Currently, school districts lack the authority to enter into multiple year
investment or depository agreements in the debt service fund.  Each year's
debt service fund taxes (collected primarily in December and January) are
invested at the then current market yields for about 1_  to 8 _ months.
Yields on multiple year investment agreements should be higher than those
available if the term (as it is for schools and colleges under current law)
is less than 12 months.  This bill would allow school districts to seek
competitive bids on the investment yield that would be received each time
the school district collects and invests its debt service fund taxes during
the life of the investment agreement.  

PURPOSE

As proposed, S.B. 1089 authorizes school districts and certain other
districts to enter into contracts relating to the investment of debt
service funds. 

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Chapter 45E, Education Code, by adding Section 45.112, as
follows: 

Sec. 45.112. CONTRACTS FOR INVESTMENT OF DEBT SERVICE FUNDS.  Authorizes a
school district and certain other districts to enter into a contract with a
term not to exceed seven years to purchase investments with the proceeds of
taxes levied for the purpose of paying debt service on bonds issued by the
district.  Authorizes a contract to provide for the purchase of investments
at a starting yield.  Requires a school district to solicit and receive
bids from at least three separate providers prior to entering a contract,
and requires the district to accept the bid that provides for the highest
yield.  Authorizes a contract to provide only for the purchase of an
obligation described by Section 2256.009(a)(1), Government Code, other than
an obligation described by Section 2256.009(b) of that code. 

SECTION 2.Emergency clause.
  Effective date: upon passage.