HBA-TYH C.S.S.J.R. 16 76(R) BILL ANALYSIS Office of House Bill AnalysisC.S.S.J.R. 16 By: Barrientos Financial Institutions 4/22/1999 Committee Report (Substituted) BACKGROUND AND PURPOSE The Hinson-Hazelwood College Student Loan program was established in 1965 to provide loans to low and moderate income students. The purpose of this resolution is to extend funding for the program for the next six years through general obligation bonds. C.S.S.J.R. 16 proposes to authorize the legislature to provide for the investment of bond proceeds and to establish and provide for the investment of an interest and sinking fund to pay the bonds. In addition, it requires income from the investment to be used for the purposes prescribed by the legislature. As proposed, C.S.S.J.R. 16 requires the submission to the voters of a constitutional amendment authorizing the legislature by general law to authorize the Texas Higher Education Coordinating Board or its successor or successors to issue and sell general obligation bonds of the State of Texas in an amount not to exceed $400 million to finance educational loans to students. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Article III, Texas Constitution, by adding Section 50b-5, as follows: Sec. 50b-5. ADDITIONAL STUDENT LOANS. (a) Authorizes the legislature by general law to authorize the Texas Higher Education Coordinating Board or its successor or successors (board) to issue and sell general obligation bonds of the State of Texas in an amount not to exceed $400 million to finance educational loans to students. Provides that these bonds are in addition to those bonds issued under Sections 50b, 50b-1, 50b-2, 50b-3, and 50b-4 (relating to student loans and additional student loans) of this article. (b) Requires the bonds to be executed in the form, on the terms, and in the denominations, bear interest, and be issued in installments as prescribed by the board. (c) Prohibits the maximum net effective interest rate to be borne by bonds issued under this section from exceeding the maximum rate provided by law. (d) Authorizes the legislature to provide for the investment of bond proceeds and to establish and provide for the investment of an interest and sinking fund to pay the bonds. Requires income from the investment to be used for the purposes prescribed by the legislature. (e) Provides that, while any of the bonds issued under this section or interest on the bonds is outstanding and unpaid, there is appropriated out of the first money coming into the treasury in each fiscal year, not otherwise appropriated by this constitution, the amount sufficient to pay the principal of and interest on the bonds that mature or become due during the fiscal year, less any amount in an interest and sinking fund established under this section at the end of the preceding fiscal year that is pledged to the payment of the bonds or interest. (f) Specifies that bonds issued under this section, after approval by the attorney general, registration by the comptroller of public accounts, and delivery to the purchasers, are incontestable. SECTION 2. Requires this proposed constitutional amendment to be submitted to the voters at an election to be held November 2, 1999. Sets forth the required language for the ballot. COMPARISON OF ORIGINAL TO SUBSTITUTE The substitute modifies the original bill in SECTION 1 by adding the title "ADDITIONAL STUDENT LOANS" for proposed Section 50b-5 in the original bill. The substitute modifies the original bill in SECTION 1 (proposed Section 50b-5(c)) by clarifying that the maximum net effective interest rate is prohibited from exceeding the maximum rate provided by law, rather than the maximum provided by law.