AN ACT
 1-1     relating to the creation and operation of health services
 1-2     districts; granting the authority to issue bonds.
 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-4           SECTION 1.  Subtitle D, Title 4, Health and Safety Code, is
 1-5     amended by adding Chapter 287 to read as follows:
 1-6                   CHAPTER 287.  HEALTH SERVICES DISTRICTS
 1-7                      SUBCHAPTER A.  GENERAL PROVISIONS
 1-8           Sec. 287.001.  DEFINITIONS.  In this chapter:
 1-9                 (1)  "Board" means the board of directors of a
1-10     district.
1-11                 (2)  "District" means a health services district
1-12     created under this chapter.
1-13                 (3)  "Director" means a member of the board.
1-14           Sec. 287.002.  DISTRICT AUTHORIZATION.  A health services
1-15     district may be created and established and, if created, must be
1-16     maintained, operated, and financed in the manner provided by this
1-17     chapter.
1-18              (Sections 287.003-287.020 reserved for expansion)
1-19                     SUBCHAPTER B.  CREATION OF DISTRICT
1-20           Sec. 287.021.  CREATION BY CONCURRENT ORDERS.  (a)  Except as
1-21     provided by Subsection (b), a county or hospital district and one
1-22     or more other counties or hospital districts may create a health
1-23     services district by adopting concurrent orders.
1-24           (b)  A county or portion of a county that is in the
 2-1     boundaries of a hospital district may not be a party to the
 2-2     creation of a health services district or to a contract with a
 2-3     health services district.  The hospital district that serves the
 2-4     county or portion of the county may create and contract with the
 2-5     health services district for the boundaries of the hospital
 2-6     district.
 2-7           (c)  A concurrent order to create a health services district
 2-8     must:
 2-9                 (1)  be approved by the governing body of each creating
2-10     county and hospital district;
2-11                 (2)  contain identical provisions; and
2-12                 (3)  define the boundaries of the district to be
2-13     coextensive with the combined boundaries of each creating county
2-14     and hospital district.
2-15           (d)  A concurrent order to create a health services district
2-16     adopted by a hospital district for which the tax rate is set by the
2-17     commissioners court of the county in which the hospital district
2-18     operates must be approved by the commissioners court of that
2-19     county.
2-20           Sec. 287.022.  CONTRACT TERMS.  (a)  A county or hospital
2-21     district that creates a district under this chapter shall contract
2-22     with the district to provide, at a minimum, the health care
2-23     services the county or hospital district is required to provide by
2-24     law or under the constitution.  A contract with a county or
2-25     hospital district that created the health services district under
2-26     this chapter must:
 3-1                 (1)  state the term of the contract, not to exceed six
 3-2     years;
 3-3                 (2)  specify the purpose, terms, rights, and duties of
 3-4     the district, as authorized by this chapter;
 3-5                 (3)  specify the financial contributions to be made by
 3-6     each party to the contract to fund the district, as described by
 3-7     Section 287.024; and
 3-8                 (4)  specify the land, buildings, improvements,
 3-9     equipment, and other assets owned by a party to the contract that
3-10     the district will be required to manage and operate.
3-11           (b)  Chapter 791, Government Code, does not apply to a
3-12     contract made under this chapter.
3-13           Sec. 287.023.  PURPOSE AND DUTIES.  (a)  A health services
3-14     district shall:
3-15                 (1)  provide health care services to indigent residents
3-16     of the district;
3-17                 (2)  manage the funds contributed to the district by
3-18     each county or hospital district that contracts with the district;
3-19     and
3-20                 (3)  plan and coordinate with public and private health
3-21     care providers and entities for the long-term provision of health
3-22     care services to residents of the district.
3-23           (b)  A health services district may:
3-24                 (1)  provide health care services on a sliding-fee
3-25     scale to residents of the district who do not meet the basic income
3-26     and resources requirements established under Sections 61.006 and
 4-1     61.008 to be eligible for assistance under Chapter 61 but who are
 4-2     unable to pay for the full cost of health care services; and
 4-3                 (2)  assume responsibility for management and operation
 4-4     of the land, buildings, improvements, equipment, and other assets
 4-5     that are acquired by the district or for which the district agrees
 4-6     to assume responsibility under the terms of the contract.
 4-7           (c)  A health services district may not:
 4-8                 (1)  establish, conduct, or maintain an institution as
 4-9     defined by Section 242.002; or
4-10                 (2)  establish or operate a personal care facility as
4-11     defined by Section 247.002.
4-12           Sec. 287.024.  FUNDING.  (a)  Each county or hospital
4-13     district that contracts with the district shall contribute to the
4-14     district for its operation:
4-15                 (1)  a specified dollar amount from or a percentage of
4-16     the contracting entity's operating budget and reserves if the
4-17     contracting entity is a hospital district;
4-18                 (2)  a specified percentage, not less than the
4-19     percentage required under Section 61.037 for state assistance, of
4-20     the contracting entity's general revenue levy for each state fiscal
4-21     year for the term of the contract, if the contracting entity is a
4-22     county;
4-23                 (3)  state assistance received under Chapter 61;
4-24                 (4)  federal matching funds received by a hospital
4-25     district under the Medicaid disproportionate share program; and
4-26                 (5)  any funds that are:
 5-1                       (A)  received under the Agreement Regarding
 5-2     Disposition of Settlement Proceeds dated July 18, 1998, or
 5-3     July 24, 1998, and filed in the United States District Court,
 5-4     Eastern District of Texas, in the case styled The State of Texas v.
 5-5     The American Tobacco Company, et al., No. 5-96CV-91; and
 5-6                       (B)  received on or after the date on which the
 5-7     district is created and before the district is dissolved.
 5-8           (b)  The district shall maintain an accounting of the funds
 5-9     received from each county or hospital district that contracts with
5-10     the district.
5-11           (c)  The district may administer the financial contributions
5-12     of all parties to the contract for district purposes.
5-13              (Sections 287.025-287.040 reserved for expansion)
5-14                   SUBCHAPTER C.  DISTRICT ADMINISTRATION
5-15           Sec. 287.041.  BOARD OF DIRECTORS.  (a)  A county or hospital
5-16     district that creates the district and has a population of 125,000
5-17     or more shall appoint one director to the board for every 125,000
5-18     persons in the population of the county or hospital district,
5-19     rounded to the nearest 125,000.
5-20           (b)  A county or hospital district that creates the district
5-21     and has a population of less than 125,000 may appoint one director
5-22     to the board.
5-23           (c)  The county judges of a county that creates the district
5-24     shall appoint the directors to the board on behalf of the county.
5-25     The board of directors of a hospital district that creates the
5-26     district shall appoint the directors to the board on behalf of the
 6-1     hospital district.
 6-2           (d)  Directors serve staggered two-year terms, with as near
 6-3     as possible to one-half of the directors' terms expiring each year.
 6-4           (e)  The number of directors appointed to the board by each
 6-5     county or hospital district that creates the district is determined
 6-6     at the time of the initial appointment of directors under this
 6-7     section and does not vary with subsequent variations in the
 6-8     population of the county or hospital district.
 6-9           Sec. 287.042.  QUALIFICATIONS FOR OFFICE.  (a)  To be
6-10     eligible to serve as a director, a person must be a resident of the
6-11     county or hospital district that appoints the person under Section
6-12     287.041.
6-13           (b)  An employee of the district may not serve as a director.
6-14           Sec. 287.043.  BOND.  (a)  Before assuming the duties of the
6-15     office, each director must execute a bond for $5,000 payable to the
6-16     district, conditioned on the faithful performance of the person's
6-17     duties as director.
6-18           (b)  The bond shall be kept in the permanent records of the
6-19     district.
6-20           (c)  The board may pay for directors' bonds with district
6-21     funds.
6-22           Sec. 287.044.  BOARD VACANCY.  A vacancy in the office of
6-23     director shall be filled for the unexpired term in the same manner
6-24     as the original appointment.
6-25           Sec. 287.045.  OFFICERS.  (a)  The board shall elect from
6-26     among its members a president and a vice president.
 7-1           (b)  The board shall appoint a secretary, who need not be a
 7-2     director.
 7-3           Sec. 287.046.  OFFICERS' TERMS; VACANCY.  (a)  Each officer
 7-4     of the board serves for a term of one year.
 7-5           (b)  The board shall fill a vacancy in a board office for the
 7-6     unexpired term.
 7-7           Sec. 287.047.  COMPENSATION.  (a)  Directors and officers
 7-8     serve without compensation but may be reimbursed for actual
 7-9     expenses incurred in the performance of official duties.
7-10           (b)  Expenses reimbursed under this section must be:
7-11                 (1)  reported in the district's minute book or other
7-12     district records; and
7-13                 (2)  approved by the board.
7-14           Sec. 287.048.  VOTING REQUIREMENT.  A majority of the members
7-15     of the board voting must concur in a matter relating to the
7-16     business of the district.
7-17           Sec. 287.049.  ADMINISTRATOR AND ADDITIONAL STAFF.  (a)  The
7-18     board may appoint qualified persons as administrator of the
7-19     district and as additional administrative staff members as the
7-20     board considers necessary for the efficient operation of the
7-21     district.
7-22           (b)  The administrator and other administrative staff members
7-23     serve at the will of the board.
7-24           (c)  The administrator and other administrative staff members
7-25     are entitled to compensation as determined by the board.
7-26           (d)  Before assuming the administrator's duties, the
 8-1     administrator shall execute a bond payable to the health services
 8-2     district in an amount not less than $5,000 as determined by the
 8-3     board, conditioned on the faithful performance of the
 8-4     administrator's duties under this chapter.  The board may pay for
 8-5     the bond with district funds.
 8-6           Sec. 287.050.  APPOINTMENTS TO STAFF.  The board may:
 8-7                 (1)  appoint to the staff any doctors the board
 8-8     considers necessary for the efficient operation of the district;
 8-9     and
8-10                 (2)  make temporary appointments the board considers
8-11     necessary.
8-12           Sec. 287.051.  TECHNICIANS, NURSES, AND OTHER DISTRICT
8-13     EMPLOYEES.  (a)  The district may employ technicians, nurses,
8-14     fiscal agents, accountants, architects, additional attorneys, and
8-15     other necessary employees.
8-16           (b)  The board may delegate to the administrator the
8-17     authority to employ persons for the district.
8-18           Sec. 287.052.  GENERAL DUTIES OF ADMINISTRATOR.  The
8-19     administrator shall:
8-20                 (1)  supervise the work and activities of the district;
8-21     and
8-22                 (2)  direct the general affairs of the district,
8-23     subject to the limitations prescribed by the board.
8-24           Sec. 287.053.  RETIREMENT BENEFITS.  The board may provide
8-25     retirement benefits for employees of the district by:
8-26                 (1)  establishing or administering a retirement
 9-1     program; or
 9-2                 (2)  electing to participate in the Texas County and
 9-3     District Retirement System or in any other statewide retirement
 9-4     system in which the district is eligible to participate.
 9-5              (Sections 287.054-287.070 reserved for expansion
 9-6                      SUBCHAPTER D.  POWERS AND DUTIES
 9-7           Sec. 287.071.  RESPONSIBILITY OF GOVERNMENTAL ENTITY.  On
 9-8     creation of a district, a county or hospital district that creates
 9-9     the district may transfer to the district:
9-10                 (1)  management and operation of any land, buildings,
9-11     improvements, and equipment related to the health care system
9-12     located wholly in the district that are owned by the county or
9-13     hospital district in which the district is located, as specified in
9-14     the contract with the counties and hospital districts that created
9-15     the district; and
9-16                 (2)  operating funds and reserves for operating
9-17     expenses and funds that have been budgeted by the county or
9-18     hospital district in which the district is located to provide
9-19     medical care for residents of the district, as specified in the
9-20     contract with the counties and hospital districts that created the
9-21     district.
9-22           Sec. 287.072.  DISTRICT RESPONSIBILITIES.  On creation of a
9-23     district, the district assumes the duties required under Section
9-24     287.023 and any additional duties specified in the contract with
9-25     the counties and hospital districts that created the district.
9-26           Sec. 287.073.  MANAGEMENT, CONTROL, AND ADMINISTRATION.  The
 10-1    board shall manage, control, and administer the health care system
 10-2    and the funds and resources of the district that are transferred
 10-3    under Section 287.071.
 10-4          Sec. 287.074.  DISTRICT RULES.  The board may adopt rules
 10-5    governing the operation of the district and the duties, functions,
 10-6    and responsibilities of district staff and employees.
 10-7          Sec. 287.075.  METHODS AND PROCEDURES.  The board may
 10-8    prescribe:
 10-9                (1)  the method of making purchases and expenditures by
10-10    and for the district; and
10-11                (2)  accounting and control procedures for the
10-12    district.
10-13          Sec. 287.076.  HEALTH CARE PROPERTY, FACILITIES, AND
10-14    EQUIPMENT.  (a)  The board shall determine:
10-15                (1)  the type, number, and location of buildings
10-16    required to establish and maintain an adequate health care system;
10-17    and
10-18                (2)  the type of equipment necessary for health care.
10-19          (b)  The board may:
10-20                (1)  acquire property, facilities, and equipment for
10-21    the district for use in the health care system;
10-22                (2)  mortgage or pledge the property, facilities, or
10-23    equipment acquired as security for the payment of the purchase
10-24    price;
10-25                (3)  transfer by lease to physicians, individuals,
10-26    companies, corporations, or other legal entities or acquire by
 11-1    lease district health care facilities;
 11-2                (4)  sell or otherwise dispose of property, facilities,
 11-3    or equipment acquired by the district; and
 11-4                (5)  contract with a state agency or other qualified
 11-5    provider to provide services.
 11-6          Sec. 287.077.  CONSTRUCTION CONTRACTS.  (a)  The board may
 11-7    enter into construction contracts for the district.
 11-8          (b)  The board may enter into construction contracts that
 11-9    involve spending more than $10,000 only after competitive bidding
11-10    as provided by Subchapter B, Chapter 271, Local Government Code.
11-11          (c)  Chapter 2253, Government Code, as it relates to
11-12    performance and payment bonds, applies to construction contracts
11-13    let by the district.
11-14          Sec. 287.078.  DISTRICT OPERATING AND MANAGEMENT CONTRACTS.
11-15    The board may enter into operating or management contracts relating
11-16    to health care facilities owned by the district or for which the
11-17    district assumes responsibility for managing and operating under
11-18    the terms of the contract with the counties and hospital districts
11-19    that created the district.
11-20          Sec. 287.079.  PAYMENT FOR HEALTH CARE SERVICES.  (a)  The
11-21    district without charge shall supply to a patient residing in the
11-22    district the care and treatment that the patient or a relative of
11-23    the patient who is legally responsible for the patient's support
11-24    cannot pay.
11-25          (b)  Not later than the first day of each operating year, the
11-26    district shall adopt an application procedure to determine
 12-1    eligibility for assistance that complies with Section 61.053.
 12-2          (c)  The administrator of the district may have an inquiry
 12-3    made into the financial circumstances of:
 12-4                (1)  a patient residing in the district and admitted to
 12-5    a district facility; and
 12-6                (2)  a relative of the patient who is legally
 12-7    responsible for the patient's support.
 12-8          (d)  The board may adopt a sliding-fee scale for health care
 12-9    services provided to a patient who can pay for some, but not all,
12-10    of the care and treatment provided by the district.
12-11          (e)  A county that created and contracted with the district
12-12    may credit a district expenditure for the care and treatment of an
12-13    eligible county resident to the same extent and in the same manner
12-14    the county would be able to claim the expenditure under Chapter 61
12-15    if the county made the expenditure.
12-16          (f)  The board shall adopt rules regarding the collection of
12-17    money that is owed to the district for health care services
12-18    provided to a patient who is determined to be able to pay for all
12-19    or any part of the services from a patient, a patient's estate, or
12-20    a relative who is legally responsible for the patient's support.
12-21          Sec. 287.080.  REIMBURSEMENT FOR SERVICES.  (a)  The board
12-22    shall require reimbursement from a county, municipality, or public
12-23    hospital located outside the boundaries of the district for the
12-24    district's care and treatment of a sick, diseased, or injured
12-25    person of that county, municipality, or public hospital as provided
12-26    by Chapter 61.
 13-1          (b)  The board shall require reimbursement from the sheriff
 13-2    or police chief of a county or municipality for the district's care
 13-3    and treatment of a person confined in a jail facility of the county
 13-4    or municipality who is not a resident of the district, as
 13-5    determined in the same manner as the person's residence is
 13-6    determined under Chapter 61.
 13-7          (c)  The board may contract with a state or federal agency or
 13-8    political subdivision of the state to provide health care services.
 13-9          Sec. 287.081.  SERVICE CONTRACTS.  The board may contract
13-10    with a municipality, county, special district, or other political
13-11    subdivision of the state or with a state or federal agency for the
13-12    district to:
13-13                (1)  furnish a mobile emergency medical service; or
13-14                (2)  provide for the investigatory or welfare needs of
13-15    inhabitants of the district.
13-16          Sec. 287.082.  GIFTS AND ENDOWMENTS.  On behalf of the
13-17    district, the board may accept gifts and endowments to be held in
13-18    trust for any purpose and under any direction, limitation, or
13-19    provision prescribed in writing by the donor that is consistent
13-20    with the proper management of the district.
13-21          Sec. 287.083.  AUTHORITY TO SUE AND BE SUED.  The board may
13-22    sue and be sued on behalf of the district.
13-23             (Sections 287.084-287.100 reserved for expansion
13-24                  SUBCHAPTER E.  DISSOLUTION OF DISTRICT
13-25          Sec. 287.101.  DISSOLUTION.  (a)  A district shall be
13-26    dissolved if:
 14-1                (1)  the contract with the counties and hospital
 14-2    districts that created the district expires and is not renewed; or
 14-3                (2)  the counties and hospital districts that created
 14-4    the district adopt concurrent orders to terminate the contract and
 14-5    dissolve the district and the concurrent orders:
 14-6                      (A)  are approved by the governing bodies of each
 14-7    county and hospital district; and
 14-8                      (B)  contain identical provisions.
 14-9          (b)  The governing body of a county or hospital district may
14-10    adopt orders to terminate the contract with the district and end
14-11    the county's or hospital district's participation in the district.
14-12    The county or hospital district must give written notice to the
14-13    district at least one fiscal year, as established by the board
14-14    under Section 287.121, before terminating the contract and ending
14-15    participation in the district.  On termination of the contract with
14-16    the district, the district shall transfer to the county or hospital
14-17    district all unspent funds contributed by the county or hospital
14-18    district to the district and the land, buildings, improvements,
14-19    equipment, and other assets acquired by the district that are
14-20    located in the county or hospital district.  The termination of the
14-21    contract by a county or hospital district does not affect the
14-22    operation of the district with respect to each other county or
14-23    hospital district that created the district.
14-24          Sec. 287.102.  TRANSFER OF ASSETS AFTER DISSOLUTION.  (a)  If
14-25    the district is dissolved, the board shall:
14-26                (1)  transfer the land, buildings, improvements,
 15-1    equipment, and other assets acquired by the district to the county
 15-2    or hospital district in which the property is located; or
 15-3                (2)  administer the property, assets, and debts in
 15-4    accordance with Section 287.103.
 15-5          (b)  If the district transfers its land, buildings,
 15-6    improvements, equipment, and other assets to a county or hospital
 15-7    district, the county or hospital district assumes all debts and
 15-8    obligations of the district related to the land, buildings,
 15-9    improvements, equipment, or assets at the time of the transfer, and
15-10    the district is dissolved.
15-11          Sec. 287.103.  ADMINISTRATION OF PROPERTY, DEBTS, AND ASSETS
15-12    AFTER DISSOLUTION.  (a)  If the district does not transfer its
15-13    land, buildings, improvements, equipment, and other assets to a
15-14    county or hospital district in the district, the board shall
15-15    continue to control and administer the property, debts, and assets
15-16    of the district until all funds have been disposed of and all
15-17    district debts have been paid or settled.
15-18          (b)  If, after administering the property and assets, the
15-19    board determines that the district's property and assets are
15-20    insufficient to pay the debts of the district, the district shall
15-21    transfer the remaining debts to the counties and hospital districts
15-22    that created the district in proportion to the funds contributed to
15-23    the district by each county or hospital district.
15-24          (c)  If, after administering the property and assets, the
15-25    board determines that unused funds remain, the board shall transfer
15-26    the unused funds to the counties and hospital districts that
 16-1    created the district in proportion to the funds contributed to the
 16-2    district by each county or hospital district.
 16-3          Sec. 287.104.  ACCOUNTING.  After the district has paid all
 16-4    its debts and has disposed of all its assets and funds as
 16-5    prescribed by Sections 287.102 and 287.103, the board shall provide
 16-6    an accounting to each county and hospital district that created and
 16-7    contracted with the district.  The accounting must show the manner
 16-8    in which the assets and debts of the district were distributed.
 16-9             (Sections 287.105-287.120 reserved for expansion
16-10                     SUBCHAPTER F.  DISTRICT FINANCES
16-11          Sec. 287.121.  FISCAL YEAR.  (a)  The district operates on
16-12    the fiscal year established by the board.
16-13          (b)  The fiscal year may not be changed if revenue bonds of
16-14    the district are outstanding or more than once in a 24-month
16-15    period.
16-16          Sec. 287.122.  ANNUAL AUDIT.  (a)  The board annually shall
16-17    have an independent audit made of the financial condition of the
16-18    district.
16-19          (b)  A copy of the audit must be provided to:
16-20                (1)  each county and hospital district that created and
16-21    contracted with the district;
16-22                (2)  each state and federal agency with which the
16-23    district contracts; and
16-24                (3)  each other entity that contributes substantial
16-25    funds to the district.
16-26          Sec. 287.123.  DISTRICT AUDIT AND RECORDS.  The annual audit
 17-1    and other district records are open to inspection during regular
 17-2    business hours at the principal office of the district.
 17-3          Sec. 287.124.  ANNUAL BUDGET.  (a)  The administrator of the
 17-4    district shall prepare a proposed annual budget for the district.
 17-5          (b)  The proposed budget must contain a complete financial
 17-6    statement, including a statement of:
 17-7                (1)  the outstanding obligations of the district;
 17-8                (2)  the amount of cash on hand to the credit of each
 17-9    fund of the district;
17-10                (3)  the amount of money received by the district from
17-11    all sources during the previous year;
17-12                (4)  the amount of money available to the district from
17-13    all sources during the ensuing year;
17-14                (5)  the amount of the balances expected at the end of
17-15    the year in which the budget is being prepared; and
17-16                (6)  the estimated amount of revenues and balances
17-17    available to cover the proposed budget.
17-18          Sec. 287.125.  NOTICE; HEARING; ADOPTION OF BUDGET.  (a)  The
17-19    board shall hold a public hearing on the proposed annual budget.
17-20          (b)  The board shall publish notice of the hearing in a
17-21    newspaper of general circulation in the district not later than the
17-22    10th day before the date of the hearing.
17-23          (c)  Any resident of the district is entitled to be present
17-24    and participate at the hearing.
17-25          (d)  At the conclusion of the hearing, the board shall adopt
17-26    a budget by acting on the budget proposed by the administrator.
 18-1    The board may make any changes in the proposed budget that in its
 18-2    judgment the interests of the residents of the district demand.
 18-3          (e)  The budget is effective only after adoption by the
 18-4    board.
 18-5          Sec. 287.126.  AMENDING BUDGET.  After adoption, the annual
 18-6    budget may be amended on the board's approval.
 18-7          Sec. 287.127.  LIMITATION OF EXPENDITURES.  Money may not be
 18-8    spent for an expense not included in the annual budget or an
 18-9    amendment to it.
18-10          Sec. 287.128.  SWORN STATEMENT.  As soon as practicable after
18-11    the close of the fiscal year, the administrator shall prepare for
18-12    the board a sworn statement of the amount of money that belongs to
18-13    the district and an account of the disbursements of that money.
18-14          Sec. 287.129.  SPENDING AND INVESTMENT LIMITATIONS.
18-15    (a)  Except for construction contracts under Section 287.077(a) or
18-16    as provided by Sections 287.142 and 287.143, the district may not
18-17    incur a debt payable from revenues of the district other than the
18-18    revenues on hand or to be on hand in the current and immediately
18-19    following fiscal year of the district.
18-20          (b)  The board may invest operating, depreciation, or
18-21    building reserves only in funds or securities specified by Article
18-22    836 or 837, Revised Statutes.
18-23          Sec. 287.130.  DEPOSITORY.  (a)  The board shall name at
18-24    least one bank to serve as depository for district funds.
18-25          (b)  District funds, other than those invested as provided by
18-26    Section 287.129(b) and those transmitted to a bank of payment for
 19-1    bonds or obligations issued or assumed by the district, shall be
 19-2    deposited as received with the depository bank and must remain on
 19-3    deposit.  This subsection does not limit the power of the board to
 19-4    place a portion of district funds on time deposit or to purchase
 19-5    certificates of deposit.
 19-6          (c)  Before the district deposits funds in a bank in an
 19-7    amount that exceeds the maximum amount secured by the Federal
 19-8    Deposit Insurance Corporation, the bank must execute a bond or
 19-9    other security in an amount sufficient to secure from loss the
19-10    district funds that exceed the amount secured by the Federal
19-11    Deposit Insurance Corporation.
19-12          Sec. 287.131.  AD VALOREM TAXATION.  A district may not
19-13    impose an ad valorem tax.
19-14             (Sections 287.132-287.140 reserved for expansion
19-15                           SUBCHAPTER G.  BONDS
19-16          Sec. 287.141.  GENERAL OBLIGATION BONDS.  A district may not
19-17    issue general obligation bonds.
19-18          Sec. 287.142.  REVENUE BONDS.  (a)  The board may issue
19-19    revenue bonds to:
19-20                (1)  purchase, construct, acquire, repair, equip, or
19-21    renovate buildings or improvements for district purposes;
19-22                (2)  acquire sites to be used for district purposes; or
19-23                (3)  acquire and operate a mobile emergency medical
19-24    service to assist the district in carrying out its purposes.
19-25          (b)  The bonds must be payable from and secured by a pledge
19-26    of all or part of the revenues derived from the operation of the
 20-1    district.  The bonds may be additionally secured by a mortgage or
 20-2    deed of trust lien on all or part of district property.
 20-3          (c)  The bonds must be issued in the manner provided by
 20-4    Sections 264.042, 264.043, 264.046, 264.047, 264.048, and 264.049
 20-5    for issuance of revenue bonds by county hospital authorities.
 20-6          (d)  Revenue derived from the operation of the district and
 20-7    pledged to the repayment of revenue bonds issued by the district
 20-8    must be used to repay the principal and interest owed on the bonds
 20-9    before being used to repay any other obligation of the district,
20-10    including money owed to physicians who are employed by or who
20-11    contract with the district.
20-12          Sec. 287.143.  REFUNDING BONDS.  (a)  Refunding bonds of the
20-13    district may be issued to refund an outstanding indebtedness the
20-14    district has issued or assumed.
20-15          (b)  The bonds must be issued in the manner provided by
20-16    Chapter 784, Acts of the 61st Legislature, Regular Session, 1969
20-17    (Article 717k-3, Vernon's Texas Civil Statutes).
20-18          (c)  The refunding bonds may be sold and the proceeds applied
20-19    to the payment of outstanding indebtedness or may be exchanged in
20-20    whole or in part for not less than a similar principal amount of
20-21    outstanding indebtedness.  If the refunding bonds are to be sold
20-22    and the proceeds applied to the payment of outstanding
20-23    indebtedness, the refunding bonds must be issued and payments made
20-24    in the manner provided by Chapter 503, Acts of the 54th
20-25    Legislature, Regular Session, 1955 (Article 717k, Vernon's Texas
20-26    Civil Statutes).
 21-1          Sec. 287.144.  INTEREST AND MATURITY.  District bonds must
 21-2    mature not later than the 50th anniversary of the date of their
 21-3    issuance and must bear interest at a rate not to exceed that
 21-4    provided by Chapter 3, Acts of the 61st Legislature, Regular
 21-5    Session, 1969 (Article 717k-2, Vernon's Texas Civil Statutes).
 21-6          Sec. 287.145.  EXECUTION OF BONDS.  The president of the
 21-7    board shall execute the bonds in the name of the district, and the
 21-8    secretary of the board shall countersign the bonds in the manner
 21-9    provided by the Texas Uniform Facsimile Signature of Public
21-10    Officials Act (Article 717j-1, Vernon's Texas Civil Statutes).
21-11          Sec. 287.146.  APPROVAL AND REGISTRATION OF BONDS.
21-12    (a)  District bonds are subject to the same requirements with
21-13    regard to approval by the attorney general and registration by the
21-14    comptroller as the law provides for approval and registration of
21-15    bonds issued by counties.
21-16          (b)  On approval by the attorney general and registration by
21-17    the comptroller, the bonds are incontestable for any cause.
21-18          Sec. 287.147.  BONDS AS INVESTMENTS.  District bonds and
21-19    indebtedness assumed by the district are legal and authorized
21-20    investments for:
21-21                (1)  banks;
21-22                (2)  savings banks;
21-23                (3)  trust companies;
21-24                (4)  savings and loan associations;
21-25                (5)  insurance companies;
21-26                (6)  fiduciaries;
 22-1                (7)  trustees;
 22-2                (8)  guardians; and
 22-3                (9)  sinking funds of municipalities, counties, school
 22-4    districts, and other political subdivisions of the state and other
 22-5    public funds of the state and its agencies, including the permanent
 22-6    school fund.
 22-7          Sec. 287.148.  BONDS AS SECURITY FOR DEPOSITS.  District
 22-8    bonds are eligible to secure deposits of public funds of the state
 22-9    and of municipalities, counties, school districts, and other
22-10    political subdivisions of the state.  The bonds are lawful and
22-11    sufficient security for deposits to the extent of their value if
22-12    accompanied by all unmatured coupons.
22-13          Sec. 287.149.  TAX STATUS OF BONDS.  Because the district
22-14    created under this chapter is a public entity performing an
22-15    essential public function, bonds issued by the district, any
22-16    transaction relating to the bonds, and profits made in the sale of
22-17    the bonds are free from taxation by the state or by any
22-18    municipality, county, special district, or other political
22-19    subdivision of the state.
22-20          SECTION 2.  This Act takes effect September 1, 1999.
22-21          SECTION 3.  The importance of this legislation and the
22-22    crowded condition of the calendars in both houses create an
22-23    emergency and an imperative public necessity that the
22-24    constitutional rule requiring bills to be read on three several
22-25    days in each house be suspended, and this rule is hereby suspended.
                                                               S.B. No. 1615
         ________________________________   ________________________________
             President of the Senate              Speaker of the House
               I hereby certify that S.B. No. 1615 passed the Senate on
         May 10, 1999, by a viva-voce vote; May 27, 1999, Senate refused to
         concur in House amendments and requested appointment of Conference
         Committee; May 28, 1999, House granted request of the Senate;
         May 30, 1999, Senate adopted Conference Committee Report by a
         viva-voce vote.
                                             _______________________________
                                                 Secretary of the Senate
               I hereby certify that S.B. No. 1615 passed the House, with
         amendments, on May 22, 1999, by a non-record vote; May 28, 1999,
         House granted request of the Senate for appointment of Conference
         Committee; May 30, 1999, House adopted Conference Committee Report
         by a non-record vote.
                                             _______________________________
                                                 Chief Clerk of the House
         Approved:
         ________________________________
                      Date
         ________________________________
                    Governor