LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 76th Regular Session
  
                               May 17, 1999
  
  
          TO:  Honorable Paul Sadler, Chair, House Committee on Public
               Education
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  SB1091  by Duncan (Relating to the issuance and sale of
               bonds and time warrants by school districts and the
               issuance of obligations and execution of credit
               agreements by certain school districts and junior
               college districts), As Engrossed
  
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*  No fiscal implication to the State is anticipated.                    *
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Local Government Impact
  
No significant fiscal implication to units of local government is
anticipated.

Districts may be able to lower the costs of issuing and servicing
variable rate bonds over the life of the issue.  Over the past ten years,
variable rate bonds have had average interest rates below 4% compared to
fixed rate bonds, which have averaged approximately 6%.  Allowing
districts to use variable rate bonds can significantly lower debt service
costs for the acquisition and construction of school facilities.
Long-term debt service costs could be affected by overall changes in the
bond market.

Allowing the use of line of credit instead of stand-by bond purchase
agreements may also lower costs to districts.  Depending on market
conditions and the size of the issue, savings to a district could range
from $10,000 to $50,000 annually.
  
  
Source Agencies:   352   Bond Review Board, 781   Higher Education
                   Coordinating Board, 701   Texas Education Agency -
                   Administration, 304   Comptroller of Public Accounts
LBB Staff:         JK, CT, RN