C.S.H.B. 604 78    BILL ANALYSIS


C.S.H.B. 604
By: Grusendorf
Public Education
2/4/2003
Committee Report (Substituted)



BACKGROUND 

Created at least in part as a temporary response to litigation, the
current school finance system has outlived its usefulness. Today, the
Legislature is faced with a three-fold school funding crisis. First, many
school districts have reached the limit of their ability to meet the needs
of the districts under the existing system. Of 1040 Texas school
districts, 408 are at the $1.50 cap on tax rates. Another 199 districts
are within five cents of the cap. Second, Texas taxpayers are at the limit
of their ability to pay property taxes on existing properties and are
increasingly feeling an unequal burden for school finance. Finally, the
legislature is faced with further litigation already in state and federal
court.  

PURPOSE
 The purpose of this bill is two-fold: First, it will end the Robin Hood
finance system effective September 1, 2005.  Second, by sun-setting the
entire school code, it will provide the incentive for all parties to come
to the table for the development of a new plan designed to promote student
success.   

RULEMAKING AUTHORITY

It is the committee's opinion that rulemaking authority is expressly
granted to the Commissioner of Education in Section 2 (c) of this bill. 

SECTION BY SECTION ANALYSIS

Section 1.  Repealer

 Section 1 repeals existing Sections of the Education Code 41, 42, 45 and
46. 

Section 2.  Local Tax Rates and payment of Debt Obligations

 Section 2, subsection (a), prevents a school district  from adopting
their 2005 tax rate and allows the districts to collect and use delinquent
ad valorem taxes for 2004 and earlier tax years. 

 Section 2, subsection (b),  insures that any outstanding indebtedness
created by the issuance of notes, bonds, lease-purchase agreements, or
other evidences of indebtedness issued before September 1, 2005 in
accordance with prior law and all such indebtedness validly issued before
that date remain valid, enforceable and binding on the school districts.  
 
 Section 2, subsection (c), allows school districts to levy and collect
taxes and receive state assistance  in order to pay the debt of the
district. A district may receive state assistance with such debt payments
to the extent the district would have been entitled to receive the
assistance under Chapters 42 or 46, Education Code, as those chapters
existed before repeal by this act and former law is continued in effect
for that purpose. The commissioner of education may adopt rules to
implement this section. 

 Section 2, subsection (d), prohibits the attorney general from refusing
to approve the  issuance by a school district of a public security, on the
basis that the district's authority to levy ad valorem taxes or impose
rentals, rates, and charges was repealed effective September 1, 2005.  


Section 3. Effective Date 

 Section 3 creates the effective date of the Act September 1, 2005


EFFECTIVE DATE

September 1, 2005

COMPARISON OF ORIGINAL TO SUBSTITUTE

C.S.H.B. 604 differs from the original H.B. 604 by adding provisions to
Section 2 of the bill to allow school districts to levy and collect ad
valorem taxes and to receive state financial assistance under Chapters 42
and 46, Texas Education Code to pay debt and other contractual obligations
made prior to September 1, 2005.  

C.S.H.B. 604 also differs from the original by adding a provision to
prevent the attorney general from refusing to permit school districts to
issue public securities before September 1, 2005.