SRC-TAG H.B. 1295 78(R)   BILL ANALYSIS


Senate Research Center   H.B. 1295
78R8958 BDH-FBy: Hochberg (Shapiro)
Education
4/23/2003
Engrossed


DIGEST AND PURPOSE

The construction and renovation of school facilities is financed largely
through bonds issued by school districts.  The Permanent School Fund Bond
Guarantee Program allows districts to obtain a lower interest rate on the
bonds, by using the corpus and income of the permanent school fund to
guarantee the bonds.  The guarantee capacity of the fund is limited by
both state law and Internal Revenue Service rules.  Until recently, the
IRS limit was the more restrictive of the two.  However, a possible change
in IRS policy could allow the state to guarantee more bonds.  H.B. 1295
increases the allowed capacity of the Permanent School Fund (PSF)  to
two-and-a-half times the total value of the PSF.  

RULEMAKING AUTHORITY

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

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 45.053(a), Education Code, to  prohibit the
commissioner of education from approving bonds for guarantee if the
approval would result in the total amount of outstanding guaranteed bonds
exceeding an amount equal to 2-1/2 times, rather than two times, the cost
value or market value, whichever is less, of the permanent school fund, as
estimated by the State Board of Education and certified by the state
auditor.  

SECTION 2. Effective date: upon passage or September 1, 2003.