BILL ANALYSIS
Senate Research Center S.B. 2240
AUTHOR'S / SPONSOR'S STATEMENT OF INTENT
Currently, little or no oversight exists for higher education facility authorities. While the bonds that they authorize are not obligations of the state, they are financial expenses to the borrowing institution, and ultimately could render institutions in need of additional state aid. The creation of an oversight mechanism in the form of notification to the governor, lieutenant governor, speaker of the house of representatives, and the Legislative Budget Board when other bonds such as general obligation bonds and revenue bonds are issued would help prevent financial hardships for cities and institutions.
Officers and employees of cities are prohibited from serving on the facility authority board. Many boards do not meet after the initial issuance of debt. As a result, a crisis is compounded when meetings are needed but board members have moved or cannot be located. Allowing officers and city employees to serve will allow the board of directors agility in moving quickly and easily to call board meetings when necessary.
Finally, the definition of "educational facilities" does not include athletic facilities. Under current law, bonds are allowed to fund educational and housing facilities but athletic facilities are not included. The attorney general's office approves athletic facilities on a case-by-case basis, and only if the institution can show how it will be used for educational purposes. Private universities and colleges have limited financing options for athletic facilities.
As proposed, S.B. 2240 amends current law relating to the financing of educational facilities by higher education authorities and the governance of certain higher education authorities.
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 53.40, Education Code, as follows:
Sec. 53.40. APPROVAL OF BONDS; REGISTRATION; NEGOTIABILITY. (a) Creates this subsection from existing text. Requires that bonds issued under this chapter and the record relating to their issuance be submitted to the attorney general, and if the attorney general, rather than he, finds that they have been issued in accordance with this chapter and constitute valid and binding obligations of the authority and are secured as recited therein, the attorney general is required to approve them, and they are required to be registered by the comptroller of public accounts, who is required to certify the registration thereon. Makes a conforming and nonsubstantive change.
(b) Requires the higher education facility authority, when the bonds and the record relating to their issuance are submitted to the attorney general, to deliver notice of that action to the governor, the lieutenant governor, and the Legislative Budget Board (LBB). Requires that the notice include the amount of the bonds to be issued and a description of the facilities to be financed from the bond proceeds.
SECTION 2. Amends Section 53A.02(6), Education Code, to redefine "educational facility."
SECTION 3. Amends Section 53A.14, Education Code, by amending Subsection (c) and adding Subsection (d), as follows:
(c) Deletes existing text to provide that no officer or employee of any such city is eligible for appointment as a director.
(d) Requires the board of directors of an authority to meet regularly at the call of the presiding officer of the board.
SECTION 4. Effective date: upon passage or September 1, 2009.