| TO: | Honorable Florence Shapiro, Chair, Senate Committee on Education |
| FROM: | John S. O'Brien, Director, Legislative Budget Board |
| IN RE: | SB1255 by Shapiro (Relating to additional guarantees for certain bonds issued by school districts.), As Introduced |
The bill would establish a program in which school districts with bonds not covered under the state's existing bond guarantee program could apply to have their bonds guaranteed by certain monies appropriated for the Foundation School Program.
The bill would have an impact on the operations of the Texas Education Agency (TEA) by requiring the operation of an additional program. The TEA believes that the additional workload could be managed within existing personnel resources.
The state's bond guarantee program currently has no capacity under federal regulations to guarantee additional bonds. The bill would allow school districts to continue to benefit from a state program that can reduce their interest costs for general obligation bonds.
In the event there are school district defaults on debt service, and to the extent that there are no surplus appropriations available for the Foundation School Program, it is possible that districts would see a reduction to state aid payments under the proration provisions of Education Code Section 42.253(h). However, given the infrequency of defaults under the existing bond guarantee program, such a scenario is considered unlikely.
| Source Agencies: | 308 State Auditor's Office, 701 Central Education Agency
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| LBB Staff: | JOB, JSp, JGM
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