Honorable Florence Shapiro, Chair, Senate Committee on Education
John S O'Brien, Director, Legislative Budget Board
SB31 by Shapiro (Relating to the guarantee of open-enrollment charter school bonds by the permanent school fund.), As Introduced
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The bill would create a Permanent School Fund (PSF) bond guarantee for qualified charter schools. The commissioner of education would administer the program and issue guarantees for qualified charter school bonds. The bill would limit the total amount of charter school bonds to be guaranteed to the portion of total available capacity in the PSF school bond guarantee program that is equal to the proportion of charter school enrollment to total enrollment. The bill would create a special fund in the state treasury outside the general revenue fund to be known as the charter district bond guarantee reserve fund. The bill would require each charter school that has a bond guaranteed to remit an annually amortized amount equal in total to 10 percent of the savings realized due to the bond guarantee. These amounts would be deposited in the charter district bond guarantee reserve fund and would serve as the first source of payment of any defaults of charter bonds carrying PSF guarantees.
The Texas Education Agency (TEA) indicates that there are currently 214 charter holders operating 649 open-enrollment charter school campuses in the state. Students enrolled in these schools make up approximately 2.7 percent of the total public school population. Accordingly, the amount of charter bonds for which guarantee could be made would be limited to approximately 2.7 percent of available capacity for the overall PSF bond guarantee program.
The TEA states that costs would be incurred for additional administrative functions associated with designating of financially qualified charter districts, determinations of bond guarantee capacity, charter bond issuance tracking, analysis of charter district bond guarantee applications, and technical assistance to charter districts seeking guarantee. The estimated costs for two additional FTE positions and associated operating expenses for these functions are $178,727 in FY12 and $162,727 each year thereafter. The Agency estimates revenues generated by application fees will be sufficient to offset costs.
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