82R8849 KSD-F
 
  By: Patrick S.B. No. 1822
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the administration of certain supplemental student loan
  programs and the issuance of private activity bonds by qualified
  nonprofit corporations.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  The legislature, giving due consideration to the
  historical and continuing interest of the people of Texas in
  encouraging deserving and qualified persons to realize their
  aspirations for education beyond high school, finds and declares
  that postsecondary education for qualified Texans who desire to
  pursue such education is important to the welfare and security of
  this state and the nation and, consequently, is an important public
  purpose. The legislature finds and declares that the state can
  achieve its full economic and social potential only if every
  individual Texan has the opportunity to contribute to the full
  extent of the individual's capabilities and only when financial
  barriers to the individual's economic, social, and educational
  goals are removed. It is, therefore, the policy of the legislature
  and the purpose of this Act to assist and permit qualified nonprofit
  corporations to carry out one or more supplemental programs to
  assist qualified students by making financial and other assistance
  available to borrowers or institutions to finance the cost of
  attendance at an accredited postsecondary educational institution.
         SECTION 2.  Chapter 53B, Education Code, is amended by
  adding Subchapter D to read as follows:
  SUBCHAPTER D. ADMINISTRATION OF SUPPLEMENTAL LOAN PROGRAMS AND
  ISSUANCE OF PRIVATE ACTIVITY BONDS BY QUALIFIED
  NONPROFIT CORPORATIONS
         Sec. 53B.61.  DEFINITIONS. In this subchapter:
               (1)  "Closing" means the issuance and delivery of a
  supplemental program bond by a qualified nonprofit corporation in
  exchange for the required payment for the supplemental program
  bond.
               (2)  "Internal Revenue Code" means the Internal Revenue
  Code of 1986 and its subsequent amendments.
               (3)  "Nationally recognized statistical rating
  organization" has the meaning assigned by Section 3(a)(62),
  Securities Exchange Act of 1934 (15 U.S.C. Section 78c(a)(62)).
               (4)  "Private activity bond" has the meaning assigned
  by Section 141(a), Internal Revenue Code.
               (5)  "Qualified student loan bond" has the meaning
  assigned by Section 144(b), Internal Revenue Code.
               (6)  "Supplemental program" means a program
  established, implemented, administered, and financed by a
  qualified nonprofit corporation under Section 53B.63 to provide
  supplemental program education loans.
               (7)  "Supplemental program bonds" includes bonds,
  notes, refunding bonds, commercial paper, pass-through
  instruments, or any other evidences of obligations of a qualified
  nonprofit corporation secured by a capital reserve fund established
  under Section 53B.65  and issued under this subchapter for the
  purpose of originating, acquiring, or financing supplemental
  program education loans.
               (8)  "Supplemental program education loan" means an
  alternative education loan made by a qualified nonprofit
  corporation under a supplemental program or by or on behalf of an
  accredited institution to a student or to parents of a student, or
  both, in amounts not to exceed the maximum amounts specified by a
  qualified nonprofit corporation under its supplemental program to
  finance part or all of the student's cost of attendance.
         Sec. 53B.62.  DETERMINATION BY COMPTROLLER OF QUALIFIED
  NONPROFIT CORPORATION AUTHORITY TO ISSUE PRIVATE ACTIVITY BONDS.
  The comptroller shall determine whether the definition of a
  qualified scholarship funding corporation under Section 150(d),
  Internal Revenue Code, allows a qualified nonprofit corporation to
  issue private activity bonds consisting of qualified student loan
  bonds in accordance with Section 144(b)(1)(B), Internal Revenue
  Code. On the making by the comptroller of a determination that the
  issuance is permissible:
               (1)  the comptroller shall provide notice of its
  determination to the Legislative Budget Board; and
               (2)  each qualified nonprofit corporation may apply for
  a student loan bond allocation in compliance with Chapter 1372,
  Government Code, with respect to its supplemental program bonds
  under this subchapter.
         Sec. 53B.63.  SUPPLEMENTAL PROGRAM. (a) A qualified
  nonprofit corporation may administer one or more supplemental
  programs approved by the comptroller under Section 53B.64 under
  which the qualified nonprofit corporation makes financial and other
  assistance available to borrowers or accredited institutions to
  finance the cost of attendance, issues supplemental program bonds,
  lends the proceeds of supplemental program bonds, and exercises any
  other powers authorized by this subchapter.
         (b)  Each qualified nonprofit corporation administering a
  supplemental program approved by the comptroller shall establish
  rules pertaining to participation in its supplemental programs,
  including rules relating to issuing supplemental program bonds,
  borrowing money, servicing and collection of supplemental program
  education loans, and other policies governing the operation of its
  supplemental programs.
         (c)  A qualified nonprofit corporation that has issued
  supplemental program bonds to support a supplemental program may
  continue to exercise the powers granted by the Texas Nonprofit
  Corporation Law, including the power to issue bonds or otherwise
  incur debt that does constitute a supplemental program bond and is
  not secured by a capital reserve fund created and established under
  Section 53B.65 for the purpose of financing or purchasing
  alternative education loans or guaranteed student loans.
         Sec. 53B.64.  COMPTROLLER APPROVAL OF SUPPLEMENTAL
  PROGRAMS. (a) Pursuant to Section 144(b)(1)(B), Internal Revenue
  Code, the comptroller on behalf of the state may approve
  supplemental programs administered by a qualified nonprofit
  corporation and shall establish procedures for that approval. The
  procedures established by the comptroller shall require that:
               (1)  the comptroller permit qualified nonprofit
  corporations to submit the terms of any proposed supplemental
  programs to the comptroller for approval on or after January 1 and
  before June 1 of each calendar year;
               (2)  the comptroller, after providing notice of the
  time, place, and purpose of the public hearing by publishing notice
  in a newspaper of general circulation earlier than the 10th day
  before the date of the hearing, conduct a public hearing before July
  2 of each calendar year to consider the approval of proposed
  supplemental programs;
               (3)  a proposed supplemental program submitted by a
  qualified nonprofit corporation be accompanied by a nonrefundable
  application fee in the amount of $500 that the comptroller shall
  retain to offset the costs of holding the related public hearing;
               (4)  the approval of a supplemental program be
  memorialized in a written resolution adopted by the comptroller;
               (5)  any supplemental program bonds issued to support
  an approved supplemental program receive, on or before the closing
  date, an initial unenhanced credit rating of not less than an "A"
  category or the equivalent of that rating as rated by a nationally
  recognized statistical rating organization; and
               (6)  the comptroller not approve any supplemental
  program that discriminates on the basis of the location of the
  accredited institutions in which the students enroll.
         (b)  The comptroller may charge a qualified nonprofit
  corporation an annual capital reserve fund maintenance fee in an
  amount not to exceed 0.50 percent of the capital reserve
  requirement relating to a capital reserve fund created and
  established under Section 53B.65 that secures supplemental program
  bonds issued under a supplemental program. Any required capital
  reserve fund maintenance fee must be established in the written
  resolution approving the supplemental program. The payment of any
  required capital reserve fund maintenance fee by the related
  qualified nonprofit corporation shall commence on the closing date
  of the related supplemental program bonds and is payable annually
  in arrears on each anniversary date after the closing date of the
  related supplemental program bonds.
         (c)  Following the initial approval of a supplemental
  program by the comptroller, the comptroller shall establish:
               (1)  a process for the approval of any material changes
  in terms with respect to an approved supplemental program; and
               (2)  procedures allowing a qualified nonprofit
  corporation to petition for a special hearing for the approval of
  material changes in the terms with respect to an approved
  supplemental program.
         Sec. 53B.65. CAPITAL RESERVE FUNDS; OBLIGATION OF THE STATE.
  (a) As part of a supplemental program administered under Section
  53B.63, a qualified nonprofit corporation may create and establish
  one or more capital reserve funds and may pay into the capital
  reserve fund any money appropriated and made available by the state
  for the purposes of that fund, any proceeds of the sale by the
  qualified nonprofit corporation of supplemental program bonds to
  the extent determined by the qualified nonprofit corporation, and
  any other money available to the qualified nonprofit corporation.
  A qualified nonprofit corporation may not create or establish any
  capital reserve fund under this section to secure supplemental
  program bonds issued as qualified student loan bonds until the
  determination described by Section 53B.62 has been made by the
  comptroller.
         (b)  Except as otherwise provided by this section, money held
  in any capital reserve fund must be used solely with respect to
  supplemental program bonds, the repayment of which is secured by
  any such fund and solely for the payment of principal of
  supplemental program bonds, the purchase or redemption of those
  supplemental program bonds, including any fees or premiums, and the
  payment of interest on those supplemental program bonds. In
  addition, if a qualified nonprofit corporation obtains a letter of
  credit, insurance contract, surety bond, or similar financial
  undertaking to establish and fund a capital reserve fund under this
  section, money in that capital reserve fund may be used to pay all
  reimbursement obligations of the qualified nonprofit corporation
  established in connection with that letter of credit, insurance
  contract, surety bond, or other financial undertaking, including
  all fees, expenses, indemnities, and commissions. Money in excess
  of the reserve requirement established by Subsection (c) may be
  transferred to other funds and accounts of the qualified nonprofit
  corporation.
         (c)  A qualified nonprofit corporation may establish a
  capital reserve requirement for a capital reserve fund by providing
  that money in the fund may not be withdrawn at any time in an amount
  that would reduce the amount of the fund to less than the maximum
  amount of principal and interest becoming due by reason of maturity
  or a required sinking fund payment in the next succeeding period not
  exceeding 24 months within which any such maturity occurs or any
  such payment is required, except for the purpose of paying the
  amount due on any interest payment date or on maturity or making a
  sinking fund payment with respect to supplemental program bonds
  secured by the capital reserve fund.
         (d)  A qualified nonprofit corporation may provide that it
  will not issue supplemental program bonds if the capital reserve
  requirement established under Subsection (c) with respect to
  supplemental program bonds outstanding and to be issued that are
  secured by the capital reserve fund will exceed the amount of the
  capital reserve fund at the time of issuance, unless the qualified
  nonprofit corporation, at the time of issuance of the supplemental
  program bonds, deposits in the capital reserve fund from proceeds
  of the supplemental program bonds to be issued, or from other
  sources, an amount that, together with the amount in the capital
  reserve fund, is not less than the capital reserve requirement.
         (e)  On or before September 1 of each year, a qualified
  nonprofit corporation shall certify to the comptroller and the
  Legislative Budget Board the amount, if any, necessary to restore
  the amount in any capital reserve fund to which this subsection
  applies, as stated in the trust indenture or other document, to the
  capital reserve requirement. The comptroller shall cause to be
  paid directly from legislative appropriations or from other funds
  designated by the Legislative Budget Board under its budget
  execution authority to the qualified nonprofit corporation during
  the current state fiscal year the amount necessary to restore the
  amount in the capital reserve fund to the capital reserve
  requirement.
         (f)  Neither this state nor any political subdivision of this
  state is obligated to pay the principal of or the interest on
  supplemental program bonds, except from amounts on deposit in the
  applicable capital reserve funds, and neither the faith and credit
  nor the taxing power of this state or of any political subdivision
  of this state is pledged to the payment of the principal of, premium
  if any, or interest on supplemental program bonds. The issuance of
  supplemental program bonds does not directly, indirectly, or
  contingently obligate this state or any political subdivision of
  this state to levy or pledge any form of taxation whatsoever or to
  make any appropriation for the payment of supplemental program
  bonds.
         (g)  The aggregate sum of capital reserve requirements
  relating to capital reserve funds securing supplemental program
  bonds may not at any time exceed $98 million.
         SECTION 3.  This Act takes effect September 1, 2011.