BILL ANALYSIS |
C.S.H.B. 2610 |
By: Pitts |
Public Education |
Committee Report (Substituted) |
BACKGROUND AND PURPOSE
Time warrants are financial tools public school districts can use for smaller-scale facilities projects, such as paying for the replacement of a $600,000 HVAC system, without depleting liquidity. Interested parties note that time warrants are paid off in a much shorter life cycle than that of a typical bond and that the cap on the total value of time warrants a district is authorized to have outstanding has not been increased since the mid-1990s, despite increases in the costs of labor and materials.
C.S.H.B. 2610 seeks to address this issue by increasing the time a school district has to pay off a time warrant, with the intention of allowing districts to take advantage of lower interest rates, and by increasing the cap on the value of such time warrants to reflect the cost increases that have occurred since the cap was last set.
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RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.
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ANALYSIS
C.S.H.B. 2610 amends the Education Code to increase from five years to 15 years the maximum maturity period of a serial installment for interest-bearing time warrants issued by a school district and to authorize a school district to issue interest-bearing time warrants to refund warrants previously issued if the refunding warrants are coterminous with the refunded obligations. The bill increases from $500,000 to $1 million the maximum total value of warrants a school district is authorized to have outstanding at any one time.
C.S.H.B. 2610 authorizes an independent or consolidated school district to evidence loans for the purpose of paying maintenance expenses with nonnegotiable notes, in addition to negotiable notes. The bill specifies that the term "maintenance expenses" or "maintenance expenditures" includes expenditures relating to notes issued to refund notes issued previously if the refunding notes are coterminous with the refunded obligation.
C.S.H.B. 2610 amends the Government Code to exempt a nonnegotiable note issued for the purpose of paying school district maintenance expenses, in a principal amount that does not exceed $1 million, from approval and registration requirements of public securities.
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EFFECTIVE DATE
September 1, 2013.
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COMPARISON OF ORIGINAL AND SUBSTITUTE
While C.S.H.B. 2610 may differ from the original in minor or nonsubstantive ways, the following comparison is organized and highlighted in a manner that indicates the substantial differences between the introduced and committee substitute versions of the bill.
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