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A BILL TO BE ENTITLED
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AN ACT
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relating to a study on the use of certain credit management |
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agreements by state agencies and political subdivisions. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. (a) In this section: |
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(1) "Credit management agreement" means: |
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(A) an interest rate swap agreement; |
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(B) an interest rate lock agreement; |
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(C) a currency swap agreement; |
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(D) a forward payment conversion agreement; |
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(E) an agreement to provide payments based on |
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levels of or changes in interest rates or currency exchange rates; |
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(F) an agreement to exchange cash flows or a |
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series of payments; |
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(G) an option, put, or call to hedge payment, |
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currency, rate, spread, or other exposure; or |
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(H) another agreement that enhances the |
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marketability, security, or creditworthiness of bonds or notes. |
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(2) "Political subdivision" means a county, |
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municipality, school district, junior college district, hospital |
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district, or other special purpose district in this state. |
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(3) "State agency" means a department, board, bureau, |
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commission, committee, division, office, council, or other agency |
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of the state, including an institution of higher education as |
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defined by Section 61.003, Education Code. |
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(b) The comptroller of public accounts shall conduct a study |
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on the use of credit management agreements by state agencies and |
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political subdivisions. In conducting the study, for each state |
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agency or political subdivision that currently enters into credit |
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management agreements, the comptroller must consider: |
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(1) the entity's stated purpose for contracting for |
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credit management; |
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(2) whether the entity's use of credit management |
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agreements risks the loss of public funds; and |
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(3) if public funds are at risk as a result of the |
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entity's use of credit management agreements, the extent of the |
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financial risk. |
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(c) At the comptroller's request, a state agency or |
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political subdivision shall provide information for and assistance |
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in conducting the study under this section. |
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(d) Not later than December 1, 2014, the comptroller shall |
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provide a report on the results of the study to the governor, the |
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lieutenant governor, and the legislature. The report must include: |
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(1) a detailed explanation of: |
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(A) the various types of credit management |
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agreements used by state agencies and political subdivisions; |
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(B) the benefits, if any, resulting from the use |
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of credit management agreements, including the enhanced |
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marketability of bonds or other obligations issued by state |
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agencies and political subdivisions; and |
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(C) the risks, if any, resulting from the use of |
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credit management agreements, including the possible loss of public |
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funds; and |
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(2) as to each type of credit management agreement |
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examined, the comptroller's evaluation as to whether continued use |
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of that type of agreement should be disallowed because of a risk |
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posed to public funds. |
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(e) This section expires August 31, 2015. |
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SECTION 2. This Act takes effect immediately if it receives |
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a vote of two-thirds of all the members elected to each house, as |
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provided by Section 39, Article III, Texas Constitution. If this |
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Act does not receive the vote necessary for immediate effect, this |
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Act takes effect September 1, 2013. |