BILL ANALYSIS |
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C.S.H.B. 3438 |
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By: Koop |
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Public Education |
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Committee Report (Substituted) |
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BACKGROUND AND PURPOSE
Interested parties note a need for additional financing options for public school districts beyond traditional bond financing. C.S.H.B. 3438 seeks to satisfy that need by creating a state financing program administered by the Texas Public Finance Authority to assist school districts with certain expenses.
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CRIMINAL JUSTICE IMPACT
It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.
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RULEMAKING AUTHORITY
It is the committee's opinion that rulemaking authority is expressly granted to the board of directors of the Texas Public Finance Authority in SECTION 6 of this bill.
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ANALYSIS
C.S.H.B. 3438 amends the Government Code to authorize the Texas Public Finance Authority to issue and sell obligations to finance the following: loans to eligible public school districts for eligible purposes; purchase by the authority of vehicles, equipment, or appliances for sale, lease, or lease purchase to eligible districts; a lease or other agreement that concerns equipment that an eligible district has purchased or leased or intends to purchase or lease; or costs associated with maintenance, repair, rehabilitation, or renovation of eligible district facilities. The bill authorizes the authority to use proceeds of such obligations to pay related administrative costs, including costs of issuing obligations, and, in connection with a purchase or project financed with the proceeds of the obligations, to enter into loan agreements, lease agreements, lease purchase agreements, or other appropriate financing agreements with eligible districts; to purchase obligations issued by eligible districts; and to enter into credit agreements and exercise other powers granted to issuers under statutory provisions relating to obligations for certain public improvements. The bill authorizes the authority to secure payment of obligations issued under these provisions to assist a district with the pledge of money in the school district equipment and improvement fund.
C.S.H.B. 3438 establishes the school district equipment and improvement fund outside the treasury as a trust fund administered by the comptroller of public accounts on behalf of the authority as directed or agreed to by the authority's board of directors and consisting of proceeds of obligations issued by the authority to assist districts and obligations and agreements issued or executed by districts and purchased or funded by the authority with proceeds of authority obligations. The bill authorizes money in the fund to be spent without appropriation, restricts its use to funding the activities specified by the bill or to securing repayment of authority obligations, and requires interest and income from the assets of the fund to be credited to and deposited in the fund. The bill authorizes the board of directors of the authority to establish funds and accounts determined to be necessary or appropriate in connection with the activities of the authority relating to obligations issued to assist public school districts. The bill caps the aggregate amount of obligations issued by the authority for that purpose outstanding at one time at $100 million and prohibits the authority from issuing an applicable obligation on or after September 1, 2021. The bill exempts from that prohibition refunding bonds issued by the authority in accordance with applicable law or other obligations issued by the authority to refinance obligations incurred under the bill's amendment of the Government Code before September 1, 2021.
C.S.H.B. 3438 requires the authority's board of directors to adopt rules necessary to implement the bill's provisions relating to obligations issued by the authority, including rules prescribing eligibility requirements for public school districts seeking assistance from the authority, rules identifying eligible purposes for loans to eligible districts, and rules identifying eligible district facilities for purposes of authority financing for maintenance, repair, rehabilitation, or renovation. The bill requires the board of directors to consult with the commissioner of education before adopting or modifying a rule under the bill's provisions and authorizes the adopted rules to establish a process under which a district must obtain approval by the commissioner in order to be eligible for assistance from the authority.
C.S.H.B. 3438 amends the Education Code to authorize a public school district to borrow money from the authority and, as necessary in connection with obtaining loans or other financial assistance from the authority, to issue bonds and notes, provided that the term of an obligation issued for this purpose may not exceed 15 years, and to enter into loan agreements, lease agreements, lease purchase agreements, or other appropriate financing agreements with the authority. The bill authorizes a district to make payments on an obligation or agreement so issued or executed using any available funds, including maintenance and operations tax revenue, and to secure the payment of such an obligation or agreement through creating a lien against equipment obtained using the proceeds of the obligation, through imposing a property tax otherwise authorized by law, or through obtaining credit enhancement under the intercept credit enhancement program, for which the bill authorizes a district to apply.
C.S.H.B. 3438 includes bonds issued by the authority to assist school districts among the bonds that, on approval by the commissioner, are guaranteed by the corpus and income of the permanent school fund and subjects the authority, in seeking that guarantee, to each statutory provision relating to guaranteed bonds that applies to a district seeking guarantee of district bonds, except as otherwise provided by State Board of Education (SBOE) rules. The bill specifies that, for the purposes of statutory provisions relating to guaranteed bonds, a reference to bonds issued by the authority includes short-term obligations and any other obligations the authority may issue under the bill's amendment of the Government Code. The bill includes among the rules the SBOE may adopt for the administration of the bond guarantee program rules modifying statutory requirements as necessary to facilitate the guarantee of bonds issued by the authority. The bill requires the rules to provide for the application of statutory provisions relating to a district's default on payment of a guaranteed bond to a default in the payment of bonds issued by the authority and guaranteed by the permanent school fund in a manner that provides for the withholding of state aid that would otherwise be paid to the district on whose behalf the authority issued its bonds.
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EFFECTIVE DATE
September 1, 2017.
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COMPARISON OF ORIGINAL AND SUBSTITUTE
While C.S.H.B. 3438 may differ from the original in minor or nonsubstantive ways, the following comparison is organized and formatted in a manner that indicates the substantial differences between the introduced and committee substitute versions of the bill.
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