By: Hughes  S.B. No. 1480
         (In the Senate - Filed March 8, 2017; March 20, 2017, read
  first time and referred to Committee on Education; April 24, 2017,
  reported adversely, with favorable Committee Substitute by the
  following vote:  Yeas 9, Nays 1, 1 present not voting;
  April 24, 2017, sent to printer.)
Click here to see the committee vote
 
  COMMITTEE SUBSTITUTE FOR S.B. No. 1480 By:  Hall
 
 
A BILL TO BE ENTITLED
 
AN ACT
 
  relating to the guarantee of school district and charter district
  bonds by the permanent school fund.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 45.0532, Education Code, is amended by
  amending Subsections (a), (a-1), and (b) and adding Subsections
  (b-1), (b-2), (b-3), and (b-4) to read as follows:
         (a)  In addition to the general limitation under Section
  45.053, the commissioner may not approve charter district bonds for
  guarantee under this subchapter in a total amount that exceeds the
  charter capacity [percentage of the total available capacity] of
  the guaranteed bond program [that is equal to the percentage of the
  number of students enrolled in open-enrollment charter schools in
  this state compared to the total number of students enrolled in all
  public schools in this state, as determined by the commissioner].
         (a-1)  The commissioner may not approve charter district
  refunding or refinanced bonds for guarantee under this subchapter
  in a total amount that exceeds one-half of the charter capacity
  [total amount available for the guarantee of charter district bonds
  under Subsection (a)].
         (b)  For purposes of this section [Subsection (a)], the
  charter [total available] capacity of the guaranteed bond program
  is the percentage of the total capacity of the guaranteed bond
  program [limit] established by the board under Sections 45.053(d)
  and 45.0531 that is equal to the percentage of the number of
  students enrolled in open-enrollment charter schools in this state
  compared to the total number of students enrolled in all public
  schools in this state, as determined by the commissioner [minus the
  total amount of outstanding guaranteed bonds].  Each time the board
  increases the limit under Section 45.053(d), the total amount of
  charter district bonds that may be guaranteed increases accordingly
  under Subsection (a).
         (b-1)  The charter capacity provided by Subsection (b)
  applies beginning with the state fiscal year that begins September
  1, 2021. Subject to Subsections (b-2) and (b-3), the board shall
  establish a charter capacity for the preceding state fiscal years
  by increasing the total limitation on the amount of charter
  district bonds that could be guaranteed under the law in effect on
  January 1, 2017, by the following amount:
               (1)  for the state fiscal year that begins September 1,
  2017, 20 percent of the difference between the charter capacity
  provided by Subsection (b) and the charter capacity in effect on
  January 1, 2017;
               (2)  for the state fiscal year that begins September 1,
  2018, 40 percent of the difference between the charter capacity
  provided by Subsection (b) and the charter capacity in effect on
  January 1, 2017;
               (3)  for the state fiscal year that begins September 1,
  2019, 60 percent of the difference between the charter capacity
  provided by Subsection (b) and the charter capacity in effect on
  January 1, 2017; and
               (4)  for the state fiscal year that begins September 1,
  2020, 80 percent of the difference between the charter capacity
  provided by Subsection (b) and the charter capacity in effect on
  January 1, 2017.
         (b-2)  For any year, the board may increase the charter
  capacity by less than the amount provided by Subsection (b-1) or may
  decline to increase the charter capacity by any amount if:
               (1)  the board determines that increasing the charter
  capacity by the amount provided by Subsection (b-1) would likely
  result in a negative impact on the bond ratings provided by one or
  more nationally recognized investment rating firms for school
  district or charter district bonds for which a guarantee is
  requested under this subchapter; or
               (2)  one or more charter districts default on payment
  of maturing or matured principal or interest on a guaranteed bond,
  resulting in a negative impact on the bond ratings provided by one
  or more nationally recognized investment rating firms for school
  district or charter district bonds for which a guarantee is
  requested under this subchapter.
         (b-3)  If the board makes a determination described by
  Subsection (b-2) for any year and modifies the schedule provided by
  Subsection (b-1) for that year, the board may also make appropriate
  adjustments to the schedule for subsequent years to reflect the
  modification, provided that the charter capacity for any year may
  not exceed the limit provided for that year by the schedule.
         (b-4)  Subsections (b-1), (b-2), and (b-3) and this
  subsection expire September 1, 2022.
         SECTION 2.  Subchapter C, Chapter 45, Education Code, is
  amended by adding Section 45.0533 to read as follows:
         Sec. 45.0533.  COMMUNICATION WITH NATIONALLY RECOGNIZED
  INVESTMENT RATING FIRM. Information obtained from a nationally
  recognized investment rating firm relating to Section 45.053,
  45.0531, or 45.0532 that concerns a hypothetical or actual scenario
  relating to the credit rating of the permanent school fund or the
  bond guarantee program of the permanent school fund, and any
  communications from, or information generated by, the agency, the
  board, the commissioner, or their employees relating to that
  information, is confidential and not subject to disclosure under
  Chapter 552, Government Code.
         SECTION 3.  Section 45.056, Education Code, is amended by
  adding Subsection (a-1) to read as follows:
         (a-1)  For purposes of this subsection, "bond security
  documents" include the resolution, trust agreement, indenture,
  ordinance, loan agreement, deed of trust, bond, note, and any
  additional document executed in connection with the issuance of a
  charter district bond for which a guarantee is requested under this
  subchapter. The commissioner's investigation of an application
  submitted by a charter district may include evaluation of whether
  the charter district bond security documents provide a security
  interest in real property pledged as collateral for the bond and the
  repayment obligation under the proposed guarantee. The
  commissioner may decline to approve the application if the
  commissioner determines that sufficient security is not provided.
         SECTION 4.  Subchapter C, Chapter 45, Education Code, is
  amended by adding Section 45.0561 to read as follows:
         Sec. 45.0561.  COMMISSIONER CONSIDERATION OF ADDITIONAL
  FACTORS FOR CHARTER DISTRICT BONDS. (a)  In addition to
  considering all other applicable requirements under this
  subchapter, in determining whether to approve charter district
  bonds for guarantee the commissioner may consider any additional
  reasonable factor that the commissioner determines necessary to
  protect the guarantee program or minimize risk to the permanent
  school fund, including:
               (1)  whether the charter district had an average daily
  attendance of more than 75 percent of its student capacity for each
  of the preceding three school years, or for each school year of
  operation if the charter district has not been in operation for the
  preceding three school years;
               (2)  the performance of the charter district under
  Sections 39.053 and 39.054; and
               (3)  any other indicator of performance that could
  affect the charter district's financial performance.
         (b)  This section expires September 1, 2019.
         SECTION 5.  Section 45.0571, Education Code, is amended by
  adding Subsections (a-1) and (a-2) and amending Subsections (b) and
  (c) to read as follows:
         (a-1)  Notwithstanding Chapter 404, Government Code, the
  charter district bond guarantee reserve fund is managed by the
  board in the same manner that the permanent school fund is managed
  by the board. The board may invest money in the charter district
  bond guarantee reserve fund in accordance with the investment
  standard described by Section 404.024(j), Government Code, and the
  board's investment is not subject to any other limitation or
  requirement provided by Section 404.024, Government Code.
         (a-2)  The board shall adjust the investment portfolio of
  charter district bond guarantee reserve fund money periodically to
  ensure that the balance of the fund is sufficient to meet the cash
  flow requirements of the fund.
         (b)  Subject to Subsection (c), a [A] charter district that
  has a bond guaranteed as provided by this subchapter must
  [annually] remit to the commissioner, for deposit in the charter
  district bond guarantee reserve fund, an amount equal to 20 [10]
  percent of the savings to the charter district that is a result of
  the lower interest rate on the bond due to the guarantee by the
  permanent school fund.  The amount due under this section shall be
  [amortized and] paid on receipt by the charter district of the bond
  proceeds [over the duration of the bond.   Each payment is due on the
  anniversary of the date the bond was issued].  The commissioner
  shall adopt rules to determine the amount [total and annual
  amounts] due under this section.
         (c)  Subsection (b) does not apply if, at the time the
  charter district receives the proceeds of the bond guaranteed as
  provided by this subchapter, the balance of the charter district
  bond guarantee reserve fund is at least equal to three percent of
  the total amount of outstanding guaranteed bonds issued by charter
  districts. [The commissioner may direct the comptroller to
  annually withhold the amount due to the charter district bond
  guarantee reserve fund under Subsection (b) for that year from the
  state funds otherwise payable to the charter district.]
         SECTION 6.  Section 45.0571, Education Code, as amended by
  this Act, applies only to a charter district bond that is approved
  by the commissioner of education for guarantee under Subchapter C,
  Chapter 45, Education Code, on or after the effective date of this
  Act. A charter district bond that is approved by the commissioner
  of education for guarantee under Subchapter C, Chapter 45,
  Education Code, before the effective date of this Act is governed by
  the law in effect on the date the bond is approved for guarantee,
  and the former law is continued in effect for that purpose.
         SECTION 7.  This Act takes effect September 1, 2017.
 
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