85R21398 KKA-F     By: Murphy, Shine, et al. H.B. No. 467     Substitute the following for H.B. No. 467:     By:  Gooden C.S.H.B. No. 467       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.