87R3184 CAE-D     By: Cole, VanDeaver, Israel, et al. H.B. No. 586       A BILL TO BE ENTITLED   AN ACT   relating to the creation of a state financing program administered   by the Texas Public Finance Authority to assist school districts   with certain expenses; granting authority to issue bonds or other   obligations.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 45.051, Education Code, is amended to   read as follows:          Sec. 45.051.  DEFINITIONS. In this subchapter:                (1)  "Authority" means the Texas Public Finance   Authority.                (2)  "Board" means the State Board of Education.                (3) [(1-a)]  "Charter district" means an   open-enrollment charter school designated as a charter district   under Section 12.135.                (4) [(2)]  "Paying agent" means the financial   institution that is designated by a school district, a [or] charter   district, or the authority as its agent for the payment of the   principal of and interest on guaranteed bonds.          SECTION 2.  Section 45.052, Education Code, is amended to   read as follows:          Sec. 45.052.  GUARANTEE. (a)  On approval by the   commissioner, bonds issued under Subchapter A by a school district,   [or] Chapter 53 for a charter district, or Section 1232.1031,   Government Code, by the authority, including refunding and   refinanced bonds, are guaranteed by the corpus and income of the   permanent school fund.          (b)  Notwithstanding any amendment of this subchapter or   other law, the guarantee under this subchapter of school district,   [or] charter district, or authority bonds remains in effect until   the date those bonds mature or are defeased in accordance with state   law.          (c)  In seeking the guarantee of bonds under this subchapter,   the authority is subject to each provision of this subchapter that   applies to a school district seeking guarantee of school district   bonds, except as provided by board rules adopted under Section   45.063.          (d)  A reference in this subchapter to bonds issued by the   authority includes short-term debt obligations and any other   obligations the authority is authorized to issue under Section   1232.1031, Government Code.          SECTION 3.  Section 45.057(b), Education Code, is amended to   read as follows:          (b)  The guarantee is not effective unless the attorney   general approves the bonds under Section 45.005 or 53.40 of this   code or Section 1232.1031, Government Code, as applicable.          SECTION 4.  Section 45.063, Education Code, is amended to   read as follows:          Sec. 45.063.  RULES. The board may adopt rules necessary for   the administration of the bond guarantee program, including rules   modifying requirements imposed under this subchapter as necessary   to facilitate the guarantee of bonds issued by the authority.  The   rules must provide for the application of Sections 45.058, 45.059,   45.060, 45.061, and 45.062 to a default in the payment of bonds   issued by the authority and guaranteed under this subchapter in a   manner that provides for the withholding of state aid under Section   45.061 that would otherwise be paid to the school district on whose   behalf the authority issued its bonds.          SECTION 5.  Subchapter E, Chapter 45, Education Code, is   amended by adding Section 45.114 to read as follows:          Sec. 45.114.  ASSISTANCE FROM TEXAS PUBLIC FINANCE   AUTHORITY. (a) A school district may:                (1)  borrow money from the Texas Public Finance   Authority made available in accordance with Section 1232.1031,   Government Code; and                (2)  as necessary in connection with obtaining loans or   other financial assistance from the Texas Public Finance Authority   in accordance with Section 1232.1031, Government Code:                      (A)  issue bonds and notes, provided that the term   of an obligation issued for this purpose may not exceed 15 years;   and                      (B)  enter into loan agreements, lease   agreements, lease purchase agreements, or other appropriate   financing agreements with the Texas Public Finance Authority.          (b)  A school district may:                (1)  make payments on an obligation or agreement issued   or executed under Subsection (a) using any available funds,   including maintenance and operations tax revenue; and                (2)  secure the payment of an obligation or agreement   issued or executed under Subsection (a) through:                      (A)  creating a lien against equipment obtained   using the proceeds of the obligation; or                      (B)  imposing an ad valorem maintenance tax   otherwise authorized by law.          (c)  A school district that secures payment of an obligation   or agreement issued or executed under Subsection (a) through   imposing an ad valorem maintenance tax must include the obligation   or agreement in the district's total maintenance tax debt service   when submitting public securities for review to the attorney   general under Chapter 1202, Government Code.          SECTION 6.  Subchapter C, Chapter 1232, Government Code, is   amended by adding Section 1232.1031 to read as follows:          Sec. 1232.1031.  ISSUANCE OF OBLIGATIONS TO ASSIST SCHOOL   DISTRICTS. (a) The authority may issue and sell obligations to   finance:                (1)  loans to eligible school districts for eligible   purposes;                (2)  the purchase by the authority of vehicles,   equipment, or appliances for sale, lease, or lease purchase to   eligible school districts;                (3)  a lease or other agreement that concerns equipment   that an eligible school district has purchased or leased or intends   to purchase or lease; and                (4)  costs associated with improvement of existing   instructional facilities, limited to the maintenance, repair,   rehabilitation, or renovation of eligible school district   facilities.          (b)  The authority may use proceeds of obligations issued   under this section to pay costs of administering this section,   including costs of issuing obligations.          (c)  Vehicles, equipment, and appliances are considered   furnishings of instructional facilities for purposes of Section   5(d), Article VII, Texas Constitution.          (d)  In connection with a purchase or project financed with   the proceeds of obligations issued under this section, the   authority may:                (1)  enter into loan agreements, lease agreements,   lease purchase agreements, or other appropriate financing   agreements with eligible school districts;                (2)  purchase obligations issued by eligible school   districts; and                (3)  enter into credit agreements and exercise other   powers granted to issuers under Chapter 1371.          (e)  The authority may secure payment of authority   obligations issued under this section only with the pledge of money   in the school district equipment and improvement fund established   under Subsection (f).          (f)  The school district equipment and improvement fund is   established outside the treasury as a trust fund and is   administered by the comptroller on behalf of the authority as   directed or agreed to by the board. The fund consists of proceeds   of obligations issued by the authority under this section and   obligations and agreements issued or executed by school districts   and purchased or funded by the authority with proceeds of authority   obligations. Money in the fund may be spent without appropriation   and may be used only to fund activities under this section or to   secure repayment of authority obligations. Interest and income   from the assets of the fund shall be credited to and deposited in   the fund.          (g)  The board may establish funds and accounts determined to   be necessary or appropriate in connection with the activities of   the authority under this section.          (h)  The aggregate amount of obligations issued by the   authority under this section may not exceed $100 million.  An   issuance of obligations to refund outstanding obligations is not   included in determining the maximum aggregate amount under this   subsection if the principal amount of the refunding obligations   does not exceed the principal amount of the refunded obligations.   If the principal amount of the refunding obligations exceeds the   principal amount of the refunded obligations, the excess amount of   the refunding obligations is included in determining the maximum   aggregate amount.          (i)  The board shall adopt rules necessary to implement this   section, including rules prescribing eligibility requirements for   school districts seeking assistance under this section, rules   identifying eligible purposes for purposes of Subsection (a)(1),   and rules identifying eligible school district facilities for   purposes of Subsection (a)(4). Before adopting or modifying a rule   under this subsection, the board shall consult with the   commissioner of education.          (j)  Rules adopted under Subsection (i) may establish a   process under which a school district must obtain approval by the   commissioner of education in order to be eligible for assistance   under this section.          (k)  The authority may not issue an obligation under this   section on or after September 1, 2025.  The prohibition imposed by   this subsection does not apply to:                (1)  refunding bonds issued by the authority in   accordance with Chapter 1207; or                (2)  other obligations issued by the authority to   refinance obligations incurred under this section before September   1, 2025.          (l)  An obligation issued under this section is not a debt of   the state or any state agency, political corporation, or political   subdivision of the state and is not a pledge of the faith and credit   of any of those entities. The obligation may only be payable from   all or part of the amounts on deposit in the school district   equipment and improvement fund established under Subsection (f).          (m)  An obligation issued under this section must contain on   the obligation's face a statement to the effect that:                (1)  neither the state nor a state agency, political   corporation, or political subdivision of the state is obligated to   pay the principal of or interest on the obligation except as   provided by this section; and                (2)  neither the faith and credit nor the taxing power   of the state or any state agency, political corporation, or   political subdivision of the state is pledged to the payment of the   principal of or interest on the obligation.          (n)  The authority may not issue an obligation under this   section until the Bond Review Board has approved the issuance under   Chapter 1231.          (o)  In submitting an obligation for review under Chapter   1202 or 1371, as applicable, the authority shall demonstrate to the   attorney general the ability of the eligible school district to   repay the loan or other financing agreement executed with the   authority.          SECTION 7.  This Act takes effect September 1, 2021.