82R8849 KSD-F
	By: Patrick	S.B. No. 1822

	A BILL TO BE ENTITLED
	AN ACT
	relating to the administration of certain supplemental student loan
	programs and the issuance of private activity bonds by qualified
	nonprofit corporations.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  The legislature, giving due consideration to the
	historical and continuing interest of the people of Texas in
	encouraging deserving and qualified persons to realize their
	aspirations for education beyond high school, finds and declares
	that postsecondary education for qualified Texans who desire to
	pursue such education is important to the welfare and security of
	this state and the nation and, consequently, is an important public
	purpose. The legislature finds and declares that the state can
	achieve its full economic and social potential only if every
	individual Texan has the opportunity to contribute to the full
	extent of the individual's capabilities and only when financial
	barriers to the individual's economic, social, and educational
	goals are removed. It is, therefore, the policy of the legislature
	and the purpose of this Act to assist and permit qualified nonprofit
	corporations to carry out one or more supplemental programs to
	assist qualified students by making financial and other assistance
	available to borrowers or institutions to finance the cost of
	attendance at an accredited postsecondary educational institution.
	SECTION 2.  Chapter 53B, Education Code, is amended by
	adding Subchapter D to read as follows:
	SUBCHAPTER D. ADMINISTRATION OF SUPPLEMENTAL LOAN PROGRAMS AND
	ISSUANCE OF PRIVATE ACTIVITY BONDS BY QUALIFIED
	NONPROFIT CORPORATIONS
	Sec. 53B.61.  DEFINITIONS. In this subchapter:
	(1)  "Closing" means the issuance and delivery of a
	supplemental program bond by a qualified nonprofit corporation in
	exchange for the required payment for the supplemental program
	bond.
	(2)  "Internal Revenue Code" means the Internal Revenue
	Code of 1986 and its subsequent amendments.
	(3)  "Nationally recognized statistical rating
	organization" has the meaning assigned by Section 3(a)(62),
	Securities Exchange Act of 1934 (15 U.S.C. Section 78c(a)(62)).
	(4)  "Private activity bond" has the meaning assigned
	by Section 141(a), Internal Revenue Code.
	(5)  "Qualified student loan bond" has the meaning
	assigned by Section 144(b), Internal Revenue Code.
	(6)  "Supplemental program" means a program
	established, implemented, administered, and financed by a
	qualified nonprofit corporation under Section 53B.63 to provide
	supplemental program education loans.
	(7)  "Supplemental program bonds" includes bonds,
	notes, refunding bonds, commercial paper, pass-through
	instruments, or any other evidences of obligations of a qualified
	nonprofit corporation secured by a capital reserve fund established
	under Section 53B.65  and issued under this subchapter for the
	purpose of originating, acquiring, or financing supplemental
	program education loans.
	(8)  "Supplemental program education loan" means an
	alternative education loan made by a qualified nonprofit
	corporation under a supplemental program or by or on behalf of an
	accredited institution to a student or to parents of a student, or
	both, in amounts not to exceed the maximum amounts specified by a
	qualified nonprofit corporation under its supplemental program to
	finance part or all of the student's cost of attendance.
	Sec. 53B.62.  DETERMINATION BY COMPTROLLER OF QUALIFIED
	NONPROFIT CORPORATION AUTHORITY TO ISSUE PRIVATE ACTIVITY BONDS.
	The comptroller shall determine whether the definition of a
	qualified scholarship funding corporation under Section 150(d),
	Internal Revenue Code, allows a qualified nonprofit corporation to
	issue private activity bonds consisting of qualified student loan
	bonds in accordance with Section 144(b)(1)(B), Internal Revenue
	Code. On the making by the comptroller of a determination that the
	issuance is permissible:
	(1)  the comptroller shall provide notice of its
	determination to the Legislative Budget Board; and
	(2)  each qualified nonprofit corporation may apply for
	a student loan bond allocation in compliance with Chapter 1372,
	Government Code, with respect to its supplemental program bonds
	under this subchapter.
	Sec. 53B.63.  SUPPLEMENTAL PROGRAM. (a) A qualified
	nonprofit corporation may administer one or more supplemental
	programs approved by the comptroller under Section 53B.64 under
	which the qualified nonprofit corporation makes financial and other
	assistance available to borrowers or accredited institutions to
	finance the cost of attendance, issues supplemental program bonds,
	lends the proceeds of supplemental program bonds, and exercises any
	other powers authorized by this subchapter.
	(b)  Each qualified nonprofit corporation administering a
	supplemental program approved by the comptroller shall establish
	rules pertaining to participation in its supplemental programs,
	including rules relating to issuing supplemental program bonds,
	borrowing money, servicing and collection of supplemental program
	education loans, and other policies governing the operation of its
	supplemental programs.
	(c)  A qualified nonprofit corporation that has issued
	supplemental program bonds to support a supplemental program may
	continue to exercise the powers granted by the Texas Nonprofit
	Corporation Law, including the power to issue bonds or otherwise
	incur debt that does constitute a supplemental program bond and is
	not secured by a capital reserve fund created and established under
	Section 53B.65 for the purpose of financing or purchasing
	alternative education loans or guaranteed student loans.
	Sec. 53B.64.  COMPTROLLER APPROVAL OF SUPPLEMENTAL
	PROGRAMS. (a) Pursuant to Section 144(b)(1)(B), Internal Revenue
	Code, the comptroller on behalf of the state may approve
	supplemental programs administered by a qualified nonprofit
	corporation and shall establish procedures for that approval. The
	procedures established by the comptroller shall require that:
	(1)  the comptroller permit qualified nonprofit
	corporations to submit the terms of any proposed supplemental
	programs to the comptroller for approval on or after January 1 and
	before June 1 of each calendar year;
	(2)  the comptroller, after providing notice of the
	time, place, and purpose of the public hearing by publishing notice
	in a newspaper of general circulation earlier than the 10th day
	before the date of the hearing, conduct a public hearing before July
	2 of each calendar year to consider the approval of proposed
	supplemental programs;
	(3)  a proposed supplemental program submitted by a
	qualified nonprofit corporation be accompanied by a nonrefundable
	application fee in the amount of $500 that the comptroller shall
	retain to offset the costs of holding the related public hearing;
	(4)  the approval of a supplemental program be
	memorialized in a written resolution adopted by the comptroller;
	(5)  any supplemental program bonds issued to support
	an approved supplemental program receive, on or before the closing
	date, an initial unenhanced credit rating of not less than an "A"
	category or the equivalent of that rating as rated by a nationally
	recognized statistical rating organization; and
	(6)  the comptroller not approve any supplemental
	program that discriminates on the basis of the location of the
	accredited institutions in which the students enroll.
	(b)  The comptroller may charge a qualified nonprofit
	corporation an annual capital reserve fund maintenance fee in an
	amount not to exceed 0.50 percent of the capital reserve
	requirement relating to a capital reserve fund created and
	established under Section 53B.65 that secures supplemental program
	bonds issued under a supplemental program. Any required capital
	reserve fund maintenance fee must be established in the written
	resolution approving the supplemental program. The payment of any
	required capital reserve fund maintenance fee by the related
	qualified nonprofit corporation shall commence on the closing date
	of the related supplemental program bonds and is payable annually
	in arrears on each anniversary date after the closing date of the
	related supplemental program bonds.
	(c)  Following the initial approval of a supplemental
	program by the comptroller, the comptroller shall establish:
	(1)  a process for the approval of any material changes
	in terms with respect to an approved supplemental program; and
	(2)  procedures allowing a qualified nonprofit
	corporation to petition for a special hearing for the approval of
	material changes in the terms with respect to an approved
	supplemental program.
	Sec. 53B.65. CAPITAL RESERVE FUNDS; OBLIGATION OF THE STATE.
	(a) As part of a supplemental program administered under Section
	53B.63, a qualified nonprofit corporation may create and establish
	one or more capital reserve funds and may pay into the capital
	reserve fund any money appropriated and made available by the state
	for the purposes of that fund, any proceeds of the sale by the
	qualified nonprofit corporation of supplemental program bonds to
	the extent determined by the qualified nonprofit corporation, and
	any other money available to the qualified nonprofit corporation.
	A qualified nonprofit corporation may not create or establish any
	capital reserve fund under this section to secure supplemental
	program bonds issued as qualified student loan bonds until the
	determination described by Section 53B.62 has been made by the
	comptroller.
	(b)  Except as otherwise provided by this section, money held
	in any capital reserve fund must be used solely with respect to
	supplemental program bonds, the repayment of which is secured by
	any such fund and solely for the payment of principal of
	supplemental program bonds, the purchase or redemption of those
	supplemental program bonds, including any fees or premiums, and the
	payment of interest on those supplemental program bonds. In
	addition, if a qualified nonprofit corporation obtains a letter of
	credit, insurance contract, surety bond, or similar financial
	undertaking to establish and fund a capital reserve fund under this
	section, money in that capital reserve fund may be used to pay all
	reimbursement obligations of the qualified nonprofit corporation
	established in connection with that letter of credit, insurance
	contract, surety bond, or other financial undertaking, including
	all fees, expenses, indemnities, and commissions. Money in excess
	of the reserve requirement established by Subsection (c) may be
	transferred to other funds and accounts of the qualified nonprofit
	corporation.
	(c)  A qualified nonprofit corporation may establish a
	capital reserve requirement for a capital reserve fund by providing
	that money in the fund may not be withdrawn at any time in an amount
	that would reduce the amount of the fund to less than the maximum
	amount of principal and interest becoming due by reason of maturity
	or a required sinking fund payment in the next succeeding period not
	exceeding 24 months within which any such maturity occurs or any
	such payment is required, except for the purpose of paying the
	amount due on any interest payment date or on maturity or making a
	sinking fund payment with respect to supplemental program bonds
	secured by the capital reserve fund.
	(d)  A qualified nonprofit corporation may provide that it
	will not issue supplemental program bonds if the capital reserve
	requirement established under Subsection (c) with respect to
	supplemental program bonds outstanding and to be issued that are
	secured by the capital reserve fund will exceed the amount of the
	capital reserve fund at the time of issuance, unless the qualified
	nonprofit corporation, at the time of issuance of the supplemental
	program bonds, deposits in the capital reserve fund from proceeds
	of the supplemental program bonds to be issued, or from other
	sources, an amount that, together with the amount in the capital
	reserve fund, is not less than the capital reserve requirement.
	(e)  On or before September 1 of each year, a qualified
	nonprofit corporation shall certify to the comptroller and the
	Legislative Budget Board the amount, if any, necessary to restore
	the amount in any capital reserve fund to which this subsection
	applies, as stated in the trust indenture or other document, to the
	capital reserve requirement. The comptroller shall cause to be
	paid directly from legislative appropriations or from other funds
	designated by the Legislative Budget Board under its budget
	execution authority to the qualified nonprofit corporation during
	the current state fiscal year the amount necessary to restore the
	amount in the capital reserve fund to the capital reserve
	requirement.
	(f)  Neither this state nor any political subdivision of this
	state is obligated to pay the principal of or the interest on
	supplemental program bonds, except from amounts on deposit in the
	applicable capital reserve funds, and neither the faith and credit
	nor the taxing power of this state or of any political subdivision
	of this state is pledged to the payment of the principal of, premium
	if any, or interest on supplemental program bonds. The issuance of
	supplemental program bonds does not directly, indirectly, or
	contingently obligate this state or any political subdivision of
	this state to levy or pledge any form of taxation whatsoever or to
	make any appropriation for the payment of supplemental program
	bonds.
	(g)  The aggregate sum of capital reserve requirements
	relating to capital reserve funds securing supplemental program
	bonds may not at any time exceed $98 million.
	SECTION 3.  This Act takes effect September 1, 2011.