By: Hughes	S.B. No. 740

	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 certain 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.  Subchapter E, Chapter 45, Education Code, is
	amended by adding Sections 45.114 and 45.115 to read as follows:
	Sec. 45.114.  ASSISTANCE FROM TEXAS PUBLIC FINANCE
	AUTHORITY. (a) In this section, "eligible school district" means a
	school district that has not more than 1,600 students in average
	daily attendance.
	(b)  An eligible school district may:
	(1)  borrow money from the Texas Public Finance
	Authority made available in accordance with Section 1232.1031,
	Government Code;
	(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;
	(3)  make payments on an obligation or agreement issued
	or executed under Subsection (a) using any available funds,
	including maintenance and operations tax revenue; and
	(4)  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;
	(B)  imposing an ad valorem tax otherwise
	authorized by law; or
	(C)  obtaining credit enhancement under
	Subchapter I.
	Sec. 45.115.  PAYMENT PROTECTIONS FOR TEXAS PUBLIC FINANCE
	AUTHORITY. (a) In this section:
	(1)  "Obligation" means an obligation issued by the
	Texas Public Finance Authority under Section 1232.1031, Government
	Code, for the benefit of an eligible school district.
	(2)  "Eligible school district" means a school district
	that has not more than 1,600 students in average daily attendance.
	(b)  Immediately following a determination that an eligible
	school district will be or is unable to pay maturing or matured
	principal or interest on an obligation, but not later than the fifth
	day before maturity date, the district shall notify the
	commissioner.
	(c)  Immediately following receipt of notice from an
	eligible school district under Subsection (b), the commissioner
	shall instruct the comptroller to transfer to the Texas Public
	Finance Authority from the next payment of state money payable to
	the district from appropriations to the Foundation School Program
	the amount necessary to pay the maturing or matured principal or
	interest.
	(d)  Immediately following receipt of the funds for payment
	of the principal or interest, the Texas Public Finance Authority
	shall forward the canceled obligation to the comptroller. The
	comptroller shall hold the canceled obligation on behalf of the
	Texas Public Finance Authority.
	(e)  Following full reimbursement to the Texas Public
	Finance Authority with interest, the comptroller shall cancel the
	obligation and forward it to the eligible school district.
	(f)  If an eligible school district fails to pay principal or
	interest on an obligation at maturity, other obligations not yet
	mature are not accelerated and are not due by virtue of the
	district's default.
	(g)  If a total of two or more payments are made using state
	money otherwise payable to an eligible school district from
	appropriations to the Foundation School Program and the
	commissioner determines that the district is acting in bad faith,
	the commissioner may request the attorney general to institute
	appropriate legal action to compel the eligible school district and
	the district's officers, agents, and employees to comply with the
	duties required by law in regard to the appropriate obligations.
	Jurisdiction of proceedings under this subsection is in district
	court in Travis County.
	(h)  The Texas Public Finance Authority may adopt rules
	necessary for the administration of obligations issued on behalf
	eligible of school districts.
	SECTION 2.  Section 45.252, Education Code, is amended by
	adding Subsection (a-1) to read as follows:
	(a-1)  A school district that has not more than 1,600
	students in average daily attendance may apply for credit
	enhancement under this subchapter of obligations issued under
	Section 45.114.
	SECTION 3.  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) In this section, "eligible school district" means a
	school district that has not more than 1,600 students in average
	daily attendance.
	(b) 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 maintenance, repair,
	rehabilitation, or renovation of eligible school district
	facilities.
	(c)  The authority may use proceeds of obligations issued
	under this section to pay costs of administering this section,
	including costs of issuing obligations.
	(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 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 eligible 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 outstanding at one time may not exceed
	$100 million.
	(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 (h) may establish a
	process under which an eligible 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, 2023. 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, 2023.
	SECTION 4.  This Act takes effect immediately if it receives
	a vote of two-thirds of all the members elected to each house, as
	provided by Section 39, Article III, Texas Constitution. If this
	Act does not receive the vote necessary for immediate effect, this
	Act takes effect on the 91st day after the last day of the
	legislative session.