3/3/2010

The March 2010 State Board of Education meeting agenda for the Committee on School Finance/Permanent School Fund includes an item for first reading and filing authorization for proposed amendment to 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, §33.65, Guarantee Program for School District Bonds.  The proposed changes are excerpted below.

"The section title would be changed from Guarantee Program for School District Bonds to Bond Guarantee Programto reflect the commonly used name of the program.

In subsection (b), providing definitions, the definition for annual debt servicewould be modified to explicitly exclude debt that was no longer outstanding. The definition for average daily attendancewould be modified to reference the definition used in the TEC. The definition for enrollment growthwould be modified to reference the definition used in 19 TAC §129.1025. The definition for refunding issue would be modified to reference notes issued to provide interim financing. Definitions would be added for the terms Bond Guarantee Program, notes issued to provide interim financing, and total debt service. In addition, the list of definitions would be reorganized in alphabetical order.

Subsection (c), on data sources, would be modified so that the subsection lists actual data sources and not definitions of terms already defined in subsection (b).

In subsection (d), on application processing, the number of days between application deadline and prioritization of applications would be changed to 15. Also, throughout subsection (d), references to the modified approval process in subsection (e) would be added.

Subsection (d)(2) would be modified to explain that an applicant school district would be ineligible for consideration for the guarantee if its lowest credit rating from any credit rating agency was the same as or higher than that of the BGP.

Subsection (d)(3) would be modified to change certain requirements for refunding bonds.

Subsection (d)(4) would be modified to reference added provisions in subsection (e) and to reference the multiplier used to determine PSF capacity. At the time this item was prepared, staff was still analyzing the calculation of capacity upon which to base the cost value multiplier. A recommendation for the amount of the multiplier will be provided at the March meeting.

Subsection (d)(7) would be modified to change the number of business days within which a district would be notified of its application status from 10 to 15.

Subsections (d)(7) and (d)(9) would be modified to change the length of time before the expiration of approval for the guarantee from 120 days to 180 days.

In subsection (e), on application for the guarantee, the amount of the program application fee would be explicitly stated. Also, the provisions setting out the approval process would be altered to make having a final approval process contingent on the PSF capacity's dropping to 10 percent or less. At the time the item was prepared, staff was still analyzing factors upon which to base the program application fee. A recommendation for the fee will be provided at the March meeting.

Subsection (f), on limitations on access to the guarantee, would be modified to allow the commissioner to limit approval based on annual debt service or total debt service and to clarify provisions relating to enrollment growth and the application of the limitation.

Subsections (n) through (r) would be added to include statutory requirements related to notice of default, payments from the PSF, whether bonds are accelerated on default, reimbursement of the PSF, and repeated failure of a district to make bond payments."

For more information on proposed changes to the State Board of Education rule for the Bond Guarantee Program click on the link below.

http://www.tea.state.tx.us/index4.aspx?id=8097