HBA-NMO, LCA H.B. 2685 76(R)BILL ANALYSIS Office of House Bill AnalysisH.B. 2685 By: Coleman Public Education 10/29/1999 Enrolled BACKGROUND AND PURPOSE State law authorizes a municipality or a county to issue notes with a maximum maturity of seven years. The law authorizes the use of these notes to finance, among other things, equipment, machinery, professional services, and operating expenses. In addition, the law authorizes a municipality or a county to issue short-term obligations such as commercial paper as another method of finance. However, prior to the 76th Legislature, state law did not authorize an independent school district to issue either form of obligation. H.B. 2685 allows a school district with an average daily attendance of at least 190,000 to issue both anticipation notes and short-term obligations, with certain provisions regarding the use of funds generated and restrictions on the amounts of notes issued. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 1(1), Chapter 656, Acts of the 68th Legislature, Regular Session, 1983 (Article 717q, V.T.C.S.), to include an independent school district having an average daily attendance, as defined under Section 42.005 (Average Daily Attendance), Education Code, of 190,000 or more in the definition of "issuer." Makes changes to conform to Legislative Council format. SECTION 2. Amends Article 717q, V.T.C.S., by adding Subsection (d), as follows: (d) Prohibits an issuer that is an independent school district from issuing obligations under this article unless such obligations are authorized in accordance with the provisions of Section 45.003 (Bond and Tax Elections), Education Code. SECTION 3. Amends Section 1, Article 717w, V.T.C.S., by amending Subdivisions (6) and (7) and adding Subdivision (8), as follows: (6) Defines "eligible school district" as an independent school district having an average daily attendance of 190,000 or more, as defined under Section 42.005, Education Code. (7) Makes a conforming change. (8) Includes "eligible school district" with "municipality" and "county" in the definition of "issuer." SECTION 4. Amends Section 3, Article 717w, V.T.C.S., as follows: (a) Created from existing text. (b) Authorizes the governing body of an eligible school district to authorize anticipation notes for any or all of the purposes described in Subsection (a)(3), (4), or (5) of this section; or paying a contractual obligation incurred or to be incurred for the purchase of materials, supplies, equipment, and machinery for an issuer's authorized needs and purposes. SECTION 5. Amends Section 4(a), Article 717w, V.T.C.S., to include an eligible school district among the entities to which this section applies regarding the issuance of obligations under Article 717q (Short Term Obligation for Public Utility), V.T.C.S., and to make a conforming change. SECTION 6. Amends Section 5, Article 717w, V.T.C.S., as follows: Sec. 5. AUTHORIZATION OF ANTICIPATION NOTES BY ORDINANCE OR ORDER. Includes an order adopted by an eligible school district among the means by which anticipation notes may be authorized. SECTION 7. Amends Sections 6(e)-(h), Article 717w, Revised Statutes, as follows: (e) Makes conforming changes. (f) Makes conforming changes. (g) Prohibits an anticipation note issued by a school district under Section 3(a)(4) of this article from exceeding 75 percent of the income of the district for the fiscal year preceding the fiscal year in which the attorney general approves the notes. Makes conforming changes. (h) Makes conforming changes. SECTION 8. Effective date: September 1, 1999. SECTION 9. Emergency clause.