HBA-MPM H.B. 2888 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2888 By: Truitt Public Education 67/3/2001 Enrolled BACKGROUND AND PURPOSE Although there are approximately 1,000 school districts in the state of Texas, most of the growth in student enrollment has occurred in approximately 10 percent of the state's school districts during the past five years. These fast-growth districts have been facing strong financial pressures. Most fast-growth school districts finance the expansion of their facilities through voted bond issues. Prior to the 77th Legislature, state law provided that the interest and sinking fund (I&S) tax rate for all bonds that a school district issued after September 1, 1992 could not exceed 50 cents per $100 of valuation. This "50 cent test" based on current property values had limited the ability of some fast-growth school districts to expand their facilities. House Bill 2888 authorizes a district to demonstrate the ability to pay bonds using the most recent property values or projected future property values. 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. ANALYSIS House Bill 2888 amends the Education Code to authorize a school district to demonstrate the ability to pay for proposed and previously issued bonds from a $0.50 per $100 of valuation tax rate by using the most recent taxable value of property in the district combined with state assistance to which the district is entitled under the Foundation School Program (FSP), the Instructional Facilities Allotment (IFA), and the Existing Debt Allotment (EDA) that may be lawfully used for payment of bonds. The bill also authorizes the district to demonstrate the ability to pay for proposed and existing bonds by using a projected future taxable value of property in the district anticipated for the earlier of the tax year five years after the current tax year or the tax year in which the final payment is due for the bonds submitted to the attorney general, combined with state assistance under the FSP, IFA, and EDA. The bill specifies that the district must submit to the attorney general a certification of the district's projected taxable value of property that is prepared by a registered professional appraiser who has demonstrated professional experience in making such projections. The bill establishes a procedure by which the appraiser must demonstrate the professional experience required by this bill. The bill specifies that until the bonds are approved or disapproved, the district must maintain the documentation and on request provide it to the attorney general or comptroller of public accounts. The bill specifies that the certification must be signed by the district's superintendent. The attorney general must base the determination of whether the district is able to pay for the proposed and previously issued bonds on a taxable value of property that is equal to 90 percent of the district's projected taxable value of property. If a district demonstrates to the attorney general the district's ability to pay for the proposed and previously issued bonds by using a projected future taxable value of property and subsequently imposes a tax to pay the principal of and interest on the bonds at a rate that exceeds $0.50 per $100 valuation, the attorney general is prohibited from approving a subsequent issuance of bonds unless the district has a projected ability to pay the principal of and interest on the proposed bonds and previously issued bonds from a tax at a rate not to exceed $0.45 per $100 of valuation. If a district demonstrates the ability to pay for the proposed and previously issued bonds contingent on receiving state assistance, the district if prohibited from adopting a tax rate for a year for purposes of paying the principal of and interest on the bonds unless the district credits to the account of the interest and sinking fund of the bonds the amount of state assistance equal to the amount needed to demonstrate compliance and received or to be received in that year. EFFECTIVE DATE September 1, 2001.