HBA-MPM, JEK C.S.H.B. 2888 77(R)    BILL ANALYSIS


Office of House Bill AnalysisC.S.H.B. 2888
By: Truitt
Public Education
4/18/2001
Committee Report (Substituted)



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% of the state's school districts during the past five
years. These fast-growth districts face strong financial pressures.  Most
fast-growth school districts finance the expansion of their facilities
through voted bond issues.  Current law provides that the interest and
sinking fund (I&S) tax rate for all bonds that a school district issues
after September 1, 1992, must not exceed fifty cents per $100 of valuation.
This "fifty cent test" based on current property values has limited the
ability of some fast-growth school districts to expand their facilities.
C.S.H.B. 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

C.S.H.B. 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.

COMPARISON OF ORIGINAL TO SUBSTITUTE

C.S.H.B. 2888 differs from the original by authorizing a school district to
demonstrate the ability to pay for proposed bonds as well as previously
issued bonds based on the district's most recent taxable value of property
or a projected future value of property.  The original removed the
provision that a district must demonstrate the ability to pay.