HBA-MPM S.B. 1089 76(R)    BILL ANALYSIS


Office of House Bill AnalysisS.B. 1089
By: Duncan
Public Education
5/12/1999
Engrossed



BACKGROUND AND PURPOSE 

Currently, a school district may not enter into a contract to purchase
investments with the proceeds of taxes levied or to be levied by the
district to retire debt service on bonds it has issued. S.B. 1089 amends
Chapter 45, Education Code (School District Funds) to authorize a school
district, including a junior college district or community college
district, to enter into a contract, with a term of less than seven years,
to purchase investments with the proceeds of taxes levied or to be levied
by the district to pay debt service on bonds issued by the district.  This
bill also sets forth bidding and contract requirements for a purchase of
investments under this section. 

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 Subchapter E, Chapter 45, Education Code, by adding
Section 45.112, as follows: 

Sec. 45.112. CONTRACTS FOR INVESTMENT OF DEBT SERVICE FUNDS.  (a)
Authorizes a school district, including a junior or community college
district (district), to enter into a contract with a term not to exceed
seven years to purchase investments with the proceeds of taxes levied or to
be levied by the district for the purpose of paying debt service on bonds
the district issued.  

(b)  Authorizes a contract under this section to provide for the purchase
of investments at a stated yield or yields. 

(c)  Provides that before entering a contract under this section, a
district must solicit and receive bids from at least three separate
providers, and must accept the qualifying bid that provides the highest
yield investments over the term of the contract. 

(d) Authorizes a contract under this section to provide only for the
purchase of an obligation described by Section 2256.009(a)(1) (Authorized
Investments: Obligations of, or Guaranteed by Governmental Entities),
Government Code, which provides that obligations of the United States or
its agencies and instrumentalities are authorized investments. 

SECTION 2.  Emergency clause.
  Effective date: upon passage.