HBA-JLV H.B. 2190 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2190 By: Junell Financial Institutions 3/20/2001 Introduced BACKGROUND AND PURPOSE The Texas Bond Review Board (board) was created in 1987 to provide a vehicle to oversee and approve state debt. The board reviews the financial feasibility of proposed bond issues, planned uses for proceeds, issuance costs, and the legal authority of the issuing agency. The board often reviews matters involving legislative policy as well, and provides information on state debt to the Legislature, the financial community, other state agencies, and the general public. The board's oversight responsibilities, however, do not begin until the final phases of the debt issuance process. Decisions involving the timing and structure of state bonds and notes are made by the state agencies issuing the debt, not the board. Texas issues billions of dollars worth of debt each year in the form of bonds and commercial paper notes but has no formal statewide debt policy. Such a policy could help ensure that the state's strategic goals are met, that decisions to issue debt do not limit the state's ability to issue other debts in the future, and that all debts are managed prudently. House Bill 2190 establishes debt issuance policies and guidelines by the Bond Review Board. 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 2190 amends the Government Code to establish debt issuance policies and guidelines by the Bond Review Board (board). The bill requires the board to adopt debt issuance policies to guide issuers of state securities and to ensure that state debt is prudently managed. The bill provides that policies must be sufficiently flexible to allow the state and issuers of state securities to respond to changing economic conditions. The bill requires the board to consult with issuers of state securities in developing policies. The bill requires the board to adopt policies that: _provide a mechanism for evaluating the amount of state debt that can be managed prudently; _address opportunities to consolidate debt authority; _include guidelines for the appropriate levels of reserves, various types of state security, and the terms and structure of a state security; _help the board and issuers of state securities to evaluate potential risks and effects of the issuance on finances and overall debt position of the issuer and of the state; and _recommend other advisable practices related to the issuance of a state security. EFFECTIVE DATE On passage, or if the Act does not receive the necessary vote, the Act takes effect September 1, 2001.