Adopted Amendment to 19 TAC Chapter 61, School Districts, Subchapter CC, Commissioner's Rules Concerning School Facilities, §61.1035, Assistance with Payment of Existing Debt
I. Statutory Citations (PDF)
II. Text of Adopted Amendment to 19 TAC Chapter 61, School Districts, Subchapter CC, Commissioner's Rules Concerning School Facilities, §61.1035, Assistance with Payment of Existing Debt (PDF)
The rule action presented in this item will be filed as adopted with the Texas Register under the commissioner's rulemaking authority. This item adopts an amendment to 19 TAC Chapter 61, School Districts, Subchapter CC, Commissioner's Rules Concerning School Facilities, §61.1035, Assistance with Payment of Existing Debt. The adopted amendment modifies eligibility for the Existing Debt Allotment (EDA) based on changes to statutory language, in accordance with Senate Bill 962, 80th Texas Legislature, 2007, and House Bill 1922, 80th Texas Legislature, 2007. The adopted amendment also incorporates other revisions, such as requiring the reporting of bond issues and related debt service payments and the disclosing of transactions that affect EDA eligible bonds, explaining the effect of interest rate management agreements, establishing requirements for refinanced bonds, and modifying the time limit for amending data used for calculations. No changes were made to the rule since published as proposed.
Texas Education Code (TEC), §46.031 and §46.061.
May 4, 2008.
BACKGROUND INFORMATION AND SIGNIFICANT ISSUES:
Through 19 TAC §61.1035, adopted to be effective December 12, 1999, the commissioner exercised rulemaking authority relating to assistance with payment of existing debt. The current provisions include the establishment of eligibility; definition of qualifying debt service; and explanations of limits on assistance, data and payment cycles, deposits and uses of funds, and refinancing of eligible debt.
House Bill 1922, 80th Texas Legislature, 2007, amended TEC, §46.033 and §46.034, relating to assistance with payment of existing debt, by updating the reference to eligibility date of bonds from 2004-2005 to 2006-2007. Senate Bill 962, 80th Texas Legislature, 2007, amended TEC, §46.034, to restrict certain limitations on assistance if a district is affected by a military base realignment. The adopted amendment to 19 TAC §61.1035 includes revisions that incorporate these statutory changes as well as other updates and revisions, as follows.
Subsection (a) is revised in paragraph (1) to specify that payment on bonds must have been made on or before August 31, 2007, to meet eligibility criteria. Paragraph (1) is also revised to add language requiring that final official statements or bond orders be reported to the state information depository in order for bond issues and their related debt service payments to be eligible to receive EDA state assistance. Technical corrections to terms are also made in subsection (a).
Subsection (b) is revised by adding new paragraphs (3)-(5). New paragraph (3) requires a district to disclose any changes in the financing of EDA-supported debt. New paragraph (4) establishes a state aid penalty for failure to disclose such changes and explains how EDA eligibility is regained after it has been lost as a result of failing to report changes. New paragraph (5) requires a district to disclose interest rate management agreement transactions and their associated credit risk ratings in the final official statement related to the bond transaction. It also establishes a state aid penalty for failure to disclose the interest rate management agreement. Additional technical corrections to terms and numbering are also made in subsection (b).
Subsection (c) is revised to modify the calculation of the existing debt tax rate (EDTR) for a district affected by a military base realignment.
Subsection (d) is revised by adding new paragraph (2) to explain that requests for payments or adjustments that are submitted to TEA after December 15 will be processed with the payments due for the following fiscal year. The subsequent paragraphs are renumbered accordingly. Renumbered paragraph (3)(B) changes the date by which districts must remit amounts they were overpaid to be no later than 30 days after the date they were notified of the overpayment. Renumbered paragraph (3)(C) requires that adjustments to state assistance for any reason be requested within a three-year time limit.
Subsection (f) is revised by modifying paragraph (1) to clarify the definition of refinanced debt. New paragraph (2) is added to describe penalties for failure to report required information on refinancings. Subsequent paragraphs are renumbered accordingly.
New subsection (g) is added to require that a district notify the commissioner of EDA-related financing activities by submitting an EDA correction form packet. New subsection (g) also defines the materials that make up a complete EDA correction form packet.
No changes were made to the rule since published as proposed.
The TEA has determined that there are no fiscal implications to persons or entities required to comply with the proposed rule action, including local school districts and open-enrollment charter schools. In addition, there is no economic impact for small businesses and microbusinesses; therefore, no regulatory flexibility analysis, specified in Texas Government Code, §2006.002, is required.
PUBLIC AND STUDENT BENEFIT:
The adopted amendment expands the eligibility of bonds for state assistance through the EDA, resulting in lower local tax rates needed to retire school district debt. The requirements to disclose interest rate management agreements and other financing activities provide greater transparency in school district transactions. The modification of the calculation of the EDTR for districts affected by military base realignments helps these districts absorb costs associated with the realignments.
PROCEDURAL AND REPORTING IMPLICATIONS:
Districts will be required to disclose interest rate management agreement transactions in their final official statements, though this appears to be a common practice and will not likely result in a change in the way of doing business for most districts. The adopted amendment includes the addition of new language which requires districts that are eligible for a modified calculation of their EDTR as a result of a military base realignment to provide documentation from the U.S. Department of Defense describing the impact of the base realignment on the local school district.
LOCALLY MAINTAINED PAPERWORK REQUIREMENTS:
The locally maintained paperwork requirements resulting from the adopted amendment to 19 TAC §61.1035 correspond with and support the stated procedural and reporting implications.
The public comment period on the proposal began February 8, 2008, and ended March 9, 2008. No public comments were received.
OTHER COMMENTS AND RELATED ISSUES:
Staff Members Responsible:
Adam Jones, Deputy Commissioner, Finance and Administration
Shirley Beaulieu, Associate Commissioner, Finance / CFO
Lisa Dawn-Fisher, Deputy Associate Commissioner, School Finance
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