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Relating to the issuance of tax-supported bonds by certain school districts and increasing the tax rate limitation on the issuance of those bonds.
No significant fiscal implication to the State.
Local GovernmentSchool districts with an interest and sinking rate of $0.45 or greater per $100 of valuation could incur some administrative costs related to adopting a capital improvement plan. According to the Texas Education Agency, certain districts which would be allowed to exceed the current statutory limits related to school district bond authorizations could experience a savings on interest by using current interest bonds rather than capital appreciation bonds.
HB 506 would amend the Education Code to increase the limitation on the property tax rate imposed by a school district to support the issuance of bonds from 50 cents per $100 of valuation to an amount per $100 of valuation that is 20 percent greater than that rate.
The district must meet the following criteria; 1) has an interest and sinking fund tax rate of 45 cents or greater per $100 of valuation, 2) is a high enrollment growth district, as determined in accordance with commissioner of education rules adopted for purposes of the instructional materials allotment adjustment for a high enrollment growth district, 3) has a current Financial Allocation Study for Texas (FAST) rating from the comptroller of public accounts of at least three stars on a five-star scale, or the equivalent of that rating under any subsequent system developed by the comptroller; 4) has adopted a capital improvement plan, 5) demonstrates to the attorney general that the terms of the proposed issuance will result in total interest costs to the district that are at least five percent less than the total interest costs that would result if the district were to issue an alternate debt instrument that defers interest costs, such as a capital appreciation bond.
This bill would require the board of a district to adopt a capital improvement plan.