Bill Caption

Relating to the guarantee of charter district bonds by the permanent school fund.

Fiscal Notes

Estimated Two-year Net Impact to General Revenue Related Funds for SB 1480, Committee Report 1st House, Substituted: an impact of $0 through the biennium ending August 31, 2019.

However, there would be a revenue gain of $13,060,190 to the Charter District Bond Guarantee Reserve Fund in the 2018-19 biennium. 

Bill Analysis

Requirements under current law mandate the subtraction of any outstanding guaranteed bonds from the total capacity before calculating the percentages available for school districts and charter districts. This bill would amend the Education Code related to the calculation of the capacity of the bond guarantee program.

SB 1480 would apply the available capacity for charter districts to the total capacity of the bond guarantee program based on the number of students in charter schools as a percentage of all public school students. The increase of charter bond guarantee capacity would be phased-in over five years, making available over each of the next four fiscal years 20 percent of the difference between the existing charter capacity as of January 1, 2017 and the new charter capacity on September 1, 2017.

In addition, the bill establishes certain safeguards to reduce the risks of default on charter district bonds. The bill grants the board the authority to increase charter bond capacity by less than the total capacity allowed by the bill, or to decline to increase charter capacity if an increase of capacity would have a negative impact on bond ratings

Vote Recommendation Notes

This bill satisfies our individual liberty principle because it would help charter schools enroll more students; enhancing educational opportunity, and satisfies our limited government principle by enhancing fiscal accountability at charter schools. SB 1408 would expand the availability of charter district bonds that could be guaranteed by the Permanent School Fund and therefore, enable more charter districts bonds to be issued to fund their facilities and enroll more people. SB 1480 also provides the State Board of Education with oversight powers to deny or limit the amount that a charter campus can receive if the results would be a negative bond rating, limiting debt that can be incurred. While we are concerned about local debt, we are cognizant of the fact that charter schools do not have taxing authority and do not receive the same level of funding from the Foundation School Fund as traditional school districts. For these reasons, we support this bill.