SB 740

86(R) - 2019
Senate Education
Senate Education

Vote Recommendation

  • Neutral
  • Neutral
  • Neutral
  • Negative
  • Neutral


Bryan Hughes

Bill Caption

Relating to the creation of a state financing program administered by the Texas Public Finance Authority to assist school districts with certain expenses; granting authority to issue bonds or other obligations.

Fiscal Notes

No significant fiscal implication to the State is anticipated.

Bill Analysis

SB 740 would allow certain school districts to: (1) borrow money from the Texas Public Finance Authority (TPFA); (2) as necessary in connection with obtaining financial assistance from TPFA, issue bonds bonds and notes with a term not to exceed 15 years and enter into financing agreements with TPFA; (3) make payments on an obligation issued using any available funds, including maintenance and operation tax revenue; and (4) secure the payment of an obligation through certain actions.

In the case that the school district defaults on the loan, the comptroller would transfer to TPFA from the next payment of state money payable to the district from appropriation to the Foundation School Program the amount necessary to pay the maturing or matured principal or interest.

This bill would also establish the school district equipment and improvement fund outside the treasury as a trust fund to be administered by the comptroller on behalf of TPFA. The fund would consist of proceeds of obligations issued by the authority under this section, and obligations issued by school districts and purchased or funded by TPFA with proceeds of authority obligations. The aggregate amount of obligations issued by TPFA outstanding at one time may not exceed $100 million. The board would be required to reserve 40 percent of the amount available for issuing obligations for school districts with an average daily attendance of 1,600 students or fewer. TPFA would be prohibited from issuing an obligation under this bill's provisions after September 1, 2023.

Vote Recommendation Notes

Texas Action recommends opposing SB 740 because it violates our principle of limited government. As of fiscal year 2018, the Texas Bond Review Board found cities, counties, schools districts, and special districts owe a total of $354.6 billion. This local government debt has contributed to higher property taxes, bigger government, and slower economic growth. Thus, we have deep reservation about allowing a new mechanism for the creation of local debt when there is already a substantial local debt problem in this state. 

Further, the bill would create a new trust fund outside of the treasury. Dedicating funds outside of the treasury and without appropriation is inconsistent with limited government principles.