= OFFICE OF THE ATTORNEY GENERAL . STATE OF TEXAS 

JOHN CORNYN 

July 9,2002 

Mr. Bernie Francis Opinion No. JC-0523 

Chair, Texas State Technical College System 

3801 Campus Drive Re: Whether the Texas Public Finance Authority 

Waco, Texas 76705 is authorized to issue bonds on behalf of the Texas 

State Technical College System (RQ-0493-JC) 

Dear Mr. Francis: 

You ask whether section 1232.101 of the Government Code authorizes the Texas Public 

Finance Authority (the “TPFA”) to issue bonds on behalf of the Texas State Technical College 

System (the “College System”).’ We conclude in the negative. 

To provide a legal context for your question, we begin by reviewing the bond-issuing 

authority of the College System. The College System is a two-year institution of higher education 

offering technical-vocational courses. TEX. EDUC. CODE ANN. 8 135.01(a) (Vernon Supp. 2002). It 

is governed by a board of nine regents appointed by the governor with the advice and consent of the 

senate. See id. 89 135.21-.22 (Vernon 1991). The College System is a “public technical institute,” 

and, thus, an “institution of higher education” as defined by section 61.003(8) of the Education 

Code. See id. 9 61.003(7) (defining “public technical institute”), (8) (defining “institution of higher 

education”) (Vernon Supp. 2002). The College System is authorized to issue “general obligation” 

bonds payable from state general revenues appropriated and allocated to the College System under 

article VII, section 17 of the Texas Constitution. See TEX. CONST. art. VII, 0 17; see also TEX. EDUC. 

CODE ANN. 8 62.021 (Vernon Supp. 2002). Additionally, the College System is authorized to issue 

“special obligation” bonds, payable from fees, charges, and other revenues of the system pursuant 

to chapters 55 and 135 of the Education Code. See TEX. EDUC. CODE ANN. $9 55.13, 55.17392, 

135.56 (Vernon Supp. 2002). 

Also relevant to your query is the bond-issuing authority of the TPFA. The TPFA, “a public 

authority and a body politic and corporate,” is established and governed by the Texas Public Finance 

Authority Act, TEX. GOV’T CODE ANN. 55 1232.001-.206 (Vernon 2000 & Supp. 2002) (the “Act”). 

It is authorized to issue and sell bonds on its own behalf and on behalf of certain state entities to 

finance the cost of authorized projects. See id. $5 1232.101-.104, .1115; see also id. 8 1232.066(a) 

‘See Letter from Ray Rushing, General Counsel, Texas State Technical College, to Honorable John Comyn, 

Texas Attorney General (Jan. 11, 2002) (on file with Opinion Committee) [hereinafter Request Letter]. 
Mr. Bernie Francis - Page 2 (JC-0523) 

(board’s authority under Act limited to financing buildings, equipment, and stranded costs of 

municipal power agency). 

Your request specifically concerns the effect of recent amendments to section 1232.101 of 

the Act granting the TPFA the “exclusive” authority to issue bonds on behalf of, among other 

entities, certain named institutions of higher education. As amended, section 1232.101 provides: 

With respect to all bonds authorized to be issued by the Texas 

Military Facilities Commission, Texas National Research Laboratory 

Commission, Parks and Wildlife Department, Texas Low-Level 

Radioactive Waste Disposal Authority, Stephen F. Austin State 

University, Midwestern State University, and Texas Southern 

University, the authority has the exclusive authority to act on behalf 

of those entities in issuing bonds on their behalJ: In connection with 

those issuances and with the issuance of refunding bonds on behalf 

of those entities, the authority is subject to all rights, duties, and 

conditions surrounding issuance previously applicable to the issuing 

entity under the statute authorizing the issuance. A reference in an 

authorizing statute to the entity on whose behalf the bonds are being 

issued applies equally to the authority in its capacity as issuer on 

behalf of the entity. 

Id. 5 1232.101 (Vernon Supp. 2002) (emphasis added). 

Prior to its 2001 amendment, section 1232.10 1 provided that “[wlith respect to all bonds 

authorized to be issued by the Texas Military Facilities Commission, . . . and each institution of 

higher education authorized to issue bonds under Chapter 55, Education Code, the [TPFA] has the 

exclusive authority to act on behalf of those entities in issuing bonds on their behalf.” Act of May 

10, 1999, 76th Leg., R.S., ch. 227, 8 1, 1999 Tex. Gen. Laws 721, 762. However, the statute 

specifically excluded from this bond-issuing authority certain institutions of higher education, 

including the College System: 

w Subsection (a) [granting TPFA exclusive au 

on behalf of named entities] does not apply to: 

.thority to issue 

(1) The University of Texas System, The Texas A & M 

University System, or a component of those systems; 

(2) an institution of higher education authorized to issue 

bonds under Section 17, Article VII Texas Constitution; or 

(3) bonds authorized to be issued by a system, comp.onent, or 

institution described by Subdivision (1) or (2). 
Mr. Bernie Francis - Page 3 (JC-0523) 

(c) Notwithstanding any other provision of this section, with respect 

to all bonds authorized to be issued by Midwestern State University, 

Stephen F. Austin State University, or Texas Southern University, the 

authority has the exclusive authority to act on behalf of those 

institutions in issuing bonds on their behalf. . . . 

Id. (emphasis added). Because the College System is “an institution of higher education authorized 

to issue bonds under Section 17, Article VII, Texas Constitution,” former section 1232.101(a) did 

not authorize the TPFA to issue bonds on behalf of the College System. Moreover, no other 

provision in the Act authorized the TPFA to issue bonds for institutions of higher education 

generally or specifically for the College System. See id. 

The statute was amended in the 2001 legislative session merely to clarify the existing law 

that the “only institution of higher education the TPFA has the authority to issue bonds for are the 

three institutions specifically named.” Texas Public Finance Authority Act: Hearing on Tex. H.B. 

21.53 Before the Senate Comm. on Finance, 77th Leg., R.S. (May 10, 2001) (tape available from 

Senate Staff Services Office) (statements of Judith Porras, General Counsel to TPFA).2 

2-2 

2-3 

2-4 

2-5 

2-6 

2-7 

2-8 

2-9 

2-10 

2-18 

2-19 

2-20 

2-21 

2-22 

2-23 

2-24 

2-25 

2-26 

2-27 

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3-2 

3-3 

2House Bill 2 153 amended section 1232.10 1 as follows: 

Sec. 1232.101. ISSUANCE OF BONDS FOR CERTAIN STATE AGENCIES. 

[(a+] With respect to all bonds authorized to be issued by the 

Texas Military Facilities Commission, Texas National Research 

Laboratory Commission, Parks and Wildlife Department, Texas 

Low-Level Radioactive Waste Disposal Authority, Stephen F. Austin 

State Universitv, Midwestern State Universitv, and Texas Southern 

Universitu_ [a 

-1, the authority has 

behalf of those entities in 

issuing bonds on their behalf. . . . 

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Tex. H.B. 2153,77thLeg., R.S. (2001). 
Mr. Bernie Francis - Page 4 (JC-0523) 

We gather that you believe the 2001 amendment creates more ambiguity. You ask whether 

section 1232.101 “make[s] it impermissible for TPFA to issue bonds on behalf of [the College 

System] .” Request Letter, supra note 1, at 2. You suggest that “[tlhe deletion of ‘and each 

institution of higher education authorized to issue bonds under Chapter 55, Education Code’ . . . has 

the potential meaning that TPFA may no longer issue bonds for” the College System. Id. But, you 

assert, the statutory language following the named institutions of higher education, “the authority 

has the exclusive authority to act on behalf of those entities in issuing bonds,” could mean that 

“institutions of higher education authorized to issue bonds under Chapter 55 of the Texas Education 

Code are merely not limited to having TPFA as the exclusive body that may issue bonds on their 

behalf,” but may choose to have the TPFA issue their bonds. Id. We disagree. 

Neither you nor the TPFA provide any legal arguments or advocate a particular interpretation 

of the Act. See Osterberg v. Peca, 12 S.W.3d 3 1,5 1 (Tex. 2000) (courts will generally defer to the 

construction of a statute by administrative agency charged with its enforcement). We conclude, 

based on our review of the Act as a whole and other provisions authorizing issuance of bonds by 

institutions of higher education, that section 1232.101 of the Act does not authorize the TPFA to 

issue bonds on behalf of the College System. 

It is well-established that the authority to issue bonds or other negotiable securities must be 

expressly granted. See San Antonio Union Jr. Cull. Dist. v. Daniel, 206 S.W.2d 995, 999 (Tex. 

1947); Keel v. Pulte, 10 S.W.2d 694,697 (Tex. Comm’n App. 1928); Foster v. City of Waco, 255 

S.W. 1104, 1105 (Tex. 1923); Lasater v. Lopez, 217 SW. 373, 376 (Tex. 1919). Furthermore, 

“where [this] power is granted, and the method of its exercise prescribed, the prescribed method 

excludes all others, and must be followed.” Foster, 255 S.W. at 1105; see also Cobra Oil & Gas 

Corp. v. Sadler, 447 S.W.2d 887, 892 (Tex. 1968). Thus, the TPFA may not, pursuant to section 

1232.101 of the Act, issue bonds “authorized to be issued” by the College System unless expressly 

authorized to do so by another provision. 

The Act as amended does not expressly authorize the TPFA to issue bonds on behalf of the 

College System. Section 1232.101 is the only provision in the Act that expressly directs the TPFA 

to issue bonds “authorized to be issued by” the named institutions of higher education. See generally 

TEX. GOV’TCODEANN. 55 1232.001-.206 (Vernon 2000 & Supp. 2002). The College System is not 

included in that list. See id. 8 1232.101. While the “exclusive authority” language could be read to 

imply that the TPFA possesses non-exclusive authority to issue bonds on behalf of other institutions 

of higher education, nothing else in the Act supports such a reading. See Jones v. Fowler, 969 

S.W.2d 429,432 (Tex. 1998) (legislative intent to be determined from entire act not simply from 

isolated portions of act); Sayre v. Mullins, 68 1 S.W.2d 25,27 (Tex. 1984) (in determining meaning 

of statutory language, statute to be read as whole giving consideration to entire act, its nature and 

object, and consequences that would follow from particular construction). No other provision in the 

Act grants the TPFA power to issue bonds on behalf of other institutions of higher education. 

Nor do other provisions authorizing the College System to issue bonds authorize the TPFA 

to exercise the College System’s bond-issuing authority. Again, the College System is authorized 
Mr. Bernie Francis - Page 5 (JC-0523) 

to issue “general obligation” bonds under article VII, section 17 of the Texas Constitution, see TEX. 

CONST. art. VII, 8 17, and “special obligations” pursuant to chapters 55 and 135 of the Education 

Code, see TEX. EDUC. CODE ANN. $5 55.13,55.17392,135.56 (Vernon Supp. 2002). We consider 

each provision. 

Article VII, section 17 appropriates “out of the first money coming into the state treasury not 

otherwise appropriated by the constitution $100 million” and directs its allocation for the use of 

named institutions of higher education, including the College System. See TEX. CONST. art. VII, 5 

17(a)-(c); see also TEX. EDUC. CODE ANN. 5 62.021 (Vernon Supp. 2002) (specific allocations). 

Article VII, section 17 authorizes the governing board of the “institutions authorized to participate 

in the distribution of money under this section” to issue bonds “for the purposes of refunding bonds 

or notes issued under this section or prior law, acquiring land either with or without permanent 

improvements, constructing and equipping buildings or other permanent improvements, acquiring 

capital equipment, library books.” TEX. CONST. art. VII, 5 17(e) (emphasis added); see also TEX. 

EDUC. CODE ANN. 6 62.021(c) (Vernon Supp. 2002) (authorizing issuance of bonds for purposes 

authorized by article VII, 9 17). This constitutional provision is “self-enacting,” and prevails over 

any other conflicting constitutional provision. See TEX. CONST. art. VII, 5 17(Z). No other 

constitutional provision purports to transfer to the TPFA the bond-issuing authority granted to the 

governing boards of the eligible institutions of higher education. And no statute, including the Act, 

may do so. See Cookv. State, 902 S.W.2d 471,478-79 (Tex. Crim. App. 1995, no pet.) (and cases 

cited) (“It is fundamental to constitutional and statutory construction that the Legislature lacks the 

authority to enact a statute which conflicts with a provision of the Constitution.“). Accordingly, the 

TPFA may not issue the general obligation bonds that the College System’s board is specifically 

authorized to issue under article VII, section 17. 

The TPFA may not issue special revenue bonds that the College System is authorized to issue 

under chapter 55 of the Education Code. Section 55.17392 specifically authorizes the College 

System’s board of regents to issue bonds secured by system-wide revenues for the system’s 

component institutions. TEX. EDUC. CODE ANN. 4 55.17392 (Vernon Supp. 2002). Section 55.13(a) 

generally authorizes the governing boards of institutions of higher education to issue revenue bonds 

for the acquisition, improvement, or equipping of facilities. See id. 8 55.13(a). “Institutions of 

higher education,” for the purposes of chapter 55, has the meaning ascribed to it by section 61.003 

of the Education Code. See id. 5 55.01( 1); see also supra p. 1. Subsections (b) and (c) of section 

55.13 provide that the revenue bonds authorized under subsection (a) must be issued by the TPFA, 

but with significant exceptions: 

(b) With respect to all institutions the Texas Public Finance 

Authority shall exercise the authority of a board to issue revenue 

bonds on behalf of such institution or institutions, or any branch or 

branches thereof, in the manner provided by this subchapter, 

including the authority to issue refunding bonds under Section 5 5.19 

of this code. In connection with the issuance of bonds under this 

chapter, the Texas Public Finance Authority has all of the rights and 
Mr. Bernie Francis - Page 6 (JC-0523) 

duties granted or assigned to and is subject to the same conditions as 

a board under this chapter. This subsection does not apply to The 

University of Texas System, The Texas A & i’kf University System, or 

a component of those systems [or] to an institution authorized to 

issue bonds under Article VII, Section I7, of the Texas Constitution, 

or to bonds authorized to be issued by any of those systems, 

components, or institutions. 

(c) Notwithstanding any other provision of this section, with respect 

to all bonds authorized to be issued by Midwestern State University, 

Stephen F. Austin State University, or Texas Southern University, the 

Texas Public Finance Authority shall exercise the authority of a 

board to issue bonds on behalf of those institutions, in the manner 

provided by this subchapter, including the authority to issue 

refunding bonds under Section 55.19. In connection with the 

issuance of bonds under this chapter, the Texas Public Finance 

Authority has all the rights and duties granted or assigned to and is 

subject to the same conditions as a board under this chapter. 

TEX. EDUC. CODE ANN. 8 55.13 (Vernon Supp. 2002) (emphasis added). Under subsections (b) and 

(c), the TPFA’s authority to issue revenue bonds specifically excludes the authority to issue bonds 

for institutions of higher education that are authorized to issue bonds under article VII, section 17, 

such as the College System. See id. Compare id., with id. 5 5 1.927(h) (Master Equipment Lease 

Purchase Program operated by TPFA may be utilized by institution of higher education to fund 

contract for energy or water conservation measures). Significantly, the exclusion is not limited to 

the non-transferable “general obligation” bond authority of these institutions under that 

constitutional provision. See id. § 55.13; see also supra p. 5. We note that prior to its 2001 

amendment, section 1232.101 of the Act contained language virtually identical to that of subsections 

(b) and (c). See Tex. H. B. 2153, supra note 2. 

Finally, the TPFA may not exercise the College System’s bond issuing authority under 

chapter 135 of the Education Code. Section 135.56(d) provides that the College System’s “board, 

in addition to the authority already provided, may issue revenue bonds for the purposes authorized 

and in the manner prescribed and under the terms and conditions set forth in Chapter 55 of this 

code.” TEX. EDUC. CODE ANN. 8 135.56 (Vernon Supp. 2002) (emphasis added). Similarly, section 

135.56(e) authorizes the College System “board” to “issue additional revenue bonds for the purposes 

authorized and in the manner prescribed by 26 U.S.C. Section 142, relating to airport development, 

water and sewage treatment . . . .” Id. 5 135.56(e). Under these provisions, the authority to issue 

bonds is vested in the College System’s board and not transferable to the TPFA. 
Mr. Bernie Francis - Page 7 (JC-0523) 

SUMMARY 

Section 1232.101 of the Texas Public Finance Authority Act, 

TEX. GOV’T CODE ANN. $5 1232.001-.206 (Vernon 2000 & Supp. 

2002), does not authorize the Texas Public Finance Authority to issue 

bonds on behalf of the Texas State Technical College System. 

Attorney General of Texas 

HOWARD G. BALDWIN, JR. 

First Assistant Attorney General 

NANCY FULLER 

Deputy Attorney General - General Counsel 

SUSAN DENMON GUSKY 

Chair, Opinion Committee 

Sheela Rai 

Assistant Attorney General, Opinion Committee