Texas Administrative Code › Title 19 - EDUCATION › Part 2 - TEXAS EDUCATION AGENCY › Chapter 33 - STATEMENT OF INVESTMENT OBJECTIVES, POLICIES, AND GUIDELINES OF THE TEXAS PERMANENT SCHOOL FUND › Subchapter A - STATE BOARD OF EDUCATION RULES › Section 33.7 - Bond Guarantee Program for Charter Schools

Current through Reg. 49, No. 28; July 12, 2024
(a) Statutory
				  provision. The commissioner of education must administer the guarantee program
				  for open-enrollment charter school bonds according to the provisions of Texas
				  Education Code (TEC), Chapter 45, Subchapter C.
(b) Definitions. The following definitions
				  apply to the guarantee program for open-enrollment charter school bonds.
(1) Amortization expense--the annual expense
				  of any debt and/or loan obligations.
(2) Annual debt service--payments of
				  principal and noncapitalized interest on outstanding bonded debt scheduled to
				  occur during a charter district's fiscal year as reported by the Municipal
				  Advisory Council (MAC) of Texas or its successor, if the charter district is
				  responsible for outstanding bonded indebtedness.
(A) The annual debt service will be
				  determined by the current report of the bonded indebtedness of the charter
				  district as reported by the MAC of Texas or its successor as of the date of the
				  application deadline.
(B) Solely
				  for the purpose of this calculation, the debt service amounts for variable rate
				  bonds will be those that are published in the final official statement or, if
				  there is no official statement, debt service amounts based on the maximum rate
				  permitted by the bond resolution or other bond proceeding that establishes a
				  maximum interest rate for the bonds.
(C) Annual debt service includes required
				  payments into a sinking fund as authorized under 26 United States Code (USC)
				  §54A(d)(4)(C), provided that the sinking fund is maintained by a trustee
				  or other entity approved by the commissioner that is not under the control or
				  common control of the charter district.
(3) Application deadline--the last business
				  day of the month in which an application for a guarantee is filed. Applications
				  must be submitted electronically through the website of the MAC of Texas or its
				  successor by 5:00 p.m. on the last business day of the month to be considered
				  in that month's application processing. This application deadline does not
				  apply to applications for issues to refund bonds previously guaranteed by the
				  Bond Guarantee Program.
(4) Board
				  resolution--the resolution adopted by the governing body of an open-enrollment
				  charter holder that:
(A) requests guarantee
				  of bonds through the Bond Guarantee Program; and
(B) authorizes the charter holder's
				  administration to pursue bond financing.
(5) Bond--a debt security issuance approved
				  by the attorney general, issued under TEC, Chapter 53, to provide long-term
				  financing with a maturity schedule of at least three years.
(6) Bond Guarantee Program (BGP)--the
				  guarantee program that is described by this section and established under TEC,
				  Chapter 45, Subchapter C.
(7) Bond
				  resolution--the resolution, indenture, or other instrument adopted by the
				  governing body of an issuer of bonds authorizing the issuance of bonds for the
				  benefit of a charter district.
(8)
				  Charter district--an open-enrollment charter holder designated as a charter
				  district under subsection (e) of this section, as authorized by TEC, §
											12.135.
(9) Combination issue--an issuance of bonds
				  for which an application for a guarantee is filed that includes both a new
				  money portion and a refunding portion, as permitted by TEC, Chapter 53. The
				  eligibility of combination issues for the guarantee is limited by the
				  eligibility of the new money and refunding portions as defined in this
				  subsection.
(10) Debt service
				  coverage ratio--a measure of a charter district's ability to pay interest and
				  principal with cash generated from current operations. The debt service
				  coverage ratio (total debt service coverage on all long-term capital debt)
				  equals the excess of revenues over expenses plus interest expense plus
				  depreciation expense plus amortization expense, all divided by annual debt
				  service. The calculation can be expressed as: (Excess of revenues over expenses
				  + interest expense + depreciation expense + amortization expense)/ annual debt
				  service.
(11) Depreciation
				  expense--the audited amount of depreciation that was expensed during the fiscal
				  period.
(12) Educational
				  facility--a classroom building, laboratory, science building, faculty or
				  administrative office building, or other facility used exclusively for the
				  conduct of the educational and administrative functions of a charter
				  school.
(13) Foundation School
				  Program (FSP)--the program established under TEC, Chapters 41, 42, and 46, or
				  any successor program of state appropriated funding for school districts in the
				  state of Texas.
(14) Long-term
				  debt--any debt of the charter district that has a term of greater than three
				  years and is secured on a parity basis with the bonds to be
				  guaranteed.
(15) Maximum annual
				  debt service--as of any date of calculation, the highest annual debt service
				  requirements with respect to all outstanding long-term debt for any succeeding
				  fiscal year.
(16) Nationally
				  recognized investment rating firm--an investment rating firm that is designated
				  by the United States Securities and Exchange Commission as a nationally
				  recognized statistical rating organization (NRSRO) and is demonstrating that it
				  has:
(A) had its current NRSRO designation for
				  at least three consecutive years;
(B) provided credit ratings to each of the
				  following:
(i) fifteen or more fixed income
				  securities denominated in United States dollars and issued during the
				  immediately preceding three years;
(ii) ten or more school districts in the
				  United States;
(iii) one or more
				  charter schools in the United States; and
(C) a documented separation of duties between
				  employees involved in credit analysis and employees involved in business
				  relationships with clients.
(17) New money issue--an issuance of revenue
				  bonds under TEC, Chapter 53, for the purposes of:
(A) the acquisition, construction, repair, or
				  renovation of an educational facility of an open-enrollment charter school and
				  equipping real property of an open-enrollment charter school, provided that any
				  bonds for student or teacher housing must meet the following criteria:
(i) the proposed housing is contemplated in
				  the charter or charter application; and
(ii) the proposed housing is an essential and
				  integral part of the educational program included in the charter contract;
				  or
(B) the refinancing
				  of one or more promissory notes executed by an open-enrollment charter school,
				  each in an amount in excess of $500,000, that evidence one or more loans from a
				  national or regional bank, nonprofit corporation, or foundation that
				  customarily makes loans to charter schools, the proceeds of which loans were
				  used for a purpose described in subparagraph (A) of this paragraph;
				  or
(C) both.
(18) Open-enrollment charter--this term has
				  the meaning assigned in §
											100.1001 of this title (relating
				  to Definitions).
(19)
				  Open-enrollment charter holder--this term has the meaning assigned to the term
				  "charter holder" in TEC, §
											12.1012.
(20) Open-enrollment charter school--this
				  term has the meaning assigned to the term "charter school" in §
											100.1001 of this title.
(21) Open-enrollment charter school
				  campus--this term has the meaning assigned to the term "charter school campus"
				  in §
											100.1001 of this title.
(22) Refunding issue--an issuance of bonds
				  under TEC, Chapter 53, for the purpose of refunding:
(A) bonds that have previously been issued
				  under that chapter and have previously been approved by the attorney general;
				  or
(B) bonds that have previously
				  been issued for the benefit of an open-enrollment charter school under Vernon's
				  Civil Statutes, Article 1528m, and have previously been approved by the
				  attorney general.