CHAPTER 45. SCHOOL DISTRICT FUNDS

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EDUCATION CODE

TITLE 2. PUBLIC EDUCATION

SUBTITLE I. SCHOOL FINANCE AND FISCAL MANAGEMENT

CHAPTER 45. SCHOOL DISTRICT FUNDS

SUBCHAPTER A. TAX BONDS AND MAINTENANCE TAXES

Sec. 45.001. BONDS AND BOND TAXES. (a) The governing board of

an independent school district, including the city council or

commission that has jurisdiction over a municipally controlled

independent school district, the governing board of a rural high

school district, and the commissioners court of a county, on

behalf of each common school district under its jurisdiction,

may:

(1) issue bonds for:

(A) the construction, acquisition, and equipment of school

buildings in the district;

(B) the acquisition of property or the refinancing of property

financed under a contract entered under Subchapter A, Chapter

271, Local Government Code, regardless of whether payment

obligations under the contract are due in the current year or a

future year;

and

(D) the purchase of new school buses; and

(2) may levy, pledge, assess, and collect annual ad valorem

taxes sufficient to pay the principal of and interest on the

bonds as or before the principal and interest become due, subject

to Section 45.003.

(b) The bonds must mature serially or otherwise not more than 40

years from their date. The bonds may be made redeemable before

maturity.

the governing board of the district.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995. Amended by Acts 1999, 76th Leg., ch. 1536, Sec. 1, eff.

June 19, 1999; Acts 2001, 77th Leg., ch. 1500, Sec. 1, eff. June

17, 2001.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

1240, Sec. 2, eff. June 19, 2009.

Acts 2009, 81st Leg., R.S., Ch.

1328, Sec. 87(b), eff. June 19, 2009.

Sec. 45.0011. CREDIT AGREEMENTS IN CERTAIN SCHOOL DISTRICTS.

(a) This section applies only to an independent school district

that, at the time of the issuance of obligations and execution of

credit agreements under this section, has:

(1) at least 2,000 students in average daily attendance; or

(2) a combined aggregate principal amount of at least $50

million of outstanding bonds and voted but unissued bonds.

(b) A district to which this section applies may, in the

issuance of bonds as provided by Sections 45.001 and

45.003(b)(1), exercise the powers granted to the governing body

of an issuer with regard to the issuance of obligations and

execution of credit agreements under Chapter 1371, Government

Code.

must, in addition to meeting the requirements of Section

45.003(b)(1), include the question of whether the governing board

or commissioners court may levy, pledge, assess, and collect

annual ad valorem taxes, on all taxable property in the district,

sufficient, without limit as to rate or amount, to pay the

principal of and interest on the bonds and the costs of any

credit agreements executed in connection with the bonds.

(d) A district may not issue bonds to which this section applies

in an amount greater than the greater of:

(1) 25 percent of the sum of:

(A) the aggregate principal amount of all district debt payable

from ad valorem taxes that is outstanding at the time the bonds

are issued; and

(B) the aggregate principal amount of all bonds payable from ad

valorem taxes that have been authorized but not issued;

(2) $25 million, in a district that has at least 3,500 but not

more than 15,000 students in average daily attendance; or

(3) $50 million, in a district that has more than 15,000

students in average daily attendance.

(e) In this section, average daily attendance is determined in

the manner provided by Section 42.005.

(f) Sections 1371.057 and 1371.059, Government Code, govern

approval by the attorney general of obligations issued under the

authority of this section.

Added by Acts 1999, 76th Leg., ch. 1536, Sec. 2, eff. June 19,

1999. Amended by Acts 2001, 77th Leg., ch. 1420, Sec. 8.207, eff.

Sept. 1, 2001.

Sec. 45.002. MAINTENANCE TAXES. The governing board of an

independent school district, including the city council or

commission that has jurisdiction over a municipally controlled

independent school district, the governing board of a rural high

school district, and the commissioners court of a county, on

behalf of each common school district under its jurisdiction, may

levy, assess, and collect annual ad valorem taxes for the further

maintenance of public schools in the district, subject to Section

45.003.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995.

Sec. 45.003. BOND AND TAX ELECTIONS. (a) Bonds described by

Section 45.001 may not be issued and taxes described by Section

45.001 or 45.002 may not be levied unless authorized by a

majority of the qualified voters of the district, voting at an

election held for that purpose, at the expense of the district,

in accordance with the Election Code, except as provided by this

section. Each election must be called by resolution or order of

the governing board or commissioners court. The resolution or

order must state the date of the election, the proposition or

propositions to be submitted and voted on, the polling place or

places, and any other matters considered necessary or advisable

by the governing board or commissioners court.

(b) A proposition submitted to authorize the issuance of bonds

must include the question of whether the governing board or

commissioners court may levy, pledge, assess, and collect annual

ad valorem taxes, on all taxable property in the district,

either:

(1) sufficient, without limit as to rate or amount, to pay the

principal of and interest on the bonds; or

(2) sufficient to pay the principal of and interest on the

bonds, provided that the annual aggregate bond taxes in the

district may never be more than the rate stated in the

proposition.

(b)(1), then all bonds thereafter proposed must be submitted

pursuant to that subsection, and Subsection (b)(2) does not apply

to the district.

(d) A proposition submitted to authorize the levy of maintenance

taxes must include the question of whether the governing board or

commissioners court may levy, assess, and collect annual ad

valorem taxes for the further maintenance of public schools, at a

rate not to exceed the rate stated in the proposition. For any

year, the maintenance tax rate per $100 of taxable value adopted

by the district may not exceed the rate equal to the sum of $0.17

and the product of the state compression percentage, as

determined under Section 42.2516, multiplied by $1.50.

(e) A rate that exceeds the maximum rate specified by Subsection

(d) for the year in which the tax is to be imposed is void. A

school district with a tax rate that is void under this

subsection may, subject to requirements imposed by other law,

adopt a rate for that year that does not exceed the maximum rate

specified by Subsection (d) for that year.

(f) Notwithstanding any other law, a district that levied a

maintenance tax for the 2005 tax year at a rate greater than

$1.50 per $100 of taxable value in the district as permitted by

special law may not levy a maintenance tax at a rate that exceeds

the rate per $100 of taxable value that is equal to the sum of

$0.17 and the product of the state compression percentage, as

determined under Section 42.2516, multiplied by the rate of the

maintenance tax levied by the district for the 2005 tax year.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995. Amended by Acts 1997, 75th Leg., ch. 1071, Sec. 22, eff.

Sept. 1, 1997; Acts 2001, 77th Leg., ch. 678, Sec. 2, eff. Sept.

1, 2001.

Amended by:

Acts 2006, 79th Leg., 3rd C.S., Ch.

5, Sec. 1.12, eff. May 31, 2006.

Sec. 45.0031. LIMITATION ON ISSUANCE OF TAX-SUPPORTED BONDS.

(a) Before issuing bonds described by Section 45.001, a school

district must demonstrate to the attorney general under

Subsection (b) or (c) that, with respect to the proposed

issuance, the district has a projected ability to pay the

principal of and interest on the proposed bonds and all

previously issued bonds other than bonds authorized to be issued

at an election held on or before April 1, 1991, and issued before

September 1, 1992, from a tax at a rate not to exceed $0.50 per

$100 of valuation.

(b) A district may demonstrate the ability to comply with

Subsection (a) by using the most recent taxable value of property

in the district, combined with state assistance to which the

district is entitled under Chapter 42 or 46 that may be lawfully

used for the payment of bonds.

Subsection (a) by using a projected future taxable value of

property in the district anticipated for the earlier of the tax

year five years after the current tax year or the tax year in

which the final payment is due for the bonds submitted to the

attorney general, combined with state assistance to which the

district is entitled under Chapter 42 or 46 that may be lawfully

used for the payment of bonds. The district must submit to the

attorney general a certification of the district's projected

taxable value of property that is prepared by a registered

professional appraiser certified under Chapter 1151, Occupations

Code, who has demonstrated professional experience in projecting

taxable values of property or who can by contract obtain any

necessary assistance from a person who has that experience. To

demonstrate the professional experience required by this

subsection, a registered professional appraiser must provide to

the district written documentation relating to two previous

projects for which the appraiser projected taxable values of

property. Until the bonds submitted to the attorney general are

approved or disapproved, the district must maintain the

documentation and on request provide the documentation to the

attorney general or comptroller. The certification of the

district's projected taxable value of property must be signed by

the district's superintendent. The attorney general must base a

determination of whether the district has complied with

Subsection (a) on a taxable value of property that is equal to 90

percent of the value certified under this subsection.

(d) A district that demonstrates to the attorney general that

the district's ability to comply with Subsection (a) is

contingent on receiving state assistance may not adopt a tax rate

for a year for purposes of paying the principal of and interest

on the bonds unless the district credits to the account of the

interest and sinking fund of the bonds the amount of state

assistance equal to the amount needed to demonstrate compliance

and received or to be received in that year.

(e) If a district demonstrates to the attorney general the

district's ability to comply with Subsection (a) using a

projected future taxable value of property under Subsection (c)

and subsequently imposes a tax to pay the principal of and

interest on bonds to which Subsection (a) applies at a rate that

exceeds the limit imposed by Subsection (a), the attorney general

may not approve a subsequent issuance of bonds unless the

attorney general finds that the district has a projected ability

to pay the principal of and interest on the proposed bonds and

all previously issued bonds to which Subsection (a) applies from

a tax at a rate not to exceed $0.45 per $100 of valuation.

Added by Acts 2001, 77th Leg., ch. 678, Sec. 1, eff. Sept. 1,

2001. Amended by Acts 2003, 78th Leg., ch. 1276, Sec. 14A.762,

eff. Sept. 1, 2003.

Sec. 45.004. REFUNDING BONDS. (a) In this section:

(1) "Bond" includes a note or other evidence of indebtedness.

(2) "Total debt service" means the amount of principal and

unpaid interest on a bond to final maturity.

(b) Each governing board or commissioners court described by

Section 45.001 may refund or refinance all or any part of any of

the district's outstanding bonds and matured or unmatured but

unpaid interest on those bonds payable from ad valorem taxes by

issuing refunding bonds payable from ad valorem taxes.

unless:

(1) the total debt service on the refunding bonds will amount to

less than the total debt service on the bonds being refunded;

(2) if a maximum interest rate was voted for the bonds being

refunded, the refunding bonds do not bear interest at a rate

higher than that maximum rate; and

(3) the refunding bonds are payable from taxes of the same

nature as those pledged to the payment of the obligations being

refunded.

(d) Refunding bonds may be made redeemable before maturity.

(e) The refunding bonds may be:

(1) issued and delivered in lieu of, and on surrender to the

comptroller and cancellation of, the obligations being refunded,

and the comptroller shall register the refunding bonds and

deliver them in accordance with the resolution or order

authorizing the refunding bonds; or

(2) sold for cash in any principal amounts necessary to provide

all or any part of the money required to:

(A) pay the principal of any bonds being refunded and the

interest to accrue on the bonds to maturity; or

(B) redeem any bonds being refunded before maturity, including

principal, any required redemption premium, and the interest to

accrue on the bonds to the redemption date.

(f) The refunding may be accomplished in one or in several

installment deliveries. Refunding bonds also may be issued and

delivered in accordance with any other applicable law.

(g) To refund bonds or to pay or redeem bonds in whole or in

part without issuing refunding bonds, the governing board or

commissioners court may deposit directly with the paying agent

the proceeds from the sale of refunding bonds or any other

available funds or resources. The deposit must be in an amount

sufficient, after taking into account both the principal and

interest to accrue on the assets of any escrow account created

under Subsection (h), to provide for the payment or redemption of

the bonds and assumed obligations that are to be refunded or to

be paid or redeemed. The deposit constitutes the making of firm

banking and financial arrangements for the discharge and final

payment or redemption of the bonds being refunded.

(h) The governing board or commissioners court may enter into an

escrow or a similar agreement with the paying agent with respect

to the safekeeping, investment, reinvestment, administration, or

disposition of the deposits, but the deposits may be invested and

reinvested only in direct obligations of the United States,

including obligations the principal of and interest on which are

unconditionally guaranteed by the United States and that mature

or bear interest payable at times and in amounts sufficient to

provide for the scheduled payment or redemption of the bonds. The

governing board or commissioners court shall enter into an

appropriate escrow or a similar agreement if any of the bonds are

scheduled to be paid or redeemed on a date later than the next

succeeding scheduled interest payment date.

(i) If the governing body or commissioners court has entered

into an escrow or a similar agreement under Subsection (h), the

refunded bonds are considered to be defeased and may not be

included in or considered to be an indebtedness of the district

for the purpose of a limitation on outstanding indebtedness or

taxation or for any other purpose.

(j) Refunding bonds may be issued under this section to refund

any bonds that are scheduled to mature or that are subject to

redemption before maturity, not more than 20 years from the date

of the refunding bonds. The refunding bonds may be sold at public

or private sale under the procedures, at the price, and on the

terms determined by the governing board or commissioners court.

In addition, the bonds may be sold bearing interest at the rate

determined by the governing board or commissioners court, but not

to exceed the maximum rate prescribed by Chapter 1204, Government

Code. The governing board or commissioners court may pledge to

the payment of any refunding bonds any surplus income to be

available from the investment or reinvestment of any deposit made

as authorized by this section or any other available revenues,

income, or resources.

(k) The refunding bonds may be issued in an additional amount

sufficient to pay the costs and expenses of issuing the bonds and

sufficient to fund any debt service reserve, contingency, or

other similar fund considered necessary or advisable by the

governing board or commissioners court.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995. Amended by Acts 2001, 77th Leg., ch. 1420, Sec. 8.208, eff.

Sept. 1, 2001.

Sec. 45.005. EXAMINATION OF BONDS BY ATTORNEY GENERAL. All

bonds issued pursuant to this subchapter, and the appropriate

proceedings authorizing their issuance, shall be submitted to the

attorney general for examination.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995.

Sec. 45.006. MAINTENANCE TAX REQUIRED FOR JUDGMENT ORDERING AD

VALOREM TAX REFUND; BONDS. (a) This section applies only to a

school district that:

(1) has an average daily attendance of less than 10,000; and

(2) is located in whole or part in a municipality with a

population of less than 25,000 that is located in a county with a

population of 200,000 or more bordering another county with a

population of 2.8 million or more.

(b) Notwithstanding Section 45.003, a school district may levy,

assess, and collect maintenance taxes at a rate that exceeds

$1.50 per $100 valuation of taxable property if:

(1) additional ad valorem taxes are necessary to pay a debt of

the district that:

(A) resulted from the rendition of a judgment against the

district before May 1, 1995;

(B) is greater than $5 million;

(D) requires the district to refund to the property owner the

difference between the amount of taxes paid by the property owner

and the amount of taxes for which the property owner is liable;

and

(E) is payable according to the judgment in more than one of the

district's fiscal years; and

(2) the additional taxes are approved by the voters of the

district at an election held for that purpose.

maintenance taxes that the district collects under this section

may be used only to pay the district's debt under Subsection

(b)(1).

(d) Except as provided by Subsection (e), the authority of a

school district to levy the additional ad valorem taxes under

this section expires when the judgment against the district is

paid.

(e) The governing body of a school district shall pay the

district's debt under Subsection (b)(1) in a lump sum. To satisfy

the district's debt under Subsection (b)(1), the governing body

may levy and collect additional maintenance taxes as provided by

Subsection (b) and may issue bonds. If bonds are issued:

(1) the district may use any additional maintenance taxes

collected by the district under this section to pay debt service

on the bonds; and

(2) the authority of the district to levy the additional ad

valorem taxes expires when the bonds are paid in full or the

judgment is paid, whichever occurs later.

(f) The governing body of a school district that adopts a tax

rate that exceeds $1.50 per $100 valuation of taxable property

may set the amount of the exemption from taxation authorized by

Section 11.13(n), Tax Code, at any time before the date the

governing body adopts the district's tax rate for the tax year in

which the election approving the additional taxes is held.

(g) The authority to issue bonds granted by this section expires

June 1, 1996.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995.

SUBCHAPTER B. REVENUE BONDS

Sec. 45.031. GYMNASIA, STADIA, AND OTHER RECREATIONAL

FACILITIES. The governing board of an independent school

district, including the city council or commission that has

jurisdiction over a municipally controlled independent school

district, the governing board of a rural high school district,

and the commissioners court of a county, on behalf of each common

school district under its jurisdiction, may acquire, construct,

improve, equip, operate, and maintain gymnasia, stadia, or other

recreational facilities for and on behalf of its district. The

facilities may be located inside or outside of the district.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995.

Sec. 45.032. REVENUE BONDS. To provide funds to acquire,

construct, improve, or equip gymnasia, stadia, or other

recreational facilities, the board, city council or commission,

or commissioners court may issue revenue bonds payable from and

secured by liens on and pledges of all or any part of any of the

revenues from any rentals, rates, charges, or other revenues from

any or all of the facilities, in the manner provided by this

subchapter. The bonds may be additionally secured by mortgages

and deeds of trust on any real property on which any of the

facilities are or will be located, or any real or personal

property incident or appurtenant to the facilities, and the

board, city council or commission, or commissioners court may

authorize the execution and delivery of trust indentures,

mortgages, deeds of trust, or other forms of encumbrances to

evidence those liens. The bonds may be issued to mature serially

or otherwise not to exceed 50 years from their date. In the

authorization of any of those bonds, the board, city council or

commission, or commissioners court may provide for the subsequent

issuance of additional parity bonds, or subordinate lien bonds,

or other types of bonds, under the terms set forth in the

resolution or order authorizing the issuance of the bonds, all

within the discretion of the board, city council or commission,

or commissioners court. The bonds may be made redeemable before

maturity. The bonds may be sold in the manner, at the price, and

under the terms provided by the board, city council or

commission, or commissioners court in the resolution or order

authorizing the issuance of the bonds. If permitted by the bond

resolution or order, any required part of the proceeds from the

sale of the bonds may be:

(1) used for paying interest on the bonds during the period of

the construction of any facilities to be provided through the

issuance of the bonds;

(2) used for paying the operation and maintenance expenses of

facilities to the extent and for the period specified in the bond

resolution;

(3) used for creating reserves for the payment of the principal

of and interest on the bonds; or

(4) invested, until needed, to the extent and in the manner

provided in the bond resolution or order.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995.

Sec. 45.033. RENTALS, RATES, AND CHARGES. The board, city

council or commission, or commissioners court may set and collect

rentals, rates, and charges from students and others for the

occupancy or use of any of the facilities, in the amounts and

manner determined by the board, city council or commission, or

commissioners court.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995.

Sec. 45.034. PLEDGE OF REVENUES. The board, city council or

commission, or commissioners court may pledge all or any part of

any of its revenues from the facilities to the payment of any

bonds issued under this subchapter, including the payment of

principal, interest, and any other amounts required or permitted

in connection with the bonds. If revenues from the facilities are

pledged to the payment of bonds, the rentals, rates and charges

for the occupancy or use of the facilities must be fixed and

collected in amounts at least sufficient to provide for all

payments of principal, interest, and any other amounts required

in connection with the bonds, and, to the extent required by the

resolution or order authorizing the issuance of the bonds, to

provide for the payment of operation, maintenance, and other

expenses.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995.

Sec. 45.035. REFUNDING BONDS. Revenue bonds issued by a board,

city council or commission, or commissioners court under this

subchapter and revenue bonds issued by a board, city council or

commission, or commissioners court under other law and payable

from revenues from facilities described by Section 45.031 may be

refunded or otherwise refinanced by the board, city council or

commission, or commissioners court, and in that case all

appropriate provisions of this subchapter apply to the refunding

bonds. In refunding or otherwise refinancing any such bonds, the

board, city council or commission, or commissioners court may, in

the same authorizing proceedings, refund or refinance bonds

issued pursuant to this code and bonds issued pursuant to any

other law, may combine all refunding bonds and any other

additional new bonds to be issued under this chapter into one or

more issues or series of bonds, and may provide for the

subsequent issuance of additional parity bonds, or subordinate

lien bonds, or other type of bonds. All refunding bonds must be

issued and delivered under the terms set forth in the authorizing

proceedings.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995.

Sec. 45.036. EXAMINATION OF BONDS BY ATTORNEY GENERAL. All

bonds issued pursuant to this subchapter, and the appropriate

proceedings authorizing their issuance, shall be submitted to the

attorney general for examination.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995.

SUBCHAPTER C. GUARANTEED BONDS

Sec. 45.051. DEFINITIONS. In this subchapter:

(1) "Board" means the State Board of Education.

(2) "Paying agent" means the financial institution that is

designated by a school district as its agent for the payment of

the principal of and interest on guaranteed bonds.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995.

Sec. 45.052. GUARANTEE. (a) On approval by the commissioner,

bonds issued under Subchapter A, including refunding bonds, are

guaranteed by the corpus and income of the permanent school fund.

(b) Notwithstanding any amendment of this subchapter or other

law, the guarantee under this subchapter of school district bonds

remains in effect until the date those bonds mature or are

defeased in accordance with state law.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

1328, Sec. 68, eff. September 1, 2009.

Sec. 45.053. LIMITATION; VALUE ESTIMATES. (a) Except as

provided by Subsection (d), the commissioner may not approve

bonds for guarantee under this subchapter if the approval would

result in the total amount of outstanding guaranteed bonds under

this subchapter exceeding an amount equal to 2-1/2 times the cost

value of the permanent school fund, as estimated by the board and

certified by the state auditor.

(b) Each year, the state auditor shall analyze the status of

guaranteed bonds under this subchapter as compared to the cost

value of the permanent school fund. Based on that analysis, the

state auditor shall certify whether the amount of bonds

guaranteed under this subchapter is within the limit prescribed

by this section.

annual report on the status of the guaranteed bond program under

this subchapter.

(d) The board by rule may increase the limit prescribed by

Subsection (a) to an amount not to exceed five times the cost

value of the permanent school fund, provided that the increased

limit is consistent with federal law and regulations and does not

prevent the bonds to be guaranteed from receiving the highest

available credit rating, as determined by the board. The board

shall at least annually consider whether to change any limit in

accordance with this subsection. This subsection may not be

construed in a manner that impairs, limits, or removes the

guarantee of bonds that have been approved by the commissioner.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995. Amended by Acts 2003, 78th Leg., ch. 89, Sec. 1, eff. May

20, 2003.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

139, Sec. 1, eff. May 18, 2007.

Acts 2009, 81st Leg., R.S., Ch.

1328, Sec. 68A, eff. September 1, 2009.

Sec. 45.0531. ADDITIONAL LIMITATION: RESERVATION OF PERCENTAGE

OF PERMANENT SCHOOL FUND VALUE. (a) In addition to the

limitation on the approval of bonds for guarantee under Section

45.053, the board by rule may establish a percentage of the cost

value of the permanent school fund to be reserved from use in

guaranteeing bonds under this subchapter.

(b) If the board has reserved a portion of the permanent school

fund under Subsection (a), each year, the state auditor shall

analyze the status of the reserved portion compared to the cost

value of the permanent school fund. Based on that analysis, the

state auditor shall certify whether the portion of the permanent

school fund reserved from use in guaranteeing bonds under this

subchapter satisfies the reserve percentage established.

fund under Subsection (a), the board shall at least annually

consider whether to change the reserve percentage established to

ensure that the reserve percentage allows compliance with federal

law and regulations and serves to enable bonds guaranteed under

this subchapter to receive the highest available credit rating,

as determined by the board.

(d) This section may not be construed in a manner that impairs,

limits, or removes the guarantee of bonds that have been approved

by the commissioner.

Added by Acts 2009, 81st Leg., R.S., Ch.

1328, Sec. 69, eff. September 1, 2009.

Sec. 45.054. ELIGIBILITY. To be eligible for approval by the

commissioner, bonds must be issued under Subchapter A of this

chapter or under Subchapter A, Chapter 1207, Government Code, to

make a deposit under Subchapter B or C of that chapter, by an

accredited school district.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995. Amended by Acts 2001, 77th Leg., ch. 1420, Sec. 8.209, eff.

Sept. 1, 2001.

Sec. 45.055. APPLICATION FOR GUARANTEE. (a) A school district

seeking guarantee of eligible bonds under this subchapter shall

apply to the commissioner using a form adopted by the

commissioner for the purpose. The commissioner may adopt a

single form on which a district seeking guarantee or credit

enhancement of eligible bonds may apply simultaneously first for

guarantee under this subchapter and then, if that guarantee is

rejected, for credit enhancement under Subchapter I.

(b) An application under Subsection (a) must include:

(1) the name of the school district and the principal amount of

the bonds to be issued;

(2) the name and address of the district's paying agent for

those bonds; and

(3) the maturity schedule, estimated interest rate, and date of

the bonds.

fee set by rule of the board in an amount designed to cover the

costs of administering the programs to provide the guarantee or

credit enhancement of eligible bonds.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

1328, Sec. 70, eff. September 1, 2009.

Sec. 45.056. INVESTIGATION. (a) Following receipt of an

application for the guarantee of bonds, the commissioner shall

conduct an investigation of the applicant school district in

regard to:

(1) the status of the district's accreditation; and

(2) the total amount of outstanding guaranteed bonds.

(b) If following the investigation the commissioner is satisfied

that the school district's bonds should be guaranteed under this

subchapter or provided credit enhancement under Subchapter I, as

applicable, the commissioner shall endorse the bonds.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

1328, Sec. 71, eff. September 1, 2009.

Sec. 45.057. GUARANTEE ENDORSEMENT. (a) The commissioner shall

endorse bonds approved for guarantee with:

(1) the commissioner's signature or a facsimile of the

commissioner's signature; and

(2) a statement relating the constitutional and statutory

authority for the guarantee.

(b) The guarantee is not effective unless the attorney general

approves the bonds under Section 45.005.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995.

Sec. 45.058. NOTICE OF DEFAULT. Immediately following a

determination that a school district will be or is unable to pay

maturing or matured principal or interest on a guaranteed bond,

but not later than the fifth day before maturity date, the school

district shall notify the commissioner.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995.

Sec. 45.059. PAYMENT FROM PERMANENT SCHOOL FUND. (a)

Immediately following receipt of notice under Section 45.058, the

commissioner shall instruct the comptroller to transfer from the

appropriate account in the permanent school fund to the

district's paying agent the amount necessary to pay the maturing

or matured principal or interest.

(b) Immediately following receipt of the funds for payment of

the principal or interest, the paying agent shall pay the amount

due and forward the canceled bond or coupon to the comptroller.

The comptroller shall hold the canceled bond or coupon on behalf

of the permanent school fund.

with interest, the comptroller shall further cancel the bond or

coupon and forward it to the school district for which payment

was made.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995. Amended by Acts 1997, 75th Leg., ch. 1423, Sec. 5.07, eff.

Sept. 1, 1997.

Sec. 45.060. BONDS NOT ACCELERATED ON DEFAULT. If a school

district fails to pay principal or interest on a guaranteed bond

when it matures, other amounts not yet mature are not accelerated

and do not become due by virtue of the school district's default.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995.

Sec. 45.061. REIMBURSEMENT OF PERMANENT SCHOOL FUND. (a) If

the commissioner orders payment from the permanent school fund on

behalf of a school district, the commissioner shall direct the

comptroller to withhold the amount paid, plus interest, from the

first state money payable to the school district. The amount

withheld shall be deposited to the credit of the permanent school

fund.

(b) In accordance with the rules of the board, the commissioner

may authorize reimbursement to the permanent school fund with

interest in a manner other than that provided by this section.

valorem tax rate capable of producing an amount of revenue

sufficient to enable the district to:

(1) provide reimbursement under this section; and

(2) pay the principal of and interest on district bonds as the

principal and interest become due.

(d) If a school district fails to comply with the commissioner's

order under Subsection (c), the commissioner may impose any

sanction on the district authorized to be imposed on a district

under Subchapter G, Chapter 39, including appointment of a board

of managers or annexation to another district, regardless of the

district's accreditation status or the duration of a particular

accreditation status.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

1328, Sec. 72, eff. September 1, 2009.

Sec. 45.062. REPEATED DEFAULTS. (a) If a total of two or more

payments are made under this subchapter or Subchapter I on the

bonds of a school district and the commissioner determines that

the school district is acting in bad faith under the guarantee

program under this subchapter or the credit enhancement program

under Subchapter I, the commissioner may request the attorney

general to institute appropriate legal action to compel the

school district and its officers, agents, and employees to comply

with the duties required of them by law in regard to the bonds.

(b) Jurisdiction of proceedings under this section is in

district court in Travis County.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

1328, Sec. 73, eff. September 1, 2009.

Sec. 45.063. RULES. The board may adopt rules necessary for the

administration of the bond guarantee program.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995.

SUBCHAPTER D. SALE OF SURPLUS REAL PROPERTY; REVENUE BONDS

Sec. 45.081. DEFINITIONS. In this subchapter:

(a) "District" means an independent school district.

(b) "Board" means the governing body of a district.

fixtures permanently attached to buildings or land.

(d) "Bonds" includes notes, contracts, and any other evidences

of an obligation to pay a sum of money.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995.

Sec. 45.082. SALE OF PROPERTY; REVENUE BONDS. (a) The board of

a district may sell real property owned by the district and issue

revenue bonds payable from the proceeds of the sale subject to

this section.

(b) The board must determine by order that the real property is

not required for the current needs of the district for

educational purposes, and the proceeds from the sale are required

and will be used for:

(1) constructing or equipping school buildings in the district

or purchasing necessary sites for school buildings; or

(2) paying the principal of and interest and premium on any

bonds issued pursuant to this subchapter.

sale is:

(1) to a corporation established by the district under Chapter

303, Local Government Code; and

(2) subject to a lease-purchase agreement under which the

district will acquire the real property.

(d) The real property may be sold for the price and on the terms

determined by order of the board to be most advantageous to the

district. The sale may be made pursuant to an installment sale

agreement or contract or any other method. The sale must be for

cash and all payments for the real property must be scheduled to

be paid not more than 10 years after the date of execution of the

agreement or contract of sale. Real property may not be sold for

less than an aggregate price equal to its fair market value as

determined by an appraisal obtained by the district not more than

180 days before the publication of the notice required by

Subsection (e)(3). The appraisal is conclusive of the fair market

value of the property for purposes of this subchapter.

(e) Before selling or executing any agreement or contract for

the sale of the real property, the board shall:

(1) determine which real estate is proposed to be sold;

(2) determine the scope of the terms on which it will consider

selling the real property, and, if the sale price is to be paid

in installments, require the purchasers of the real property to

secure the payment of the sale price by escrowing collateral

acceptable to the board such as a letter of credit, United States

government bonds, or any other generally recognized form of

guarantee or security;

(3) publish a notice to prospective purchasers at least two

weeks before the date set for receiving proposals in a real

estate journal and in at least two newspapers of general

circulation in the district, requesting sealed written proposals

from prospective purchasers to purchase the real property and

including the scope of the terms of sale that will be considered,

and the time, date, and place where the proposals will be

received; and

(4) determine by order of the board which sealed written

proposal is most advantageous to the district, and accept that

proposal, or reject all proposals if considered advisable.

(f) Except as provided by this subsection, the sale must have

been previously approved by a majority of the qualified voters of

the district voting at an election held in the district at which

a proposition to ascertain approval is submitted. An election is

not required if the board determines by order that the proceeds

from the sale of the real property are required and will be used

for constructing or equipping or for paying the principal of, and

interest and premium, if any, on bonds issued pursuant to this

subchapter for the purpose of constructing or equipping a school

building that is to be constructed pursuant to an order or

judgment entered by a United States District Judge in any action

or cause in which the district is a party.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995. Amended by Acts 2001, 77th Leg., ch. 1420, Sec. 8.210, eff.

Sept. 1, 2001.

Sec. 45.083. OTHER LAWS NOT APPLICABLE. Section 272.001, Local

Government Code, Chapter 26, Parks and Wildlife Code, and all

other general laws pertaining to the sale of public property do

not apply to sales of real property pursuant to this subchapter.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995.

Sec. 45.084. CONTRACTS. The district may execute contracts for

constructing or equipping school buildings in the district or for

purchasing any necessary sites for school buildings in the manner

provided by law. If any contract recites that payments under the

contract are to be made either from the proceeds from the sale of

real property under an installment sale agreement or any similar

method pursuant to this subchapter or from proceeds from the sale

of bonds issued pursuant to this subchapter, then the contract

may be made payable in installments to correspond with the

receipt by the district either of proceeds under the sale

agreement or proceeds from the sale of any bonds to be issued and

delivered in more than one issue, series, or installment, and the

contract is not a prohibited debt or indebtedness of the district

if the payments under the contract are required to be made solely

from the proceeds from the sale of real property or the bonds.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995.

Sec. 45.085. BOND REQUIREMENTS. (a) In addition to the powers

granted by this subchapter, any board, for and on behalf of its

district, may issue, sell, and deliver revenue bonds of its

district from time to time and in one or more issues, series, or

installments, with the principal of and interest and premium, if

any, on the bonds to be payable from and secured by liens on and

pledges of all or any part of any of the revenue, income,

payments, or receipts derived by the district from the sale of

real property pursuant to this subchapter, and those amounts may

be pledged by the district to the payment of the principal of and

interest and premium, if any, on such bonds, subject to this

section.

(b) Bonds must be issued by an order of the board.

equipping school buildings in the district or purchasing

necessary sites for school buildings.

(d) The bonds shall mature, come due, or be payable serially, in

installments, or otherwise, within not to exceed 90 days after

the last date on which the final payment is due to the district

from the sale of the real property. The bond order may provide

for the subsequent issuance of additional parity bonds, or

subordinate lien bonds, under any terms set forth in the bond

order.

(e) The bonds may be executed, made redeemable before maturity

or due date, and be issued in the form, denominations, and manner

and under the terms provided in the bond order. The bonds may be

sold in the manner, at the price, and under the terms and may

bear interest at the rates provided in the bond order.

(f) If so provided in any bond order, the proceeds from the sale

of the bonds may be used for paying interest on the bonds during

the period of constructing or equipping any school buildings to

be provided through the issuance of the bonds or for creating a

reserve fund for the payment of principal and interest on the

bonds. The proceeds may be placed on time deposit, in

certificates of deposit, or invested, until needed, to the extent

and in the manner provided in any bond order. The proceeds also

may be used for paying the costs and expenses of issuing the

bonds and selling the real property.

(g) The bonds may be payable only from the revenues described by

Subsection (a) and may not be payable or paid from any taxes

levied and collected in the district.

(h) Chapter 1201, Chapter 1204, and Subchapters A-C, Chapter

1207, Government Code, apply to bonds issued pursuant to this

subchapter.

(i) If bonds are issued pursuant to this subchapter, the bonds,

along with the appropriate proceedings authorizing their

issuance, and the sale agreement the proceeds from which they are

payable shall be submitted to the attorney general for

examination. If after the initial issuance of any bonds under

this subchapter payable from the proceeds of a particular sale

agreement, one or more subsequent issues, series, or installments

of bonds are issued as additional parity bonds, on a parity with

the initial bonds and payable from the proceeds of that sale

agreement, then, at the option of the board, the subsequent

issues, series, or installments of bonds need not be submitted to

the attorney general or approved by the attorney general or

registered by the comptroller, and the subsequent bonds are, on

delivery of and payment for the bonds, valid and incontestable in

the same manner and with the same effect as if they had been

approved by the attorney general and registered by the

comptroller as were the initial bonds.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995. Amended by Acts 2001, 77th Leg., ch. 1420, Sec. 8.211, eff.

Sept. 1, 2001.

Sec. 45.086. LIBERAL CONSTRUCTION. This subchapter shall be

construed liberally to accomplish the legislative intent and the

purposes of the subchapter, and all powers granted by this

subchapter shall be broadly interpreted to accomplish that intent

and those purposes and not as a limitation of powers.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995.

Sec. 45.087. OTHER POWERS UNRESTRICTED. This subchapter does

not restrict the power of a school district to sell property or

issue bonds as provided by other law.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995.

SUBCHAPTER E. MISCELLANEOUS PROVISIONS

Sec. 45.101. USE OF BOND PROCEEDS FOR UTILITY CONNECTIONS. The

proceeds of bonds issued by school districts for the construction

and equipment of school buildings in the district and the

purchase of the necessary sites for school buildings may be used,

among other things, to pay the cost of acquiring, laying, and

installing pipes or lines to connect with the water, sewer, or

gas lines of a municipality or private utility company, whether

or not the water, sewer, or gas lines adjoin the school, so that

the school district may provide its public school buildings the

water, sewer, or gas services.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995.

Sec. 45.102. INVESTMENT OF BOND PROCEEDS IN OBLIGATIONS OF

UNITED STATES OR INTEREST-BEARING SECURED TIME BANK DEPOSITS.

(a) A school district that has on hand proceeds received from

the issuance and sale of bonds or certificates of indebtedness of

the district that are not immediately needed for the purposes for

which the bonds or certificates of indebtedness were issued and

sold, may, on order of the board of trustees:

(1) place the proceeds on interest-bearing time deposit, secured

in the manner provided by Section 45.208, with a state or

national banking corporation in this state the deposits of which

are insured by the Federal Deposit Insurance Corporation; or

(2) invest the proceeds in bonds or other obligations of the

United States.

(b) Interest-bearing secured time deposits or bonds or other

obligations of the United States in which proceeds of bonds or

certificates of indebtedness are placed or invested must be of a

type that cannot be cashed, sold, or redeemed for an amount less

than the sum deposited or invested by the school district.

needed for the purposes for which the bonds or certificates of

indebtedness of the school district were originally authorized,

issued, and sold:

(1) the time deposits or bonds or other obligations of the

United States in which the sums have been placed or invested

shall be cashed, sold, or redeemed; and

(2) the proceeds shall be used for the purposes for which the

bonds or certificates of indebtedness of the school district were

originally authorized, issued, and sold.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995.

Sec. 45.103. INTEREST-BEARING TIME WARRANTS. (a) Any school

district in need of funds to construct, repair, or renovate

school buildings, purchase school buildings and school equipment,

or equip school properties with necessary heating, water,

sanitation, lunchroom, or electric facilities or in need of funds

with which to employ a person who has special skill and

experience to compile taxation data and that is financially

unable out of available funds to construct, repair, renovate, or

purchase school buildings, purchase school equipment, or equip

school properties with necessary heating, water, sanitation,

lunchroom, or electric facilities or is unable to pay the person

for compiling taxation data, may, subject to this section, issue

interest-bearing time warrants, in amounts sufficient to

construct, purchase, equip, or improve school buildings and

facilities or to pay all or part of the compensation of the

person to compile taxation data, any law to the contrary

notwithstanding. The warrants shall mature in serial installments

of not more than five years from their date of issue. The

warrants on maturity may be payable out of any available funds of

the school district in the order of their maturity dates. Any

interest-bearing time warrants may be issued and sold by the

district for not less than their face value, and the proceeds

used to provide funds required for the purpose for which they are

issued. The warrants shall be entitled to first payment out of

any available funds of the district as they become due. Included

in the purposes for which interest-bearing time warrants may be

issued is the payment of any amounts owed by the school district

that was incurred in carrying out any of those purposes.

(b) Interest-bearing time warrants may not be issued or sold by

a common school district or rural high school district until they

are approved by the county board of school trustees. The board

shall, on application of the school district, inquire into the

financial conditions and needs of the district, and may not

approve the issuance of interest-bearing time warrants unless in

its opinion the district:

(1) is in need of constructing, purchasing, repairing, or

renovating a school building, obtaining the school equipment, or

equipping school properties with necessary heating, water,

sanitation, lunchroom, or electric facilities; and

(2) will be able with the resources in prospect to liquidate the

warrants at their maturity.

warrants in excess of five percent of the assessed valuation of

the district for the year in which the warrants are issued. The

payment of interest-bearing time warrants in any one year may not

exceed the anticipated surplus income of the district for the

year in which the warrants are issued, based on the budget of the

district for that year. The anticipated income computed under

this section is exclusive of all bond taxes. A school district

may not have outstanding at any one time warrants totaling in

excess of $500,000 under this section.

(d) If interest-bearing time warrants issued under this section

are outstanding, the officer in charge of the collection of

delinquent taxes shall pay those collections to the legal

depository of the district, to be deposited and held in a special

fund for the payment of the interest-bearing time warrants, and

except as otherwise provided by this section, collections of

delinquent taxes may not be applied or used for any other

purpose.

(e) Interest and penalties on delinquent taxes are considered a

part of those taxes for purposes of this section. If any

delinquent taxes, including interest and penalties, are canceled,

waived, released, or reduced either by the school district or in

any other way, with or without its consent, the amount of the

loss sustained shall be paid by the district to the special fund

provided for by Subsection (d) out of funds not otherwise pledged

to that special fund.

(f) All school districts issuing interest-bearing time warrants

may encumber and mortgage any property purchased with the

proceeds of the warrants or any property, including teachers'

residences, owned by the district to secure the payment of

legally incurred obligations, except that a lien may not be

placed on any school building in which actual classroom

instruction of students is conducted.

(g) In this section, "interest-bearing time warrant" includes a

promissory note or other evidence of indebtedness issued under

this section.

(h) Taxes levied to pay principal and interest of bonds that are

delinquent are not included in the term "delinquent taxes" as

used in this section.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995. Amended by Acts 1999, 76th Leg., ch. 1536, Sec. 3, eff.

June 19, 1999.

Sec. 45.104. PLEDGE OF DELINQUENT TAXES AS SECURITY FOR LOAN.

(a) The board of trustees of any school district may pledge its

delinquent taxes levied for maintenance purposes for specific

past, current, and future school years as security for a loan,

and may evidence any such loan with negotiable notes, and the

delinquent taxes pledged shall be applied against the principal

and interest of the loan. Negotiable notes issued under this

subsection must mature not more than 20 years from their date.

(b) A school district may not pledge delinquent taxes levied for

school bonds as security for a loan.

be employed for any legal maintenance expenditure or purpose of

the school district, including all costs incurred in connection

with:

(1) environmental cleanup and asbestos removal programs

implemented by school districts; or

(2) maintenance, repair, rehabilitation, or replacement of

heating, air conditioning, water, sanitation, roofing, flooring,

electric, or other building systems of existing school

properties.

(d) A loan secured by delinquent taxes may bear interest at a

rate not to exceed the maximum rate provided by Section 1204.006,

Government Code.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30,

1995. Amended by Acts 1999, 76th Leg., ch. 396, Sec. 1.34, eff.

Sept. 1, 1999; Acts 2001, 77th Leg., ch. 1420, Sec. 8.212, eff.

Sept. 1, 2001.

Sec. 45.105. AUTHORIZED EXPENDITURES. (a) The public school

funds may not be spent except as provided by this section.

(b) The state and county available funds may be used only for

the payment of teachers' and superintendents' salaries and

interest on money borrowed on short time to pay those salaries

that become due before the school funds for the current year

become available. Loans for the purpose of payment of teachers

may not be paid out of funds other than those for the current

year.

students not entitled to a free education, other local sources,

and state funds not designated for a specific purpose may be used

for the purposes listed for state and county available funds and

for purchasing appliances and supplies, paying insurance

premiums, paying janitors and other employees, buying school

sites, buying, building, repairing, and renting school buildings,

including acquiring school buildings and sites by leasing through

annual payments with an ultimate option to purchase, and for

other purposes necessary in the conduct of the public schools

determined by the board of trustees. The accounts and vouchers

for county districts must be approved by the county

superintendent. If the state available school fund in any

municipality or district is sufficient to maintain the schools in

any year for at least eight months and leave a surplus, the

surplus may be spent for the purposes listed in this subsection.

(d) An independent school district that has in its limits a

municipality with a population of 150,000 or more or that

contains at least 170 square miles, has $850 million or more

assessed value of taxable property on the most recent approved

tax roll and has a growth in average daily attendance of 11

percent or more for each of the preceding five years as

determined by the agency may, in buying school sites or additions

to school sites and in building school buildings, issue and

deliver negotiable or nonnegotiable notes representing all or

part of the cost to the school district of the land or building.

The district may secure the notes by a vendor's lien or deed of

trust lien against the land or building. By resolution or order

of the governing body made at or before the delivery of the

notes, the district may set aside and appropriate as a trust

fund, and the sole and only fund, for the payment of the

principal of and interest on the notes that part of the local

school funds, levied and collected by the school district in that

year or subsequent years, as the governing body determines. The

aggregate amount of local school funds set aside in or for any

subsequent year for the retirement of the notes may not exceed,

in any one subsequent year, 10 percent of the local school funds

collected during that year. The district may issue the notes only

if approved by majority vote of the qualified voters voting in an

election conducted in the manner provided by Section 45.003 for

approval of bonds.

(e) The governing body of an independent school district that

governs a junior college district under Subchapter B, Chapter

130, in a county with a population of more than 1.5 million may

dedicate a specific percentage of the local tax levy to the use

of the junior college district for facilities and equipment or

for the maintenance and operating expenses of the junior college

district. To be effective, the dedication must be made by the

governing body on or before the date on which the governing body

adopts its tax rate for a year. The amount of local tax funds

derived from the percentage of the local tax levy dedicated to a

junior college district from a tax levy may not exceed the amount

that would be levied by five percent of

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Texas Codes and Statutes

CHAPTER 45. SCHOOL DISTRICT FUNDS