|(a) Statutory provision. The commissioner of education
must administer the guarantee program for open-enrollment charter
school bonds according to the provisions of the 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
(B) authorizes the charter holder's administration
to pursue bond financing.
(5) Bond Guarantee Program (BGP)--The guarantee program
that is described by this section and established under the TEC, Chapter
45, Subchapter C.
(6) 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.
(7) Charter district--An open-enrollment charter holder
designated as a charter district under subsection (e) of this section,
as authorized by the TEC, §12.135.
(8) 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 the 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.
(9) 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.
(10) Depreciation expense--The audited amount of depreciation
that was expensed during the fiscal period.
(11) 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.
(12) Foundation School Program (FSP)--The program established
under the TEC, Chapters 41, 42, and 46, or any successor program
of state appropriated funding for school districts in the state of
(13) 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.
(14) 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.
(15) New money issue--An issuance of revenue bonds
under the 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; 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
(16) Open-enrollment charter--This term has the meaning
assigned in §100.1011 of this title (relating to Definitions).
(17) Open-enrollment charter holder--This term has
the meaning assigned to the term "charter holder" in the TEC, §12.1012.
(18) Open-enrollment charter school--This term has
the meaning assigned to the term "charter school" in §100.1011
of this title.
(19) Open-enrollment charter school campus--This term
has the meaning assigned to the term "charter school campus" in §100.1011
of this title.
(20) Refunding issue--An issuance of bonds under the
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;
(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
(c) Bond eligibility.
(1) Only those combination, new money, and refunding
issues as defined in subsection (b)(8), (15), and (20), respectively,
of this section are eligible to receive the guarantee. The bonds must,
without the guarantee, be rated as investment grade by a nationally
recognized investment rating firm and must be issued on or after September
(2) Refunding issues must comply with the following
requirements to retain eligibility for the guarantee for the refunding
(A) As with any open-enrollment charter holder applying
for approval for the guarantee, the charter holder for which the
refunding bonds are being issued must meet the requirements for charter
district designation specified in subsection (e)(2) of this section
and the requirements for initial approval specified in subsection
(f)(3)(A) of this section.
(B) The charter holder must demonstrate that issuing
the refunding bond(s) will result in a present value savings to the
charter holder. Present value savings is determined by computing the
net present value of the difference between each scheduled payment
on the original bonds and each scheduled payment on the refunding
bonds. Present value savings must be computed at the true interest
cost of the refunding bonds. If the commissioner approves refunding
bonds for the guarantee based on evidence of present value savings
but at the time of the sale of the refunding bonds a present value
savings is not realized, the commissioner may revoke the approval
of the bonds for the guarantee.
(C) For issues that refund bonds previously guaranteed
by the BGP, the charter holder must demonstrate that the refunding
bond or bonds will not have a maturity date later than the final maturity
date of the bonds being refunded.
(D) The refunding transaction must comply with the
provisions of subsection (f)(5)(A)-(C) and (E) of this section.
(3) If an open-enrollment charter holder files an application
for a combination issue, the application will be treated as an application
for a single issue for the purposes of eligibility for the guarantee.
A guarantee for the combination issue will be awarded only if both
the new money portion and the refunding portion meet all of the applicable
eligibility requirements described in this section. As part of its
application, the charter holder making the application must present
data that demonstrate compliance for both the new money portion of
the issue and the refunding portion of the issue.
(4) If the commissioner determines that an applicant
has deliberately misrepresented information related to a bond issue
to secure a guarantee, the commissioner must revoke the approval of
the bonds for the guarantee.
(d) Determination of Permanent School Fund (PSF) capacity
to guarantee bonds for charter districts.
(1) Each month the commissioner will estimate the available
capacity of the PSF to guarantee bonds for charter districts. This
capacity is determined by taking the net capacity determined under §33.65
of this title (relating to Bond Guarantee Program for School Districts),
subtracting the total amount of outstanding guaranteed bonds, and
then determining the percentage of the difference that is equal to
the percentage of the number of students enrolled in open-enrollment
charter schools in this state compared to the total number of students
enrolled in all public schools in this state, as determined by the
commissioner. The commissioner's determination of the number of students
enrolled in open-enrollment charter schools in this state and the
number of students enrolled in all public schools in this state is
based on the enrollment data submitted by school districts and charter
schools to the Public Education Information Management System (PEIMS)
during the most recent fall PEIMS submission. Annually, the commissioner
will post the applicable student enrollment numbers and the percentage
of students enrolled in open-enrollment charter schools on the Texas
Education Agency (TEA) web page related to the BGP.
(2) Up to half of the total capacity of the PSF to
guarantee bonds for charter districts may be used to guarantee charter
district refunding bonds.
(e) Application process and application processing.
An open-enrollment charter holder must apply to the commissioner
for the guarantee of eligible bonds by submitting an application
electronically through the website of the MAC of Texas or its successor.
Before an application for the guarantee will be considered, a charter
holder must first be determined by the commissioner to meet criteria
for designation as a charter district for purposes of this section.
The application submitted through the website of the MAC of Texas
or its successor will serve as both a charter holder's application
for designation as a charter district and its application for the
(1) Application submission and fee. As part of its
application, an open-enrollment charter holder must submit the information
required under the TEC, §45.055(b), and this section and any
additional information the commissioner may require. The application
and all additional information required by the commissioner must be
received before the application will be processed. The open-enrollment
charter holder may not submit an application for a guarantee before
the governing body of the charter holder adopts a board resolution
as defined in subsection (b)(4) of this section.
(A) The amount of the application fee is the amount
specified in §33.65 of this title.
(B) The fee is due at the time the application for
charter district designation and the guarantee is submitted. An application
will not be processed until the fee has been remitted according to
the directions provided on the website of the MAC of Texas or its
successor and received by the TEA.
(C) The fee will not be refunded to an applicant that:
(i) is designated a charter district but is not approved
for the guarantee; or
(ii) receives approval for the guarantee but does not
sell its bonds before the expiration of its approval for the guarantee.
(D) The fee may be transferred to a subsequent application
for the guarantee by a charter district that has been approved for
the guarantee if the charter district withdraws its application and
submits the subsequent application before the expiration of its approval
for the guarantee.
(2) Eligibility to be designated a charter district.
(A) To be designated a charter district and have its
application for the guarantee considered by the commissioner, an open-enrollment
charter holder must:
(i) have operated at least one open-enrollment charter
school in the state of Texas for at least three years and have had
students enrolled in the school for those three years;
(ii) identify in its application for which open-enrollment
charter school and, if applicable, for which open-enrollment charter
school campus the bond funds will be used;