Bond Guarantee Program
The Bond Guarantee Program (BGP), using the corpus of the Permanent School Fund (PSF), guarantees bonds issued by a school district or charter school. The PSF guarantee has received “AAA” ratings from the major bond rating services and replaces the need for private bond insurance.
Both districts and charters must apply to the TEA and be approved by the commissioner of education to participate in this program. The TEA reviews each application according to statutory requirements and State Board of Education (SBOE) rules. This review must confirm that the application is complete and accurate. The district or charter must also be financially sound. The TEA also reviews the School FIRST rating or Charter FIRST rating, the annual financial audit report, accreditation status, and any complaints.
Law and Rules
- Texas Education Code: §7.102(c)(33), State Board of Education Powers and Duties
- Texas Education Code: §45.063, Rules
- State Board of Education Rules: 19 Texas Administrative Code §33.6, Bond Guarantee Program for School Districts
- State Board of Education Rules: 19 Texas Administrative Code §33.7, Bond Guarantee Program for Charter Schools
- Commissioner's Rules on the Charter Reserve Fund: §33.1001. Payments for Remittance to Charter District Bond Guarantee Reserve Fund.
Information on Applying for a Guarantee
The TEA only accepts applications for the BGP through the Municipal Advisory Council (MAC) website.
The link to the sign-up page for the BGP is located on MAC home page. Click that link.
- If you currently have an account with the MAC, click the Please enable my account button (indicating that you will be completing PSF Bond Guarantee applications). This action will send the MAC an email instructing them to give you access to the application.
- If you do not currently have an account, the link will first take you to a page to create an account (at no charge). On the succeeding page, click the Please enable my account button. This action will send the MAC an email instructing them to give you access to the application.
Once you have been granted access to the application, you will see a link for the PSF application under My MAC (on the left side of the page). Click on that link to begin the process.
- Click Create New Application.
- Review the application requirements.
- Click Begin PSF Application.
- Complete the application as instructed by the system.
If you have any questions about the online application process, please send an email to the MAC at email@example.com or call Laura Slaughter or Terrence Spencer at (512) 476-6947.
Applications for New or Combination Issues
Applications for new or combination (new and refunding) issues are subject to a monthly prioritization system in accordance with SBOE rules. Applications that are received on or before 5:00 p.m. of the last business day of the calendar month will be held until the fifteenth business day of the subsequent month. The commissioner of education announces the results of the prioritization on this day each month.
Each district or charter that submits a valid application will be notified of the application status on the fifteenth business day of the month that follows the application deadline.
If a district does not receive a guarantee, the commissioner will consider the application withdrawn. The TEA will not retain applications that were denied a guarantee. However, a district or charter may reapply for a guarantee in a subsequent month.
If the guarantee is granted, but the bonds are not approved by the Office of the Attorney General within 180 days of the date of the letter granting the approval for the guarantee, the commissioner will consider the application withdrawn.
Applications for Refunding Bonds with Present Value Savings
Applications for refunding bonds with present value savings (that refund previously guaranteed bonds) require a separate application form and are not subject to the monthly prioritization system.
Information for Charter Schools
Percentage of Students in Open-Enrollment Charters
19 Texas Administrative Code 33.7(d)(1) requires the commissioner of education to post information each year stating the percentage of students enrolled in charter schools. This information is used to calculate the available capacity of the Permanent School Fund to guarantee bonds for charter schools. Charter schools enrolled 403,113 (7.36%) out of a total enrollment of 5,480,190 students in the 2022–2023 school year.* As a result, we will use 7.36% of total available capacity of the bond guarantee program for charter school guarantees beginning with the February 2023 round.
*Per statute, these numbers are based on enrollment data submitted by school districts and charter schools to the Public Information Management System (PEIMS) during the fall 2022 submission.
Payments for Remittance to Charter District Bond Guarantee Reserve Fund
Texas Education Code (TEC) §45.0571 authorizes the commissioner to establish rules related to the Charter District Bond Guarantee Reserve Fund. Those rules are established in 19 TAC Chapter 33, Subchapter AA §33.1001.
The amount to be remitted is based on the savings to the issuer as a result of being able to access the guarantee. To determine the payment required, the commissioner will calculate an amount equal to 20% of the savings over the life of the bond to the charter district resulting from the lower interest rate on the bond due to the guarantee by the Permanent School Fund. The formula for calculating the amount due will be R = (P x S x 0.2) ÷ (1 + PV)T.
"R" is the annual amount to be contributed to Charter District Bond Guarantee Reserve Fund;
"P" is the outstanding principal amount on the closing date of the bond or the outstanding principal amount on the anniversary of the closing date of the bond, as applicable.
"S" is the savings to the charter district as a result of the bond guarantee under §33.7 of this title, which is computed as the difference between the preceding 36-month moving average of the Thomson Reuters Municipal Market Data index yield for the Baa twenty-year maturity and the preceding 36-month moving average of the Thomson Reuters Municipal Market Data index yield for the AAA twenty-year maturity. If the Thomson Reuters Municipal Market Data index is discontinued, the commissioner shall choose another data source for a reasonable period of time until this section can be amended with another acceptable data source. The savings "S" shall remain constant for the life of the newly guaranteed bond.
"PV" is the present value discount factor, which is the yield to worst of the Bloomberg Barclays US Aggregate 3-5 Year Bond Index on the last business day of the previous month. If the Bloomberg Barclays US Aggregate 3-5 Year Bond Index is discontinued, the commissioner shall choose another data source for a reasonable period of time until this section can be amended with another acceptable data source.
"T" is the number of years from the anniversary of the closing date of the bond.
The payment is equal to the sum of the amount required annually and is due within 30 days of the closing date of the bonds.
The value of “S” is calculated in March and September of the applicable state fiscal year. The value of “PV” is calculated monthly. Both values can be found in this spreadsheet: Charter Reserve Calculation Numbers.
- Bond Transaction Document Provisions (March 27, 2017)
- Permanent School Fund website
- PSF Bond Guarantee Program Disclosure Language (August 04, 2023)
- Texas Bond Review Board's Website - School District Debt Information