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
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
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
If the guarantee is granted, but the
bonds are not approved by the Office of the Attorney General within 180
days of the application deadline, the commissioner will consider the
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
Information for Charter Schools
Percentage of Students in Open-Enrollment Charters
19 Texas Administrative Code 33.67(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 295,538 (5.50%) out of a total enrollment of 5,369,187 students in the 2017–2018 school year.* As a result, we will use 5.10% of total available capacity of the bond guarantee program for charter school guarantees beginning with the February 2018 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 2017 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 §33.67 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: (Excel, 12 KB) (PDF 76 KB).
For additional information, contact:
Division of State Funding