Senator West advocates for transparency in Texas bond guarantee program with SB 604

The Senate Committee on Education K-16 convened on April 8, 2025, to discuss key legislative matters, including Senate Bill 604, presented by Senator West. The primary focus of the meeting was the Texas Permanent School Fund Corporation's management of the Bond Guarantee Program (BGP), which guarantees bonds for over 900 schools and charter districts, amounting to more than $117 billion.

Senator West highlighted a critical issue regarding the financial health of schools participating in the BGP. He noted that if a school or charter district defaults on bond payments, the state is responsible for covering the costs, which are then deducted from future state allocations to those institutions. This system places a significant financial burden on taxpayers, especially when bonds are downgraded to speculative or junk status.

In the fiscal year 2024-2025, over $100 million in bonds backed by the BGP faced downgrades, raising concerns about the financial stability of the affected districts. Senator West emphasized the need for increased transparency within the program. He proposed that Senate Bill 604 require the Permanent School Fund Corporation to publicly track and disclose the status of bonds downgraded to speculative status on a quarterly basis. This measure aims to provide early warning signs of financial distress, allowing for timely interventions.

During the meeting, there were no questions from committee members regarding the bill, and public testimony was closed without any individuals expressing support or opposition. The bill was left pending for further consideration.

The committee then announced a recess, with plans to reconvene later in the session. This meeting underscored ongoing efforts to enhance financial accountability and transparency in Texas's education funding mechanisms.