Texas Insurance Codes 5.76-5

Sec. 1. The legislature finds that the issuance of bonds for the purposes of providing a method to raise funds to provide workers' compensation insurance coverage through the Texas Workers' Compensation Insurance Fund and workers' compensation insurance coverage for employers in this state is for the benefit of the public and in furtherance of a public purpose.

Definitions

Sec. 2. In this article:

(1) "Bond resolution" means the resolution or order authorizing the bonds to be issued under this article.

(2) "Board" means the board of directors of the Texas Public Finance Authority.

(3) "Fund" means the Texas Workers' Compensation Insurance Fund.

Bonds authorized; application of Texas public finance authority act

Sec. 3. (a) On behalf of the fund, the Texas Public Finance Authority shall issue revenue bonds to:

(1) establish the initial surplus of the fund;

(2) establish and maintain reserves;

(3) pay initial operating costs;

(4) pay costs related to issuance of the bonds; and

(5) pay other costs related to the bonds as may be determined by the board.

(b) To the extent not inconsistent with this article, the Texas Public Finance Authority Act (Article 601d, Vernon's Texas Civil Statutes) applies to bonds issued under this article. In the event of a conflict, this article controls.

Applicability of other statutes

Sec. 4. The following Acts apply to bonds issued under this article to the extent consistent with this article:

(1) Chapter 656, Acts of the 68th Legislature, Regular Session, 1983 (Article 717q, Vernon's Texas Civil Statutes);

(2) Chapter 3, Acts of the 61st Legislature, Regular Session, 1969 (Article 717k-2, Vernon's Texas Civil Statutes);

(3) the Bond Procedures Act of 1981 (Article 717k-6, Vernon's Texas Civil Statutes);

(4) Chapter 1078, Acts of the 70th Legislature, Regular Session, 1987 (Article 717k-7, Vernon's Texas Civil Statutes);

(5) Article 3, Chapter 53, Acts of the 70th Legislature, 2nd Called Session, 1987 (Article 717k-8, Vernon's Texas Civil Statutes);

(6) Article 717k-9, Revised Statutes; and

(7) Chapter 400, Acts of the 66th Legislature, 1979 (Article 717m-1, Vernon's Texas Civil Statutes).

Limits

Sec. 5. The Texas Public Finance Authority may issue, on behalf of the fund, bonds in a total amount not to exceed $300 million.

Conditions

Sec. 6. (a) Bonds may be issued at public or private sale.

(b) Bonds may mature not more than 20 years after the date issued.

(c) Bonds must be issued in the name of the fund.

Additional covenants

Sec. 7. In a bond resolution, the board may make additional covenants with respect to the bonds and the designated income and receipts of the fund pledged to their payment and may provide for the flow of funds and the establishment, maintenance, and investment of funds and accounts with respect to the bonds.

Special accounts

Sec. 8. (a) A bond resolution may establish special accounts including an interest and sinking fund account, reserve account, and other accounts.

(b) The president of the fund or the president's designee shall administer the accounts in accordance with Article 5.76-3 of this code.

Security

Sec. 9. (a) Bonds are payable only from the maintenance tax surcharge established in Section 10 of this article or other sources the fund is authorized to levy, charge, and collect in connection with paying any portion of the bonds.

(b) Bonds are obligations solely of the fund. Bonds do not create a pledging, giving, or lending of the faith, credit, or taxing authority of this state.

(c) Each bond must include a statement that the state is not obligated to pay any amount on the bond and that the faith, credit, and taxing authority of this state are not pledged, given, or lent to those payments.

(d) Each bond issued under this article must state on its face that the bond is payable solely from the revenues pledged for that purpose and that the bond does not and may not constitute a legal or moral obligation of the state.

Maintenance tax surcharge

Sec. 10. (a) A maintenance tax surcharge is assessed against:

(1) each insurance company writing workers' compensation insurance in this state;

(2) each certified self-insurer as provided in Chapter D, Article 3, Texas Workers' Compensation Act (Article 8308-3.51 et seq., Vernon's Texas Civil Statutes); and

(3) the fund.

(b) The maintenance tax surcharge shall be set in an amount sufficient to pay all debt service on the bonds. The maintenance tax surcharge is set by the commissioner in the same time and shall be collected by the comptroller on behalf of the fund in the same manner as provided under Article 5.68 of this code.

(c) On receiving notice of the rate of assessment set by the Texas Workers' Compensation Commission under Section 2.23, Texas Workers' Compensation Act (Article 8308-2.23, Vernon's Texas Civil Statutes), the State Board of Insurance shall increase the tax rate to a rate sufficient to pay all debt service on the bonds subject to the maximum tax rate established by Section 2.22, Texas Workers' Compensation Act (Article 8308-2.22, Vernon's Texas Civil Statutes). If the resulting tax rate is insufficient to pay all costs for the Texas Workers' Compensation Commission and all debt service on the bonds, the State Board of Insurance may assess an additional surcharge not to exceed one percent of gross workers' compensation premiums to cover all debt service on the bonds. In this code, the maintenance tax surcharge includes the additional maintenance tax assessed under this subsection and the surcharge assessed under this subsection to pay all debt service of the bonds.

(d) The fund and each insurance company may pass through the maintenance tax surcharge to each of its policyholders.

(e) As a condition of engaging in the business of insurance in this state, an insurance company writing workers' compensation insurance in this state agrees that if the company leaves the workers' compensation insurance market in this state it remains obligated to pay, until the bonds are retired, the company's share of the maintenance tax surcharge assessed under this section in an amount proportionate to that company's share of the workers' compensation insurance market in this state as of the last complete reporting period before the date on which the company ceases to engage in the insurance business in this state. The proportion assessed against the company shall be based on the company's workers' compensation insurance gross premiums for the company's last reporting period. However, a company is not required to pay the proportionate amount in any year in which the surcharge assessed against insurance companies continuing to write workers' compensation insurance in this state is sufficient to service the bond obligation. The abolition of the fund under Section 2(d), Article 5.76-3, Insurance Code, does not affect the liability of an insurance company for a maintenance tax surcharge assessed under this section.

Sec. 10A. Expired.

Tax exempt

Sec. 11. The bonds issued under this article, and any interest from the bonds, and all assets pledged to secure the payment of the bonds are free from taxation by the state or a political subdivision of this state.

Authorized investments

Sec. 12. The bonds issued under this article constitute authorized investments under Article 2.10 and Subpart A, Part I, Article 3.39 of this code.

State pledge

Sec. 13. The state pledges to and agrees with the owners of any bonds issued in accordance with this article that the state will not limit or alter the rights vested in the fund to fulfill the terms of any agreements made with the owners of the bonds or in any way impair the rights and remedies of those owners until the bonds, any premium or interest, and all costs and expenses in connection with any action or proceeding by or on behalf of those owners are fully met and discharged. The fund may include this pledge and agreement of the state in any agreement with the owners of the bonds.

Enforcement by mandamus

Sec. 14. A writ of mandamus and all other legal and equitable remedies are available to any party at interest to require the fund and any other party to carry out agreements and to perform functions and duties under this article, the Texas Constitution, or a bond resolution.

Application to Texas Mutual Insurance Company

Sec. 15. (a) Notwithstanding any other provision of this article, effective September 1, 2001:

(1) the fund is operated as the Texas Mutual Insurance Company as provided by Article 5.76-3 of this code; and

(2) additional bonds may not be issued under this article.

(b) The Texas Mutual Insurance Company may exercise any power, and is liable to perform any duty, imposed on the fund as this article existed immediately before September 1, 2001.

Added by Acts 1991, 72nd Leg., 2nd C.S., ch. 12, Sec. 18.19, eff. Aug. 30, 1991. Sec. 10(b) amended by Acts 1993, 73rd Leg., ch. 685, Sec. 3.17, eff. Sept. 1, 1993; Sec. 10A added by Acts 1999, 76th Leg., ch. 1126, Sec. 3, eff. Aug. 30, 1999; Sec. 15 added by Acts 2001, 77th Leg., ch. 1195, Sec. 2.02, eff. Sept. 1, 2001.