Nov. 1, 2011 at 6:01 a.m.
Official Ballot Language
The constitutional amendment providing for the issuance of general obligation bonds of the State of Texas to finance educational loans to students.
The Hinson-Hazlewood College Student Loan Program provides low-interest loans to Texas residents who attend public or private higher education institutions in Texas and who have insufficient resources to finance a college education. The loan program uses general obligation bonds to finance the loans, which generally must be authorized by constitutional amendment. Since 1965, Texas voters have approved seven constitutional amendments authorizing $1.86 billion in bonds for the HH loan program. It is projected that the remaining bonds will be exhausted by 2013.
Proposition 3 would authorize additional bonds to be issued to support the HH loan program, but unlike the previous bond authorizations, the proposed amendment would not limit the total amount of bonds issued, as long as the aggregate amount did not exceed the total amount previously authorized by voters. This ongoing authority is known as "evergreen" authority.
The HH student loan program has a demonstrated record of success and is self-supporting, depending not on tax dollars, but on money from student loan repayments to pay the interest and principal on the bonds. Bonds for the program do not count against the state bond debt cap because they are financed through loan repayments, not general revenue.
The "evergreen" authority would enable the student loan program to be continued without repeated and costly constitutional amendment elections. This type of ongoing authority was overwhelmingly approved by Texas voters in 2009 for state bonds issued by the Veteran's Land Board.
Recent reductions in federal financial aid and possible reductions in state programs increase the need for additional sources of college funding for Texas students.
The loan program supports the state's goal to improve student access to postsecondary education.
This is not a good time to increase state debt. Even though the program is self-supporting, the bonds are considered an obligation of the state, and the state is ultimately responsible for repaying the money borrowed.
The current poor economy could increase the rate of default on the loans, affecting the program's ability to be self-supporting.
The "evergreen" authority would re-authorize the issuance of bonds originally approved as long as 40 years ago and since paid off and retired. The Legislature and the voters should maintain accountability for the administration of the funds by retaining their authority to approve the issuance of state bonds periodically.