Texas Administrative Code Title 34 - PUBLIC FINANCE
Texas Administrative Code – Title 34: Public Finance
Authority: Title 34 of the Texas Administrative Code governs rules, procedures, and standards related to public finance in Texas, primarily under the Texas Public Finance Authority (TPFA) and other state financial entities. It regulates how the state manages debt, bonds, credit ratings, investments, and reporting.
Purpose:
Ensure the sound financial management of public funds.
Provide transparency and accountability in state debt issuance and public finance.
Protect public resources and the interests of taxpayers.
1. Structure of Title 34
Title 34 is divided into several chapters, each focusing on a specific area of public finance:
Chapter 1201 – General Provisions
Establishes the purpose, definitions, and scope of rules under the TPFA.
Defines key terms like:
“Authority” – Texas Public Finance Authority
“Debt instrument” – bonds, notes, or other financial obligations issued by the state
“Credit rating” – evaluation by a rating agency of the state’s ability to meet debt obligations
Chapter 1202 – Debt Issuance and Management
Rules for issuing bonds and notes:
Procedure for bond authorization and legislative approval
Requirements for official statements and investor disclosure
Restrictions on interest rates, maturities, and call provisions
Debt reporting: State agencies must submit debt information to the TPFA regularly.
Chapter 1203 – Investment Management
Governs state investment of public funds, including:
Types of allowable investments (Treasury securities, municipal bonds, etc.)
Risk management standards
Reporting and auditing requirements
Requires compliance with the Public Funds Investment Act.
Chapter 1204 – Fiscal Procedures and Accounting
Defines financial reporting standards for state agencies:
Monthly and annual reports
Procedures for approving expenditures
Rules for cash management and internal controls
Chapter 1205 – Enforcement and Penalties
Specifies administrative penalties for violations, including:
Suspension of borrowing privileges
Civil penalties for misreporting or misuse of funds
Requirement to correct procedural errors in debt issuance
2. Key Rules and Requirements
A. Debt Issuance
Bonds cannot be sold without proper authorization from the legislature or the TPFA.
All official statements must disclose:
Outstanding debt
Future payment obligations
Credit ratings and financial risks
B. Reporting Requirements
State agencies must report all new debt obligations within 30 days.
Annual reports must include:
Total debt outstanding
Debt service schedules
Interest rates and maturities
C. Investment Standards
Funds must be invested safely, with liquidity and yield considerations.
Agencies cannot invest in high-risk or speculative securities.
Investments are audited annually.
D. Transparency and Accountability
All financial statements must be publicly available.
Misrepresentation or failure to comply can result in administrative action.
3. Examples
While case law specifically citing Title 34 TAC is limited, related Texas court cases and administrative decisions illustrate enforcement:
Example 1: Misrepresentation of Bond Issuance
A Texas state agency issued bonds but failed to disclose pending litigation affecting revenue.
The TPFA required corrective statements, and the agency faced administrative sanctions.
Principle: Transparency and full disclosure are mandatory under Title 34 rules.
Example 2: Investment Mismanagement
A local government misinvested public funds in high-risk securities beyond allowable types.
TPFA or state auditors required immediate liquidation and reporting.
Court upheld authority of the TPFA to enforce investment limits.
Example 3: Unauthorized Debt
An agency attempted to issue debt without proper legislative or board approval.
TPFA voided the debt issuance, and agency officials were prohibited from further unauthorized borrowing.
Legal principle: Debt issuance must strictly follow administrative and statutory requirements.
These cases show that compliance with Title 34 is mandatory and that failure to follow procedures can lead to administrative or legal consequences.
4. Connection to Texas Statutes
Title 34 TAC implements statutes such as:
Texas Government Code §1231 – Texas Public Finance Authority
Establishes the TPFA and its powers.
Texas Government Code §2256 – Public Funds Investment Act
Governs investment of public funds.
Texas Government Code §1201 – State Debt Management
Authorizes debt issuance and reporting.
The TAC rules provide detailed administrative guidance for these statutory requirements, including specific procedures and compliance measures.
5. Summary of Title 34 – Public Finance
Title 34 ensures that:
Debt issuance by state agencies follows proper authorization and disclosure.
Investments of public funds are safe, transparent, and audited.
Financial reporting is accurate and timely.
Noncompliance can result in administrative sanctions or civil penalties.
Key Takeaways:
Transparency, accountability, and statutory compliance are central.
TPFA serves as the primary regulatory authority.
Administrative rules have legal force and can be enforced through penalties or corrective actions.
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