By Cain                                               H.B. No. 2769
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to school district expenditures for administrative
    1-3  purposes.
    1-4        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-5        SECTION 1.  Subchapter B, Chapter 16, Education Code is
    1-6  amended by adding Section 16.058 to read as follows:
    1-7  Section 16.058  Limitations on Administrative Expenditures.
    1-8        (a)  In this section:
    1-9              (1)  "Administrative Costs" include all current
   1-10  operating expenditures from the general fund for general district
   1-11  administration, instructional administration, school
   1-12  administration, curriculum and staff development, communication and
   1-13  dissemination and data processing services.
   1-14              (2)  "Instructional Costs" include all current
   1-15  operating expenditures from the general fund for the purpose of
   1-16  instructing students including those enrolled in adult basic
   1-17  education programs.  This includes expenditures for direct
   1-18  classroom instruction and other activities that deliver, supplement
   1-19  or direct the delivery of learning situations to students in
   1-20  regular program basic skills, bilingual and English as a second
   1-21  language programs, compensatory, remedial or tutorial programs,
   1-22  gifted and talented education programs, and vocational education
   1-23  programs.  Also included are expenditures for special education
    2-1  instructional purposes, including speech, occupational, and
    2-2  physical therapy and other related services necessary for the
    2-3  learning needs of handicapped students.  Upkeep and repairs to
    2-4  instructional equipment in classrooms and expenditures for
    2-5  instructional computing are also included.
    2-6              (3)  "Administrative Cost Ratio" is a district's
    2-7  administrative costs divided by the district's instructional costs.
    2-8        (b)  A school district's administrative cost ratio may not
    2-9  exceed the following amounts:
   2-10              (1)  for the 1993-94 school year, 23 percent;
   2-11              (2)  for the 1994-95 school year, 22 percent;
   2-12              (3)  for the 1995-96 school year, 21 percent or an
   2-13  amount adopted by the foundation school fund budget committee;
   2-14              (4)  for the 1996-97 school year and thereafter, 20
   2-15  percent or an amount adopted by the foundation school fund budget
   2-16  committee.
   2-17        (c)  Each school district's administrative cost ratio shall
   2-18  be adjusted for district size and the percentage of students in the
   2-19  bilingual education program.
   2-20        (d)  Each year the Commissioner shall compute the
   2-21  administrative cost ratio for each district.
   2-22        (e)  Any amount by which a district's administrative cost
   2-23  ratio exceeds the limitation established in this section shall be
   2-24  deducted from the amount the school district is entitled to receive
   2-25  for the following school year from the foundation school fund.  If
    3-1  a district is not entitled to receive foundation school fund
    3-2  payments, the district must remit to the comptroller of public
    3-3  accounts an amount equal to the amount by which the district's
    3-4  administrative cost ratio exceeds the limitation.
    3-5        (f)  The foundation school fund budget committee, established
    3-6  in section 16.256 of this code, by rule shall adopt adjustments to
    3-7  the administrative cost ratio for district size and the percentage
    3-8  of students in the bilingual education program to apply beginning
    3-9  with the 1993-94 school year.  Beginning with the 1995-96 school
   3-10  year the committee by rule may modify the definitions of
   3-11  administrative costs and instructional costs and the limitation on
   3-12  the administrative cost ratio.  The foundation school fund budget
   3-13  committee shall report the adjustments and modifications adopted to
   3-14  the legislature and the commissioner of education.
   3-15        (g)  The Educational Economic Policy Center shall biennially
   3-16  review the method for limiting administrative expenditures and
   3-17  recommend changes to the foundation school fund budget committee.
   3-18        SECTION 2.  Section 16.205, Education Code, is repealed.