Amend CSSB 1873 by adding a new Section ____ to read as
follows:
      SECTION ____. SECTION 42.152, Education Code, is amended by
amending Subsection (c) and adding Subsections (q) and (r) to read
as follows:
      (c)  Funds allocated under this section, other than an
indirect cost allotment established under State Board of Education
rule, which may not exceed 15 percent, may <must> be used only in
providing compensatory education and accelerated instruction
programs under Section 29.081 and may only be spent to improve and
enhance programs and services funded under the regular education
program. A district's compensatory education allotment may only be
used for costs supplementary to the regular program, such as costs
for program and student evaluation, instructional materials and
equipment and other supplies required for quality instruction,
supplemental staff expenses, salary supplements for teachers,
smaller class size, and individualized instruction <, and the
district must account for the expenditure of state funds by program
and by campus under existing agency reporting and auditing
procedures.  Funds allocated under this section, other than the
indirect cost allotment, shall only be expended to improve and
enhance programs and services funded under the regular education
program>. A home-rule school district or an open-enrollment charter
school must use funds allocated under Subsection (a) to provide
compensatory education services but is not otherwise subject to
Subchapter C, Chapter 29.
      (q)  The State Board of Education, with the assistance of the
state auditor and the comptroller, shall develop and implement by
rule a reporting and auditing system for district and campus
expenditures of compensatory education funds to ensure that
compensatory education funds, other than the indirect cost
allotment, are spent only to supplement the regular program. The
commissioner, in the year following an audit of compensatory
education expenditures, shall withhold from a district's foundation
school fund payment an amount equal to the amount of compensatory
education funds the agency determines were not used in compliance
with Subsection (c). The commissioner shall release to a district
funds withheld under this subsection when the district provides to
the commissioner a detailed plan to spend those funds in compliance
with Subsection (c).
      (r)  Subsection (q) applies beginning with the 1998-1999
school year. For the 1997-1998 school year, a school district shall
account for the expenditure of funds allocated under Subsection (a)
by program and by campus under existing agency reporting and
auditing procedures. The board, state auditor, and comptroller
shall develop the reporting and auditing system required by
Subsection (q) not later than August 1, 1998. This subsection
expires September 1, 1999.