By:  Shapiro                                           S.B. No. 875
                                A BILL TO BE ENTITLED
                                       AN ACT
 1-1     relating to the financial accountability of school districts.
 1-3           SECTION 1.  Chapter 39, Education Code, is amended by adding
 1-4     Subchapter I to read as follows:
 1-7     (a)  The commissioner by rule shall establish a financial
 1-8     accountability rating system for school districts, to be
 1-9     implemented beginning in the 2001-2002 school year, based on:
1-10                 (1)  the findings of a district's annual audit report
1-11     under Section 44.008;
1-12                 (2)  the agency's review of a district's annual audit
1-13     report under Section 44.008(e); and
1-14                 (3)  quantitative performance data relating to a
1-15     district collected through the Public Education Information
1-16     Management System (PEIMS) established under Section 42.006.
1-17           (b)  The financial accountability rating system shall compare
1-18     the performance of each school district on financial excellence
1-19     indicators with standards established by the commissioner.
1-20           (c)  The commissioner shall in consultation with the
1-21     comptroller develop and implement the financial accountability
1-22     rating system.
1-23           Sec. 39.202.  ANNUAL REPORTS.  (a)  Each year, starting with
1-24     the 2002-2003 school year, the agency shall prepare and distribute
 2-1     to each school district a report that rates the district's prior
 2-2     year performance on the financial excellence indicators.  The
 2-3     report shall include the recommendations of the commissioner under
 2-4     Section 44.008(e) and other appropriate recommendations.
 2-5           (b)  The board of trustees shall disseminate and publicize
 2-6     the report in accordance with the rules of the commissioner.
 2-7           (c)  The report may be combined with other reports and
 2-8     financial statements, including other reports under this chapter.
 2-9           SECTION 2.  Subsection (e), Section 44.008, Education Code,
2-10     is amended to read as follows:
2-11           (e)  The audit reports shall be reviewed by the agency, and
2-12     the commissioner shall notify the board of trustees of objections,
2-13     violations of sound accounting practices or law and regulation
2-14     requirements, or of recommendations concerning the audit reports
2-15     that the commissioner wants to make.  If the audit report reflects
2-16     that penal laws have been violated, the commissioner shall notify
2-17     the appropriate county or district attorney, who shall thoroughly
2-18     investigate, and the attorney general.  The commissioner shall have
2-19     access to all vouchers, receipts, district fiscal and financial
2-20     records, and other school records as the commissioner considers
2-21     necessary and appropriate for the review, analysis, and passing on
2-22     audit reports.  Beginning with the 2000-2001 school year, school
2-23     districts shall make available to the agency their complete audited
2-24     annual financial reports and management letters in an electronic
2-25     format to be determined by the commissioner.  The commissioner may
2-26     waive this requirement if it will unduly burden a district.
 3-1           SECTION 3.  Section 402.028, Government Code, is amended by
 3-2     adding Subsection (d) to read as follows:
 3-3           (d)  The attorney general shall ensure that prosecuting
 3-4     attorneys and the general public are aware of the availability of
 3-5     assistance under this section, including assistance in the
 3-6     investigation and prosecution of crimes involving public school
 3-7     funds.
 3-8           SECTION 4.  This Act takes effect September 1, 1999.
 3-9           SECTION 5.  The importance of this legislation and the
3-10     crowded condition of the calendars in both houses create an
3-11     emergency and an imperative public necessity that the
3-12     constitutional rule requiring bills to be read on three several
3-13     days in each house be suspended, and this rule is hereby suspended,
3-14     and that this Act take effect and be in force from and after its
3-15     passage, and it is so enacted.