1-1     By:  Shapiro                                           S.B. No. 875
 1-2           (In the Senate - Filed March 4, 1999; March 8, 1999, read
 1-3     first time and referred to Committee on Education; May 3, 1999,
 1-4     reported adversely, with favorable Committee Substitute by the
 1-5     following vote:  Yeas 7, Nays 0; May 3, 1999, sent to printer.)
 1-6     COMMITTEE SUBSTITUTE FOR S.B. No. 875                By:  Zaffirini
 1-7                            A BILL TO BE ENTITLED
 1-8                                   AN ACT
 1-9     relating to the financial accountability of school districts.
1-10           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11           SECTION 1.  Chapter 39, Education Code, is amended by adding
1-12     Subchapter I to read as follows:
1-13                   SUBCHAPTER I.  FINANCIAL ACCOUNTABILITY
1-14           Sec. 39.201.  FINANCIAL ACCOUNTABILITY RATING SYSTEM.
1-15     (a)  The commissioner by rule shall establish a financial
1-16     accountability rating system for school districts, to be
1-17     implemented beginning in the 2001-2002 school year, based on:
1-18                 (1)  the findings of a district's annual audit report
1-19     under Section 44.008;
1-20                 (2)  the agency's review of a district's annual audit
1-21     report under Section 44.008(e); and
1-22                 (3)  quantitative performance data relating to a
1-23     district collected through the Public Education Information
1-24     Management System (PEIMS) established under Section 42.006.
1-25           (b)  The financial accountability rating system shall compare
1-26     the performance of each school district on financial excellence
1-27     indicators with standards established by the commissioner.
1-28           (c)  The commissioner shall in consultation with the
1-29     comptroller develop and implement the financial accountability
1-30     rating system.
1-31           Sec. 39.202.  ANNUAL REPORTS.  (a)  Each year, starting with
1-32     the 2002-2003 school year, the agency shall prepare and distribute
1-33     to each school district a report that rates the district's prior
1-34     year performance on the financial excellence indicators.  The
1-35     report shall include the recommendations of the commissioner under
1-36     Section 44.008(e) and other appropriate recommendations.
1-37           (b)  The board of trustees shall disseminate and publicize
1-38     the report in accordance with the rules of the commissioner.
1-39           (c)  The report may be combined with other reports and
1-40     financial statements, including other reports under this chapter.
1-41           SECTION 2.  Subsection (e), Section 44.008, Education Code,
1-42     is amended to read as follows:
1-43           (e)  The audit reports shall be reviewed by the agency, and
1-44     the commissioner shall notify the board of trustees of objections,
1-45     violations of sound accounting practices or law and regulation
1-46     requirements, or of recommendations concerning the audit reports
1-47     that the commissioner wants to make.  If the audit report reflects
1-48     that penal laws have been violated, the commissioner shall notify
1-49     the appropriate county or district attorney, who shall thoroughly
1-50     investigate, and the attorney general.  The commissioner shall have
1-51     access to all vouchers, receipts, district fiscal and financial
1-52     records, and other school records as the commissioner considers
1-53     necessary and appropriate for the review, analysis, and passing on
1-54     audit reports.  Beginning with the 2000-2001 school year, school
1-55     districts shall make available to the agency their complete audited
1-56     annual financial reports and management letters in an electronic
1-57     format to be determined by the commissioner.  The commissioner may
1-58     waive this requirement if it will unduly burden a district.
1-59           SECTION 3.  Section 402.028, Government Code, is amended by
1-60     adding Subsection (d) to read as follows:
1-61           (d)  The attorney general shall ensure that prosecuting
1-62     attorneys and the general public are aware of the availability of
1-63     assistance under this section, including assistance in the
1-64     investigation and prosecution of crimes involving public school
 2-1     funds.
 2-2           SECTION 4.  This Act takes effect September 1, 1999.
 2-3           SECTION 5.  The importance of this legislation and the
 2-4     crowded condition of the calendars in both houses create an
 2-5     emergency and an imperative public necessity that the
 2-6     constitutional rule requiring bills to be read on three several
 2-7     days in each house be suspended, and this rule is hereby suspended,
 2-8     and that this Act take effect and be in force from and after its
 2-9     passage, and it is so enacted.
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