By Sadler                                             H.R. No. 1402
         Line and page numbers may not match official copy.
         Bill not drafted by TLC or Senate E&E.
                                 R E S O L U T I O N
 1-1           BE IT RESOLVED by the House of Representatives of the State
 1-2     of Texas, 77th Legislature, Regular Session, 2001, That House Rule
 1-3     13, Section 9(a), be suspended in part as provided by House Rule
 1-4     13, Section 9(f), to enable the conference committee appointed to
 1-5     resolve the differences on House Bill 3343, relating to the
 1-6     operation and funding of certain group coverage programs for
 1-7     certain school and educational employees and their dependents, to
 1-8     consider and take action on the following matters:
 1-9           (1)  House Rule 13, Sections 9(a)(1) and (4), are suspended
1-10     to permit the committee to add text changing Section 2, Article
1-11     3.50-7, Insurance Code, as added by SECTION 1.01, House Bill 3343,
1-12     to read as follows:
1-13           Sec. 2.  DEFINITIONS. In this article:
1-14                 (1)  "Administering firm" means any entity designated
1-15     by the trustee to administer any coverages, services, benefits, or
1-16     requirements under this article and the trustee's rules adopted
1-17     under this article.
1-18                 (2)  "Charter school"  means an open-enrollment charter
1-19     school established under Subchapter D, Chapter 12, Education Code.
1-20                 (3)  "Dependent" means:
1-21                       (A)  a spouse of a full-time employee or
1-22     part-time employee;
1-23                       (B)  a full-time or part-time employee's
 2-1     unmarried child who is younger than 25 years of age, including:
 2-2                             (i)  an adopted child;
 2-3                             (ii)  a foster child, stepchild, or other
 2-4     child who is in a regular parent-child relationship; and
 2-5                             (iii)  a recognized natural child;
 2-6                       (C)  a full-time or part-time employee's
 2-7     recognized natural child, adopted child, foster child, stepchild,
 2-8     or other child who is in a regular parent-child relationship and
 2-9     who lives with or whose care is provided by the employee or the
2-10     surviving spouse on a regular basis, regardless of the child's age,
2-11     if the child is mentally retarded or physically incapacitated to
2-12     such an extent as to be dependent on the employee or surviving
2-13     spouse for care or support, as determined by the trustee; and
2-14                       (D)  notwithstanding any other provision of this
2-15     code, any other dependent of a full-time or part-time employee
2-16     specified by rules adopted by the trustee.
2-17                 (4)  "Employee" means a participating member of the
2-18     Teacher Retirement System of Texas who is employed by a
2-19     participating entity and who  is not receiving coverage from a
2-20     uniform group insurance program under the Texas Employees Uniform
2-21     Group Insurance Benefits Act (Article 3.50-2, Vernon's Texas
2-22     Insurance Code) or the Texas State College and University Employees
2-23     Uniform Insurance Benefits Act (Article 3.50-3, Vernon's Texas
2-24     Insurance Code) or from the Texas Public School Retired Employees
2-25     Group Insurance Program established under Article 3.50-4 of this
2-26     code. The term does not include an individual performing personal
 3-1     services as an independent contractor.
 3-2                 (5)  "Health coverage plan" means any group policy or
 3-3     contract, hospital service agreement, health maintenance
 3-4     organization agreement, preferred provider arrangement, or any
 3-5     similar group arrangement or any combination of those policies,
 3-6     contracts, agreements, or arrangements that provides for, pays for,
 3-7     or reimburses expenses for health care services.
 3-8                 (6)  "Participating entity" means an entity
 3-9     participating in the uniform group coverage program established
3-10     under this article.  The term includes:
3-11                       (A)  a school district;
3-12                       (B)  another educational district whose employees
3-13     are members of the Teacher Retirement System of Texas;
3-14                       (C)  a regional education service center; and
3-15                       (D)  a charter school that meets the requirements
3-16     of Section 6 of this article.
3-17                 (7)  "Program" means the uniform group coverage program
3-18     established under this article.
3-19                 (8)  "Regional education service center" means a
3-20     regional education service center established under Chapter 8,
3-21     Education Code.
3-22                 (9)  "Trustee" means the Teacher Retirement System of
3-23     Texas.
3-24           Explanation:  This change is necessary to clarify who is a
3-25     dependent eligible for coverage under the new group coverage
3-26     program and to clarify that certain educational districts whose
 4-1     employees are members of the Teacher Retirement System of Texas are
 4-2     also eligible to participate in the program.
 4-3           (2)  House Rule 13, Section 9(a)(4), is suspended to permit
 4-4     the committee to add text changing Sections 4(d) and (e), Article
 4-5     3.50-7, Insurance Code, as added by SECTION 1.01, House Bill 3343,
 4-6     to read as follows:
 4-7           (d)  During the initial period of eligibility, coverage
 4-8     provided under the program may not be made subject to a preexisting
 4-9     condition limitation.
4-10           (e)  The trustee may offer optional coverages to employees
4-11     participating in the program.  The trustee by rule may define the
4-12     types of optional coverages offered under this subsection.
4-13           Explanation:  These changes are necessary to clarify that
4-14     preexisting condition limitations may not be imposed during the
4-15     initial eligibility, and to authorize the provision of certain
4-16     optional coverages to participating employees.
4-17           (3)  House Rule 13, Section 9(a)(4), is suspended to permit
4-18     the committee to add text changing Section 5, Article 3.50-7,
4-19     Insurance Code, as added by SECTION 1.01, House Bill 3343, to read
4-20     as follows:
4-21           Sec. 5.  PARTICIPATION IN PROGRAM BY SCHOOL DISTRICTS, OTHER
4-22     EDUCATIONAL DISTRICTS, AND REGIONAL EDUCATION SERVICE CENTERS. (a)
4-23     Effective September 1, 2002, each school district with 500 or fewer
4-24     employees and each regional education service center is required to
4-25     participate in the program.
4-26           (a-1)  Effective September 1, 2002, a school district that,
 5-1     on January 1, 2001, had more than 500 employees but not more than
 5-2     1,000 employees may elect to participate in the program.  A school
 5-3     district that elects to participate in the program under this
 5-4     subsection must notify the trustee of the election, in the manner
 5-5     prescribed by the trustee, not later than September 30, 2001.  This
 5-6     subsection expires January 1, 2002.
 5-7           (b)  Effective September 1, 2005, a school district with more
 5-8     than 500 employees may elect to participate in the program.  A
 5-9     school district that elects to participate under this subsection
5-10     shall apply for participation in the manner prescribed by the
5-11     trustee by rule.
5-12           (b-1)  Notwithstanding Subsection (b) of this section, a
5-13     school district with more than 500 employees may elect to
5-14     participate in the program before September 1, 2005, if the trustee
5-15     determines that participation by districts in that category would
5-16     be administratively feasible and cost-effective.  This subsection
5-17     expires September 1, 2005.
5-18           (c)  In determining the number of employees of a school
5-19     district for purposes of Subsections (a) and (b) of this section,
5-20     school districts that, on January 1, 2001, were members of a risk
5-21     pool established under the authority of Chapter 172, Local
5-22     Government Code, as provided by Section 22.004, Education Code, may
5-23     elect to be treated as a single unit.  A school district shall
5-24     elect whether to be considered as a member of  a risk pool under
5-25     this section by notifying the trustee not later than September 1,
5-26     2001.
 6-1           (d)  A risk pool in existence on January 1, 2001, that, as of
 6-2     that date, provided group health coverage to 500 or fewer school
 6-3     district employees may elect to participate in the program. 
 6-4           (e)  A school district with 500 or fewer employees that is a
 6-5     member of a risk pool described by Subsection (c) of this section
 6-6     that provides  group health coverage to more than 500 school
 6-7     district employees must elect, not later than September 1, 2001,
 6-8     whether to be treated as a school district with 500 or fewer
 6-9     employees or as part of a unit with more than 500 employees.  The
6-10     school district must notify the trustee of the election, in the
6-11     manner prescribed by the trustee, not later than September 1, 2001.
6-12           (f)  For purposes of this section, participation in the
6-13     program by school districts covered by a risk pool is limited to
6-14     school districts covered by the risk pool as of January 1, 2001.
6-15           (g)  Notwithstanding Subsection (a) of this section, a school
6-16     district otherwise subject to Subsection (a) of this section that,
6-17     on January 1, 2001, was individually self-funded for the provision
6-18     of health coverage to its employees may elect to not participate in
6-19     the program.
6-20           (h)  Notwithstanding Subsection (a) of this section, a school
6-21     district otherwise subject to Subsection (a) of this section that
6-22     is a party to a contract for the provision of insurance coverage to
6-23     the employees of the district that is in effect on September 1,
6-24     2002, is not required to participate in the program until the
6-25     expiration of the contract period.  A school district subject to
6-26     this subsection shall notify the trustee in the manner prescribed
 7-1     by the trustee.  This subsection expires March 1, 2004.
 7-2           (i)  An educational district described by Section 2(6)(B) of
 7-3     this article that, on January 1, 2001, has 500 or fewer employees
 7-4     may elect not to participate in the program.
 7-5           Explanation: This change is necessary to clarify the
 7-6     participation in the group coverage program of educational
 7-7     districts that are not school districts but whose employees are
 7-8     members of the Teacher Retirement System of Texas, to add a January
 7-9     1, 2001, date for determination of the size of a school district or
7-10     risk pool, and to authorize larger districts to participate before
7-11     September 1, 2005, if the Teacher Retirement System of Texas
7-12     authorizes that early participation.
7-13           (4)  House Rule 13, Section 9(a)(4), is suspended to permit
7-14     the committee to add text changing Sections 7(c) and (e), Article
7-15     3.50-7, Insurance Code, as added by SECTION 1.01, House Bill 3343,
7-16     to read as follows:
7-17           (c)  A participating employee may select coverage in any
7-18     coverage plan offered by the trustee.  The employee is not required
7-19     to continue participation in the coverage plan initially selected
7-20     and may select a higher or lower tier coverage plan than the plan
7-21     initially selected by the employee in the manner provided by
7-22     trustee rule.  If the combined contributions received from the
7-23     state and the employing participating entity under Section 9 of
7-24     this article exceed the cost of a coverage plan selected by the
7-25     employee, the employee may use the excess amount of contributions
7-26     to obtain coverage under a higher tier coverage plan, or to pay all
 8-1     or part of the cost of coverage for the employee's dependents.  A
 8-2     married couple, both of whom are eligible for coverage under the
 8-3     program, may pool the amount of contributions to which the couple
 8-4     are entitled under the program to obtain coverage for themselves
 8-5     and dependent coverage.
 8-6           (e)  Notwithstanding Subsection (d) of this section, a
 8-7     participating entity may pay any portion of what otherwise would be
 8-8     the employee share of premiums and other costs associated with the
 8-9     coverage selected by the employee.
8-10           Explanation:  These changes are necessary to specify that an
8-11     employee participating in the group coverage program may elect
8-12     higher or lower coverage plans, clarifies the use of contributions
8-13     for dependent coverage, and expands the authority to pay for part
8-14     of an employee's premiums to all participating entities.
8-15           (5)  House Rule 13, Sections 9(a)(1) and (4), are suspended
8-16     to permit the committee to add text changing Section 9, Article
8-17     3.50-7, Insurance Code, as added by SECTION 1.01, House Bill 3343,
8-18     to read as follows:
8-19           Sec. 9.  PAYMENT OF CONTRIBUTIONS FOR PROGRAM. (a)  The state
8-20     shall assist employees of participating school districts and
8-21     charter schools in the purchase of group health coverage under this
8-22     article by providing for each covered employee the amount of $900
8-23     each state fiscal year or a greater amount as provided by the
8-24     General Appropriations Act.  The state contribution shall be
8-25     distributed through the school finance formulas under Chapters 41
8-26     and 42, Education Code, and used by school districts and charter
 9-1     schools as provided by Sections 42.2514 and 42.260, Education Code.
 9-2           (b)  The state shall assist employees of participating
 9-3     regional education service centers and educational districts
 9-4     described by Section 2(6)(B) of this article in the purchase of
 9-5     group health coverage under this article by providing to the
 9-6     employing service center for each covered employee the amount of
 9-7     $900 each state fiscal year or a greater amount as provided by the
 9-8     General Appropriations Act.
 9-9           (c)  A participating entity shall make contributions for the
9-10     program as provided by Article 3.50-9 of this code.
9-11           (d)  An employee covered by the program shall pay that
9-12     portion of the cost of coverage selected by the employee that
9-13     exceeds the amount of the state contribution under Subsection (a)
9-14     or (b) of this section and the participating entity contribution
9-15     under Subsection (c) of this section.  The employee may pay the
9-16     employee's contribution under this subsection from the amount
9-17     distributed to the employee under Article 3.50-8 of this code.
9-18           (e)  Notwithstanding Subsection (d) of this section, a
9-19     participating entity may pay any portion of what otherwise would be
9-20     the employee share of premiums and other costs associated with the
9-21     coverage selected by the employee.
9-22           Explanation: This change is necessary to clarify how the
9-23     state contributions for the group coverage program will be made,
9-24     and to specify that educational districts that are not school
9-25     districts but whose employees are members of the Teacher Retirement
9-26     System of Texas are eligible for state contributions.
 10-1          (6)  House Rule 13, Sections 9(a)(4), is suspended to permit
 10-2    the committee to add text changing Section 1, Article 3.50-8,
 10-3    Insurance Code, as added by SECTION 1.02, House Bill 3343, by
 10-4    adding a new definition of "cafeteria plan" to read as follows:
 10-5          (1)  "Cafeteria plan" means a plan as defined and authorized
 10-6    by Section 125, Internal Revenue Code of 1986, and its subsequent
 10-7    amendments.
 10-8          Explanation:      This change is necessary to clarify that
 10-9    the reference in the bill to the use of cafeteria plans means a
10-10    plan as prescribed by federal law.
10-11          (7)  House Rule 13, Sections 9(a)(4), is suspended to permit
10-12    the committee to add text changing Section 2, Article 3.50-8,
10-13    Insurance Code, as added by SECTION 1.02, House Bill 3343, to read
10-14    as follows:
10-15          Sec. 2.  ACTIVE EMPLOYEE HEALTH COVERAGE OR COMPENSATION
10-16    SUPPLEMENTATION. (a)  Each year, the trustee shall deliver to each
10-17    school district, including a school district that is ineligible for
10-18    state aid under Chapter 42, Education Code, each other educational
10-19    district that is a member of the Teacher Retirement System of
10-20    Texas, each eligible charter school, and each regional education
10-21    service center state funds in an amount, as determined by the
10-22    trustee, equal to the product of the number of employees employed
10-23    by the district, school, or service center multiplied by $1,000 or
10-24    a greater amount as provided by the General Appropriations Act for
10-25    purposes of this article.
10-26          (b)  All funds received by a school district, other
 11-1    educational district, eligible charter school, or regional
 11-2    education service center under this article are held in trust for
 11-3    the benefit of the employee on whose behalf the district, school,
 11-4    or service center received the funds.
 11-5          (c)  The trustee shall distribute funds under this article in
 11-6    equal monthly installments.  The trustee is entitled to recover
 11-7    from a school district, other educational district, eligible
 11-8    charter school, or regional education service center any amount
 11-9    distributed under this article to which the district, school, or
11-10    service center was not entitled.
11-11          (d)  A determination by the trustee under this section is
11-12    final and may not be appealed.
11-13          Explanation:  This change is necessary to clarify how the
11-14    state  contributions for the group coverage program will be paid
11-15    and allocated, and to specify that educational districts that are
11-16    not school districts but whose employees are members of the Teacher
11-17    Retirement System of Texas are eligible for state contributions.
11-18          (8)  House Rule 13, Section 9(a)(4), is suspended to permit
11-19    the committee to add text changing Section 3, Article 3.50-8,
11-20    Insurance Code, as added by SECTION 1.02, House Bill 3343, to read
11-21    as follows:
11-22          Sec. 3.  EMPLOYEE ELECTION. (a)  If an employee is covered by
11-23    a cafeteria plan of a school district, other educational district,
11-24    eligible charter school, or regional education service center, the
11-25    state contribution under this article shall be deposited in the
11-26    cafeteria plan, and the employee may elect among the options
 12-1    provided by the cafeteria plan.  A cafeteria plan receiving state
 12-2    contributions under this article may include a medical savings
 12-3    account option and must include, at a minimum, the following
 12-4    options:
 12-5                (1)  a health care reimbursement account;
 12-6                (2)  a benefit or coverage other than that provided
 12-7    under Article 3.50-7 of this code, or any employee coverage or
 12-8    dependent coverage available under Article 3.50-7 of this code but
 12-9    not otherwise fully funded by the state or the employer
12-10    contributions, any of which must be a "qualified benefit" under
12-11    Section 125, Internal Revenue Code of 1986, and its subsequent
12-12    amendments;
12-13                (3)  an option for the employee to receive the state
12-14    contribution as supplemental compensation; or
12-15                (4)  an option to divide the state contribution among
12-16    two or more of the other options provided under this subsection.
12-17          (b)  If an employee is not covered by a cafeteria plan of a
12-18    school district, other educational district, eligible charter
12-19    school, or regional education service center, the state
12-20    contribution under this article shall be paid to the employee as
12-21    supplemental compensation.
12-22          (c)  Supplemental compensation under this section must be in
12-23    addition to the rate of compensation that:
12-24                (1)  the school district, other educational district,
12-25    eligible charter school, or regional education service center paid
12-26    the employee in the preceding school year; or
 13-1                (2)  the district, school, or service center would have
 13-2    paid the employee in the preceding school year if the employee had
 13-3    been employed by the district, school, or service center in the
 13-4    same capacity in the preceding school year.
 13-5          (d)  For each state fiscal year, an election under this
 13-6    section must be made before the later of:
 13-7                (1)  August 1 of the preceding state fiscal year; or
 13-8                (2)  the 31st day after the date the employee is hired.
 13-9          (e)  The trustee shall prescribe and distribute to each
13-10    school district, other educational district, eligible charter
13-11    school, and regional education service center:
13-12                (1)  a model explanation written in English and Spanish
13-13    of the options employees may elect under this section and the
13-14    effect of electing each option; and
13-15                (2)  an election form to be completed by employees.
13-16          (f)  Each state fiscal year, a school district, other
13-17    educational district, eligible charter school, or regional
13-18    education service center shall prepare and distribute to each
13-19    employee a written explanation in English and Spanish, as
13-20    appropriate, of the options the employee may elect under this
13-21    section.  The explanation must be based on the model explanation
13-22    prepared by the trustee under Subsection (e) of this section and
13-23    must reflect all available health coverage options available to the
13-24    employee.  The explanation must be distributed to an employee
13-25    before the later of:
13-26                (1)  July 1 of the preceding state fiscal year; or
 14-1                (2)  the fifth day after the date the employee is
 14-2    hired.
 14-3          (g)  The written explanation under Subsection (f) of this
 14-4    section must be accompanied by a copy of the election form
 14-5    prescribed under Subsection (e)(2) of this section.
 14-6          (h)  Any unencumbered funds that are returned to the school
 14-7    district from accounts established under Subsection (a) of this
 14-8    section may be used only to provide employee compensation,
 14-9    benefits, or both.
14-10          Explanation:  This change is necessary to clarify the options
14-11    available to employees and to clarify the requirements for employee
14-12    elections.
14-13          (9)  House Rule 13, Section 9(a)(4), is suspended to permit
14-14    the committee to add text changing Section 4, Article 3.50-8,
14-15    Insurance Code, as added by SECTION 1.02, House Bill 3343, by
14-16    adding a new Subsection (b) to read as follows:
14-17          (b)  The trustee may enter into interagency contracts with
14-18    any agency of this state for the purpose of assistance in
14-19    implementing this article.
14-20          Explanation:  This change is necessary to clarify that the
14-21    contract authority of the Teacher Retirement System of Texas
14-22    applies to contracts under Article 3.50-8, Insurance Code, as added
14-23    by the bill.
14-24          (9)  House Rule 13, Section 9(a)(4), is suspended to permit
14-25    the committee to add text changing Sections 1 and 2, Article
14-26    3.50-10, Insurance Code, as added by SECTION 1.04, House Bill 3343
 15-1    (corresponding to Article 3.50-9, Insurance Code, in conference
 15-2    committee report), to read as follows:
 15-3          Sec. 1.  DEFINITIONS. In this article:
 15-4                (1)  "Participating employee" means an employee of a
 15-5    school district, other educational district whose employees are
 15-6    members of the Teacher Retirement System of Texas, participating
 15-7    charter school, or regional education service center who
 15-8    participates in a group health coverage plan provided by or through
 15-9    the district, school, or service center.
15-10                (2)  "Participating charter school" means an
15-11    open-enrollment charter school established under Subchapter D,
15-12    Chapter 12, Education Code, that participates in the uniform group
15-13    coverage program established under Article 3.50-7 of this code.
15-14                (3)  "Regional education service center" means a
15-15    regional education service center established under Chapter 8,
15-16    Education Code.
15-17          Sec. 2.  MAINTENANCE OF EFFORT FOR 2000-2001 SCHOOL YEAR. (a)
15-18    Subject to Section 3 of this article, and except as provided by
15-19    Section 5 of this article, a school district, other educational
15-20    district whose employees are members of the Teacher Retirement
15-21    System of Texas, participating charter school, or regional
15-22    education service center that, for the 2000-2001 school year, paid
15-23    amounts to share with employees the cost of coverage under a group
15-24    health coverage plan shall, for each fiscal year, use to provide
15-25    health coverage an amount for each participating employee at least
15-26    equal to the amount computed as provided by this section.
 16-1          (b)  The school district, other educational district,
 16-2    participating charter school, or regional education service center
 16-3    shall divide the amount that the district, school, or service
 16-4    center paid during the 2000-2001 school year for the prior group
 16-5    health coverage plan by the total number of full-time employees of
 16-6    the district, school, or service center in the 2000-2001 school
 16-7    year and multiply the result by the number of full-time employees
 16-8    of the district, school, or service center in the fiscal year for
 16-9    which the computation is made.  If, for the 2000-2001 school year,
16-10    a school district, other educational district, participating
16-11    charter school, or regional education service center provided group
16-12    health coverage to its employees through a self-funded insurance
16-13    plan, the amount the district, school, or service center paid
16-14    during that school year for the plan includes only the amount of
16-15    regular contributions made by the district, school, or service
16-16    center to the plan.
16-17          (c)  Amounts used as required by this section shall be
16-18    deposited, as applicable, in:
16-19                (1)  the Texas school employees uniform group coverage
16-20    trust fund established under Section 8, Article 3.50-7, of this
16-21    code; or
16-22                (2)  another fund established for the payment of
16-23    employee health coverage that meets requirements for those funds
16-24    prescribed by the Texas Education Agency.
16-25          Explanation:  This change is necessary to clarify that
16-26    certain educational districts whose employees are members of the
 17-1    Teacher Retirement System of Texas, open-enrollment charter schools
 17-2    that participate in the statewide group health coverage program,
 17-3    and regional education service centers are required to maintain
 17-4    current spending efforts for employee health coverage.
 17-5          (10)  House Rule 13, Section 9(a)(4), is suspended to permit
 17-6    the committee to add text changing Section 3, Article 3.50-10,
 17-7    Insurance Code, as added by SECTION 1.04, House Bill 3343
 17-8    (corresponding to Article 3.50-9, Insurance Code, in conference
 17-9    committee report), to read as follows:
17-10          Sec. 3.  MINIMUM EFFORT. (a)  A school district, other
17-11    educational district, participating charter school, or regional
17-12    education service center shall, for each fiscal year, use to
17-13    provide health coverage an amount equal to the number of
17-14    participating employees of the district, school, or service center
17-15    multiplied by $1,800.  Amounts used as required by this section
17-16    shall be deposited in a fund described by Section 2(c) of this
17-17    article.
17-18          (b)  To comply with this section, a school district or
17-19    participating charter school may use state funds received under
17-20    Chapter 42, Education Code, other than funds that may be used under
17-21    that chapter only for a specific purpose, except that amounts a
17-22    district or school is required to use to pay contributions under a
17-23    group health coverage plan for district or school employees under
17-24    Section 42.2514 or 42.260, Education Code, other than amounts
17-25    described by Section 42.260(c)(2)(B), are not used in computing
17-26    whether the district or school complies with this section.
 18-1          Explanation:  This change is necessary to clarify that
 18-2    certain educational districts whose employees are members of the
 18-3    Teacher Retirement System of Texas, open-enrollment charter schools
 18-4    that participate in the statewide group health coverage program,
 18-5    and regional education service centers are required to meet the
 18-6    same minimum spending effort applicable to school districts, and to
 18-7    clarify that certain state funds school districts and participating
 18-8    charter schools are required to use in meeting the minimum spending
 18-9    effort count against the minimum effort.
18-10          (11)  House Rule 13, Section 9(a)(4), is suspended to permit
18-11    the committee to add text changing Sections 4(a)-(a-7), Article
18-12    3.50-10, Insurance Code (corresponding to Article 3.50-9, Insurance
18-13    Code, in conference committee report), as added by SECTION 1.04,
18-14    House Bill 3343, to read as follows:
18-15          (a)  For any state fiscal year beginning with the fiscal year
18-16    ending August 31, 2003, except as provided by Subsection (b) of
18-17    this section, a school district that imposes maintenance and
18-18    operations taxes at the maximum rate permitted under Section
18-19    45.003(d), Education Code, is entitled to state funds in an amount
18-20    equal to the difference, if any, between:
18-21                (1)  an amount equal to the number of participating
18-22    employees of the district multiplied by $1,800; and
18-23                (2)  if the following amount is less than the amount
18-24    specified by Subdivision (1) of this subsection, the sum of:
18-25                      (A)  the amount the district is required to use
18-26    to provide health coverage under Section 2 of this article for that
 19-1    fiscal year; and
 19-2                      (B)  the difference, if any, between:
 19-3                            (i)  the amount determined under Section
 19-4    42.2514(b)(2), Education Code; and
 19-5                            (ii)  the amount determined under Section
 19-6    42.2514(b)(1), Education Code, if that amount is less than the
 19-7    amount specified by Subparagraph (i) of this paragraph.
 19-8          (a-1)  For the state fiscal year beginning September 1, 2002,
 19-9    a school district or participating entity is entitled to state
19-10    funds in an amount equal to the difference, if any, between:
19-11                (1)  an amount equal to the number of participating
19-12    employees of the district or entity multiplied by $1,800; and
19-13                (2)  if the following amount is less than the amount
19-14    specified by Subdivision (1) of this subsection, the sum of:
19-15                      (A)  the amount the district or entity is
19-16    required to use to provide health coverage under Section 2 of this
19-17    article for that fiscal year; and
19-18                      (B)  the difference, if any, between:
19-19                            (i)  the amount determined under Section
19-20    42.2514(b)(2), Education Code; and
19-21                            (ii)  the amount determined under Section
19-22    42.2514(b)(1), Education Code, if that amount is less than the
19-23    amount specified by Subparagraph (i) of this paragraph.
19-24          (a-2)  For the state fiscal year beginning September 1, 2003,
19-25    a school district or participating entity is entitled to state
19-26    funds in an amount equal to the difference, if any, between:
 20-1                (1)  an amount equal to the number of participating
 20-2    employees of the district or entity multiplied by $1,500; and
 20-3                (2)  if the following amount is less than the amount
 20-4    specified by Subdivision (1) of this subsection, the sum of:
 20-5                      (A)  the amount the district or entity is
 20-6    required to use to provide health coverage under Section 2 of this
 20-7    article for that fiscal year; and
 20-8                      (B)  the difference, if any, between:
 20-9                            (i)  the amount determined under Section
20-10    42.2514(b)(2), Education Code; and
20-11                            (ii)  the amount determined under Section
20-12    42.2514(b)(1), Education Code, if that amount is less than the
20-13    amount specified by Subparagraph (i) of this paragraph.
20-14          (a-3)  For the state fiscal year beginning September 1, 2004,
20-15    a school district or participating entity is entitled to state
20-16    funds in an amount equal to the difference, if any, between:
20-17                (1)  an amount equal to the number of participating
20-18    employees of the district or entity multiplied by $1,200; and
20-19                (2)  if the following amount is less than the amount
20-20    specified by Subdivision (1) of this subsection, the sum of:
20-21                      (A)  the amount the district or entity is
20-22    required to use to provide health coverage under Section 2 of this
20-23    article for that fiscal year; and
20-24                      (B)  the difference, if any, between:
20-25                            (i)  the amount determined under Section
20-26    42.2514(b)(2), Education Code; and
 21-1                            (ii)  the amount determined under Section
 21-2    42.2514(b)(1), Education Code, if that amount is less than the
 21-3    amount specified by Subparagraph (i) of this paragraph.
 21-4          (a-4)  For the state fiscal year beginning September 1, 2005,
 21-5    a school district or participating entity is entitled to state
 21-6    funds in an amount equal to the difference, if any, between:
 21-7                (1)  an amount equal to the number of participating
 21-8    employees of the district or entity multiplied by $900; and
 21-9                (2)  if the following amount is less than the amount
21-10    specified by Subdivision (1) of this subsection, the sum of:
21-11                      (A)  the amount the district or entity is
21-12    required to use to provide health coverage under Section 2 of this
21-13    article for that fiscal year; and
21-14                      (B)  the difference, if any, between:
21-15                            (i)  the amount determined under Section
21-16    42.2514(b)(2), Education Code; and
21-17                            (ii)  the amount determined under Section
21-18    42.2514(b)(1), Education Code, if that amount is less than the
21-19    amount specified by Subparagraph (i) of this paragraph.
21-20          (a-5)  For the state fiscal year beginning September 1, 2006,
21-21    a school district or participating entity is entitled to state
21-22    funds in an amount equal to the difference, if any, between:
21-23                (1)  an amount equal to the number of participating
21-24    employees of the district or entity multiplied by $600; and
21-25                (2)  if the following amount is less than the amount
21-26    specified by Subdivision (1) of this subsection, the sum of:
 22-1                      (A)  the amount the district or entity is
 22-2    required to use to provide health coverage under Section 2 of this
 22-3    article for that fiscal year; and
 22-4                      (B)  the difference, if any, between:
 22-5                            (i)  the amount determined under Section
 22-6    42.2514(b)(2), Education Code; and
 22-7                            (ii)  the amount determined under Section
 22-8    42.2514(b)(1), Education Code, if that amount is less than the
 22-9    amount specified by Subparagraph (i) of this paragraph.
22-10          (a-6)  For the state fiscal year beginning September 1, 2007,
22-11    a school district or participating entity is entitled to state
22-12    funds in an amount equal to the difference, if any, between:
22-13                (1)  an amount equal to the number of participating
22-14    employees of the district or entity multiplied by $300; and
22-15                (2)  if the following amount is less than the amount
22-16    specified by Subdivision (1) of this subsection, the sum of:
22-17                      (A)  the amount the district or entity is
22-18    required to use to provide health coverage under Section 2 of this
22-19    article for that fiscal year; and
22-20                      (B)  the difference, if any, between:
22-21                            (i)  the amount determined under Section
22-22    42.2514(b)(2), Education Code; and
22-23                            (ii)  the amount determined under Section
22-24    42.2514(b)(1), Education Code, if that amount is less than the
22-25    amount specified by Subparagraph (i) of this paragraph.
22-26          (a-7)  A school district that receives state funds under
 23-1    Subsection (a)  of this section for a state fiscal year is not
 23-2    entitled to state funds under Subsection (a-1), (a-2), (a-3),
 23-3    (a-4), (a-5), or (a-6) of this section.
 23-4          Explanation:  This change is necessary to require school
 23-5    districts and participating charter schools for whom 75% of the
 23-6    increased funding through the foundation school program funding
 23-7    elements exceeds the level of $900 per employee per year to use
 23-8    that excess towards meeting the minimum spending effort.
 23-9          (12)  House Rule 13, Section 9(a)(4), is suspended to permit
23-10    the committee to add text changing Section 4(c), Article 3.50-10,
23-11    Insurance Code (corresponding to Article 3.50-9, Insurance Code, in
23-12    conference committee report), as added by SECTION 1.04, House Bill
23-13    3343, to read as follows:
23-14          (c)  The Teacher Retirement System of Texas shall distribute
23-15    state funds to school districts and participating entities under
23-16    this section in equal monthly installments.  State funds received
23-17    under this section shall be deposited in a fund described by
23-18    Section 2(c) of this article.  The Texas Education Agency shall
23-19    provide to the retirement system information necessary for the
23-20    retirement system to determine a school district's or participating
23-21    entity's eligibility for state funds under this section.  The
23-22    trustee may enter into interagency contracts with any agency of
23-23    this state for the purpose of assistance in distributing funds
23-24    under this article.
23-25          Explanation:  This change is necessary to permit the Teacher
23-26    Retirement System of Texas to enter into interagency contracts
 24-1    relating to the distribution of state assistance towards meeting
 24-2    the minimum spending effort.
 24-3          (13)  House Rule 13, Section 9(a)(4), is suspended to permit
 24-4    the committee to add text changing Section 41.002(a), Education
 24-5    Code, as amended by SECTIONS 2.02 and 2.03, senate committee
 24-6    report, House Bill 3343, to read as follows:
 24-7          SECTION 2.02. Effective September 1, 2001, Section 41.002(a),
 24-8    Education Code, is amended to read as follows:
 24-9          (a)  A school district may not have a wealth per student that
24-10    exceeds $300,000 [$295,000].
24-11          SECTION 2.03. Effective September 1, 2002, Section 41.002(a),
24-12    Education Code, is amended to read as follows:
24-13          (a)  A school district may not have a wealth per student that
24-14    exceeds $305,000 [$295,000].
24-15          Explanation:  This change is necessary to increase the
24-16    equalized wealth level under the school finance system.
24-17          (14)  House Rule 13, Section 9(a)(4), is suspended to permit
24-18    the committee to add text changing Section 42.2514, Education Code,
24-19    as added by SECTION 2.06, senate committee report, House Bill 3343,
24-20    to read as follows:
24-21          SECTION 2.05. Effective September 1, 2002, Subchapter E,
24-22    Chapter 42, Education Code, is amended by adding Section 42.2514 to
24-23    read as follows:
24-24          Sec. 42.2514.  ADDITIONAL STATE AID FOR SCHOOL EMPLOYEE
24-25    BENEFITS. (a)  In this section, "participating charter school"
24-26    means an open-enrollment charter school that participates in the
 25-1    uniform group coverage program established under Article 3.50-7,
 25-2    Insurance Code.
 25-3          (b)  For each school year, a school district, including a
 25-4    school district that is otherwise ineligible for state aid under
 25-5    this chapter, or a participating charter school is entitled to
 25-6    state aid in an amount, as determined by the commissioner, equal to
 25-7    the difference, if any, between:
 25-8                (1)  the amount determined by multiplying the amount of
 25-9    $900 or the amount specified in the General Appropriations Act for
25-10    that year for purposes of the state contribution under Section 9,
25-11    Article 3.50-7, Insurance Code, by the number of district or school
25-12    employees who participate in a group health coverage plan provided
25-13    by or through the district or school; and
25-14                (2)  an amount equal to 75 percent of the amount of:
25-15                      (A)  additional funds to which the district or
25-16    school is entitled due to the increase made by H.B. No. 3343, Acts
25-17    of the 77th Legislature, Regular Session, 2001, to:
25-18                            (i)  the equalized wealth level under
25-19    Section 41.002; and
25-20                            (ii)  the guaranteed level of state and
25-21    local funds per weighted student per cent of tax effort under
25-22    Section 42.302; or
25-23                      (B)  additional state aid to which the district
25-24    is entitled under Section 42.2513.
25-25          (c)  A school district or participating charter school may
25-26    use state aid received under this section only to pay contributions
 26-1    under a group health coverage plan for district or school
 26-2    employees.
 26-3          (d)  A determination by the commissioner under this section
 26-4    is final and may not be appealed.
 26-5          (e)  The commissioner may adopt rules to implement this
 26-6    section.
 26-7          Explanation:  This change is necessary to permit
 26-8    open-enrollment charter schools that participate in the uniform
 26-9    group coverage plan to receive additional state funding if the
26-10    increased funding the school receives through the foundation school
26-11    program funding elements does not reach the level of $900 per
26-12    employee per year.
26-13          (15)  House Rule 13, Section 9(a)(4), is suspended to permit
26-14    the committee to add text changing Section 42.260, Education Code,
26-15    as added by SECTION 2.10, senate committee report, House Bill 3343,
26-16    to read as follows:
26-17          SECTION 2.08. Effective September 1, 2002, Subchapter E,
26-18    Chapter 42, Education Code, is amended by adding Section 42.260 to
26-19    read as follows:
26-20          Sec. 42.260.  USE OF CERTAIN FUNDS. (a)  In this section,
26-21    "participating charter school" has the meaning assigned by Section
26-22    42.2514.
26-23          (b)  For each year, the commissioner shall certify to each
26-24    school district or participating charter school the amount of:
26-25                (1)  additional funds to which the district or school
26-26    is entitled due to the increase made by H.B. No. 3343, Acts of the
 27-1    77th Legislature, Regular Session, 2001, to:
 27-2                      (A)  the equalized wealth level under Section
 27-3    41.002; or
 27-4                      (B)  the guaranteed level of state and local
 27-5    funds per weighted student per cent of tax effort under Section
 27-6    42.302; or
 27-7                (2)  additional state aid to which the district or
 27-8    school is entitled under Section 42.2513.
 27-9          (c)  Notwithstanding any other provision of this code, a
27-10    school district or participating charter school may use the
27-11    following amount of funds only to pay contributions under a group
27-12    health coverage plan for district or school employees:
27-13                (1)  an amount equal to 75 percent of the amount
27-14    certified for the district or school under Subsection (b); or
27-15                (2)  if the following amount is less than the amount
27-16    specified by Subdivision (1), the sum of:
27-17                      (A)  the amount determined by multiplying the
27-18    amount of $900 or the amount specified in the General
27-19    Appropriations Act for that year for purposes of the state
27-20    contribution under Section 9, Article 3.50-7, Insurance Code, by
27-21    the number of district or school employees who participate in a
27-22    group health coverage plan provided by or through the district or
27-23    school; and
27-24                      (B)  the difference between the amount necessary
27-25    for the district or school to comply with Section 3, Article
27-26    3.50-9, Insurance Code, for the school year and the amount the
 28-1    district or school is required to use to provide health coverage
 28-2    under Section 2 of that article for that year.
 28-3          (d)  A determination by the commissioner under this section
 28-4    is final and may not be appealed.
 28-5          (e)  The commissioner may adopt rules to implement this
 28-6    section.
 28-7          Explanation:  This change is necessary to require
 28-8    open-enrollment charter schools that participate in the uniform
 28-9    group coverage plan to use a portion of state funding received
28-10    through the increases in the foundation school program funding
28-11    elements to provide employee health coverage.
28-12          (16)  House Rule 13, Section 9(a)(4), is suspended to permit
28-13    the committee to add text changing Section 42.302(a) Education
28-14    Code, as amended by SECTIONS 2.11 and 2.12, senate committee
28-15    report, House Bill 3343, to read as follows:
28-16          SECTION 2.09. Effective September 1, 2001, Section 42.302(a),
28-17    Education Code, is amended to read as follows:
28-18          (a)  Each school district is guaranteed a specified amount
28-19    per weighted student in state and local funds for each cent of tax
28-20    effort over that required for the district's local fund assignment
28-21    up to the maximum level specified in this subchapter.  The amount
28-22    of state support, subject only to the maximum amount under Section
28-23    42.303, is determined by the formula:
28-24                    GYA = (GL X WADA X DTR X 100) - LR
28-25    where:
28-26          "GYA" is the guaranteed yield amount of state funds to be
 29-1    allocated to the district;
 29-2          "GL" is the dollar amount guaranteed level of state and local
 29-3    funds per weighted student per cent of tax effort, which is $25.81
 29-4    [$24.99] or a greater amount for any year provided by
 29-5    appropriation;
 29-6          "WADA" is the number of students in weighted average daily
 29-7    attendance, which is calculated by dividing the sum of the school
 29-8    district's allotments under Subchapters B and C, less any allotment
 29-9    to the district for transportation, any allotment under Section
29-10    42.158, and 50 percent of the adjustment under Section 42.102, by
29-11    the basic allotment for the applicable year;
29-12          "DTR" is the district enrichment tax rate of the school
29-13    district, which is determined by subtracting the amounts specified
29-14    by Subsection (b) from the total amount of maintenance and
29-15    operations taxes collected by the school district for the
29-16    applicable school year and dividing the difference by the quotient
29-17    of the district's taxable value of property as determined under
29-18    Subchapter M, Chapter 403, Government Code, or, if applicable,
29-19    under Section 42.2521, divided by 100; and
29-20          "LR" is the local revenue, which is determined by multiplying
29-21    "DTR" by the quotient of the district's taxable value of property
29-22    as determined under Subchapter M, Chapter 403, Government Code, or,
29-23    if applicable, under Section 42.2521, divided by 100.
29-24          SECTION 2.10. Effective September 1, 2002, Section 42.302(a),
29-25    Education Code, is amended to read as follows:
29-26          (a)  Each school district is guaranteed a specified amount
 30-1    per weighted student in state and local funds for each cent of tax
 30-2    effort over that required for the district's local fund assignment
 30-3    up to the maximum level specified in this subchapter.  The amount
 30-4    of state support, subject only to the maximum amount under Section
 30-5    42.303, is determined by the formula:
 30-6                    GYA = (GL X WADA X DTR X 100) - LR
 30-7    where:
 30-8          "GYA" is the guaranteed yield amount of state funds to be
 30-9    allocated to the district;
30-10          "GL" is the dollar amount guaranteed level of state and local
30-11    funds per weighted student per cent of tax effort, which is $27.14
30-12    [$24.99] or a greater amount for any year provided by
30-13    appropriation;
30-14          "WADA" is the number of students in weighted average daily
30-15    attendance, which is calculated by dividing the sum of the school
30-16    district's allotments under Subchapters B and C, less any allotment
30-17    to the district for transportation, any allotment under Section
30-18    42.158, and 50 percent of the adjustment under Section 42.102, by
30-19    the basic allotment for the applicable year;
30-20          "DTR" is the district enrichment tax rate of the school
30-21    district, which is determined by subtracting the amounts specified
30-22    by Subsection (b) from the total amount of maintenance and
30-23    operations taxes collected by the school district for the
30-24    applicable school year and dividing the difference by the quotient
30-25    of the district's taxable value of property as determined under
30-26    Subchapter M, Chapter 403, Government Code, or, if applicable,
 31-1    under Section 42.2521, divided by 100; and
 31-2          "LR" is the local revenue, which is determined by multiplying
 31-3    "DTR" by the quotient of the district's taxable value of property
 31-4    as determined under Subchapter M, Chapter 403, Government Code, or,
 31-5    if applicable, under Section 42.2521, divided by 100.
 31-6          Explanation:  This change is necessary to increase the
 31-7    guaranteed level of state and local funding per weighted student
 31-8    per penny of tax effort.
 31-9          (17)  House Rule 13, Section 9(a)(4), is suspended to permit
31-10    the committee to add text adding Subsection (l) to Section 26.08,
31-11    Tax Code, as amended by SECTION 1.06, House Bill 3343, to read as
31-12    follows:
31-13          (l)  For purposes of Subsection (k), the amount of state
31-14    funds that would have been available to a school district in the
31-15    preceding year is computed using the maximum tax rate for the
31-16    current year under Section 42.253(e), Education Code.
31-17          Explanation:  This change is necessary to clarify that school
31-18    district rollback tax rates that are adjusted for tax increases in
31-19    connection with the minimum spending effort are computed in the
31-20    same manner as other school district rollback tax rates.
31-21          (18)  House Rule 13, Section 9(a)(4), is suspended to permit
31-22    the committee to add text changing Section 62.1015, Health and
31-23    Safety Code, as added by SECTION 1.07, House Bill 3343 to read as
31-24    follows:
31-25          SECTION 1.04. Subchapter C, Chapter 62, Health and Safety
31-26    Code, is amended by adding Section 62.1015 to read as follows:
 32-1          Sec. 62.1015.  ELIGIBILITY OF CERTAIN CHILDREN; DISALLOWANCE
 32-2    OF MATCHING FUNDS. (a)  In this section, "charter school,"
 32-3    "employee," and "regional education service center" have the
 32-4    meanings assigned by Section 2, Article 3.50-7, Insurance Code.
 32-5          (b)  A child of an employee of a charter school, school
 32-6    district, other educational district whose employees are members of
 32-7    the Teacher Retirement System of Texas, or regional education
 32-8    service center may be enrolled in health benefits coverage under
 32-9    the child health plan. A child enrolled in the child health plan
32-10    under this section participates in the same manner as any other
32-11    child enrolled in the child health plan.
32-12          (c)  The cost of health benefits coverage for children
32-13    enrolled in the child health plan under this section shall be paid
32-14    as provided in the General Appropriations Act. Expenditures made to
32-15    provide health benefits coverage under this section may not be
32-16    included for the purpose of determining the state children's health
32-17    insurance expenditures, as that term is defined by 42 U.S.C.
32-18    Section 1397ee(d)(2)(B), as amended, unless the Health and Human
32-19    Services Commission, after consultation with the appropriate
32-20    federal agencies, determines that the expenditures may be included
32-21    without adversely affecting federal matching funding for the child
32-22    health plan provided under this chapter.
32-23          Explanation: This change is necessary to provide for coverage
32-24    under the child health program for children of employees of all
32-25    entities eligible to participate in the new group coverage plan and
32-26    to clarify the Health and Human Services Commission's authority to
 33-1    determine whether resulting expenditures affect federal matching
 33-2    funds for the child health program.
 33-3          (19)  House Rule 13, Section 9(a)(4), is suspended to permit
 33-4    the committee to add text changing Section 3, Article 3.51,
 33-5    Insurance Code, as amended by SECTION 3.16, House Bill 3343, by
 33-6    adding a new Subsection (b) to read as follows:
 33-7          (b)  This section does not preclude an entity described by
 33-8    Subsection (a)  of this section from procuring contracts under this
 33-9    article for the provision of optional insurance coverages to the
33-10    employees of the entity.
33-11          Explanation:   This change is necessary to clarify that a
33-12    participating entity retains the authority to purchase optional
33-13    coverages for its employees.
33-14          (20)  House Rule 13, Section 9(a)(4), is suspended to permit
33-15    the committee to add text changing Article 26.036(c), Insurance
33-16    Code, as added by SECTION 2.17, House Bill 3343, to read as
33-17    follows:
33-18          (c)  An independent school district that is participating in
33-19    the uniform group coverage program established under Article 3.50-7
33-20    of this code may not participate in the small employer market under
33-21    this article for health insurance coverage and may not renew a
33-22    health insurance contract obtained in accordance with this article
33-23    after the date on which the program of coverages provided under
33-24    Article 3.50-7 of this code is implemented.  This subsection does
33-25    not affect a contract for the provision of optional coverages not
33-26    included in a health benefits plan under this chapter.
 34-1          Explanation:       This change is necessary to clarify that
 34-2    an independent school district retains the authority to purchase
 34-3    optional coverages for its employees through the small employer
 34-4    program under Chapter 26, Insurance Code.
 34-5          (21)  House Rule 13, Section 9(a)(4), is suspended to permit
 34-6    the committee to add text changing Section 22.004, Education Code,
 34-7    as amended by SECTION 3.18, House Bill 3343, to read as follows:
 34-8          Sec. 22.004.  GROUP HEALTH BENEFITS FOR SCHOOL EMPLOYEES. (a)
 34-9    A [Each] district shall participate in the uniform group coverage
34-10    program established under Article 3.50-7, Insurance Code, as
34-11    provided by Section 5 of that article.
34-12          (b)  A district that does not participate in the program
34-13    described by Subsection (a) shall make available to its employees
34-14    group health coverage provided by a risk pool established by one or
34-15    more school districts under Chapter 172, Local Government Code, or
34-16    under a policy of insurance or group contract issued by an insurer,
34-17    a company subject to Chapter 20, Insurance Code, or a health
34-18    maintenance organization under the Texas Health Maintenance
34-19    Organization Act (Chapter 20A, Vernon's Texas Insurance Code).  The
34-20    coverage must meet the substantive coverage requirements of Article
34-21    3.51-6, Insurance Code, and any other law applicable to group
34-22    health insurance policies or contracts issued in this state.  The
34-23    coverage must include major medical treatment but may exclude
34-24    experimental procedures.  In this subsection, "major medical
34-25    treatment" means a medical, surgical, or diagnostic procedure for
34-26    illness or injury.  The coverage may include managed care or
 35-1    preventive care and must be comparable to the basic health coverage
 35-2    provided under the Texas Employees Uniform Group Insurance Benefits
 35-3    Act (Article 3.50-2, Vernon's Texas Insurance Code).  The board of
 35-4    trustees of the Teacher Retirement System of Texas shall adopt
 35-5    rules to determine whether a school district's group health
 35-6    coverage is comparable to the basic health coverage specified by
 35-7    this subsection.  The rules must provide for consideration of the
 35-8    following factors concerning the district's coverage in determining
 35-9    whether the district's coverage is comparable to the basic health
35-10    coverage specified by this subsection:
35-11                (1)  the deductible amount for service provided inside
35-12    and outside of the network;
35-13                (2)  the coinsurance percentages for service provided
35-14    inside and outside of the network;
35-15                (3)  the maximum amount of coinsurance payments a
35-16    covered person is required to pay;
35-17                (4)  the amount of the copayment for an office visit;
35-18                (5)  the schedule of benefits and the scope of
35-19    coverage;
35-20                (6)  the lifetime maximum benefit amount; and
35-21                (7)  verification that the coverage is issued by a
35-22    provider licensed to do business in this state by the Texas
35-23    Department of Insurance or is provided by a risk pool authorized
35-24    under Chapter 172, Local Government Code, or that a district is
35-25    capable of covering the assumed liabilities in the case of coverage
35-26    provided through district self-insurance.
 36-1          (c) [(b)]  The cost of the coverage provided under the
 36-2    program described by Subsection (a)  shall be paid by the state,
 36-3    the district, and the employees in the manner provided by Article
 36-4    3.50-7, Insurance Code.  The cost of coverage provided under a plan
 36-5    adopted under Subsection (b) shall [may] be shared by the employees
 36-6    and the district using the contributions by the state described by
 36-7    Section 9, Article 3.50-7, Insurance Code, and Article 3.50-8,
 36-8    Insurance Code.
 36-9          (d) [(c)]  Each district shall report the district's
36-10    compliance with this section [subsection] to the executive director
36-11    of the Teacher Retirement System of Texas not later than March 1 of
36-12    each even-numbered year in the manner required by the board of
36-13    trustees of the Teacher Retirement System of Texas.  For a district
36-14    that does not participate in the program described by Subsection
36-15    (a), the [The] report must be based on the district group health
36-16    coverage plan in effect during the current plan year and must
36-17    include:
36-18                (1)  appropriate documentation of:
36-19                      (A)  the district's contract for group health
36-20    coverage with a provider licensed to do business in this state by
36-21    the Texas Department of Insurance or a risk pool authorized under
36-22    Chapter 172, Local Government Code; or
36-23                      (B)  a resolution of the board of trustees of the
36-24    district authorizing a self-insurance plan for district employees
36-25    and of the district's review of district ability to cover the
36-26    liability assumed;
 37-1                (2)  the schedule of benefits;
 37-2                (3)  the premium rate sheet, including the amount paid
 37-3    by the district and employee;
 37-4                (4)  the number of employees covered by the [each]
 37-5    health coverage plan offered by the district; and
 37-6                (5)  any other information considered appropriate by
 37-7    the executive director of the Teacher Retirement System of Texas.
 37-8          (e) [(d)]  Based on the criteria prescribed by Subsection (b)
 37-9    [(a)], the executive director of the Teacher Retirement System of
37-10    Texas shall, for each district that does not participate in the
37-11    program described by Subsection (a), certify whether a district's
37-12    coverage is comparable to the basic health coverage provided under
37-13    the Texas Employees Uniform Group Insurance Benefits Act (Article
37-14    3.50-2, Vernon's Texas Insurance Code).  If the executive director
37-15    of the Teacher Retirement System of Texas determines that the group
37-16    health coverage offered by a district is not comparable, the
37-17    executive director shall report that information to the district
37-18    and to the Legislative Budget Board.  The executive director shall
37-19    submit a report to the legislature not later than September 1 of
37-20    each even-numbered year describing the status of each district's
37-21    group health coverage program based on the information contained in
37-22    the report required by Subsection (d) [(c)] and the certification
37-23    required by this subsection.
37-24          (f) [(e)]  A school district that does not participate in the
37-25    program described by Subsection (a) may not contract with an
37-26    insurer, a company subject to Chapter 20, Insurance Code, or a
 38-1    health maintenance organization to issue a policy or contract under
 38-2    this section, or with any person to assist the school district in
 38-3    obtaining or managing the policy or contract unless, before the
 38-4    contract is entered into, the insurer, company, organization, or
 38-5    person provides the district with an audited financial statement
 38-6    showing the financial condition of the insurer, company,
 38-7    organization, or person.
 38-8          (g) [(f)]  An insurer, a company subject to Chapter 20,
 38-9    Insurance Code, or a health maintenance organization that issues a
38-10    policy or contract under this section and any person that assists
38-11    the school district in obtaining or managing the policy or contract
38-12    for compensation shall provide an annual audited financial
38-13    statement to the school district showing the financial condition of
38-14    the insurer, company, organization, or person.
38-15          (h) [(g)]  An audited financial statement provided under this
38-16    section must be made in accordance with rules adopted by the
38-17    commissioner of insurance or state auditor, as applicable.
38-18          (i)  Notwithstanding any other provision of this section, a
38-19    district participating in the uniform group coverage program
38-20    established under Article 3.50-7, Insurance Code, may not make
38-21    group health coverage  available to its employees under this
38-22    section after the date on which the program of coverages provided
38-23    under Article 3.50-7, Insurance Code, is implemented.
38-24          (j)  This section does not preclude a district that is
38-25    participating in the uniform group coverage program established
38-26    under Article 3.50-7, Insurance Code, from entering into contracts
 39-1    to provide optional insurance coverages for the employees of the
 39-2    district.
 39-3          Explanation:  This change is necessary to clarify that a
 39-4    school district that does not participate in the group coverage
 39-5    program retains the responsibility to offer coverage comparable to
 39-6    the plan provided to state employees through the Employees
 39-7    Retirement System of Texas, and also retains the authority to
 39-8    purchase optional coverages for its employees.
 39-9          (22)  House Rule 13, Section 9(a)(4), is suspended to permit
39-10    the committee to add SECTION 4.01 to read as follows:
39-11          SECTION 4.01. On September 1, 2002, the comptroller shall
39-12    transfer the amount of $42 million from the retired school
39-13    employees group insurance fund created under Section 15, Article
39-14    3.50-4, Insurance Code, as amended by this Act, to the Texas school
39-15    employees uniform group coverage trust fund created under Section
39-16    8, Article 3.50-7, Insurance Code, as added by this Act.  The
39-17    Teacher Retirement System of Texas shall use the amount transferred
39-18    under this section to establish and implement the uniform group
39-19    coverage program for school employees established under Article
39-20    3.50-7, Insurance Code, as added by this Act.
39-21          Explanation:  This change is necessary to use a portion of
39-22    the current balance in the fund for the TRS-Care program to
39-23    implement the group coverage program for active school employees.
39-24          (23)  House Rule 13, Section 9(a)(4), is suspended to permit
39-25    the committee to add SECTION 4.02 to read as follows:
39-26          SECTION 4.02. A portion of the amounts appropriated in
 40-1    Article III, S.B. No. 1, Acts of the 77th Legislature, Regular
 40-2    Session, 2001, to the Texas Education Agency is allocated as
 40-3    provided by this section:
 40-4                (1)  for the fiscal year ending August 31, 2002, the
 40-5    amount appropriated under Strategy A.2.1.:  FSP-Equalized
 40-6    Operations is reduced by the sum of $3 million and the amount
 40-7    appropriated to the Teacher Retirement System of Texas is increased
 40-8    by that amount for the establishment and implementation of the
 40-9    uniform group coverage program for school employees established
40-10    under Article 3.50-7, Insurance Code, as added by this Act;
40-11                (2)  for the fiscal year ending August 31, 2003, the
40-12    amount appropriated under Strategy A.2.1.:  FSP-Equalized
40-13    Operations is reduced by the sum of $691,100,000 and the amount
40-14    appropriated to the Teacher Retirement System of Texas is increased
40-15    by that amount for payment of:
40-16                      (A)  school employee health coverage or
40-17    compensation supplementation under Article 3.50-8, Insurance Code,
40-18    as added by this Act; and
40-19                      (B)  state assistance in meeting the minimum
40-20    effort regarding school employee health coverage under Article
40-21    3.50-9, Insurance Code, as added by this Act;
40-22                (3)  for the fiscal year ending August 31, 2003, the
40-23    amount appropriated under Strategy A.2.1.:  FSP-Equalized
40-24    Operations is reduced by the sum of $1,361,000 and the amount
40-25    appropriated to the Teacher Retirement System of Texas is increased
40-26    by that amount for assistance to school districts in paying social
 41-1    security taxes on amounts of supplemental compensation received by
 41-2    district employees under Article 3.50-8, Insurance Code, as added
 41-3    by this Act, as provided by Section 6, Article 3.50-9, Insurance
 41-4    Code, as added by this Act; and
 41-5                (4)  for the fiscal year ending August 31, 2003, the
 41-6    amount appropriated under Strategy A.2.1.:  FSP-Equalized
 41-7    Operations is reduced by the sum of $4.2 million and the amount
 41-8    appropriated to the Health and Human Services Commission is
 41-9    increased by that amount for payment of the costs of health
41-10    benefits coverage for children enrolled in the child health plan
41-11    under Section 62.1015, Health and Safety Code, as added by this
41-12    Act.
41-13          Explanation:  This change is necessary to reallocate money
41-14    previously appropriated in Senate Bill 1 for the foundation school
41-15    program to the Teacher Retirement System of Texas for establishing
41-16    and implementing the group coverage program for active school
41-17    employees, for paying school employee health coverage or
41-18    compensation supplementation, state assistance in meeting the
41-19    minimum effort requirement, and  assistance to certain school
41-20    districts for paying additional social security taxes, and to the
41-21    Health and Human Services Commission for paying costs of health
41-22    benefits coverage for children of school employees enrolled in the
41-23    child health plan.
41-24          (24)  House Rule 13, Section 9(a)(4), is suspended to permit
41-25    the committee to add SECTION 4.03 to read as follows:
41-26          SECTION 4.03. The Legislative Budget Board shall increase the
 42-1    number of full-time-equivalent positions authorized for the Teacher
 42-2    Retirement System of Texas by S.B. No. 1, Acts of the 77th
 42-3    Legislature, Regular Session, 2001, by 25 for each fiscal year of
 42-4    the biennium ending August 31, 2003.
 42-5          Explanation:  This change is necessary to allow the Teacher
 42-6    Retirement System of Texas to employ additional employees to
 42-7    establish and implement the group coverage program for active
 42-8    school employees.
 42-9          (25)  House Rule 13, Section 9(a)(4), is suspended to permit
42-10    the committee to add SECTION 4.04 to read as follows:
42-11          SECTION 4.04. The Legislative Budget Board shall increase the
42-12    number of full-time-equivalent positions authorized for the Texas
42-13    Education Agency by S.B. No. 1, Acts of the 77th Legislature,
42-14    Regular Session, 2001, by three for each fiscal year of the
42-15    biennium ending August 31, 2003.
42-16          Explanation:  This change is necessary to allow the Texas
42-17    Education Agency to employ additional employees to implement the
42-18    group coverage program for active school employees and the system
42-19    for making associated payments to school districts.
42-20          (26)  House Rule 13, Section 9(a)(4), is suspended to permit
42-21    the committee to add text to the transitional material in the bill,
42-22    as added by SECTIONS 5.02-5.06, House Bill 3343, to read as
42-23    follows:
42-24          SECTION 5.02. The Teacher Retirement System of Texas shall
42-25    transfer to the fund established under Section 8, Article 3.50-7,
42-26    Insurance Code, as added by this Act, any outstanding balance held
 43-1    by the Teacher Retirement System of Texas as of December 31, 2001,
 43-2    in the school employees group insurance fund established under
 43-3    Section 15, Article 3.50-4, Insurance Code, that was designated for
 43-4    use in programs relating to active school district employees.
 43-5          SECTION 5.03. Not later than July 31, 2001, the Teacher
 43-6    Retirement System of Texas shall provide written information to
 43-7    school districts subject to Section 5(a-1), Article 3.50-7,
 43-8    Insurance Code, as added by this Act, that provides a general
 43-9    description of the uniform group coverage program established under
43-10    Article 3.50-7, Insurance Code, as added by this Act.
43-11          SECTION 5.04. A school district that becomes eligible to
43-12    participate in the uniform group coverage program established under
43-13    Article 3.50-7, Insurance Code, as added by this Act, as provided
43-14    by Section 5(b) of that article and that elects to participate in
43-15    the program beginning September 1, 2005, must notify the Teacher
43-16    Retirement System of Texas of the election not later than January
43-17    1, 2005.
43-18          SECTION 5.05. During the initial implementation of Article
43-19    3.50-7, Insurance Code, as added by this Act, and notwithstanding
43-20    any bidding requirements or other requirements set forth in Article
43-21    3.50-4, Insurance Code, or Article 3.50-7, Insurance Code, as added
43-22    by this Act, the Teacher Retirement System of Texas may amend any
43-23    agreement in effect on September 1, 2001, that it has entered into
43-24    under Article 3.50-4, Insurance Code, for benefits or
43-25    administration to extend application of that agreement to include
43-26    participants and programs under Article 3.50-7, Insurance Code, as
 44-1    added by this Act, and may, as necessary, extend the periods of
 44-2    contracts for benefits or administration in effect on September 1,
 44-3    2001, under Article 3.50-4, Insurance Code.
 44-4          SECTION 5.06. As soon as practicable after September 1, 2001,
 44-5    the Health and Human Services Commission shall consult with the
 44-6    appropriate federal agencies and make the determination required by
 44-7    Section 62.1015, Health and Safety Code, as added by this Act.
 44-8          Explanation:  These changes are necessary to modify the
 44-9    transitional material to accurately reflect the changes made to the
44-10    bill.
44-11          (27)  House Rule 13, Section 9(a)(4), is suspended to permit
44-12    the committee to add text to the transitional material in the bill,
44-13    as added by SECTION 5.07, House Bill 3343, to read as follows:
44-14          SECTION 5.07. Notwithstanding any applicable state law
44-15    relating to competitive bidding requirements for school districts,
44-16    a school district that is required as of September 1, 2002, to
44-17    participate in the uniform group coverage program established under
44-18    Article 3.50-7, Insurance Code, as added by this Act, is exempt
44-19    from any requirement that the district request bids for health
44-20    insurance coverage before the renewal date of the district's
44-21    contract for health insurance coverage for the 2001-2002 school
44-22    year.
44-23          Explanation:  This change is necessary to grant school
44-24    districts that will be required to participate in the uniform group
44-25    coverage plan additional flexibility in negotiating health
44-26    insurance coverage contracts for the 2001-2002 school year.
 45-1          (28)  House Rule 13, Section 9(a)(4), is suspended to permit
 45-2    the committee to add text to the transitional material in the bill,
 45-3    as added by SECTION 5.08, House Bill 3343, to read as follows:
 45-4          SECTION 5.08. (a)  Except as otherwise provided by this Act,
 45-5    this Act takes effect September 1, 2001.
 45-6          (b)  Sections 5.03 and 5.07 of this Act take effect
 45-7    immediately if this Act receives a vote of two-thirds of all the
 45-8    members elected to each house, as provided by Section 39, Article
 45-9    III, Texas Constitution.  If this Act does not receive the vote
45-10    necessary for immediate effect, Sections 5.03 and 5.07 of this Act
45-11    take effect September 1, 2001.
45-12          Explanation:  This change is necessary to allow certain
45-13    transitional provisions to have immediate effect.