SRC-GSM H.B. 1 78(4) BILL ANALYSIS
Senate Research Center H.B. 1
By: Grusendorf (Shapiro)
Committee of the Whole
5/7/2004
Engrossed
DIGEST AND PURPOSE
Today, Texas is facing a crisis in providing funding for the state public
education system. Some believe that property taxes are too high and that
schools lack the flexibility to raise additional revenue to meet the
rising costs of educating Texas children. Legal challenges have also been
filed against the current system of finance. H.B. 1 proposes to modify
the public education funding system in order to address these problems and
to stabilize and improve funding for public education in Texas. H.B. 1
also proposes to address and encourage student achievement through an
incentive program and other education reforms.
RULEMAKING AUTHORITY
Rulemaking authority is granted throughout this bill to the commissioner
of public education, the
comptroller of public accounts, the Legislative Budget Board, and the
State Board of Education, including the following grants:
Rulemaking authority is expressly granted to the commissioner of education
in SECTION 1A.01 (Sections 42.004, 42.007, and 42.151, Education Code),
SECTION 1A.09 (Section 41.093, Education Code), SECTION 1E.01 (Section
606.0261, Government Code), SECTION 1F.21 (Section 34.0071, Education
Code) , SECTION 2A.02 (Sections 21.651 and 21.653 Education Code), SECTION
2B.01 (Section 7.0041, Education Code), SECTION 2B.02 (Sections 7.007 and
7.009, Education Code) , and SECTION 2D.07 (Section 39.025, Education
Code).
Rulemaking authority previously granted to the commissioner of education
is modified in SECTION 1B.01 (Section 46.002(b), Education Code).
Rulemaking authority is expressly granted to the to the commissioner of
higher education in SECTION 2B.02 (Section 7.009, Education Code).
Rulemaking authority is expressly granted to the to the to the State Board
of Education in 2D.02 (Section 28.025, Education Code).
Rulemaking authority is expressly granted to the to the Legislative Budget
Board in SECTION 1A.01 (Section 42.006, Education Code).
SECTION BY SECTION ANALYSIS
ARTICLE 1. PUBLIC SCHOOL FINANCE
PART A. EDUCATION FUNDING
SECTION 1A.01. Amends Subtitle I, Title 2, Education Code, by adding
Chapter 42, as follows:
CHAPTER 42. FOUNDATION SCHOOL PROGRAM
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 42.001. STATE POLICY. (a) Establishes that it is the policy of
this state that the provision of public education is a state
responsibility and that a thorough and efficient system be provided and
substantially financed through state revenue sources so that each student
enrolled in the public school system shall have access to programs and
services that are appropriate to the student's educational needs and that
are substantially equal to those available to any similar student,
notwithstanding varying local economic factors.
(b) Requires the public school finance system of this state to adhere to
a standard of neutrality that provides for substantially equal access to
similar revenue per student at similar tax effort, considering all state
and local revenues of districts after acknowledging all legitimate student
and district cost differences.
Sec. 42.002. PURPOSES OF FOUNDATION SCHOOL PROGRAM. (a) Sets forth that
the purposes of the Foundation School Program in this chapter are to
guarantee that each school district in the state has adequate resources to
provide each eligible student an accredited instructional program and
facilities suitable to the student's educational needs, and access to
substantially equalized financing for an enriched program.
(b) Establishes that the Foundation School Program consists of two tiers
that in combination provide for sufficient financing for all school
districts to provide an accredited program of education that is rated
academically acceptable or higher under Section 39.072 and meets other
applicable legal standards, provides for substantially equal access to
funds to provide an enriched program, and provides a facilities component
as provided by Chapter 46 (Assistance With Instructional Facilities and
Payment of existing Debt).
Sec. 42.003. STUDENT ELIGIBILITY. (a) Establishes that a student is
entitled to the benefits of the Foundation School Program if the student
is five years of age or older and under 21 years of age on September 1 of
the school year and has not graduated from high school.
(b) Provides that a student to whom Subsection (a) does not apply is
entitled to the benefits of the Foundation School Program if the student
is enrolled in a prekindergarten class under Section 29.153.
(c) Provides that a child may be enrolled in the first grade if the child
is at least six years of age at the beginning of the school year of the
district or has been enrolled in the first grade or has completed
kindergarten in the public schools in another state before transferring to
a public school in this state.
(d) Provides that notwithstanding Subsection (a), a student younger than
five years of age is entitled to the benefits of the Foundation School
Program if the student performs satisfactorily on the assessment
instrument administered under Section 39.023(a) to students in the third
grade and the district has adopted a policy for admitting students younger
than five years of age.
Sec. 42.004. ADMINISTRATION OF PROGRAM. (a) Requires the commissioner of
education (commissioner) to take such action and require such reports
consistent with this chapter as may be necessary to implement and
administer the Foundation School Program.
(b) Authorizes the commissioner to adopt rules necessary to implement and
administer the Foundation School Program.
Sec. 42.005. AVERAGE DAILY ATTENDANCE. (a) Defines "average daily
attendance."
(b) Requires a school district that experiences a decline of two percent
or more in average daily attendance to be funded on the basis of an
average daily attendance equal to the actual average daily attendance of
the preceding school year.
(c) Requires the commissioner to adjust the average daily attendance of a
school district that has a significant percentage of students who are
migratory children as defined by 20 U.S.C. Section 6399.
(d) Authorizes the commissioner to adjust the average daily attendance of
a school district in which a disaster, flood, extreme weather condition,
fuel curtailment, or other calamity has a significant effect on the
district's attendance.
(e) Provides that an open-enrollment charter school is not entitled to
funding based on an adjustment under Subsection (b).
Sec. 42.006. EQUALIZED FUNDING ELEMENTS. (a) Requires the Legislative
Budget Board (LBB) to adopt rules, subject to appropriate notice and
opportunity for public comment, for the calculation for each year of a
biennium of the equalized funding elements, in accordance with Subsection
(c), necessary to achieve the state policy under Section 42.001.
(b) Requires the LBB, before each regular session of the legislature, to
report the equalized funding elements to the commissioner and the
legislature.
(c) Sets forth certain requirements for the funding elements.
(d) Requires the LBB to conduct a study of the funding elements each
biennium, as appropriate. Sets forth certain requirements for the study.
(e) Requires the LBB, notwithstanding Subsection (d), to contract for a
comprehensive study of the funding elements and report the results of the
study to the commissioner and the legislature not later than December 1,
2008. Provides that this subsection expires January 1, 2009.
Sec. 42.007. EFFECT OF SALE BY SCHOOL DISTRICT OF TAX RECEIVABLE. (a)
Provides that the sale by a school district of an ad valorem tax
receivable under Chapter 274, Local Government Code, does not affect the
allocation of state or federal funds to the school district or the
entitlement of the school district to state or federal funds under this
code, or the taxable value of property in the district for the purposes of
the allocation of or entitlement to those funds.
(b) Requires the commissioner to adopt rules governing, for purposes of
the Foundation School Program, collection of delinquent ad valorem taxes.
Authorizes the rules to provide for documentation and other recordkeeping
requirements.
[Reserves Sections 42.008-42.100 for expansion.]
SUBCHAPTER B. BASIC PROGRAM
Sec. 42.101. ACCREDITATION ALLOTMENT AND SPECIAL STUDENT ALLOTMENTS. (a)
Provides that for each student in average daily attendance, a school
district is entitled to an accreditation allotment of $4,459 if the
student is enrolled below the ninth grade level, or $5,459 if the student
is enrolled at or above the ninth grade level.
(b) Authorizes an accreditation allotment in a greater amount for any
school year to be provided by appropriation.
(c) Provides that in addition to the accreditation allotment, a school
district is entitled to special student allotments in the manner specified
under Subchapter C.
[Reserves Sections 42.102-42.150 for expansion.]
SUBCHAPTER C. SPECIAL STUDENT ALLOTMENTS
AND OTHER EXPENDITURES
Sec. 42.151. SPECIAL EDUCATION ALLOTMENT. (a) Provides that for each
student in average daily attendance, a school district is entitled to an
annual allotment of $300 or a greater amount for any school year provided
by appropriation.
(b) Authorizes a school district, in addition to the allotment provided
by Subsection (a), and subject to amounts appropriated and available for
the purpose, to apply to the commissioner for a grant to reimburse the
district for the costs associated with a high level of students receiving
special education services, or the costs of providing high-severity
special education services.
(c) Requires the commissioner to adopt certain rules necessary to
implement this section.
Sec. 42.152. ACCELERATED PROGRAMS ALLOTMENT. (a) Provides that a school
district is entitled to an allotment for the costs of providing
accelerated programs in an amount determined by a specified formula: AAA =
507 X ADA X PR. Defines "AAA," "ADA," and "PR."
(b) Authorizes the legislature to provide by appropriation for a greater
allotment than the amount prescribed by Subsection (a).
Sec. 42.1521. SCHOOL COUNSELORS AND COUNSELING PROGRAMS. Requires the
commissioner, from funds appropriated for the purpose, each fiscal year,
to distribute funds for programs under Subchapter A, Chapter 33. Provides
that a program established under that subchapter is required only in
school districts in which the program is financed by funds distributed
under this section or other funds distributed by the commissioner for a
program under that subchapter. Requires that preference be given to a
school district that received funds for a program for the preceding school
year in distributing those funds.
Sec. 42.153. TRANSITIONAL PROGRAM ALLOTMENT. Provides that for each
student in average daily attendance in a bilingual education or special
language program under Subchapter B, Chapter 29, a district is entitled to
an annual allotment of $254 or a greater amount for any school year
provided by appropriation.
Sec. 42.154. CAREER AND TECHNOLOGY EDUCATION ALLOTMENT. (a) Provides that
for each student in average daily attendance in an approved career and
technology education program in grades nine through 12 or in career and
technology education programs for students with disabilities in grades
seven through 12, a district is entitled to an annual allotment of $178
for each annual credit hour the student is enrolled in the program, or a
greater amount for any school year provided by appropriation.
(b) Requires that funds allotted under this section, other than an
indirect cost allotment established under State Board of Education rule,
be used in providing career and technology education programs in grades
nine through 12 or career and technology education programs for students
with disabilities in grades seven through 12 under Sections 29.182,
29.183, and 29.184.
Sec. 42.155. PUBLIC EDUCATION GRANT ALLOTMENT. (a) Establishes that,
except as provided by Subsection (b), for each student in average daily
attendance who is using a public education grant under Subchapter G,
Chapter 29, to attend school in a district other than the district in
which the student resides, the district in which the student attends
school is entitled to an annual allotment of $250 or a greater amount for
any school year provided by appropriation.
(b) Provides that the total number of allotments under this section to
which a school district is entitled may not exceed the number by which the
number of students using public education grants to attend school in the
district exceeds the number of students who reside in the district and use
public education grants to attend school in another district.
[Reserves Sections 42.156-42.170 for expansion.]
Sec. 42.171. RESTRICTIONS ON USE OF ADJUSTED ALLOTMENTS. Provides that
any restriction imposed under this subchapter on a school district's use
of an amount allotted under this subchapter applies equally to the amount
by which the allotment is adjusted under Sections 42.301, 42.302, and
42.303.
Sec. 42.172. MAINTENANCE OF EFFORT. (a) Provides that a school
district, notwithstanding any other provision of this code, but subject to
Subsection (b), may not spend in any school year for a certain program or
service an amount per student in average daily attendance that is less
than the amount the district spent for that program or service per student
in average daily attendance during the 2004-2005 school year.
(b) Provides that the commissioner may authorize a school district to
spend less than the amount required by this section if the commissioner,
considering the district's unique circumstances, determines that the
requirement imposes an undue hardship on the district.
[Reserves Sections 42.173-42.200 for expansion.]
SUBCHAPTER D. NEW INSTRUCTIONAL FACILITY ALLOTMENTS
Sec. 42.201. NEW INSTRUCTIONAL FACILITY ALLOTMENT. Provides that a
school district is entitled to an additional allotment as provided by this
subchapter for operational expenses associated with opening a new
instructional facility.
Sec. 42.202. DEFINITION. Defines "instructional facility."
Sec. 42.203. ALLOTMENT FOR FIRST YEAR OF OPERATION. Provides that a
school district is entitled to an allotment of $250 for each student in
average daily attendance at the facility or a greater amount provided by
appropriation, for the first school year in which students attend a new
instructional facility.
Sec. 42.204. ALLOTMENT FOR SECOND YEAR OF OPERATION. (a) Provides that
a school district is entitled to an allotment of $250 for each additional
student in average daily attendance at the facility or a greater amount
provided by appropriation, for the second school year in which students
attend a new instructional facility.
(b) Provides that for purposes of this section, the number of additional
students in average daily attendance at a facility is the difference
between the number of students in average daily attendance in the current
year at that facility and the number of students in average daily
attendance at that facility in the preceding year.
Sec. 42.205. PRORATION OF ALLOTMENTS. Requires the commissioner to
reduce each district's allotment under this subchapter in the manner
provided by Section 42.312(f), if the total amount of allotments to which
school districts are entitled under this subchapter for a school year
exceeds the amount appropriated for allotments under this subchapter.
Sec. 42.206. APPLICABILITY TO CERTAIN DISTRICTS. Provides that a school
district subject to Section 42.401 that elects to purchase average daily
attendance credit under Subchapter D, Chapter 41, is entitled to a
credit, in the amount of the allotments to which the district is entitled
under this subchapter, against the total amount required under Section
41.093 for the district to purchase attendance credits.
[Reserves Sections 42.207-42.250 for expansion.]
SUBCHAPTER E. ENRICHMENT PROGRAM
Sec. 42.251. PURPOSE. Establishes that the purpose of the enrichment
program component of the Foundation School Program is to provide each
school district with the opportunity to supplement the basic program at a
level of its own choice. Provides that an allotment under this
subchapter may be used for any legal purpose other than capital outlay or
debt service.
Sec. 42.252. ALLOTMENT. (a) Provides that each school district is
guaranteed a specified amount per student in state and local funds for
each cent of enrichment tax effort up to the maximum level specified in
this subchapter. Provides that the amount of state support, subject only
to the maximum amount under Section 42.253(b), is determined by the
formula: GYA = (GL X ADA X DETR X 100) - LR. Defines "GYA," "GL,"
"ADA,""DETR," and "LR."
(b) (1) Specifies that, for purposes of this section, the total amount of
maintenance and operations taxes collected by the school district does not
include certain factors.
(2) Provides that school district taxes for which credit is granted under
Section 31.035, 31.036, or 31.037, Tax Code, or under Subchapter D,
Chapter 313, Tax Code, are considered taxes collected by the school
district as if the taxes were paid when the credit for the taxes was
granted.
(3) Provides that the total amount of maintenance and operations taxes
collected for an applicable school year by a school district with
alternate tax dates, as authorized by Section 26.135, Tax Code, is the
amount of taxes collected on or after January 1 of the year in which the
school year begins and not later than December 31 of the same year.
Sec. 42.253. DISTRICT ENRICHMENT TAX. (a) Prohibits the district
enrichment tax rate from exceeding $0.10 per $100 of valuation.
(a-1) Prohibits a school district, notwithstanding Subsection (a), from
imposing a district enrichment tax earlier than the 2006 tax year.
Provides that the maximum rate that may be imposed during the 2006 tax
year is $0.02 per $100 of valuation. Authorizes the maximum rate to be
increased in subsequent tax years by $0.02 per year, until the maximum
amount specified by Subsection (a) is reached. Provides that this
subsection expires January 1, 2011.
(b) Requires the legislature by appropriation to establish for each
biennium the maximum district enrichment tax rate for purposes of
determining the district's guaranteed yield amount of state enrichment
funds under Section 42.252, notwithstanding Subsection (a).
Sec. 42.254. COMPUTATION OF ENRICHMENT AID FOR DISTRICT ON MILITARY
INSTALLATION OR AT STATE SCHOOL. Provides that state enrichment
assistance under this subchapter for a school district located on a
federal military installation or at Moody State School is computed using
the average district enrichment tax rate and property value per student of
school districts in the county, as determined by the commissioner.
Sec. 42.255. DISTRIBUTION OF ENRICHMENT PROGRAM FUNDS. Requires the
commissioner, as provided by Section 42.312, for each school year, to
determine the guaranteed yield amount of state enrichment program funds
to which a school district is entitled under Section 42.252; and approve
and transmit warrants to school districts.
[Reserves Sections 42.256-42.300 for expansion.]
SUBCHAPTER F. ADDITIONAL ADJUSTMENTS; FINANCING THE PROGRAM
Sec. 42.301. COST OF EDUCATION ADJUSTMENT. (a) Provides that the
amounts of the accreditation allotments under Subchapter B and each
special student allotment under Subchapter C are adjusted to reflect the
geographic variation in known resource costs and costs of education due to
factors beyond the control of the school district. Provides that the
amount of the adjustment is 50 percent of the total amount that would
result from application of the cost of education index adopted under
Subsection (b), or a greater amount for any school year provided by
appropriation.
(b) Requires the commissioner to adopt a cost of education index based on
a statistical analysis conducted on a revenue neutral basis that is
designed to isolate the independent effects of uncontrollable factors on
the compensation that school districts must pay, including teacher
salaries and other benefits. Sets forth minimum requirements for the
analysis.
(b-1) Provides that for the 2005-2006 and 2006-2007 school years, the
cost of education index is based on the teacher fixed effects index in the
2004 report commissioned by the Joint Select Committee on Public School
Finance of the 78th Legislature. Provides that this subsection expires
September 1, 2007.
(c) Requires the commissioner to biennially update the cost of education
index required by this section and to submit the updated index to the
legislature not later than December 1 of each even-numbered year.
Sec. 42.302. DISTRICT SIZE AND SPARSITY ADJUSTMENT. (a) Provides that
the amounts of the accreditation allotments under Subchapter B and each
special student allotment under Subchapter C of a school district that has
fewer than 5,000 students in average daily attendance are adjusted to
reflect district costs related to the district's size or sparsity.
(b) Requires the commissioner to adopt the adjustment required by this
section based on a statistical analysis conducted on a revenue neutral
basis that is designed to isolate the independent effects of a school
district's size and sparsity on the costs of achieving the state's
educational goals.
(c) Requires the commissioner to update the adjustment required by this
section at least once in each five-year period.
(d) Provides that notwithstanding any other provision of this section, if
the adjustment to which a school district is entitled under this section
is smaller than the adjustment the district would receive if the
adjustments provided by Sections 42.103 and 42.105, as those sections
existed on January 1, 2004, were applied to the district, the district is
entitled to receive the larger adjustment.
Sec. 42.303. INFLATION ADJUSTMENT. (a) Defines "employment cost
index."
(b) Provides that the amounts of the accreditation allotments under
Subchapter B and each special student allotment under Subchapter C that a
school district is otherwise entitled to receive under this subchapter, as
adjusted under Sections 42.301 and 42.302, are adjusted in accordance with
this section as necessary to reflect inflation.
(c) Requires the commissioner to determine the amount of the adjustment
for each biennium based on the difference, if any, between the employment
cost index most recently published as of January 1 of the calendar year in
which the first year of the biennium begins and the employment cost index
most recently published as of January 1, 2005.
(d) Provides that the commissioner's determination under this section is
final and may not be appealed.
(e) Provides that this section applies beginning with the 2006-2007
school year. Provides that for the 2006-2007 school year, the adjustment
is based on the difference, if any, between the employment cost index most
recently published on January 1, 2006, and the employment cost index most
recently published as of January 1, 2005. Provides that this subsection
expires September 1, 2007.
Sec. 42.304. FINANCING: GENERAL RULE. (a) Provides that the sum of the
accreditation allotments under Subchapter B, the special student
allotments under Subchapter C, and the new instructional facility
allotments under Subchapter D constitutes the tier one allotments. Provide
that the sum of the tier one allotments and the enrichment program
allotments under Subchapter E constitutes the total cost of the Foundation
School Program.
(b) Requires the program to be financed by state funds appropriated for
the purposes of public school education; ad valorem tax revenue generated
by an equalized uniform school district effort; ad valorem tax revenue
generated by local school district effort for an enrichment program in
accordance with Subchapter E; and state available school funds distributed
in accordance with law.
Sec. 42.305. ADDITIONAL STATE AID FOR AD VALOREM TAX CREDITS UNDER TEXAS
ECONOMIC DEVELOPMENT ACT. Establishes that for each school year, a school
district, including a school district that is otherwise ineligible for
state aid under this chapter, is entitled to state aid in an amount equal
to the amount of all tax credits credited against ad valorem taxes of the
district in that year under Subchapter D, Chapter 313, Tax Code.
Sec. 42.306. LOCAL SHARE OF PROGRAM COST (TIER ONE). (a) Provides that
each school district's share of the Foundation School Program is
determined by the following formula: LS=TR X DPV. Defines "LS," "TR," and
"DPV."
(b) Requires the commissioner to adjust the values reported in the
official report of the comptroller as required by Section 5.09(a), Tax
Code, to reflect reductions in taxable value of property resulting from
natural or economic disaster after January 1 in the year in which the
valuations are determined. Provides that the decision of the commissioner
is final. Provides that an adjustment does not affect the local share of
any other school district.
(c) Requires appeals of district values to be held pursuant to Section
403.303, Government Code.
(d) Requires a school district to adopt a maintenance and operations tax
rate sufficient to raise its total local share of the Foundation School
Program to be eligible to receive foundation school fund payments.
Provides that the district's adopted maintenance and operations tax rate,
including any enrichment tax rate under Subchapter E, may not exceed the
maximum rate specified by Section 45.003(d).
Sec. 42.307. ADJUSTMENT FOR RAPID DECLINE IN TAXABLE VALUE OF PROPERTY.
(a) Requires the commissioner to adjust the taxable value of property in
a school district that, due to factors beyond the control of the board of
trustees, experiences a rapid decline in the tax base used in calculating
taxable values in excess of four percent of the tax base used in the
preceding year, for purposes of Chapter 46 and this chapter, and to the
extent money specifically authorized to be used under this section is
available.
(b) Requires the commissioner to reduce adjustments in the manner
provided by Section 42.312(f) so that the total amount of adjustments
equals the amount of money available to fund the adjustments, to the
extent that a sufficient amount of money is not available to fund all
adjustments under this section.
(c) Provides that a decision of the commissioner under this section is
final and may not be appealed.
Sec. 42.308. EFFECT OF APPRAISAL APPEAL. (a) Requires the commissioner
to the request the comptroller to adjust its taxable property value
findings for that year consistent with the final determination of the
appraisal appeal, if the final determination of an appeal under Chapter
42, Tax Code, results in a reduction in the taxable value of property that
exceeds five percent of the total taxable value of property in the school
district for the same tax year determined under Subchapter M, Chapter 403,
Government Code.
(b) Requires the commissioner to add the difference to subsequent
distributions to the district from the foundation school fund, if the
district would have received a greater amount from the foundation school
fund for the applicable school year using the adjusted value. Provides
that an adjustment does not affect the local share of any other district.
Sec. 42.309. ADDITIONAL TRANSITIONAL AID. (a) Provides that
notwithstanding any other provision of this subtitle, a school district is
entitled to the amount of state revenue necessary to maintain state and
local revenue in an amount equal to the sum of the amount of state and
local revenue per student in average daily attendance for maintenance and
operation of the district that would have been available to the district
if the funding elements under Chapters 41 and 42, Education Code,
including any amounts the district would have received under Rider 82 to
the appropriation to the Texas Education Agency in Article III, Chapter
1330, Acts of the 78th Legislature, Regular Session, 2003, in effect
during the 2004-2005 school year were in effect for the current year; and
an amount equal to two percent of the amount described by Subdivision (1).
(b) Provides that the amount of state funds to which a school district is
entitled under this section is not subject to any adjustment for inflation
under Section 42.303.
(c) Requires the commissioner to determine the amount of state funds to
which a school district is entitled under this section. Provides that the
commissioner's determination is final and may not be appealed.
Sec. 42.310. TEMPORARY LIMITATIONS ON AID. (a) Defines "public school
adequacy standards."
(b) Provides that this subsection applies to a school district otherwise
entitled under this subtitle to receive, for the 2005-2006 school year, an
amount of state and local revenue per student in average daily attendance
for maintenance and operation of the district that exceeds 105 percent of
the amount necessary to provide an accredited basic program that meets
public school adequacy standards. Requires the commissioner,
notwithstanding any other provision of this subtitle, to withhold from a
district described by this subsection the amount of state funds necessary
to ensure that the district does not receive a greater amount of state and
local revenue per student in average daily attendance for maintenance and
operation of the district than the amount to which the district is
entitled under Section 42.309. Provides that a school district is
entitled to the amount provided by Section 42.309, regardless of the
degree to which that amount exceeds 105 percent of the amount necessary to
provide an accredited basic program that meets public school adequacy
standards.
(c) Requires the commissioner, for the 2006-2007 and 2007-2008 school
years, and notwithstanding any other provision of this subtitle, to
determine the appropriate amount, based on available appropriations, of
state funds to withhold in the manner provided by Subsection (b) from a
school district that would otherwise be entitled under this subtitle to
receive an amount of state and local revenue per student in average daily
attendance that exceeds, by the percentage established by the
commissioner, the amount necessary to provide an accredited basic program
that meets public school adequacy standards. Provides that a school
district is entitled to the amount provided by Section 42.309, regardless
of the degree to which that amount exceeds the percentage determined under
Subdivision (1) of the amount necessary to provide an accredited basic
program that meets public school adequacy standards.
(d) Requires the commissioner, notwithstanding any other provision of
this subtitle, to withhold from a school district that is not subject to
Subsection (b) or (c) the amount of state funds necessary to ensure that
the district does not receive an amount of state and local revenue per
student in average daily attendance that is greater than the certain
percentages of the amount to which the district is entitled under Section
42.304.
(e) Requires the commissioner to determine the amount of state funds
required to be withheld under this section. Requires the commissioner, in
determining the amount of state funds required to be withheld, to ensure
that the amount of state and local revenue the district receives for the
2006-2007 or 2007-2008 school year is adjusted so that a district receives
any annual benefit derived from the inflation adjustment under Section
42.303, notwithstanding any other provision of this section. Provides
that the commissioner's determination is final and may not be appealed.
(f) Provides that this section expires September 1, 2008.
Sec. 42.311. ADDITIONAL BASIC PROGRAM AID. (a) Defines "public school
adequacy standards."
(b) Provides that a school district is entitled to the amount of state
revenue necessary to ensure that the district has sufficient state and
local revenue to provide an accredited basic program that meets public
school adequacy standards, notwithstanding any other provision of this
subtitle.
(c) Requires the commissioner to determine the amount of state funds to
which a school district is entitled under this section. Provides that the
commissioner's determination is final and may not be appealed.
Sec. 42.312. DISTRIBUTION OF TEXAS EDUCATION FUND. (a) Requires the
commissioner, for each school year, to determine certain amounts of money
to which a school district is entitled.
(b) Requires the commissioner, except as provided by this subsection, to
base the determinations under Subsection (a) on the estimates provided to
the legislature under Section 42.313, or, if the General Appropriations
Act provides estimates for that purpose, on the estimates provided under
that Act, for each school district for each school year. Requires the
commissioner to reduce the entitlement of each district that has a final
taxable value of property for the second year of a state fiscal biennium
that is higher than the estimate under Section 42.313 or the General
Appropriations Act, as applicable. Provides that a reduction under this
subsection may not reduce the district's entitlement below the amount to
which it is entitled at its actual taxable value of property.
(c) Provides that each school district is entitled to an amount equal to
the difference for that district between the sum of Subsections (a)(1) and
(a)(2) and the sum of Subsections (a)(3), (a)(4), and (a)(5).
(d) Requires the commissioner to approve warrants to each school district
equaling the amount of its entitlement, except as provided by this
section. Requires warrants for all money expended according to this
chapter to be approved and transmitted to treasurers or depositories of
school districts in the same manner that warrants for state available fund
payments are transmitted. Provides that the total amount of the warrants
issued under this section may not exceed the total amount appropriated for
Foundation School Program purposes for that fiscal year.
(e) Authorizes commissioner to adjust funding to that district in that
school year to the extent that funds are available for that year if a
school district demonstrates to the satisfaction of the commissioner that
the estimate of the district's tax rate, student enrollment, or taxable
value of property used in determining the amount of state funds to which
the district is entitled are so inaccurate as to result in undue financial
hardship to the district.
(f) Requires the commissioner to reduce the total amount of funds
allocated to each district proportionately if the total amount
appropriated for a year is less than the amount of money to which school
districts are entitled for that year. Provides that the following fiscal
year, a district's entitlement under this section is increased by an
amount equal to the reduction made under this subsection.
(g) Requires the commissioner, not later than March 1 each year, to
determine the actual amount of state funds to which each school district
is entitled under this chapter for the current school year and to compare
that amount with the amount of the warrants issued to each district for
that year. Requires the commissioner to adjust the district's entitlement
for the next fiscal year accordingly if the amount of the warrants differs
from the amount to which a district is entitled because of variations in
the district's tax rate, student enrollment, or taxable value of property.
(h) Authorizes the legislature to appropriate funds necessary for
increases under Subsection (g) from funds that the comptroller, at any
time during the fiscal year, finds are available.
(i) Requires the commissioner to compute for each school district the
total amount by which the district's allocation of state funds is
increased or reduced under Subsection (g) and to certify that amount to
the district.
Sec. 42.313. ESTIMATES REQUIRED. (a) Requires the Texas Education
Agency (TEA), not later than October 1 of each even-numbered year, to
submit to the legislature an estimate of the tax rate and student
enrollment of each school district for the following biennium and requires
the comptroller of public accounts (comptroller) to submit to the
legislature an estimate of the total taxable value of all property in the
state as determined under Subchapter M, Chapter 403, Government Code, for
the following biennium.
(b) Requires TEA and the comptroller to update the information provided
to the legislature under Subsection (a) not later than March 1 of each
odd-numbered year.
Sec. 42.314. FALSIFICATION OF RECORDS; REPORT. Requires the TEA director
of school audits to promptly and fully report to the State Board of
Education (SBOE), the state auditor, and the appropriate county attorney,
district attorney, or criminal district attorney, when, in the opinion of
the director, audits or reviews of accounting, enrollment, or other
records of a school district reveal deliberate falsification of the
records, or violation of the provisions of this chapter, through which the
district's share of state funds allocated under the authority of this
chapter would be, or has been, illegally increased.
Sec. 42.315. PAYMENTS FROM TEXAS EDUCATION FUND. (a) Defines "category
1 school district," "category 2 school district," "category 3 school
district," and "wealth per student."
(b) Sets forth the procedures, time frames, and amounts for payments from
the Texas education fund to each category 1 school district.
(c) Sets forth the procedures, time frames, and amounts for payments from
the Texas education fund to each category 2 school district.
(d) Sets forth the procedures, time frames, and amounts for payments from
the Texas education fund to each category 3 school district.
(e) Authorizes modification of the amount of any installment required by
this section to provide a school district with the proper amount to which
the district may be entitled by law and to correct errors in the
allocation or distribution of funds, if an installment under this section
is required to be equal to other installments. Authorizes the adjustment
of the amount of other installments to provide for that equality.
(f) Requires that except as provided by Subsection (c)(8) or (d)(3), any
previously unpaid additional funds from prior years owed to a district be
paid to the district together with the September payment of the current
year entitlement.
Sec. 42.316. RECOVERY OF OVERALLOCATED FUNDS. (a) Requires TEA to
recover from the district, if a school district has received an
overallocation of state funds, an amount equal to the overallocation by
withholding from subsequent allocations of state funds or by requesting
and obtaining a refund.
(b) Requires TEA to certify to the comptroller that the amount
constitutes a debt for purposes of Section 403.055, Government Code, if a
district fails to comply with a request for a refund under Subsection (a).
Requires TEA to provide to the comptroller the amount of the
overallocation and any other information required by the comptroller.
Authorizes the comptroller to certify the amount of the debt to the
attorney general for collection.
(c) Requires any amounts recovered under this section to be deposited in
the Texas education fund.
[Reserves Sections 42.317-42.400 for expansion.]
SUBCHAPTER G. ADDITIONAL EQUALIZATION
Sec. 42.401. DISTRICTS SUBJECT TO ADDITIONAL EQUALIZATION. (a) Requires
that a school district in which the district's local share under Section
42.306 exceeds the district's tier one allotment under Section 42.304,
except as provided by Subsection (b), be consolidated by the commissioner
under Subchapter H, Chapter 41.
(b) Authorizes a school district described by Subsection (a) to elect to
purchase average daily attendance credit in the manner provided by
Subchapter D, Chapter 41, as an alternative to consolidation under
Subchapter H, Chapter 41.
SECTION 1A.02. Amends the heading to Chapter 41, Education Code, to read
as follows:
CHAPTER 41. EQUALIZATION ACTIONS
SECTION 1A.03. Amends Section 41.006(a), Education Code, to make
conforming changes.
SECTION 1A.04. Amends Section 41.008(a), Education Code, to delete
language relating to a consolidated taxing district under Subchapter F.
SECTION 1A.05. Amends Section 41.009(a), Education Code, to delete
language relating to detachment and annexation of territory.
SECTION 1A.06. Amends Section 41.010, Education Code, to delete language
relating to tax bases or annexation.
SECTION 1A.07. Amends Section 41.013(a), Education Code, to delete an
exception provided by Subchapter G relating to the appeal of a decision of
the commissioner under this chapter.
SECTION 1A.08. Amends Section 41.091, Education Code, as follows:
Sec. 41.091. AGREEMENT. Authorizes a school district subject to Section
42.401, rather than a school district subject to Section 42.40, with a
wealth per student that exceeds the equalized wealth level, to execute an
agreement with the commissioner to purchase attendance credits in an
amount equal to the difference between the district's local share under
Section 42.306 and the district's tier one allotment under Section 42.304.
Deletes text requiring the agreement to be sufficient, in combination with
any other actions taken under this chapter, to reduce the district's
wealth per student to a level that is equal to or less than the equalized
wealth level.
SECTION 1A.09. Amends Section 41.093, Education Code, by amending
Subsection (a) and adding Subsection (d), as follows:
(a) Deletes weighted as modifier for average daily attendance in
determining the cost of a credit under this section.
(d) Requires the commissioner to adopt rules governing the collection of
delinquent ad valorem taxes and provides that the rules may provide for
documentation and other recordkeeping requirements.
SECTION 1A.10. Amends Section 41.251, Education Code, to make a
conforming change.
SECTION 1A.11. Amends Section 41.252, Education Code, by amending
Subsections (a) and (c) and adding Subsection (d), as follows:
(a) Requires the commissioner, in selecting the districts to be
consolidated with a district subject to Section 42.401, rather than one
that has a property wealth greater than the equalized wealth level, to
select one or more districts with a local share under Section 42.306,
rather than wealth per student, that, when consolidated, will result in a
consolidated district that is not subject to Section 42.401, rather than
with a wealth per student equal to or less than the equalized wealth
level. Requires the commissioner, in achieving that result, to give
priority to school districts in a certain order.
(c) Requires the commissioner select the third and each subsequent
district to be consolidated by treating the district subject to Section
42.401, rather than one that has a property wealth greater than the
equalized wealth level, in applying the selection criteria specified by
Subsection (a), if more than two districts are to be consolidated, and the
district or districts previously selected for consolidation as one
district.
(d) Defines "local share percentage."
SECTION 1A.12. Amends Section 41.257, Education Code, as follows:
Sec. 41.257. New heading: APPLICATION OF SIZE AND SPARSITY ADJUSTMENTS.
Requires that the budget of the consolidated district apply the benefit of
the adjustment or allotment to the schools of the consolidating district
to which Section 42.302, rather than 42.103, 42.105, or 42.155, would have
applied in the event that the consolidated district still qualifies for
that adjustment, rather than as a small or sparse district.
SECTION 1A.13. Amends Section 45.003, Education Code, by amending
Subsections (a) and (d) and adding Subsections (e) and (f), as follows:
(a) Prohibits bonds described by Section 45.001 from being issued and
taxes described by Section 45.001 or 45.002 from being levied unless
authorized by a majority of the qualified voters of the district, voting
at an election held for that purpose. Deletes text relating to certain
election procedures.
(d) Decreases from $1.50 to $1.30 per $100 valuation of taxable property
the maximum rate which may be assessed for the maintenance of public
schools.
(e) Provides that an election held before January 1, 2004, authorizing a
maintenance tax at a rate of at least $1.30 on the $100 valuation of
taxable property in the district is sufficient to authorize a rate of
$1.30 or less.
(f) Authorizes a district permitted by special law on January 1, 2004, to
impose an ad valorem tax at a rate greater than $1.50 to continue to
impose a rate that is $0.20 less than the rate previously authorized.
SECTION 1A.14. Amends Section 26.08, Tax Code, by amending Subsections
(i) and (j) and adding Subsections (i-1) and (i-2), as follows:
(i) Amends the formula for determining the rollback tax rate of a school
district.
(i-1) Provides that for purposes of this section, for the 2005 tax year
the rollback tax rate of a school district, including a district to which
Section 45.003(f), Education Code, applies, is the sum of the rate of
$1.20 per $100 of taxable value for maintenance and operation of the
district and the district's current debt rate.
(i-2) Provides that Subsection (i-1) and this subsection expire January
1, 2006.
(j) Provides that for purposes of Subsection (i), the amount of state
funds that would have been available to a school district in the preceding
year is computed using the maximum tax rate for the current year under
Section 45.003(d), rather than 42.253(e), Education Code.
PART B. SCHOOL DISTRICT FACILITIES
SECTION 1B.01. Amends Section 46.002(b), Education Code, as follows:
(b) Requires, rather than authorizes, the commissioner's rules to limit
the amount of an allotment under this subchapter that is to be used to
construct, acquire, renovate, or improve an instructional facility that
may also be used for noninstructional or extracurricular activities.
Prohibits an allotment under this subchapter from being used to construct,
acquire, renovate, or improve a facility, such as a stadium, if the
facility's predominant use is for extracurricular purposes or for
purposes other than teaching the curriculum required under Section 28.002.
SECTION 1B.02. Amends Section 46.008, Education Code, as follows:
Sec. 46.008. New heading: STANDARDS AND BEST PRACTICES. (a) Deletes
text relating to space. Prohibits the standards from including
requirements related to space or square footage for a facility or any part
of a facility. Requires all new facilities constructed after September 1,
1998, to meet or exceed, rather than meet, the standards to be eligible to
be financed with state or local tax funds.
(b) Requires the commissioner to establish a program of best practices for
the construction, replacement, renovation, or improvement of school
facilities. Specifies requirements for the program.
(c) Provides that this section may not be construed in a manner that
impairs or eliminates a guarantee of an eligible bond under Subchapter C,
Chapter 45.
SECTION 1B.03. Amends Section 46.033, Education Code, as follows:
Sec. 46.033. ELIGIBLE BONDS. Provides that bonds, including bonds issued
under Section 45.006, are eligible to be paid with state and local funds
under this subchapter if the district does not receive state assistance
under Subchapter A for payment of the principal and interest on the bonds
and:
(1) the proceeds of the bonds were used to construct, acquire, renovate,
or improve an instructional facility, as defined by Section 46.001, and
the district made payments on the bonds during the final school year of
the state fiscal biennium preceding the biennium in which the district
first receives assistance under this subchapter for the payment of
principal of and interest on the bonds or taxes levied to pay the
principal of and interest on the bonds were included in the district's
audited debt service collections for that school year; or
(2) Makes a conforming change. Deletes related to a district that does
not receive state assistance under Subchapter A for payment of the
principal and interest on the bonds.
SECTION 1B.04. Amends Section 46.034(c), Education Code, to provide that
if the amount required to pay the principal of and interest on eligible
bonds in a school year is less than the amount of payments made by the
district on the bonds during the final, rather than 2002-2003, school year
of the state fiscal biennium preceding the biennium in which the district
first receives assistance under this subchapter for the payment of
principal of and interest on the bonds or the district's audited debt
service collections for that school year, the district may not receive aid
in excess of the amount that, when added to the district's local revenue
for the school year, equals the amount required to pay the principal of
and interest on the bonds.
SECTION 1B.05. Provides that Section 46.008(a), Education Code, as
amended by this part, applies to a school facility for which construction
begins on or after the effective date of this part, and such a facility is
not required to meet any requirements related to space established by the
commissioner of education under that section as it existed before
amendment by this part.
SECTION 1B.06. Provides that Subchapter A, Chapter 46, Education Code, as
amended by this part, applies only to the payment of state assistance
under Subchapter A, Chapter 46, Education Code, for which a school
district applies on or after September 1, 2005. Provides that payment of
state assistance under Subchapter A, Chapter 46, Education Code, for which
a school district applies before September 1, 2005, is governed by the law
in effect on the date the district applies for the state assistance, and
the former law is continued in effect for that purpose.
SECTION 1B.07. Provides that Subchapter B, Chapter 46, Education Code, as
amended by this part, applies only to bonds that first become eligible for
payment with state assistance under that subchapter after January 1, 2004.
Provides that bonds that were eligible for payment with state assistance
under that subchapter as of January 1, 2004, are governed by that
subchapter as it existed before amendment by this part, and the former law
is continued in effect for that purpose.
PART C. STUDY ON PUBLIC LAW NO. 108-173
SECTION 1C.01. Requires the Teacher Retirement System of Texas to conduct
a study regarding Pub. L. No. 108-173.
SECTION 1C.02. Requires the Teacher Retirement System of Texas, not later
than January 1, 2005, to report the results of the study conducted under
this part in writing to the lieutenant governor, the speaker of the house
of representatives, and the members and members-elect of the 79th
Legislature.
PART D. COMPENSATION SUPPLEMENTATION FOR CERTAIN ACTIVE
SCHOOL EMPLOYEES
SECTION 1D.01. Requires the trustee under Chapter 1580, Insurance Code,
notwithstanding any other law, with respect to classroom teachers,
full-time librarians, full-time counselors, or full-time school nurses
employed by the district, school, or service center, to deliver an amount,
as determined by the trustee, equal to the number of classroom teachers,
full-time librarians, full-time counselors, and full-time school nurses
employed by the district, school, or service center multiplied by $1,000
or a greater amount as provided by the General Appropriations Act for
purposes of Chapter 1580.
SECTION 1D.02. Repealer: Chapter 313, Acts of the 78th Legislature,
Regular Session, 2003.
PART E. SOCIAL SECURITY CONTRIBUTIONS
SECTION 1E.01. Amends Subchapter B, Chapter 606, Government Code, by
adding Section 606.0261 as follows:
Sec. 606.0261. PAYMENT OF SCHOOL DISTRICT CONTRIBUTIONS. (a) Requires
the state to pay 50 percent of the total costs incurred by a school
district in making contributions for social security coverage for the
district's employees subject to Subsection (b).
(b) Provides that payment of state assistance under this section is
limited to school districts that covered district employees under the
social security program before January 1, 2004; and contributions made on
behalf of employees in a class of employees the district covered under the
social security program before January 1, 2004.
(c) Requires the commissioner of education, using funds appropriated for
the purpose, to distribute money to which school districts are entitled
under this section in accordance with rules adopted by the commissioner.
SECTION 1E.02. Provides that this part takes effect September 1, 2005.
PART F. CONFORMING AMENDMENTS
SECTION 1F.01. Amends Section 7.024(a), Education Code, to provide that
the investment capital fund consists of money appropriated by the
legislature for that purpose rather than money transferred to the fund as
provided by Section 42.152(l).
SECTION 1F.02. Amends Section 7.055(b)(34), Education Code, to require
the commissioner to perform duties in connection with equalization
actions, rather than the equalized wealth level, under Chapter 41.
SECTION 1F.03. Amends Section 8.051(d), Education Code, to add a gifted
and talented program under Subchapter D, Chapter 29, as a core service to
be maintained by each regional education service center for purchase by
school districts and campuses. Makes conforming changes.
SECTION 1F.04. Amends Section 11.158(a), Education Code, to provide that
the board of trustees of an independent school district may require
payment of a reasonable fee for transportation of a student who lives
within two miles of the school the student attends to and from that
school, except that the board may not charge a fee for transportation for
which the school district receives grant funds under Section 34.0071,
rather than 42.155(d).
SECTION 1F.05. Amends Section 12.013(b), Education Code, to make
conforming changes.
SECTION 1F.06. Amends Section 12.106(a), Education Code, as follows:
(a) Provides that a charter holder is entitled to receive for the
open-enrollment charter school funding under Chapter 42 as if the school
were a school district without a tier one local share for purposes of
Section 42.306, rather than 42.253, and without any local revenue ("LR")
for purposes of Section 42.252, rather than 42.302. Provides that in
determining funding for an openenrollment charter school the adjustment
under Section 42.301 is the adjustment for the school district in which
the school is located and the district enrichment tax rate under Section
42.252 is the average district enrichment tax rate for the state. Deletes
text referring to Sections 42.102, 42.103, 42.104, and 42.105 and the
district enrichment tax rate ("DTR") under Section 42.302 and an average
adjustment.
SECTION 1F.07. Amends Section 13.054(f), Education Code, to make
conforming changes.
SECTION 1F.08. Amends Sections 13.282(a) and (b), Education Code, to make
conforming changes.
SECTION 1F.09. Amends Sections 21.402(a) and (c), Education Code, as
follows:
(a) Amends existing text relating to the minimum monthly salary, based on
the employee's level of experience, prescribed by Subsection (c), that a
school district must pay each classroom teacher, full-time librarian,
full-time counselor certified under Subchapter B, or full-time school
nurse by deleting language relating to the formula.
(c) Sets forth the minimum monthly salary under this section. Makes
conforming changes.
SECTION 1F.10. Amends Section 21.410(h), Education Code, to make
conforming changes.
SECTION 1F.11. Amends Section 21.411(h), Education Code, to make
conforming changes.
SECTION 1F.12. Amends Section 21.412(h), Education Code, to make
conforming changes.
SECTION 1F.13. Amends Section 21.413(h), Education Code, as added by
Section 2, Chapter 430, Acts of the 78th Legislature, Regular Session,
2003, to make conforming changes.
SECTION 1F.14. Amends Section 29.002, Education Code, to amend the
definition of "special services."
SECTION 1F.15. Amends Section 29.008(b), Education Code, to make
conforming changes.
SECTION 1F.16. Amends Section 29.014(d), Education Code, as follows:
(d) Provides that the accreditation, rather than basic, allotment for a
student enrolled in a district to which this section applies is adjusted
by the cost of education adjustment under Section 42.301, rather than
42.102, for the school district in which the district is geographically
located, and any other appropriate factor adopted by the commissioner,
rather than the weight for a homebound student under Section 42.151(a).
SECTION 1F.17. Amends Section 29.087(j), Education Code, as follows:
(j) Provides that for purposes of funding under Chapters 42 and 46, a
student attending a program authorized by this section may be counted in
attendance only for the actual number of hours each school day the student
attends the program, in accordance with Sections 25.081 and 25.082.
Deletes reference to Chapter 41.
SECTION 1F.18. Amends Section 29.203(b), Education Code, as follows:
(b) Provides that a school district is entitled to the allotment provided
by Section 42.155 , rather than 42.157, for each eligible student using a
public education grant. Deletes text providing that if a district has a
wealth per student greater than the guaranteed wealth level but less than
the equalized wealth level, a school district is entitled under rules
adopted by the commissioner to additional state aid in an amount equal to
the difference between the cost to the district of providing services to a
student using a public education grant and the sum of the state aid
received because of the allotment under Section 42.157 and money from the
available school fund attributable to the student.
SECTION 1F.19. Amends Section 33.002(a), Education Code, to provide that
this section applies only to a school district that receives funds as
provided by Section 42.1521, rather than 42.152(i).
SECTION 1F.20. Amends Section 34.002(c), Education Code, to provide that
a school district that fails or refuses to meet the safety standards for
school buses established under this section is ineligible for a state
transportation grant, rather than to share in the transportation
allotment, under Section 34.0071, rather than 42.155, until the first
anniversary of the date the district begins complying with the safety
standards.
SECTION 1F.21. Amends Chapter 34, Education Code, by adding Section
34.0071, as follows:
Sec. 34.0071. STATE TRANSPORTATION GRANTS. (a) Authorizes the
commissioner to award a grant to a school district or county that operates
a public school transportation system under Section 34.007 using funds
appropriated for the purpose.
(b) Requires the commissioner to adopt rules governing the grant program
authorized by this section. Sets forth the requirements for a funding
system under the rules.
(c) Requires money awarded under this section to be used in providing
public school transportation services.
SECTION 1F.22. Amends Section 37.0061, Education Code, as follows:
Sec. 37.0061. FUNDING FOR ALTERNATIVE EDUCATION SERVICES IN JUVENILE
RESIDENTIAL FACILITIES. Deletes existing text requiring the district in
which the student is enrolled on the date a court orders the student to be
confined to a juvenile residential facility to transfer to the district
providing education services an amount equal to the difference between the
average Foundation School Program costs per student of the district
providing education services and the sum of the state aid and the money
from the available school fund received by the district that is
attributable to the student for the portion of the school year for which
the district provides education services to the student, if the district
has a wealth per student greater than the guaranteed wealth level but
less than the equalized wealth level.
SECTION 1F.23. Amends Section 39.031, Education Code, as follows:
Sec. 39.031. COST. (a) Requires the commissioner to set aside an
appropriate amount from the Foundation School Program to pay the cost of
preparing, administering, or grading the assessment instruments and the
cost of releasing the question and answer keys under Section 39.023(e).
Deletes text requiring these costs to be paid from the funds allotted
under Section 42.152, each district to bear the cost in the same manner
described for a reduction in allotments under Section 42.253, the
commissioner to subtract the cost from the district's other foundation
school fund allotments, if a district does not receive an allotment under
Section 42.152, and that costs be paid from amounts appropriated to TEA.
(b) Requires the commissioner to reduce each district's tier one
allotments proportionately after setting aside an appropriate amount in
accordance with this section. Provides that a reduction in tier one
allotments under this subsection does not affect the computation of
guaranteed level of state and local enrichment funds per student in
average daily attendance per cent of tax effort under Section 42.252.
(c) Requires any amount set aside under this section to be approved by
the LBB and the governor's office of budget and planning.
SECTION 1F.24. Amends Section 39.134, Education Code, to make a
conforming change.
SECTION 1F.25. Amends Section 43.002(b), Education Code, to make
conforming changes.
SECTION 1F.26. Amends Section 46.003(a), Education Code, to make
conforming changes.
SECTION 1F.27. Amends Section 46.006(g), Education Code, to make a
conforming change.
SECTION 1F.28. Amends Sections 46.009(b), (e), and (f), Education Code,
to make conforming changes.
SECTION 1F.29. Amends Section 46.013, Education Code, to make a
conforming change.
SECTION 1F.30. Amends Section 46.032(a), Education Code, to make
conforming changes.
SECTION 1F.31. Amends Section 46.037, Education Code, to make a
conforming change.
SECTION 1F.32. Amends Section 56.208, Education Code, as follows:
Sec. 56.208. FUNDING. (a) Deletes existing text providing that funding
for the state tuition credits is not subject to the provisions of Sections
42.253(e) through (k).
(b) and (c) Make conforming changes.
SECTION 1F.33. Amends Section 105.301(e), Education Code, to makes a
conforming change.
SECTION 1F.34. Amends Section 403.093(d), Government Code, to make
conforming changes.
SECTION 1F.35. Amends Section 404.121(1), Government Code, to make a
conforming change.
SECTION 1F.36. Amends Section 2175.304(c), Government Code, to delete
text that gives preference to a public school that is considered
low-performing by the commissioner of education or to a school district
that has a relatively low taxable wealth per student, as determined by the
commissioner of education that entitles the district to an allotment of
state funds under Subchapter F, Chapter 42, Education Code.
SECTION 1F.37. Amends Section 1579.251, Insurance Code, by amending
Subsection (a) and adding Subsections (c) and (d), as follows:
(a) Deletes existing text requiring the state contribution to be used by
school districts and charter schools as provided by Sections 42.2514 and
42.260, Education Code.
(c) Requires the trustee to deposit state assistance for a participating
entity in the fund established under Subchapter G.
(d) Provides that a school district that does not participate in the
program is entitled to state assistance computed as provided by Subsection
(a). Requires the trustee to distribute state assistance under this
subsection in equal monthly installments. Requires state funds received
under this subsection to be deposited in a fund described by Section
1581.052(b)(2).
SECTION 1F.38. Amends Section 6.02(b), Tax Code, to delete existing text
that provides that the choice of a school district to participate in a
single appraisal district does not apply to property annexed to the school
district under Subchapter C or G, Chapter 41, Education Code, unless the
school district taxes property other than property annexed to the district
under Subchapter C or G, Chapter 41, Education Code, in the same county as
the annexed property; or the annexed property is contiguous to property in
the school district other than property annexed to the district under
Subchapter C or G, Chapter 41, Education Code.
SECTION 1F.39. Amends Section 21.02(a), Tax Code, to delete a reference
to Subsection (b) and make conforming changes.
SECTION 1F.40. Amends Section 39.901(d), Utilities Code, to make
conforming changes.
PART G. REPEALER; EFFECTIVE DATE
SECTION 1G.01. Repealer: (a) Sections 1-3, Chapter 201, Acts of the 78th
Legislature, Regular Session, 2003.
(b) Repealer: The following provisions of the Education Code are
repealed:
(1) Subchapters B (Consolidation by Agreement); C (Purchase of Attendance
Credit); E (Education of Nonresident Students); F (Tax Base
Consolidation); and G (Detachment and Annexation by Commissioner), Chapter
41 (Equalized Wealth Level);
(2) Chapter 42 (Foundation School Program), as it existed on April 1,
2004; and
(3) Sections 21.402(b) and (e) (Minimum Salary Schedule for Certain
Professional Staff); 29.203(c) and (g) (Financing); 39.024(e)
(Satisfactory Performance); 41.001 (Definitions); 41.002 (Equalized Wealth
Level); 41.003 (Options to Achieve Equalized Wealth); 41.031 (Inclusion of
Attendance Credits and Nonresidents in Weighted Average Daily Attendance);
41.004 (Annual Review of Property Wealth); 41.007 (Commissioner to
Approve Subsequent Boundary Changes); 41.009(b) (Tax Abatements); 41.011
(Contingency); 41.092 (Credit); 41.099 (Limitation); 41.252(b) (Selection
Criteria); and 105.301(f) (Establishment; Scope).
(c) Repealer: Sections 403.302(j) and (k) (Determination of School
District Propoerty Values) and 466.355(c) (State Lottery Account),
Government Code.
(d) Repealer: The following provisions of the Insurance Code are
repealed:
(1) Section 1581.053(b) (Use of State Funds); and
(2) Subchapter C (State Assistance for Meeting Minimum Effort), Chapter
1581 (Employer Expenditures for School Employee Health Coverage Plans).
(e) Repealer: Sections 21.02(b) (Assessment Ratios Prohibited) and
26.08(k)-(m) (Election to Ratify School Taxes), Tax Code.
SECTION 1G.02. (a) Provides that except as otherwise provided by this
Act, this article takes effect September 1, 2005, and applies beginning
with the 2005-2006 school year.
(b) Provides that Section 1G.01(a) of this Act takes effect August 31,
2004.
ARTICLE 2. EDUCATION REFORM
PART A. INCENTIVES
SECTION 2A.01. Amends the heading to Subchapter H, Chapter 21, Education
Code, to read:
SUBCHAPTER H. APPRAISALS
SECTION 2A.02. Amends Chapter 21, Education Code, by adding Subchapter N,
as follows:
SUBCHAPTER N. EDUCATOR EXCELLENCE INCENTIVE PROGRAM
Sec. 21.651. EDUCATOR EXCELLENCE INCENTIVE PROGRAM; FUND. (a) Requires
the commissioner to establish an educator excellence incentive program as
provided by this subchapter. Provides that the purpose of the program is
to reward employees in participating school districts whose performance
demonstrates success in adding value to student academic achievement.
(b) Provides that the educational excellence fund is an account in the
general revenue fund. Provides that the fund consists of $175 million per
fiscal year transferred to the fund at the direction of the legislature
for purposes of the program and donations and grants made to the fund for
purposes of the program.
(c) Requires the commissioner to approve each payment from the fund and
authorizes the commissioner to adopt rules for the administration of the
program and the payment of incentive grants from the fund.
(d) Requires the commissioner to encourage local flexibility in designing
incentive programs that promote student achievement.
Sec. 21.652. GRANTS TO SCHOOL DISTRICTS. (a) Requires the commissioner
to make grants to school districts that develop a local incentive program
to enable the districts to pay incentives under this subchapter, from
funds appropriated for that purpose.
(b) Provides that each fiscal year, a participating school district is
entitled to an amount determined by dividing the amount appropriated for
incentives under this subchapter for that year by the number of classroom
teachers in participating school districts in the state and multiplying
the resulting quotient by the number of classroom teachers in the
district.
(c) Requires the commissioner to determine the amount of the grant to
which each participating school district is entitled under this section
and to notify each district of the determination not later than March 1
of the fiscal year for which the determination is made. Provides that the
commissioner's determination under this section is final and may not be
appealed.
(d) Provides that except as provided by Section 21.656, a school district
may use money received under this section only to pay employee incentives
as provided by this subchapter. Requires a district to use all money
received under this subchapter for a school year in making awards for that
year.
Sec. 21.653. MINIMUM CRITERIA FOR LOCAL INCENTIVE PROGRAM. (a)
Authorizes a school district to develop a system for rewarding academic
improvement and achievement in the district.
(b) Requires the commissioner, by rule, to establish minimum criteria for
local incentive programs. Provides that the primary criteria for making
awards in a local incentive program under this subchapter must be measures
for incremental growth in student achievement. Provides that a local
incentive program may also consider high levels of student performance on
assessment instruments and progress towards proficiency in English.
(c) Requires a local incentive program to be adopted through a process
that considers comments of classroom teachers in the district.
(d) Requires a district that applies for a grant under Section 21.652 to
certify that the district has complied with this section and rules adopted
under this subchapter.
Sec. 21.654. AWARDS. (a) Requires a local incentive program to provide
awards to classroom teachers and authorizes the program to provide for
awards to other employees.
(b) Prohibits a school district from awarding state money received under
this subchapter, except as provided by Subsection (c), in an amount less
than $2,500 to an eligible employee for a school year, or to more than 15
percent of district employees, under a local incentive program component
that provides campus-level awards.
(c) Authorizes a district to apply to the commissioner for approval of a
local incentive program that does not meet the requirements of Subsection
(b). Prohibits the commissioner from approving a program that makes
awards of state funds to more than 40 percent of the employees at a single
campus.
(d) Authorizes a district to provide in its employment policy or
employment contracts that qualifying employees are entitled to a payment
under the local incentive program. Provides that this subchapter does not
require a district to pay employees an amount exceeding the amount of the
grant, if any, that the district receives under Section 21.652.
(e) Provides that a decision by the board of trustees or the board's
designee in making an award under the local incentive program is final and
may not be appealed.
Sec. 21.655. PREMIUM TEACHER PROGRAM. (a) Requires the commissioner to
develop a system for evaluating classroom teachers for the purpose of
awarding individual incentives to premium teachers under this subchapter.
Requires the system developed by the commissioner to consider certain
factors.
(b) Requires the commissioner's evaluation system to define "premium
teacher."
(c) Sets forth certain provisions under the program that apply to a
premium teacher.
(d) Sets forth certain characteristics a classroom teacher must have to
be eligible for an award under the program.
(e) Provides that not more than $10 million may be appropriated for
purposes of the program.
SECTION 2A.03. Amends Chapter 39, Education Code, by adding Subchapter J,
as follows:
SUBCHAPTER J. STUDENT EXCELLENCE
AND IMPROVEMENT INCENTIVES
Sec. 39.221. DEFINITION. Defines "at-risk student."
Sec. 39.222. DISTINGUISHED ACHIEVEMENT PROGRAM INCENTIVE. Provides that
in addition to any other funds to which a school campus is entitled under
this code, each school year each campus is entitled to certain additional
funds.
Sec. 39.223. COMMENDED PERFORMANCE INCENTIVE. (a) Defines "commended
performance."
(b) Provides that in addition to any other funds to which a school campus
is entitled under this code, each school year each campus is entitled to
certain additional funds.
Sec. 39.224. ALGEBRA I INCENTIVE. Provides that in addition to any other
funds to which a school campus is entitled under this code, each school
year each campus is entitled to certain additional funds.
Sec. 39.225. DISTRIBUTION AND USE OF FUNDS. (a) Requires funds
distributed under Sections 39.222-39.224 to be distributed to the school
district that contains the school campus entitled to the funds under the
applicable section. Requires that the funds be used at the campus
entitled to the funds.
(b) Provides that a school district or campus may use funds distributed
under Sections 39.222-39.224 only for academic enhancement purposes.
Prohibits the funds from being used for any purpose related to athletics
and from being used to substitute for or replace funds already in the
regular budget for a district or campus.
SECTION 2A.04. Reenacts and amends Section 822.201(c), Government Code,
as follows:
(c) Amends existing text on items excluded from salary and wages to
include
amounts received by or on behalf of, rather than supplemental compensation
received by, an employee under Chapter 1580, rather than Article 3.50-8,
Insurance Code; stipends paid to teachers in accordance with Section
21.458, Education Code; and amounts received under the educator excellence
incentive program under Subchapter N, Chapter 21, Education Code. Makes
conforming changes.
SECTION 2A.06. Repealer: Section 21.357 (Performance Incentives),
Education Code.
PART B. STATE GOVERNANCE
SECTION 2B.01. Amends Subchapter A, Chapter 7, Education Code, by adding
Section 7.0041,
as follows:
Sec. 7.0041. COMMISSIONER OR AGENCY RULES. (a) Requires the
commissioner, in performing a duty under this code, to adopt rules only
if the duty requires an action to be taken by rule. Requires the
commissioner or the agency to otherwise act as required by this code,
federal law, or court order without adopting rules under the procedures
required by Chapter 2001, Government Code.
(b) Provides that this section may not be construed as expanding the
authority or duties of the commissioner or the agency, or authorizing the
commissioner or agency to perform an educational function reserved to
school districts and open-enrollment charter schools under Section 7.003.
(c) Requires the commissioner to develop a procedure allowing, to the
extent practicable, school districts, open-enrollment charter schools,
parents of public school students, and educational organizations to
comment on actions the commissioner or agency proposes to take in
performing a duty that does not require the adoption of rules.
SECTION 2B.02. Amends Subchapter A, Chapter 7, Education Code, by adding
Sections 7.007-7.009 as follows:
Sec. 7.007. PUBLIC EDUCATION INFORMATION MANAGEMENT SYSTEM (PEIMS). (a)
Requires each school district to participate in PEIMS and to provide
through that system information required for the administration of this
code.
(b) Requires each school district to use a uniform accounting system
adopted by the commissioner for the data required to be reported for
PEIMS.
(c) Requires the commissioner to annually review PEIMS and to repeal or
amend rules that require school districts to provide information through
the PEIMS that is not necessary. Requires the commissioner, in reviewing
and revising the PEIMS to develop certain rules, to ensure that the system
meets certain requirements.
(d) Requires the commissioner's rules to ensure that PEIMS links student
performance data to other related information for purposes of efficient
and effective allocation of school resources.
Sec. 7.008. STATEWIDE STUDENT ENROLLMENT, ATTENDANCE, AND ACHIEVEMENT
TRACKING SYSTEM. (a) Requires each school district to participate in a
system meeting standards approved by the commissioner to track each
student enrolled in a public school in this state. Sets forth certain
requirements for a student tracking system.
(b) Requires each school district to use the student tracking system.
(c) Authorizes the commissioner to solicit and accept grant funds to
maintain the student tracking system and to make the system available to
school districts.
Sec. 7.009. CENTERS FOR EDUCATION RESEARCH. (a) Defines "center."
(b) Authorizes the commissioner of education and the commissioner of
higher education, in consultation with the State Board for Educator
Certification, to establish not more than three centers for education
research, including research regarding the impact of federal education
programs.
(c) Sets forth certain requirements for a center established under this
subchapter.
(d) Authorizes a center to be operated in accordance with a memorandum of
understanding among the commissioner of education, the commissioner of
higher education, and the governing board of a public junior college,
public senior college or university, or public state college, as defined
by Section 61.003. Requires any memorandum of understanding under this
subsection to provide for the center to be under the direct, joint
supervision of the commissioner of education and the commissioner of
higher education or their designees.
(e) Authorizes a center, in conducting research for the benefit of
education in this state, to use data on student performance that the
center has collected from the agency, the Texas Higher Education
Coordinating Board, the State Board for Educator Certification, any public
or private institution of higher education, and any school district,
including data that is confidential under the Family Educational Rights
and Privacy Act of 1974 (20 U.S.C. Section 1232g). Requires a center to
comply with rules adopted by the commissioner of education and the
commissioner of higher education to protect the confidentiality of student
information, including rules establishing procedures to ensure that
confidential student information is not duplicated or removed from a
center in an unauthorized manner.
(f) Authorizes the commissioner of education and the commissioner of
higher education to accept gifts and grants to be used in operating one or
more centers, and by rule, to impose reasonable fees, as appropriate, on a
person who uses a center's research, resources, or facilities.
(g) Establishes that this section does not authorize the disclosure of
student information that may not be disclosed under the Family Educational
Rights and Privacy Act of 1974 (20 U.S.C. Section 1232g).
(h) Requires the commissioner of education and the commissioner of higher
education to adopt rules necessary to implement this section.
SECTION 2B.03. Amends Subchapter C, Education Code, by adding Section
7.060, as follows:
Sec. 7.060. GIFTS AND GRANTS. Authorizes the commissioner to accept a
gift, donation, or other contribution for the benefit of public education
and may use the contribution in accordance with its terms.
SECTION 2B.04. Amends Section 7.107(b), Education Code, as follows:
(b) Requires at the board's first regular meeting after the election and
qualification of new members that the chair appoint, with the advice and
consent of the governor, a vice chair and a secretary, rather than those
officers being elected by separate votes. Makes conforming changes.
SECTION 2B.05. Requires TEA to study the practicality of modifying the
Public Education Information Management System (PEIMS) to permit greater
linking of student performance data to all other information submitted
under the system on matters that affect student success. Requires the
commissioner, based on the study, to develop a plan to improve, over the
next five years, the data linkage described by this section. Requires the
commissioner, not later than December 1, 2004, to file with the
legislature a report with the commissioner's recommendation for
implementing the data linkage described by this section.
SECTION 2B.06. Provides that Section 7.0041, Education Code, as added by
this Act, does not affect the validity of an action taken by the
commissioner under a rule adopted before the effective date of this Act.
PART C. SCHOOL DISTRICT GOVERNANCE
SECTION 2C.01. Amends Section 11.059, Education Code, as follows:
Sec. 11.059. TERMS. (a) Provides that a trustee of an independent
school district serves a term of four years, rather than three or four
years. Makes conforming changes.
(b) Requires elections for trustees to be held on the uniform election
date in November. Provides that the terms of one-half of the trustees, or
as near to one-half as possible, expire every two years.
(c) Requires that a board policy state the schedule on which specific
terms expire. Makes conforming changes.
SECTION 2C.02. Amends Section 11.163, Education Code, by adding
Subsection (d), to provide that if, under the employment policy, the board
of trustees delegates to the superintendent the final authority to select
district personnel the superintendent is a public official for purposes of
Chapter 573, Government Code, only with respect to a decision made
pursuant to that delegation of authority; and that each member of the
board of trustees remains subject to Chapter 573, Government Code, with
respect to all district employees.
SECTION 2C.03. Amends Section 41.001(d), Election Code, to prohibit a
general election of officers of an independent school district from being
held on the February, May, or September uniform election date.
SECTION 2C.04. (a) Provides that Section 11.059, Education Code, as
amended by this Act, applies beginning with a school district trustee
election scheduled for 2005.
(b) Requires a school district trustee election that on the effective
date of this Act is scheduled to be held in 2005 or 2006 to be held on
November 8, 2005, or November 7, 2006, except as provided by Subsection
(c) of this section.
(c) Provides that if, under Subsection (b) of this section, the positions
of more than one-half of the trustees or as near to one-half as possible
would be scheduled for election on November 8, 2005, or November 7, 2006,
the trustees holding those positions shall draw lots to determine, as
appropriate, which positions are subject to election in 2005 or 2006 and
which are subject to election in 2007 or 2008.
(d) Authorizes a person to serve a term as school district trustee that
is longer than the term for which the person was elected to implement the
changes made to Section 11.059, Education Code, by this Act.
PART D. ACCOUNTABILITY
SECTION 2D.01. Amends Section 25.005(b), Education Code, to require a
reciprocity agreement to include certain procedures and include
appropriate criteria developed by TEA.
SECTION 2D.02. Amends Section 28.025, Education Code, by amending
Subsection (c) and adding Subsections (c-1)-(c-3), as follows:
(c) Authorizes a person to receive a diploma if the person is eligible
for a diploma under Subsection (c-1) or Section 28.0251. Provides that
in other cases, a student may graduate and receive a diploma only if the
student meets certain conditions.
(c-1) Requires the State Board of Education (SBOE) to adopt rules under
which a student who first enrolls in a public school in this state in the
10th, 11th, or 12th grade may graduate and receive a diploma if the
student meets certain requirements.
(c-2) Requires that a student who is entitled to graduate and receive a
diploma under rules adopted under that subsection who takes a course in a
public school in this state for which an end-of-course assessment
instrument is administered under Section 39.023(c) to take that assessment
instrument, notwithstanding Subsection (c-1).
(c-3) Requires SBOE to adopt rules under Subsection (c-1) that apply to
students graduating in the 2005-2006 or a later school year. Provides
that Section 7.102(f) does not apply to rules adopted under Subsection
(c-1). Provides that this subsection expires July 1, 2006.
SECTION 2D.03. Amends Section 29.081(b), Education Code, to require each
district to provide accelerated instruction to a student enrolled in the
district who has taken an end-of-course, rather than the secondary
exit-level, assessment instrument administered under Section 39.023(c) and
has not performed satisfactorily on the assessment instrument, rather than
each section, or who is at risk of dropping out of school.
SECTION 2D.04. Amends Section 30.021(e), Education Code, to make
conforming changes.
SECTION 2D.05. Amends Sections 39.023(a) and (c), Education Code, as
follows:
(a) Requires TEA to adopt or develop appropriate criterion-referenced
assessment instruments designed to assess essential knowledge and skills
in reading, writing, mathematics, social studies, and science. Requires
all students, except students assessed under Subsection (b) or (l) or
exempted under Section 39.027, to be assessed in certain subjects in
ceratin grades.
(c) Requires TEA to also adopt end-of-course, rather than secondary
exit-level, assessment instruments for secondary-level courses in Algebra
I, Algebra II, Geometry, Biology, Chemistry, Physics, Integrated Physics
and Chemistry, English I, English II, English III, World Geography, World
History, and United States History. Deletes language relating to specific
design requirements. Makes conforming changes. Deletes an exemption
from the requirements of Section 51.306 for a student who performs at or
above a level established by the Texas Higher Education Coordinating Board
on the secondary exit-level assessment instruments.
SECTION 2D.06. Amends Subchapter B, Chapter 39, Education Code, by adding
Sections 39.0232 and 39.0233, as follows:
Sec. 39.0232. COMPUTER-BASED ASSESSMENT. (a) Requires TEA to provide
for assessment instruments required under Section 39.023 to be designed so
that those assessment instruments can be administered on computers and, to
the extent practicable and appropriate, require school districts to
administer to students the computer-based assessment instruments.
(b) Requires TEA to implement Subsection (a) not later than March 1,
2006. Provides that this subsection expires September 1, 2006.
Sec. 39.0233. COMPUTER-ADAPTIVE ASSESSMENT. (a) Requires TEA to develop
computer-adaptive diagnostic assessment instruments for subjects for which
assessment instruments are adopted under Sections 39.023(a), (c), and (l).
Authorizes an assessment instrument administered under this section to
include statistical sampling techniques to measure the full range of skill
levels and curriculum.
(b) Requires TEA, during the 2005-2006 school year, to administer as a
pilot project one or more of the assessment instruments required under
Subsection (a). Requires TEA to report the results of the pilot project
to the legislature not later than December 1, 2006. Provides that this
subsection expires January 15, 2007.
SECTION 2D.07. Amends Section 39.025, Education Code, as follows:
Sec. 39.025. EXIT-LEVEL PERFORMANCE REQUIRED. (a) Amends existing text
to require that, except as otherwise provided by Section 28.025(c), a
student may not receive a high school diploma until the student has
performed satisfactorily on certain end-of-course assessment instruments
for students in secondary grades administered under Section 39.023(c).
(b) and (c) Make conforming changes.
(d) Provides that Subsection (a) does not require a student to
demonstrate readiness to enroll in an institution of higher education.
(e) Requires the commissioner by rule to adopt a transition plan to
implement the amendments made by H.B. No. 1, Acts of the 78th Legislature,
4th Called Session, 2004, to Sections 28.025(c), 39.023(a) and (c), and
39.051(b)(5) and this section. Requires the rules to provide for the
administration of end-of-course assessment instruments adopted under
Section 39.023(c) to begin as soon as practicable but not later than the
2008-2009 school year. Sets forth procedures for the period under which
the transition to end-of-course assessment instruments is made.
(f) Provides that rules adopted under Subsection (e) must require that
each student who will be subject to the requirements of Subsection (a) is
entitled to notice of the specific requirements applicable to the student.
Requires notice under this subsection to be provided not later than the
date the student enters the ninth grade. Provides that Subsection (e) and
this subsection expire September 1, 2009.
SECTION 2D.08. Amends Subchapter B, Chapter 39, Education Code, by adding
Section 39.0261, as follows:
Sec. 39.0261. COLLEGE PREPARATION ASSESSMENT. (a) Requires each school
district to administer a college preparation assessment instrument to
students in grades 8, 10, and 12 who are enrolled in courses necessary to
complete the curriculum requirements for the recommended or advanced high
school program established under Section 28.025(a), to ensure that
students are prepared for college-level courses. Requires that an
assessment instrument administered under this section be part of an
established, valid, and reliable system of nationally normed and
curriculumbased educational planning and achievement assessment
instruments with certain characteristics.
(b) Requires TEA to select and approve vendors of the specific assessment
instruments administered under this section.
(c) Requires the commissioner to make grants to school districts to
prepare students for assessment instruments administered under this
section from amounts appropriated for purposes of this section.
(d) Requires TEA to compile the results of any assessment instrument
administered under this section and make the results available through the
Public Education Information Management System (PEIMS).
(e) Requires the commissioner to provide for the implementation of this
section not later than the 2006-2007 school year. Provides that this
subsection expires July 1, 2007.
SECTION 2D.09. Amends Subchapter B, Chapter 39, Education Code, by adding
Section 39.034, as follows:
Sec. 39.034. MEASURE OF ANNUAL CHANGE IN PERFORMANCE ON ASSESSMENT
INSTRUMENTS. (a) Requires the commissioner by rule to adopt a method by
which TEA may measure any change in a student's performance from one
school year to the next on an assessment instrument required under this
subchapter.
(b) Requires TEA to use the method adopted under Subsection (a) to
compare the student's results on the assessment instrument to the
student's results on any assessment instrument for that subject the
student has taken during the preceding school year each year, for each
student who takes an assessment instrument required under Section
39.023(a), (b), or (l).
(c) Requires TEA to maintain a record of the comparisons made under this
section and each year provide the record to the school the student
attends.
(d) Requires the commissioner to implement this section not later than
September 1, 2006. Provides that this subsection expires January 1, 2008.
SECTION 2D.10. Amends Section 39.052(b), Education Code, to add a
requirement that the report card include a summary of the district's
significant noninstructional expenditures, as determined under Section
44.0072.
SECTION 2D.11. Amends Section 39.202(b), Education Code, to require the
commissioner, in adopting uniform indicators, to identify indicators
considered to be critical by the commissioner; and to include in the
indicators identified under Subdivision (1) an indicator relating to a
district's instructional costs.
SECTION 2D.12. Amends Subchapter A, Chapter 44, Education Code, by adding
Section 44.0072 as follows:
Sec. 44.0072. NONINSTRUCTIONAL EXPENDITURES. (a) Requires a school
district to compute and report certain information through PEIMS to the
commissioner, each fiscal year.
(b) Authorizes the commissioner to determine, in a manner consistent with
Section 44.0071, whether an expenditure is noninstructional.
SECTION 2D.13. Amends Section 51.3062(q), Education Code, to make
conforming changes.
SECTION 2D.14. Repealer: Section 39.023(j) (Adoption and Administration
of Instruments), Education Code.
SECTION 2D.15. Provides that a reference in the Education Code to an
end-of-course assessment instrument administered under Section 39.023(c),
Education Code, includes a secondary exit-level assessment instrument
administered under that section as provided by Section 39.025(e),
Education Code, as added by this Act.
PART E. BILINGUAL EDUCATION AND SPECIAL LANGUAGE PROGRAMS
SECTION 2E.01. Amends Section 28.006(j), Education Code, to make a
conforming change.
SECTION 2E.02. Amends Section 29.056(g), Education Code, as follows:
(g) Authorizes a district to transfer a student of limited English
proficiency out of a bilingual education or special language program for
the first time or a subsequent time if the student is able to participate
equally in a regular all-English instructional program as determined by
certain measures, including satisfactory performance on the reading or
English language arts assessment instrument, as applicable, under Section
39.023(a), with the assessment instrument administered in English, or, if
the student is enrolled in the first or second grade, an achievement score
at or above the 40th percentile in the reading and language arts sections
of an English standardized test approved by TEA.
SECTION 2E.03. Amends Subchapter B, Chapter 29, Education Code, by adding
Section 29.0561, as follows:
Sec. 29.0561. CONSIDERATION; REENROLLMENT. (a) Requires the language
proficiency assessment committee to consider certain factors for the first
two school years after a student is transferred out of a bilingual
education or special language program under Section 29.056(g).
(b) Requires the language proficiency assessment committee to reevaluate
the student to determine if the student should reenroll in the bilingual
education or special language program if, during any grading period during
the first two school years after a student is transferred out of a
bilingual education or special language program under Section 29.056(g),
the student earns a failing grade in a subject in the foundation
curriculum under Section 28.002(a)(1). Authorizes the committee to
arrange for intensive instruction for the student or to reenroll the
student in the program based on the reevaluation.
SECTION 2E.04. Amends Subchapter B, Chapter 29, Education Code, by adding
Sections 29.065 and 29.066, as follows:
Sec. 29.065. MEASURE OF PROGRESS TOWARD ENGLISH LANGUAGE PROFICIENCY.
Requires the commissioner by rule to develop a longitudinal measure of
progress toward English language proficiency under which a student of
limited English proficiency is evaluated from the time the student enters
public school until, for two consecutive school years, the child scores at
a specific level determined by the commissioner on the reading or English
language arts assessment instrument, as applicable, under Section
39.023(a). Requires the commissioner to consider certain factors.
Sec. 29.066. BEST PRACTICES. Requires the commissioner to determine
which school districts offer the most effective bilingual education and
special language programs, based on the measure of progress toward English
language proficiency under Section 29.065. Requires the commissioner,
using funds appropriated for that purpose, to determine the practices
those districts use that result in student progress toward English
language proficiency and distribute information concerning those practices
to each school district that provides a bilingual education or special
language program.
SECTION 2E.05. Reenacts and amends Section 39.051(b), Education Code, as
amended by Chapters 433 and 805, Acts of the 78th Legislature, Regular
Session, 2003, as follows:
(b) Requires performance on the indicators adopted under this section to
be compared to stateestablished standards. Requires consideration of the
degree of change from one school year to the next in performance on each
indicator adopted under this section. Requires the indicators to be based
on information that is disaggregated by race, ethnicity, gender, and
socioeconomic status and must include, among other factors, the measure of
progress toward English language proficiency under Section 29.065, for
students of limited English proficiency, as defined by Section 29.052 and
dropout rates for students who have dropped out of school after being
enrolled at any time in a bilingual education or special language program
under Subchapter B, Chapter 29. Makes conforming changes.
SECTION 2E.06. Amends Sections 39.072(b) and (c), Education Code, to make
conforming changes.
SECTION 2E.07. Amends Sections 39.073(a) and (b), Education Code, to make
conforming changes.
SECTION 2E.08. Amends Section 39.074(e), Education Code, to make a
conforming change.
SECTION 2E.09. Repealer: Section 29.056(h) (Enrollment of Students in
Program), Education Code.
SECTION 2E.10. (a) Requires TEA, not later than the 2006-2007 school
year, to collect information concerning the measure of progress toward
English language proficiency for purposes of Section 39.051(b)(7), as
amended by this Act, and the dropout rates for purposes of Section
39.051(b)(14), Education Code, as added by this Act.
(b) Requires TEA, not later than the 2007-2008 school year, to include
the measure of progress toward English language proficiency under Section
39.051(b)(7), as amended by this Act, in evaluating the performance of
school districts, campuses, and openenrollment charter schools under
Subchapter D, Chapter 39, Education Code.
PART F. EFFECTIVE DATE
SECTION 2F.01. (a) Effective date, this article: September 1, 2005,
except as otherwise provided by this Act.
(b) Provides that Part C of this article takes effect January 1, 2005.
ARTICLE 3. PROPERTY TAXATION AND LOCAL REVENUE
PART A. LIMITATION ON CERTAIN RESIDENTIAL REAL
PROPERTY APPRAISALS
SECTION 3A.01. Amends Section 1.12(d), Tax Code, to provide that for
purposes of this section, the appraisal ratio of real property, rather
than a homestead, to which Section 23.23 applies is the ratio of the
property's market value as determined by the appraisal district or
appraisal review board, as applicable, to the market value of the property
according to law.
SECTION 3A.02. Amends Section 23.23, Tax Code, as follows:
Sec. 23.23. New heading: LIMITATION ON APPRAISED VALUE OF CERTAIN
RESIDENTIAL REAL PROPERTY. (a) Provides that the appraised value of
qualified residential real property, rather than a residence homestead,
for a tax year may not exceed the lesser of:
(1) the market value of the property; or
(2) the sum of:
(A) five , rather than 10, percent of the appraised value of the property
for the last year in which the property was appraised for taxation times
the number of years since the property was last appraised;
(B) the appraised value of the property for the last year in which the
property was appraised; and
(C) the market value of all new improvements to the property.
(b) Makes conforming changes.
(c) Provides that the limitation provided by Subsection (a) takes effect
as to a parcel of qualified residential real property, rather than
residence homestead, on January 1 of the tax year following the first tax
year in which the owner owns, rather than qualifies, the property on
January 1 and in which the owner qualifies the property as a residence
homestead or uses the property primarily for the owner's residential
purposes or, if the property qualifies as the residence homestead of the
owner under Section 11.13 in the tax year in which the owner acquires the
property, the limitation takes effect on January 1 of the tax year
following that tax year. Except as provided by Subsections (d) and (e),
the limitation expires on January 1 of the tax year following the year in
which the owner of the property ceases to own the property or ceases to
qualify the property as a residence homestead or to use the property
primarily for the owner's residential purposes, rather than when the
limitation took effect nor the owner's spouse or surviving spouse
qualifies for an exemption under Section 11.13. Makes conforming changes.
(d) Provides that if qualified residential real property subject to a
limitation under Subsection (a) qualifies for an exemption under Section
11.13 when the ownership of the property is transferred to the owner's
spouse or surviving spouse, the limitation expires on January 1 of the tax
year following the year in which the owner's spouse or surviving spouse
ceases to own the property, unless the limitation is further continued
under this subsection on the subsequent transfer to a spouse or surviving
spouse.
(e) Provides that if qualified residential real property subject to a
limitation under Subsection (a), other than a residence homestead, is
owned by two or more persons, the limitation expires on January 1 of the
tax year following the year in which the ownership of at least a 50
percent interest in the property is sold or otherwise transferred to a
person other than those owners.
(f) Redesignated from existing Subsection (d). Makes conforming
changes.
(g) Redesignated from existing Subsection (c). Redefines "new
improvement" and defines "qualified residential real property."
(h) Redesignated from existing Subsection (f). Makes a conforming
change.
(i) Provides that for purposes of applying the limitation provided by
Subsection (a) in the first tax year after the 2004 tax year in which the
qualified residential real property is appraised for taxation:
(1) the property is considered to have been appraised for taxation in the
2004 tax year at a market value equal to the appraised value of the
property for that tax year;
(2) a person who acquired in a tax year before the 2004 tax year
residential real property that the person owns in the 2004 tax year is
considered to have acquired the property on January 1, 2004; and
(3) a person who qualified the property for an exemption under Section
11.13 as the person's residence homestead for any portion of the 2004 tax
year is considered to have acquired the property in the 2004 tax year.
(j) Provides that this subsection and Subsections (k)-(n) do not apply to
property that qualifies for a residence homestead exemption under Section
11.13. Requires a person claiming the limitation under Subsection (a) to
apply for the limitation by filing an application with the chief appraiser
of the appraisal district. Requires the chief appraiser to accept and
approve or deny an application. Requires a separate application to be
filed in each appraisal district to receive the limitation in that
district for property appraised by more than one appraisal district.
Provides that a limitation provided by Subsection (a), once allowed, need
not be claimed in subsequent years and applies to the property until the
limitation expires as provided by this section or until the person's
qualification for the limitation ends. Authorizes the chief appraiser to
require a person allowed a limitation in a prior year to file a new
application to confirm the person's current qualification for the
limitation by delivering not later than April 1 a written notice that a
new application is required, accompanied by an appropriate application
form, to the person previously allowed the limitation.
(k) Requires the comptroller, in prescribing the contents of the
application form for a limitation under Subsection (a), to ensure that the
form requires an applicant to provide the information necessary to
determine the validity of the limitation claim. Prescribes the required
content of the form. Defines "driver's license" and "personal
identification certificate."
(l) Requires a person who is required to apply for a limitation under
Subsection (a) to receive the limitation for a tax year to apply for the
limitation not later than May 1 of that year. Provides that if the person
fails to timely file a completed application, the person may not receive
the limitation for that year, except as provided by Subsection (m).
(m) Requires the chief appraiser to accept and approve or deny an
application for a limitation under Subsection (a) for a tax year after the
deadline for filing the application has passed if the application is filed
not later than one year after the delinquency date for the taxes on the
property for that tax year. Requires the chief appraiser to notify the
collector for each taxing unit in which the property is located if a late
application is approved after approval of the appraisal records by the
appraisal review board. Requires the collector to deduct from the
person's tax bill the difference between the taxes that would have been
due had the property not qualified for the limitation and the taxes due
after taking the limitation into account if the tax has not been paid, and
to refund the difference if the tax has been paid.
(n) Requires a person who receives a limitation under Subsection (a) to
notify the appraisal office in writing before May 1 after the person's
qualification for the limitation ends.
SECTION 3A.03. Amends Subchapter B, Chapter 23, Tax Code, by adding
Section 23.235, as follows:
Sec. 23.235. LEGISLATIVE OVERSIGHT COMMITTEE. (a) Establishes the
legislative oversight committee (LOC) on the effect of the yearly
limitation on appraised value of a residence homestead. Sets forth the
composition of the LOC.
(b) Requires the LOC to study the effect of a limitation of appraised
value of a residence homestead established under this subchapter on tax
fairness for property owners and ad valorem revenue raised by local taxing
entities. Requires the study to include investigation of the long-term
economic effects of appraisal caps.
(c) Authorizes the LOC to request reports and other information from
appraisal districts relating to the limitation on appraised values on
residence homesteads.
(d) Requires the LOC to study the current truth in taxation laws of this
state and determine their effectiveness.
(e) Authorizes the LOC to make specific recommendations for legislation
related to this subchapter.
(f) Requires the LOC to file a report with the governor, lieutenant
governor, and speaker of the house of representatives not later than
December 31, 2004.
(g) Provides that this section expires January 1, 2005.
SECTION 3A.04. Amends Section 42.26(d), Tax Code, to make a conforming
change.
SECTION 3A.05. Amends Sections 403.302(d) and (i), Government Code, as
follows:
(d) Redefines "taxable value."
(i) Makes conforming changes.
SECTION 3A.06. Provides that this part takes effect January 1, 2005, and
applies only to the appraisal for ad valorem tax purposes of residential
real property for a tax year that begins on or after that date.
PART B. QUALIFICATION FOR RESIDENCE HOMESTEAD EXEMPTION
SECTION 3B.01. Amends Section 11.42(c), Tax Code, to provide that an
exemption authorized by Section 11.13, rather than 11.13(c) or (d), is
effective as of January 1 of the tax year in which the person qualifies
for the exemption and applies to the entire tax year.
SECTION 3B.02. Amends Section 11.43(k), Tax Code, to make a conforming
change.
SECTION 3B.03. Amends Section 26.10(b), Tax Code, to make conforming
changes.
SECTION 3B.04. Amends Section 26.112, Tax Code, as follows:
Sec. 26.112. New Heading: CALCULATION OF TAXES ON RESIDENCE HOMESTEAD. (a)
and (b) Make conforming changes.
SECTION 3B.05. Provides that this part takes effect January 1, 2005, and
applies only to ad valorem taxes imposed for a tax year that begins on or
after that date.
PART C. SALE OF TAX RECEIVABLES
SECTION 3C.01. Amends Subtitle C, Title 8, Local Government Code, by
adding Chapter 274, as follows:
CHAPTER 274. SALE OF TAX RECEIVABLES
Sec. 274.001. DEFINITIONS. Defines "date of sale," "local government,"
and "tax receivable."
Sec. 274.002. AUTHORITY TO SELL TAX RECEIVABLES OR UNDIVIDED INTEREST IN
TAX RECEIVABLES. (a) Authorizes a local government to sell all or any
part of its tax receivables, including an undivided interest in all or
any part of the receivables, at any time.
(b) Provides that a sale by a local government of a tax receivable under
this chapter is a sale and not a borrowing by the local government.
(c) Requires the local government to determine the terms and conditions
of a sale of a tax receivable.
(d) Provides that the sale by a local government of a tax receivable is
governed exclusively by this chapter.
Sec. 274.003. AMOUNT OF TAX RECEIVABLE; INCLUDED COSTS. Establishes that
the amount of a tax receivable sold under this chapter may include the
original amount of a delinquent ad valorem tax plus the amounts of any
penalty and interest that accrued on that delinquent tax under Section
33.01, Tax Code, through the date of sale that remain unpaid on the date
of sale, and the original amount of a delinquent assessment or other
charge other than a delinquent ad valorem tax plus the amount of any
interest that accrued on that assessment or charge and remains unpaid on
the date of sale.
Sec. 274.004. INTEREST AND PENALTIES ON CERTAIN TAX RECEIVABLES. (a)
Provides that interest on a tax receivable sold under this chapter accrues
on the total unpaid amount computed under Section 274.003 at the rate of
one percent for each month or portion of a month that the tax receivable
remains unpaid after the date of sale, except as provided by Subsection
(b).
(b) Provides that after the date of sale of a delinquent ad valorem tax
receivable interest and all penalties, as provided by Chapter 33, Tax
Code, continue to accrue on the unpaid original amount of the tax as if
the tax receivable had not been sold, and in a suit to collect the
delinquent tax, the local government is entitled to recover the court
costs and other expenses specified by Section 33.48(a), Tax Code.
Sec. 274.005. ENFORCEMENT OF TAX RECEIVABLE. (a) Provides that the sale
of an ad valorem tax receivable under this chapter does not affect an
existing contract for the collection of delinquent taxes under Section
6.30(c), Tax Code, between the local government or an entity acting on
behalf of the local government and an attorney. Provides that performance
by the attorney under that contract includes the collection of the
delinquent ad valorem tax by suit filed on behalf of the local government,
by tax sale, or by other means, as if the tax receivable had not been
sold.
(b) Prohibits the local government from selling an ad valorem tax
receivable to a person who controls, is controlled by, or is under common
control with a private attorney under contract to collect the related
delinquent ad valorem tax entered into under Section 6.30(c), Tax Code, or
after the date of sale of an ad valorem tax receivable to a person,
entering into a contract under Section 6.30(c), Tax Code, with an attorney
who controls, is controlled by, or is under common control with that
person.
(c) Provides that in this section, control of a person includes the
direct or indirect ownership of a majority of the voting power of that
person.
Sec. 274.006. METHOD OF SALE. (a) Authorizes a sale permitted by this
chapter to be made through competitive bidding or a negotiated sale.
(b) Authorizes a local government, notwithstanding any other law to the
contrary, in determining whether and to whom to award a sale of a tax
receivable, to take into account any factor the local government considers
to be in the best interest of the local government, including the price at
which the tax receivable is offered for sale and the terms and conditions
of a tax receivable purchase and sale agreement.
(c) Authorizes the local government to enter into negotiations with one
or more prospective purchasers to determine the terms and conditions under
which a tax receivable is proposed to be sold.
Sec. 274.007. SALE THROUGH COMPETITIVE BIDDING. (a) Requires a local
government that elects to sell all or part of its tax receivables through
competitive bidding to publish a notice of its intention to sell the tax
receivables through competitive bidding.
(b) Requires the notice to contain certain information.
(c) Requires the notice to identify separately the tax receivables
intended to be sold, or state the approximate number and aggregate amount
of those tax receivables and that a copy of a list of those tax
receivables may be obtained from the local government on request.
(d) Requires the notice to be published in a newspaper of general
circulation in the local government not later than the 30th day before the
date designated by the local government for the submission of bids.
(e) Authorizes the local government to reject any or all bids or to
accept any combination of bids received in a sale conducted through
competitive bidding.
Sec. 274.008. SALE THROUGH NEGOTIATED SALE. (a) Requires a local
government that elects to sell all or a part of its tax receivables
through a negotiated sale to publish a notice of its intention to sell tax
receivables through a negotiated sale.
(b) Requires the notice to contain certain information.
(c) Requires the notice to identify separately the tax receivables
intended to be sold, or state the approximate number and aggregate amount
of those tax receivables and that a copy of a list of those tax
receivables may be obtained from the local government on request.
(d) Requires the notice to be published in a newspaper of general
circulation in the local government not later than the 30th day before the
date designated by the local government for the submission of bids.
Sec. 274.009. NOTICE TO AFFECTED PROPERTY OWNERS. (a) Prohibits a local
government from selling a tax receivable unless the local government
notifies the owner of the property associated with the tax receivable, by
first class mail sent to the address of record of the owner, of the
proposed sale by the local government of the tax receivable.
(b) Requires the notice to be mailed to the property owner not later than
the 30th day before the date of sale.
(c) Requires the notice to contain certain information.
(d) Prohibits the local government from proceeding with the sale of the
tax receivable if the property owner pays the full amount of the tax
receivable associated with the property before the date of sale of the tax
receivable.
Sec. 274.010. POSTPONEMENT OR CANCELLATION OF SALE AUTHORIZED. (a)
Authorizes a local government to postpone or cancel any proposed sale of a
tax receivable for which notice has been published.
(b) Provides that a local government is not liable for damages as a
result of the postponement or cancellation of a proposed sale of tax
receivables and a cause of action does not arise from a postponement or
cancellation of a proposed sale.
Sec. 274.011. PURCHASE AND SALE AGREEMENTS. (a) Authorizes a local
government to enter into a purchase and sale agreement with the purchaser
of a tax receivable sold under this chapter.
(b) Establishes that a purchase and sale agreement may contain any term,
provision, condition, representation, or warranty consistent with this
chapter that, in the judgment of the local government, is necessary or in
the best interest of the local government.
(c) Requires a purchase and sale agreement to specify certain
information.
(d) Provides that a purchase and sale agreement may require the local
government to perform certain tasks.
(e) Prohibits a purchase and sale agreement from requiring the local
government to prohibit a person from paying the person's taxes in
installments under Section 31.031, 31.032, or 33.02, Tax Code.
(f) Prohibits a purchase and sale agreement from requiring a local
government that under Section 31.035 or 31.036, Tax Code, permits
individuals to perform services in lieu of paying taxes, or that under
Section 31.037, Tax Code, permits business entities to provide employees
to perform services in lieu of paying taxes, to refrain from entering into
a contract under those sections. Authorizes a local government that
enters into such a contract to repurchase any related ad valorem tax
receivable.
(g) Prohibits a purchase and sale agreement from containing any
provision that would interfere with the right of an individual to defer or
abate a suit to collect a delinquent tax under Section 33.06 or 33.065,
Tax Code. Authorizes the local government to repurchase the related tax
receivable if the individual defers or abates the suit.
(h) Prohibits a purchase and sale agreement from requiring the local
government to demand of its officers, employees, agents, or attorneys a
standard of performance of their statutory or contractual duties in the
collection of a tax receivable that is different from the customary and
reasonable standard of performance required of those persons.
Sec. 274.012. TAX RECEIVABLE CERTIFICATES; ISSUANCE AND OPERATION;
TRANSFERABILITY. (a) Requires the local government to issue to the
purchaser a tax receivable certificate evidencing the sale and transfer of
the tax receivable to the purchaser on the sale by a local government of a
tax receivable.
(b) Provides that a tax receivable certificate operates to transfer and
assign the tax receivable only for certain amounts.
(c) Provides that any amount, other than an amount specified by
Subsection (b), that may be collected by the local government under
Chapter 33, Tax Code, or another law is not transferred or assigned by a
tax receivable certificate. Requires that any amount described by this
subsection that is collected be retained by the local government for
distribution in accordance with the applicable law or, if applicable, the
terms of a contract entered into under Section 6.30(c), Tax Code.
(d) Authorizes the holder of a tax receivable certificate to transfer the
certificate to any other person.
(e) Establishes that except as otherwise agreed to in a purchase and sale
agreement under Section 274.011(d)(1) or (2), the holder of a tax
receivable certificate holds the certificate without recourse, in
contract, in tort, or otherwise, against the local government or the
officers, employees, agents, or attorneys of the local government because
of a failure to collect the related tax receivable.
Sec. 274.013. CONTENTS OF TAX RECEIVABLE CERTIFICATE. (a) Requires each
tax receivable certificate to contain a transfer and assignment by the
local government of the tax receivables transferred to the purchaser and
state certain information.
(b) Requires a tax receivable certificate to be executed by the tax
collector for the local government or a person designated by the tax
collector and acknowledged in the manner required for a deed to be
recorded in this state.
(c) Provides that a tax receivable certificate may evidence the transfer
of more than one tax receivable relating to more than one property.
Sec. 274.014. REPLACEMENT TAX RECEIVABLE CERTIFICATES. (a) Authorizes
the tax collector or a person designated by the tax collector to execute
and issue a replacement tax receivable certificate to the applicant or the
person entitled to the original replacement certificate, on application to
the collector for a local government accompanied by proof sufficient to
show that a tax receivable certificate issued on behalf of the local
government under this chapter is lost.
(b) Authorize the tax collector for the local government, at the
collector's discretion, to require the applicant or other person to post a
bond of indemnity in favor of the local government.
Sec. 274.015. ENTITLEMENT TO PROCEEDS OF TAX SALE. (a) Provides that
this section applies to real property associated with a tax receivable
sold under this chapter if the property is sold in compliance with an
order of sale following a suit for foreclosure of a local government's
lien on the property, regardless of whether the suit to foreclose the lien
is brought by the local government that sold the tax receivable or by
another local government.
(b) Establishes that from the proceeds of a sale of the property under
Section 34.01, Tax Code, or of the resale of the property under Section
34.05, Tax Code, the holder of the applicable tax receivable certificate
is entitled to receive an amount equal to the amount the local government
that sold the tax receivable certificate would otherwise be entitled to
receive and retain for its benefit.
Sec. 274.016. DUTY OF LOCAL GOVERNMENT TO PAY OVER CERTAIN MONEY. (a)
Requires a local government to promptly pay over to the holder of a tax
receivable certificate, or to the person designated in writing by the
holder, any money received by the local government in connection with the
tax receivable evidenced by the tax receivable certificate.
(b) Requires a local government to pay over to its attorney, including a
private attorney retained under a contract entered into under Section
6.30(c), Tax Code, any money received to which the attorney is entitled by
virtue of a contract or otherwise, including certain fees and costs.
Sec. 274.017. AFFIDAVITS OF PUBLICATION AND MAILING. (a) Requires each
local government that sells a tax receivable under this chapter to obtain
and preserve affidavits of the publication and mailing of all
advertisements and notices required by this chapter to be published and
mailed.
(b) Establishes that an affidavit of publication and mailing is
presumptive proof of the related publication and mailing in any court of
this state.
Sec. 274.018. PUBLIC INFORMATION. Establishes that information
collected, assembled, or maintained in connection with the sale of a tax
receivable of a local government and in connection with the issuance of a
tax receivable certificate under this chapter is public information that
is available to the public under Chapter 552, Government Code.
Sec. 274.019. CALCULATION OF EFFECTIVE TAX RATE AND ROLLBACK RATE.
Prohibits the officer or employee designated to calculate the effective
tax rate and the rollback rate of a local government under Section
26.04(c), Tax Code, from including the amount of any proceeds received by
the local government from the sale of a tax receivable under this chapter
in making those calculations.
SECTION 3C.02. Amends Section 1.04(6), Tax Code, to redefine "intangible
personal property" to include a tax receivable under Chapter 274, Local
Government Code, or a tax receivable certificate issued under that
chapter. Makes conforming changes.
PART D. REAL PROPERTY SALES PRICE DISCLOSURE
SECTION 3D.01. Amends Section 12.001, Property Code, by adding
Subsections (e)-(g), as follows:
(e) Provides that an instrument conveying real property may not be
recorded under Subsection (a) unless a certificate issued by the chief
appraiser of the appraisal district established for the county in which
the property is located stating that the sales price disclosure report
required by Subchapter D, Chapter 22, Tax Code, has been filed with the
chief appraiser is filed with the instrument of conveyance.
(f) Provides that Subsection (e) does not apply to an instrument
conveying real property if the conveyance is made under certain
conditions or by certain persons.
(g) Authorize the chief appraiser of the appraisal district established
for the county in which the property is located and the county clerk by
written agreement to establish a procedure for the electronic transfer to
the county clerk of the certificate required by Subsection (e). Provides
that an instrument of conveyance may be recorded under this section
without an accompanying paper copy of the certificate required by
Subsection (e) if the certificate is electronically transferred to the
county clerk by the chief appraiser under a procedure established under
this subsection.
SECTION 3D.02. Amends the heading to Subchapter C, Chapter 22, Tax Code,
to read as follows:
SUBCHAPTER C. REPORTS OF POLITICAL SUBDIVISION ACTIONS
SECTION 3D.03. Amends Chapter 22, Tax Code, by adding Subchapter D, as
follows:
SUBCHAPTER D. REPORT OF SALES PRICE
Sec. 22.61. SALES PRICE DISCLOSURE REPORT. (a) Requires on the sale of
real property the purchaser of the property or a person acting on behalf
of the purchaser, except as provided by Subsection (d), to file a sales
price disclosure report with the chief appraiser of the appraisal district
established for the county in which the property is located.
(b) Provides that a sales price disclosure report may be filed by
facsimile.
(c) Authorizes the sales price disclosure report to be filed with the
chief appraiser before the sale of the property closes. Requires the
person who prepared the original report to prepare, sign, and file with
the chief appraiser a supplemental sales price disclosure report updating
the information that changed if any information required by the sales
price disclosure report changes after the report is filed with the chief
appraiser. Requires the supplemental report to be filed not later than
the third day after the date the sale of the property closed.
(d) Provides that this section does not apply to a sale of real property
if the sale is made under certain conditions or by certain persons.
Sec. 22.62. SIGNATURE REQUIRED. Requires a sales price disclosure report
to be signed by the purchaser or by the person who prepares the report.
Sec. 22.63. REPORT FORMS. (a) Requires the comptroller to prescribe the
form and content of a sales price disclosure report filed under this
subchapter and to ensure that each form requires the person preparing the
report to provide, at a minimum, certain information.
(b) Prohibits a form from requiring information not relevant to the
appraisal of property for tax purposes or to the assessment or collection
of property taxes.
(c) Requires a person who prepares a sales price disclosure report under
this subchapter to use the appropriate form prescribed by the comptroller;
and include all information required by the form.
Sec. 22.64. DELIVERY OF CERTIFICATE TO PURCHASER. (a) Requires the
chief appraiser to provide to the purchaser a certificate stating that the
completed sales price disclosure report has been filed not later than the
second day after the date the sales price disclosure report is filed with
the chief appraiser, except as provided by Subsection (b).
(b) Authorizes the chief appraiser to electronically transfer the
certificate to the county clerk if the chief appraiser and the county
clerk of the county in which the property is located have entered into an
agreement under Section 12.001(g), Property Code. Requires a chief
appraiser that elects to electronically transfer the certificate to
transfer the certificate not later than the second day after the date the
sales price disclosure report is filed and notify the purchaser in
writing that the certificate has been filed with the county clerk.
Sec. 22.65. PUBLICIZING REQUIREMENTS. (a) Requires the comptroller to
publicize, in a manner reasonably designed to come to the attention of
title companies, attorneys, and property owners, the requirements of this
subchapter and of the availability of sales price disclosure report forms.
(b) Requires the Texas Real Estate Commission to assist the comptroller
in publicizing the information required by Subsection (a) to title
companies and attorneys.
(c) Requires a chief appraiser to assist the comptroller in publicizing
the information required by Subsection (a) to property owners in the
county for which the appraisal district is established.
Sec. 22.66. CONFIDENTIAL INFORMATION. (a) Provides that a sales price
disclosure report filed with a chief appraiser under this subchapter is
confidential and not open to public inspection. Prohibits the disclosure
of the report and the information it contains about specific property or a
specific person to another person other than an employee of the appraisal
office who appraises property except as provided by Subsection (b).
(b) Authorizes disclosure of information that is confidential under
Subsection (a) to certain persons or under certain conditions.
(c) Provides that a person, other than a person described by Subsection
(b)(2), who legally has access to a sales price disclosure report or who
legally obtains the information from a report made confidential by this
section commits an offense if the person knowingly commits certain acts.
(d) Establishes a defense to prosecution under Subsection (c) if the
person obtained the information from a person described by Subsection
(b)(2) or a record or document lawfully available to the public.
(e) Provides that an offense under Subsection (c) is a Class B
misdemeanor.
Sec. 22.67. IMMUNITY FROM LIABILITY. Establishes that a person who
prepares a sales price disclosure report in compliance with this
subchapter is not liable to any other person as a result of providing the
information required by this subchapter.
SECTION 3D.04. Effective date: (a) Provides that this part, except as
provided by Subsection (b) of this section, takes effect immediately if
this Act receives a vote of two-thirds of all the members elected to each
house, as provided by Section 39, Article III, Texas Constitution.
Provides that if this Act does not receive the vote necessary for
immediate effect, this part takes effect on the 91st day after the last
day of the legislative session.
(b) Provides that Sections 3D.01, 3D.02, and 3D.03 of this part take
effect January 1, 2005.
(c) Requires the comptroller of public accounts, as soon as practicable
after the effective date of this part provided by Subsection (a) of this
section, but not later than January 1, 2005, to perform certain acts.
(d) Provides that this part applies only to a sale of real property that
occurs on or after January 1, 2005.
ARTICLE 4. SALES AND USE TAXES
PART A. STATE AND LOCAL SALES AND USE TAXES
SECTION 4A.01. Amends Section 151.051(b), Tax Code, to provide that the
sales tax rate is seven, rather than 6.25, percent of the sales price of
the taxable item sold.
SECTION 4A.02. Amends Subchapter A, Chapter 151, Tax Code, by adding
Section 151.0029, as follows:
Sec. 151.0029. BILLBOARD ADVERTISING SERVICE. (a) Defines "billboard
advertising service."
(b) Defines "billboard."
SECTION 4A.03. Amends Section 151.0038(b), Tax Code, to redefine
"newspaper."
SECTION 4A.04. Amends Section 151.00394(b), Tax Code, to redefine
"internet access service."
SECTION 4A.05. Amends Section 151.0101(a), Tax Code, to redefine "taxable
services."
SECTION 4A.06. Amends Section 151.308(a), Tax Code, to delete the
exemption from the taxes imposed by this chapter for mixed beverages, ice,
or nonalcoholic beverages and the preparation or service of these items if
the receipts are taxable by Chapter 183. Makes conforming changes.
SECTION 4A.07. Amends Section 151.315, Tax Code, to specify that water
sold in a sealed container with a volume of three gallons or less is not
exempted from the taxes imposed by this chapter.
SECTION 4A.08. Amends Section 321.501(a), Tax Code, to require the
comptroller, after deducting the taxes that are required to be deposited
to the credit of the Texas education fund under Section 25, Article VIII,
Texas Constitution, to deposit the taxes collected by the comptroller
under this chapter in trust in the separate suspense account of the
municipality from which the taxes were collected.
SECTION 4A.09. Amend Section 321.503, Tax Code, to require the
comptroller, before sending any money to a municipality under this
subchapter, to deduct two percent of the amount of the municipality's
share of the taxes, rather than two percent of the taxes, collected
within the municipality during the period for which a distribution is made
as the state's charge for its services under this chapter and to credit
the money deducted to the general revenue fund. Deletes reference to
premiums payments under Section 321.501(c).
SECTION 4A.10. Amends Section 322.303, Tax Code, to require the
comptroller, before sending any money to a taxing entity under this
subchapter, to deduct two percent of the amount of the taxes collected,
rather than two percent of the amount of the taxing entity's share of the
taxes collected, within the entity area during the period for which a
distribution is made as the state's charge for its services under this
chapter and shall credit the money deducted to the general revenue fund.
SECTION 4A.11. Amends Section 323.501(a), Tax Code, to require the
comptroller, after deducting the taxes that are required to be deposited
to the credit of the Texas education fund under Section 25, Article VIII,
Texas Constitution, to deposit the taxes collected by the comptroller
under this chapter in trust in the separate suspense account of the county
from which the taxes were collected.
SECTION 4A.12. Amends Section 323.503, Tax Code, to require the
comptroller, before sending any money to a county under this subchapter,
to deduct two percent of the amount of the county's share of the taxes
collected within the county, rather than two percent of the amount of
taxes collected within the county, during the period for which a
distribution is made as the state's charge for its services under this
chapter and to credit the money deducted to the general revenue fund.
Deletes reference to premiums payments under Section 323.501(c).
SECTION 4A.13. Repealer: Repeals the following provisions of the Tax Code:
(1) Section 151.319 (Newspapers and Property Used in Newspaper
Publication);
(2) Section 151.320 (Magazines); and
(3) Section 151.325 (Basic Fee for Internet Access).
SECTION 4A.14. (a) Provides that there are exempted from the taxes
imposed by Chapter 151, Tax Code, the receipts from the sale, use,
storage, rental, or other consumption in this state of services that
became subject to the taxes because of the terms of this part and that are
the subject of a written contract or bid entered into on or before the day
after the last day of the 78th Legislature, 4th Called Session, 2004.
(b) Provides that the exemption provided by this section expires January
1, 2007.
SECTION 4A.15. Effective date, this part takes effect January 1, 2005.
PART B. [reserved]
PART C. BOAT AND MOTOR BOAT SALES AND USE TAX
SECTION 4C.01. Amends Section 160.021(b), Tax Code, to provide that the
tax rate is 7.75, rather than 6.25 percent of the total consideration.
SECTION 4C.02. Amends Section 160.022(b), Tax Code, to provide that the
tax rate is 7.75, rather than 6.25 percent of the total consideration.
SECTION 4C.03. Effective date: this part: January 1, 2005.
PART D. ADMISSIONS TAX
SECTION 4D.01. Amends Subtitle E, Title 2, Tax Code, by adding Chapter
163, as follows:
CHAPTER 163. ADMISSION TO EVENTS
Sec. 163.001. SALES TAX. (a) Provides that a tax is imposed on each
sale of an admission ticket to an event described by Section 163.002.
(b) Provides that the tax rate is $1 on the sale of each ticket.
Sec. 163.002. TAXABLE EVENTS. (a) Provides that the tax imposed under
Section 163.001 applies to an admission ticket purchased to an event as
described by this section other than an event exempted under Section
163.003.
(b) Provides that the tax imposed under Section 163.001 applies to an
admission ticket purchased to certain events and locations.
Sec. 163.003. EXEMPTION. Provides that the tax imposed under Section
163.001 does not apply to an admission ticket purchased to an event
sponsored, produced, or affiliated with a public or private primary or
secondary school or a public or private institution of higher education in
this state, including a public junior college, as defined by Section
61.003, Education Code; or if the net proceeds of the event are used only
for a charitable purpose.
Sec. 163.004. APPLICATION OF OTHER PROVISIONS OF CODE. Provides that
except as provided by this chapter, the tax imposed by this chapter is
administered, imposed, collected, and enforced in the same manner as the
tax under Chapter 151 is administered, imposed, collected, and enforced;
and the provisions of Chapter 151 applicable to the sales tax imposed
under Subchapter C, Chapter 151, apply to the tax imposed by this chapter.
Sec. 163.005. ALLOCATION OF TAX. Requires the comptroller to allocate
the net revenue from taxes imposed by this chapter to the Texas education
fund.
ARTICLE 5. CIGARETTE AND TOBACCO PRODUCTS TAXES
SECTION 5.01. Amends Section 154.021(b), Tax Code, to provide that the
tax rates are $70.50, rather than $20.50, per thousand on cigarettes
weighing three pounds or less per thousand, and the rate provided by
Subdivision (1) plus $2.10 per thousand on cigarettes weighing more than
three pounds per thousand.
SECTION 5.02. Amends Section 155.021(b), Tax Code, to provide that the
tax rates are 3.44 cents, rather than one cent, per 10 or fraction of 10
on cigars weighing three pounds or less per thousand; $25.80, rather than
$7.50, per thousand on cigars that weigh more than three pounds per
thousand and sell at factory list price, exclusive of any trade discount,
special discount, or deal, for 3.3 cents or less each; $37.84, rather than
$11 per thousand on cigars that weigh more than three pounds per thousand,
sell at factory list price, exclusive of any trade discount, special
discount, or deal, for more than 3.3 cents each, and contain no
substantial amount of nontobacco ingredients; and $51.60, rather than
$15, per thousand on cigars that weigh more than three pounds per
thousand, sell at factory list price, exclusive of any trade discount,
special discount, or deal, for more than 3.3 cents each, and contain a
substantial amount of nontobacco ingredients.
SECTION 5.03. Amends Section 155.0211(b), Tax Code, to provide that the
tax rate for tobacco products other than cigars is 40, rather than 35.213,
percent of the manufacturer's list price, exclusive of any trade discount,
special discount, or deal.
SECTION 5.04. Effective date, this article: January 1, 2005.
ARTICLE 6. TELECOMMUNICATIONS INFRASTRUCTURE FUND
SECTION 6.01. Amends Section 57.048, Utilities Code,by amending
Subsections (c) and (d) and adding Subsections (f)-(i), as follows:
(c) Provides that the total amount deposited to the credit of the fund,
excluding interest and loan repayments, may not exceed $2, rather than
$1.75, billion. Requires the comptroller, not later than August 31 of
each year, to determine the total amount, excluding interest and loan
repayments, that has been deposited to the credit of the fund during that
fiscal year and the preceding fiscal years. Requires the comptroller, if
the comptroller determines that a total of $1.75, rather than $1.5,
billion or more, excluding interest and loan repayments, has been
deposited to the credit of the fund, to impose the assessment during the
next fiscal year at a rate that the comptroller estimates is sufficient to
produce the amount necessary to result in the deposit in the fund of a
total of not more than $2, rather than $1.75, billion, excluding interest
and loan repayments.
(d) Provides that the comptroller may not collect the assessment during a
fiscal year if the comptroller determines after the yearly review that the
total amount deposited to the credit of the fund during that fiscal year
and the preceding fiscal years is $1.99, rather than $1.74, billion or
more, excluding interest and loan repayments, and it is not possible to
impose the assessment during the next fiscal year at a practical rate
without collecting more than a total of $2, rather than $1.75, billion,
excluding interest and loan repayments.
(f) Authorizes a certificated telecommunications utility, notwithstanding
any other provision of this title, to recover from the utility's
customers an assessment imposed on the utility under this subchapter after
the total amount deposited to the credit of the fund, excluding interest
and loan repayments, is equal to $1.5 billion, as determined by the
comptroller. Authorizes a certificated telecommunications utility to
recover only the amount of the assessment imposed after the total amount
deposited to the credit of the fund, excluding interest and loan
repayments, is equal to $1.5 billion, as determined by the comptroller.
Authorizes the utility to recover the assessment through a monthly billing
process.
(g) Requires the comptroller to publish in the Texas Register the date on
which the total amount deposited to the credit of the fund, excluding
interest and loan repayments, is equal to $1.5 billion.
(h) Requires a certificated telecommunications utility that wants to
recover the assessment under Subsection (f), not later than February 15 of
each year, to file with the Public Utility Commission (PUC) an affidavit
or affirmation stating the amount that the utility paid to the comptroller
under this section during the previous calendar year and the amount the
utility recovered from its customers in cumulative payments during that
year.
(i) Requires the PUC to maintain the confidentiality of information the
commission receives under this section that is claimed to be confidential
for competitive purposes. Provides that the confidential information is
exempt from disclosure under Chapter 552, Government Code.
SECTION 6.02. Amends Section 57.051, Utilities Code, is amended to read
as follows:
Sec. 57.051. SUNSET PROVISION. Provides that the Telecommunications
Infrastructure Fund, rather than board, is subject to Chapter 325,
Government Code (Texas Sunset Act). Provides that unless continued in
existence as provided by that chapter, this subchapter expires September
1, 2007, rather than in 2005. Makes conforming changes.
SECTION 6.03. (a) Effective date: Provides that this article takes
effect on the date the constitutional amendment proposed by H.J.R. No. 1,
78th Legislature, 4th Called Session, 2004, takes effect.
(b) Provides that if, on the effective date of this article, the
assessment prescribed by Section 57.048, Utilities Code, is imposed at a
rate of less than 1.25 percent, the comptroller shall, effective January
1, 2005, reset the rate of the assessment to 1.25 percent.
ARTICLE 7. EFFECTIVE DATE
SECTION 7.01. (a) Effective date: Provides that except as otherwise
provided by this Act, this Act takes effect January 1, 2005, but only if
the constitutional amendment proposed by H.J.R. No. 1, 78th Legislature,
4th Called Session, 2004, is approved by the voters. Provides that if
that amendment is not approved by the voters, this Act has no effect.
(b) Provides that this subsection and Section 2B.05 of this Act take
effect September 1, 2004, regardless of whether the constitutional
amendment proposed by H.J.R. No. 1, 78th Legislature, 4th Called Session,
2004, is approved by the voters.