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By: Grusendorf H.B. No. 1
A BILL TO BE ENTITLED
AN ACT
relating to public education, public school finance, and related
matters, including certain new or modified taxes and fees and other
state and local tax and revenue measures to provide sufficient
funding for public education and to provide tax relief and
protection for taxpayers; providing penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
ARTICLE 1. PUBLIC SCHOOL FINANCE
PART A. EDUCATION FUNDING
SECTION 1A.01. Subtitle I, Title 2, Education Code, is
amended by adding Chapter 42 to read as follows:
CHAPTER 42. FOUNDATION SCHOOL PROGRAM
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 42.001. STATE POLICY. (a) 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) The public school finance system of this state shall
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)
The purposes of the Foundation School Program set forth in this
chapter are to guarantee that each school district in the state has:
(1) adequate resources to provide each eligible
student an accredited instructional program and facilities
suitable to the student's educational needs; and
(2) access to substantially equalized financing for an
enriched program.
(b) The Foundation School Program consists of:
(1) two tiers that in combination provide for:
(A) 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; and
(B) substantially equal access to funds to
provide an enriched program; and
(2) a facilities component as provided by Chapter 46.
Sec. 42.003. STUDENT ELIGIBILITY. (a) 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) 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) 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) Notwithstanding Subsection (a), a student younger than
five years of age is entitled to the benefits of the Foundation
School Program if:
(1) the student performs satisfactorily on the
assessment instrument administered under Section 39.023(a) to
students in the third grade; and
(2) the district has adopted a policy for admitting
students younger than five years of age.
Sec. 42.004. ADMINISTRATION OF PROGRAM. (a) The
commissioner shall take such action and require such reports
consistent with this chapter as may be necessary to implement and
administer the Foundation School Program.
(b) The commissioner may adopt rules necessary to implement
and administer the Foundation School Program.
Sec. 42.005. AVERAGE DAILY ATTENDANCE. (a) In this
chapter, average daily attendance is:
(1) the quotient of the sum of attendance for each day
of the minimum number of days of instruction as described under
Section 25.081(a) divided by the minimum number of days of
instruction; or
(2) for a district that operates under a flexible year
program under Section 29.0821, the quotient of the sum of
attendance for each actual day of instruction as permitted by
Section 29.0821(b)(1) divided by the number of actual days of
instruction as permitted by Section 29.0821(b)(1).
(b) A school district that experiences a decline of two
percent or more in average daily attendance shall be funded on the
basis of an average daily attendance equal to the actual average
daily attendance of the preceding school year.
(c) The commissioner shall 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) The commissioner may 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) An open-enrollment charter school is not entitled to
funding based on an adjustment under Subsection (b).
Sec. 42.006. EQUALIZED FUNDING ELEMENTS. (a) The
Legislative Budget Board shall 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) Before each regular session of the legislature, the
board shall report the equalized funding elements to the
commissioner and the legislature.
(c) The funding elements must include:
(1) accreditation allotment amounts for the purposes
of Section 42.101 that represent the cost per student of a regular
education program that meets all mandates of law and regulation;
(2) adjustments designed to reflect the variation in
known resource costs and costs of education beyond the control of
school districts;
(3) appropriate program cost differentials and other
funding elements for the programs authorized under Subchapter C,
with the program funding level expressed as total dollar amounts
for each program and the specific dollar amount to be provided for
each student for the appropriate year;
(4) the maximum district enrichment tax rate for
purposes of Section 42.252; and
(5) the amount to be appropriated for the school
facilities assistance program under Chapter 46.
(d) The board shall conduct a study of the funding elements
each biennium, as appropriate. The study must include a
determination of the projected cost to the state in the next state
fiscal biennium of ensuring the ability of each school district to
maintain existing programs.
(e) Notwithstanding Subsection (d), the board shall
contract for a comprehensive study of the funding elements. The
board shall report the results of the study to the commissioner and
the legislature not later than December 1, 2008. This subsection
expires January 1, 2009.
Sec. 42.007. EFFECT OF SALE BY SCHOOL DISTRICT OF TAX
RECEIVABLE. (a) The sale by a school district of an ad valorem tax
receivable under Chapter 274, Local Government Code, does not
affect:
(1) 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
(2) the taxable value of property in the district for
the purposes of the allocation of or entitlement to those funds.
(b) The commissioner shall adopt rules governing, for
purposes of the Foundation School Program, collection of delinquent
ad valorem taxes. The rules may provide for documentation and other
recordkeeping requirements.
[Sections 42.008-42.100 reserved for expansion]
SUBCHAPTER B. BASIC PROGRAM
Sec. 42.101. ACCREDITATION ALLOTMENT AND SPECIAL STUDENT
ALLOTMENTS. (a) For each student in average daily attendance, a
school district is entitled to an accreditation allotment of:
(1) $4,459 if the student is enrolled below the ninth
grade level; or
(2) $5,459 if the student is enrolled at or above the
ninth grade level.
(b) An accreditation allotment in a greater amount for any
school year may be provided by appropriation.
(c) In addition to the accreditation allotment, a school
district is entitled to special student allotments in the manner
specified under Subchapter C.
[Sections 42.102-42.150 reserved for expansion]
SUBCHAPTER C. SPECIAL STUDENT ALLOTMENTS
AND OTHER EXPENDITURES
Sec. 42.151. SPECIAL EDUCATION ALLOTMENT. (a) 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) In addition to the allotment provided by Subsection (a),
and subject to amounts appropriated and available for the purpose,
a school district may apply to the commissioner for a grant to
reimburse the district for:
(1) the costs associated with a high level of students
receiving special education services; or
(2) the costs of providing high-severity special
education services.
(c) The commissioner shall adopt rules necessary to
implement this section, including:
(1) rules identifying high-severity special education
services; and
(2) rules necessary to administer the grant program
provided by Subsection (b).
Sec. 42.152. ACCELERATED PROGRAMS ALLOTMENT. (a) A school
district is entitled to an allotment for the costs of providing
accelerated programs in an amount determined by the formula:
AAA = 507 X ADA X PR
where:
"AAA" is the amount of the district's allotment;
"ADA" is the district's total number of students in average
daily attendance; and
"PR" is the percentage of the district's total number of
students enrolled in prekindergarten through grade level 8 who
participate in the national free or reduced-price lunch program as
reported through the Public Education Information Management
System (PEIMS) for the current school year or the percentage
determined in accordance with commissioner rule if no campus in the
district with students enrolled in prekindergarten through grade
level 8 participates in the national free or reduced-price lunch
program.
(b) The legislature may provide by appropriation for a
greater allotment than the amount prescribed by Subsection (a).
Sec. 42.1521. SCHOOL COUNSELORS AND COUNSELING PROGRAMS.
From funds appropriated for the purpose, the commissioner shall,
each fiscal year, distribute funds for programs under Subchapter A,
Chapter 33. 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. In
distributing those funds, preference shall be given to a school
district that received funds for a program for the preceding school
year.
Sec. 42.153. TRANSITIONAL PROGRAM ALLOTMENT. 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)
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) Funds allotted under this section, other than an
indirect cost allotment established under State Board of Education
rule, must 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) 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) 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.
[Sections 42.156-42.170 reserved for expansion]
Sec. 42.171. RESTRICTIONS ON USE OF ADJUSTED ALLOTMENTS.
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) Notwithstanding
any other provision of this code, but subject to Subsection (b), a
school district may not spend in any school year for a program or
service listed below 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:
(1) a special education program under Subchapter A,
Chapter 29;
(2) supplemental programs and services designed to
eliminate any disparity in performance on assessment instruments
administered under Subchapter C, Chapter 39, or disparity in the
rates of high school completion between students at risk of
dropping out of school, as defined by Section 29.081, and all other
students;
(3) a bilingual education or special language program
under Subchapter B, Chapter 29;
(4) a career and technology education program in
grades nine through 12 or a career and technology education program
for students with disabilities in grades seven through 12 under
Sections 29.182, 29.183, and 29.184; or
(5) a gifted and talented program under Subchapter D,
Chapter 29.
(b) 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.
[Sections 42.173-42.200 reserved for expansion]
SUBCHAPTER D. NEW INSTRUCTIONAL FACILITY ALLOTMENTS
Sec. 42.201. NEW INSTRUCTIONAL FACILITY ALLOTMENT. 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. In this subchapter,
"instructional facility" has the meaning assigned by Section
46.001.
Sec. 42.203. ALLOTMENT FOR FIRST YEAR OF OPERATION. For the
first school year in which students attend a new instructional
facility, 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.
Sec. 42.204. ALLOTMENT FOR SECOND YEAR OF OPERATION. (a)
For the second school year in which students attend a new
instructional facility, 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.
(b) 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. 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, the commissioner shall reduce
each district's allotment under this subchapter in the manner
provided by Section 42.312(f).
Sec. 42.206. APPLICABILITY TO CERTAIN DISTRICTS. 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.
[Sections 42.207-42.250 reserved for expansion]
SUBCHAPTER E. ENRICHMENT PROGRAM
Sec. 42.251. PURPOSE. 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. An allotment under this
subchapter may be used for any legal purpose other than capital
outlay or debt service.
Sec. 42.252. ALLOTMENT. (a) 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. 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
where:
"GYA" is the guaranteed yield amount of state enrichment
funds to be allocated to the district;
"GL" is the dollar amount guaranteed level of state and local
enrichment funds per student in average daily attendance per cent
of tax effort, which is an amount equal to the sum of the district's
accreditation allotments under Subchapter B and special student
allotments under Subchapter C, as adjusted in the manner provided
by Sections 42.301, 42.302, and 42.303, divided by the total number
of district students in average daily attendance, divided by 100,
or a greater amount for any school year provided by appropriation;
"ADA" is the district's total number of students in average
daily attendance;
"DETR" is the district enrichment tax rate of the school
district, which is determined by dividing the total amount of
maintenance and operations taxes collected by the school district
for the applicable school year, as provided by Subsection (b), by
the quotient of the district's taxable value of property for the
preceding tax year as determined under Subchapter M, Chapter 403,
Government Code, or, if applicable, Section 42.307, divided by 100;
and
"LR" is the local revenue, which is determined by multiplying
"DETR" by the quotient of the district's taxable value of property
as determined under Subchapter M, Chapter 403, Government Code, or,
if applicable, Section 42.307, divided by 100.
(b) For purposes of this section:
(1) the total amount of maintenance and operations
taxes collected by the school district does not include the amount
of:
(A) the district's local share under Section
42.306; or
(B) taxes paid into a tax increment fund under
Chapter 311, Tax Code;
(2) 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; and
(3) 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) The district
enrichment tax rate may not exceed $0.10 per $100 of valuation.
(a-1) Notwithstanding Subsection (a), a school district may
not impose a district enrichment tax earlier than the 2006 tax year.
The maximum rate that may be imposed during the 2006 tax year is
$0.02 per $100 of valuation. For subsequent tax years, the maximum
rate is increased by $0.02 per year, until the maximum amount
specified by Subsection (a) is reached. This subsection expires
January 1, 2011.
(b) Notwithstanding Subsection (a), the legislature by
appropriation shall 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.
Sec. 42.254. COMPUTATION OF ENRICHMENT AID FOR DISTRICT ON
MILITARY INSTALLATION OR AT STATE SCHOOL. 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. As
provided by Section 42.312, for each school year, the commissioner
shall:
(1) determine the guaranteed yield amount of state
enrichment program funds to which a school district is entitled
under Section 42.252; and
(2) approve and transmit warrants to school districts.
[Sections 42.256-42.300 reserved for expansion]
SUBCHAPTER F. ADDITIONAL ADJUSTMENTS; FINANCING THE PROGRAM
Sec. 42.301. COST OF EDUCATION ADJUSTMENT. (a) 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. 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) The commissioner shall 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. The
analysis must include, at a minimum, variations in teacher
characteristics, teacher work environments, and the economic and
social conditions of the communities in which teachers reside.
(b-1) 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. This subsection
expires September 1, 2007.
(c) The commissioner shall biennially update the cost of
education index required by this section. The commissioner shall
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)
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) The commissioner shall 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) The commissioner shall update the adjustment required
by this section at least once in each five-year period.
(d) 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) In this section,
"employment cost index" means the employment cost index published
by the Federal Bureau of Labor Statistics.
(b) 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) The commissioner shall 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) The commissioner's determination under this section is
final and may not be appealed.
(e) This section applies beginning with the 2006-2007
school year. For that 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. This subsection expires
September 1, 2007.
Sec. 42.304. FINANCING: GENERAL RULE. (a) 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.
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) The program shall be financed by:
(1) state funds appropriated for the purposes of
public school education;
(2) ad valorem tax revenue generated by an equalized
uniform school district effort;
(3) ad valorem tax revenue generated by local school
district effort for an enrichment program in accordance with
Subchapter E; and
(4) 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. 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)
Each school district's share of the Foundation School Program is
determined by the following formula:
LS = TR X DPV
where:
"LS" is the school district's local share;
"TR" is a tax rate which for each hundred dollars of valuation
is an effective tax rate of $1.20; and
"DPV" is the taxable value of property in the school district
for the preceding tax year determined under Subchapter M, Chapter
403, Government Code.
(b) The commissioner shall 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. The decision of the
commissioner is final. An adjustment does not affect the local
share of any other school district.
(c) Appeals of district values shall be held pursuant to
Section 403.303, Government Code.
(d) A school district must 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. 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) For purposes of Chapter 46 and this chapter, and
to the extent money specifically authorized to be used under this
section is available, the commissioner shall 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.
(b) To the extent that a sufficient amount of money is not
available to fund all adjustments under this section, the
commissioner shall 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.
(c) A decision of the commissioner under this section is
final and may not be appealed.
Sec. 42.308. EFFECT OF APPRAISAL APPEAL. (a) 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, the commissioner shall request the
comptroller to adjust its taxable property value findings for that
year consistent with the final determination of the appraisal
appeal.
(b) If the district would have received a greater amount
from the foundation school fund for the applicable school year
using the adjusted value, the commissioner shall add the difference
to subsequent distributions to the district from the foundation
school fund. An adjustment does not affect the local share of any
other district.
Sec. 42.309. ADDITIONAL TRANSITIONAL AID. (a)
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 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.
(b) 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) The commissioner shall determine the amount of state
funds to which a school district is entitled under this section. The
commissioner's determination is final and may not be appealed.
Sec. 42.310. TEMPORARY LIMITATIONS ON AID. (a) In this
section, "public school adequacy standards" has the meaning
assigned by Section 42.311.
(b) 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 the amount necessary to provide an accredited basic program
that meets public school adequacy standards. Notwithstanding any
other provision of this subtitle:
(1) the commissioner shall 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; and
(2) a school district is entitled to the amount
provided by Section 42.309, regardless of the degree to which that
amount exceeds the amount necessary to provide an accredited basic
program that meets public school adequacy standards.
(c) Notwithstanding any other provision of this subtitle:
(1) for the 2006-2007 and 2007-2008 school years, the
commissioner shall 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; and
(2) 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) Notwithstanding any other provision of this subtitle,
the commissioner shall 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 following percentage of the amount to which the
district is entitled under Section 42.304:
(1) 105 percent for the 2005-2006 school year;
(2) 110 percent for the 2006-2007 school year; and
(3) 115 percent for the 2007-2008 school year.
(e) The commissioner shall determine the amount of state
funds required to be withheld under this section. Notwithstanding
any other provision of this section, the commissioner, in
determining the amount of state funds required to be withheld,
shall 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. The commissioner's
determination is final and may not be appealed.
(f) This section expires September 1, 2008.
Sec. 42.311. ADDITIONAL BASIC PROGRAM AID. (a) In this
section, "public school adequacy standards" means standards for the
adequacy of funding for a public school education, as determined by
the legislature based on a statistical analysis of the costs of
achieving the educational goals of this state.
(b) Notwithstanding any other provision of this subtitle, 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.
(c) The commissioner shall determine the amount of state
funds to which a school district is entitled under this section.
The commissioner's determination is final and may not be appealed.
Sec. 42.312. DISTRIBUTION OF TEXAS EDUCATION FUND. (a) For
each school year the commissioner shall determine:
(1) the amount of money to which a school district is
entitled under Subchapters B, C, and D, as adjusted in accordance
with this subchapter;
(2) the amount of money to which a school district is
entitled under Subchapter E;
(3) the amount of money allocated to the district from
the available school fund;
(4) the amount of the district's tier one local share
under Section 42.306; and
(5) the amount of each district's enrichment program
local revenue under Section 42.252.
(b) Except as provided by this subsection, the commissioner
shall 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. The commissioner shall 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. 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) 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) The commissioner shall approve warrants to each school
district equaling the amount of its entitlement, except as provided
by this section. Warrants for all money expended according to this
chapter shall be approved and transmitted to treasurers or
depositories of school districts in the same manner that warrants
for state available fund payments are transmitted. 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) 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, the commissioner may adjust funding to that
district in that school year to the extent that funds are available
for that year.
(f) If the total amount appropriated for a year is less than
the amount of money to which school districts are entitled for that
year, the commissioner shall reduce the total amount of funds
allocated to each district proportionately. 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) Not later than March 1 each year, the commissioner shall
determine the actual amount of state funds to which each school
district is entitled under this chapter for the current school year
and shall compare that amount with the amount of the warrants issued
to each district for that year. 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, the commissioner shall adjust the
district's entitlement for the next fiscal year accordingly.
(h) The legislature may appropriate funds necessary for
increases under Subsection (g) from funds that the comptroller, at
any time during the fiscal year, finds are available.
(i) The commissioner shall 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 shall certify that
amount to the district.
Sec. 42.313. ESTIMATES REQUIRED. (a) Not later than
October 1 of each even-numbered year:
(1) the agency shall submit to the legislature an
estimate of the tax rate and student enrollment of each school
district for the following biennium; and
(2) the comptroller shall 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) The agency and the comptroller shall 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. When, in
the opinion of the agency's director of school audits, 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, the
director shall promptly and fully report the fact to the State Board
of Education, the state auditor, and the appropriate county
attorney, district attorney, or criminal district attorney.
Sec. 42.315. PAYMENTS FROM TEXAS EDUCATION FUND. (a) In
this section:
(1) "Category 1 school district" means a school
district having a wealth per student of less than one-half of the
statewide average wealth per student.
(2) "Category 2 school district" means a school
district having a wealth per student of at least one-half of the
statewide average wealth per student but not more than the
statewide average wealth per student.
(3) "Category 3 school district" means a school
district having a wealth per student of more than the statewide
average wealth per student.
(4) "Wealth per student" means the taxable property
values reported by the comptroller to the commissioner under
Section 42.306 divided by the number of students in average daily
attendance.
(b) Payments from the Texas education fund to each category
1 school district shall be made as follows:
(1) 15 percent of the yearly entitlement of the
district shall be paid in an installment to be made on or before the
25th day of September of a fiscal year;
(2) 80 percent of the yearly entitlement of the
district shall be paid in eight equal installments to be made on or
before the 25th day of October, November, December, January, March,
May, June, and July; and
(3) five percent of the yearly entitlement of the
district shall be paid in an installment to be made on or before the
25th day of February.
(c) Payments from the Texas education fund to each category
2 school district shall be made as follows:
(1) 22 percent of the yearly entitlement of the
district shall be paid in an installment to be made on or before the
25th day of September of a fiscal year;
(2) 18 percent of the yearly entitlement of the
district shall be paid in an installment to be made on or before the
25th day of October;
(3) 9.5 percent of the yearly entitlement of the
district shall be paid in an installment to be made on or before the
25th day of November;
(4) 7.5 percent of the yearly entitlement of the
district shall be paid in an installment to be made on or before the
25th day of April;
(5) five percent of the yearly entitlement of the
district shall be paid in an installment to be made on or before the
25th day of May;
(6) 10 percent of the yearly entitlement of the
district shall be paid in an installment to be made on or before the
25th day of June;
(7) 13 percent of the yearly entitlement of the
district shall be paid in an installment to be made on or before the
25th day of July; and
(8) 15 percent of the yearly entitlement of the
district shall be paid in an installment to be made after the fifth
day of September and not later than the 10th day of September of the
calendar year following the calendar year of the payment made under
Subdivision (1).
(d) Payments from the foundation school fund to each
category 3 school district shall be made as follows:
(1) 45 percent of the yearly entitlement of the
district shall be paid in an installment to be made on or before the
25th day of September of a fiscal year;
(2) 35 percent of the yearly entitlement of the
district shall be paid in an installment to be made on or before the
25th day of October; and
(3) 20 percent of the yearly entitlement of the
district shall be paid in an installment to be made after the fifth
day of September and not later than the 10th day of September of the
calendar year following the calendar year of the payment made under
Subdivision (1).
(e) The amount of any installment required by this section
may be modified 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, the
amount of other installments may be adjusted to provide for that
equality.
(f) Except as provided by Subsection (c)(8) or (d)(3), any
previously unpaid additional funds from prior years owed to a
district shall be paid to the district together with the September
payment of the current year entitlement.
Sec. 42.316. RECOVERY OF OVERALLOCATED FUNDS. (a) If a
school district has received an overallocation of state funds, the
agency shall, by withholding from subsequent allocations of state
funds or by requesting and obtaining a refund, recover from the
district an amount equal to the overallocation.
(b) If a district fails to comply with a request for a refund
under Subsection (a), the agency shall certify to the comptroller
that the amount constitutes a debt for purposes of Section 403.055,
Government Code. The agency shall provide to the comptroller the
amount of the overallocation and any other information required by
the comptroller. The comptroller may certify the amount of the debt
to the attorney general for collection.
(c) Any amounts recovered under this section shall be
deposited in the Texas education fund.
[Sections 42.317-42.400 reserved for expansion]
SUBCHAPTER G. ADDITIONAL EQUALIZATION
Sec. 42.401. DISTRICTS SUBJECT TO ADDITIONAL EQUALIZATION.
(a) Except as provided by Subsection (b), 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 shall be
consolidated by the commissioner under Subchapter H, Chapter 41.
(b) As an alternative to consolidation under Subchapter H,
Chapter 41, a school district described by Subsection (a) may elect
to purchase average daily attendance credit in the manner provided
by Subchapter D, Chapter 41.
SECTION 1A.02. The heading to Chapter 41, Education Code,
is amended to read as follows:
CHAPTER 41. EQUALIZATION ACTIONS [EQUALIZED WEALTH LEVEL]
SECTION 1A.03. Section 41.006(a), Education Code, is
amended to read as follows:
(a) The commissioner may adopt rules necessary for the
implementation of this chapter. The rules may provide for the
commissioner to make necessary adjustments to the provisions of
Chapter 42, including providing for the commissioner to make an
adjustment in the funding element established by Section 42.252
[42.302], at the earliest date practicable, to the amount the
commissioner believes, taking into consideration options exercised
by school districts under Section 42.401 [this chapter] and
estimates of student enrollments, will match appropriation levels.
SECTION 1A.04. Section 41.008(a), Education Code, is
amended to read as follows:
(a) The governing board of a school district that results
from consolidation under this chapter[, including a consolidated
taxing district under Subchapter F,] for the tax year in which the
consolidation occurs may determine whether to adopt a homestead
exemption provided by Section 11.13, Tax Code, and may set the
amount of the exemption, if adopted, at any time before the school
district adopts a tax rate for that tax year. This section applies
only to an exemption that the governing board of a school district
is authorized to adopt or change in amount under Section 11.13, Tax
Code.
SECTION 1A.05. Section 41.009(a), Education Code, is
amended to read as follows:
(a) A tax abatement agreement executed by a school district
that is involved in consolidation [or in detachment and annexation
of territory] under this chapter is not affected and applies to the
taxation of the property covered by the agreement as if executed by
the district within which the property is included.
SECTION 1A.06. Section 41.010, Education Code, is amended
to read as follows:
Sec. 41.010. TAX INCREMENT OBLIGATIONS. The payment of tax
increments under Chapter 311, Tax Code, is not affected by the
consolidation of territory [or tax bases or by annexation] under
this chapter. In each tax year a school district paying a tax
increment from taxes on property over which the district has
assumed taxing power is entitled to retain the same percentage of
the tax increment from that property that the district in which the
property was located before the consolidation [or annexation] could
have retained for the respective tax year.
SECTION 1A.07. Section 41.013(a), Education Code, is
amended to read as follows:
(a) A [Except as provided by Subchapter G, a] decision of
the commissioner under this chapter is appealable under Section
7.057.
SECTION 1A.08. Section 41.091, Education Code, is amended
to read as follows:
Sec. 41.091. AGREEMENT. A school district subject to
Section 42.401 [with a wealth per student that exceeds the
equalized wealth level] may 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
[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. Section 41.093, Education Code, is amended
by amending Subsection (a) and adding Subsection (d) to read as
follows:
(a) The cost of each credit is an amount equal to the greater
of:
(1) the amount of the district's maintenance and
operations tax revenue per student in [weighted] average daily
attendance for the school year for which the contract is executed;
or
(2) the amount of the statewide district average of
maintenance and operations tax revenue per student in [weighted]
average daily attendance for the school year preceding the school
year for which the contract is executed.
(d) The commissioner shall adopt rules governing, for
purposes of this section, the collection of delinquent ad valorem
taxes. The rules may provide for documentation and other
recordkeeping requirements.
SECTION 1A.10. Section 41.251, Education Code, is amended
to read as follows:
Sec. 41.251. COMMISSIONER ORDER. If the commissioner is
required under Section 42.401 [41.004] to order the consolidation
of districts, the consolidation is governed by this subchapter.
The commissioner's order shall be effective on a date determined by
the commissioner, but not later than the earliest practicable date
after November 8.
SECTION 1A.11. Section 41.252, Education Code, is amended
by amending Subsections (a) and (c) and adding Subsection (d) to
read as follows:
(a) In selecting the districts to be consolidated with a
district subject to Section 42.401 [that has a property wealth
greater than the equalized wealth level], the commissioner shall
select one or more districts with a local share under Section 42.306
[wealth per student] that, when consolidated, will result in a
consolidated district that is not subject to Section 42.401 [with a
wealth per student equal to or less than the equalized wealth
level]. In achieving that result, the commissioner shall give
priority to school districts in the following order:
(1) first, to the contiguous district that has the
lowest local share percentage [wealth per student] and is located
in the same county;
(2) second, to the district that has the lowest local
share percentage [wealth per student] and is located in the same
county;
(3) third, to a contiguous district not subject to
Section 42.401 [with a property wealth below the equalized wealth
level] that has requested the commissioner to consider [that] it
for inclusion [be considered] in a consolidation plan;
(4) fourth, to include as few districts as possible
that are not subject to Section 42.401 and [fall below the equalized
wealth level within the consolidation order that] have not
requested the commissioner to be included in a consolidation plan;
(5) fifth, to the district that has the lowest local
share percentage [wealth per student] and is located in the same
regional education service center area; and
(6) sixth, to a district that has a tax rate similar to
that of the district subject to Section 42.401 [that has a property
wealth greater than the equalized wealth level].
(c) In applying the selection criteria specified by
Subsection (a), if more than two districts are to be consolidated,
the commissioner shall select the third and each subsequent
district to be consolidated by treating the district subject to
Section 42.401 [that has a property wealth greater than the
equalized wealth level] and the district or districts previously
selected for consolidation as one district.
(d) In this section, "local share percentage" means a
percentage determined by dividing a school district's local share
under Section 42.306 by the district's tier one allotment under
Section 42.304.
SECTION 1A.12. Section 41.257, Education Code, is amended
to read as follows:
Sec. 41.257. APPLICATION OF SIZE AND SPARSITY [SMALL AND
SPARSE] ADJUSTMENTS [AND TRANSPORTATION ALLOTMENT]. The budget of
the consolidated district must apply the benefit of the adjustment
or allotment to the schools of the consolidating district to which
Section 42.302 [42.103, 42.105, or 42.155] would have applied in
the event that the consolidated district still qualifies for that
adjustment [as a small or sparse district].
SECTION 1A.13. Section 45.003, Education Code, is amended
by amending Subsections (a) and (d) and adding Subsections (e) and
(f) to read as follows:
(a) Bonds described by Section 45.001 may not be issued and
taxes described by Section 45.001 or 45.002 may not be levied unless
authorized by a majority of the qualified voters of the district,
voting at an election held for that purpose[, at the expense of the
district, in accordance with the Election Code, except as provided
by this section. Each election must be called by resolution or
order of the governing board or commissioners court. The
resolution or order must state the date of the election, the
proposition or propositions to be submitted and voted on, the
polling place or places, and any other matters considered necessary
or advisable by the governing board or commissioners court].
(d) A proposition submitted to authorize the levy of
maintenance taxes must include the question of whether the
governing board or commissioners court may levy, assess, and
collect annual ad valorem taxes for the further maintenance of
public schools, at a rate not to exceed the rate, which may be not
more than $1.30 [$1.50] on the $100 valuation of taxable property in
the district, stated in the proposition.
(e) 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) A district permitted by special law on January 1, 2004,
to impose an ad valorem tax at a rate greater than $1.50 may
continue to impose a rate that is $0.20 less than the rate
previously authorized.
SECTION 1A.14. Section 26.08, Tax Code, is amended by
amending Subsections (i) and (j) and adding Subsections (i-1) and
(i-2) to read as follows:
(i) For purposes of this section, the rollback tax rate of a
school district is the sum of:
(1) the tax rate that, applied to the current total
value for the district, would impose taxes in an amount that, when
added to state funds that would be distributed to the district under
Chapter 42, Education Code, for the school year beginning in the
current tax year using that tax rate, would provide the same amount
of state funds distributed under Chapter 42 and maintenance and
operations taxes of the district per student in [weighted] average
daily attendance for that school year that would have been
available to the district in the preceding year if the funding
elements for Chapters 41 and 42, Education Code, for the current
year, including the adjustment for inflation under Section 42.303,
Education Code, had been in effect for the preceding year; and
(2) [the rate of $0.06 per $100 of taxable value; and
[(3)] the district's current debt rate.
(i-1) 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:
(1) the rate of $1.20 per $100 of taxable value for
maintenance and operation of the district; and
(2) the district's current debt rate.
(i-2) Subsection (i-1) and this subsection expire January
1, 2006.
(j) 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) [42.253(e)], Education Code.
PART B. SCHOOL DISTRICT FACILITIES
SECTION 1B.01. Section 46.002(b), Education Code, is
amended to read as follows:
(b) The commissioner's rules shall [may] 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.
An allotment under this subchapter may not be 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. Section 46.008, Education Code, is amended
to read as follows:
Sec. 46.008. STANDARDS AND BEST PRACTICES. (a) The
commissioner shall establish standards for adequacy of school
facilities. The standards must include requirements related to
[space,] educational adequacy[,] and construction quality. The
standards may not include requirements related to space or square
footage for a facility or any part of a facility. All new
facilities constructed after September 1, 1998, must meet or exceed
the standards to be eligible to be financed with state or local tax
funds.
(b) The commissioner shall establish a program of best
practices for the construction, replacement, renovation, or
improvement of school facilities. The program must:
(1) include solicitation of information from school
districts on best practices;
(2) recognize school districts that have achieved
cost-effectiveness in construction and long-term maintenance;
(3) emphasize cost-effectiveness, energy efficiency,
functionality, and replicability;
(4) be designed to encourage, without imposing
requirements relating to specific criteria, school district
consideration of:
(A) best practices, including evaluation of the
school district's financial status, total amount of outstanding
debt, maturity of outstanding debt, and preventive maintenance of
facilities;
(B) cost-effectiveness;
(C) projected enrollment in the portion of the
school district to be served by a facility for which state financial
assistance is sought; and
(D) if applicable, the condition of a facility
that is to be replaced, renovated, or improved with state financial
assistance; and
(5) include a process for local evaluation of the need
for construction, acquisition, renovation, or improvement of a
facility.
(c) 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. Section 46.033, Education Code, is amended
to read as follows:
Sec. 46.033. ELIGIBLE BONDS. 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) the district made payments on the bonds during the
2002-2003 school year 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[; and
[(2) the district does not receive state assistance
under Subchapter A for payment of the principal and interest on the
bonds].
SECTION 1B.04. Section 46.034(c), Education Code, is
amended to read as follows:
(c) 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
[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. 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. 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.
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. 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. 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. The Teacher Retirement System of Texas shall
conduct a study regarding Pub. L. No. 108-173.
SECTION 1C.02. Not later than January 1, 2005, the Teacher
Retirement System of Texas shall 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. 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, the trustee under Chapter 1580, Insurance Code,
shall 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. Chapter 313, Acts of the 78th Legislature,
Regular Session, 2003, is repealed.
PART E. SOCIAL SECURITY CONTRIBUTIONS
SECTION 1E.01. Subchapter B, Chapter 606, Government Code,
is amended by adding Section 606.0261 to read as follows:
Sec. 606.0261. PAYMENT OF SCHOOL DISTRICT CONTRIBUTIONS.
(a) Subject to Subsection (b), the state shall pay 50 percent of
the total costs incurred by a school district in making
contributions for social security coverage for the district's
employees.
(b) Payment of state assistance under this section is
limited to:
(1) school districts that covered district employees
under the social security program before January 1, 2004; and
(2) contributions made on behalf of employees in a
class of employees the district covered under the social security
program before January 1, 2004.
(c) Using funds appropriated for the purpose, the
commissioner of education shall distribute money to which school
districts are entitled under this section in accordance with rules
adopted by the commissioner.
SECTION 1E.02. This part takes effect September 1, 2005.
PART F. CONFORMING AMENDMENTS
SECTION 1F.01. Section 7.024(a), Education Code, is amended
to read as follows:
(a) The investment capital fund consists of money
appropriated by the legislature for that purpose [transferred to
the fund as provided by Section 42.152(l)]. The agency shall
administer the fund. The purposes of this fund are to assist
eligible public schools to implement practices and procedures
consistent with deregulation and school restructuring in order to
improve student achievement and to help schools identify and train
parents and community leaders who will hold the school and the
school district accountable for achieving high academic standards.
SECTION 1F.02. Section 7.055(b)(34), Education Code, is
amended to read as follows:
(34) The commissioner shall perform duties in
connection with equalization actions [the equalized wealth level]
under Chapter 41.
SECTION 1F.03. Section 8.051(d), Education Code, is amended
to read as follows:
(d) Each regional education service center shall maintain
core services for purchase by school districts and campuses. The
core services are:
(1) training and assistance in teaching each subject
area assessed under Section 39.023;
(2) training and assistance in providing:
(A) each program that qualifies for a funding
allotment under Section 42.151, 42.152, or 42.153[, or 42.156]; or
(B) a gifted and talented program under
Subchapter D, Chapter 29;
(3) assistance specifically designed for a school
district rated academically unacceptable under Section 39.072(a)
or a campus whose performance is considered unacceptable based on
the indicators adopted under Section 39.051;
(4) training and assistance to teachers,
administrators, members of district boards of trustees, and members
of site-based decision-making committees;
(5) assistance specifically designed for a school
district that is considered out of compliance with state or federal
special education requirements, based on the agency's most recent
compliance review of the district's special education programs; and
(6) assistance in complying with state laws and rules.
SECTION 1F.04. Section 11.158(a), Education Code, is
amended to read as follows:
(a) The board of trustees of an independent school district
may require payment of:
(1) a fee for materials used in any program in which
the resultant product in excess of minimum requirements becomes, at
the student's option, the personal property of the student, if the
fee does not exceed the cost of materials;
(2) membership dues in student organizations or clubs
and admission fees or charges for attending extracurricular
activities, if membership or attendance is voluntary;
(3) a security deposit for the return of materials,
supplies, or equipment;
(4) a fee for personal physical education and athletic
equipment and apparel, although any student may provide the
student's own equipment or apparel if it meets reasonable
requirements and standards relating to health and safety
established by the board;
(5) a fee for items of personal use or products that a
student may purchase at the student's option, such as student
publications, class rings, annuals, and graduation announcements;
(6) a fee specifically permitted by any other statute;
(7) a fee for an authorized voluntary student health
and accident benefit plan;
(8) a reasonable fee, not to exceed the actual annual
maintenance cost, for the use of musical instruments and uniforms
owned or rented by the district;
(9) a fee for items of personal apparel that become the
property of the student and that are used in extracurricular
activities;
(10) a parking fee or a fee for an identification card;
(11) a fee for a driver training course, not to exceed
the actual district cost per student in the program for the current
school year;
(12) a fee for a course offered for credit that
requires the use of facilities not available on the school premises
or the employment of an educator who is not part of the school's
regular staff, if participation in the course is at the student's
option;
(13) a fee for a course offered during summer school,
except that the board may charge a fee for a course required for
graduation only if the course is also offered without a fee during
the regular school year;
(14) 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 [42.155(d)]; or
(15) a reasonable fee, not to exceed $50, for costs
associated with an educational program offered outside of regular
school hours through which a student who was absent from class
receives instruction voluntarily for the purpose of making up the
missed instruction and meeting the level of attendance required
under Section 25.092.
SECTION 1F.05. Section 12.013(b), Education Code, is
amended to read as follows:
(b) A home-rule school district is subject to:
(1) a provision of this title establishing a criminal
offense;
(2) a provision of this title relating to limitations
on liability; and
(3) a prohibition, restriction, or requirement, as
applicable, imposed by this title or a rule adopted under this
title, relating to:
(A) the Public Education Information Management
System (PEIMS) to the extent necessary to monitor compliance with
this subchapter as determined by the commissioner;
(B) educator certification under Chapter 21 and
educator rights under Sections 21.407, 21.408, and 22.001;
(C) criminal history records under Subchapter C,
Chapter 22;
(D) student admissions under Section 25.001;
(E) school attendance under Sections 25.085,
25.086, and 25.087;
(F) inter-district or inter-county transfers of
students under Subchapter B, Chapter 25;
(G) elementary class size limits under Section
25.112, in the case of any campus in the district that is considered
low-performing under Section 39.132;
(H) high school graduation under Section 28.025;
(I) special education programs under Subchapter
A, Chapter 29;
(J) bilingual education under Subchapter B,
Chapter 29;
(K) prekindergarten programs under Subchapter E,
Chapter 29;
(L) safety provisions relating to the
transportation of students under Sections 34.002, 34.003, 34.004,
and 34.008;
(M) computation and distribution of state aid
under Chapters 31, 42, and 43;
(N) extracurricular activities under Section
33.081;
(O) health and safety under Chapter 38;
(P) public school accountability under
Subchapters B, C, D, and G, Chapter 39;
(Q) equalization [equalized wealth] under
Section 42.401 [Chapter 41];
(R) a bond or other obligation or tax rate under
Chapters 42, 43, and 45; and
(S) purchasing under Chapter 44.
SECTION 1F.06. Section 12.106(a), Education Code, is
amended to read as follows:
(a) 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 [42.253] and without any local revenue
("LR") for purposes of Section 42.252 [42.302]. In determining
funding for an open-enrollment charter school:
(1) the adjustment [, adjustments] under Section
42.301 is [Sections 42.102, 42.103, 42.104, and 42.105 and the
district enrichment tax rate ("DTR") under Section 42.302 are based
on] the [average] adjustment for the school district in which the
school is located; and
(2) the district enrichment tax rate under Section
42.252 is the average district enrichment tax rate for the state.
SECTION 1F.07. Section 13.054(f), Education Code, is
amended to read as follows:
(f) For five years beginning with the school year in which
the annexation occurs, the commissioner shall annually adjust the
local share [fund assignment] of a district to which territory is
annexed under this section by multiplying the enlarged district's
local share [fund assignment] computed under Section 42.306
[42.252] by a fraction, the numerator of which is the number of
students residing in the district preceding the date of the
annexation and the denominator of which is the number of students
residing in the district as enlarged on the date of the annexation.
SECTION 1F.08. Sections 13.282(a) and (b), Education Code,
are amended to read as follows:
(a) The amount of incentive aid payments may not exceed the
difference between:
(1) the sum of the entitlements computed under Section
42.312 [42.253] that would have been paid to the districts included
in the reorganized district if the districts had not been
consolidated; and
(2) the amount to which the reorganized district is
entitled under Section 42.312 [42.253].
(b) If the reorganized district is not eligible for an
entitlement under Section 42.312 [42.253], the amount of the
incentive aid payments may not exceed the sum of the entitlements
computed under Section 42.312 [42.253] for which the districts
included in the reorganized district were eligible in the school
year when they were consolidated.
SECTION 1F.09. Sections 21.402(a) and (c), Education Code,
are amended to read as follows:
(a) Except as provided by Subsection (d)[, (e),] or (f), a
school district must pay each classroom teacher, full-time
librarian, full-time counselor certified under Subchapter B, or
full-time school nurse not less than the minimum monthly salary,
based on the employee's level of experience, prescribed by
Subsection (c) [determined by the following formula:
[MS = SF x FS
[where:
["MS" is the minimum monthly salary;
["SF" is the applicable salary factor specified by Subsection
(c); and
["FS" is the amount, as determined by the commissioner under
Subsection (b), of state and local funds per weighted student
available to a district eligible to receive state assistance under
Section 42.302 with an enrichment tax rate, as defined by Section
42.302, equal to the maximum rate authorized under Section 42.303,
except that the amount of state and local funds per weighted student
does not include the amount attributable to the increase in the
guaranteed level made by H.B. No. 3343, Acts of the 77th
Legislature, Regular Session, 2001].
(c) The minimum monthly salary under this section is
[factors per step are] as follows:Years Experience 0 1 2
Chapter 41] applies is entitled to the grants paid under this
section. The commissioner shall determine the timing of the
distribution of grants to a district that does not receive
Foundation School Program payments.
SECTION 1F.11. Section 21.411(h), Education Code, is
amended to read as follows:
(h) A grant a school district receives under this section is
in addition to any funding the district receives under Chapter 42.
The commissioner shall distribute funds under this section with the
Foundation School Program payment to which the district is entitled
as soon as practicable after the end of the school year as
determined by the commissioner. A district to which Section 42.401
[Chapter 41] applies is entitled to the grants paid under this
section. The commissioner shall determine the timing of the
distribution of grants to a district that does not receive
Foundation School Program payments.
SECTION 1F.12. Section 21.412(h), Education Code, is
amended to read as follows:
(h) A grant a school district receives under this section is
in addition to any funding the district receives under Chapter 42.
The commissioner shall distribute funds under this section with the
Foundation School Program payment to which the district is entitled
as soon as practicable after the end of the school year as
determined by the commissioner. A district to which Section 42.401
[Chapter 41] applies is entitled to the grants paid under this
section. The commissioner shall determine the timing of the
distribution of grants to a district that does not receive
Foundation School Program payments.
SECTION 1F.13. Section 21.413(h), Education Code, as added
by Section 2, Chapter 430, Acts of the 78th Legislature, Regular
Session, 2003, is amended to read as follows:
(h) A grant a school district receives under this section is
in addition to any funding the district receives under Chapter 42.
The commissioner shall distribute funds under this section with the
Foundation School Program payment to which the district is entitled
as soon as practicable after the end of the school year as
determined by the commissioner. A district to which Section 42.401
[Chapter 41] applies is entitled to the grants paid under this
section. The commissioner shall determine the timing of the
distribution of grants to a district that does not receive
Foundation School Program payments.
SECTION 1F.14. Section 29.002, Education Code, is amended
to read as follows:
Sec. 29.002. DEFINITION. In this subchapter, "special
services" means:
(1) special education instruction, which may be
provided by professional and supported by paraprofessional
personnel in the regular classroom or in an alternate instructional
arrangement [described by Section 42.151]; and
(2) related services, which are developmental,
corrective, supportive, or evaluative services, not instructional
in nature, that may be required for the student to benefit from
special education instruction and for implementation of a student's
individualized education program.
SECTION 1F.15. Section 29.008(b), Education Code, is
amended to read as follows:
(b) Except as provided by Subsection (c), costs of an
approved contract for residential placement may be paid from a
combination of federal, state, and local funds. The legislature by
appropriation shall provide for the state's share of the costs of
these placements. The local share of the total contract cost for
each student is that portion of the local tax effort that exceeds
the district's local share [fund assignment] under Section 42.306
[42.252], divided by the average daily attendance in the district.
If the contract involves a private facility, the state share of the
total contract cost is that amount remaining after subtracting the
local share. If the contract involves a public facility, the state
share is that amount remaining after subtracting the local share
from the portion of the contract that involves the costs of
instructional and related services. For purposes of this
subsection, "local tax effort" means the total amount of money
generated by taxes imposed for debt service and maintenance and
operation less any amounts paid into a tax increment fund under
Chapter 311, Tax Code.
SECTION 1F.16. Section 29.014(d), Education Code, is
amended to read as follows:
(d) The accreditation [basic] allotment for a student
enrolled in a district to which this section applies is adjusted by:
(1) the cost of education adjustment under Section
42.301 [42.102] for the school district in which the district is
geographically located; and
(2) any other appropriate factor adopted by the
commissioner [the weight for a homebound student under Section
42.151(a)].
SECTION 1F.17. Section 29.087(j), Education Code, is
amended to read as follows:
(j) For purposes of funding under Chapters [41,] 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.
SECTION 1F.18. Section 29.203(b), Education Code, is
amended to read as follows:
(b) A school district is entitled to the allotment provided
by Section 42.155 [42.157] for each eligible student using a public
education grant. [If the 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. Section 33.002(a), Education Code, is
amended to read as follows:
(a) This section applies only to a school district that
receives funds as provided by Section 42.1521 [42.152(i)].
SECTION 1F.20. Section 34.002(c), Education Code, is
amended to read as follows:
(c) 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 [to share in the
transportation allotment] under Section 34.0071 [42.155] until the
first anniversary of the date the district begins complying with
the safety standards.
SECTION 1F.21. Chapter 34, Education Code, is amended by
adding Section 34.0071 to read as follows:
Sec. 34.0071. STATE TRANSPORTATION GRANTS. (a) Using
funds appropriated for the purpose, the commissioner may award a
grant to a school district or county that operates a public school
transportation system under Section 34.007.
(b) The commissioner shall adopt rules governing the grant
program authorized by this section. The rules must provide for a
funding system that:
(1) gives priority to school districts and counties
with the highest number of route miles per student; and
(2) concentrates funding in school districts and
counties with higher-than-average transportation costs per
student.
(c) Money awarded under this section must be used in
providing public school transportation services.
SECTION 1F.22. Section 37.0061, Education Code, is amended
to read as follows:
Sec. 37.0061. FUNDING FOR ALTERNATIVE EDUCATION SERVICES IN
JUVENILE RESIDENTIAL FACILITIES. A school district that provides
education services to pre-adjudicated and post-adjudicated
students who are confined by court order in a juvenile residential
facility operated by a juvenile board is entitled to count such
students in the district's average daily attendance for purposes of
receipt of state funds under the Foundation School Program. [If the
district has a wealth per student greater than the guaranteed
wealth level but less than the equalized wealth level, the district
in which the student is enrolled on the date a court orders the
student to be confined to a juvenile residential facility shall
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.]
SECTION 1F.23. Section 39.031, Education Code, is amended
to read as follows:
Sec. 39.031. COST. (a) The commissioner shall set aside an
appropriate amount from the Foundation School Program to pay the
cost of preparing, administering, or grading the assessment
instruments and the [shall be paid from the funds allotted under
Section 42.152, and each district shall bear the cost in the same
manner described for a reduction in allotments under Section
42.253. If a district does not receive an allotment under Section
42.152, the commissioner shall subtract the cost from the
district's other foundation school fund allotments.
[(b) The] cost of releasing the question and answer keys
under Section 39.023(e) [shall be paid from amounts appropriated
to the agency].
(b) After setting aside an appropriate amount in accordance
with this section, the commissioner shall reduce each district's
tier one allotments proportionately. 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) Any amount set aside under this section must be approved
by the Legislative Budget Board and the governor's office of budget
and planning.
SECTION 1F.24. Section 39.134, Education Code, is amended
to read as follows:
Sec. 39.134. COSTS PAID BY DISTRICT. The costs of providing
a monitor, conservator, management team, or special campus
intervention team shall be paid by the district. If the district
fails or refuses to pay the costs in a timely manner, the
commissioner may:
(1) pay the costs using amounts withheld from any
funds to which the district is otherwise entitled; or
(2) recover the amount of the costs in the manner
provided for recovery of an overallocation of state funds under
Section 42.316 [42.258].
SECTION 1F.25. Section 43.002(b), Education Code, is
amended to read as follows:
(b) Of the amounts available for transfer from the general
revenue fund to the available school fund for the months of January
and February of each fiscal year, no more than the amount necessary
to enable the comptroller to distribute from the available school
fund an amount equal to 9-1/2 percent of the estimated annual
available school fund apportionment to category 1 school districts,
as defined by Section 42.315 [42.259], and 3-1/2 percent of the
estimated annual available school fund apportionment to category 2
school districts, as defined by Section 42.315 [42.259], may be
transferred from the general revenue fund to the available school
fund. Any remaining amount that would otherwise be available for
transfer for the months of January and February shall be
transferred from the general revenue fund to the available school
fund in equal amounts in June and in August of the same fiscal year.
SECTION 1F.26. Section 46.003(a), Education Code, is
amended to read as follows:
(a) For each year, except as provided by Sections 46.005 and
46.006, a school district is guaranteed a specified amount per
student in state and local funds for each cent of tax effort, up to
the maximum rate under Subsection (b), to pay the principal of and
interest on eligible bonds issued to construct, acquire, renovate,
or improve an instructional facility. The amount of state support
is determined by the formula:
FYA = (FYL X ADA X BTR X 100) - (BTR X (DPV/100))
where:
"FYA" is the guaranteed facilities yield amount of state
funds allocated to the district for the year;
"FYL" is the dollar amount guaranteed level of state and
local funds per student per cent of tax effort, which is $35 or a
greater amount for any year provided by appropriation;
"ADA" is the greater of the number of students in average
daily attendance, as determined under Section 42.005, in the
district or 400;
"BTR" is the district's bond tax rate for the current year,
which is determined by dividing the amount budgeted by the district
for payment of eligible bonds by the quotient of the district's
taxable value of property as determined under Subchapter M, Chapter
403, Government Code, or, if applicable, Section 42.307 [42.2521],
divided by 100; and
"DPV" is the district's taxable value of property as
determined under Subchapter M, Chapter 403, Government Code, or, if
applicable, Section 42.307 [42.2521].
SECTION 1F.27. Section 46.006(g), Education Code, is
amended to read as follows:
(g) In this section, "wealth per student" means a school
district's taxable value of property as determined under Subchapter
M, Chapter 403, Government Code, or, if applicable, Section 42.307
[42.2521], divided by the district's average daily attendance as
determined under Section 42.005.
SECTION 1F.28. Sections 46.009(b), (e), and (f), Education
Code, are amended to read as follows:
(b) If the amount appropriated for purposes of this
subchapter for a year is less than the total amount determined under
Subsection (a) for that year, the commissioner shall:
(1) transfer from the Foundation School Program to the
instructional facilities program the amount by which the total
amount determined under Subsection (a) exceeds the amount
appropriated; and
(2) reduce each district's foundation school fund
allocations in the manner provided by Section 42.312(f)
[42.253(h)].
(e) Section 42.316 [42.258] applies to payments under this
subchapter.
(f) If a school district would have received a greater
amount under this subchapter for the applicable school year using
the adjusted value determined under Section 42.308 [42.257], the
commissioner shall add the difference between the adjusted value
and the amount the district received under this subchapter to
subsequent distributions to the district under this subchapter.
SECTION 1F.29. Section 46.013, Education Code, is amended
to read as follows:
Sec. 46.013. MULTIPLE ALLOTMENTS PROHIBITED. A school
district is not entitled to state assistance under this subchapter
based on taxes with respect to which the district receives state
assistance under Subchapter E [F], Chapter 42.
SECTION 1F.30. Section 46.032(a), Education Code, is
amended to read as follows:
(a) Each school district is guaranteed a specified amount
per student in state and local funds for each cent of tax effort to
pay the principal of and interest on eligible bonds. The amount of
state support, subject only to the maximum amount under Section
46.034, is determined by the formula:
EDA = (EDGL X ADA X EDTR X 100) - (EDTR X (DPV/100))
where:
"EDA" is the amount of state funds to be allocated to the
district for assistance with existing debt;
"EDGL" is the dollar amount guaranteed level of state and
local funds per student per cent of tax effort, which is $35 or a
greater amount for any year provided by appropriation;
"ADA" is the number of students in average daily attendance,
as determined under Section 42.005, in the district;
"EDTR" is the existing debt tax rate of the district, which is
determined by dividing the amount budgeted by the district for
payment of eligible bonds by the quotient of the district's taxable
value of property as determined under Subchapter M, Chapter 403,
Government Code, or, if applicable, under Section 46.307 [42.2521],
divided by 100; and
"DPV" is the district's taxable value of property as
determined under Subchapter M, Chapter 403, Government Code, or, if
applicable, under Section 46.307 [42.2521].
SECTION 1F.31. Section 46.037, Education Code, is amended
to read as follows:
Sec. 46.037. MULTIPLE ALLOTMENTS PROHIBITED. A school
district is not entitled to state assistance under this subchapter
based on taxes with respect to which the district receives state
assistance under Subchapter E [F], Chapter 42.
SECTION 1F.32. Section 56.208, Education Code, is amended
to read as follows:
Sec. 56.208. FUNDING. (a) The Early High School Graduation
Scholarship program is financed under the Foundation School
Program. [Funding for the state tuition credits is not subject to
the provisions of Sections 42.253(e) through (k).]
(b) The commissioner of education shall reduce the total
annual amount of Texas education [foundation school] fund payments
made to a school district by an amount equal to F x A, where:
(1) "F" is the lesser of one or the quotient of the
district's local share for the preceding school year under Section
42.306 [42.252] divided by the tier one allotment under Section
42.304 [amount of money to which the district was entitled under
Subchapters B and C, Chapter 42,] for the preceding school year; and
(2) "A" is the amount of state tuition credits under
this subchapter applied by institutions of higher education on
behalf of eligible persons who graduated from the district that has
not been used to compute a previous reduction under this
subsection.
(c) A school district that does not receive foundation
school fund payments during a year in which the commissioner would
otherwise withhold money from the district under Subsection (b)
shall remit an amount equal to the amount that would be withheld
under Subsection (b) to the comptroller for deposit to the credit of
the Texas education [foundation school] fund.
SECTION 1F.33. Section 105.301(e), Education Code, is
amended to read as follows:
(e) The academy is not subject to the provisions of this
code, or to the rules of the Texas Education Agency, regulating
public schools, except that:
(1) professional employees of the academy are entitled
to the limited liability of an employee under Section 22.0511,
22.0512, or 22.052;
(2) a student's attendance at the academy satisfies
compulsory school attendance requirements; and
(3) for each student enrolled, the academy is entitled
to allotments from the foundation school program under Chapter 42
as if the academy were a school district without a tier one local
share for purposes of Section 42.306 [42.253].
SECTION 1F.34. Section 403.093(d), Government Code, is
amended to read as follows:
(d) The comptroller shall transfer from the general revenue
fund to the Texas education [foundation school] fund an amount of
money necessary to fund the foundation school program as provided
by Chapter 42, Education Code. The comptroller shall make the
transfers in installments as necessary to comply with Section
42.315 [42.259], Education Code. An installment must be made not
earlier than two days before the date an installment to school
districts is required by Section 42.315 [42.259], Education Code,
and must not exceed the amount necessary for that payment.
SECTION 1F.35. Section 404.121(1), Government Code, is
amended to read as follows:
(1) "Cash flow deficit" for any period means the
excess, if any, of expenditures paid and transfers made from the
general revenue fund in the period, including payments provided by
Section 42.315 [42.259], Education Code, over taxes and other
revenues deposited to the fund in the period, other than revenues
deposited pursuant to Section 403.092, that are legally available
for the expenditures and transfers.
SECTION 1F.36. Section 2175.304(c), Government Code, is
amended to read as follows:
(c) The procedures established under Subsection (b) must
give preference to transferring the property directly to a public
school or school district or to an assistance organization
designated by the school district before disposing of the property
in another manner. If more than one public school or school
district or assistance organization seeks to acquire the same
property on substantially the same terms, the system, institution,
or agency shall give 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], or to the assistance
organization designated by such a school district.
SECTION 1F.37. Section 1579.251, Insurance Code, is amended
by amending Subsection (a) and adding Subsections (c) and (d) to
read as follows:
(a) The state shall assist employees of participating
school districts and charter schools in the purchase of group
health coverage under this chapter by providing for each covered
employee the amount of $900 each state fiscal year or a greater
amount as provided by the General Appropriations Act. The state
contribution shall be distributed through the school finance
formulas under Chapters 41 and 42, Education Code[, and used by
school districts and charter schools as provided by Sections
42.2514 and 42.260, Education Code].
(c) The trustee shall deposit state assistance for a
participating entity in the fund established under Subchapter G.
(d) A school district that does not participate in the
program is entitled to state assistance computed as provided by
Subsection (a). The trustee shall distribute state assistance
under this subsection in equal monthly installments. State funds
received under this subsection shall be deposited in a fund
described by Section 1581.052(b)(2).
SECTION 1F.38. Section 6.02(b), Tax Code, is amended to
read as follows:
(b) A taxing unit that has boundaries extending into two or
more counties may choose to participate in only one of the appraisal
districts. In that event, the boundaries of the district chosen
extend outside the county to the extent of the unit's boundaries.
To be effective, the choice must be approved by resolution of the
board of directors of the district chosen. [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:
[(1) 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
[(2) 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. Section 21.02(a), Tax Code, is amended to
read as follows:
(a) Except as provided by [Subsection (b) and] Sections
21.021, 21.04, and 21.05, tangible personal property is taxable by
a taxing unit if:
(1) it is located in the unit on January 1 for more
than a temporary period;
(2) it normally is located in the unit, even though it
is outside the unit on January 1, if it is outside the unit only
temporarily;
(3) it normally is returned to the unit between uses
elsewhere and is not located in any one place for more than a
temporary period; or
(4) the owner resides (for property not used for
business purposes) or maintains the owner's [his] principal place
of business in this state (for property used for business purposes)
in the unit and the property is taxable in this state but does not
have a taxable situs pursuant to Subdivisions (1) through (3) [of
this section].
SECTION 1F.40. Section 39.901(d), Utilities Code, is
amended to read as follows:
(d) Not later than May 1 of each year, subject to Section
39.903(b), the commission shall transfer from the system benefit
fund to the Texas education [foundation school] fund the amount
determined by the Texas Education Agency under Subsection (b) to
the extent that funds are available. Amounts transferred from the
system benefit fund under this section may be appropriated only for
the support of the Foundation School Program and are available, in
addition to any amounts allocated by the General Appropriations
Act, to finance actions under Section 42.307 [41.002(b) or
42.2521], Education Code.
PART G. REPEALER; EFFECTIVE DATE
SECTION 1G.01. (a) Sections 1-3, Chapter 201, Acts of the
78th Legislature, Regular Session, 2003, are repealed.
(b) The following provisions of the Education Code are
repealed:
(1) Subchapters B, C, E, F, and G, Chapter 41;
(2) Chapter 42, as it existed on April 1, 2004; and
(3) Sections 21.402(b) and (e), 29.203(c) and (g),
39.024(e), 41.001, 41.002, 41.003, 41.0031, 41.004, 41.007,
41.009(b), 41.011, 41.092, 41.099, 41.252(b), and 105.301(f).
(c) Sections 403.302(j) and (k) and 466.355(c), Government
Code, are repealed.
(d) The following provisions of the Insurance Code are
repealed:
(1) Section 1581.053(b); and
(2) Subchapter C, Chapter 1581.
(e) Sections 21.02(b) and 26.08(k)-(m), Tax Code, are
repealed.
SECTION 1G.02. (a) Except as otherwise provided by this
Act, this article takes effect September 1, 2005, and applies
beginning with the 2005-2006 school year.
(b) Section 1G.01(a) of this Act takes effect August 31,
2004.
ARTICLE 2. EDUCATION REFORM
PART A. INCENTIVES
SECTION 2A.01. The heading to Subchapter H, Chapter 21,
Education Code, is amended to read as follows:
SUBCHAPTER H. APPRAISALS [AND INCENTIVES]
SECTION 2A.02. Chapter 21, Education Code, is amended by
adding Subchapter N to read as follows:
SUBCHAPTER N. EDUCATOR EXCELLENCE INCENTIVE PROGRAM
Sec. 21.651. EDUCATOR EXCELLENCE INCENTIVE PROGRAM; FUND.
(a) The commissioner shall establish an educator excellence
incentive program as provided by this subchapter. 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) The educational excellence fund is an account in the
general revenue fund. 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) The commissioner must approve each payment from the fund
and may adopt rules for the administration of the program and the
payment of incentive grants from the fund.
(d) The commissioner shall encourage local flexibility in
designing incentive programs that promote student achievement.
Sec. 21.652. GRANTS TO SCHOOL DISTRICTS. (a) From funds
appropriated for that purpose, the commissioner shall make grants
to school districts that develop a local incentive program to
enable the districts to pay incentives under this subchapter.
(b) 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) The commissioner shall determine the amount of the grant
to which each participating school district is entitled under this
section and shall notify each district of the determination not
later than March 1 of the fiscal year for which the determination is
made. The commissioner's determination under this section is final
and may not be appealed.
(d) 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. A district must 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) A school district may develop a system for rewarding academic
improvement and achievement in the district.
(b) The commissioner by rule shall establish minimum
criteria for local incentive programs. The primary criteria for
making awards in a local incentive program under this subchapter
must be measures for incremental growth in student achievement. A
local incentive program may also consider high levels of student
performance on assessment instruments and progress towards
proficiency in English.
(c) A local incentive program must be adopted through a
process that considers comments of classroom teachers in the
district.
(d) A district that applies for a grant under Section 21.652
must certify that the district has complied with this section and
rules adopted under this subchapter.
Sec. 21.654. AWARDS. (a) A local incentive program must
provide awards to classroom teachers and may provide for awards to
other employees.
(b) Except as provided by Subsection (c), a school district
may not award state money received under this subchapter:
(1) in an amount less than $2,500 to an eligible
employee for a school year; or
(2) to more than 15 percent of district employees,
under a local incentive program component that provides
campus-level awards.
(c) A district may apply to the commissioner for approval of
a local incentive program that does not meet the requirements of
Subsection (b). The commissioner may not approve a program that
makes awards of state funds to more than 40 percent of the employees
at a single campus.
(d) A district may provide in its employment policy or
employment contracts that qualifying employees are entitled to a
payment under the local incentive program. 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) 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) The
commissioner shall develop a system for evaluating classroom
teachers for the purpose of awarding individual incentives to
premium teachers under this subchapter. The system developed by
the commissioner must consider:
(1) factors such as a classroom teacher's assignment
to:
(A) a campus considered low-performing under
Section 39.132; or
(B) a campus at which 85 percent or more of the
students are educationally disadvantaged and that ranks in the
lowest quarter of achievement on the campus's most recent
accountability ratings;
(2) a classroom teacher's supervisor evaluations; and
(3) value-added indicators, including student
performance.
(b) The commissioner's evaluation system must define
"premium teacher."
(c) Under the program, a premium teacher:
(1) is entitled to an annual award of $4,000;
(2) may work one extra hour per day; and
(3) may be assigned additional duties, such as
tutoring, supervising, or planning, for which the district may
compensate the teacher.
(d) To be eligible for an award under the program, a
classroom teacher must:
(1) have at least three years of classroom experience;
and
(2) meet criteria developed by the commissioner
related to value-added student achievement.
(e) Not more than $10 million may be appropriated for
purposes of the program.
SECTION 2A.03. Chapter 39, Education Code, is amended by
adding Subchapter J to read as follows:
SUBCHAPTER J. STUDENT EXCELLENCE
AND IMPROVEMENT INCENTIVES
Sec. 39.221. DEFINITION. In this subchapter, "at-risk
student" means a student considered to be at risk of dropping out of
school under Section 29.081(d)(1), (3), (4), (5), (6), (7), (8),
(9), (10), (11), (12), or (13).
Sec. 39.222. DISTINGUISHED ACHIEVEMENT PROGRAM INCENTIVE.
In addition to any other funds to which a school campus is entitled
under this code, each school year each campus is entitled to:
(1) $1,000 for each student who graduates completing
the curriculum requirements, including the additional components
and advanced measures, for an advanced high school program as
determined under Section 28.025; and
(2) an additional $1,000 for each at-risk student who
graduates completing the curriculum requirements, including the
additional components and advanced measures, for an advanced high
school program as determined under Section 28.025.
Sec. 39.223. COMMENDED PERFORMANCE INCENTIVE. (a) In this
section, "commended performance" means commended performance, as
determined by the State Board of Education, on each assessment
instrument under Section 39.023(a), (c), or (l) that a student is
required to take during a school year.
(b) In addition to any other funds to which a school campus
is entitled under this code, each school year each campus is
entitled to:
(1) $100 for each student who achieves commended
performance; and
(2) an additional $100 for each at-risk student who
achieves commended performance.
Sec. 39.224. ALGEBRA I INCENTIVE. In addition to any other
funds to which a school campus is entitled under this code, each
school year each campus is entitled to:
(1) $100 for each student who performs successfully on
the end-of-course assessment instrument for Algebra I developed
under Section 39.023; and
(2) an additional $100 for each at-risk student who
performs successfully on the end-of-course assessment instrument
for Algebra I.
Sec. 39.225. DISTRIBUTION AND USE OF FUNDS. (a) Funds
distributed under Sections 39.222-39.224 shall be distributed to
the school district that contains the school campus entitled to the
funds under the applicable section. The funds must be used at the
campus entitled to the funds.
(b) A school district or campus may use funds distributed
under Sections 39.222-39.224 only for academic enhancement
purposes. The funds may not be used for any purpose related to
athletics and may not be used to substitute for or replace funds
already in the regular budget for a district or campus.
SECTION 2A.04. Section 822.201(c), Government Code, is
reenacted and amended to read as follows:
(c) Excluded from salary and wages are:
(1) expense payments;
(2) allowances;
(3) payments for unused vacation or sick leave;
(4) maintenance or other nonmonetary compensation;
(5) fringe benefits;
(6) deferred compensation other than as provided by
Subsection (b)(3);
(7) compensation that is not made pursuant to a valid
employment agreement;
(8) payments received by an employee in a school year
that exceed $5,000 for teaching a driver education and traffic
safety course that is conducted outside regular classroom hours;
(9) the benefit replacement pay a person earns as a
result of a payment made under Subchapter B or C, Chapter 661;
(10) amounts received by or on behalf of [supplemental
compensation received by] an employee under Chapter 1580 [Article
3.50-8], Insurance Code; [and]
(11) stipends paid to teachers in accordance with
Section 21.458, Education Code;
(12) amounts received under the educator excellence
incentive program under Subchapter N, Chapter 21, Education Code;
and
(13) any compensation not described in Subsection (b).
SECTION 2A.05. Section 21.357, Education Code, is repealed.
PART B. STATE GOVERNANCE
SECTION 2B.01. Subchapter A, Chapter 7, Education Code, is
amended by adding Section 7.0041 to read as follows:
Sec. 7.0041. COMMISSIONER OR AGENCY RULES. (a) In
performing a duty under this code, the commissioner shall adopt
rules only if the duty requires an action to be taken by rule. The
commissioner or the agency shall 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) This section may not be construed as:
(1) expanding the authority or duties of the
commissioner or the agency; or
(2) authorizing the commissioner or agency to perform
an educational function reserved to school districts and
open-enrollment charter schools under Section 7.003.
(c) The commissioner shall 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. Subchapter A, Chapter 7, Education Code, is
amended by adding Sections 7.007-7.009 to read as follows:
Sec. 7.007. PUBLIC EDUCATION INFORMATION MANAGEMENT SYSTEM
(PEIMS). (a) Each school district shall participate in the Public
Education Information Management System (PEIMS) and shall provide
through that system information required for the administration of
this code.
(b) Each school district shall use a uniform accounting
system adopted by the commissioner for the data required to be
reported for the Public Education Information Management System.
(c) Annually, the commissioner shall review the Public
Education Information Management System and shall repeal or amend
rules that require school districts to provide information through
the Public Education Information Management System that is not
necessary. In reviewing and revising the Public Education
Information Management System, the commissioner shall develop
rules to ensure that the system:
(1) provides useful, accurate, and timely information
on student demographics and academic performance, personnel, and
school district finances;
(2) contains only the data necessary for the
legislature and the agency to perform their legally authorized
functions in overseeing the public education system; and
(3) does not contain any information related to
instructional methods, except as required by federal law.
(d) The commissioner's rules must ensure that the Public
Education Information Management System 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) Each school district shall
participate in a system meeting standards approved by the
commissioner to track each student enrolled in a public school in
this state. A student tracking system must:
(1) produce detailed reports for agency officials and
policymakers and update information on each student's:
(A) enrollment;
(B) attendance;
(C) achievement, including course or grade
completion and assessment instrument results; and
(D) if applicable, specific reason for leaving a
school or school district, such as transferring, graduating, or
dropping out of school; and
(2) to facilitate the electronic transfer of student
records and the evaluation and improvement of educational programs
in the state, permit an authorized state or district official to
electronically retrieve information about a particular student as
necessary.
(b) Each school district shall use the student tracking
system.
(c) The commissioner may 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) In this
section, "center" means a center for education research.
(b) The commissioner of education and the commissioner of
higher education, in consultation with the State Board for Educator
Certification, may establish not more than three centers for
education research, including research regarding the impact of
federal education programs.
(c) A center may be established as part of:
(1) the agency;
(2) the Texas Higher Education Coordinating Board; or
(3) a public junior college, public senior college or
university, or public state college, as defined by Section 61.003.
(d) A center may 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. Any memorandum
of understanding under this subsection must 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) In conducting research for the benefit of education in
this state, a center may 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). A center shall 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) The commissioner of education and the commissioner of
higher education may:
(1) accept gifts and grants to be used in operating one
or more centers; and
(2) by rule, impose reasonable fees, as appropriate,
on a person who uses a center's research, resources, or facilities.
(g) 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) The commissioner of education and the commissioner of
higher education shall adopt rules necessary to implement this
section.
SECTION 2B.03. Subchapter C, Education Code, is amended by
adding Section 7.060 to read as follows:
Sec. 7.060. GIFTS AND GRANTS. The commissioner may 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. Section 7.107(b), Education Code, is amended
to read as follows:
(b) At the board's first regular meeting after the election
and qualification of new members:
(1) [,] the board shall organize and [,] adopt rules of
procedure;[,] and
(2) the chair shall, with the advice and consent of the
governor, appoint [elect by separate votes] a vice chair and a
secretary.
SECTION 2B.05. The Texas Education Agency shall 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. Based on the study,
the commissioner of education shall develop a plan to improve, over
the next five years, the data linkage described by this section.
Not later than December 1, 2004, the commissioner shall file with
the legislature a report with the commissioner's recommendation for
implementing the data linkage described by this section.
SECTION 2B.06. Section 7.0041, Education Code, as added by
this Act, does not affect the validity of an action taken by the
commissioner of education under a rule adopted before the effective
date of this Act.
PART C. SCHOOL DISTRICT GOVERNANCE
SECTION 2C.01. Section 11.059, Education Code, is amended
to read as follows:
Sec. 11.059. TERMS. (a) A trustee of an independent school
district serves a term of [three or] four years.
(b) [Elections for trustees with three-year terms shall be
held annually. The terms of one-third of the trustees, or as near
to one-third as possible, expire each year.
[(c)] Elections for trustees [with four-year terms] shall
be held on the uniform election date in November [biennially]. The
terms of one-half of the trustees, or as near to one-half as
possible, expire every two years.
(c) [(d)] A board policy must state the schedule on which
specific terms expire.
SECTION 2C.02. Section 11.163, Education Code, is amended
by adding Subsection (d) to read as follows:
(d) If, under the employment policy, the board of trustees
delegates to the superintendent the final authority to select
district personnel:
(1) 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
(2) each member of the board of trustees remains
subject to Chapter 573, Government Code, with respect to all
district employees.
SECTION 2C.03. Section 41.001(d), Election Code, is amended
to read as follows:
(d) A general election of officers of a city, school
district, junior college district, or hospital district may not be
held on the February or September uniform election date. A general
election of officers of an independent school district may not be
held on the February, May, or September uniform election date.
SECTION 2C.04. (a) Section 11.059, Education Code, as
amended by this Act, applies beginning with a school district
trustee election scheduled for 2005.
(b) Except as provided by Subsection (c) of this section, a
school district trustee election that on the effective date of this
Act is scheduled to be held in 2005 or 2006 must be held on November
8, 2005, or November 7, 2006.
(c) 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) To implement the changes made to Section 11.059,
Education Code, by this Act, a person may serve a term as school
district trustee that is longer than the term for which the person
was elected.
PART D. ACCOUNTABILITY
SECTION 2D.01. Section 25.005(b), Education Code, is
amended to read as follows:
(b) A reciprocity agreement must:
(1) address procedures for:
(A) transferring student records;
(B) awarding credit for completed course work;
and
(C) permitting a student to satisfy the
requirements of Section 39.025 through successful performance on
comparable end-of-course or other exit-level assessment
instruments administered in another state; and
(2) include appropriate criteria developed by the
agency.
SECTION 2D.02. Section 28.025, Education Code, is amended
by amending Subsection (c) and adding Subsections (c-1)-(c-3) to
read as follows:
(c) A person may receive a diploma if the person is eligible
for a diploma under Subsection (c-1) or Section 28.0251. In other
cases, a student may graduate and receive a diploma only if:
(1) the student successfully completes the curriculum
requirements identified by the State Board of Education under
Subsection (a) and:
(A) complies with Section 39.025(a); or
(B) scores a three or better on a college
advanced placement test, or a four or better on an international
baccalaureate examination, in a course in English language arts,
mathematics, social studies, or science that is a continuation of a
course for which an end-of-course assessment instrument is adopted
under Section 39.023(c), and complies with Section 39.025(a) as to
each other course for which that section requires satisfactory
performance; or
(2) the student successfully completes an
individualized education program developed under Section 29.005.
(c-1) The State Board of Education shall 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:
(1) successfully completes the course requirements
identified by the board; and
(2) scores at or above a level determined by the board
on the Scholastic Assessment Test II (SAT II) or the American
College Test (ACT).
(c-2) Notwithstanding Subsection (c-1), 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) must take that assessment
instrument.
(c-3) The State Board of Education shall adopt rules under
Subsection (c-1) that apply to students graduating in the 2005-2006
or a later school year. Section 7.102(f) does not apply to rules
adopted under Subsection (c-1). This subsection expires July 1,
2006.
SECTION 2D.03. Section 29.081(b), Education Code, is
amended to read as follows:
(b) Each district shall provide accelerated instruction to
a student enrolled in the district who has taken an end-of-course
[the secondary exit-level] assessment instrument administered
under Section 39.023(c) and has not performed satisfactorily on the
assessment instrument [each section] or who is at risk of dropping
out of school.
SECTION 2D.04. Section 30.021(e), Education Code, is
amended to read as follows:
(e) The school shall cooperate with public and private
agencies and organizations serving students and other persons with
visual impairments in the planning, development, and
implementation of effective educational and rehabilitative service
delivery systems associated with educating students with visual
impairments. To maximize and make efficient use of state
facilities, funding, and resources, the services provided in this
area may include conducting a cooperative program with other
agencies to serve students who have graduated from high school by
completing all academic requirements applicable to students in
regular education, excluding satisfactory performance on the
end-of-course [exit-level] assessment instruments required under
Section 39.025(a) [instrument], who are younger than 22 years of
age on September 1 of the school year and who have identified needs
related to vocational training, independent living skills,
orientation and mobility, social and leisure skills, compensatory
skills, or remedial academic skills.
SECTION 2D.05. Sections 39.023(a) and (c), Education Code,
are amended to read as follows:
(a) The agency shall adopt or develop appropriate
criterion-referenced assessment instruments designed to assess
essential knowledge and skills in reading, writing, mathematics,
social studies, and science. All students, except students
assessed under Subsection (b) or (l) or exempted under Section
39.027, shall be assessed in:
(1) mathematics, annually in grades three through
seven without the aid of technology and in grade [grades] eight
[through 11] with the aid of technology on any assessment
instruments that include algebra;
(2) reading, annually in grades three through eight
[nine];
(3) writing, including spelling and grammar, in grades
four and seven;
(4) [English language arts, in grade 10;
[(5)] social studies, in grade [grades] eight [and
10];
(5) [(6)] science, in grades five and[,] eight[, and
10]; and
(6) [(7)] any other subject and grade required by
federal law.
(c) The agency shall also adopt end-of-course [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
[designed to be administered to students in grade 11 to assess
essential knowledge and skills in mathematics, English language
arts, social studies, and science. The mathematics section must
include at least Algebra I and geometry with the aid of technology.
The English language arts section must include at least English III
and must include the assessment of essential knowledge and skills
in writing. The social studies section must include early American
and United States history. The science section must include at
least biology and integrated chemistry and physics. The assessment
instruments must be designed to assess a student's mastery of
minimum skills necessary for high school graduation and readiness
to enroll in an institution of higher education]. If a student is
in a special education program under Subchapter A, Chapter 29, the
student's admission, review, and dismissal committee shall
determine whether any allowable modification is necessary in
administering to the student an assessment instrument required
under this subsection or whether the student should be exempted
under Section 39.027(a)(2). The State Board of Education shall
administer the assessment instruments. The State Board of
Education shall adopt a schedule for the administration of
end-of-course [secondary exit-level] assessment instruments. Each
student who did not perform satisfactorily on any end-of-course
[secondary exit-level] assessment instrument when initially tested
shall be given multiple opportunities to retake that assessment
instrument. [A student who performs at or above a level established
by the Texas Higher Education Coordinating Board on the secondary
exit-level assessment instruments is exempt from the requirements
of Section 51.306.]
SECTION 2D.06. Subchapter B, Chapter 39, Education Code, is
amended by adding Sections 39.0232 and 39.0233 to read as follows:
Sec. 39.0232. COMPUTER-BASED ASSESSMENT. (a) The agency
shall 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, shall require school districts to administer to
students the computer-based assessment instruments.
(b) The agency shall implement Subsection (a) not later than
March 1, 2006. This subsection expires September 1, 2006.
Sec. 39.0233. COMPUTER-ADAPTIVE ASSESSMENT. (a) The
agency shall develop computer-adaptive diagnostic assessment
instruments for subjects for which assessment instruments are
adopted under Sections 39.023(a), (c), and (l). An assessment
instrument administered under this section may include statistical
sampling techniques to measure the full range of skill levels and
curriculum.
(b) During the 2005-2006 school year, the agency shall
administer as a pilot project one or more of the assessment
instruments required under Subsection (a). The agency shall report
the results of the pilot project to the legislature not later than
December 1, 2006. This subsection expires January 15, 2007.
SECTION 2D.07. Section 39.025, Education Code, is amended
to read as follows:
Sec. 39.025. EXIT-LEVEL PERFORMANCE REQUIRED. (a) Except
as otherwise provided by Section 28.025(c), a [A] student may not
receive a high school diploma until the student has performed
satisfactorily on the following end-of-course [secondary
exit-level] assessment instruments for students in secondary
grades [English language arts, mathematics, social studies, and
science] administered under Section 39.023(c):
(1) English III;
(2) United States History;
(3) two of the following assessment instruments:
(A) Algebra I;
(B) Algebra II; or
(C) Geometry;
(4) two of the following assessment instruments:
(A) Biology;
(B) Chemistry;
(C) Physics; or
(D) Integrated Physics and Chemistry;
(5) one of the following assessment instruments:
(A) English I; or
(B) English II; and
(6) one of the following assessment instruments:
(A) World Geography; or
(B) World History. [This subsection does not
require a student to demonstrate readiness to enroll in an
institution of higher education.]
(b) Each time an end-of-course [a secondary exit-level]
assessment instrument is administered, a student who has not been
given a high school diploma because of a failure to perform
satisfactorily on the assessment instrument for that subject area
may retake the assessment instrument.
(c) A student who has been denied a high school diploma
under Subsections (a) and (b) and who subsequently performs
satisfactorily on each necessary end-of-course [secondary
exit-level] assessment instrument shall be issued a high school
diploma.
(d) Subsection (a) does not require a student to demonstrate
readiness to enroll in an institution of higher education.
(e) The commissioner shall by rule 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. The rules
must 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. During
the period under which the transition to end-of-course assessment
instruments is made:
(1) the commissioner may retain, administer, and use
for campus and district ratings under Subchapter D any assessment
instrument required by Section 39.023(a) or (c), as that section
existed before amendment by H.B. No. 1, Acts of the 78th
Legislature, 4th Called Session, 2004; and
(2) the agency may defer releasing assessment
instrument questions and answer keys as required by Section
39.023(e) to the extent necessary to develop additional assessment
instruments.
(f) 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. Notice under this subsection must be provided not
later than the date the student enters the ninth grade. Subsection
(e) and this subsection expire September 1, 2009.
SECTION 2D.08. Subchapter B, Chapter 39, Education Code, is
amended by adding Section 39.0261 to read as follows:
Sec. 39.0261. COLLEGE PREPARATION ASSESSMENT. (a) To
ensure that students are prepared for college-level courses, each
school district shall 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). An assessment instrument administered under
this section must be part of an established, valid, and reliable
system of nationally normed and curriculum-based educational
planning and achievement assessment instruments with the following
characteristics:
(1) an integrated series of standards and
curriculum-based achievement assessment instruments, with the
grade 12 assessment instrument currently accepted by this state's
colleges and universities for use in determining admissions; and
(2) a common content continuum and score scale in the
assessed areas of reading, English, mathematics, and science across
the assessment instruments administered at each grade level.
(b) The agency shall select and approve vendors of the
specific assessment instruments administered under this section.
(c) From amounts appropriated for purposes of this section,
the commissioner shall make grants to school districts to prepare
students for assessment instruments administered under this
section.
(d) The agency shall 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) The commissioner shall provide for the implementation
of this section not later than the 2006-2007 school year. This
subsection expires July 1, 2007.
SECTION 2D.09. Subchapter B, Chapter 39, Education Code, is
amended by adding Section 39.034 to read as follows:
Sec. 39.034. MEASURE OF ANNUAL CHANGE IN PERFORMANCE ON
ASSESSMENT INSTRUMENTS. (a) The commissioner by rule shall adopt a
method by which the agency 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) Each year, for each student who takes an assessment
instrument required under Section 39.023(a), (b), or (l), the
agency shall 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.
(c) The agency shall maintain a record of the comparisons
made under this section and each year shall provide the record to
the school the student attends.
(d) The commissioner shall implement this section not later
than September 1, 2006. This subsection expires January 1, 2008.
SECTION 2D.10. Section 39.052(b), Education Code, is
amended to read as follows:
(b) The report card shall include the following
information:
(1) where applicable, the academic excellence
indicators adopted under Sections 39.051(b)(1) through (10) [(9)];
(2) average class size by grade level and subject;
(3) the administrative and instructional costs per
student, computed in a manner consistent with Section 44.0071;
(4) a summary of the district's significant
noninstructional expenditures, as determined under Section
44.0072; and
(5) [(4)] the district's instructional expenditures
ratio and instructional employees ratio computed under Section
44.0071, and the statewide average of those ratios, as determined
by the commissioner.
SECTION 2D.11. Section 39.202(b), Education Code, is
amended to read as follows:
(b) The system must include uniform indicators adopted by
the commissioner by which to measure a district's financial
management performance. In adopting uniform indicators, the
commissioner shall:
(1) identify indicators considered to be critical by
the commissioner; and
(2) include in the indicators identified under
Subdivision (1) an indicator relating to a district's instructional
costs.
SECTION 2D.12. Subchapter A, Chapter 44, Education Code, is
amended by adding Section 44.0072 to read as follows:
Sec. 44.0072. NONINSTRUCTIONAL EXPENDITURES. (a) Each
fiscal year, a school district shall compute and report through the
Public Education Information Management System (PEIMS) to the
commissioner:
(1) the district's significant noninstructional
expenditures for the preceding fiscal year, as determined by the
commissioner; and
(2) any money spent by the district during the
preceding fiscal year on dues or contributions to a
noninstructional group, club, committee, organization, or
association, including dues or contributions used for the purpose
of lobbying.
(b) The commissioner may determine, in a manner consistent
with Section 44.0071, whether an expenditure is noninstructional.
SECTION 2D.13. Section 51.3062(q), Education Code, is
amended to read as follows:
(q) A student who has achieved scores [a score] set by the
board on end-of-course assessment instruments [an exit-level
assessment instrument] required under Section 39.023 is exempt from
the requirements of this section. The exemption is effective for
the three-year period following the date a student takes the last
assessment instrument required for purposes of this section and
achieves the standard set by the board. This subsection does not
apply during any period for which the board designates the
end-of-course assessment instruments [exit-level assessment
instrument] required under Section 39.023 as the primary assessment
instrument under this section, except that the three-year period
described by this subsection remains in effect for students who
qualify for an exemption under this subsection [section] before
that period.
SECTION 2D.14. Section 39.023(j), Education Code, is
repealed.
SECTION 2D.15. 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. Section 28.006(j), Education Code, is
amended to read as follows:
(j) No more than 15 percent of the funds certified by the
commissioner under Subsection (i) may be spent on indirect costs.
The commissioner shall evaluate the programs that fail to meet the
standard of performance under Section 39.051(b)(9) [39.051(b)(7)]
and may implement sanctions under Subchapter G, Chapter 39. The
commissioner may audit the expenditures of funds appropriated for
purposes of this section. The use of the funds appropriated for
purposes of this section shall be verified as part of the district
audit under Section 44.008.
SECTION 2E.02. Section 29.056(g), Education Code, is
amended to read as follows:
(g) A district may 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:
(1) tests administered at the end of each school year
to determine the extent to which the student has developed oral and
written language proficiency and specific language skills in both
the student's primary language and English;
(2) 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
the agency; and
(3) other indications of a student's overall progress,
including criterion-referenced test scores, subjective teacher
evaluation, and parental evaluation.
SECTION 2E.03. Subchapter B, Chapter 29, Education Code, is
amended by adding Section 29.0561 to read as follows:
Sec. 29.0561. CONSIDERATION; REENROLLMENT. (a) 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), the language proficiency assessment committee shall
consider:
(1) the total amount of time the student has been
enrolled in a bilingual education or special language program;
(2) the student's grades each grading period in each
subject in the foundation curriculum under Section 28.002(a)(1);
(3) the student's performance on each assessment
instrument required under Section 39.023(a) or (c);
(4) the number of credits toward high school
graduation the student has earned, as applicable; and
(5) any disciplinary actions taken against the student
under Subchapter A, Chapter 37.
(b) 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), the language proficiency
assessment committee shall reevaluate the student to determine if
the student should reenroll in the bilingual education or special
language program. Based on the reevaluation, the committee may
arrange for intensive instruction for the student or may reenroll
the student in the program.
SECTION 2E.04. Subchapter B, Chapter 29, Education Code, is
amended by adding Sections 29.065 and 29.066 to read as follows:
Sec. 29.065. MEASURE OF PROGRESS TOWARD ENGLISH LANGUAGE
PROFICIENCY. The commissioner by rule shall 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). The
commissioner shall:
(1) as part of the measure of progress, include
student advancement from one proficiency level to a higher level
under the reading proficiency in English assessment system
developed under Section 39.027(e) and from the highest level under
that assessment system to the level determined by the commissioner
under this section on the reading or English language arts
assessment instrument, as applicable, under Section 39.023(a); and
(2) to the extent practicable in developing the
measure of progress, use applicable research and analysis done in
developing an annual measurable achievement objective as required
by Section 3122, No Child Left Behind Act of 2001 (20 U.S.C. Section
6842).
Sec. 29.066. BEST PRACTICES. Based on the measure of
progress toward English language proficiency under Section 29.065,
the commissioner shall determine which school districts offer the
most effective bilingual education and special language programs.
Using funds appropriated for that purpose, the commissioner shall
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. Section 39.051(b), Education Code, as
amended by Chapters 433 and 805, Acts of the 78th Legislature,
Regular Session, 2003, is reenacted and amended to read as follows:
(b) Performance on the indicators adopted under this
section shall be compared to state-established standards. The
degree of change from one school year to the next in performance on
each indicator adopted under this section shall also be considered.
The indicators must be based on information that is disaggregated
by race, ethnicity, gender, and socioeconomic status and must
include:
(1) the results of assessment instruments required
under Sections 39.023(a), (c), and (l), aggregated by grade level
and subject area;
(2) dropout rates, including dropout rates and
district completion rates for grade levels 9 through 12, computed
in accordance with standards and definitions adopted by the
National Center for Education Statistics of the United States
Department of Education;
(3) high school graduation rates, computed in
accordance with standards and definitions adopted in compliance
with the federal No Child Left Behind Act of 2001 (Pub. L. No.
107-110);
(4) student attendance rates;
(5) the percentage of graduating students who attain
scores on the end-of-course [secondary exit-level] assessment
instruments required under Subchapter B that are equivalent to a
passing score on the assessment [test] instrument required under
Section 51.3062 [51.306];
(6) the percentage of graduating students who meet the
course requirements established for the recommended high school
program by State Board of Education rule;
(7) the measure of progress toward English language
proficiency under Section 29.065, for students of limited English
proficiency, as defined by Section 29.052;
(8) the results of the Scholastic Assessment Test
(SAT), the American College Test (ACT), articulated postsecondary
degree programs described by Section 61.852, and certified
workforce training programs described by Chapter 311, Labor Code;
(9) [(8)] the percentage of students, aggregated by
grade level, provided accelerated instruction under Section
28.0211(c), the results of assessments administered under that
section, the percentage of students promoted through the grade
placement committee process under Section 28.0211, the subject of
the assessment instrument on which each student failed to perform
satisfactorily, and the performance of those students in the school
year following that promotion on the assessment instruments
required under Section 39.023;
(10) [(9)] for students who have failed to perform
satisfactorily on an assessment instrument required under Section
39.023(a) or (c), the numerical progress of those students on
subsequent assessment instruments required under those sections,
aggregated by grade level and subject area;
(11) [(10)] the percentage of students exempted, by
exemption category, from the assessment program generally
applicable under this chapter; [and]
(12) [(11)] the percentage of students of limited
English proficiency exempted from the administration of an
assessment instrument under Sections 39.027(a)(3) and (4);
(13) the percentage of students in a special education
program under Subchapter A, Chapter 29, assessed through assessment
instruments developed or adopted under Section 39.023(b); and
(14) 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.
SECTION 2E.06. Sections 39.072(b) and (c), Education Code,
are amended to read as follows:
(b) The academic excellence indicators adopted under
Sections 39.051(b)(1) through (8) [(7)] and the district's current
special education compliance status with the agency shall be the
main considerations of the agency in the rating of the district
under this section. Additional criteria in the rules may include
consideration of:
(1) compliance with statutory requirements and
requirements imposed by rule of the State Board of Education under
specific statutory authority that relate to:
(A) reporting data through the Public Education
Information Management System (PEIMS);
(B) the high school graduation requirements
under Section 28.025; or
(C) an item listed in Sections
7.056(e)(3)(C)-(I) that applies to the district;
(2) the effectiveness of the district's programs for
special populations; and
(3) the effectiveness of the district's career and
technology programs.
(c) The agency shall evaluate against state standards and
shall, not later than August 1 of each year, report the performance
of each campus in a district and each open-enrollment charter
school on the basis of the campus's performance on the indicators
adopted under Sections 39.051(b)(1) through (8) [(7)].
Consideration of the effectiveness of district programs under
Subsection (b)(2) or (3) must be based on data collected through the
Public Education Information Management System for purposes of
accountability under this chapter and include the results of
assessments required under Section 39.023.
SECTION 2E.07. Sections 39.073(a) and (b), Education Code,
are amended to read as follows:
(a) The agency shall annually review the performance of each
district and campus on the indicators adopted under Sections
39.051(b)(1) through (8) [(7)] and determine if a change in the
accreditation status of the district is warranted. The
commissioner may determine how all indicators adopted under Section
39.051(b) may be used to determine accountability ratings and to
select districts and campuses for acknowledgment.
(b) Each annual review shall include an analysis of the
indicators under Sections 39.051(b)(1) through (7) [(6)] to
determine district and campus performance in relation to:
(1) standards established for each indicator;
(2) required improvement as defined under Section
39.051(c); and
(3) comparable improvement as defined by Section
39.051(c).
SECTION 2E.08. Section 39.074(e), Education Code, is
amended to read as follows:
(e) If an annual review indicates low performance on one or
more of the indicators under Sections 39.051(b)(1) through (8)
[(7)] of one or more campuses in a district, the agency may conduct
an on-site evaluation of those campuses only.
SECTION 2E.09. Section 29.056(h), Education Code, is
repealed.
SECTION 2E.10. (a) Not later than the 2006-2007 school
year, the Texas Education Agency shall 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) Not later than the 2007-2008 school year, the Texas
Education Agency shall 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 open-enrollment charter schools under
Subchapter D, Chapter 39, Education Code.
PART F. EFFECTIVE DATE
SECTION 2F.01. (a) Except as otherwise provided by this
Act, this article takes effect September 1, 2005.
(b) 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. Section 1.12(d), Tax Code, is amended to
read as follows:
(d) For purposes of this section, the appraisal ratio of
real property [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. The appraisal ratio is not
calculated according to the appraised value of the property as
limited by Section 23.23.
SECTION 3A.02. Section 23.23, Tax Code, is amended to read
as follows:
Sec. 23.23. LIMITATION ON APPRAISED VALUE OF CERTAIN
RESIDENTIAL REAL PROPERTY [RESIDENCE HOMESTEAD]. (a) The
appraised value of qualified residential real property [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 [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) When appraising qualified residential real property [a
residence homestead], the chief appraiser shall:
(1) appraise the property at its market value; and
(2) include in the appraisal records both the market
value of the property and the amount computed under Subsection
(a)(2).
(c) The limitation provided by Subsection (a) takes effect
as to a parcel of qualified residential real property [residence
homestead] on January 1 of the tax year following the first tax year
in which the owner owns [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 [for an exemption] 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 [. The] limitation expires
on January 1 of the [first] tax year following the year in which
[that neither] 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 [when
the limitation took effect nor the owner's spouse or surviving
spouse qualifies for an exemption under Section 11.13].
(d) 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) 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) This section does not apply to property appraised under
Subchapter C, D, E, F, [or] G, or H.
(g) [(e)] In this section:[,]
(1) "New [new] improvement" means an improvement to
real property [a residence homestead] that is made after the most
recent appraisal of the property [for the preceding year] and that
increases the market value of the property. The term does not
include ordinary upkeep, repair, or maintenance of an existing
structure or the grounds or another feature of the property.
(2) "Qualified residential real property" means real
property that:
(A) qualifies for an exemption under Section
11.13; or
(B) is designed or adapted for residential
purposes and used primarily for residential purposes by the owner
of the property, including the owner-occupied portion of a duplex,
triplex, or other multifamily structure and the residential
portion, not to exceed 20 acres, of farm or ranch property.
(h) [(f)] Notwithstanding Subsections (a) and (g)(1) [(e)]
and except as provided by Subdivision (2), an improvement to
property that would otherwise constitute a new improvement is not
treated as a new improvement if the improvement is a replacement
structure for a structure that was rendered uninhabitable or
unusable by a casualty or by mold or water damage. For purposes of
appraising the property in the tax year in which the structure would
have constituted a new improvement:
(1) the last year in which the property was appraised
for taxation before the casualty or damage occurred is considered
to be the last year in which the property was appraised for taxation
for purposes of Subsection (a)(2)(A); and
(2) the replacement structure is considered to be a
new improvement only to the extent it is a significant improvement
over the replaced structure as that structure existed before the
casualty or damage occurred.
(i) 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) This subsection and Subsections (k)-(n) do not apply to
property that qualifies for a residence homestead exemption under
Section 11.13. To receive a limitation under Subsection (a), a
person claiming the limitation must apply for the limitation by
filing an application with the chief appraiser of the appraisal
district. The chief appraiser shall accept and approve or deny an
application. For property appraised by more than one appraisal
district, a separate application must be filed in each appraisal
district to receive the limitation in that district. 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. However, the chief
appraiser may 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) The comptroller, in prescribing the contents of the
application form for a limitation under Subsection (a), shall
ensure that the form requires an applicant to provide the
information necessary to determine the validity of the limitation
claim. The form must require an applicant to provide the
applicant's name and driver's license number, personal
identification certificate number, or social security number. The
comptroller shall include on the form a notice of the penalties
prescribed by Section 37.10, Penal Code, for making or filing an
application containing a false statement and shall include on the
form a statement explaining that the application need not be made
annually and that if the limitation is allowed, the applicant has a
duty to notify the chief appraiser when the applicant's
qualification for the limitation ends. In this subsection,
"driver's license" and "personal identification certificate" have
the meanings assigned by Section 11.43(f).
(l) A person who is required to apply for a limitation under
Subsection (a) to receive the limitation for a tax year must apply
for the limitation not later than May 1 of that year. Except as
provided by Subsection (m), if the person fails to timely file a
completed application, the person may not receive the limitation
for that year.
(m) The chief appraiser shall 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. If a late
application is approved after approval of the appraisal records by
the appraisal review board, the chief appraiser shall notify the
collector for each taxing unit in which the property is located. If
the tax has not been paid, the collector shall 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
been paid, the collector shall refund the difference.
(n) A person who receives a limitation under Subsection (a)
shall notify the appraisal office in writing before May 1 after the
person's qualification for the limitation ends.
SECTION 3A.03. Subchapter B, Chapter 23, Tax Code, is
amended by adding Section 23.235 to read as follows:
Sec. 23.235. LEGISLATIVE OVERSIGHT COMMITTEE. (a) The
legislative oversight committee on the effect of the yearly
limitation on appraised value of a residence homestead is composed
of six members as follows:
(1) three members of the senate appointed by the
lieutenant governor, of which one member shall be the chairman of
the Senate Committee on Intergovernmental Relations; and
(2) three members of the house of representatives
appointed by the speaker of the house of representatives, of which
one member shall be the chairman of the House Committee on Local
Government Ways and Means.
(b) The committee shall 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. The study shall include
investigation of the long-term economic effects of appraisal caps.
(c) The committee may request reports and other information
from appraisal districts relating to the limitation on appraised
values on residence homesteads.
(d) The committee shall study the current truth in taxation
laws of this state and determine their effectiveness.
(e) The committee may make specific recommendations for
legislation related to this subchapter.
(f) The committee shall file a report with the governor,
lieutenant governor, and speaker of the house of representatives
not later than December 31, 2004.
(g) This section expires January 1, 2005.
SECTION 3A.04. Section 42.26(d), Tax Code, is amended to
read as follows:
(d) For purposes of this section, the value of the property
subject to the suit and the value of a comparable property or sample
property that is used for comparison must be the market value
determined by the appraisal district when the property is [a
residence homestead] subject to the limitation on appraised value
imposed by Section 23.23.
SECTION 3A.05. Sections 403.302(d) and (i), Government
Code, are amended to read as follows:
(d) For the purposes of this section, "taxable value" means
the market value of all taxable property less:
(1) the total dollar amount of any residence homestead
exemptions lawfully granted under Section 11.13(b) or (c), Tax
Code, in the year that is the subject of the study for each school
district;
(2) one-half of the total dollar amount of any
residence homestead exemptions granted under Section 11.13(n), Tax
Code, in the year that is the subject of the study for each school
district;
(3) the total dollar amount of any exemptions granted
before May 31, 1993, within a reinvestment zone under agreements
authorized by Chapter 312, Tax Code;
(4) subject to Subsection (e), the total dollar amount
of any captured appraised value of property that:
(A) is within a reinvestment zone created on or
before May 31, 1999, or is proposed to be included within the
boundaries of a reinvestment zone as the boundaries of the zone and
the proposed portion of tax increment paid into the tax increment
fund by a school district are described in a written notification
provided by the municipality or the board of directors of the zone
to the governing bodies of the other taxing units in the manner
provided by Section 311.003(e), Tax Code, before May 31, 1999, and
within the boundaries of the zone as those boundaries existed on
September 1, 1999, including subsequent improvements to the
property regardless of when made;
(B) generates taxes paid into a tax increment
fund created under Chapter 311, Tax Code, under a reinvestment zone
financing plan approved under Section 311.011(d), Tax Code, on or
before September 1, 1999; and
(C) is eligible for tax increment financing under
Chapter 311, Tax Code;
(5) the total dollar amount of any exemptions granted
under Section 11.251, Tax Code;
(6) the difference between the comptroller's estimate
of the market value and the productivity value of land that
qualifies for appraisal on the basis of its productive capacity,
except that the productivity value estimated by the comptroller may
not exceed the fair market value of the land;
(7) the portion of the appraised value of residence
homesteads of individuals who receive a tax limitation under
Section 11.26, Tax Code, on which school district taxes are not
imposed in the year that is the subject of the study, calculated as
if the residence homesteads were appraised at the full value
required by law;
(8) a portion of the market value of property not
otherwise fully taxable by the district at market value because of:
(A) action required by statute or the
constitution of this state that, if the tax rate adopted by the
district is applied to it, produces an amount equal to the
difference between the tax that the district would have imposed on
the property if the property were fully taxable at market value and
the tax that the district is actually authorized to impose on the
property, if this subsection does not otherwise require that
portion to be deducted; or
(B) action taken by the district under Subchapter
B or C, Chapter 313, Tax Code;
(9) the market value of all tangible personal
property, other than manufactured homes, owned by a family or
individual and not held or used for the production of income;
(10) the appraised value of property the collection of
delinquent taxes on which is deferred under Section 33.06, Tax
Code;
(11) the portion of the appraised value of property
the collection of delinquent taxes on which is deferred under
Section 33.065, Tax Code; and
(12) the amount by which the market value of real
property [a residence homestead] to which Section 23.23, Tax Code,
applies exceeds the appraised value of that property as calculated
under that section.
(i) If the comptroller determines in the annual study that
the market value of property in a school district as determined by
the appraisal district that appraises property for the school
district, less the total of the amounts and values listed in
Subsection (d) as determined by that appraisal district, is valid,
the comptroller, in determining the taxable value of property in
the school district under Subsection (d), shall for purposes of
Subsection (d)(12) subtract from the market value as determined by
the appraisal district of real properties [residence homesteads] to
which Section 23.23, Tax Code, applies the amount by which that
amount exceeds the appraised value of those properties as
calculated by the appraisal district under Section 23.23, Tax Code.
If the comptroller determines in the annual study that the market
value of property in a school district as determined by the
appraisal district that appraises property for the school district,
less the total of the amounts and values listed in Subsection (d) as
determined by that appraisal district, is not valid, the
comptroller, in determining the taxable value of property in the
school district under Subsection (d), shall for purposes of
Subsection (d)(12) subtract from the market value as estimated by
the comptroller of real properties [residence homesteads] to which
Section 23.23, Tax Code, applies the amount by which that amount
exceeds the appraised value of those properties as calculated by
the appraisal district under Section 23.23, Tax Code.
SECTION 3A.06. 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. Section 11.42(c), Tax Code, is amended to
read as follows:
(c) An exemption authorized by Section 11.13 [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. Section 11.43(k), Tax Code, is amended to
read as follows:
(k) A person who qualifies for an exemption authorized by
Section 11.13 [11.13(c) or (d)] must apply for the exemption no
later than the first anniversary of the date the person qualified
for the exemption.
SECTION 3B.03. Section 26.10(b), Tax Code, is amended to
read as follows:
(b) If the appraisal roll shows that a residence homestead
exemption for an individual [65 years of age or older or a residence
homestead exemption for a disabled individual] applicable to a
property on January 1 of a year terminated during the year and if
the owner qualifies a different property for a [one of those]
residence homestead exemption [exemptions] during the same year,
the tax due against the former residence homestead is calculated
by:
(1) subtracting:
(A) the amount of the taxes that otherwise would
be imposed on the former residence homestead for the entire year had
the individual qualified for the residence homestead exemption for
the entire year; from
(B) the amount of the taxes that otherwise would
be imposed on the former residence homestead for the entire year had
the individual not qualified for the residence homestead exemption
during the year;
(2) multiplying the remainder determined under
Subdivision (1) by a fraction, the denominator of which is 365 and
the numerator of which is the number of days that elapsed after the
date the exemption terminated; and
(3) adding the product determined under Subdivision
(2) and the amount described by Subdivision (1)(A).
SECTION 3B.04. Section 26.112, Tax Code, is amended to read
as follows:
Sec. 26.112. CALCULATION OF TAXES ON RESIDENCE HOMESTEAD
[OF ELDERLY OR DISABLED PERSON]. (a) Except as provided by Section
26.10(b), if at any time during a tax year property is owned by an
individual who qualifies for an exemption under Section 11.13
[11.13(c) or (d)], the amount of the tax due on the property for the
tax year is calculated as if the person qualified for the exemption
on January 1 and continued to qualify for the exemption for the
remainder of the tax year.
(b) If a person qualifies for an exemption under Section
11.13 [11.13(c) or (d)] with respect to the property after the
amount of the tax due on the property is calculated and the effect
of the qualification is to reduce the amount of the tax due on the
property, the assessor for each taxing unit shall recalculate the
amount of the tax due on the property and correct the tax roll. If
the tax bill has been mailed and the tax on the property has not been
paid, the assessor shall mail a corrected tax bill to the person in
whose name the property is listed on the tax roll or to the person's
authorized agent. If the tax on the property has been paid, the tax
collector for the taxing unit shall refund to the person who paid
the tax the amount by which the payment exceeded the tax due.
SECTION 3B.05. 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. Subtitle C, Title 8, Local Government Code, is
amended by adding Chapter 274 to read as follows:
CHAPTER 274. SALE OF TAX RECEIVABLES
Sec. 274.001. DEFINITIONS. In this chapter:
(1) "Date of sale" means:
(A) for a sale made through competitive bidding,
the date designated by the applicable local government for the
submission of bids; and
(B) for a sale negotiated by a local government,
the date the tax receivable sale and purchase agreement is signed.
(2) "Local government" means a county, municipality,
school district, special purpose district or authority, or other
political subdivision of this state.
(3) "Tax receivable" means the right to receive the
revenue from:
(A) a delinquent ad valorem tax imposed by a
local government on real property; and
(B) a delinquent assessment or other charge
imposed by a local government that is secured by a lien on real
property.
Sec. 274.002. AUTHORITY TO SELL TAX RECEIVABLES OR
UNDIVIDED INTEREST IN TAX RECEIVABLES. (a) At any time, a local
government may sell all or any part of its tax receivables,
including an undivided interest in all or any part of the
receivables.
(b) 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) The local government shall determine the terms and
conditions of a sale of a tax receivable.
(d) 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.
The amount of a tax receivable sold under this chapter may include:
(1) 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
(2) 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) Except as provided by Subsection (b), 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.
(b) After the date of sale of a delinquent ad valorem tax
receivable:
(1) 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
(2) 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) 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.
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) The local government may not:
(1) sell 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
(2) after the date of sale of an ad valorem tax
receivable to a person, enter 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) 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) A sale authorized by
this chapter may be made through:
(1) competitive bidding; or
(2) a negotiated sale.
(b) Notwithstanding any other law to the contrary, in
determining whether and to whom to award a sale of a tax receivable,
a local government may 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) The local government may 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) A
local government that elects to sell all or part of its tax
receivables through competitive bidding shall publish a notice of
its intention to sell the tax receivables through competitive
bidding.
(b) The notice must include:
(1) the terms and conditions of the sale;
(2) the criteria by which bids will be evaluated; and
(3) a description of any other information or
documents that the local government may require a bidder to
provide.
(c) The notice must:
(1) identify separately the tax receivables intended
to be sold; or
(2) 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) The notice shall 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) The local government may reject any or all bids or may
accept any combination of bids received in a sale conducted through
competitive bidding.
Sec. 274.008. SALE THROUGH NEGOTIATED SALE. (a) A local
government that elects to sell all or a part of its tax receivables
through a negotiated sale shall publish a notice of its intention to
sell tax receivables through a negotiated sale.
(b) The notice must:
(1) state that a request for statements of interest to
purchase tax receivables is available at the location specified in
the notice; and
(2) include any requirement by the local government
for a person seeking to purchase tax receivables to provide the
local government any information or documents.
(c) The notice must:
(1) identify separately the tax receivables intended
to be sold; or
(2) 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) The notice shall 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 receipt
of statements of interest.
Sec. 274.009. NOTICE TO AFFECTED PROPERTY OWNERS. (a) A
local government may not sell 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) The notice shall be mailed to the property owner not
later than the 30th day before the date of sale.
(c) The notice must:
(1) include a description of the real property
associated with the tax receivable, by block and lot or by other
means sufficient to identify and locate the property, and may
include other identifying information that the local government
considers appropriate;
(2) state the amount of the tax receivable; and
(3) state that the tax receivable associated with the
property may be sold as provided by this chapter if the amounts due
on the property remain unpaid.
(d) The local government may not proceed 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) A local government may postpone or cancel any
proposed sale of a tax receivable for which notice has been
published.
(b) 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) A local
government may enter into a purchase and sale agreement with the
purchaser of a tax receivable sold under this chapter.
(b) 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) A purchase and sale agreement must specify:
(1) the purchase price of each tax receivable covered
by the agreement, which amount may:
(A) be more or less than the face amount of the
tax receivable; and
(B) include nonmonetary consideration;
(2) any other amounts that may be made available to the
local government on a contingent basis under the terms of the
agreement; and
(3) that the local government and the officers,
employees, agents, and attorneys of the local government are not
liable for damages for any failure to collect the tax receivable,
and that a failure to collect the tax receivable does not give rise
to a cause of action.
(d) A purchase and sale agreement may require the local
government to:
(1) repurchase a tax receivable, or to substitute
another tax receivable of equivalent value, under conditions that
may be specified in the agreement;
(2) sell to the purchaser subsequent tax receivables
associated with the property on substantially the same terms as
those on which the initial tax receivable was sold; and
(3) use its customary and reasonable efforts to
enforce the collection of the tax receivable, as if the tax
receivable had not been sold.
(e) A purchase and sale agreement may not require 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) A purchase and sale agreement may not require 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. A local
government that enters into such a contract may agree to repurchase
any related ad valorem tax receivable.
(g) A purchase and sale agreement may not contain 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. The local government may agree to
repurchase the related tax receivable if the individual defers or
abates the suit.
(h) A purchase and sale agreement may not require 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) On the sale by a local government
of a tax receivable, the local government shall issue to the
purchaser a tax receivable certificate evidencing the sale and
transfer of the tax receivable to the purchaser.
(b) A tax receivable certificate operates to transfer and
assign the tax receivable only for:
(1) the amount provided by Section 274.003;
(2) interest on any unpaid amounts of the tax
receivable that accrues under Section 274.004(a) on and after the
date of sale to the date of payment; and
(3) the amounts of any penalty and interest on the
unpaid original amount of an ad valorem tax receivable that accrues
under Section 33.01, Tax Code, on and after the date of the sale to
the date of payment.
(c) 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. Any amount described by this subsection
that is collected shall 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) The holder of a tax receivable certificate may transfer
the certificate to any other person.
(e) 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)
Each tax receivable certificate must contain a transfer and
assignment by the local government of the tax receivables
transferred to the purchaser and must state:
(1) the date of the sale;
(2) the aggregate amount of the tax receivables
transferred to the purchaser;
(3) as separate items, the amounts included in each
tax receivable specified in Section 274.003;
(4) the rate of interest that accrues on the unpaid
amount of the tax receivables; and
(5) a description of the real property associated with
each tax receivable, by block and lot or by other means sufficient
to identify and locate the property.
(b) A tax receivable certificate shall 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) 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)
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,
the tax collector or a person designated by the tax collector may
execute and issue a replacement tax receivable certificate to the
applicant or the person entitled to the original replacement
certificate.
(b) The tax collector for the local government, at the
collector's discretion, may 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)
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) 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) A local government shall 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) A local government shall 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:
(1) attorney's fees and any other amount collected for
the benefit of the attorney; and
(2) any costs of court and expenses advanced by the
attorney.
Sec. 274.017. AFFIDAVITS OF PUBLICATION AND MAILING. (a)
Each local government that sells a tax receivable under this
chapter shall obtain and preserve affidavits of the publication and
mailing of all advertisements and notices required by this chapter
to be published and mailed.
(b) 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. 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. 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, may not include 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. Section 1.04(6), Tax Code, is amended to
read as follows:
(6) "Intangible personal property" means a claim,
interest (other than an interest in tangible property), right, or
other thing that has value but cannot be seen, felt, weighed,
measured, or otherwise perceived by the senses, although its
existence may be evidenced by a document. The term [It] includes:
(A) a stock, bond, note or account receivable,
franchise, license or permit, demand or time deposit, certificate
of deposit, share account, share certificate account, share deposit
account, insurance policy, annuity, pension, cause of action,
contract, and goodwill; and
(B) a tax receivable under Chapter 274, Local
Government Code, or a tax receivable certificate issued under that
chapter.
PART D. REAL PROPERTY SALES PRICE DISCLOSURE
SECTION 3D.01. Section 12.001, Property Code, is amended by
adding Subsections (e)-(g) to read as follows:
(e) 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) Subsection (e) does not apply to an instrument conveying
real property if the conveyance is made:
(1) pursuant to a court order or foreclosure sale;
(2) by a trustee in bankruptcy;
(3) by a mortgagor or a mortgagor's successor in
interest to a mortgagee or by a trustor or a trustor's successor in
interest to a beneficiary of a deed of trust;
(4) by a mortgagee or a beneficiary under a deed of
trust who has acquired the real property:
(A) at a sale conducted pursuant to a power of
sale under a deed of trust;
(B) at a sale pursuant to a court-ordered
foreclosure; or
(C) by a deed in lieu of foreclosure;
(5) by a fiduciary in the course of the administration
of a decedent's estate, guardianship, conservatorship, or trust;
(6) by one co-owner to one or more other co-owners;
(7) to a spouse or to a person or persons in the lineal
line of consanguinity of one or more of the transferors;
(8) between spouses and results from:
(A) a decree of dissolution of marriage;
(B) a decree of legal separation; or
(C) a property settlement agreement incidental
to a decree described by Paragraph (A) or (B); or
(9) to or from any governmental entity.
(g) The chief appraiser of the appraisal district
established for the county in which the property is located and the
county clerk by written agreement may establish a procedure for the
electronic transfer to the county clerk of the certificate required
by Subsection (e). 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. The heading to Subchapter C, Chapter 22, Tax
Code, is amended to read as follows:
SUBCHAPTER C. [OTHER] REPORTS OF POLITICAL SUBDIVISION ACTIONS
SECTION 3D.03. Chapter 22, Tax Code, is amended by adding
Subchapter D to read as follows:
SUBCHAPTER D. REPORT OF SALES PRICE
Sec. 22.61. SALES PRICE DISCLOSURE REPORT. (a) Except as
provided by Subsection (d), on the sale of real property the
purchaser of the property or a person acting on behalf of the
purchaser shall 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) A sales price disclosure report may be filed by
facsimile.
(c) The sales price disclosure report may be filed with the
chief appraiser before the sale of the property closes. If any
information required by the sales price disclosure report changes
after the report is filed with the chief appraiser, the person who
prepared the original report shall prepare, sign, and file with the
chief appraiser a supplemental sales price disclosure report
updating the information that changed. The supplemental report
shall be filed not later than the third day after the date the sale
of the property closed.
(d) This section does not apply to a sale of real property if
the sale is made:
(1) pursuant to a court order or foreclosure sale;
(2) by a trustee in bankruptcy;
(3) by a mortgagor or a mortgagor's successor in
interest to a mortgagee or by a trustor or a trustor's successor in
interest to a beneficiary of a deed of trust;
(4) by a mortgagee or a beneficiary under a deed of
trust who has acquired the real property:
(A) at a sale conducted pursuant to a power of
sale under a deed of trust;
(B) at a sale pursuant to a court-ordered
foreclosure; or
(C) by a deed in lieu of foreclosure;
(5) by a fiduciary in the course of the administration
of a decedent's estate, guardianship, conservatorship, or trust;
(6) by one co-owner to one or more other co-owners;
(7) to a spouse or to a person or persons in the lineal
line of consanguinity of one or more of the transferors;
(8) between spouses and results from:
(A) a decree of dissolution of marriage;
(B) a decree of legal separation; or
(C) a property settlement agreement incidental
to a decree described by Paragraph (A) or (B); or
(9) to or from any governmental entity.
Sec. 22.62. SIGNATURE REQUIRED. A sales price disclosure
report must be signed by the purchaser or by the person who prepares
the report.
Sec. 22.63. REPORT FORMS. (a) The comptroller shall
prescribe the form and content of a sales price disclosure report
filed under this subchapter. The comptroller shall ensure that
each form requires the person preparing the report to provide, at a
minimum:
(1) the seller's name and address;
(2) the purchaser's name and address;
(3) information necessary to identify the property and
to determine the property's location;
(4) the mailing address for tax notices concerning the
property;
(5) a description of the use of the property at the
time of sale;
(6) a statement of whether any personal property was
included in the sale and, if so, the estimated value of the personal
property;
(7) the method used to finance the sale;
(8) a statement of whether the property was offered
for sale to other potential purchasers;
(9) a statement of whether the purchaser holds title
to any adjoining property;
(10) the sales price of the property;
(11) the closing date of the sale; and
(12) the name and address of the person preparing the
report.
(b) A form may not require information not relevant to the
appraisal of property for tax purposes or to the assessment or
collection of property taxes.
(c) A person who prepares a sales price disclosure report
under this subchapter must:
(1) use the appropriate form prescribed by the
comptroller; and
(2) include all information required by the form.
Sec. 22.64. DELIVERY OF CERTIFICATE TO PURCHASER. (a)
Except as provided by Subsection (b), not later than the second day
after the date the sales price disclosure report is filed with the
chief appraiser, the chief appraiser shall provide to the purchaser
a certificate stating that the completed sales price disclosure
report has been filed.
(b) 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, the chief
appraiser may electronically transfer the certificate to the county
clerk. A chief appraiser that elects to electronically transfer
the certificate shall:
(1) transfer the certificate not later than the second
day after the date the sales price disclosure report is filed; and
(2) notify the purchaser in writing that the
certificate has been filed with the county clerk.
Sec. 22.65. PUBLICIZING REQUIREMENTS. (a) The comptroller
shall 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) The Texas Real Estate Commission shall assist the
comptroller in publicizing the information required by Subsection
(a) to title companies and attorneys.
(c) A chief appraiser shall 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) A sales price
disclosure report filed with a chief appraiser under this
subchapter is confidential and not open to public inspection. The
report and the information it contains about specific property or a
specific person may not be disclosed to another person other than an
employee of the appraisal office who appraises property except as
provided by Subsection (b).
(b) Information that is confidential under Subsection (a)
may be disclosed:
(1) in a judicial or administrative proceeding
pursuant to a lawful subpoena;
(2) to the person who filed the sales price disclosure
report, to the owner of the property described in the report, or to
a representative of the person who filed the report or the owner who
is authorized in writing to receive the information;
(3) to the comptroller and the comptroller's employees
authorized by the comptroller in writing to receive the information
or to an assessor or a chief appraiser if requested in writing;
(4) in a judicial or administrative proceeding
relating to property taxation:
(A) in which the person who filed the sales price
disclosure report is a party;
(B) in which the owner of the property described
in the report is a party;
(C) by the appraisal district for the purpose of
establishing the value of the property; or
(D) for the purpose of providing evidence of
comparable sales used to appraise another property;
(5) for statistical purposes if the information is
provided in a form that does not identify a specific property or a
specific property owner;
(6) if and to the extent the information is required to
be included in a public document or record that the appraisal office
is required to prepare or maintain; or
(7) to a taxing unit or its legal representative that
is engaged in the collection of delinquent taxes on the property
that is described in the report.
(c) 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:
(1) permits inspection of the confidential
information by a person not authorized by Subsection (b) to inspect
the information; or
(2) discloses the confidential information to a person
not authorized by Subsection (b) to receive the information.
(d) It is a defense to prosecution under Subsection (c) that
the person obtained the information from:
(1) a person described by Subsection (b)(2); or
(2) a record or document lawfully available to the
public.
(e) An offense under Subsection (c) is a Class B
misdemeanor.
Sec. 22.67. IMMUNITY FROM LIABILITY. 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. (a) Except as provided by Subsection (b) of
this section, this part 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.
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) Sections 3D.01, 3D.02, and 3D.03 of this part take
effect January 1, 2005.
(c) 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, the comptroller of public accounts shall:
(1) prescribe or approve sales price disclosure report
forms as provided by Section 22.63, Tax Code, as added by this part;
and
(2) begin to publicize the requirements of Subchapter
D, Chapter 22, Tax Code, as required by Section 22.65, Tax Code, as
added by this part.
(d) 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. Section 151.051(b), Tax Code, is amended to
read as follows:
(b) The sales tax rate is seven [6 1/4] percent of the sales
price of the taxable item sold.
SECTION 4A.02. Subchapter A, Chapter 151, Tax Code, is
amended by adding Section 151.0029 to read as follows:
Sec. 151.0029. BILLBOARD ADVERTISING SERVICE. (a)
"Billboard advertising service" means a service allowing a
purchaser to obtain outdoor advertising on a billboard, including
the rental of the billboard space.
(b) In this section, "billboard" means a sign that:
(1) is a separate and fixed structure directly
attached to land or a building;
(2) is designed to have its content changed at
frequent intervals in an economically feasible manner; and
(3) is designed to prominently display outdoor
advertising that is visible to the occupants of motor vehicles
driving by the sign.
SECTION 4A.03. Section 151.0038(b), Tax Code, is amended to
read as follows:
(b) In this section, "newspaper" means a publication that is
printed on newsprint, the average sales price of which for each copy
over a 30-day period does not exceed $1.50, and that is printed and
distributed at a daily, weekly, or other short interval for the
dissemination of news of a general character and of a general
interest. "Newspaper" does not include a magazine, handbill,
circular, flyer, sales catalog, or similar printed item unless the
printed item is printed for distribution as a part of a newspaper
and is actually distributed as a part of a newspaper. For the
purposes of this section, an advertisement is news of a general
character and of a general interest. Notwithstanding any other
provision of this subsection, "newspaper" includes:
(1) a publication containing articles and essays of
general interest by various writers and advertisements that is
produced for the operator of a licensed and certified carrier of
persons and distributed by the operator to its customers during
their travel on the carrier; and
(2) a publication for the dissemination of news of a
general character and of a general interest that is printed on
newsprint and distributed to the general public free of charge at a
daily, weekly, or other short interval [has the meaning assigned by
Section 151.319(f)].
SECTION 4A.04. Section 151.00394(b), Tax Code, is amended
to read as follows:
(b) "Internet access service" does not include [and the
exemption under Section 151.325 does not apply to] any other
taxable service listed in Section 151.0101(a), unless the taxable
service is provided in conjunction with and is merely incidental to
the provision of Internet access service.
SECTION 4A.05. Section 151.0101(a), Tax Code, is amended to
read as follows:
(a) "Taxable services" means:
(1) amusement services;
(2) cable television services;
(3) personal services;
(4) motor vehicle parking and storage services;
(5) the repair, remodeling, maintenance, and
restoration of tangible personal property, except:
(A) aircraft;
(B) a ship, boat, or other vessel, other than:
(i) a taxable boat or motor as defined by
Section 160.001;
(ii) a sports fishing boat; or
(iii) any other vessel used for pleasure;
(C) the repair, maintenance, and restoration of a
motor vehicle; and
(D) the repair, maintenance, creation, and
restoration of a computer program, including its development and
modification, not sold by the person performing the repair,
maintenance, creation, or restoration service;
(6) telecommunications services;
(7) credit reporting services;
(8) debt collection services;
(9) insurance services;
(10) information services;
(11) real property services;
(12) data processing services;
(13) real property repair and remodeling;
(14) security services;
(15) telephone answering services;
(16) Internet access service; [and]
(17) a sale by a transmission and distribution
utility, as defined in Section 31.002, Utilities Code, of
transmission or delivery of service directly to an electricity
end-use customer whose consumption of electricity is subject to
taxation under this chapter; and
(18) billboard advertising services.
SECTION 4A.06. Section 151.308(a), Tax Code, is amended to
read as follows:
(a) The following are exempted from the taxes imposed by
this chapter:
(1) oil as taxed by Chapter 202;
(2) sulphur as taxed by Chapter 203;
(3) motor fuels and special fuels as defined, taxed,
or exempted by Chapter 153;
(4) cement as taxed by Chapter 181;
(5) motor vehicles, trailers, and semitrailers as
defined, taxed, or exempted by Chapter 152, other than a mobile
office as defined by Section 152.001(16);
(6) [mixed beverages, ice, or nonalcoholic beverages
and the preparation or service of these items if the receipts are
taxable by Chapter 183;
[(7)] alcoholic beverages when sold to the holder of a
private club registration permit or to the agent or employee of the
holder of a private club registration permit if the holder or agent
or employee is acting as the agent of the members of the club and if
the beverages are to be served on the premises of the club;
(7) [(8)] oil well service as taxed by Subchapter E,
Chapter 191; and
(8) [(9)] insurance premiums subject to gross
premiums taxes.
SECTION 4A.07. Section 151.315, Tax Code, is amended to
read as follows:
Sec. 151.315. WATER. Water, other than water sold in a
sealed container with a volume of three gallons or less, is exempted
from the taxes imposed by this chapter.
SECTION 4A.08. Section 321.501(a), Tax Code, is amended to
read as follows:
(a) 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, the [The] comptroller shall
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. Section 321.503, Tax Code, is amended to
read as follows:
Sec. 321.503. STATE'S SHARE. Before sending any money to a
municipality under this subchapter the comptroller shall deduct two
percent of the amount of the municipality's share 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 shall[, subject to premiums payments under Section
321.501(c),] credit the money deducted to the general revenue fund.
SECTION 4A.10. Section 322.303, Tax Code, is amended to
read as follows:
Sec. 322.303. STATE'S SHARE. Before sending any money to a
taxing entity under this subchapter, the comptroller shall deduct
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. Section 323.501(a), Tax Code, is amended to
read as follows:
(a) 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, the [The] comptroller shall
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. Section 323.503, Tax Code, is amended to
read as follows:
Sec. 323.503. STATE'S SHARE. Before sending any money to a
county under this subchapter the comptroller shall deduct two
percent of the amount of the county's share of the 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
shall[, subject to premiums payments under Section 323.501(c),]
credit the money deducted to the general revenue fund.
SECTION 4A.13. The following provisions of the Tax Code are
repealed:
(1) Section 151.319;
(2) Section 151.320; and
(3) Section 151.325.
SECTION 4A.14. (a) 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) The exemption provided by this section expires January
1, 2007.
SECTION 4A.15. This part takes effect January 1, 2005.
PART B. [reserved]
PART C. BOAT AND MOTOR BOAT SALES AND USE TAX
SECTION 4C.01. Section 160.021(b), Tax Code, is amended to
read as follows:
(b) The tax rate is 7.75 [6 1/4] percent of the total
consideration.
SECTION 4C.02. Section 160.022(b), Tax Code, is amended to
read as follows:
(b) The tax rate is 7.75 [6 1/4] percent of the total
consideration.
SECTION 4C.03. This part takes effect January 1, 2005.
PART D. ADMISSIONS TAX
SECTION 4D.01. Subtitle E, Title 2, Tax Code, is amended by
adding Chapter 163 to read as follows:
CHAPTER 163. ADMISSION TO EVENTS
Sec. 163.001. SALES TAX. (a) A tax is imposed on each sale
of an admission ticket to an event described by Section 163.002.
(b) The tax rate is $1 on the sale of each ticket.
Sec. 163.002. TAXABLE EVENTS. (a) 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) The tax imposed under Section 163.001 applies to an
admission ticket purchased to:
(1) a professional athletic or amusement event in this
state;
(2) a permanently sited theme or amusement park in
this state; and
(3) a live performance, including a concert, show,
reading, or play.
Sec. 163.003. EXEMPTION. The tax imposed under Section
163.001 does not apply to an admission ticket purchased to an event:
(1) sponsored, produced, or affiliated with:
(A) a public or private primary or secondary
school; or
(B) 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
(2) if the net proceeds of the event are used only for
a charitable purpose.
Sec. 163.004. APPLICATION OF OTHER PROVISIONS OF CODE.
Except as provided by this chapter:
(1) 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
(2) 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. The comptroller shall
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. Section 154.021(b), Tax Code, is amended to
read as follows:
(b) The tax rates are:
(1) $70.50 [$20.50] per thousand on cigarettes
weighing three pounds or less per thousand; and
(2) the rate provided by Subdivision (1) plus $2.10
per thousand on cigarettes weighing more than three pounds per
thousand.
SECTION 5.02. Section 155.021(b), Tax Code, is amended to
read as follows:
(b) The tax rates are:
(1) 3.44 cents [one cent] per 10 or fraction of 10 on
cigars weighing three pounds or less per thousand;
(2) $25.80 [$7.50] per thousand on cigars that:
(A) weigh more than three pounds per thousand;
and
(B) sell at factory list price, exclusive of any
trade discount, special discount, or deal, for 3.3 cents or less
each;
(3) $37.84 [$11] per thousand on cigars that:
(A) weigh more than three pounds per thousand;
(B) sell at factory list price, exclusive of any
trade discount, special discount, or deal, for more than 3.3 cents
each; and
(C) contain no substantial amount of nontobacco
ingredients; and
(4) $51.60 [$15] per thousand on cigars that:
(A) weigh more than three pounds per thousand;
(B) sell at factory list price, exclusive of any
trade discount, special discount, or deal, for more than 3.3 cents
each; and
(C) contain a substantial amount of nontobacco
ingredients.
SECTION 5.03. Section 155.0211(b), Tax Code, is amended to
read as follows:
(b) The tax rate for tobacco products other than cigars is
40 [35.213] percent of the manufacturer's list price, exclusive of
any trade discount, special discount, or deal.
SECTION 5.04. This article takes effect January 1, 2005.
ARTICLE 6. TELECOMMUNICATIONS INFRASTRUCTURE FUND
SECTION 6.01. Section 57.048, Utilities Code, is amended by
amending Subsections (c) and (d) and adding Subsections (f)-(i) to
read as follows:
(c) The total amount deposited to the credit of the fund,
excluding interest and loan repayments, may not exceed $2 [$1.75]
billion. Not later than August 31 of each year, the comptroller
shall 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. If the comptroller
determines that a total of $1.75 [$1.5] billion or more, excluding
interest and loan repayments, has been deposited to the credit of
the fund, the comptroller shall 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 [$1.75] billion,
excluding interest and loan repayments.
(d) 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 [$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 [$1.75]
billion, excluding interest and loan repayments.
(f) Notwithstanding any other provision of this title, a
certificated telecommunications utility may 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. A certificated
telecommunications utility may 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. The utility may
recover the assessment through a monthly billing process.
(g) The comptroller shall 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) Not later than February 15 of each year, a certificated
telecommunications utility that wants to recover the assessment
under Subsection (f) shall file with the commission 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) The commission shall maintain the confidentiality of
information the commission receives under this section that is
claimed to be confidential for competitive purposes. The
confidential information is exempt from disclosure under Chapter
552, Government Code.
SECTION 6.02. Section 57.051, Utilities Code, is amended to
read as follows:
Sec. 57.051. SUNSET PROVISION. The Telecommunications
Infrastructure Fund [Board] is subject to Chapter 325, Government
Code (Texas Sunset Act). Unless continued in existence as provided
by that chapter, [the board is abolished and] this subchapter
expires September 1, 2007 [2005].
SECTION 6.03. (a) 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) 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) 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.
If that amendment is not approved by the voters, this Act has no
effect.
(b) 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.