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By: Hochberg H.B. No. 45
A BILL TO BE ENTITLED
AN ACT
relating to public school finance; authorizing an ad valorem tax
collected by the state at rates set by individual school districts;
and providing for the distribution of that tax equitably to school
districts for the maintenance and operation of public schools.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 42.002, Education Code, is amended to
read as follows:
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 [a basic] instructional program and facilities suitable
to the student's educational needs[; and
[(2) access to a substantially equalized program of
financing in excess of basic costs for certain services, as
provided by this chapter].
(b) The Foundation School Program consists of:
(1) a basic entitlement [two tiers] that provides [in
combination provide] for:
(A) sufficient financing for all school
districts to provide a basic program of education that is rated
recognized [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.
SECTION 2. Subchapter A, Chapter 42, Education Code, is
amended by adding Section 42.0051 to read as follows:
Sec. 42.0051. STUDENT COUNT. For purposes of this chapter,
the student count is the number of students in average daily
attendance, the number of full-time equivalent students, or the
number of students enrolled, as appropriate, in a regular education
program or an educational program described by Chapter 29.
SECTION 3. Section 42.007(c), Education Code, is amended to
read as follows:
(c) The funding elements must include:
(1) an amount [a basic allotment] for the purposes of
Section 42.101 that, when multiplied by the statewide average
school district maintenance and operations tax rate for the final
year of the preceding state fiscal biennium [combined with the
guaranteed yield component provided by Subchapter F], represents
the cost per student of a regular education program that is rated
recognized or higher under Section 39.072 and meets all other
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 Subchapters A-D
and F, Chapter 29 [Subchapter C], with the program funding level
expressed as [dollar amounts and as] weights applied to the student
count [adjusted basic allotment] for the appropriate year; and
(4) [the maximum guaranteed level of qualified state
and local funds per student for the purposes of Subchapter F;
[(5) the enrichment and facilities tax rate under
Subchapter F;
[(6) the computation of students in weighted average
daily attendance under Section 42.302; and
[(7)] the amount to be appropriated for the school
facilities assistance program under Chapter 46.
SECTION 4. Subchapter B, Chapter 42, Education Code, is
amended to read as follows:
SUBCHAPTER B. BASIC ENTITLEMENT
Sec. 42.101. GUARANTEED AMOUNT. Each school district is
guaranteed a specified amount per weighted student in state funds.
The amount of state support is determined by the formula:
GA = SA X WADA X DTR X ER
where:
"GA" is the guaranteed amount of state funds to be allocated
to the district;
"SA" is the student allotment, which is $_____ or a greater
amount for any year provided by appropriation;
"DTR" is the maintenance and operations tax rate imposed by
the district as provided by Section 45.252;
"ER" is exemption ratio for the district which is the
quotient of the taxable property value in the district for the
preceding tax year determined under Subchapter M, Chapter 403,
Government Code, reduced by the total taxable property value of all
exemptions, abatements and similar reductions in property value
granted by the district except those that are reduced from the
taxable value under Section 403.302(d), Government Code, divided by
the taxable property value in the district.
"WADA" is the number of students in weighted average daily
attendance, which is the sum of the school district's student count
for each educational program for which a program weight is provided
by Section 42.102.
Sec. 42.102. PROGRAM WEIGHTS. (a) In this section:
(1) "Career and technology education program" means a
program under Subchapter F, Chapter 29.
(2) "Full-time equivalent student" means 30 hours of
contact a week between a student and program personnel.
(3) "Special education program" means a program under
Subchapter A, Chapter 29.
(b) The program weights are:
(1) 1.0 for a student in average daily attendance, not
including time the student spends each day in a special education
program in an instructional arrangement other than mainstream or in
a career and technology education program;
(2) 1.1 for a student in a special education program in
a mainstream instructional arrangement;
(3) 5.0 for a full-time equivalent student in a
special education program in a homebound instructional
arrangement;
(4) 3.0 for a full-time equivalent student in a
special education program in a hospital class instructional
arrangement;
(5) 5.0 for a full-time equivalent student in a
special education program in a speech therapy instructional
arrangement;
(6) 3.0 for a full-time equivalent student in a
special education program in a resource room instructional
arrangement;
(7) 3.0 for a full-time equivalent student in a
special education program in a self-contained, mild and moderate,
regular campus instructional arrangement;
(8) 3.0 for a full-time equivalent student in a
special education program in a self-contained, severe, regular
campus instructional arrangement;
(9) 2.7 for a full-time equivalent student in a
special education program in an off-home-campus instructional
arrangement;
(10) 1.7 for a full-time equivalent student in a
special education program in a nonpublic day school;
(11) 2.3 for a full-time equivalent student in a
special education program vocational adjustment class;
(12) 4.0 for a student in a special education program
who resides in a residential care and treatment facility, other
than a state school, whose parent or guardian does not reside in the
district and who receives educational services from a local school
district;
(13) 2.8 for a student in a special education program
who resides in a state school;
(14) 0.2 for a student who is educationally
disadvantaged or who is a student who does not have a disability and
resides in a residential placement facility in a district in which
the student's parent or guardian does not reside;
(15) 2.41 for a full-time equivalent student who is in
a compensatory, intensive, or accelerated program under Section
29.081 because the student is pregnant;
(16) 0.1 for a student who is in a bilingual education
or special language program under Subchapter B, Chapter 29;
(17) 1.35 for a full-time equivalent student in an
approved career and technology education program in grades nine
through 12 or in a career and technology program for students with
disabilities in grades seven through 12;
(18) 0.12 for a student in a program for gifted and
talented students that the district certifies to the commissioner
as complying with Subchapter D, Chapter 29; and
(19) except as provided by Subsection (c), 0.1 for a
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.
(c) The total number of weights under Subsection (b)(19) to
which a 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.
Sec. 42.103. [BASIC ALLOTMENT. For each student in average
daily attendance, not including the time students spend each day in
special education programs in an instructional arrangement other
than mainstream or career and technology education programs, for
which an additional allotment is made under Subchapter C, a
district is entitled to an allotment of $2,537. A greater amount
for any school year may be provided by appropriation.
[Sec. 42.102.] COST OF EDUCATION ADJUSTMENT. (a) The
guaranteed amount ("GA") under Section 42.101 [basic allotment] for
each district is adjusted to reflect the geographic variation in
known resource costs and costs of education due to factors beyond
the control of the school district.
(a-1) For the 2005-2006 school year, the [(b) The] cost of
education adjustment is the cost of education index adjustment
adopted by the foundation school fund budget committee and
contained in Chapter 203, Title 19, Texas Administrative Code, as
that chapter existed on March 26, 1997.
(b) The Legislative Budget Board shall conduct a study each
biennium and shall recompute the cost of education index and adopt
adjustments as the board determines are necessary to ensure that
the cost of education index reflects current variations in known
resource costs and costs of education due to factors beyond the
control of a school district. The board's determination is final
and may not be appealed.
(c) From funds appropriated for the purpose, the
Legislative Budget Board may contract with one or more public or
private entities for studies to assist with the board's
recomputation and adjustments. Subject to appropriate notice and
opportunity for public comment, the board may adopt rules necessary
to implement this section.
(c-1) For the 2006-2007 and 2007-2008 school years, the cost
of education index is the average of the cost of education index as
provided by Subsection (a-1) and the initial recomputation and
adjustment of the cost of education index adopted by the
Legislative Budget Board in accordance with Subsection (b).
(d) The cost of education index is the average of the two
most recent recomputations and adjustments adopted by the
Legislative Budget Board under Subsection (b).
(e) Subsection (d) applies beginning with the 2008-2009
school year. Subsections (a-1) and (c-1) and this subsection
expire September 1, 2008.
Sec. 42.104 [42.103]. SMALL AND MID-SIZED DISTRICT
ADJUSTMENT. (a) The guaranteed amount ("GA") under Section 42.101
[basic allotment] for certain small and mid-sized districts is
adjusted in accordance with this section. In this section:
(1) ["AA" is the district's adjusted allotment per
student;
[(2)] "ADA" is the number of students in average daily
attendance for which the district is entitled to funding [an
allotment] under Section 42.101; [and]
(2) "AGA" [(3) "ABA"] is the adjusted guaranteed
amount as [basic allotment] determined under Section 42.103; and
(3) "SAGA" is the district's size-adjusted guaranteed
amount [42.102].
(b) The guaranteed amount ("GA") under Section 42.101
[basic allotment] of a school district that contains at least 300
square miles and has not more than 1,600 students in average daily
attendance is adjusted by applying the formula:
SAGA [AA] = (1 + ((1,600 - ADA) X .0004)) X AGA [ABA]
(c) The guaranteed amount ("GA") under Section 42.101
[basic allotment] of a school district that contains less than 300
square miles and has not more than 1,600 students in average daily
attendance is adjusted by applying the formula:
SAGA [AA] = (1 + ((1,600 - ADA) X .00025)) X AGA [ABA]
(d) The guaranteed amount ("GA") under Section 42.101
[basic allotment] of a school district that offers a kindergarten
through grade 12 program and has less than 5,000 students in average
daily attendance is adjusted by applying the formula, of the
following formulas, that results in the greatest adjusted
allotment:
(1) the formula in Subsection (b) or (c) for which the
district is eligible; or
(2) SAGA [AA] = (1 + ((5,000 - ADA) X .000025)) X AGA
[ABA].
[(e) The commissioner may make the adjustment authorized by
Subsection (d)(2) only if the district's wealth per student does
not exceed the equalized wealth level under Section 41.002. For
purposes of this subsection, a district's wealth per student is
determined in the manner provided by Section 41.001, except that
the adjustment provided by Subsection (d)(2) is not used in
computing the number of students in weighted average daily
attendance.
[Sec. 42.104. USE OF SMALL OR MID-SIZED DISTRICT ADJUSTMENT
IN CALCULATING SPECIAL ALLOTMENTS. In determining the amount of a
special allotment under Subchapter C for a district to which
Section 42.103 applies, a district's adjusted basic allotment is
considered to be the district's adjusted allotment determined under
Section 42.103.]
Sec. 42.105. SPARSITY ADJUSTMENT. Notwithstanding
Sections 42.101, [42.102, and] 42.103, and 42.104:
(1) a school district that has fewer than 130 students
in average daily attendance is entitled to [shall be provided] an
adjusted guaranteed amount [basic allotment] on the basis of 130
students in average daily attendance if it offers a kindergarten
through grade 12 program and has preceding or current year's
average daily attendance of at least 90 students or is 30 miles or
more by bus route from the nearest high school district;
(2) a school [. A] district that offers [offering] a
kindergarten through grade 8 program and has [whose] preceding or
current year's average daily attendance of [was] at least 50
students or that [which] is 30 miles or more by bus route from the
nearest high school district is entitled to [shall be provided] an
adjusted guaranteed amount [basic allotment] on the basis of 75
students in average daily attendance; and
(3) [. An average daily attendance of 60 students
shall be the basis of providing the adjusted basic allotment if] a
school district that offers a kindergarten through grade 6 program
and has preceding or current year's average daily attendance of at
least 40 students or that is 30 miles or more by bus route from the
nearest high school district is entitled to an adjusted guaranteed
amount on the basis of 60 students in average daily attendance.
[Sec. 42.106. ADJUSTED PROPERTY VALUE FOR DISTRICTS NOT
OFFERING ALL GRADE LEVELS. For purposes of this chapter, the
taxable value of property of a school district that contracts for
students residing in the district to be educated in another
district under Section 25.039(a) is adjusted by applying the
formula:
[ADPV - DPV - (TN/.015)
[where:
["ADPV" is the district's adjusted taxable value of property;
["DPV" is the taxable value of property in the district for
the preceding tax year determined under Subchapter M, Chapter 403,
Government Code; and
["TN" is the total amount of tuition required to be paid by
the district under Section 25.039 for the school year for which the
adjustment is made, not to exceed the amount specified by
commissioner rule under Section 25.039(b).]
SECTION 5. The heading to Subchapter C, Chapter 42,
Education Code, is amended to read as follows:
SUBCHAPTER C. LIMITATIONS ON PROGRAM [SPECIAL] ALLOTMENTS;
ADDITIONAL ALLOTMENTS
SECTION 6. The heading to Section 42.151, Education Code,
is amended to read as follows:
Sec. 42.151. SPECIAL EDUCATION PROGRAMS.
SECTION 7. Sections 42.151(e), (h), (k), and (l), Education
Code, are amended to read as follows:
(e) The State Board of Education by rule shall prescribe the
qualifications an instructional arrangement must meet in order to
be funded as a particular instructional arrangement under this
chapter [section]. In prescribing the qualifications that a
mainstream instructional arrangement must meet, the board shall
establish requirements that students with disabilities and their
teachers receive the direct, indirect, and support services that
are necessary to enrich the regular classroom and enable student
success.
(h) Funds allocated under this chapter for special
education programs [section], other than an indirect cost allotment
established under State Board of Education rule, must be used in the
special education program under Subchapter A, Chapter 29.
(k) A school district that provides an extended year program
required by federal law for special education students who may
regress is entitled to receive funds in an amount equal to 75
percent, or a lesser percentage determined by the commissioner, of
the guaranteed amount [adjusted basic allotment or adjusted
allotment, as applicable,] for each full-time equivalent student in
average daily attendance, multiplied by the amount designated for
the student's instructional arrangement under Section 42.102(b)
[this section], for each day the program is provided divided by the
number of days in the minimum school year. The total amount of
state funding for extended year services under this subsection
[section] may not exceed $10 million per year. A school district
may use funds received under this subsection [section] only in
providing an extended year program.
(l) From the total amount of funds appropriated for special
education programs under this chapter [section], the commissioner
shall withhold an amount specified in the General Appropriations
Act, and distribute that amount to school districts for programs
under Section 29.014. The program established under that section
is required only in school districts in which the program is
financed by funds distributed under this subsection and any other
funds available for the program. After deducting the amount
withheld under this subsection from the total amount appropriated
for special education, the commissioner shall reduce each
district's allotment proportionately and shall allocate funds to
each district accordingly.
SECTION 8. The heading to Section 42.152, Education Code,
is amended to read as follows:
Sec. 42.152. COMPENSATORY EDUCATION PROGRAMS [ALLOTMENT].
SECTION 9. Sections 42.152(b) and (c), Education Code, are
amended to read as follows:
(b) For purposes of Section 42.102(b)(14) [this section],
the number of educationally disadvantaged students is determined:
(1) by averaging the best six months' enrollment in the
national school lunch program of free or reduced-price lunches for
the preceding school year; or
(2) in the manner provided by commissioner rule, if no
campus in the district participated in the national school lunch
program of free or reduced-price lunches during the preceding
school year.
(c) Funds allocated under Sections 42.102(b)(14) and (15)
[this section] shall be used to fund supplemental programs and
services designed to eliminate any disparity in performance on
assessment instruments administered under Subchapter B, 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. Specifically, the funds, other
than an indirect cost allotment established under State Board of
Education rule, which may not exceed 15 percent, may be used to meet
the costs of providing a compensatory, intensive, or accelerated
instruction program under Section 29.081 or an alternative
education program established under Section 37.008 or to support a
program eligible under Title I of the Elementary and Secondary
Education Act of 1965, as provided by Pub. L. No. 103-382 and its
subsequent amendments, and by federal regulations implementing
that Act, at a campus at which at least 40 percent of the students
are educationally disadvantaged. In meeting the costs of providing
a compensatory, intensive, or accelerated instruction program
under Section 29.081, a district's compensatory education
allotment shall be used for costs supplementary to the regular
education program, such as costs for program and student
evaluation, instructional materials and equipment and other
supplies required for quality instruction, supplemental staff
expenses, salary for teachers of at-risk students, smaller class
size, and individualized instruction. A home-rule school district
or an open-enrollment charter school must use funds allocated under
Sections 42.102(b)(14) and (15) [Subsection (a)] for a purpose
authorized in this subsection but is not otherwise subject to
Subchapter C, Chapter 29. Notwithstanding any other provisions of
this section:
(1) to ensure that a sufficient amount of the funds
allotted under Sections 42.102(b)(14) and (15) [this section] are
available to supplement instructional programs and services, no
more than 18 percent of the funds allotted under Sections
42.102(b)(14) and (15) [this section] may be used to fund
disciplinary alternative education programs established under
Section 37.008;
(2) the commissioner may waive the limitations of
Subdivision (1) upon an annual petition, by a district's board and a
district's site-based decision making committee, presenting the
reason for the need to spend supplemental compensatory education
funds on disciplinary alternative education programs under Section
37.008, provided that:
(A) the district in its petition reports the
number of students in each grade level, by demographic subgroup,
not making satisfactory progress under the state's assessment
system; and
(B) the commissioner makes the waiver request
information available annually to the public on the agency's
website; and
(3) for purposes of this subsection, a program
specifically designed to serve students at risk of dropping out of
school, as defined by Section 29.081, is considered to be a program
supplemental to the regular education program, and a district may
use its compensatory education allotment for such a program.
SECTION 10. Section 42.152(c-1), Education Code, as added
by Chapter 253, Acts of the 78th Legislature, Regular Session,
2003, is amended to read as follows:
(c-1) Notwithstanding Subsection (c), funds allocated under
Sections 42.102(b)(14) and (15) [this section] may be used to fund
in proportion to the percentage of students served by the program
that meet the criteria in Section 29.081(d) or (g):
(1) an accelerated reading instruction program under
Section 28.006(g); or
(2) a program for treatment of students who have
dyslexia or a related disorder as required by Section 38.003.
SECTION 11. Section 42.152(c-1), Education Code, as added
by Chapter 783, Acts of the 78th Legislature, Regular Session,
2003, is redesignated as Section 42.152(c-2), Education Code, and
amended to read as follows:
(c-2) [(c-1)] Notwithstanding Subsection (c), funds
allocated under Sections 42.102(b)(14) and (15) [this section] may
be used to fund a district's mentoring services program under
Section 29.089.
SECTION 12. Sections 42.152(e), (f), and (h)-(p), Education
Code, are amended to read as follows:
(e) The commissioner may:
(1) retain a portion of the total amount allotted
under Sections 42.102(b)(14) and (15) [Subsection (a)] that the
commissioner considers appropriate to finance [intensive
accelerated instruction programs and] study guides provided under
Section 39.024(c) [Sections 39.024(b) and (c)]; and
(2) reduce each district's guaranteed amount [tier one
allotments] in the same manner described for a reduction in
allotments under Section 42.253.
(f) From the total amount of funds appropriated for
allotments under Sections 42.102(b)(14) and (15) [this section],
the commissioner shall, each fiscal year, withhold an amount to be
determined by the commissioner, but not less than $10,000,000, and
distribute that amount for programs under Section 29.085. In
distributing those funds, preference shall be given to a school
district that received funds for a program under Section 29.085 for
the preceding school year. The program established under that
section is required only in school districts in which the program is
financed by funds distributed under Sections 42.102(b)(14) and (15)
[this section] and any other funds available for the program.
(h) After deducting the amount withheld under Subsection
(f) from the total amount appropriated for the allotment under
Sections 42.102(b)(14) and (15) [Subsection (a)], the commissioner
shall reduce each district's tier one allotments in the same manner
described for a reduction in allotments under Section 42.253 and
shall allocate funds to each district accordingly.
(i) From the total amount of funds appropriated for
allotments under Sections 42.102(b)(14) and (15) [this section],
the commissioner shall, each fiscal year, withhold $7,500,000 or a
greater amount as determined in the General Appropriations Act and
distribute that amount 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 Sections 42.102(b)(14) and (15) [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 under
this subsection for the preceding school year.
(j) The commissioner shall coordinate the funds withheld
under Subsection (i) and any other funds available for the program
and shall distribute those funds. To receive funds for the program,
a school district must apply to the commissioner. The commissioner
shall give a preference to the districts that apply that have the
highest concentration of at-risk students. For each school year
that a school district receives funds under Sections 42.102(b)(14)
and (15) [this section], the district shall allocate an amount of
local funds for school guidance and counseling programs that is
equal to or greater than the amount of local funds that the school
district allocated for that purpose during the preceding school
year.
(k) After deducting the amount withheld under Subsection
(i) from the total amount appropriated for the allotment under
Sections 42.102(b)(14) and (15) [Subsection (a)], the commissioner
shall reduce each district's tier one allotments in the same manner
described for a reduction in allotments under Section 42.253.
(l) From the total amount of funds appropriated for
allotments under Sections 42.102(b)(14) and (15) [this section],
the commissioner shall, each fiscal year, withhold the amount of
$2.5 million for transfer to the investment capital fund under
Section 7.024.
(m) From the total amount of funds appropriated for
allotments under Sections 42.102(b)(14) and (15) [this section],
the commissioner may withhold an amount not exceeding $1 million
each fiscal year and distribute the funds to school districts that
incur unanticipated expenditures resulting from a significant
increase in the enrollment of students who do not have disabilities
and who reside in residential placement facilities.
(n) After deducting the amount withheld under Subsection
(l) from the total amount appropriated for the allotment under
Sections 42.102(b)(14) and (15) [Subsection (a)], the commissioner
shall reduce each district's allotment under Sections
42.102(b)(14) and (15) [Subsection (a)] proportionately and shall
allocate funds to each district accordingly.
(o) After deducting the amount withheld under Subsection
(m) from the total amount appropriated for the allotment under
Sections 42.102(b)(14) and (15) [Subsection (a)], the commissioner
shall reduce each district's allotment under Sections
42.102(b)(14) and (15) [Subsection (a)] proportionately.
(p) The commissioner shall:
(1) withhold, from the total amount of funds
appropriated for allotments under Sections 42.102(b)(14) and (15)
[this section], an amount sufficient to finance extended year
programs under Section 29.082 not to exceed five percent of the
amounts allocated under Sections 42.102(b)(14) and (15) [this
section]; and
(2) give priority to applications for extended year
programs to districts with high concentrations of educationally
disadvantaged students.
SECTION 13. The heading to Section 42.153, Education Code,
is amended to read as follows:
Sec. 42.153. BILINGUAL EDUCATION PROGRAMS [ALLOTMENT].
SECTION 14. Section 42.153(b), Education Code, is amended
to read as follows:
(b) Funds allocated under Section 42.102(b)(16) [this
section], other than an indirect cost allotment established under
State Board of Education rule, must be used in providing bilingual
education or special language programs under Subchapter B, Chapter
29, and must be accounted for under existing agency reporting and
auditing procedures.
SECTION 15. The heading to Section 42.154, Education Code,
is amended to read as follows:
Sec. 42.154. CAREER AND TECHNOLOGY EDUCATION PROGRAMS
[ALLOTMENT].
SECTION 16. Sections 42.154(c) and (e), Education Code, are
amended to read as follows:
(c) Funds allocated under Section 42.102(b)(17) [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.
(e) Out of the total statewide allotment for career and
technology education under Section 42.102(b)(17) [this section],
the commissioner shall set aside an amount specified in the General
Appropriations Act, which may not exceed an amount equal to one
percent of the total amount appropriated, to support regional
career and technology education planning. After deducting the
amount set aside under this subsection from the total amount
appropriated for career and technology education under Section
42.102(b)(17) [this section], the commissioner shall reduce each
district's tier one allotments in the same manner described for a
reduction in allotments under Section 42.253.
SECTION 17. The heading to Section 42.156, Education Code,
is amended to read as follows:
Sec. 42.156. GIFTED AND TALENTED STUDENT PROGRAMS
[ALLOTMENT].
SECTION 18. Sections 42.156(b)-(f), Education Code, are
amended to read as follows:
(b) Funds allocated under Section 42.102(b)(18) [this
section], other than the amount that represents the program's share
of general administrative costs, must be used in providing programs
for gifted and talented students under Subchapter D, Chapter 29,
including programs sanctioned by International Baccalaureate and
Advanced Placement, or in developing programs for gifted and
talented students. Each district must account for the expenditure
of state funds as provided by rule of the State Board of Education.
If by the end of the 12th month after receiving an allotment for
developing a program a district has failed to implement a program,
the district must refund the amount of the allotment to the agency
within 30 days.
(c) Not more than five percent of a district's students in
average daily attendance are eligible for funding under Section
42.102(b)(18) [this section].
(d) If the amount of state funds for which school districts
are eligible under Section 42.102(18) [this section] exceeds the
amount of state funds appropriated in any year for the programs, the
commissioner shall reduce each district's tier one allotments in
the same manner described for a reduction in allotments under
Section 42.253.
(e) If the total amount of funds allotted under Section
42.102(b)(18) [this section] before a date set by rule of the State
Board of Education is less than the total amount appropriated for a
school year, the commissioner shall transfer the remainder to any
program for which an allotment under Section 42.102(b)(14) or (15)
[42.152] may be used.
(f) After each district has received allotted funds for this
program, the State Board of Education may use up to $500,000 of the
funds allocated under Section 42.102(b)(18) [this section] for
programs such as MATHCOUNTS, Future Problem Solving, Odyssey of the
Mind, and Academic Decathlon, as long as these funds are used to
train personnel and provide program services. To be eligible for
funding under this subsection, a program must be determined by the
State Board of Education to provide services that are effective and
consistent with the state plan for gifted and talented education.
SECTION 19. Section 42.251, Education Code, is amended to
read as follows:
Sec. 42.251. FINANCING; GENERAL RULE. (a) The sum of the
guaranteed amounts [basic allotment] under Subchapter B, the
transportation allotments under Section 42.155, and the new
instructional facility allotments [special allotments] under
Section 42.158 [Subchapter C], computed in accordance with this
chapter, constitute the [tier one allotments. The sum of the tier
one allotments and the guaranteed yield allotments under Subchapter
F, computed in accordance with this chapter, constitute the] total
cost of the Foundation School Program.
(b) The program shall be financed by:
(1) ad valorem tax revenue deposited in the Texas
education trust as required by Sections 1A and 3(e), Article VII,
Texas Constitution [generated by an equalized uniform school
district effort;
[(2) ad valorem tax revenue generated by local school
district effort in excess of the equalized uniform school district
effort];
(2) [(3)] state available school funds distributed in
accordance with law; and
(3) [(4)] state funds appropriated for the purposes of
public school education and allocated to each district in an amount
sufficient to finance the cost of each district's Foundation School
Program not covered by other funds specified in this subsection.
SECTION 20. Sections 42.253(a)-(c) and (g)-(i), Education
Code, are amended to read as follows:
(a) For each school year the commissioner shall determine:
(1) the amount of money to which a school district is
entitled under Subchapters B and C; and
(2) [the amount of money to which a school district is
entitled under Subchapter F;
[(3)] the amount of money allocated to the district
from the available school fund[;
[(4) the amount of each district's tier one local share
under Section 42.252; and
[(5) the amount of each district's tier two local share
under Section 42.302].
(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 42.254, 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 42.254 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 amount determined
under Subsection [sum of Subsections] (a)(1) and the amount
determined under Subsection (a)(2) [and the sum of Subsections
(a)(3), (a)(4), and (a)(5)]. The comptroller shall pay a
district's entitlement under this subsection from the Texas
education trust and the foundation school fund in the proportions
provided by the General Appropriations Act.
(g) If a school district demonstrates to the satisfaction of
the commissioner that the estimate of the district's tax rate or [,]
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, including funds in the reserve account. Funds in the
reserve account may not be used under this subsection until any
reserve funds have been used for purposes of Subsection (f).
(h) If the legislature fails during the regular session to
enact the transfer and appropriation proposed under Subsection (f)
and there are not funds available under Subsection (j), the
commissioner shall reduce the total amount of state funds allocated
to each district proportionately [by an amount determined by a
method under which the application of the same number of cents of
increase in tax rate in all districts applied to the taxable value
of property of each district, as determined under Subchapter M,
Chapter 403, Government Code, results in a total levy equal to the
total reduction]. The following fiscal year, a district's
entitlement under this section is increased by an amount equal to
the reduction made under this subsection.
(i) 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 the allocation formulas in 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 or [,] student enrollment, [or taxable value of property,] the
commissioner shall adjust the district's entitlement for the next
fiscal year accordingly.
SECTION 21. Subchapter E, Chapter 42, Education Code, is
amended by adding Section 42.256 to read as follows:
Sec. 42.256. TEXAS EDUCATION TRUST AND FOUNDATION SCHOOL
FUND TRANSFERS. The comptroller shall make payments from the Texas
education trust and the foundation school fund to each school
district as follows:
(1) the comptroller shall pay 15 percent of the yearly
entitlement of the district under this chapter in an installment to
be made on or before the 25th day of September of a fiscal year;
(2) the comptroller shall pay 80 percent of the yearly
entitlement of the district under this chapter 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) the comptroller shall pay five percent of the
yearly entitlement of the district under this chapter in an
installment to be made on or before the 25th day of February.
SECTION 22. The heading to Subchapter A, Chapter 45,
Education Code, is amended to read as follows:
SUBCHAPTER A. TAX BONDS [AND MAINTENANCE TAXES]
SECTION 23. Section 45.003(a), Education Code, is amended
to read as follows:
(a) Bonds described by Section 45.001 may not be issued and
taxes described by that section [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.
SECTION 24. Chapter 45, Education Code, is amended by
adding Subchapter I to read as follows:
SUBCHAPTER I. TEXAS EDUCATION TRUST
Sec. 45.251. TEXAS EDUCATION TRUST. The Texas education
trust is a fund maintained by the comptroller within the general
revenue fund. The Texas education trust consists of the tax revenue
allocated to the trust under Sections 1A and 3(e), Article VII,
Texas Constitution.
Sec. 45.252. AD VALOREM TAX. (a) An ad valorem tax for
elementary and secondary public school purposes is imposed on all
taxable real and tangible personal property in this state.
(b) The tax is imposed in each school district at the rate
adopted by the board of trustees of the district. The rate may not
exceed $____ on the $100 valuation of taxable property.
(c) A residence homestead exemption granted under Section
11.13(b), (c), or (n), Tax Code, a limitation on tax increases or
the appraised value of a residence homestead under Section 11.26,
Tax Code, or a limitation on the appraised value of a residence
homestead under Section 23.23, Tax Code, that applies to school
district ad valorem taxes applies to the ad valorem tax authorized
under this section.
(d) Subsection (c) and Sections 45.253 and 45.254 apply only
in connection with the appraisal of property and the collection of
the ad valorem tax in a school district in which the levy,
assessment, and collection of the tax has been approved under
Subsection (b).
(e) Except as otherwise provided by law, the state shall be
treated, for purposes of this ad valorem tax, as a taxing unit under
Title 1, Tax Code, that participates in each appraisal district
established under that title. The comptroller and the state do not
participate in the election of the board of directors of an
appraisal district, the governance or management of the district,
or the determination of the district's finances and budget.
Sec. 45.253. APPRAISAL OF PROPERTY. (a) Property subject
to the ad valorem tax authorized under Section 42.252 shall be
appraised for taxation by the appraisal district established for
the county in which the property has taxable situs under Chapter 21,
Tax Code.
(b) Property subject to the ad valorem tax authorized under
Section 42.252 shall be appraised in the manner provided by Title 1,
Tax Code, for the appraisal of property that is subject to ad
valorem taxation by a county.
Sec. 45.254. TAX COLLECTION. (a) The assessor-collector
for each county shall assess and collect ad valorem taxes
authorized under Section 42.252 imposed on property included on the
appraisal roll for such taxation certified to the county
assessor-collector under Section 26.01, Tax Code, unless the
commissioners court of a county contracts with an official, taxing
unit, or political subdivision of this state for the assessment or
collection of the ad valorem taxes of the county, in which event the
official, taxing unit, or political subdivision shall also assess
or collect, as applicable, the ad valorem taxes authorized under
Section 42.252.
(b) Each assessor or collector of ad valorem taxes
authorized under Section 42.252 is entitled to be reimbursed by the
comptroller for the actual costs incurred by the assessor or
collector in assessing or collecting such ad valorem taxes.
However, an assessor or collector is not entitled to be reimbursed
for any amount that is greater than the additional incremental
costs incurred in assessing or collecting such ad valorem taxes.
(c) The comptroller shall:
(1) prescribe methods of accounting for and remitting
such ad valorem taxes;
(2) prescribe methods for establishing an assessor's
or collector's additional incremental costs incurred in assessing
or collecting such ad valorem taxes;
(3) prescribe and furnish forms for periodic reports
relating to such ad valorem taxes; and
(4) periodically examine the records of each assessor
or collector of such ad valorem taxes to verify the accuracy of any
reports required under this subsection.
Sec. 45.255. DUTIES AND POWERS OF COMPTROLLER. (a) Except
as otherwise provided by this subchapter, a duty imposed on or power
granted to the governing body of a taxing unit by Title 1 or Chapter
312, Tax Code, may, for purposes of the ad valorem tax authorized
under Section 42.252, be exercised by the comptroller. A reference
to the presiding officer of a governing body in Title 1 or Chapter
312, Tax Code, is a reference to the comptroller for the purposes of
the tax under authorized under Section 42.252.
(b) The comptroller may delegate to the county
assessor-collector any function of the comptroller with respect to
such ad valorem tax and may designate the county assessor-collector
as the comptroller's agent for purposes of administration of the ad
valorem tax.
Sec. 45.256. ADMINISTRATION AND REFUND ACCOUNTS. The
comptroller shall deposit to the credit of the general revenue fund
in appropriately designated accounts an amount of revenue collected
from the ad valorem tax authorized under Section 42.252 to pay for
the comptroller's expenses in administering this subchapter and for
the payment of tax refunds that may become payable.
Sec. 45.257. NONAPPLICABILITY OF CERTAIN OTHER TAX LAWS.
Title 2, Tax Code, does not apply to the ad valorem tax authorized
under Section 42.252.
Sec. 45.258. TAX INCREMENT FINANCING. (a) Except as
otherwise provided by this section, the state may not pay any
portion of the tax increment produced by the state into the tax
increment fund for a reinvestment zone designated under Chapter
311, Tax Code.
(b) If a reinvestment zone was designated under Chapter 311,
Tax Code, before May 1, 2004, and a school district entered into an
agreement with the governing body of the municipality that created
the zone to pay into the tax increment fund for the zone any portion
of the school district's tax increment produced from property
located in the zone, the state shall pay into the tax increment fund
the portion of the tax increment that the school district would be
required to pay into the tax increment fund under the terms of the
agreement.
(c) If the reinvestment zone was designated under Chapter
311, Tax Code, before this subchapter took effect, the tax
increment base of the state is calculated under Section 311.012,
Tax Code, as if this subchapter were in effect for the year in which
the zone was designated.
(d) If the reinvestment zone includes property taxable by
more than one school district, the amount of tax increment required
to be paid into the tax increment fund by the state shall be
calculated as provided by Subsection (b) separately for the portion
of the reinvestment zone located in each school district.
Sec. 45.259. INVESTMENT OF TEXAS EDUCATION TRUST. In
managing the trust, the comptroller may acquire, exchange, sell,
supervise, manage, or retain, through procedures and subject to
restrictions the comptroller establishes and in amounts the
comptroller considers appropriate, any kind of investment that a
person of ordinary prudence, discretion, and intelligence,
exercising the judgment and care under the circumstances then
prevailing, would acquire or retain for the person's own account in
the management of the person's affairs, not in regard to
speculation but in regard to the permanent disposition of the
person's funds, considering:
(1) the probable income as well as the probable safety
of the person's capital; and
(2) the payments required to be made from the trust to
school districts under Section 42.256.
SECTION 25. (a) The following provisions of the Education
Code are repealed:
(1) Chapter 41;
(2) Subchapter F, Chapter 42; and
(3) Sections 42.001, 42.151(a), (b), and (f),
42.152(a) and (t), 42.153(a), 42.154(a) and (b), 42.156(a), 42.157,
42.158(e), 42.2511, 42.2512, 42.2514, 42.2515, 42.252, 42.2521,
42.2522, 42.253(l), 42.2531, 42.257, 42.259, and 42.260.
(b) Sections 45.002, 45.003(d), and 45.006, Education Code,
are repealed.
SECTION 26. The repeal of Section 45.002, Education Code,
by this Act does not affect the authority of a school district to
collect and use delinquent ad valorem taxes imposed under that
section before January 1, 2005, and a school district is not
required to remit those taxes to the comptroller for deposit in the
Texas education trust.
SECTION 27. (a) Except as provided by Subsection (b) of
this section:
(1) Sections 22-24, 25(b), and 26 of this Act and this
section take effect January 1, 2005; and
(2) Sections 1-21 and 25(a) of this Act take effect
September 1, 2005.
(b) This Act takes effect only if the constitutional
amendment proposed by __.J.R. No. ___, 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.