SRC-TJG, VRA C.S.H.B. 3459 78(R)BILL ANALYSIS


Senate Research CenterC.S.H.B. 3459
78R17951 ESH-DBy: Pitts (Bivins)
Finance
5/24/2003
Committee Report (Substituted)


DIGEST AND PURPOSE 

Due to the current budget shortfall,  state agencies and institutions of
higher education were asked to prioritize spending based on core functions
and essential services.  Legislators looked to these priorities in
preparation of the budget; however, certain statutory changes are also
needed to conform with appropriations levels in the 2004-05 General
Appropriations Act.  C.S.H.B. 3459 authorizes these statutory changes for
the education agencies listed under Article III of the 2004-05 General
Appropriations Act.   

RULEMAKING AUTHORITY

Rulemaking authority is expressly granted to the commissioner of education
in SECTION 9 (Section 21.413, Education Code), and SECTIONS 54 and 55 of
this bill. 

Rulemaking authority is expressly granted to the Teacher Retirement System
in SECTION 39 (Section 1575.212, Insurance Code) of this bill. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Repealer:  Chapters 41 (Equalized Wealth Level), 42
(Foundation School program), and 46 (Assistance with Instructional
Facilities and Payment of Existing Debt); and Section 45.002 (Maintenance
Taxes), Education Code. 

SECTION 2.  Provides that Section 1 of this Act takes effect September 1,
2004, but only if certain conditions exist before that date.  
 
SECTION 3.  Amends Subchapter B, Chapter 7, Education Code, by adding
Section 7.027, as follows: 
 
Sec. 7.027.  LIMITATION ON COMPLIANCE MONITORING.  (a) Requires the Texas
Education Agency (TEA),  except as provided by Section 29.001(5),
29.010(a), 39.074, or 39.075, to monitor compliance with requirements
applicable to a process or program provided by a school district, campus,
program, or school granted charters under Chapter 12, including the
process described by Subchapter F, Chapter 11, or a program described by
Subchapter A, B, C, D, E, F, H, or I, Chapter 29, Subchapter A, Chapter
37, or Section 38.003, and the use of funds provided for such a program
under Subchapter C, Chapter 42, only as necessary to ensure that certain
criteria are met. 
  
(b)  Provides that the board of trustees of a school district or the
governing body of an open-enrollment charter school has primary
responsibility for ensuring that the district or school complies with all
applicable requirements of state educational programs. 

SECTION 4.  Amends Section 21.253, Education Code, as follows:

(a) Requires the teacher to provide the district with a copy of the
hearing request and to  provide the commissioner of education
(commissioner) with a copy of the notice. 

(b) Authorizes the parties to agree in writing to extend by not more than
10 days the deadline for requesting a hearing. 

SECTION 5.  Amends Sections 21.254(c), (d), and (e), Education Code, as
follows: 

(c) Requires the commissioner, if a hearing examiner is not selected by
the parties to a pending case under Subsection (e), to assign a hearing
examiner to the case, rather than a pending case, not earlier than the
sixth business day and not later than the 10th business day after the date
on which the commissioner receives the request for a hearing. 

(d) Authorizes the parties to agree to reject a hearing examiner for any
reason and provides that either party is entitled to reject the assigned
hearing examiner for cause.  Requires the commissioner, if the parties
agree to reject the hearing examiner or if the commissioner determines
that one party has good cause to reject the hearing examiner, to assign
another hearing examiner as provided by Subsection (b). 

(e) Authorizes the parties by agreement, after the teacher receives the
notice of the proposed action, to select a hearing examiner from the list
maintained by the commissioner under Subsection (a) or a person who is not
certified to serve as a hearing examiner.  Authorizes a person who is not
a certified examiner to be selected only if the person is, rather than
under this subsection must be, licensed to practice law in this state.
Requires the parties, if the parties agree on a hearing examiner, to,
before the date the commissioner is permitted to assign a hearing
examiner, notify the commissioner in writing of the agreement, including
the name of the hearing examiner selected.  Deletes text relating
notifying the commissioner before the teacher files a request for hearing.
Deletes text relating the teacher notifying the commissioner in writing of
the name of the hearing examiner, if the parties agree on a hearing
examiner after the teacher files the request for hearing. 

SECTION 6.  Amends Sections 21.257(a) and (c), Education Code, as follows:

(a) Requires the hearing examiner, not later than the 60th, rather than
45th, day after the date on which the commissioner receives a teacher's
written request for a hearing, to complete the hearing and make a certain
written recommendation. 

(c) Authorizes the parties to agree in writing to extend by not more than
45 days, rather than waive, the right to a recommendation by the date
prescribed by Subsection (a).  Prohibits a hearing under this section from
being held on certain days, unless all parties agree.   

SECTION 7.  Amends Subchapter G, Chapter 21, Education Code, by adding
Section 21.3041, as follows: 

Sec. 21.3041.  REHEARING BY COMMISSIONER.  (a) Authorizes the party to
file a request for rehearing, not later than the 20th day after the date
the party or the party's representative receives notice of the
commissioner's decision under Section 21.304. 

(b) Provides that a request for rehearing is not required for a party to
appeal the commissioner's decision under Section 21.307.   

(c) Provides that a request for rehearing is denied by operation of law if
the commissioner does not issue an order before the 45th day after the
date the party or the party's representative receives notice of the
commissioner's decision. 

SECTION 8.  Amends Section 21.307(b), Education Code, to require an appeal
under this section to  be perfected not later than the 30th day after a
certain date or after action is taken. 
 
SECTION 9.  Amends Subchapter I, Chapter 21, Education Code, by adding
Section 21.413, as follows: 
 
Sec. 21.413.  CLASSROOM SUPPLY REIMBURSEMENT PROGRAM.  (a)  Requires the
commissioner of education (commissioner) to establish a reimbursement
program under which the commissioner provides funds to a school district
for the purpose of reimbursing classroom teachers in the district who
expend personal funds on classroom supplies.  Requires a school district
to match any funds provided to the district under the reimbursement
program with local funds to be used for the same purpose. 
 
(b)  Requires the commissioner to adopt rules for the local allocation of
funds provided to a school district under the reimbursement program.
Requires a school district to allow each classroom teacher in the district
who is reimbursed under the reimbursement program to use the funds in the
teacher's discretion, except that the funds must be used for the benefit
of the district's students.  Prohibits a school district from using funds
received under the reimbursement program to replace local funds used by
the district for the same purpose. 
 
(c)  Requires the commissioner to identify state and federal funds
available for use under the reimbursement program, including funds subject
to the Education Flexibility Partnership Act of 1999 (20 U.S.C. Section
5891a et seq.), and its subsequent amendments, as well as consolidated
administrative funds. 
 
(d)  Requires the commissioner to establish the reimbursement program for
implementation beginning not later than the 2005-2006 school year.
Authorizes the commissioner to implement the reimbursement program only if
funds are specifically appropriated by the legislature for the program or
if the commissioner identifies available funds, other than general revenue
funds, that may be used for the program. 

SECTION 10.  Amends Subchapter A, Chapter 29, Education Code, by adding
Section 29.0161, as follows: 

Sec. 29.0161.  CONTRACT WITH STATE OFFICE OF ADMINISTRATIVE HEARINGS FOR
SPECIAL EDUCATION DUE PROCESS HEARINGS.  (a) Requires the Texas Education
Agency (TEA) and the State Office of Administrative Hearings (SOAH), not
later than December 1, 2003, to jointly determine whether it would be
cost-effective for TEA to enter an interagency contract with SOAH under
which SOAH would conduct all or part of the agency's special education due
process hearings under 20 U.S.C. Section 1415 and its subsequent
amendments. 

(b) Requires TEA and SOAH, if, as provided by Subsection (a), TEA and SOAH
jointly determine it would be cost-effective to transfer all or a portion
of TEA's special education due process hearings to the office to enter
into an interagency contract to transfer the hearings accordingly. 
 
SECTION 11.  Amends Sections 29.062(a) and (e), Education Code, as follows:
 
(a)   Requires TEA, in accordance with the policy of the state, to
evaluate the effectiveness of programs under this subchapter based on the
academic excellence indicators adopted under Section 39.051(a), including
results of assessment instruments.   Authorizes TEA to combine evaluations
under this section with federal accountability measures concerning
students of limited English proficiency, rather than monitor compliance
with state rules by inspecting each school district and open-enrollment
charter school on-site at least every three years. 
 
(e)  Requires TEA, if a school district or open-enrollment charter school
fails to satisfy appropriate standards adopted by the commissioner for
purpose of Subsection (a) to apply  sanctions, which may include the
removal of accreditation, loss of foundation school funds, or both. 
 
SECTION 12.  Amends Section 31.021(b), Education Code, to delete
Subdivision 2 relating to a requirement to provide an allotment to be
distributed to each district equal to $30 per student in average daily
attendance, or a greater amount for any year provided by appropriation. 
 
SECTION 13.  Amends Section 31.103(b), Education Code, to require the
commissioner,  as made necessary by available funds, to reduce the
additional percentage of attendance for which a district or school may
requisition textbooks.  Authorizes the commissioner, on application of a
district or school that is experiencing high enrollment growth, to
increase the additional percentage of attendance for which the district or
school may requisition textbooks. 
 
SECTION 14.  Amends Subchapter A, Chapter 32, Education Code, by adding
Section 32.005, as follows: 
 
Sec. 32.005.  TECHNOLOGY ALLOTMENT.  (a)  Provides that each school
district is entitled to an allotment of $30 for each student in average
daily attendance or a different amount for any year provided by
appropriation. 
 
(b)  Authorizes an allotment under this section to be used only to meet
certain requirements. 
  
  (c)  Authorizes the allotment under this section to be paid from certain
funds. 

SECTION 15.  Amends Section 32.033(a), Education Code, to authorize,
rather than require TEA, in coordination with institutions of higher
education and other public or private entities, to maintain and expand, as
needed, the telecommunications capabilities of school districts and
regional education service centers. 

SECTION 16.  Amends Section 39.023(e), Education Code, to require TEA,
under rules adopted by the State Board of Education, every other year, to
release the questions and answer keys to each assessment instrument
administered under certain subsections after the last time the instrument
is administered for that, rather than a, school. 

SECTION 17.  Amends Section 39.051(f), Education Code, to require the
indicator under Subsection (b)(1) to include the results of assessment
instruments required under Section 39.023(b).  Deletes existing text
relating to prohibiting these results from being aggregated by grade level
or subject area. Deletes existing text relating to the results beginning
with the 2002-2003 school year. 

SECTION 18.  Amends Sections 39.055(a) and (e), Education Code, as follows:

(a) Requires the commissioner to develop a process for auditing school
district dropout records electronically.  Requires the commissioner to
also develop a system and standards for review of the audit or use systems
already available at TEA.  Require the system to be designed to identify
districts that are at high risk of having inaccurate dropout records and
that, as a result, require on-site monitoring of dropout records.
Prohibits the district, if the electronic audit of a district's dropout
records indicates that a district is not at high risk of having inaccurate
dropout records, from being subject to on-site monitoring under this
subsection.  Provides that if the risk-based system indicates that a
district is at high risk of having inaccurate dropout records, the
district is entitled to an opportunity to respond to the commissioner's
determination before on-site monitoring may be conducted.  Requires the
district to respond not later than the 30th day after the date the
commissioner notifies the district of the commissioner's determination.
Requires the commissioner, if the district's response does not change the
commissioner's determination that the district is at high risk of having
inaccurate dropout records or if the district does not respond in a timely
manner, to order agency staff to conduct on-site monitoring of the
district's dropout records.  Deletes exiting text relating to the board of
trustees of each school district to have the records audited annually. 
 
(e) Requires the commissioner to notify the board of trustees of a school
district of any objection the commissioner has to the district's dropout
data, rather than report, any violation of sound accounting practices or
of a law or rule revealed by the data, or any recommendation by the
commissioner concerning the data.  Provides that the commissioner is
entitled to access to all district records the commissioner considers
necessary or appropriate for the review, analysis, or approval of the
district dropout data.  Makes conforming changes. 

SECTION 19.  Amends Section 42.152, Education Code, by amending
Subsections (c), (q), and (r) and adding Subsections (q-1)-(q-4) and (u),
as follows: 

(c) Requires funds allocated under this section to be used, rather than
used only, to fund supplemental programs and services designed to
eliminate any disparity in performance on certain assessment instruments
or disparity rates. Requires, rather than authorizes, a district's
compensatory education allotment, in meeting the costs of providing a
compensatory, intensive, or accelerated instruction program under Section
29.081, to be used for certain costs.  Makes a conforming change.
Provides that notwithstanding any other provisions of this section 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 authorizes a district to use its compensatory education
allotment for such a program. 

(q) Requires the State Board of Education, with the assistance of the
state auditor and the comptroller, to develop and implement by rule
reporting and auditing systems, rather than system, for district and
campus expenditures of compensatory education funds to ensure that
compensatory education funds, other than the indirect cost allotment, are
spent only to supplement the regular education program as required by
Subsection (c).  Requires the reporting requirements to be managed
electronically to minimize local administrative costs. Requires a district
to submit the report required by this subsection not later than the 150th
day after the last day permissible for resubmission of information
required under Section 42.006. 

(q-1)  Requires the commissioner to develop a system to identify school
districts that are at high risk  of having used compensatory education
funds other than in compliance with Subsection (c) or of having
inadequately reported compensatory education expenditures.  Prohibits the
district, if a review of the report submitted under Subsection (q), using
the risk-based system, indicates that a district is not at high risk of
having misused compensatory education funds or of having inadequately
reported compensatory education expenditures, from being required to
perform a local audit of compensatory education expenditures and is not
subject to on-site monitoring under this section. 

(q-2) Requires the commissioner, if a review of the report submitted under
Subsection (q), using the risk-based system, indicates that a district is
at high risk of having misused compensatory education funds, to notify the
district of the determination.  Requires the district to respond to the
commissioner not later than the 30th day after the date the commissioner
notifies the district of the commissioner's determination.  Requires the
commissioner, if the district's response does not change the
commissioners' determination that the district is at high risk of having
misused compensatory education funds or if the district does not respond
in a timely manner, to take certain actions. 

(q-3) Authorizes the commissioner, if a review of the report submitted
under Subsection (q), using the risk-based system, indicates that a
district is at high risk of having inadequately reported compensatory
education expenditures, to require agency staff to assist the district in
following the proper reporting methods or amending a district in following
the proper reporting methods or amending a district or campus improvement
plan under Subchapter F, Chapter 11. Authorizes the commissioner, if the
district does not take appropriate corrective action before the 45th day
after the date the agency staff notifies the district of the action the
district is expected to take, to take certain actions. 

(q-4) Requires the commissioner, in the year following a local audit of
compensatory education  expenditures, to withhold from a district's
foundation school fund payment a certain amount. 

(r) Makes a conforming change.

(u) Authorizes the legislature, notwithstanding the allotments and
reductions otherwise required or permitted by this section or Section
39.051(a), to in the General Appropriations Act reduce the total amount of
funding for the compensatory education allotment.  Requires the
commissioner, after deducting the amount of a reduction made as provided
by this subsection from the total amount computed for the allotment under
Subsection (a), to take certain actions. 

SECTION 20.  Amends Section 42.154(a), Education Code, provide that a
district is entitled to an annual allotment equal to the adjusted basic
allotment multiplied by a weight of 1.35, rather than 1.37. 

SECTION 21.  Amends Section 42.253(b), Education Code, to delete text
prohibiting the sum of the reductions under this subsection from being
greater than the amount necessary to fully fund the entitlement of each
district. 

SECTION 22.  Amends Section 42.259(c), (d), and (f), Education Code, as
follows: 

(c) Requires payments from the foundation school fund to each category 2
school district to be made in a certain manner. 

(d) Requires payments from the foundation school fund to each category 3
school district to be made in a certain manner. 

(f) Makes a conforming change.
  
SECTION 23.  Amends Section 43.001(b), Education Code, to add new language
to Subdivision (1) relating to interest and dividends arising from any
securities or funds belong to the permanent school fund. 

SECTION 24.  Amends Sections 43.001(a) and (b), Education Code, as follows:

(a) Makes a conforming and a nonsubstantive change.

(b) Provides that the available school fund, which shall be apportioned
annually to each county according to its scholastic population, consists
of certain revenue. 

SECTION 25.  Amends Section 43.002, Education Code, as follows:

Sec. 423.002.  New heading: TRANSFERS FROM PERMANENT SCHOOL FUND AND
GENERAL REVENUE FUND TO AVAILABLE SCHOOL FUND.  (a) Requires the
comptroller, on the first working day of each month in a state fiscal
year, to transfer from the permanent school fund to the available school
fund a certain amount from the permanent school fund to the available
school fund as provided by Section 5(a), Article VII, Texas Constitution,
for the fiscal year.  

(a-1) Requires the comptroller, notwithstanding Subsection (a), for the
fiscal year beginning September 1, 2003, to transfer a certain amount from
the permanent school fund to the available school fund on certain dates. 

(a-2)  Provides that Subsection (a-1) and this subsection expire September
1, 2004. 

(b) Subsection created from existing text.

SECTION 26.  Amends Chapter 43, Education Code, by adding Section 43.020,
as follows: 

Sec. 43.020.  TREATMENT OF ACCRUED INCOME.  Requires all interest and
dividends  accruing from the investments of the permanent school fund to
be deposited to the credit of the available school fund in accordance with
the accrual basis of accounting.  Provides that funds recognized under
this section are considered part of the available school fund and are
authorized to be appropriated as provided by Section 5, Article VII, Texas
Constitution. 
 
SECTION 27.  Amends Section 46.033, Education Code, to change the date
specified in Subdivision (1) from 2000-2001 to 2002-2003. 
 
SECTION 28.  Amends Section 46.034, Education Code, by amending Subsection
(c) and adding Subsections (d) and (e), as follows: 
 
 (c)  Makes a conforming change.
 
(d)  Provides that notwithstanding any other provision of this chapter, if
the appropriation to support newly eligible bonds for the 2003-2004 school
year and the 2004-2005 school year is not sufficient to provide the state
aid that school districts are entitled to under Section 46.032, the
commissioner is directed to reduce the $35 guaranteed level of state and
local support per student per cent of tax effort for newly eligible debt
only to the level necessary to fund the sum of the allotments within the
appropriated amount.  Provides that the guaranteed level for eligible debt
through the 2000-2001 school year is not affected by this adjustment.
Requires the commissioner to make this determination as soon as
practicable, prior to the beginning of the school year.  Provides that the
decision of the commissioner is final and may not be appealed. 
 
 (e)  Provides that Subsection (d) and this Subsection expire September 1,
2005. 

SECTION 29.  Amends Section 403.093, Government Code, by amending
Subsection (c) and adding Subsections (c-1) and (c-2), as follows: 

(c)  Requires the comptroller, each month other than June, July, and
August, to transfer from the general revenue fund to the state
contribution account of the teacher retirement system trust fund the equal
monthly payment provided by Section 825.404. 

(c-1) Prohibits the comptroller from transferring an amount under Section
825.404 to the state contribution account of the teacher retirement system
trust fund during certain months. Requires the comptroller, after
September 1 and before September 6, to transfer the amount certified by
the Teacher Retirement System of Texas under Subsection (c-2). 

(c-2) Requires the Teacher Retirement Fund of Texas, not later than
September 1, to compute and certify to the comptroller an amount that is
the sum of the amount of the state's required contribution for the
previous fiscal year that is attributable to the preceding three months,
plus an amount determined by computing the rate of yield the contribution
would have earned if the contribution had been transferred to the state
contribution account of the teacher retirement system trust fund in equal
monthly installments in each of the preceding three months. 

SECTION 30.  Amends Section 815.403, Government Code, by amending
Subsection (e) and adding Subsections (g) and (h), as follows: 

(e) Makes a conforming change. 

(g) Prohibits the comptroller from transferring an amount under Subsection
(e) to the state accumulation fund during certain months.  Requires the
comptroller, after September 1 and before September 6, to transfer the
amount certified by the retirement system under Subsection (h). 

(h) Requires the retirement system, not later than September 1, to compute
and certify to the comptroller an amount that is the sum of the amount of
the state's required contribution for the previous fiscal year that is
attributable to the preceding three months, plus an amount determined by
computing the rate of yield the contribution would have earned if the
contribution  had been transferred to the state accumulation fund in equal
monthly installments in each of the preceding three months. 

SECTION 31.  Amends Section 825.404(e), Government Code, to add money paid
to the state contribution account as provided by Section 403.093, to the
list of exceptions money regarding appropriated by the state to the
retirement system required to be paid to the state contribution account in
equal monthly installments.  

SECTION 32. Amends Section 1575.002, Insurance Code, as effective June 1,
2003,  to conform to Section 3.03, Chapter 1187, Acts of the 77th
Legislature, Regular Session, 2001, and to conform more closely to the
source law from which the section was derived, and further amended to
redefine "active employee," "carrier," "fund," and "trustee," and define
"public school." 

SECTION 33.  Amends Section 1575.004, Insurance Code, effective June 1,
2003, to redefine "retiree." 

SECTION 34.  (a)  Amends Section 1575.153, Insurance Code, effective June
1, 2003, to conform to Section 3.10, Chapter 1187, Acts of the 77th
Legislature, Regular Session, 2001,  
to  prohibit a retiree who applies for coverage during an enrollment
period from being denied coverage in a basic plan provided under this
chapter unless the trustee, rather than the board of the trustee, finds
under Subchapter K that the retiree, rather than the individual, defrauded
or attempted to defraud the group program. 

(b)  Repealer: Section 3.10, Chapter 1187, Acts of the 77th Legislature,
Regular Session, 2001. 

SECTION 35.  Amends Subchapter D, Chapter 1575, Insurance Code, effective
June 1, 2003, by adding Sections 1575.161-1575-163, as follows: 

Sec.  1575.161.  OPEN ENROLLMENT; ADDITIONAL ENROLLMENT PERIODS.  (a)
Authorizes a retiree eligible for coverage under the group plan to select
any coverage provided under this chapter for which the person is otherwise
eligible on the date that the person retires; and during any open
enrollment periods for retirees set by the trustee by rule. 

(b)  Provides that a retiree, in addition to the enrollment periods
authorized under Subsection (a), who meets certain enrollment standards
may select certain coverage. 

(c)  Authorizes a retiree, if a retiree described by Subsection (b) is not
covered by Medicare program, to enroll in the next higher coverage tier
under the group program and to add dependent coverage in the same coverage
tier. 

(d)  Authorizes a retiree, if a retiree described by Subsection (b) is
covered by the Medicare program, to enroll in any coverage tier under the
group program and to add dependent coverage in that same coverage tier. 

(e)  Provides that this section does not affect the right of a retiree
enrolled in coverage tier under the group program to select a lower level
of coverage at any time. 

Sec.  1575.162.  SPECIAL ENROLLMENTS.  Provides that this chapter does not
limit the ability of an individual to enroll in the group program if the
individual experiences a special enrollment event as provided by the
Health Insurance Portability and Accountability Act of 1996
(Pub.L.No.104-191,110 Stat. 1936(1996), as amended; and is otherwise
eligible to enroll in the group program. 

Sec.  1575.163.  LIMITATIONS.  Prohibits TRS, as trustee, from contracting
for or providing a health benefit plan that excludes from participation in
the network a general hospital that meets a certain standard. 

 SECTION 36.  Amends Section 1575.201, Transportation Code, effective June
1,2003, as follows: 

Sec.  1575.201. ADDITIONAL STATE CONTRIBUTIONS; CERTAIN CONTRIBUTIONS.
(a)  Requires the state through the trustee, rather than system to
contribute from money in the fund the total cost of the basic plan
covering each participating retiree; and for each participating dependent,
surviving dependent child, the amount prescribed by the General
Appropriations Act to cover the dependent, surviving spouse, and surviving
child. 

(b)  Requires the trustee to collect the amount of premium required fo
basic coverage under the group program that exceeds the amount contributed
by the state for those individuals described by Subsection (a)(2)  

SECTION 37.  Amends, effective September 1, 2003, Section 1575.203(a),
Insurance Code, as effective June 1, 2003, to require each active employee
each state fiscal year, to contribute to the fund an amount equal to 0.5,
rather than 0.25, percent of the employee's salary. 

SECTION 38.  Amends Section 1575.204, Insurance Code, effective June 1,
2003, as follows: 

Sec.  1575.204.  PUBLIC SCHOOL CONTRIBUTION.  Requires each public school,
during each state fiscal year, to contribute to the fund the amount
prescribed by the General Appropriations Act, which may not be less than
0.25 percent or greater than 0.75 percent of the salary of each active
employee of the public school.  Requires the public school to make the
contributions on a monthly basis and as otherwise prescribed by the
trustee.  Deletes text requiring the ratio of contribution between the
state contribution and the active employees' contribution to be maintained
at two to one. 

SECTION 39.  Amends Subchapter E, Chapter 1575, Insurance Code, by adding
Sections 1575.211 and 1575.212, effective June 1,2003, as follows:  

Sec.  1575.211.  COST SHARING.  (a)  Requires the total costs for the
operation of the group program to be shared among the state, the public
schools, the active employees, and the retirees in the manner prescribed
by the General Appropriations Act. 

(b)  Requires the state to pay not more than 55 percent of the total cost,
requires retirees to  pay at least 30 percent of the  total cost, and
require the balance to be paid by active employees and public schools,
while determining the allocations of total costs under this section. 

Sec.  1575.212.  PAYMENT BY RETIREES; RANGES.  (a)  Requires the trustee
by rule to establish ranges for payment of the share of total costs
allocated under Section 1575.211 to retiree with different levels for
certain non-eligible retirees. 

(b)  Authorizes the trustee to consider the years of service credits
accrued by a retiree and authorizes the trustee to reward those retiree
with more years of service credits, while establishing ranges for payment
of share of total cost allocated under section 1575.211 to retirees. 

SECTION 40.  Amends Subchapter E, Chapter 3, Insurance Code, by adding
Article 3.50-7A, as follows: 

Art.  3.50-7A.  LIMITATIONS APPLICABLE TO TEXAS SCHOOL EMPLOYEES UNIFORM
GROUP COVERAGE PROGRAM.  (a)  Provides that this article applies only to
the uniform group coverage program established under Article 3.50-7 of
this code.  Provides that a term used in this article has the meaning
assigned by Section 2, Article 3.50-7, of this code. 

(b)  Authorizes TRS, as trustee, to not contract for or provide health
coverage plan that  excludes from participation in the network a general
hospital that is located in a county, all or part of which is located
within geographical service area of the health coverage plan, in which at
least two, but not more than four, general hospitals are located; and
agrees to provide medical and health care services under the plan subject
to the same terms and conditions as other under the plan subject to the
same terms and conditions as other hospital providers under the plan.  
   
SECTION 41.  Amends Section 2, Article 3.50-8, Insurance Code,  by
amending Subsection (a) and adding Subsections (e), (f), and (g), as
follows: 
 
(a)  Requires the trustee, each year, to deliver to each school district,
including a school district that is ineligible for state aid under Chapter
42, Education Code, each other educational district that is a member of
the Teacher Retirement System of Texas, each participating charter school,
and each regional education service center state funds in an amount, as
determined by the trustee, equal to certain criteria. 
 
(c)  Provides that the monthly installments are payable during the first
week of the month following the month in which the active employees were
employed. 
 
(e) Provides that a member of the professional staff of a district,
charter school, or service center described by Subsection (a) of this
section is not eligible to receive state funds under Subsection (a) of
this section. 

(f) Provides that for purposes of this section, a member of the
professional staff of a district, charter school, or service center
described by Subsection (a) of this section has the meaning defined by
rule by the trustee.  

(g) Provides that an employee is not eligible to receive a state
contribution under this article until the 90th day after the date the
employee is employed by an entity described by Section 1(2)(A) of this
article. 

SECTION 42.  Amends Section 31.301(e), Natural Resources Code, to require
the appropriate board, before approving the trade, to make a finding that
no loss to the permanent, rather than available, school fund or the
available university fund will occur as a result of the trade. 

SECTION 43.  Amends Sections 33.016, 51.069, and 51.300, Natural Resources
Code, as follows: 

Sec. 33.016.  Deletes Section 33.014 from the list of sections under which
money received by the board for the grant interest is required to be
deposited in the State Treasury. 

Sec. 51.069.  Requires payments on public school land received by the
commissioner, including payments received as interest on the purchase of
public school land, to be transmitted to the comptroller to be credited to
the permanent school fund, rather than the proper fund. Deletes text
relating to the comptroller crediting certain payments as interest on the
purchase of public school land to the available school fund.  Makes a
conforming change. 

Sec.  51.300.  Makes a conforming change.

SECTION 44.  Amends Section 51.401(b), Natural Resources Code, to make a
conforming change. 

SECTION 45.  Amends Section 52.137(b), Natural Resources Code, to delete
text regarding the deposit to a certain fund upon a certain determination
certain money, as a requirement of  the comptroller. 

SECTION 46.  Amends Section 52.297(d), Natural Resources Code, to make a
conforming change. 

SECTION 47.  Amends Section 53.155(d), Natural Resources Code, to make a
conforming change. 

 SECTION 48.  Amends Section 57.046, Utilities Code, by amending
Subsection (a) and adding Subsection (c), as follows: 

(a) Requires the board to use money in the public schools account for
certain purposes. 

(c) Provides that Section 57.047(d) does not apply to the use of money in
the public schools account for the purposes specified by Subsection
(a)(1). 

SECTION 49.  Amends Sections 57.048(c) and (d), Utilities Code, as follows:

(c) Prohibits the total amount deposited to the credit of the fund,
excluding interest and loan repayments, from exceeding $1.75, rather than
$1.5, billion.  Requires the comptroller, if the comptroller determines
that a total of $1.5, rather than $1.2, billion, or more, excluding
interest and loan repayments, has been deposited to the credit of the
fund, to impose the assessment during the next fiscal year at a rate that
the comptroller estimates is sufficient to produce the amount necessary to
result in the deposit in the fund of a total of not more than $1.75,
rather than $1.5, billion, excluding interest and loan repayments. 

(d) Makes conforming changes.

SECTION 50.  Amends Section 5, Chapter 314, Acts of the 56th Legislature,
Regular Session, 1959 (Article 5337-2, V.T.C.S.) to make a conforming
change. 

SECTION 51.  (a) Repealer: Sections 39.055(b), (c), and (d) and 53.47(k),
Education Code; Section 823.401(h), Government Code; and Section 1575.154,
Insurance Code, as effective June 1, 2003. 

 (b)  Repealer: Section 43.008 (Treatment of Premium and Discount),
Education Code. 

SECTION 52.  Requires the comptroller, effective September 1, 2003, to
transfer a certain amount of money from a certain trust fund to a certain
insurance fund, to compensate the insurance fund for certain money
transferred from that insurance fund. 

SECTION 53.  Makes application of Subchapter F, Chapter 21, Education
Code, as amended by this Act, prospective. 

SECTION 40.  (a)  Provides that the repeal by Section 1 of this Act of
Section 45.002, Education Code, does not impair any obligation created by
the issuance or execution of any lawful agreement or evidence of
indebtedness before September 1, 2004, that matures after that date and
that is payable from the levy and collection of a maintenance tax under
that section or another law, and an independent school district may, on
and after September 1, 2004, levy, assess, and collect a maintenance tax,
at a rate not greater than the rate required to pay such obligations but
only for so long as those obligations remain outstanding and unpaid. 
 
(b)  Authorizes a school district that, notwithstanding the repeal by
Section 1 of this Act of Chapters 41, 42, and 46, Education Code, and
Section 45.002, Education Code, before September 1, 2004, issues bonds,
notes, or other evidences of indebtedness under Chapter 45, Education
Code, or other applicable law or enters into a leasepurchase agreement
under Subchapter A, Chapter 271, Local Government Code, to continue,
before, on, and after September 1, 2004, to receive state assistance with
respect to such payments to the same extent the district would have been
entitled to receive the assistance under Chapter 42 or 46, Education Code,
as those chapters existed before repeal by this Act, and provides that the
former law is continued in effect for that purpose.  Authorizes the
commissioner of education to adopt rules to implement this subsection. 
 
(c)  Provides that the repeal by Section 1 of this Act of Chapters 41, 42,
and 46, Education Code, and Section 45.002, Education Code, does not
limit, modify, or eliminate the authority of a school district to perform
certain tasks. 
   
(d)  Provides that before September 1, 2004, the commissioner of education
may not refuse to grant assistance to a school district under Chapter 42
or 46, Education Code, in connection with public securities,
lease-purchase agreements, credit agreements, or other obligations,
including those described by Subchapter A, Chapter 271, Local Government
Code, on the basis that the district's authority to levy a maintenance tax
is repealed effective September 1, 2004. 
 
SECTION 55.  Requires the commissioner of education to adopt rules and
establish the classroom supply reimbursement program as required by
Section 21.413, Education Code, as added by this Act, not later than
August 1, 2005. 

SECTION 56.  Provides that notwithstanding Section 39.182, Education Code,
TEA is not required to take certain actions before December 1, 2003, that
covers the 2002-2003 school year and authorizes the report required to be
delivered not later than December 1, 2004, by TEA under that section, as
determined by the commissioner of education, to include information from
the 2002-2003 school year. 

SECTION 57.  Makes application of Section 42.152(c), Education Code, as
amended by this act, retroactive to September 1, 2003. 
 
SECTION 58.  Makes application of the change in law made by this Act to
Section 2, Article 3.50-8, Insurance Code, prospective to September 1,
2003. 

SECTION 59.  Requires the state, notwithstanding Article 3.50-8, Insurance
Code, to pay the state contribution for active employee health coverage or
supplemental compensation authorized under Section 2, Article 3.50-8,
Insurance Code, for the last month of state fiscal year 2005 not earlier
than the first day of the first month of state fiscal year 2006. 

SECTION 60.  (a)  Effective date: September 1, 2003, except as otherwise
proved by this Act. 

(b) Provides that Sections 12, 14, 23, 26, 48, and 49 of this Act take
effect upon passage or September 1, 203. 

(c) Provides that Sections 24, 25, 42, 43, 44, 45, 46, 47, 50, and 51(b)
of this Act take effect January 1, 2004, but only if a certain
constitutional amendment is passed by voters.