C.S.S.B. 929 78(R)    BILL ANALYSIS


C.S.S.B. 929
By: Shapiro
Public Education
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

Regional education service centers (ESC) were developed to provide school
districts with a broker for contracts with service providers and to take
advantage of economies-of-scale buying power. ESCs have utilized state and
local funds to build regional facilities that require significant capital
expenditures for construction and maintenance.  Funds designated for
district use are often directed to ESCs for program development to serve
the districts; if the programs developed do not meet a district's need
there is not an alternative to which the district can look for appropriate
services. ESCs, as brokers, retain a portion of the Chapter 41 (Equalized
Wealth Level) funds designated for Chapter 42 (Foundation School Program)
districts to develop programs that benefit all districts in the region.
However, at least 13 percent of the contracts reviewed by the Legislative
Budget Board were with Chapter 42 districts outside of the ESCs'
individual regions and therefore not served by the programs. 

C.S.S.B. 929 sends all funds currently distributed to ESCs directly to the
districts and allows the districts to decide with whom to contract for
services. C.S.S.B. 929 provides a mechanism for a district to decide to
have its funds distributed directly to an ESC. This bill also prohibits an
ESC from retaining any fees for brokering beyond the administrative cost
of brokering a transfer of funds. This bill requires the comptroller to
audit all ESCs and report to the legislature on the results thereof and
with recommendations for ESCs to be at least 80 percent funded by
fee-for-service contracts with school districts. 


RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any
additional rulemaking authority to a state officer, department,
institution, or agency. 


ANALYSIS

C.S.S.B. 929 amends the Education Code by providing that a regional
education service center and each center employee is subject to Chapter
556, Government Code (Political Activities by Certain Public Entities and
Individuals). The bill provides that for purposes of that chapter, the
center is considered a state agency and each center employee is considered
a state employee. 

The bill prohibits a regional education service center that acts as a
fiscal agent or broker in connection with an agreement between two school
districts under Chapter 41E (Education of Nonresident Students) from being
compensated by the districts over and above the administrative cost of
providing the service or otherwise retaining funds from the transfer
between districts for center use, unless authorized in writing by the
district receiving transferred funds. 

The bill requires the comptroller, after consulting with the presiding
officers of the senate and house of representatives public education
committees or designated staff,  to contract with a consultant for a
comprehensive audit of regional education service centers in the state and
sets forth the required content of the audit. The bill requires the
comptroller to provide the presiding officers of the senate and house of
representatives public education committees written notice of each meeting
concerning the contract or audit and provides that each presiding officer
or appropriate staff member is entitled to participate in the meetings. 
 
The bill requires costs of the audit to be paid using amounts appropriated
for the fiscal biennium ending August 31, 2005, to regional education
service centers or to the Texas Education Agency for the costs of services
provided by regional education service centers, not to exceed a total
amount of $750,000. The bill requires the comptroller to submit a report
concerning the audit not later than December 1, 2004. The bill requires
that the report include recommendations for a regional education service
center funding mechanism under which at least 80 percent of center funds
are derived from fee-for-service contracts with school districts. 

The bill repeals, effective September 1, 2005, Chapter 8, Education Code.


EFFECTIVE DATE

Except as otherwise provided, September 1, 2003.


COMPARISON OF ORIGINAL TO ENGROSSED

C.S.S.B. 929 modifies the engrossed version by repealing Chapter 8,
Education Code on September 1, 2005 and adding provisions relating to the
comptroller's audit of regional education service centers.