By: Shapiro, et al. S.B. No. 2
(In the Senate - Filed April 30, 2003; May 1, 2003, read
first time and referred to Committee of the Whole; May 2, 2003,
reported adversely, with favorable Committee Substitute by the
following vote: Yeas 30, Nays 0; May 2, 2003, sent to printer.)
COMMITTEE SUBSTITUTE FOR S.B. No. 2 By: Shapiro
A BILL TO BE ENTITLED
AN ACT
relating to public school finance, a state ad valorem tax, state
general sales and use taxes, state taxes on the sale or use of a
motor vehicle, and property tax relief for residential tenants.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
ARTICLE 1. PUBLIC SCHOOL FINANCE
SECTION 1.01. Chapter 4, Education Code, is amended by
adding Section 4.003 to read as follows:
Sec. 4.003. PRESERVATION OF LOCAL CONTROL OF PUBLIC
EDUCATION. (a) It is the policy of the state to encourage and
support the control and governance of school districts by the
citizens of this state through the boards of trustees in each school
district. The board of trustees as a body corporate has the
exclusive power and duty to govern and oversee the management of the
public schools of the district. All powers and duties not
specifically delegated by general law to another governmental
entity are reserved to the trustees, and no other governmental
entity may substitute its judgment for the lawful exercise of those
powers and duties by the trustees.
(b) After September 1, 2004, a state law, rule, or other
requirement may not be imposed on the school districts of this state
unless the commissioner of education certifies that sufficient
funds will be distributed to districts to pay the full cost of
complying with the proposed law, rule, or other requirement.
SECTION 1.02. Subtitle I, Title 2, Education Code, is
amended by adding Chapters 41 and 42 to read as follows:
CHAPTER 41. TEXAS EDUCATION EXCELLENCE PROGRAM
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 41.001. STATE POLICY. (a) It is the policy of this
state that the provision of public education is a state
responsibility and that a thorough and efficient system must be
provided and substantially financed through state revenue sources
so that each student enrolled in the public school system has access
to programs and services that are appropriate to the student's
educational needs and are substantially equal to those available to
any similar student, notwithstanding varying local economic
factors.
(b) The public school finance system of this state must
adhere to a standard of neutrality that provides for substantially
equal access to similar revenue per student after acknowledging all
legitimate student and district cost differences.
Sec. 41.002. PURPOSE OF TEXAS EDUCATION EXCELLENCE PROGRAM.
(a) The purpose of the Texas Education Excellence Program set
forth in this chapter is to guarantee that each school district in
the state has:
(1) adequate resources to provide each eligible
student an instructional program and facilities suitable to the
student's educational needs; and
(2) access to a substantially equalized program of
financing an enriched program.
(b) The Texas Education Excellence Program consists of:
(1) a basic program, as provided by this chapter, that
provides for sufficient financing for all school districts to
provide a basic program of education that is rated recognized or
higher under Subchapter D, Chapter 39, and meets other applicable
legal standards; and
(2) an enrichment program, as provided by Chapter 42,
to guarantee substantially equal access to funds to provide an
enriched program.
Sec. 41.003. STUDENT ELIGIBILITY. (a) A student is
entitled to the benefits of the Texas Education Excellence Program
if the student is five years of age or older and under 21 years of
age on September 1 of the school year and has not graduated from
high school.
(b) A student to whom Subsection (a) does not apply is
entitled to the benefits of the Texas Education Excellence Program
if the student is enrolled in a prekindergarten class under Section
29.153.
(c) A child may be enrolled in the first grade if the child
is at least six years of age at the beginning of the district's
school year or has been enrolled in the first grade or has completed
kindergarten in the public schools in another state before
transferring to a public school in this state.
(d) Notwithstanding Subsection (a), a student younger than
five years of age is entitled to the benefits of the Texas Education
Excellence Program if:
(1) the student performs satisfactorily on the
assessment instrument administered under Section 39.023(a) to
students in the third grade; and
(2) the district has adopted a policy for admitting
students younger than five years of age.
Sec. 41.004. ADMINISTRATION OF PROGRAM. The commissioner,
in accordance with rules adopted by the State Board of Education,
shall administer the Texas Education Excellence Program.
Sec. 41.005. AVERAGE DAILY ATTENDANCE. (a) In this
chapter, average daily attendance is the quotient of the sum of
attendance for each day of the minimum number of days of instruction
as described under Section 25.081(a) divided by the minimum number
of days of instruction.
(b) A school district that experiences a decline of two
percent or more in average daily attendance shall be funded on the
basis of:
(1) the actual average daily attendance of the
preceding school year, if the decline is the result of the closing
or reduction in personnel of a military base; or
(2) subject to Subsection (e), an average daily
attendance not to exceed 98 percent of the actual average daily
attendance of the preceding school year, if the decline is not the
result of the closing or reduction in personnel of a military base.
(c) The commissioner shall adjust the average daily
attendance of a school district that has a significant percentage
of students who are migratory children as defined by 20 U.S.C.
Section 6399 and its subsequent amendments.
(d) The commissioner may adjust the average daily
attendance of a school district in which a disaster, flood, extreme
weather condition, fuel curtailment, or other calamity has a
significant effect on the district's attendance.
(e) For each school year, the commissioner shall adjust the
average daily attendance of school districts that are entitled to
funding on the basis of an adjusted average daily attendance under
Subsection (b)(2) so that:
(1) all districts are funded on the basis of the same
percentage of the preceding year's actual average daily attendance;
and
(2) the total cost to the state does not exceed the
amount specifically appropriated for that year for purposes of
Subsection (b)(2).
(f) An open-enrollment charter school is not entitled to
funding based on an adjustment under Subsection (b)(2).
Sec. 41.006. 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.
Sec. 41.007. PUBLIC EDUCATION INFORMATION MANAGEMENT
SYSTEM (PEIMS). (a) Each school district shall participate in the
Public Education Information Management System (PEIMS) and shall
provide through that system information required for the
administration of this chapter and of other appropriate provisions
of this code.
(b) Each school district shall use a uniform accounting
system adopted by the commissioner for the data required to be
reported for the Public Education Information Management System
(PEIMS).
(c) Annually, the commissioner shall review the Public
Education Information Management System (PEIMS) and shall repeal or
amend rules that require school districts to provide information
through the system that is not necessary. In reviewing and revising
the Public Education Information Management System (PEIMS), the
commissioner shall develop rules to ensure that the system:
(1) provides useful, accurate, and timely information
on student demographics and academic performance, personnel, and
school district finances;
(2) contains only the data necessary for the
legislature and the agency to perform their legally authorized
functions in overseeing the public education system; and
(3) does not contain any information related to
instructional methods, except as required by federal law.
Sec. 41.008. FUNDING ELEMENTS. (a) The Legislative Budget
Board shall adopt rules, subject to appropriate notice and
opportunity for public comment, for the computation for each year
of a biennium of the funding elements, in accordance with
Subsection (c), necessary to achieve the state policy under Section
41.001.
(b) Before each regular session of the legislature, the
board shall report the funding elements to the commissioner and the
legislature.
(c) The funding elements must include:
(1) an amount for the purposes of Section 41.051 that
represents the cost per weighted student of an 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 programs authorized under Chapter 29, with the
program funding level expressed as weights applied to the student
count for the appropriate year;
(4) the maximum guaranteed level of qualified state
and local funds per student for the purposes of the enrichment
program under Chapter 42; and
(5) the amount to be appropriated for the school
facilities assistance programs under Chapter 46.
(d) The board shall conduct a study on the funding elements
each biennium. The study must include a determination of the
projected cost to the state in the next state fiscal biennium of
ensuring the ability of each school district to maintain existing
programs without increasing enrichment tax rates.
[Sections 41.009-41.050 reserved for expansion]
SUBCHAPTER B. BASIC PROGRAM
Sec. 41.051. 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
where:
"GA" is the guaranteed amount of state funds to be allocated
to the district;
"SA" is the student allotment, which is $4,300 or a greater
amount for any year provided by appropriation; and
"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 41.052.
Sec. 41.052. 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 remedial and support 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) 1.37 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. 41.053. COST OF EDUCATION ADJUSTMENT. (a) The
guaranteed amount ("GA") under Section 41.051 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 2004-2005 school year, 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 2005-2006 and 2006-2007 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 2007-2008
school year. Subsections (a-1) and (c-1) and this subsection
expire September 1, 2007.
Sec. 41.054. SMALL AND MID-SIZED DISTRICT ADJUSTMENT.
(a) The guaranteed amount ("GA") under Section 41.051 for certain
small and mid-sized districts, as adjusted under Section 41.053, is
adjusted in accordance with this section. In this section:
(1) "ADA" is the number of students in average daily
attendance for which the district is entitled to funding under
Section 41.051;
(2) "AGA" is the adjusted guaranteed amount as
determined under Section 41.053; and
(3) "SAGA" is the district's size-adjusted guaranteed
amount.
(b) The guaranteed amount ("GA") under Section 41.051 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 = (1 + ((1,600 - ADA) X 0.0004)) X AGA
(c) The guaranteed amount ("GA") under Section 41.051 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 = (1 + ((1,600 - ADA) X 0.00025)) X AGA
(d) The guaranteed amount ("GA") under Section 41.051 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 guaranteed amount:
(1) the formula in Subsection (b) or (c) for which the
district is eligible; or
(2) SAGA = (1 + ((5,000 - ADA) X 0.000025)) X AGA.
Sec. 41.055. SPARSITY ADJUSTMENT. Notwithstanding
Sections 41.051, 41.053, and 41.054:
(1) a school district that has fewer than 130 students
in average daily attendance is entitled to an adjusted guaranteed
amount on the basis of 130 students in average daily attendance if
the district 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 district that offers a kindergarten
through grade 8 program and whose preceding or current year's
average daily attendance was or is at least 50 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 75
students in average daily attendance; and
(3) a school district that offers a kindergarten
through grade 6 program and whose preceding or current year's
average daily attendance was or is 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.
[Sections 41.056-41.100 reserved for expansion]
SUBCHAPTER C. TRANSPORTATION ALLOTMENT
Sec. 41.101. TRANSPORTATION ALLOTMENT. Each district or
county operating a transportation system is entitled to allotments
for transportation costs as provided by this subchapter.
Sec. 41.102. DEFINITIONS. In this subchapter:
(1) "Eligible special education student" means a
student who is eligible for special education services under
Section 29.003 and who would be unable to attend classes without
special transportation services.
(2) "Linear density" means the average number of
regular eligible students transported daily, divided by the
approved daily route miles traveled by the respective
transportation system.
(3) "Regular eligible student" means a student who
resides two or more miles from the student's campus of regular
attendance, measured along the shortest route that may be traveled
on public roads, and who is not classified as a student eligible for
special education services.
Sec. 41.103. REGULAR TRANSPORTATION ALLOTMENT. (a) Each
school district or county operating a regular transportation system
is entitled to an allotment based on the daily cost per regular
eligible student of operating and maintaining the regular
transportation system and the linear density of that system.
(b) In determining the cost, the commissioner shall give
consideration to factors affecting the actual cost of providing
these transportation services in each school district or county.
The commissioner shall compute the average actual cost and shall
report that cost to the Legislative Budget Board for consideration
by the legislature in the General Appropriations Act.
(c) The allotment per mile of approved route may not exceed
the amount set by appropriation.
Sec. 41.104. HAZARDOUS CONDITIONS TRANSPORTATION
ALLOTMENT. (a) A school district or county may apply for and on
approval of the commissioner receive an additional amount of up to
10 percent of its regular transportation allotment to be used for
the transportation of children who live within two miles of the
school they attend and who would be subject to hazardous traffic
conditions if they walked to school.
(b) Each board of trustees shall provide to the commissioner
the definition of hazardous conditions applicable to that district
and shall identify the specific hazardous areas for which the
allotment is requested. A hazardous condition exists where no
walkway is provided and children must walk along or cross a freeway
or expressway, an underpass, an overpass or a bridge, an
uncontrolled major traffic artery, an industrial or commercial
area, or another comparable condition.
Sec. 41.105. PRIVATE OR COMMERCIAL TRANSPORTATION
ALLOTMENT. (a) The commissioner may grant an amount set by
appropriation for private or commercial transportation for
eligible students from isolated areas. The need for this type of
transportation grant shall be determined on an individual basis,
and the amount granted may not exceed the actual cost.
(b) The grants may be made only in extreme hardship cases. A
grant may not be made if the students live within two miles of an
approved school bus route.
Sec. 41.106. TRANSPORTATION OF CAREER AND TECHNOLOGY
EDUCATION STUDENTS. The cost of transporting career and technology
education students from one campus to another inside a school
district or from a sending district to another secondary public
school for a career and technology program or an area career and
technology school or to an approved postsecondary institution under
a contract for instruction approved by the agency shall be
reimbursed based on the number of actual miles traveled times the
district's official extracurricular travel per mile rate as set by
the board of trustees and approved by the agency.
Sec. 41.107. TRANSPORTATION OF SPECIAL EDUCATION STUDENTS.
(a) A school district or county that provides special
transportation services for eligible special education students is
entitled to a state allotment paid on a previous year's
cost-per-mile basis. The maximum rate per mile allowable shall be
set by appropriation based on data gathered from the first year of
each preceding biennium.
(b) A school district may use a portion of its support
allocation to pay transportation costs, if necessary. The
commissioner may grant an amount set by appropriation for private
transportation to reimburse parents or their agents for
transporting eligible special education students. The mileage
allowed shall be computed along the shortest public road from the
student's home to school and back, morning and afternoon. The need
for this type of transportation shall be determined on an
individual basis and shall be approved only in extreme hardship
cases.
Sec. 41.108. DETERMINATION OF TRANSPORTATION ALLOTMENTS OF
DISTRICT BELONGING TO COUNTY TRANSPORTATION SYSTEM. If a school
district belongs to a county transportation system, the district's
transportation allotment is determined on the basis of the number
of approved daily route miles in the district multiplied by the
allotment per mile to which the county transportation system is
entitled.
Sec. 41.109. TRANSPORTATION ALLOTMENT FOR TEXAS SCHOOL FOR
THE DEAF. The Texas School for the Deaf is entitled to an allotment
under this subchapter. The commissioner shall determine the
appropriate allotment.
Sec. 41.110. TRANSPORTATION TO CHILD-CARE FACILITIES.
Notwithstanding any other provision of this subchapter, the
commissioner may not reduce the allotment to which a school
district or county is entitled under this subchapter because, as
authorized by Section 34.007, the district or county provides
transportation for an eligible student to and from a child-care
facility, as defined by Section 42.002, Human Resources Code,
instead of the student's residence, if the transportation is
provided within the approved routes of the district or county for
the school the student attends.
Sec. 41.111. USE OF TRANSPORTATION ALLOTMENTS. Funds
allotted under this subchapter must be used in providing
transportation services.
[Sections 41.112-41.150 reserved for expansion]
SUBCHAPTER D. NEW INSTRUCTIONAL FACILITY ALLOTMENT
Sec. 41.151. NEW INSTRUCTIONAL FACILITY ALLOTMENT. A
school district is entitled to an additional allotment as provided
by this subchapter for operational expenses associated with opening
a new instructional facility.
Sec. 41.152. DEFINITION. In this subchapter,
"instructional facility" has the meaning assigned by Section
46.001.
Sec. 41.153. ALLOTMENT FOR FIRST YEAR OF OPERATION. For the
first school year in which students attend a new instructional
facility, a school district is entitled to an allotment of $250 for
each student in average daily attendance at the facility.
Sec. 41.154. ALLOTMENT FOR SECOND YEAR OF OPERATION.
(a) For the second school year in which students attend a new
instructional facility, a school district is entitled to an
allotment of $250 for each additional student in average daily
attendance at the facility.
(b) For purposes of this section, the number of additional
students in average daily attendance at a facility is the
difference between the number of students in average daily
attendance in the current year at that facility and the number of
students in average daily attendance at that facility in the
preceding year.
Sec. 41.155. LIMITATION ON ALLOTMENTS. (a) The amount
appropriated for allotments under this subchapter may not exceed
$25 million in a school year.
(b) If the total amount of allotments to which school
districts are entitled under this subchapter for a school year
exceeds the amount appropriated for allotments under this
subchapter, the commissioner shall reduce each district's
allotment under this subchapter proportionately.
Sec. 41.156. RULES. The commissioner may adopt rules
necessary to implement this subchapter.
[Subchapters E-H reserved for expansion]
SUBCHAPTER I. FINANCING THE SYSTEM
Sec. 41.401. FINANCING; GENERAL RULE. (a) The sum of the
guaranteed amounts under Subchapter B, the transportation
allotments under Subchapter C, and the new instructional facility
allotments under Subchapter D constitute the total cost of the
Texas Education Excellence Program.
(b) The program shall be financed by:
(1) revenue generated by the state ad valorem tax
under Section 1-e, Article VIII, Texas Constitution;
(2) state available school funds distributed in
accordance with law; and
(3) 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 Texas Education
Excellence Program not covered by other funds specified by this
subsection.
Sec. 41.402. DISTRIBUTION OF TEXAS EDUCATION FUND.
(a) For each school year the commissioner shall determine:
(1) the amount of money to which a school district is
entitled under Subchapters B, C, and D;
(2) the amount of money to which a school district is
entitled under Chapter 42; and
(3) the amount of each district's enrichment program
local revenue under Section 42.002.
(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 41.403, 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
under Chapter 42 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 41.403 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. The sum of the reductions under this subsection may not
be greater than the amount necessary to fully fund the entitlement
of each district.
(c) Each school district is entitled to state aid in an
amount equal to the difference for that district between the sum of
Subsections (a)(1) and (2) and the amount determined under
Subsection (a)(3).
(d) Except as provided by Section 42.005, the commissioner
shall approve warrants to each school district equaling the amount
of its entitlement. The total amount of the warrants approved under
this section may not exceed the total amount appropriated for Texas
Education Excellence Program purposes for that fiscal year.
(e) If a school district demonstrates to the satisfaction of
the commissioner that the estimate of the district's enrichment tax
rate, student enrollment, or taxable value of property used in
determining the amount of state funds to which the district is
entitled is so inaccurate as to result in undue financial hardship
to the district, the commissioner may adjust funding to that
district in that school year to the extent that funds are available
for that year.
(f) If the total amount appropriated for a year for the
basic program under the Texas Education Excellence Program is less
than the amount of money to which school districts are entitled for
that year, the commissioner shall reduce the total amount of basic
program funds allocated to each district proportionately. The
following fiscal year, a district's entitlement under this section
is increased by an amount equal to the reduction made under this
subsection.
(g) Payments from the Texas education fund to each school
district shall be made as follows:
(1) 15 percent of the yearly entitlement of the
district shall be paid in an installment to be made on or before the
25th day of September of a fiscal year;
(2) 80 percent of the yearly entitlement of the
district shall be paid in eight equal installments to be made on or
before the 25th day of October, November, December, January, March,
May, June, and July; and
(3) five percent of the yearly entitlement of the
district shall be paid in an installment to be made on or before the
25th day of February.
(h) Not later than March 1 of each year, the commissioner
shall determine the actual amount of state funds to which each
school district is entitled under this chapter and Chapter 42 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
enrichment tax rate, student enrollment, or taxable value of
property, the commissioner shall adjust the district's entitlement
for the next fiscal year accordingly.
Sec. 41.403. ESTIMATES REQUIRED. (a) Not later than
October 1 of each even-numbered year:
(1) the agency shall submit to the legislature an
estimate of the enrichment tax rate and student enrollment of each
school district for the following biennium; and
(2) the comptroller shall submit to the legislature an
estimate of the total taxable value of all property in the state as
determined under Subchapter M, Chapter 403, Government Code, for
the following biennium.
(b) The agency and the comptroller shall update the
information provided to the legislature under Subsection (a) not
later than March 1 of each odd-numbered year.
Sec. 41.404. MINIMUM PER-STUDENT AID.
(a) Notwithstanding any other provision of this subtitle, a school
district is entitled to an amount of state aid per student in
weighted average daily attendance that is equal to the amount of
state and local funds for maintenance and operations per student in
weighted average daily attendance the district received under
former Chapters 41 and 42 and Chapter 45 or under another law
authorizing a school district to impose a tax for maintenance and
operations for the 2003-2004 school year, or a greater amount
provided for any year by appropriation. For purposes of this
subsection, the amount of state and local funds for maintenance and
operations per student in weighted average daily attendance a
district received for the 2003-2004 school year does not include
any amounts the district paid for:
(1) the purchase of attendance credits under former
Subchapter D, Chapter 41; or
(2) the education of nonresident students under former
Subchapter E, Chapter 41.
(b) Each year, the commissioner shall determine for each
school district whether the amount of state aid to which the
district is entitled under Section 41.402(c) is less than the
amount specified under Subsection (a) and shall provide additional
state aid in an amount equal to the difference, if any.
(c) Additional state aid under this section shall be funded
from general revenue and designated in a separate line item in the
General Appropriations Act.
(d) A determination by the commissioner under this section
is final and may not be appealed.
(e) The commissioner may adopt rules to implement this
section.
Sec. 41.405. FALSIFICATION OF RECORDS; REPORT. When, in
the opinion of the agency's director of school audits, audits or
reviews of accounting, enrollment, or other records of a school
district reveal deliberate falsification of the records, or
violation of the provisions of this chapter, through which the
district's share of state funds allocated under this chapter would
be or has been illegally increased, the director shall promptly and
fully report the fact to the State Board of Education, the state
auditor, and the appropriate county attorney, district attorney, or
criminal district attorney.
Sec. 41.406. RECOVERY OF OVERALLOCATED FUNDS. (a) If a
school district has received an overallocation of state funds, the
agency shall, by withholding from subsequent allocations of state
funds or by requesting and obtaining a refund, recover from the
district an amount equal to the overallocation.
(b) If a district fails to comply with a request for a refund
under Subsection (a), the agency shall certify to the comptroller
that the amount constitutes a debt for purposes of Section 403.055,
Government Code. The agency shall provide to the comptroller the
amount of the overallocation and any other information required by
the comptroller. The comptroller may certify the amount of the debt
to the attorney general for collection.
(c) Any amounts recovered under this section shall be
deposited in the Texas education fund.
[Sections 41.407-41.450 reserved for expansion]
SUBCHAPTER J. LIMITATIONS ON PROGRAM ALLOTMENTS
Sec. 41.451. SPECIAL EDUCATION PROGRAMS. (a) For funding
purposes, the number of contact hours credited per day for each
special education student in the off-home-campus instructional
arrangement may not exceed the contact hours credited per day for
the multidistrict class instructional arrangement in the 1992-1993
school year.
(b) For funding purposes, the contact hours credited per day
for each special education student in the resource room;
self-contained, mild and moderate, regular campus; and
self-contained, severe, regular campus instructional arrangements
may not exceed the average of the statewide total contact hours
credited per day for those three instructional arrangements in the
1992-1993 school year.
(c) The State Board of Education by rule shall prescribe the
qualifications a special education instructional arrangement must
meet in order to be funded as a particular instructional
arrangement under this chapter. In prescribing the qualifications
that a mainstream instructional arrangement must meet, the board
shall require 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.
(d) The State Board of Education shall adopt rules and
procedures governing contracts for residential placement of
special education students. The legislature shall provide by
appropriation for the state's share of the costs of those
placements.
(e) Funds allocated under this chapter for special
education programs, 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.
(f) The agency shall encourage the placement of students in
special education programs, including students in residential
instructional arrangements, in the least restrictive environment
appropriate for students' educational needs.
(g) A school district that maintains for two successive
years a ratio of full-time equivalent special education students
placed in partially or totally self-contained classrooms to the
number of full-time equivalent students placed in resource room or
mainstream instructional arrangements that is 25 percent higher
than the statewide average ratio shall be reviewed by the agency to
determine the appropriateness of student placement. The
commissioner may reduce the guaranteed amount the district receives
to the level to which the district would be entitled if the
district's ratio was not more than 25 percent higher than the
statewide average ratio.
(h) 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 for each full-time equivalent student in
average daily attendance, multiplied by the amount designated for
the student's instructional arrangement under Section 41.052(b),
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 section may not exceed $10
million per year. A school district may use funds received under
this subsection only in providing an extended year program.
(i) From the total amount of funds appropriated for special
education under this chapter, 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
allocation proportionately.
Sec. 41.452. BILINGUAL EDUCATION AND SPECIAL LANGUAGE
PROGRAMS. (a) Funds allocated under this chapter for bilingual
education or special language programs, 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.
(b) A district's bilingual education or special language
allocation may be used only for program and student evaluation,
instructional materials and equipment, staff development,
supplemental staff expenses, salary supplements for teachers, and
other supplies required for quality instruction and smaller class
size.
Sec. 41.453. COMPENSATORY EDUCATION PROGRAMS. (a) For
purposes of Section 41.052(b)(14), 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.
(b) Funds allocated under Sections 41.052(b)(14) and (15)
may be used only 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 only 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 50 percent of the students
are educationally disadvantaged. In meeting the costs of providing
a compensatory, intensive, or accelerated instruction program
under Section 29.081, funds allocated under Sections 41.052(b)(14)
and (15) may be used only 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 41.052(b)(14) and (15) for a purpose authorized by 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
allocated under Sections 41.052(b)(14) and (15) is available to
supplement instructional programs and services, not more than 18
percent of the funds allocated under those sections may be used to
fund disciplinary alternative education programs established under
Section 37.008; and
(2) the commissioner may waive the limitations of
Subdivision (1) on 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.
(c) In a petition under Subsection (b)(2), a district shall
report the number of students in each grade level, by demographic
subgroup, not making satisfactory progress under the state's
assessment system. The commissioner shall make this waiver request
information available annually to the public on the agency's
website.
(d) The agency shall evaluate the effectiveness of
accelerated instruction and support programs provided under
Section 29.081 for students at risk of dropping out of school.
(e) From the total amount of funds appropriated for
allocations under Sections 41.052(b)(14) and (15), the
commissioner may, each fiscal year:
(1) withhold an amount determined by the commissioner
as appropriate to finance intensive accelerated instruction
programs and study guides provided under Sections 39.024(b) and
(c); and
(2) 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.
(f) From the total amount of funds appropriated for
allocations under Sections 41.052(b)(14) and (15), the
commissioner shall, each fiscal year:
(1) withhold an amount to be determined by the
commissioner, but not less than $10 million, and distribute that
amount for programs under Section 29.085, giving preference to a
school district that received funds for a program under that
section for the preceding school year;
(2) withhold the amount of $7.5 million, or a greater
amount as determined in the General Appropriations Act, and
distribute that amount for programs under Subchapter A, Chapter 33,
giving preference to a school district that received funds for a
program under that subchapter for the preceding school year;
(3) withhold the amount of $2.5 million for transfer
to the investment capital fund under Section 7.024; and
(4) withhold an amount sufficient to finance extended
year programs under Section 29.082, not to exceed five percent of
the amounts allocated under Sections 41.052(b)(14) and (15), giving
preference to extended year programs in districts with high
concentrations of educationally disadvantaged students.
(g) After deducting the amounts withheld under Subsections
(e) and (f) from the total amount appropriated for the allocations
under Sections 41.051(b)(14) and (15), the commissioner shall
reduce each district's guaranteed amount proportionately.
(h) The State Board of Education, with the assistance of the
state auditor and the comptroller, shall develop and implement by
rule a reporting and auditing system for district and campus
expenditures of funds allocated under Sections 41.051(b)(14) and
(15) to ensure that those funds, other than the indirect cost
allotment, are spent only to supplement the regular program. The
commissioner, in the year following an audit of compensatory
education expenditures, shall withhold from a district's Texas
education fund payment an amount equal to the amount of funds
allocated under Sections 41.051(b)(14) and (15) the agency
determines were not used in compliance with Subsection (b). The
commissioner shall release to a district funds withheld under this
subsection when the district provides to the commissioner a
detailed plan to use those funds in compliance with Subsection (b).
(i) The commissioner shall grant a one-year exemption from
the requirements of Subsection (h) to a school district in which the
group of students who failed to perform satisfactorily in the
preceding school year on an assessment instrument required under
Section 39.023(a), (c), or (l) subsequently performs on those
assessment instruments at a level that meets or exceeds a level
prescribed by commissioner rule. Each year the commissioner, based
on the most recent information available, shall determine if a
school district is entitled to an exemption for the following
school year and notify the district of that determination.
Sec. 41.454. PROGRAMS FOR GIFTED AND TALENTED STUDENTS.
(a) Funds allocated under this chapter for programs for gifted and
talented students, 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 State Board of Education rule. If by the end of the 12th
month after receiving an allocation for developing a program a
district has failed to implement a program, the district must
refund the amount of the allocation to the agency within 30 days.
(b) Not more than five percent of a district's students in
average daily attendance are eligible for funding under this
chapter for attendance in a program for gifted and talented
students.
(c) After each district has received allocated funds for
programs for gifted and talented students, the State Board of
Education may use up to $500,000 of the funds allocated under
Section 41.052(b)(18) for programs such as MATHCOUNTS, Future
Problem Solving, Odyssey of the Mind, and Academic Decathlon, as
long as those 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.
Sec. 41.455. CAREER AND TECHNOLOGY EDUCATION PROGRAMS.
(a) Funds allocated under this chapter for career and technology
education, 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 9 through 12 or career and
technology education programs for students with disabilities in
grades 9 through 12 under Sections 29.182, 29.183, and 29.184.
(b) Out of the total amount appropriated for allocations for
career and technology education under Section 41.052(b)(17), the
commissioner may withhold an amount specified in the General
Appropriations Act, which may not exceed one percent of the total
amount appropriated, to support regional career and technology
education planning. After deducting the amount withheld under this
subsection from the total amount appropriated for allocations for
career and technology education under Section 41.052(b)(17), the
commissioner shall reduce each district's allocations under that
section proportionately.
(c) The commissioner shall conduct a cost-benefit
comparison between career and technology education programs and
mathematics and science programs.
CHAPTER 42. ENRICHMENT PROGRAM
Sec. 42.001. PURPOSE. The purpose of the enrichment
program component of the Texas Education Excellence Program is to
provide each school district with the opportunity to supplement the
basic program at a level of its own choice.
Sec. 42.002. ALLOTMENT. (a) In this section, "wealth per
student" means a school district's taxable value of property, as
determined, except as provided by Subsection (c), under Subchapter
M, Chapter 403, Government Code, divided by the number of students
in average daily attendance in the district.
(b) Each school district is guaranteed a specified amount
per student in state and local funds for each cent of enrichment tax
effort up to the maximum level specified in this chapter. The
amount of state support is determined by the formula:
EGYA = (EGL X WADA X DETR X 100) - LR
where:
"EGYA" is the guaranteed yield amount of state enrichment
funds to be allocated to the district;
"EGL" is the dollar amount guaranteed level of state and
local enrichment funds per student per cent of tax effort, which is
the amount of district enrichment tax revenue per cent of tax effort
available to a school district at the 90th percentile in wealth per
student, as determined by the commissioner;
"WADA" is the number of students in weighted average daily
attendance, as determined under Section 41.051;
"DETR" is the district enrichment tax rate of the school
district, which is determined by dividing the total amount of
enrichment taxes collected by the school district for the
applicable school year by the district's taxable value of property
for the current year as determined, except as provided by
Subsection (c), under Subchapter M, Chapter 403, Government Code,
divided by 100; and
"LR" is the local revenue, which is determined by multiplying
"DETR" by the quotient of the district's taxable value of property
for the current year as determined, except as provided by
Subsection (c), under Subchapter M, Chapter 403, Government Code,
divided by 100.
(c) For purposes of this section, a school district's
taxable value of property is not reduced by the total dollar amount
of any residence homestead tax exemptions granted under Section
11.13(n), Tax Code.
Sec. 42.003. DISTRICT ENRICHMENT TAX. (a) Subject to
Section 42.004, the board of trustees of a school district may
impose an annual ad valorem tax for the enrichment of the public
schools in the district.
(b) The district enrichment tax rate may not exceed $0.10
for each $100 of taxable value of property.
(c) An exemption adopted by the board of trustees of a
school district under Section 11.13(n), Tax Code, does not apply to
a tax imposed under this section.
(d) Notwithstanding Subsection (b), for the 2005-2006
school year, the district enrichment tax rate may not exceed $0.05
for each $100 of taxable value of property. This subsection expires
August 31, 2006.
Sec. 42.004. ENRICHMENT TAX ELECTION. (a) A school
district may not impose an enrichment tax under Section 42.003
unless authorized by a majority of the qualified voters of the
district voting at an election held for that purpose.
(b) A proposition submitted to authorize the imposition of
an enrichment tax must include the question of whether the board of
trustees may impose annual ad valorem taxes for the further
enrichment of public schools, at a rate not to exceed the rate
stated in the proposition.
Sec. 42.005. DISTRIBUTION OF ENRICHMENT PROGRAM FUNDS.
(a) As provided by Section 41.402, for each school year, the
commissioner shall:
(1) determine the guaranteed yield amount of state
enrichment program funds to which a school district is entitled
under Section 42.002; and
(2) approve and transmit warrants to school districts.
(b) If the total amount of state enrichment funds allocated
to districts under this chapter for a fiscal year exceeds the amount
appropriated for that year, the commissioner shall reduce the total
amount of state enrichment funds allocated to each district
proportionately. The following fiscal year, a district's
entitlement under this chapter is increased by an amount equal to
the reduction made under this subsection.
Sec. 42.006. USE OF ALLOTMENT. State enrichment funds
allocated under this chapter may be used for any legal purpose,
including capital outlay and debt service.
Sec. 42.007. COMPUTATION OF ENRICHMENT AID FOR DISTRICT ON
MILITARY RESERVATION OR AT STATE SCHOOL. State enrichment funds
allocated under this chapter for a school district located on a
federal military installation or at Moody State School are computed
using the average district enrichment tax rate and property value
per student of school districts in the county, as determined by the
commissioner.
SECTION 1.03. Section 29.085, Education Code, is amended by
adding Subsections (e) and (f) to read as follows:
(e) The program established under this section is required
only in school districts in which the program is financed by funds
distributed under Section 41.453(f)(1) and any other funds
available for the program.
(f) The commissioner shall coordinate the funds withheld
under Section 41.453(f)(1) 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 students who are pregnant or
who are parents.
SECTION 1.04. Section 33.002, Education Code, is amended by
adding Subsections (d) and (e) to read as follows:
(d) This section applies only to a school district that
receives funds distributed under Section 41.453(f)(2) or any other
funds available.
(e) The commissioner shall coordinate the funds withheld
under Section 41.453(f)(2) 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.
SECTION 1.05. Sections 39.052(b) and (c), Education Code,
are amended to read as follows:
(b) The report card shall include the following information
[where applicable]:
(1) where applicable, the academic excellence
indicators adopted under Sections 39.051(b)(1) through (9);
(2) average class size by grade level and subject;
[and]
(3) the administrative and instructional costs per
student, computed in a manner consistent with Section 44.0071; and
(4) the district's instructional expenditures ratio
and instructional employees ratio computed under Section 44.0071,
and the statewide average of those ratios, as determined by the
commissioner.
(c) The commissioner shall adopt rules [for] requiring
dissemination of the information required under Subsection (b)(4)
and appropriate class size and student performance portions of
campus report cards annually to the parent, guardian, conservator,
or other person having lawful control of each student at the campus.
On written request, the school district shall provide a copy of a
campus report card to any other party.
SECTION 1.06. Section 39.182(a), Education Code, is amended
to read as follows:
(a) Not later than December 1 of each year, the agency shall
prepare and deliver to the governor, the lieutenant governor, the
speaker of the house of representatives, each member of the
legislature, the Legislative Budget Board, and the clerks of the
standing committees of the senate and house of representatives with
primary jurisdiction over the public school system a comprehensive
report covering the preceding school year and containing:
(1) an evaluation of the achievements of the state
educational program in relation to the statutory goals for the
public education system under Section 4.002;
(2) an evaluation of the status of education in the
state as reflected by the academic excellence indicators adopted
under Section 39.051;
(3) a summary compilation of overall student
performance on academic skills assessment instruments required by
Section 39.023 with the number and percentage of students exempted
from the administration of those instruments and the basis of the
exemptions, aggregated by grade level, subject area, campus, and
district, with appropriate interpretations and analysis, and
disaggregated by race, ethnicity, gender, and socioeconomic
status;
(4) a summary compilation of overall performance of
students placed in an alternative education program established
under Section 37.008 on academic skills assessment instruments
required by Section 39.023 with the number of those students
exempted from the administration of those instruments and the basis
of the exemptions, aggregated by district, grade level, and subject
area, with appropriate interpretations and analysis, and
disaggregated by race, ethnicity, gender, and socioeconomic
status;
(5) a summary compilation of overall performance of
students at risk of dropping out of school, as defined by Section
29.081(d), on academic skills assessment instruments required by
Section 39.023 with the number of those students exempted from the
administration of those instruments and the basis of the
exemptions, aggregated by district, grade level, and subject area,
with appropriate interpretations and analysis, and disaggregated
by race, ethnicity, gender, and socioeconomic status;
(6) an evaluation of the correlation between student
grades and student performance on academic skills assessment
instruments required by Section 39.023;
(7) a statement of the dropout rate of students in
grade levels 7 through 12, expressed in the aggregate and by grade
level, and a statement of the completion rates of students for grade
levels 9 through 12;
(8) a statement of:
(A) the completion rate of students who enter
grade level 9 and graduate not more than four years later;
(B) the completion rate of students who enter
grade level 9 and graduate, including students who require more
than four years to graduate;
(C) the completion rate of students who enter
grade level 9 and not more than four years later receive a high
school equivalency certificate;
(D) the completion rate of students who enter
grade level 9 and receive a high school equivalency certificate,
including students who require more than four years to receive a
certificate; and
(E) the number and percentage of all students who
have not been accounted for under Paragraph (A), (B), (C), or (D);
(9) a statement of the projected cross-sectional and
longitudinal dropout rates for grade levels 9 through 12 for the
next five years, assuming no state action is taken to reduce the
dropout rate;
(10) a description of a systematic, measurable plan
for reducing the projected cross-sectional and longitudinal
dropout rates to five percent or less for the 1997-1998 school year;
(11) a summary of the information required by Section
29.083 regarding grade level retention of students and information
concerning:
(A) the number and percentage of students
retained; and
(B) the performance of retained students on
assessment instruments required under Section 39.023(a);
(12) information, aggregated by district type and
disaggregated by race, ethnicity, gender, and socioeconomic
status, on:
(A) the number of students placed in an
alternative education program established under Section 37.008;
(B) the average length of a student's placement
in an alternative education program established under Section
37.008;
(C) the academic performance of students on
assessment instruments required under Section 39.023(a) during the
year preceding and during the year following placement in an
alternative education program; and
(D) the dropout rates of students who have been
placed in an alternative education program established under
Section 37.008;
(13) a list of each school district or campus that does
not satisfy performance standards, with an explanation of the
actions taken by the commissioner to improve student performance in
the district or campus and an evaluation of the results of those
actions;
(14) an evaluation of the status of the curriculum
taught in public schools, with recommendations for legislative
changes necessary to improve or modify the curriculum required by
Section 28.002;
(15) a description of all funds received by and each
activity and expenditure of the agency;
(16) a summary and analysis of the instructional
expenditures ratios and instructional employees ratios
[compliance] of school districts computed [with administrative
cost ratios set by the commissioner] under Section 44.0071 [42.201,
including any improvements and cost savings achieved by school
districts];
(17) a summary of the effect of deregulation,
including exemptions and waivers granted under Section 7.056 or
39.112;
(18) a statement of the total number and length of
reports that school districts and school district employees must
submit to the agency, identifying which reports are required by
federal statute or rule, state statute, or agency rule, and a
summary of the agency's efforts to reduce overall reporting
requirements;
(19) a list of each school district that is not in
compliance with state special education requirements, including:
(A) the period for which the district has not
been in compliance;
(B) the manner in which the agency considered the
district's failure to comply in determining the district's
accreditation status; and
(C) an explanation of the actions taken by the
commissioner to ensure compliance and an evaluation of the results
of those actions;
(20) a comparison of the performance of
open-enrollment charter schools and school districts on the
academic excellence indicators specified in Section 39.051(b) and
accountability measures adopted under Section 39.051(g), with a
separately aggregated comparison of the performance of
open-enrollment charter schools predominantly serving students at
risk of dropping out of school, as defined by Section 29.081(d),
with the performance of school districts; and
(21) any additional information considered important
by the commissioner or the State Board of Education.
SECTION 1.07. Section 43.001(b), Education Code, is amended
to read as follows:
(b) The available school fund[, which shall be apportioned
annually to each county according to its scholastic population,]
consists of:
(1) the interest and dividends arising from any
securities or funds belonging to the permanent school fund;
(2) all interest derivable from the proceeds of the
sale of land set apart for the permanent school fund;
(3) all money derived from the lease of land belonging
to the permanent school fund;
(4) one-fourth of all revenue derived from all state
occupation taxes, exclusive of delinquencies and cost of
collection;
(5) one-fourth of revenue derived from state gasoline
and special fuels excise taxes as provided by law; and
(6) all other appropriations to the available school
fund made by the legislature for public school purposes.
SECTION 1.08. Subchapter A, Chapter 44, Education Code, is
amended by adding Section 44.0071 to read as follows:
Sec. 44.0071. COMPUTATION OF INSTRUCTIONAL EXPENDITURES
RATIO AND INSTRUCTIONAL EMPLOYEES RATIO. (a) Each fiscal year, a
school district shall compute and report to the commissioner:
(1) the percentage of the district's total
expenditures for the preceding fiscal year that were used to fund
direct instructional activities; and
(2) the percentage of the district's full-time
equivalent employees during the preceding fiscal year whose job
function was to directly provide classroom instruction to students,
determined by dividing the number of hours spent by employees in
providing direct classroom instruction by the total number of hours
worked by all district employees.
(b) At least annually a school district shall provide
educators employed by the district with a list of district
employees determined by the district for purposes of this section
to be engaged in directly providing classroom instruction to
students. The list must include the percentage of time spent by
each employee in directly providing classroom instruction to
students.
(c) For purposes of this section, the computation of a
district's expenditures used to fund direct instructional
activities shall include the salary, including any associated
employment taxes, and value of any benefits provided to any
district employee who directly provided classroom instruction to
students, but only in proportion to the percentage of time spent by
the employee in directly providing classroom instruction to
students.
(d) The commissioner shall adopt rules as necessary to
implement this section.
SECTION 1.09. 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 1.10. Section 43.015, Education Code, is amended by
adding Subsection (c-1) to read as follows:
(c-1) On the 10th day of each month and on the last day of
the fiscal year, the comptroller shall transfer from the available
school fund to the Texas education fund all amounts in the available
school fund that the State Board of Education certifies are not
needed to purchase and distribute textbooks under Chapter 31.
SECTION 1.11. Section 46.033, Education Code, is amended to
read as follows:
Sec. 46.033. ELIGIBLE BONDS. Bonds, including bonds issued
under Section 45.006, are eligible to be paid with state and local
funds under this subchapter if:
(1) the district made payments on the bonds during the
final [2000-2001] school year of the state fiscal biennium
preceding the biennium in which the district first receives
assistance under this subchapter for the payment of principal of
and interest on the bonds or taxes levied to pay the principal of
and interest on the bonds were included in the district's audited
debt service collections for that school year; and
(2) the district does not receive state assistance
under Subchapter A for payment of the principal and interest on the
bonds.
SECTION 1.12. Section 46.034(c), Education Code, is amended
to read as follows:
(c) If the amount required to pay the principal of and
interest on eligible bonds in a school year is less than the amount
of payments made by the district on the bonds during the final
[2000-2001] school year of the state fiscal biennium preceding the
biennium in which the district first receives assistance under this
subchapter for the payment of principal of and interest on the bonds
or the district's audited debt service collections for that school
year, the district may not receive aid in excess of the amount that,
when added to the district's local revenue for the school year,
equals the amount required to pay the principal of and interest on
the bonds.
SECTION 1.13. The following provisions of the Education
Code are repealed:
(1) Section 33.001, as amended by Chapters 1223 and
1487, Acts of the 77th Legislature, Regular Session, 2001;
(2) Chapters 41 and 42, as added by Chapter 260, Acts
of the 74th Legislature, Regular Session, 1995; and
(3) Sections 11.151(b), 43.001(c), 43.016, 45.002,
and 45.003(d).
SECTION 1.14. (a) The Education Excellence Task Force is
composed of:
(1) five members appointed by the governor;
(2) five members appointed by the lieutenant governor,
three of whom must be members of the senate; and
(3) five members appointed by the speaker of the house
of representatives, three of whom must be members of the house of
representatives.
(b) The Education Excellence Task Force shall:
(1) study academic inputs needed to ensure educational
excellence;
(2) study the "best practices" of exemplary schools;
(3) analyze cost inputs;
(4) assess educational funding formulas and weights
and any impacts on educational programs provided to sustain the
weights; and
(5) study educational programs designed to improve
high school graduation rates.
(c) The Education Excellence Task Force shall, not later
than December 1, 2004, submit to the lieutenant governor, the
speaker of the house of representatives, and the legislature a
comprehensive study of the academic and funding elements needed to
ensure the opportunity for educational excellence of every Texas
student. The report must include specific recommendations for
improving student performance on the Texas Assessment of Knowledge
and Skills, for increasing high school graduation rates, and for
revising the education funding formulas and weights to promote
educational excellence.
SECTION 1.15. (a) Except as otherwise provided by this
Act, this article takes effect September 1, 2004, and applies
beginning with the 2004-2005 school year.
(b) Chapter 42, Education Code, as added by this Act,
applies beginning with the 2005-2006 school year.
SECTION 1.16. (a) A school district maintenance tax rate
imposed under Sections 45.002 and 45.003, Education Code, before
September 1, 2004, is void. The board of trustees of a school
district may not impose a district enrichment tax under Chapter 42,
Education Code, as added by this Act, without holding an election in
compliance with that chapter.
(b) The repeal by this Act of Section 45.002, Education
Code, does not affect the authority of a school district to collect
and use delinquent ad valorem taxes imposed under that section
before September 1, 2004.
(c) The repeal of Chapter 42, Education Code, by this Act
does not affect the liability of a school district for excess
administrative costs during the 2003-2004 school year that the
commissioner of education is entitled to recover during the
2004-2005 school year under Section 42.201(d), Education Code, as
that subsection existed on January 1, 2003, and the former law is
continued in effect for that purpose.
SECTION 1.17. A reference in this code or other law to the
Foundation School Program means the Texas Education Excellence
Program. A reference in this code or other law to the foundation
school fund means the Texas education fund.
ARTICLE 2. TEXAS EDUCATION FUND
SECTION 2.01. Chapter 45, Education Code, is amended by
adding Subchapter I to read as follows:
SUBCHAPTER I. TEXAS EDUCATION FUND
Sec. 45.251. TEXAS EDUCATION FUND. (a) The Texas
education fund is a fund maintained by the comptroller within the
general revenue fund. The Texas education fund consists of the tax
revenue allocated to the fund under Section 5A, Article VII, Texas
Constitution.
(b) The state ad valorem tax rate is $0.75 for each $100 of
the taxable value of property subject to the tax.
(c) Except as otherwise provided by law, the state shall be
treated, for purposes of the state ad valorem tax, as a taxing unit
under Title 1, Tax Code.
Sec. 45.252. APPRAISAL OF PROPERTY. (a) Property subject
to the state ad valorem tax shall be appraised by the appraisal
district for the county in which the property is located.
(b) Property subject to the state ad valorem tax 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. 45.253. TAX COLLECTION. (a) In each county, the
assessor-collector for the county shall assess and collect state ad
valorem taxes imposed on property in that county.
(b) If 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,
the official, taxing unit, or political subdivision shall also
assess or collect, as applicable, the state ad valorem taxes
imposed on property in that county.
(c) Each assessor or collector of state ad valorem taxes is
entitled to be reimbursed by the comptroller for the actual costs
incurred by the assessor or collector in assessing or collecting
state 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
the state ad valorem taxes.
(d) The comptroller shall:
(1) prescribe methods of accounting for and remitting
state ad valorem taxes;
(2) prescribe methods for establishing an assessor's
or collector's additional incremental costs incurred in assessing
or collecting state ad valorem taxes;
(3) prescribe and furnish forms for periodic reports
relating to state ad valorem taxes; and
(4) periodically examine the records of each assessor
or collector of state ad valorem taxes to verify the accuracy of any
reports required under this subsection.
Sec. 45.254. 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, Tax Code,
may, for purposes of the state ad valorem tax under this subchapter,
be exercised by the comptroller. A reference to the presiding
officer of a governing body in Title 1, Tax Code, is a reference to
the comptroller for the purposes of the state tax under this
subchapter.
(b) The comptroller may delegate to the county
assessor-collector any function of the comptroller with respect to
the state ad valorem tax and may designate the county
assessor-collector as the comptroller's agent for purposes of
administration of the state ad valorem tax.
Sec. 45.255. 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 state ad valorem tax to pay for the comptroller's expenses
in administering this subchapter and for the payment of tax refunds
that may become payable.
Sec. 45.256. NONAPPLICABILITY OF CERTAIN OTHER TAX LAWS.
Title 2, Tax Code, does not apply to the state ad valorem tax under
this subchapter.
SECTION 2.02. Except as otherwise provided by this Act,
this article takes effect January 1, 2004.
ARTICLE 3. AMENDMENTS TO PROPERTY TAX CODE
SECTION 3.01. Subchapter A, Chapter 6, Tax Code, is amended
by adding Section 6.038 to read as follows:
Sec. 6.038. STATE PARTICIPATION. (a) 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.
(b) The comptroller by rule shall establish guidelines and
criteria under which, if the comptroller finds that generally
accepted appraisal standards and practices were not used by the
appraisal district appraising property subject to the state ad
valorem tax or that the appraised values assigned to property
subject to that tax are invalid, the comptroller may:
(1) withhold payment of all or part of the portion of
the amount of the budget of the appraisal district that is allocated
to the state until the district takes appropriate actions to remedy
the deficiencies in appraisals found by the comptroller; or
(2) direct that all or any part of the portion of the
amount of the budget of the district allocated to the state be
applied to remedying those deficiencies.
SECTION 3.02. Section 6.06(d), Tax Code, is amended to read
as follows:
(d) The state and each [Each] taxing unit participating in
the district is allocated a portion of the amount of the budget
equal to the proportion that the total dollar amount of property
taxes imposed in the district by the state or taxing unit for the
tax year in which the budget proposal is prepared bears to the sum
of the total dollar amount of property taxes imposed in the district
by the state and each participating unit for that year. For
purposes of this subsection, only state ad valorem taxes imposed in
the county for which the district is established are considered as
state ad valorem taxes imposed in the district. If a taxing unit
participates in two or more districts, only the taxes imposed in a
district are used to calculate the unit's cost allocations in that
district. If the number of real property parcels in a taxing unit
is less than 5 percent of the total number of real property parcels
in the district and the taxing unit imposes in excess of 25 percent
of the total amount of the property taxes imposed in the district by
all of the participating taxing units for a year, the unit's
allocation may not exceed a percentage of the appraisal district's
budget equal to three times the unit's percentage of the total
number of real property parcels appraised by the district.
SECTION 3.03. Sections 11.13(b) and (c), Tax Code, are
amended to read as follows:
(b) An adult is entitled to exemption from taxation by the
state for public school purposes or by a school district of $15,000
of the appraised value of the adult's residence homestead, except
that $10,000 of the exemption does not apply to an entity operating
under former Chapter 17, 18, 25, 26, 27, or 28, Education Code, as
those chapters existed on May 1, 1995, as permitted by Section
11.301, Education Code.
(c) In addition to the exemption provided by Subsection (b)
[of this section], an adult who is disabled or is 65 years of age or
older is entitled to an exemption from taxation by the state for
public school purposes or by a school district of $10,000 of the
appraised value of the adult's [his] residence homestead.
SECTION 3.04. Section 11.14, Tax Code, is amended by adding
Subsection (f) to read as follows:
(f) Subsection (c) does not apply to the comptroller or to
the state ad valorem tax.
SECTION 3.05. Section 11.251(i), Tax Code, is amended to
read as follows:
(i) The exemption provided by Subsection (b) does not apply
to a taxing unit that takes action to tax the property under Article
VIII, Section 1-j, Subsection (b), of the Texas Constitution. If
the property is located in a school district that taxes the property
in the tax year, the property is not exempt from state ad valorem
taxes imposed under Article VIII, Section 1-n, Texas Constitution,
in that tax year.
SECTION 3.06. The heading to Section 11.26, Tax Code, is
amended to read as follows:
Sec. 11.26. LIMITATION OF SCHOOL TAXES [TAX] ON HOMESTEADS
OF ELDERLY.
SECTION 3.07. Section 11.26, Tax Code, is amended by
amending Subsections (a), (b), (g), (h), (j), and (k) and adding
Subsections (a-1) and (g-1) to read as follows:
(a) The tax officials shall appraise the property to which
this section applies and calculate taxes as on other property, but
if the tax so calculated exceeds the limitation imposed by this
section, the tax imposed is the amount of the tax as limited by this
section, except as otherwise provided by this section. The state or
a [A] school district may not increase the total annual amount of ad
valorem tax it imposes on the residence homestead of an individual
65 years or older above the amount of the tax it imposed in the first
tax year in which the individual qualified that residence homestead
for the exemption provided by Section 11.13(c) for an individual 65
years of age or older. If the individual qualified that residence
homestead for the exemption after the beginning of that first year
and the residence homestead remains eligible for the exemption for
the next year, and if the school [district] taxes imposed by the
state or the school district taxes on the residence homestead in the
next year are less than the amount of taxes it imposed in that first
year, the state or a school district may not subsequently increase
the total annual amount of ad valorem taxes it imposes on the
residence homestead above the amount it imposed in the year
immediately following the first year for which the individual
qualified that residence homestead for the exemption, except as
provided by Subsection (b).
(a-1) If the first tax year the individual qualified the
residence homestead for the exemption provided by Section 11.13(c)
was a tax year before the 2004 [1997] tax year, except as provided
by Subsection (b):
(1) the amount of the limitation on state taxes
provided by this section is the amount of tax the school district in
which the property is located imposed for the 2003 [1996] tax year
[less an amount equal to the amount determined by multiplying
$10,000 times the tax rate of the school district for the 1997 tax
year,] plus any 2004 state [1997] tax attributable to improvements
made in 2003 [1996], other than improvements made to comply with
governmental regulations or repairs; and
(2) the amount of the limitation provided by this
section on school district taxes is the amount of tax the school
district imposed for the 2003 tax year less the amount of state
taxes imposed in the 2004 tax year, plus any 2004 school taxes
attributable to improvements made in 2003, other than improvements
made to comply with governmental regulations or repairs.
(b) If an individual makes improvements to the individual's
residence homestead, other than improvements required to comply
with governmental requirements or repairs, the state or the school
district may increase the tax on the homestead in the first year the
value of the homestead is increased on the appraisal roll because of
the enhancement of value by the improvements. The amount of the tax
increase is determined by applying the current tax rate to the
difference in the assessed value of the homestead with the
improvements and the assessed value it would have had without the
improvements. A limitation imposed by this section then applies to
the increased amount of tax until more improvements, if any, are
made.
(g) Except as provided by Subsection (b), if an individual
who receives a limitation on tax increases imposed by this section,
including a surviving spouse who receives a limitation under
Subsection (i), subsequently qualifies a different residence
homestead for an exemption under Section 11.13, the state or a
school district may not impose ad valorem taxes on the subsequently
qualified homestead in a year in an amount that exceeds the amount
of taxes the state or the school district would have imposed on the
subsequently qualified homestead in the first year in which the
individual receives that exemption for the subsequently qualified
homestead had the limitation on tax increases imposed by this
section not been in effect, multiplied by a fraction the numerator
of which is the total amount of [school district] taxes imposed by
the state or the school district on the former homestead in the last
year in which the individual received that exemption for the former
homestead and the denominator of which is the total amount of taxes
the state or the school district [taxes that] would have [been]
imposed on the former homestead in the last year in which the
individual received that exemption for the former homestead had the
limitation on tax increases imposed by this section not been in
effect.
(g-1) Subsection (g) does not apply to a residence homestead
to which this subsection applies. Except as provided by Subsection
(b), if an individual who receives a limitation on tax increases
imposed by this section in a tax year before the 2004 tax year,
including a surviving spouse who receives a limitation under
Subsection (i), subsequently qualifies a different residence
homestead for an exemption under Section 11.13 and the first year in
which the subsequently qualified homestead qualifies for the
exemption is a tax year after the 2003 tax year:
(1) the state may not impose taxes on the subsequently
qualified homestead in an amount that exceeds the amount of taxes
the state would have imposed on the subsequently qualified
homestead in the first year in which the individual receives that
exemption for the subsequently qualified homestead had the
limitation on tax increases imposed by this section not been in
effect, multiplied by a fraction the numerator of which is the total
amount of school district taxes imposed on the former homestead in
the last year in which the individual received that exemption for
the former homestead and the denominator of which is the total
amount of school district taxes that would have been imposed on the
former homestead in the last year in which the individual received
that exemption for the former homestead had the limitations on tax
increases imposed by this section not been in effect; and
(2) the school district may not impose taxes on the
subsequently qualified homestead in an amount that exceeds the
positive amount, if any, by which the limitation on state taxes
calculated under Subdivision (1) exceeds the amount of state taxes
imposed in the first year in which the subsequently qualified
homestead receives the exemption.
(h) An individual who receives a limitation on tax increases
under this section, including a surviving spouse who receives a
limitation under Subsection (i), and who subsequently qualifies a
different residence homestead for an exemption under Section 11.13,
or an agent of the individual, is entitled to receive from the chief
appraiser of the appraisal district in which the former homestead
was located a written certificate providing the information
necessary to determine whether the individual may qualify for a
limitation on the subsequently qualified homestead under
Subsection (g) or (g-1) and to calculate the amount of taxes the
state or the school district may impose on the subsequently
qualified homestead.
(j) If an individual who qualifies for an exemption provided
by Section 11.13(c) for an individual 65 years of age or older dies
in the first year in which the individual qualified for the
exemption and the individual first qualified for the exemption
after the beginning of that year, except as provided by Subsection
(k), the amount to which the surviving spouse's state or school
district taxes are limited under Subsection (i) is the amount of
state or school district taxes imposed on the residence homestead
in that year determined as if the individual qualifying for the
exemption had lived for the entire year.
(k) If in the first tax year after the year in which an
individual dies in the circumstances described by Subsection (j)
the amount of [school district] taxes imposed by the state or the
school district on the residence homestead of the surviving spouse
is less than the amount of state or school district taxes imposed in
the preceding year as limited by Subsection (j), in a subsequent tax
year the surviving spouse's state or school district taxes on that
residence homestead are limited to the amount of taxes imposed by
the state or the school district in that first tax year after the
year in which the individual dies.
SECTION 3.08. Section 21.03(a), Tax Code, is amended to
read as follows:
(a) If personal property that is taxable by this state or a
taxing unit of this state is used continually outside this state,
whether regularly or irregularly, the appraisal office shall
allocate to this state the portion of the total market value of the
property that fairly reflects its use in this state.
SECTION 3.09. Section 21.031(a), Tax Code, is amended to
read as follows:
(a) If a vessel or other watercraft that is taxable by this
state or a taxing unit of this state is used continually outside
this state, whether regularly or irregularly, the appraisal office
shall allocate to this state the portion of the total market value
of the vessel or watercraft that fairly reflects its use in this
state. The appraisal office shall not allocate to this state the
portion of the total market value of the vessel or watercraft that
fairly reflects its use in another state or country, in
international waters, or beyond the Gulfward boundary of this
state.
SECTION 3.10. Section 23.46(d), Tax Code, is amended to
read as follows:
(d) A tax lien attaches to the land on the date the sale or
change of use occurs to secure payment of the additional tax and
interest imposed by Subsection (c) [of this section] and any
penalties incurred. The lien exists in favor of the state and all
taxing units for which the additional tax is imposed.
SECTION 3.11. Section 23.55(b), Tax Code, is amended to
read as follows:
(b) A tax lien attaches to the land on the date the change of
use occurs to secure payment of the additional tax and interest
imposed by this section and any penalties incurred. The lien exists
in favor of the state and all taxing units for which the additional
tax is imposed.
SECTION 3.12. Section 23.76(b), Tax Code, is amended to
read as follows:
(b) A tax lien attaches to the land on the date the change of
use occurs to secure payment of the additional tax and interest
imposed by this section and any penalties incurred. The lien exists
in favor of the state and all taxing units for which the additional
tax is imposed.
SECTION 3.13. Section 23.86(b), Tax Code, is amended to
read as follows:
(b) A tax lien attaches to the land on the date the change of
use occurs or the deed restriction expires to secure payment of the
additional tax and interest imposed by this section and any
penalties incurred. The lien exists in favor of the state and all
taxing units for which the additional tax is imposed.
SECTION 3.14. Section 23.96(b), Tax Code, is amended to
read as follows:
(b) A tax lien attaches to the property on the date the deed
restriction expires to secure payment of the additional tax and
interest imposed by this section and any penalties incurred. The
lien exists in favor of the state and all taxing units for which the
additional tax is imposed.
SECTION 3.15. Section 23.9807(c), Tax Code, is amended to
read as follows:
(c) A tax lien attaches to the land on the date the change of
use occurs to secure payment of the additional tax and interest
imposed by this section and any penalties incurred. The lien exists
in favor of the state and all taxing units for which the additional
tax is imposed.
SECTION 3.16. Section 24.39, Tax Code, is amended to read as
follows:
Sec. 24.39. IMPOSITION OF TAX. (a) The county
assessor-collector and commissioners court may not change the
apportioned values certified as provided by this subchapter.
(b) The county assessor-collector shall add each owner's
rolling stock and the value apportioned to the county as certified
to that official [him] to the appraisal roll certified to that
official [him] by the chief appraiser as provided by Section 26.01
[of this code] for county tax purposes and to the appraisal roll for
state ad valorem taxes. The county assessor-collector [He] shall
calculate the county and state taxes [tax] due on the rolling stock
as provided by Section 26.09 [of this code].
SECTION 3.17. Section 25.19(b), Tax Code, as amended by
Chapters 1358 and 1517, Acts of the 76th Legislature, Regular
Session, 1999, is reenacted and amended to read as follows:
(b) The chief appraiser shall separate real from personal
property and include in the notice for each:
(1) a list of the taxing units in which the property is
taxable and a statement that the property is subject to the state
tax to support the public schools;
(2) the appraised value of the property in the
preceding year;
(3) the taxable value of the property in the preceding
year for each taxing unit taxing the property and for state
taxation;
(4) the appraised value of the property for the
current year and the kind and amount of each partial exemption, if
any, approved for the current year;
(5) if the appraised value is greater than it was in
the preceding year:
(A) the effective tax rate for each taxing unit
other than the state that would be announced pursuant to Chapter 26
if the total values being submitted to the appraisal review board
were to be approved by the board with an explanation that that rate
would raise the same amount of revenue from property taxed in the
preceding year as the unit raised for those purposes in the
preceding year;
(B) the amount of tax that would be imposed on the
property on the basis of each [the] rate described by Paragraph (A);
and
(C) a statement that the governing body of a
local taxing [the] unit may not adopt a rate that will increase tax
revenues for operating purposes from properties taxed in the
preceding year without publishing notice in a newspaper that it is
considering a tax increase and holding a hearing for taxpayers to
discuss the tax increase;
(6) if the appraised value is greater than it was in
the preceding year, the amount of tax that would be imposed on the
property on the basis of the tax rate for the preceding year;
(7) in italic typeface, the following statement: "The
Texas Legislature does not set the amount of your local taxes. Your
local property tax burden is decided by your locally elected
officials, and all inquiries concerning your local taxes should be
directed to those officials";
(8) a detailed explanation of the time and procedure
for protesting the value; [and]
(9) the date and place the appraisal review board will
begin hearing protests; and
(10) a brief explanation that the governing body of
each local taxing unit decides whether [or not] taxes on the
property will increase and the appraisal district only determines
the value of the property.
SECTION 3.18. The heading to Section 26.01, Tax Code, is
amended to read as follows:
Sec. 26.01. SUBMISSION OF ROLLS TO STATE AND TAXING UNITS.
SECTION 3.19. Sections 26.01(a), (c), and (d), Tax Code,
are amended to read as follows:
(a) By July 25, the chief appraiser shall prepare and
certify to the assessor for each taxing unit participating in the
district that part of the appraisal roll for the district that lists
the property taxable by the unit. By that date the chief appraiser
shall prepare and certify to the comptroller that part of the
appraisal roll for the district that lists property taxable by the
state. The part certified to the assessor or the comptroller is the
appraisal roll for the taxing unit or the state. The chief
appraiser shall consult with the assessor for each taxing unit and
the comptroller and notify each taxing unit and the comptroller in
writing by April 1 of the form in which the roll will be provided to
each unit and to the comptroller.
(c) The chief appraiser shall prepare and certify to the
assessor for each taxing unit and the comptroller a listing of those
properties which are taxable by that unit or the state but which are
under protest and therefore not included on the appraisal roll
approved by the appraisal review board and certified by the chief
appraiser. This listing shall include the appraised market value,
productivity value (if applicable), and taxable value as determined
by the appraisal district and shall also include the market value,
taxable value, and productivity value (if applicable) as claimed by
the property owner filing the protest if available. If the property
owner does not claim a value and the appraised value of the property
in the current year is equal to or less than its value in the
preceding year, the listing shall include a reasonable estimate of
the market value, taxable value, and productivity value (if
applicable) that would be assigned to the property if the
taxpayer's claim is upheld. If the property owner does not claim a
value and the appraised value of the property is higher than its
appraised value in the preceding year, the listing shall include
the appraised market value, productivity value (if applicable) and
taxable value of the property in the preceding year, except that if
there is a reasonable likelihood that the appraisal review board
will approve a lower appraised value for the property than its
appraised value in the preceding year, the chief appraiser shall
make a reasonable estimate of the taxable value that would be
assigned to the property if the property owner's claim is upheld.
The taxing unit shall use the lower value for calculations as
prescribed in Sections 26.04 and 26.041 [of this code].
(d) The chief appraiser shall prepare and certify to the
assessor for each taxing unit and the comptroller a list of those
properties of which the chief appraiser has knowledge that are
reasonably likely to be taxable by that unit or the state but that
are not included on the appraisal roll certified to the assessor or
the comptroller under Subsection (a) or included on the listing
certified to the assessor or the comptroller under Subsection (c).
The chief appraiser shall include on the list for each property the
market value, appraised value, and kind and amount of any partial
exemptions as determined by the appraisal district for the
preceding year and a reasonable estimate of the market value,
appraised value, and kind and amount of any partial exemptions for
the current year. Until the property is added to the appraisal
roll, the assessor for the taxing unit shall include each property
on the list in the calculations prescribed by Sections 26.04 and
26.041, and for that purpose shall use the lower market value,
appraised value, or taxable value, as appropriate, included on or
computed using the information included on the list for the
property.
SECTION 3.20. Chapter 26, Tax Code, is amended by adding
Section 26.011 to read as follows:
Sec. 26.011. PROVISIONS EXCLUDED FOR STATE TAX. Sections
26.04, 26.041, 26.05, 26.051, 26.06, 26.07, and 26.08 do not apply
to the state ad valorem tax or to the comptroller.
SECTION 3.21. Sections 26.09(b) and (c), Tax Code, are
amended to read as follows:
(b) The county assessor-collector shall add the properties
and their values certified to that official [him] as provided by
Chapter 24 [of this code] to the appraisal roll for county tax
purposes and to the appraisal roll for state ad valorem taxes. The
county assessor-collector shall use the appropriate appraisal roll
certified to that official [him] as provided by Section 26.01 with
the added properties and values to calculate county and state
taxes.
(c) The tax is calculated by:
(1) subtracting from the appraised value of a property
as shown on the appraisal roll for a taxing [the] unit or the state
the amount of any partial exemption allowed the property owner that
applies to appraised value to determine taxable [net appraised]
value; and
(2) [multiplying the net appraised value by the
assessment ratio to determine assessed value;
[(3) subtracting from the assessed value the amount of
any partial exemption allowed the property owner to determine
taxable value; and
[(4)] multiplying the taxable value by the applicable
tax rate.
SECTION 3.22. Section 26.12, Tax Code, is amended by adding
Subsection (e) to read as follows:
(e) For purposes of this section, the state is not a taxing
unit.
SECTION 3.23. Section 26.15(c), Tax Code, is amended to
read as follows:
(c) At any time, the governing body of a taxing unit, on
motion of the assessor for the unit or of a property owner, shall
direct by written order changes in the tax roll to correct errors in
the mathematical computation of a tax. The assessor shall enter the
corrections ordered by the governing body. The comptroller may
order changes on the state tax roll to correct errors in the
mathematical computation of the state tax.
SECTION 3.24. Section 31.11(a), Tax Code, is amended to
read as follows:
(a) If a taxpayer applies to the tax collector of a taxing
unit for a refund of an overpayment or erroneous payment of taxes
and the auditor for the unit or the comptroller in the case of the
state ad valorem tax determines that the payment was erroneous or
excessive, the tax collector shall refund the amount of the
excessive or erroneous payment from available current tax
collections or from funds appropriated by the unit for making
refunds. For taxes other than state ad valorem taxes [However], the
collector may not make the refund unless the governing body of the
taxing unit or the governing body of a taxing unit that collects
another unit's taxes also determines that the payment was erroneous
or excessive and approves the refund if the amount of the refund
exceeds:
(1) $2,500 for a refund to be paid by a county with a
population of 1.5 million or more; or
(2) $500 for a refund to be paid by any other taxing
unit.
SECTION 3.25. Sections 32.01(a) and (d), Tax Code, are
amended to read as follows:
(a) On January 1 of each year, a tax lien attaches to
property to secure the payment of all taxes, penalties, and
interest ultimately imposed for the year by the state or a taxing
unit on the property, whether or not the taxes are imposed in the
year the lien attaches. The lien to secure the payment of state ad
valorem taxes and applicable penalties and interest exists in favor
of the state. The lien to secure the payment of taxes imposed by a
taxing unit and applicable penalties and interest exists in favor
of the [each] taxing unit having power to tax the property.
(d) The lien under this section is perfected on attachment
and, except as provided by Section 32.03(b), perfection requires no
further action by the state or taxing unit.
SECTION 3.26. Section 33.01(a), Tax Code, is amended to
read as follows:
(a) A delinquent tax, including a delinquent state ad
valorem tax, incurs a penalty of six percent of the amount of the
tax for the first calendar month it is delinquent plus one percent
for each additional month or portion of a month the tax remains
unpaid prior to July 1 of the year in which it becomes delinquent.
However, a tax delinquent on July 1 incurs a total penalty of twelve
percent of the amount of the delinquent tax without regard to the
number of months the tax has been delinquent. A delinquent tax
continues to incur the penalty provided by this subsection as long
as the tax remains unpaid, regardless of whether a judgment for the
delinquent tax has been rendered.
SECTION 3.27. Subchapter A, Chapter 33, Tax Code, is
amended by adding Section 33.10 to read as follows:
Sec. 33.10. COLLECTION OF DELINQUENT STATE AD VALOREM
TAXES; PENALTY. (a) Except as provided by Subsection (b), the
attorney general shall represent the state to enforce the
collection of delinquent state ad valorem taxes. The attorney
general may delegate the attorney general's duties under this
subsection to a county or district attorney or may contract with a
private attorney for the performance of those duties.
(b) If the commissioners court of a county contracts with a
private attorney for the collection of delinquent county ad valorem
taxes, the contract applies to the collection of delinquent state
ad valorem taxes on property taxable in that county without further
action. The compensation of the private attorney for collecting
delinquent state ad valorem taxes is equal to a percentage of the
amount collected that represents the portion of that amount
attributable to the additional penalty provided by Subsection (c).
If the commissioners court of a county contracts with an official,
taxing unit, or political subdivision of this state for the
collection of the ad valorem taxes of the county that includes the
collection of delinquent county taxes, the contract applies to the
collection of delinquent state ad valorem taxes on property taxable
in that county without further action.
(c) State ad valorem taxes that remain delinquent on July 1
of the year in which they become delinquent incur an additional
penalty to defray costs of collection if the collection of the
delinquent taxes is covered by a contract with a private attorney
under Subsection (a) or (b). The amount of the penalty is 15
percent of the amount of the taxes, penalty, and interest due.
(d) A tax lien attaches in favor of the state to the property
on which the tax is imposed to secure payment of the penalty.
(e) The attorney general or the person responsible for
collecting the delinquent tax shall deliver a notice of delinquency
and of the penalty to the property owner at least 30 and not more
than 60 days before July 1.
(f) Sections 6.30, 33.07, and 33.08 do not apply to the
state ad valorem tax.
SECTION 3.28. Sections 33.21(a) and (b), Tax Code, are
amended to read as follows:
(a) A person's personal property is subject to seizure for
the payment of a delinquent tax, penalty, and interest the person
[he] owes the state or a taxing unit on property.
(b) A person's personal property is subject to seizure for
the payment of a tax imposed by the state or a taxing unit on the
person's [his] property before the tax becomes delinquent if:
(1) the collector discovers that property on which the
tax has been or will be imposed is about to be removed from the
county; and
(2) the collector knows of no other personal property
in the county from which the tax may be satisfied.
SECTION 3.29. Section 33.23(b), Tax Code, is amended to
read as follows:
(b) A bond may not be required of the state or a taxing unit
for issuance or delivery of a tax warrant, and a fee or court cost
may not be charged for issuance or delivery of a warrant.
SECTION 3.30. Section 33.44(b), Tax Code, is amended to
read as follows:
(b) For purposes of joining a county, citation may be served
on the county [tax] assessor-collector. For purposes of joining
any other taxing unit, citation may be served on the officer charged
with collecting taxes for the unit or on the presiding officer or
secretary of the governing body of the unit. For purposes of
joining the state, citation shall be served on the county
assessor-collector. Citation may be served by certified mail,
return receipt requested. A person on whom service is authorized by
this subsection may waive the issuance and service of citation in
behalf of the person's [his] taxing unit.
SECTION 3.31. Section 34.04(b), Tax Code, is amended to
read as follows:
(b) A copy of the petition shall be served, in the manner
prescribed by Rule 21a, Texas Rules of Civil Procedure, as amended,
or that rule's successor, on all parties to the underlying action
not later than the 20th day before the date set for a hearing on the
petition. The attorney general represents the state at the hearing
unless the attorney general delegates that duty to the county or
district attorney.
SECTION 3.32. The heading to Chapter 41, Tax Code, is
amended to read as follows:
CHAPTER 41. ADMINISTRATIVE [LOCAL] REVIEW
SECTION 3.33. Section 41.03, Tax Code, is amended to read as
follows:
Sec. 41.03. CHALLENGE BY STATE OR TAXING UNIT. (a) The
state or a [A] taxing unit is entitled to challenge before the
appraisal review board:
(1) the level of appraisals of any category of
property in the district or in any territory in the district, but
not the appraised value of a single taxpayer's property;
(2) an exclusion of property from the appraisal
records;
(3) a grant in whole or in part of a partial exemption;
(4) a determination that land qualifies for appraisal
as provided by Subchapter C, D, E, or H, Chapter 23; or
(5) failure to identify the taxing unit as one in which
a particular property is taxable.
(b) If the state or a taxing unit challenges a determination
that land qualifies for appraisal under Subchapter H, Chapter 23,
on the ground that the land is not located in an aesthetic
management zone, critical wildlife habitat zone, or streamside
management zone, the state or the taxing unit must first seek a
determination letter from the director of the Texas Forest Service.
The appraisal review board shall accept the letter as conclusive
proof of the type, size, and location of the zone.
SECTION 3.34. Subchapter A, Chapter 41, Tax Code, is
amended by adding Section 41.031 to read as follows:
Sec. 41.031. CHALLENGE BY COMPTROLLER. The comptroller is
entitled to challenge before the appraisal review board the
exclusion of property from the appraisal roll for state ad valorem
taxes.
SECTION 3.35. Section 41.06(a), Tax Code, is amended to
read as follows:
(a) The secretary of the appraisal review board shall
deliver to the comptroller and the presiding officer of the
governing body of each taxing unit entitled to appear at a challenge
hearing written notice of the date, time, and place fixed for the
hearing. The secretary shall deliver the notice not later than the
10th day before the date of the hearing.
SECTION 3.36. Section 41.07(d), Tax Code, is amended to
read as follows:
(d) The board shall deliver by certified mail a notice of
the issuance of the order and a copy of the order to the taxing unit.
If the order of the board excludes property from the appraisal roll
for state ad valorem taxes, the board shall also deliver a notice of
issuance and a copy of the order to the comptroller in the manner
prescribed by the comptroller.
SECTION 3.37. Section 41.12, Tax Code, is amended by adding
Subsection (c) to read as follows:
(c) A protest upon which a determination is pending under
Subchapter E is not considered to be an undetermined protest for the
purposes of Subsection (b).
SECTION 3.38. Section 41.47(d), Tax Code, is amended to
read as follows:
(d) The board shall deliver by certified mail a notice of
issuance of the order and a copy of the order to the property owner
and the chief appraiser. If the order of the board excludes
property from the appraisal roll for state ad valorem taxes, the
board shall also deliver a notice of issuance and a copy of the
order to the comptroller in the manner prescribed by the
comptroller.
SECTION 3.39. Section 41.41(a), Tax Code, is amended to
read as follows:
(a) A property owner is entitled to protest before the
appraisal review board the following actions:
(1) determination of the appraised value of the
owner's property or, in the case of land appraised as provided by
Subchapter C, D, E, or H, Chapter 23, determination of its appraised
or market value;
(2) unequal appraisal of the owner's property;
(3) inclusion of the owner's property on the appraisal
records;
(4) denial to the property owner in whole or in part of
a partial exemption;
(5) determination that the owner's land does not
qualify for appraisal as provided by Subchapter C, D, E, or H,
Chapter 23;
(6) identification of the taxing units in which the
owner's property is taxable in the case of the appraisal district's
appraisal roll;
(7) determination that the property owner is the owner
of property;
(8) a determination that a change in use of land
appraised under Subchapter C, D, E, or H, Chapter 23, has occurred;
[or]
(9) the inclusion of the property on or the exclusion
of the property from the appraisal roll for state ad valorem taxes;
or
(10) any other action of the chief appraiser,
appraisal district, or appraisal review board that applies to and
adversely affects the property owner.
SECTION 3.40. Subchapter A, Chapter 42, Tax Code, is
amended by adding Section 42.032 to read as follows:
Sec. 42.032. RIGHT OF APPEAL BY COMPTROLLER. (a) The
comptroller is entitled to appeal an order of the appraisal review
board excluding property from the appraisal roll for state ad
valorem taxes.
(b) The attorney general shall represent the comptroller in
an appeal under this section. The attorney general may delegate its
duties under this section to a county or district attorney or may
contract with a private attorney for the performance of those
duties.
SECTION 3.41. Sections 42.06(a) and (c), Tax Code, are
amended to read as follows:
(a) To exercise the party's right to appeal an order of an
appraisal review board, a party other than a property owner must
file written notice of appeal within 15 days after the date the
party receives the notice required by Section 41.47 or, in the case
of a taxing unit or the comptroller, by Section 41.07 that the order
appealed has been issued. To exercise the right to appeal an order
of the comptroller, a party other than a property owner must file
written notice of appeal within 15 days after the date the party
receives the comptroller's order. A property owner is not required
to file a notice of appeal under this section.
(c) If the chief appraiser, a taxing unit, [or] a county, or
the comptroller appeals, the chief appraiser, if the appeal is of an
order of the appraisal review board, or the comptroller, if the
appeal is of an order of the comptroller, shall deliver a copy of
the notice to the property owner whose property is involved in the
appeal within 10 days after the date the notice is filed.
SECTION 3.42. Sections 42.43(a)-(c), Tax Code, are amended
to read as follows:
(a) If the final determination of an appeal that decreases a
property owner's tax liability occurs after the property owner has
paid the owner's [his] taxes, the taxing unit and the comptroller,
if the property is subject to the state ad valorem tax, shall refund
to the property owner the difference between the amount of taxes
paid and amount of taxes for which the property owner is liable.
(b) For a refund made under this section because an
exemption under Section 11.20 that was denied by the chief
appraiser or appraisal review board is granted, the taxing unit or
the comptroller shall include with the refund interest on the
amount refunded calculated at an annual rate that is equal to the
auction average rate quoted on a bank discount basis for
three-month treasury bills issued by the United States government,
as published by the Federal Reserve Board, for the week in which the
taxes became delinquent, but not more than 10 percent, calculated
from the delinquency date for the taxes until the date the refund is
made. For any other refund made under this section, the taxing unit
or the comptroller shall include with the refund interest on the
amount refunded at an annual rate of eight percent, calculated from
the delinquency date for the taxes until the date the refund is
made.
(c) Notwithstanding Subsection (b), if a taxing unit or the
comptroller does not make a refund, including interest, required by
this section before the 60th day after the date the chief appraiser
certifies a correction to the appraisal roll under Section 42.41,
the taxing unit or the comptroller shall include with the refund
interest on the amount refunded at an annual rate of 12 percent,
calculated from the delinquency date for the taxes until the date
the refund is made.
SECTION 3.43. Sections 43.01 and 43.04, Tax Code, are
amended to read as follows:
Sec. 43.01. AUTHORITY TO BRING SUIT. The comptroller or a
[A] taxing unit may sue the appraisal district that appraises
property for the unit to compel the appraisal district to comply
with the provisions of this title, rules of the comptroller, or
other applicable law.
Sec. 43.04. SUIT TO COMPEL COMPLIANCE WITH DEADLINES. The
comptroller or the governing body of a taxing unit may sue the chief
appraiser or members of the appraisal review board, as applicable,
for failure to comply with the deadlines imposed by Section
25.22(a), 26.01(a), or 41.12. If the court finds that the chief
appraiser or appraisal review board failed to comply for good cause
shown, the court shall enter an order fixing a reasonable deadline
for compliance. If the court finds that the chief appraiser or
appraisal review board failed to comply without good cause, the
court shall enter an order requiring the chief appraiser or
appraisal review board to comply with the deadline not later than
the 10th day after the date the judgment is signed. In a suit
brought under this section, the court may enter any other order the
court considers necessary to ensure compliance with the court's
deadline or the applicable statutory requirements. Failure to obey
an order of the court is punishable as contempt.
SECTION 3.44. Subchapter A, Chapter 312, Tax Code, is
amended by adding Section 312.0011 to read as follows:
Sec. 312.0011. DEFINITION. In this chapter, "taxing unit"
has the meaning assigned by Section 1.04 and includes the state.
SECTION 3.45. The changes in law made by this article to
Chapter 41, Tax Code, apply only to a challenge or protest under
that chapter for which the notice is filed on or after the effective
date of this article. A challenge or protest for which the notice
is filed before the effective date of this article is covered by the
law in effect when the notice of protest was filed, and the former
law is continued in effect for that purpose.
SECTION 3.46. (a) Except as otherwise provided by this Act,
this article takes effect January 1, 2004.
(b) This article applies to each tax year that begins on or
after January 1, 2004. The changes in law made by this article do
not apply to a tax year that begins before January 1, 2004, and the
law as it existed before January 1, 2004, is continued in effect for
purposes of taxes imposed in that tax year.
ARTICLE 4. STATE SALES AND USE TAXES
SECTION 4.01. Subchapter A, Chapter 151, Tax Code, is
amended by adding Section 151.0082 to read as follows:
Sec. 151.0082. "SERVICE." "Service" means an activity
engaged in for another person for a fee, retainer, commission, or
other monetary charge and that predominately involves the
performance of a service as distinguished from the sale or use of
tangible personal property. In determining whether something is a
service, the intended use or the principal or ultimate objective of
the parties involved does not control.
SECTION 4.02. Section 151.0101, Tax Code, is amended by
adding Subsection (c) to read as follows:
(c) Notwithstanding Subsection (a), "taxable service"
includes a service to which the tax imposed by this chapter applies
under Section 25, Article VIII, Texas Constitution, to the extent
the service is not otherwise exempted by this chapter.
SECTION 4.03. Subchapter H, Chapter 151, Tax Code, is
amended by adding Section 151.3135 to read as follows:
Sec. 151.3135. HEALTH CARE SERVICES. (a) In this section,
"health care service" means a service that a person may not provide
unless the person has a license, certificate, or permit under Title
3, Occupations Code.
(b) Except as provided by Subsection (c), the sale or use of
a health care service is exempted from the taxes imposed by this
chapter.
(c) This section does not apply to a health care service for
which a license is required under Chapter 451 or 651, Occupations
Code.
SECTION 4.04. Subchapter H, Subchapter 151, Tax Code, is
amended by adding Section 151.3145 to read as follows:
Sec. 151.3145. CERTAIN FINANCIAL ASSISTANCE AND FOOD STAMP
RECIPIENTS. (a) This section applies to a person who receives
financial assistance under Chapter 31, Human Resources Code, or
nutritional assistance under Chapter 33, Human Resources Code,
through the use of an electronic benefits transfer system.
(b) There is exempted from the taxes imposed by this chapter
40 percent of the value of a taxable item sold, leased, or rented to
a person to which this section applies.
(c) The comptroller by rule shall prescribe procedures
relating to the exemption provided by this section. The rules must
require that a person to whom this section applies present a
government-issued identification card bearing the picture of the
person to qualify for the exemption.
SECTION 4.05. Sections 151.801(a), (b), and (c), Tax Code,
are amended to read as follows:
(a) Except for the amounts allocated under Subsections (b)
and (c), all proceeds from the collection of the taxes imposed by
this chapter that are not required to be deposited to the credit of
the Texas education fund under Section 25, Article VIII, Texas
Constitution, shall be deposited to the credit of the general
revenue fund.
(b) The amount of the proceeds from the collection of the
taxes imposed by this chapter on the sale, storage, or use of
lubricating and motor oils used to propel motor vehicles over the
public roadways that are not required to be deposited to the credit
of the Texas education fund under Section 25, Article VIII, Texas
Constitution, shall be deposited to the credit of the state highway
fund.
(c) The proceeds from the collection of the taxes imposed by
this chapter on the sale, storage, or use of sporting goods that are
not required to be deposited to the credit of the Texas education
fund under Section 25, Article VIII, Texas Constitution, shall be
[deposited as follows:
[(1) For the period beginning September 1, 1993, and
ending August 31, 1995, an amount equal to 50 cents per 1,000
cigarettes shall be deposited to the credit of the general revenue
fund, state parks account, and an amount equal to 50 cents per 1,000
cigarettes shall be deposited to the credit of the general revenue
fund, Texas recreation and parks account, and the balance shall be
retained in the general revenue fund.
[(2) Beginning September 1, 1995, the taxes collected
shall be] credited to the Parks and Wildlife Department and
deposited as specified in the Parks and Wildlife Code. The
comptroller shall not credit in excess of $32 million in sporting
goods tax revenue annually to the Parks and Wildlife Department.
SECTION 4.06. Section 152.122, Tax Code, is amended to read
as follows:
Sec. 152.122. ALLOCATION OF TAX. The comptroller shall
deposit the funds received under Section 152.121 that are not
required to be deposited to the credit of the Texas education fund
under Section 26, Article VIII, Texas Constitution, [of this code
as follows:
[(1) 1/4 to the credit of the foundation school fund;
and
[(2) the remaining funds] to the credit of the general
revenue fund.
SECTION 4.07. Section 321.501(a), Tax Code, is amended to
read as follows:
(a) After deducting the taxes that are required to be
deposited to the credit of the Texas education fund under Section
25, Article VIII, Texas Constitution, the [The] comptroller shall
deposit the taxes collected by the comptroller under this chapter
in trust in the separate suspense account of the municipality from
which the taxes were collected.
SECTION 4.08. Section 321.503, Tax Code, is amended to read
as follows:
Sec. 321.503. STATE'S SHARE. Before sending any money to a
municipality under this subchapter the comptroller shall deduct two
percent of the amount of the municipality's share of the taxes
collected within the municipality during the period for which a
distribution is made as the state's charge for its services under
this chapter and shall, subject to premiums payments under Section
321.501(c), credit the money deducted to the general revenue fund.
SECTION 4.09. Section 322.303, Tax Code, is amended to read
as follows:
Sec. 322.303. STATE'S SHARE. Before sending any money to a
taxing entity under this subchapter, the comptroller shall deduct
two percent of the amount of the taxing entity's share of the taxes
collected within the entity area during the period for which a
distribution is made as the state's charge for its services under
this chapter and shall credit the money deducted to the general
revenue fund.
SECTION 4.10. Section 323.501(a), Tax Code, is amended to
read as follows:
(a) After deducting the taxes that are required to be
deposited to the credit of the Texas education fund under Section
25, Article VIII, Texas Constitution, the [The] comptroller shall
deposit the taxes collected by the comptroller under this chapter
in trust in the separate suspense account of the county from which
the taxes were collected.
SECTION 4.11. Section 323.503, Tax Code, is amended to read
as follows:
Sec. 323.503. STATE'S SHARE. Before sending any money to a
county under this subchapter the comptroller shall deduct two
percent of the amount of the county's share of the taxes collected
within the county during the period for which a distribution is made
as the state's charge for its services under this chapter and shall,
subject to premiums payments under Section 323.501(c), credit the
money deducted to the general revenue fund.
SECTION 4.12. Except as otherwise provided by this Act,
this article takes effect July 1, 2004.
ARTICLE 5. RESIDENTIAL TENANT'S PROPERTY TAX RELIEF
SECTION 5.01. Title 1, Tax Code, is amended by adding
Chapter 61 to read as follows:
CHAPTER 61. PROPERTY TAX RELIEF FOR RESIDENTIAL TENANTS
Sec. 61.001. PURPOSE. The purpose of this chapter is to
ensure that residential rental tenants receive direct and immediate
benefit from reductions in local school district ad valorem taxes
until the benefit of that tax relief is fully reflected in rental
rates through free market competition and that every residential
landlord gives a monthly rent credit or rebate, at the landlord's
option, to each tenant who is renting a residential dwelling unit in
this state during 2005, 2006, and 2007.
Sec. 61.002. DEFINITIONS. In this chapter:
(1) "Landlord" means the owner, lessor, or sublessor
of a dwelling unit, but does not include a manager or agent of the
landlord unless the manager or agent purports to be the owner,
lessor, or sublessor in a written or oral lease.
(2) "Lease" means a written or oral agreement between
a landlord and tenant that establishes or modifies the terms,
conditions, rules, or other provisions regarding the use and
occupancy of a dwelling unit.
(3) "Multifamily rental dwelling property" means a
multiunit residential property with two or more rental dwelling
units. The term includes a duplex, apartment building, dormitory,
manufactured housing community, retirement center or community,
and assisted living center and any other multiunit rental
residential property subject to local school district ad valorem
taxes.
(4) "Rent" includes the total amount charged by a
landlord, or by a person on the landlord's behalf, for the use and
occupancy of a dwelling unit. The term does not include a
refundable security deposit.
(5) "Rental dwelling unit" means one or more rooms
rented for use as a permanent residence under a single lease to one
or more tenants.
(6) "Tenant" means an individual who is authorized by
a lease to occupy a dwelling to the exclusion of others other than
cotenants and who is obligated under the lease to pay rent.
Sec. 61.003. APPLICABILITY. (a) This chapter applies only
to a rental dwelling unit or multifamily rental dwelling property
that is subject to ad valorem taxation by a school district.
(b) This chapter does not apply to a temporary residential
tenancy created by a contract of sale under which the buyer is
entitled to occupy the property before closing or the seller is
entitled to occupy the property after closing for a term of not more
than 90 days.
Sec. 61.004. CREDIT OR REBATE TO TENANT OF LANDLORD'S
PROPERTY TAX SAVINGS. A landlord shall provide each of the
landlord's tenants with a monthly credit or rebate on the tenant's
rent to reflect a portion of the landlord's school district ad
valorem tax savings for 2004, 2005, and 2006.
Sec. 61.005. NOTICE BY CHIEF APPRAISERS. (a) On or before
October 1, 2004, or as soon as practicable after that date, the
chief appraiser of each appraisal district shall send to all
residential property owners a notice describing the requirements of
this chapter. The notice shall contain language substantially
similar to the following:
"Due to the property tax relief law approved by the voters in
November 2003, residential landlords are required to pass along
school district ad valorem tax savings to their tenants under all
leases in effect as of January 1, 2005, and for all leases entered
into in 2005, 2006, and 2007. These savings must be provided to
tenants by giving a monthly rent credit or rebate that reflects a
portion of the property tax savings on school property taxes.
Failure to comply with this law could result in severe penalties,
including a civil penalty of $100, treble damages, and attorney's
fees. Information on complying with this law is available by
contacting the (name, address, and telephone number of appraisal
district) or by contacting the Texas Comptroller of Public Accounts
by calling 1-800-252-5555."
(b) The notice required under Subsection (a) may be sent to
property owners as part of another communication sent by the
appraisal district under Section 31.01 and is not required to be
sent to property owners as a separate communication.
(c) In November and December 2004, each appraisal district
shall place at least one advertisement monthly in a newspaper of
general circulation in the county for which the appraisal district
is established. The advertisement shall be in 14-point or larger
type and contain language substantially similar to the language
prescribed by Subsection (a).
Sec. 61.006. TECHNICAL ASSISTANCE BY COMPTROLLER. (a) Not
later than September 1, 2004, the comptroller shall develop
materials in plain language to assist landlords in complying with
this chapter. The materials shall be printed in both English and
Spanish and copies shall be sent to each appraisal district on or
before September 15, 2004. A copy of the materials shall be
provided without cost to any property owner on request.
(b) The comptroller shall provide necessary technical
assistance to appraisal districts and landlords in complying with
this chapter.
Sec. 61.007. TAX SAVINGS CALCULATIONS BY LANDLORDS.
(a) For each year to which this chapter applies, a landlord shall
determine the monthly school district ad valorem tax savings
payable to the landlord's tenants as follows:
(1) the monthly rent credit or rebate for a
single-family rental dwelling unit is equal to 6.25 percent of the
difference between the amount of school district ad valorem taxes
imposed on the dwelling unit for the preceding year and the amount
of the school district ad valorem taxes that would have been imposed
on that dwelling unit for that year if the dwelling unit had been
taxed at a school district maintenance and operations tax rate of 75
cents plus the school district enrichment tax rate in that tax year
per $100 of taxable value; and
(2) the monthly rent credit or rebate for a rental
dwelling unit in a multifamily rental dwelling property is equal to
6.25 percent of the difference between the amount of school
district ad valorem taxes imposed on the dwelling unit for the
preceding year and the amount of the school district ad valorem
taxes that would have been imposed on that dwelling unit for that
year if the dwelling unit had been taxed at a school district
maintenance and operations tax rate of $1.20 per $100 of taxable
value, multiplied by the square footage in the tenant's dwelling
unit, and divided by the total net rentable square footage of all
rental dwelling units in the multifamily rental dwelling property.
(b) The amount of the rent credit or rebate under Subsection
(a) shall be calculated on a per-dwelling-unit basis and not on a
per-tenant basis.
(c) If the amount of the rent credit or rebate calculated
under Subsection (a) is less than zero, the rent credit or rebate is
zero.
Sec. 61.008. DATE OF REQUIRED CREDIT OR REBATE. (a) If a
landlord gives a monthly credit to a tenant under this chapter, the
landlord shall give the credit on the due date for each month's
rent.
(b) If a landlord pays a monthly rent rebate to the tenant,
the landlord shall pay the rebate not later than the 10th day after
the date the tenant pays the entire rent due for the month. A
landlord is presumed to have timely paid a rebate if the rebate is
placed in the United States mail and postmarked on or before that
date.
(c) If the tenant's rent is payable weekly, the amount of
the weekly credit or rebate is equal to 1/52 of the credit or rebate
for the entire year.
Sec. 61.009. LANDLORD'S NOTICE TO TENANTS. (a) In
connection with each lease agreement for a rental dwelling unit
entered into before January 1, 2005, that has not terminated or
expired as of that date, the landlord shall provide a notice to each
tenant on or before January 5, 2005, in boldface, 14-point or larger
type, that substantially states the following:
"NOTICE OF TAX SAVINGS ON RENT
"Your current monthly rent on (insert unit number or street
address) is $____ (insert amount of rent).
"Because of the property tax relief law approved by the
voters of this state in November 2003, the amount of school district
property taxes for your dwelling unit has been reduced by ____
(insert percentage savings) percent for 2005. The property tax
relief law provides that the property owner must pass along tax
savings to you and other tenants until sufficient time has elapsed
for the tax relief to be fully reflected in rental rates through
free market competition.
"Accordingly, you will receive a rent credit (or rebate
check) of $____ (insert monthly prorated amount) for the current
month of January and for each month thereafter until the date your
current lease expires or December 31, 2007, whichever date is
first. If the amount of taxes imposed on your dwelling unit is not
increased or decreased, the cumulative amount of property tax
savings that will be passed on to you during the term of your lease
as a result of the 2003 property tax relief legislation is projected
to be $____ (insert cumulative savings for the unit for the term of
the lease).
"This means the net rent you will be paying for this month and
each subsequent month under your current lease will be $____
(insert net rent rate), and your rent should also be lower if you
enter into a new lease for any rental dwelling unit in Texas any
time in 2005, 2006, or 2007, through the date your new lease term
expires or December 31, 2007, whichever date is earlier.
"If you have any questions about this new law, please contact
the ______ County Appraisal District at (insert address and main
phone number of the appraisal district established for the county
in which the rental dwelling unit is located)."
(b) The notice required by Subsection (a) shall be
translated and printed in English and Spanish. A notice provided by
a landlord under this section must be provided in both languages if
the rental dwelling unit is located in a county in which the
Hispanic population exceeds 25 percent of the total population of
that county according to the most recent federal census information
available.
Sec. 61.010. CREDIT OR REBATE FOR MULTIPLE TENANTS. If two
or more tenants are on a lease for the same rental dwelling unit,
the credit or rebate under this chapter shall be provided jointly to
all tenants renting the dwelling.
Sec. 61.011. PENALTIES. (a) A landlord who fails to
comply with this chapter is liable to the affected tenant for a
civil penalty of $100 and treble the amount of any required rent
credit or rebate that was not provided to the tenant.
(b) In a suit involving the payment of a rent credit or
rebate, the prevailing party is entitled to recover reasonable
attorney's fees from the nonprevailing party.
Sec. 61.012. TAX APPRAISALS. In tax years 2004-2007, a
chief appraiser or an appraisal district may not consider a
reduction of school district ad valorem taxes attributable to this
chapter in any determination of the appraised value of a rental
dwelling unit, real property containing a rental dwelling unit, or
a multifamily rental dwelling property.
Sec. 61.013. COMPTROLLER STUDY. (a) The comptroller shall
issue a preliminary report not later than March 1, 2006, if
sufficient data is available, and shall issue a final report not
later than December 1, 2007, to the governor, the lieutenant
governor, and the speaker of the house of representatives on the
implementation, administration, and effect of this chapter,
including findings as to the following:
(1) the impact of property tax relief on rental rates
throughout this state considering competitive market conditions,
new construction, operating expenses, and other relevant factors
impacting rental rates;
(2) the number of civil actions filed by tenants
against landlords to enforce the provisions of this chapter and the
type of properties owned by those landlords;
(3) the number and amount of civil penalties levied
against landlords for noncompliance with this chapter and the type
of properties owned by those landlords;
(4) the administrative costs associated with this
chapter incurred by the comptroller, appraisal districts, and
landlords; and
(5) any effect of reduced school district ad valorem
tax rates on increasing the supply of affordable housing for
purchase or rent by a person for use as a dwelling.
(b) In preparing the report, the comptroller shall consider
the need to recommend alternative methods for providing school
district ad valorem tax relief to persons who rent their homes.
Sec. 61.014. EXPIRATION. This chapter expires January 1,
2008.
SECTION 5.02. Chapter 1, Tax Code, is amended by adding
Section 1.16 to read as follows:
Sec. 1.16. The expiration of Chapter 61 does not affect the
liability of a landlord or other person for any amount arising under
Chapter 61 before the expiration, and the law governing that
liability remains in effect notwithstanding the expiration for
purposes of enforcing or satisfying the liability.
SECTION 5.03. Chapter 61, Tax Code, as added by this
article, applies only to a tax year that begins on or after January
1, 2004.
SECTION 5.04. Except as otherwise provided by this Act,
this article takes effect January 1, 2004.
ARTICLE 6. CONTINGENT EFFECT
SECTION 6.01. This Act takes effect only if the
constitutional amendment proposed by S.J.R. No. 1, 78th
Legislature, Regular Session, 2003, is approved by the voters. If
that proposed constitutional amendment is not approved by the
voters, this Act has no effect.
* * * * *