78R6794 ESH-D

By:  West                                                         S.B. No. 1471



A BILL TO BE ENTITLED

AN ACT

relating to the reporting and auditing requirements relating to the 
use of compensatory education funds.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Section 42.152(q), Education Code, is amended to 
read as follows:
	(q)  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 compensatory education funds to ensure that 
compensatory education funds, other than the indirect cost 
allotment, are spent [only] to supplement the regular program.  The 
reporting and auditing requirements shall be managed 
electronically to minimize local administrative costs.  The 
commissioner shall develop a system to identify school districts 
that are at high risk of having used compensatory education funds 
other than in compliance with Subsection (c) or of having 
inadequately reported and audited those funds and, as a result, 
require on-site monitoring under this subsection.  If the 
risk-based system indicates that a district is not at high risk of 
having misused compensatory education funds or having inadequately 
reported and audited those funds, the district may not be subject to 
on-site monitoring under this subsection.  If the risk-based system 
indicates that a district is at high risk of having misused 
compensatory education funds or having inadequately reported and 
audited those funds, the district is entitled to an opportunity to 
respond to the commissioner's determination before on-site 
monitoring may be conducted.  If the district's response does not 
change the commissioner's determination that the district is at 
high risk of having misused compensatory education funds or having 
inadequately reported and audited those funds, the commissioner 
shall order agency staff to conduct on-site monitoring of the 
district's compensatory education expenditures.  The commissioner, 
in the year following an audit of compensatory education 
expenditures, shall withhold from a district's foundation school 
fund payment an amount equal to the amount of compensatory 
education funds the agency determines were not used in compliance 
with Subsection (c).  The commissioner shall release to a district 
funds withheld under this subsection when the district provides to 
the commissioner a detailed plan to spend those funds in compliance 
with Subsection (c).
	SECTION 2.  This Act takes effect September 1, 2003.