By:  Chisum, Eissler, Branch,                                     H.B. No. 1  
 
    Howard of Fort Bend, Hartnett, et al.                                    

A BILL TO BE ENTITLED
AN ACT
relating to public school finance, property tax relief, and related matters; making an appropriation. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
ARTICLE 1. PUBLIC SCHOOL FINANCE AND PROPERTY TAX RELIEF
SECTION 1.01. Section 41.002(a), Education Code, is amended to read as follows: (a) A school district may not have a wealth per student that exceeds $305,000, plus an amount determined under Section 42.2516(i). SECTION 1.02. Section 42.101, Education Code, is amended to read as follows: Sec. 42.101. BASIC ALLOTMENT. For each student in average daily attendance, not including the time students spend each day in special education programs in an instructional arrangement other than mainstream or career and technology education programs, for which an additional allotment is made under Subchapter C, a district is entitled to an allotment of $2,537, plus an amount determined under Section 42.2516(i). A greater amount for any school year may be provided by appropriation. SECTION 1.03. Subchapter E, Chapter 42, Education Code, is amended by adding Sections 42.2516 and 42.261 to read as follows: Sec. 42.2516. ADDITIONAL STATE AID FOR TAX REDUCTION. (a) Subject to Subsection (e), but notwithstanding any other provision of this title, a school district is entitled to the amount of state revenue necessary to maintain state and local revenue per student in weighted average daily attendance in the amount equal to the greater of: (1) the amount of state and local revenue per student in weighted average daily attendance for the maintenance and operations of the district available to the district for the 2005-2006 school year; (2) the amount of state and local revenue per student in weighted average daily attendance for the maintenance and operation of the district to which the district would have been entitled for the 2006-2007 school year under this chapter, as it existed on January 1, 2006, or, if the district would have been subject to Chapter 41, as that chapter existed on January 1, 2006, the amount to which the district would have been entitled under that chapter, based on the funding elements in effect for the 2005-2006 school year, if the district imposed a maintenance and operations tax at the rate adopted by the district for the 2005 tax year; or (3) the amount of state and local revenue per student in weighted average daily attendance for the maintenance and operation of the district to which the district would have been entitled for the 2006-2007 school year under this chapter, as it existed on January 1, 2006, or, if the district would have been subject to Chapter 41, as that chapter existed on January 1, 2006, the amount to which the district would have been entitled under that chapter, based on the funding elements in effect for the 2005-2006 school year, if the district imposed a maintenance and operations tax at the rate equal to the rate described by Section 26.08(i) or (k)(1), Tax Code, as applicable, for the 2006 tax year. (b) In determining the amount to which a district is entitled under Subsection (a), the commissioner shall include: (1) any amounts described by Rider 69, page III-19, Chapter 1369, Acts of the 79th Legislature, Regular Session, 2005 (the General Appropriations Act); (2) for a school district that received additional revenue for the 2005-2006 school year as a result of an agreement under Subchapter E, Chapter 41, the amount of that additional revenue, which is the amount by which the total maintenance and operations revenue available to the district exceeded the total maintenance and operations revenue that would have been available to the district if the district had not entered into the agreement and had imposed a maintenance and operations tax at the rate of $1.50 on the $100 valuation of taxable property; (3) any amount necessary to reflect an adjustment made by the commissioner under Section 42.005; (4) any amount necessary to reflect an adjustment made by the commissioner under Section 42.2521; and (5) any amount necessary to reflect an adjustment made by the commissioner under Section 42.2531. (c) The amount of revenue to which a school district is entitled because of the technology allotment under Section 32.005 is not included in making a determination under Subsection (a). (d) For purposes of determining the amount of revenue to which a school district is entitled under this section, the commissioner shall use the average tax collection rate for the district for the 2003, 2004, and 2005 tax years. (e) If a school district adopts a maintenance and operations tax rate that is below the rate equal to 88.67 percent of the maintenance and operations tax rate adopted by the district for the 2005 tax year, the commissioner shall reduce the district's entitlement under this section in proportion to the amount by which the adopted rate is less than the rate equal to 88.67 percent of the rate adopted by the district for the 2005 tax year. (f) A school district that is required to take action under Chapter 41 to reduce its wealth per student to the equalized wealth level and that is entitled to state revenue under this section may receive that revenue through an adjustment against the total amount of attendance credits required to be purchased under Subchapter D, Chapter 41, or the total number of nonresident students required to be educated under Subchapter E, Chapter 41, as determined by the commissioner. (g) If a school district imposes a maintenance and operations tax at a rate greater than the rate equal to 88.67 percent of the maintenance and operations tax rate adopted by the district for the 2005 tax year, the commissioner may not reduce the amount to which the district is entitled under this section on the basis of the additional revenue collected by the district. (h) The commissioner may adopt rules necessary to administer this section. (i) The commissioner shall determine the amount of state funds to which a school district is entitled under this section. The commissioner shall provide these additional amounts by increasing the guaranteed level under Section 42.302, the basic allotment under Section 42.101, and the equalized wealth level under Section 41.002, so that all three formula elements provide the same yield per penny of tax effort, and continuing to increase these formula elements proportionately so as to provide school districts the amounts required under this section as much as possible through the formula adjustments while minimizing "hold-harmless" amounts outside of the formulas. The total amount of state funds under this section shall be limited such that the changes in state law made by H.B. 1, Acts of the 79th Legislature, 3rd Called Session, shall not exceed $2,385,800,000. The commissioner's determination is final and may not be appealed. Sec. 42.261. CERTAIN FUNDS APPROPRIATED FOR PURPOSE OF TAX REDUCTION. (a) Funds appropriated by the legislature for a tax year for the purpose of reducing a school district's maintenance and operations tax rate and providing state aid under Section 42.2516: (1) are not excess funds for purposes of Section 42.2517; (2) are not available for purposes of Section 42.2521 or 42.2522; (3) may not be used for purposes of Chapter 46; and (4) may not be provided by the commissioner to a school district for a purpose other than reduction of the district's maintenance and operations tax rate. (b) The commissioner may adopt rules necessary to administer this section. SECTION 1.04. Section 42.302(a), Education Code, is amended to read as follows: (a) Each school district is guaranteed a specified amount per weighted student in state and local funds for each cent of tax effort over that required for the district's local fund assignment up to the maximum level specified in this subchapter. The amount of state support, subject only to the maximum amount under Section 42.303, is determined by the formula:
GYA = (GL X WADA X DTR X 100) - LR
where: "GYA" is the guaranteed yield amount of state funds to be allocated to the district; "GL" is the dollar amount guaranteed level of state and local funds per weighted student per cent of tax effort, which is $27.14, plus an amount determined under Section 42.2516(i), or a greater amount for any year provided by appropriation; "WADA" is the number of students in weighted average daily attendance, which is calculated by dividing the sum of the school district's allotments under Subchapters B and C, less any allotment to the district for transportation, any allotment under Section 42.158, and 50 percent of the adjustment under Section 42.102, by the basic allotment for the applicable year; "DTR" is the district enrichment tax rate of the school district, which is determined by subtracting the amounts specified by Subsection (b) from the total amount of maintenance and operations taxes collected by the school district for the applicable school year and dividing the difference by the quotient of the district's taxable value of property as determined under Subchapter M, Chapter 403, Government Code, or, if applicable, under Section 42.2521, divided by 100; and "LR" is the local revenue, which is determined by multiplying "DTR" by the quotient of the district's taxable value of property as determined under Subchapter M, Chapter 403, Government Code, or, if applicable, under Section 42.2521, divided by 100. SECTION 1.05. Section 42.302, Education Code, is amended by adding Subsection (f) to read as follows: (f) If a school district imposes a maintenance and operations tax at a rate greater than the rate equal to 88.67 percent of the maintenance and operations tax rate adopted by the district for the 2005 tax year, the district is entitled to receive an allotment under this section on the basis of that greater tax effort. SECTION 1.06. Section 21.402(a), Education Code, is amended to read as follows: (a) Except as provided by Subsection (d), (e), or (f), a school district must pay each classroom teacher, full-time librarian, full-time counselor certified under Subchapter B, or full-time school nurse not less than the minimum monthly salary, based on the employee's level of experience, determined by the following formula:
MS = SF x FS
where: "MS" is the minimum monthly salary; "SF" is the applicable salary factor specified by Subsection (c); and "FS" is the amount, as determined by the commissioner under Subsection (b), of state and local funds per weighted student, including funds provided under Section 42.2516, available to a district eligible to receive state assistance under Section 42.302 with a maintenance and operations [an enrichment] tax rate of $1.33 on the $100 valuation of taxable property[, as defined by Section 42.302, equal to the maximum rate authorized under Section 42.303], except that the amount of state and local funds per weighted student does not include the amount attributable to the increase in the guaranteed level made by Chapter 1187 [H.B. No. 3343], Acts of the 77th Legislature, Regular Session, 2001. SECTION 1.07. Section 30.003, Education Code, is amended by adding Subsection (f-1) to read as follows: (f-1) The commissioner shall determine the total amount that the Texas School for the Blind and Visually Impaired and the Texas School for the Deaf would have received from school districts in accordance with this section if __.B. No. ____, Acts of the 79th Legislature, 3rd Called Session, 2006, had not reduced the districts' share of the cost of providing education services. That amount, minus any amount the schools do receive from school districts, shall be set aside as a separate account in the foundation school fund and appropriated to those schools for educational purposes. SECTION 1.08. Section 44.004, Education Code, is amended by adding Subsection (c-1) to read as follows: (c-1) The notice described by Subsection (c) must state in a distinct row or on a separate or individual line for each of the following taxes: (1) the proposed rate of the school district's maintenance tax described by Section 45.003, under the heading "Maintenance Tax"; and (2) if the school district has issued ad valorem tax bonds under Section 45.001, the proposed rate of the tax to pay for the bonds, under the heading "School Debt Service Tax Approved by Local Voters". SECTION 1.09. Section 26.08, Tax Code, is amended by amending Subsections (i) and (k) and adding Subsections (n), (o), (p), and (q) to read as follows: (i) For purposes of this section, the effective maintenance and operations [rollback] tax rate of a school district is [the sum of: [(1)] the tax rate that, applied to the current total value for the district, would impose taxes in an amount that, when added to state funds that would be distributed to the district under Chapter 42, Education Code, for the school year beginning in the current tax year using that tax rate, would provide the same amount of state funds distributed under Chapter 42 and maintenance and operations taxes of the district per student in weighted average daily attendance for that school year that would have been available to the district in the preceding year if the funding elements for Chapters 41 and 42, Education Code, for the current year had been in effect for the preceding year[; [(2) the rate of $0.06 per $100 of taxable value; and [(3) the district's current debt rate]. (k) For purposes of this section, for the [2003, 2004, 2005,] 2006, 2007, or 2008 tax year, for a school district that is entitled to state funds under Sections 1581.1015(d), (e), and (f) [Section 4(a-1), (a-2), (a-3), (a-4), (a-5), or (a-6), Article 3.50-9], Insurance Code, the effective maintenance and operations [rollback] tax rate of the district is the sum of: (1) the tax rate that, applied to the current total value for the district, would impose taxes in an amount that, when added to state funds that would be distributed to the district under Chapter 42, Education Code, for the school year beginning in the current tax year using that tax rate, would provide the same amount of state funds distributed under Chapter 42 and maintenance and operations taxes of the district per student in weighted average daily attendance for that school year that would have been available to the district in the preceding year if the funding elements for Chapters 41 and 42, Education Code, for the current year had been in effect for the preceding year; and (2) the tax rate that, applied to the current total value for the district, would impose taxes in the amount that, when added to state funds that would be distributed to the district under Chapter 42, Education Code, for the school year beginning in the current tax year using that tax rate, permits the district to comply with Section 1581.052 [3, Article 3.50-9], Insurance Code[; [(3) the rate of $0.06 per $100 of taxable value; and [(4) the district's current debt rate]. (n) For purposes of this section, the rollback tax rate of a school district whose maintenance and operations tax rate for the 2005 tax year was less than $1.50 per $100 of taxable value is: (1) for the 2006 tax year, the sum of: (A) the lesser of the following tax rates: (i) the rate of $1.36 per $100 of taxable value; or (ii) the sum of the following tax rates: (a) the rate that is equal to 88.67 percent of the maintenance and operations tax rate adopted by the district for the 2005 tax year; and (b) the rate of $0.06 per $100 of taxable value; and (B) the district's current debt rate; and (2) for the 2007 and subsequent tax years, the following tax rate, as applicable: (A) if in the 2006 or any subsequent tax year the district adopted a maintenance and operations tax rate of at least $1.36 per $100 of taxable value, the sum of: (i) the lesser of the following tax rates: (a) the highest maintenance and operations tax rate adopted by the district in any of those years; or (b) the sum of the following tax rates: (1) the effective maintenance and operations tax rate of the district as computed under Subsection (i) or (k), as applicable; and (2) the rate of $0.06 per $100 of taxable value; and (ii) the district's current debt rate; or (B) if in the 2006 and each subsequent tax year the district adopted a maintenance and operations tax rate of less than $1.36 per $100 of taxable value, the sum of: (i) the lesser of the following tax rates: (a) the rate of $1.36 per $100 of taxable value; or (b) the sum of the following tax rates: (1) the effective maintenance and operations tax rate of the district as computed under Subsection (i) or (k), as applicable; and (2) the rate of $0.06 per $100 of taxable value; and (ii) the district's current debt rate. (o) For purposes of this section, the rollback tax rate of a school district whose maintenance and operations tax rate for the 2005 tax year was $1.50 per $100 of taxable value is: (1) for the 2006 tax year, the sum of: (A) $1.36 per $100 of taxable value; and (B) the district's current debt rate; and (2) for the 2007 and subsequent tax years, the sum of: (A) the lesser of the following tax rates: (i) the highest maintenance and operations tax rate adopted by the district in the 2006 or any subsequent tax year; or (ii) the sum of the following tax rates: (a) the effective maintenance and operations tax rate of the district as computed under Subsection (i) or (k), as applicable; and (b) the rate of $0.06 per $100 of taxable value; and (B) the district's current debt rate. (p) For purposes of this section, the rollback tax rate of a school district permitted by special law on April 1, 2006, to impose a maintenance and operations tax at a rate greater than $1.50 per $100 of taxable value is: (1) for the 2006 tax year, the sum of: (A) the rate that is equal to 88.67 percent of the maintenance and operations tax rate adopted by the district for the 2005 tax year; (B) the rate of $0.03 per $100 of taxable value; and (C) the district's current debt rate; and (2) for the 2007 and subsequent tax years, the sum of: (A) the lesser of the following tax rates: (i) the highest maintenance and operations tax rate adopted by the district in the 2006 or any subsequent tax year; or (ii) the sum of the following tax rates: (a) the effective maintenance and operations tax rate of the district as computed under Subsection (i) or (k), as applicable; and (b) the rate of $0.06 per $100 of taxable value; and (B) the district's current debt rate. (q) Notwithstanding Section 45.003, Education Code, or any other law, a school district described by Subsection (p) may not adopt a maintenance and operations tax rate that exceeds the sum of the tax rate described by Subsection (p)(1)(A) and $0.17 per $100 of taxable value. SECTION 1.10. (a) Section 31.01(c), Tax Code, as amended by Chapters 1255 and 1368, Acts of the 79th Legislature, Regular Session, 2005, is reenacted and amended to read as follows: (c) The tax bill or a separate statement accompanying the tax bill shall: (1) identify the property subject to the tax; (2) state the appraised value, assessed value, and taxable value of the property; (3) if the property is land appraised as provided by Subchapter C, D, E, or H, Chapter 23, state the market value and the taxable value for purposes of deferred or additional taxation as provided by Section 23.46, 23.55, 23.76, or 23.9807, as applicable; (4) state the assessment ratio for the unit; (5) state the type and amount of any partial exemption applicable to the property, indicating whether it applies to appraised or assessed value; (6) state the total tax rate for the unit; (7) state the amount of tax due, the due date, and the delinquency date; (8) explain the payment option and discounts provided by Sections 31.03 and 31.05, if available to the unit's taxpayers, and state the date on which each of the discount periods provided by Section 31.05 concludes, if the discounts are available; (9) state the rates of penalty and interest imposed for delinquent payment of the tax; and (10) include the name and telephone number of the assessor for the unit and, if different, of the collector for the unit[; [(11) for real property, state for the current tax year and each of the preceding five tax years: [(A) the appraised value and taxable value of the property; [(B) the total tax rate for the unit; [(C) the amount of taxes imposed on the property by the unit; and [(D) the difference, expressed as a percent increase or decrease, as applicable, in the amount of taxes imposed on the property by the unit compared to the amount imposed for the preceding tax year; [(11) for real property, state the differences, expressed as a percent increase or decrease, as applicable, in the following for the current tax year as compared to the fifth tax year before that tax year: [(A) the appraised value of the property; and [(B) the amount of taxes imposed on the property by the unit; and [(12) for real property, state the differences, expressed as a percent increase or decrease, as applicable, in the following for the current tax year as compared to the fifth tax year before that tax year: [(A) the appraised value and taxable value of the property; [(B) the total tax rate for the unit; and [(C) the amount of taxes imposed on the property by the unit; and [(13) include any other information required by the comptroller]. (b) Section 31.01, Tax Code, is amended by adding Subsection (d-1) to read as follows: (d-1) This subsection applies only to a school district. In addition to stating the total tax rate for the school district, the tax bill or the separate statement shall separately state: (1) the maintenance and operations rate of the school district; (2) if the school district has outstanding debt, as defined by Section 26.012, the debt rate of the district; (3) the maintenance and operations rate of the school district for the preceding tax year; (4) if for the current tax year the school district imposed taxes for debt, as defined by Section 26.012, the debt rate of the district for the current tax year; (5) if for the preceding tax year the school district imposed taxes for debt, as defined by Section 26.012, the debt rate of the district for that year; and (6) the total tax rate of the district for the preceding tax year. (c) Section 31.01(c-1), Tax Code, as added by Chapter 1255, Acts of the 79th Legislature, Regular Session, 2005, is repealed. (d) Section 31.01(c-1), Tax Code, as added by Chapter 1368, Acts of the 79th Legislature, Regular Session, 2005, is repealed. (e) Notwithstanding Section 4.01 of this Act, the change in law made by this section applies only to an ad valorem tax bill that is mailed on or after the effective date of this Act. (f) If this Act is passed by the legislature without receiving a vote of two-thirds of all the members elected to each house and is approved by the governor, any action taken before the effective date of this Act in preparation for the implementation of the amendment made by this Act to Section 31.01, Tax Code, by an officer or employee of a taxing unit that the officer or employee determines is necessary or appropriate and that the officer or employee would have been authorized to take had this section been in effect at the time of the action is validated as of the effective date of this Act. A tax bill or separate statement accompanying the tax bill mailed before the effective date of this section that is in compliance with Section 31.01, Tax Code, as amended by this Act, is validated as of the effective date of this Act. SECTION 1.11. Section 311.013, Tax Code, is amended by adding Subsection (n) to read as follows: (n) This subsection applies only to a school district whose taxable value computed under Section 403.302(d), Government Code, is reduced in accordance with Subdivision (5) of that subsection. In addition to the amount otherwise required to be paid into the tax increment fund, the district shall pay into the fund an amount equal to the amount by which the amount of taxes the district would have been required to pay into the fund in the current year if the district levied taxes at the rate the district levied in 2005 exceeds the amount the district is otherwise required to pay into the fund in the year of the reduction, not to exceed the amount the school district realizes from the reduction in the school district's taxable value under Section 403.302(d)(5), Government Code. SECTION 1.12. Section 403.302, Government Code, is amended by amending Subsections (d) and (i) and adding Subsection (d-1) to read as follows: (d) For the purposes of this section, "taxable value" means the market value of all taxable property less: (1) the total dollar amount of any residence homestead exemptions lawfully granted under Section 11.13(b) or (c), Tax Code, in the year that is the subject of the study for each school district; (2) one-half of the total dollar amount of any residence homestead exemptions granted under Section 11.13(n), Tax Code, in the year that is the subject of the study for each school district; (3) the total dollar amount of any exemptions granted before May 31, 1993, within a reinvestment zone under agreements authorized by Chapter 312, Tax Code; (4) subject to Subsection (e), the total dollar amount of any captured appraised value of property that: (A) is within a reinvestment zone created on or before May 31, 1999, or is proposed to be included within the boundaries of a reinvestment zone as the boundaries of the zone and the proposed portion of tax increment paid into the tax increment fund by a school district are described in a written notification provided by the municipality or the board of directors of the zone to the governing bodies of the other taxing units in the manner provided by Section 311.003(e), Tax Code, before May 31, 1999, and within the boundaries of the zone as those boundaries existed on September 1, 1999, including subsequent improvements to the property regardless of when made; (B) generates taxes paid into a tax increment fund created under Chapter 311, Tax Code, under a reinvestment zone financing plan approved under Section 311.011(d), Tax Code, on or before September 1, 1999; and (C) is eligible for tax increment financing under Chapter 311, Tax Code; (5) for a school district for which a deduction from taxable value is made under Subdivision (4), an amount equal to the taxable value required to generate revenue when taxed at the school district's current tax rate in an amount that, when added to the taxes of the district paid into a tax increment fund as described by Subdivision (4)(B), is equal to the total amount of taxes the district would have paid into the tax increment fund if the district levied taxes at the rate the district levied in 2005; (6) the total dollar amount of any exemptions granted under Section 11.251, Tax Code; (7) [(6)] the difference between the comptroller's estimate of the market value and the productivity value of land that qualifies for appraisal on the basis of its productive capacity, except that the productivity value estimated by the comptroller may not exceed the fair market value of the land; (8) [(7)] the portion of the appraised value of residence homesteads of individuals who receive a tax limitation under Section 11.26, Tax Code, on which school district taxes are not imposed in the year that is the subject of the study, calculated as if the residence homesteads were appraised at the full value required by law; (9) [(8)] a portion of the market value of property not otherwise fully taxable by the district at market value because of: (A) action required by statute or the constitution of this state that, if the tax rate adopted by the district is applied to it, produces an amount equal to the difference between the tax that the district would have imposed on the property if the property were fully taxable at market value and the tax that the district is actually authorized to impose on the property, if this subsection does not otherwise require that portion to be deducted; or (B) action taken by the district under Subchapter B or C, Chapter 313, Tax Code; (10) [(9)] the market value of all tangible personal property, other than manufactured homes, owned by a family or individual and not held or used for the production of income; (11) [(10)] the appraised value of property the collection of delinquent taxes on which is deferred under Section 33.06, Tax Code; (12) [(11)] the portion of the appraised value of property the collection of delinquent taxes on which is deferred under Section 33.065, Tax Code; and (13) [(12)] the amount by which the market value of a residence homestead to which Section 23.23, Tax Code, applies exceeds the appraised value of that property as calculated under that section. (d-1) For a school district for which in the 2005 tax year a deduction from taxable value is made under Subsection (d)(4), the comptroller shall certify to the commissioner of education a final taxable value for the 2005 tax year, calculated as if the reduction in the school district's ad valorem tax rate and the method of calculating the amount of the deduction from taxable value under Subsection (d)(5) required by __.B. No. ____, Acts of the 79th Legislature, 3rd Called Session, 2006, took effect September 1, 2005. This subsection expires September 1, 2007. (i) If the comptroller determines in the annual study that the market value of property in a school district as determined by the appraisal district that appraises property for the school district, less the total of the amounts and values listed in Subsection (d) as determined by that appraisal district, is valid, the comptroller, in determining the taxable value of property in the school district under Subsection (d), shall for purposes of Subsection (d)(13) [(d)(12)] subtract from the market value as determined by the appraisal district of residence homesteads to which Section 23.23, Tax Code, applies the amount by which that amount exceeds the appraised value of those properties as calculated by the appraisal district under Section 23.23, Tax Code. If the comptroller determines in the annual study that the market value of property in a school district as determined by the appraisal district that appraises property for the school district, less the total of the amounts and values listed in Subsection (d) as determined by that appraisal district, is not valid, the comptroller, in determining the taxable value of property in the school district under Subsection (d), shall for purposes of Subsection (d)(13) [(d)(12)] subtract from the market value as estimated by the comptroller of residence homesteads to which Section 23.23, Tax Code, applies the amount by which that amount exceeds the appraised value of those properties as calculated by the appraisal district under Section 23.23, Tax Code. SECTION 1.13. (a) Section 11.26, Tax Code, is amended by adding Subsections (a-1) and (a-2) to read as follows: (a-1) Notwithstanding the other provisions of this section and except as provided by Subsection (a-2), if in the current tax year an individual qualifies for a limitation on tax increases provided by this section on the individual's residence homestead and the individual or the individual's spouse qualified for an exemption under Section 11.13(c) for the same homestead in the preceding tax year, the amount of the limitation provided by this section on the homestead in the current tax year is equal to the lesser of: (1) the amount computed by: (A) multiplying the amount of tax the school district imposed on the homestead in the preceding tax year by the lesser of one or a fraction the numerator of which is the tax rate of the district for the current tax year and the denominator of which is the tax rate of the district for the preceding tax year; and (B) adding to the amount computed under Paragraph (A) any tax in the current tax year attributable to improvements made in the preceding tax year, as provided by Subsection (b); or (2) the amount of the limitation on tax increases on the homestead as otherwise provided by this section. (a-2) Notwithstanding the other provisions of this section, if in the 2007 tax year an individual qualifies for a limitation on tax increases provided by this section on the individual's residence homestead and the first tax year the individual or the individual's spouse qualified for an exemption under Section 11.13(c) for the same homestead was a tax year before the 2006 tax year, the amount of the limitation provided by this section on the homestead in the 2007 tax year is equal to the amount computed by: (1) multiplying the amount of tax the school district imposed on the homestead in the 2005 tax year by the lesser of one or a fraction the numerator of which is the tax rate of the district for the 2006 tax year and the denominator of which is the tax rate of the district for the 2005 tax year; (2) adding to the amount computed under Subdivision (1) any tax in the 2006 tax year attributable to improvements made in the 2005 tax year, as provided by Subsection (b); (3) multiplying the amount computed under Subdivision (2) by the lesser of one or a fraction the numerator of which is the tax rate of the district for the 2007 tax year and the denominator of which is the tax rate of the district for the 2006 tax year; and (4) adding to the amount computed under Subdivision (3) any tax in the 2007 tax year attributable to improvements made in the 2006 tax year, as provided by Subsection (b). (b) Section 42.2511(a), Education Code, is amended to read as follows: (a) Notwithstanding any other provision of this chapter, a school district is entitled to additional state aid to the extent that state aid under this chapter based on the determination of the school district's taxable value of property as provided under Subchapter M, Chapter 403, Government Code, does not fully compensate the district for ad valorem tax revenue lost due to: (1) the increase in the homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, as proposed by H.J.R. No. 4, 75th Legislature, Regular Session, 1997, and the additional limitation on tax increases under Section 1-b(d), Article VIII, Texas Constitution, as proposed by H.J.R. No. 4, 75th Legislature, Regular Session, 1997; and (2) the reduction of the limitation on tax increases to reflect any reduction in the school district tax rate as provided by Section 11.26(a-1) or (a-2), Tax Code, as applicable. (c) Section 403.302, Government Code, is amended by amending Subsection (j) and adding Subsection (j-1) to read as follows: (j) For purposes of Section 42.2511, Education Code, the comptroller shall certify to the commissioner of education: (1) a final value for each school district computed on a residence homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, of $5,000; [and] (2) a final value for each school district computed on: (A) a residence homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, of $15,000; and (B) the effect of the additional limitation on tax increases under Section 1-b(d), Article VIII, Texas Constitution, as proposed by H.J.R. No. 4, 75th Legislature, Regular Session, 1997; and (3) a final value for each school district computed on the effect of the reduction of the limitation on tax increases to reflect any reduction in the school district tax rate as provided by Section 11.26(a-1) or (a-2), Tax Code, as applicable. (j-1) For purposes of applying Subsection (j)(3) in the 2007-2008 school year, the comptroller shall compute the final value under that subsection as if the reduction of the limitation on tax increases to reflect any reduction in the school district tax rate as provided by Section 11.26(a-1) or (a-2), Tax Code, as applicable, had taken effect in the 2006 tax year. This subsection expires September 1, 2008. (d) This section applies only to an ad valorem tax year that begins on or after January 1, 2007. (e) This section takes effect January 1, 2007, but only if the constitutional amendment proposed by the 79th Legislature, 3rd Called Session, 2006, authorizing the legislature to provide for a reduction of the limitation on the total amount of ad valorem taxes that may be imposed for public school purposes on the residence homesteads of the elderly or disabled to reflect any reduction in the rate of those taxes is approved by the voters. If that amendment is not approved by the voters, this section has no effect. SECTION 1.14. (a) Not later than September 1, 2006, the secretary of state shall: (1) prepare a notice that includes a brief explanation of the property tax reduction provisions of this Act; and (2) distribute a copy of the notice to the tax assessor for each school district in this state. (b) On October 1, 2006, or as soon thereafter as practicable, the tax assessor for each school district in this state shall mail a copy of the notice to each owner of taxable property as shown on the appraisal roll for the school district. The tax assessor should include a copy of the notice with each tax bill for the school district for the 2006 tax year, if practicable. No statewide official other than the secretary of state shall be authorized to distribute the information required by this section. (c) This section expires January 1, 2007.
ARTICLE 2. FISCAL ACCOUNTABILITY
SECTION 2.01. Chapter 1, Education Code, is amended by adding Section 1.005 to read as follows: Sec. 1.005. EDUCATION RESEARCH CENTERS; SHARING STUDENT INFORMATION. (a) In this section, "center" means a center for education research authorized by this section. (b) The commissioner of education and the commissioner of higher education may establish not more than three centers for education research for conducting research described by Subsections (e) and (f). (c) A center may be established as part of: (1) the Texas Education Agency; (2) the Texas Higher Education Coordinating Board; or (3) a public junior college, public senior college or university, or public state college, as those terms are defined by Section 61.003. (d) A center may be operated under a memorandum of understanding between the commissioner of education, the commissioner of higher education, and the governing board of an educational institution described by Subsection (c)(3). The memorandum of understanding must require the commissioner of education, or a person designated by the commissioner, and the commissioner of higher education, or a person designated by the commissioner, to provide direct, joint supervision of the center under this section. (e) A center shall conduct research for the benefit of education in this state, including research relating to the impact of state and federal education programs, the performance of educator preparation programs, public school finance, and the best practices of school districts with regard to classroom instruction, bilingual education programs, special language programs, and business practices. (f) The commissioner of education and the commissioner of higher education: (1) under the memorandum of understanding described by Subsection (d), may require a center to conduct certain research projects considered of particular importance to the state, as determined by the commissioners; and (2) not later than the 45th day before the date a research project required to be conducted under this subsection is scheduled to begin, shall notify the governor, the Legislative Budget Board, and the governing body of the educational institution in which the center is established that the research project is required. (g) In conducting research under this section, a center: (1) may use data on student performance, including data that is confidential under the Family Educational Rights and Privacy Act of 1974 (20 U.S.C. Section 1232g), the center has collected from the Texas Education Agency, the Texas Higher Education Coordinating Board, the Educators' Professional Practices Board, any public or private institution of higher education, and any school district; and (2) shall comply with rules adopted by the commissioner of education and the commissioner of higher education to protect the confidentiality of student information, including rules establishing procedures to ensure that confidential student information is not duplicated or removed from a center in an unauthorized manner. (h) The commissioner of education and the commissioner of higher education may: (1) accept gifts and grants to be used in operating one or more centers; and (2) by rule impose reasonable fees, as appropriate, for the use of a center's research, resources, or facilities. (i) This section does not authorize the disclosure of student information that may not be disclosed under the Family Educational Rights and Privacy Act of 1974 (20 U.S.C. Section 1232g). (j) The commissioner of education and the commissioner of higher education shall adopt rules as necessary to implement this section. (k) In implementing this section, the commissioner of education may use funds appropriated to the agency and available for that purpose, including Foundation School Program funds. SECTION 2.02. Subchapter A, Chapter 7, Education Code, is amended by adding Sections 7.008 and 7.009 to read as follows: Sec. 7.008. PUBLIC ACCESS TO PEIMS DATA. (a) The commissioner with the assistance of an advisory panel described by Subsection (b) shall develop a request for proposal for a qualified third-party contractor to develop and implement procedures to make available, through the agency Internet website, all financial and academic performance data submitted through the Public Education Information Management System (PEIMS) for school districts and campuses. (b) The commissioner shall appoint an advisory panel to assist the commissioner in developing requirements for a system that is easily accessible by the general public and contains information of primary relevance to the public. The advisory panel shall consist of: (1) educators; (2) interested stakeholders; (3) business leaders; and (4) other interested members of the public. (c) The procedures developed under this section must provide: (1) a summarized format easily understood by the public for reporting financial and academic performance information on the agency Internet website; and (2) the ability for those who access the Internet website to view and download state, district, and campus level information. (d) This section does not authorize the disclosure of student information that may not be disclosed under the Family Educational Rights and Privacy Act of 1974 (20 U.S.C. Section 1232g). The commissioner shall adopt rules to protect the confidentiality of student information. (e) The procedures to make available, through the agency Internet website, all financial and academic performance information for school districts and campuses as described by this section shall be implemented not later than August 1, 2007. This subsection expires August 1, 2009. Sec. 7.009. BEST PRACTICES; CLEARINGHOUSE. (a) In coordination with the Legislative Budget Board, the agency shall establish an online clearinghouse of information relating to best practices of campuses and school districts regarding instruction, public school finance, resource allocation, and business practices. To the extent practicable, the agency shall ensure that information provided through the online clearinghouse is specific, actionable information relating to the best practices of high-performing and highly efficient campuses and school districts rather than general guidelines relating to campus and school district operation. The information must be accessible by campuses, school districts, and interested members of the public. (b) The agency shall solicit and collect from the Legislative Budget Board, centers for education research established under Section 1.005, and exemplary or recognized school districts and open-enrollment charter schools, as rated under Section 39.072, examples of best practices relating to instruction, public school finance, resource allocation, and business practices, including best practices relating to curriculum, scope and sequence, compensation and incentive systems, bilingual education and special language programs, compensatory education programs, and the effective use of instructional technology, including online courses. (c) The agency shall contract for the services of one or more third-party contractors to develop, implement, and maintain a system of collecting and evaluating the best practices of campuses and school districts as provided by this section. In addition to any other considerations required by law, the agency must consider an applicant's demonstrated competence and qualifications in analyzing campus and school district practices in awarding a contract under this subsection. (d) The commissioner may purchase from available funds curriculum and other instructional tools identified under this section to provide for use by school districts. SECTION 2.03. Subchapter C, Chapter 7, Education Code, is amended by adding Section 7.061 to read as follows: Sec. 7.061. FUNDING FOR CERTAIN PURPOSES. The commissioner, to the extent not specifically prohibited by state or federal law, shall use federal funds, including consolidated administrative or innovative program funds, for the purposes described by Sections 1.005, 7.008, 7.009, 11.003, 44.0061, and 44.011. SECTION 2.04. Subchapter A, Chapter 11, Education Code, is amended by adding Section 11.003 to read as follows: Sec. 11.003. ADMINISTRATIVE EFFICIENCY. (a) Not later than December 1, 2006, the commissioner shall evaluate the feasibility of including a uniform indicator under Section 39.202(b) that measures effective administrative management through the use of cooperative shared services arrangements. If the commissioner determines that the adoption of a uniform indicator described by this subsection is feasible, the commissioner by rule shall include the indicator in the financial accountability rating system under Subchapter I, Chapter 39, for school districts beginning with the 2007-2008 school year. This subsection expires September 1, 2009. (b) Each regional education service center shall: (1) notify each school district served by the center regarding the opportunities available through the center for cooperative shared services arrangements within the center's service area; and (2) evaluate the need for cooperative shared services arrangements within the center's service area and consider expanding center-sponsored cooperative shared services arrangements. (c) Each regional education service center shall assist a school district board of trustees in entering into an agreement with another district or political subdivision, a regional education service center, or an institution of higher education as defined by Section 61.003, for a cooperative shared services arrangement regarding administrative services, including transportation, food service, purchasing, and payroll functions. (d) The commissioner may require a district or an open-enrollment charter school to enter into an agreement for a cooperative shared services arrangement if the commissioner determines that the financial management performance of the district or school is unsatisfactory. SECTION 2.05. Subchapter D, Chapter 11, Education Code, is amended by adding Section 11.170 to read as follows: Sec. 11.170. INTERNAL AUDITOR. If a school district employs an internal auditor: (1) the board of trustees shall select the internal auditor; and (2) the internal auditor shall report directly to the board. SECTION 2.06. Subchapter A, Chapter 44, Education Code, is amended by adding Section 44.0041 to read as follows: Sec. 44.0041. PUBLICATION OF SUMMARY OF PROPOSED BUDGET. (a) Concurrently with the publication of notice of the budget under Section 44.004, a school district shall post a summary of the proposed budget: (1) on the school district's Internet website; or (2) if the district has no Internet website, in the district's central administrative office. (b) The budget summary must include: (1) information relating to per student and aggregate spending on: (A) instruction; (B) instructional support; (C) central administration; (D) district operations; (E) debt service; and (F) any other category designated by the commissioner; and (2) a comparison to the previous year's actual spending. SECTION 2.07. Subchapter A, Chapter 44, Education Code, is amended by adding Section 44.0061 to read as follows: Sec. 44.0061. REVIEW OF ACCOUNTING SYSTEM. (a) The commissioner shall contract with a qualified third-party contractor to conduct a comprehensive review of the accounting systems used by school districts under Section 44.007. (b) The third-party contractor conducting the review under this section shall: (1) provide any recommendations relating to the accounting systems to: (A) improve the transparency of district spending behavior; (B) provide more thorough information relating to campus spending; and (C) facilitate program evaluations, including evaluations of compensatory education programs; and (2) evaluate the accounting systems to determine whether any reporting requirements should be adjusted based on district size. (c) Before January 1, 2007, the commissioner shall submit a report to the legislature describing the results of the review conducted under this section. (d) This section expires January 2, 2007. SECTION 2.08. Section 44.007, Education Code, is amended by adding Subsection (e) to read as follows: (e) The State Board of Education shall prepare a report for the 80th Legislature evaluating the benefits of providing school districts with standardized accounting software that would meet the requirements of this section and any other appropriate sections. The report shall consider any savings and costs to school districts from having such software provided, including any savings to districts from no longer paying programming costs in response to changes in state law or agency or State Board of Education rules. The report may consider software accessed by alternative methods, such as web-based methods or network-based methods, as may be most economical for districts of different sizes. The report shall also consider any accountability benefits from making the information collected by such software available on an ongoing basis to the agency and to the public, and personnel and other costs required for the agency to review this information continuously to alert school board members and superintendents of areas of potential waste or fraud. This subsection expires September 1, 2007. SECTION 2.09. Subchapter A, Chapter 44, Education Code, is amended by adding Section 44.011 to read as follows: Sec. 44.011. SPENDING TARGETS FOR DISTRICT EXPENDITURES. (a) The commissioner shall annually establish and publish the proposed expenditures for each school district as determined by the commissioner based on an evaluation of information relating to the best practices of campuses and districts as described by Section 7.009. The commissioner shall consider unique characteristics of the district, including the district's size. (b) The proposed expenditures to be determined as required by Subsection (a) must include amounts for: (1) instructional expenditures; (2) central administrative expenditures; (3) district operations; and (4) any other category designated by the commissioner. (c) If the board of trustees of a school district intends to exceed the proposed expenditures established by the commissioner under this section, the board must adopt and publish a resolution that includes an explanation justifying the board's actions.
ARTICLE 3. APPROPRIATION
SECTION 3.01. There is appropriated to the Texas Education Agency for distribution to the school districts of this state in accordance with Chapters 41 and 42, Education Code, as amended by this Act, the amount of $2,385,800,000 in fiscal year 2007 from any funds in the State Treasury not otherwise appropriated. SECTION 3.02. Rider 97 following the appropriations to the Texas Education Agency in Chapter 1369, Acts of the 79th Legislature, Regular Session, 2005 (the General Appropriations Act), as amended by Chapter 2, Acts of the 79th Legislature, 1st Called Session, 2005, is repealed.
ARTICLE 4. APPLICATION AND EFFECTIVE DATE
SECTION 4.01. This Act applies beginning with the 2006-2007 school year. SECTION 4.02. This Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect on the 91st day after the last day of the legislative session.