79R4602 KKA/PAM-D

By:  Grusendorf                                                   H.B. No. 2  


A BILL TO BE ENTITLED
AN ACT
relating to public education and public school finance matters. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
ARTICLE 1. PUBLIC SCHOOL FINANCE
PART A. EDUCATION FUNDING
SECTION 1A.01. Subtitle I, Title 2, Education Code, is amended by adding Chapter 42 to read as follows:
CHAPTER 42. FOUNDATION SCHOOL PROGRAM
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 42.001. 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 be provided and substantially financed through state revenue sources so that each student enrolled in the public school system shall have access to programs and services that are appropriate to the student's educational needs and that are substantially equal to those available to any similar student, notwithstanding varying local economic factors. (b) The public school finance system of this state shall adhere to a standard of neutrality that provides for substantially equal access to similar revenue per student at similar tax effort, considering all state and local revenues of districts after acknowledging all legitimate student and district cost differences. Sec. 42.002. PURPOSES OF FOUNDATION SCHOOL PROGRAM. (a) The purposes of the Foundation School Program set forth in this chapter are to guarantee that each school district in the state has: (1) adequate resources to provide each eligible student an accredited instructional program and facilities suitable to the student's educational needs; and (2) access to substantially equalized financing for an enriched program. (b) The Foundation School Program consists of: (1) two tiers that in combination provide for: (A) sufficient financing for all school districts to provide an accredited program of education that is rated academically acceptable or higher under Section 39.072 and meets other applicable legal standards; and (B) substantially equal access to funds to provide an enriched program; and (2) a facilities component as provided by Chapter 46. Sec. 42.003. STUDENT ELIGIBILITY. (a) A student is entitled to the benefits of the Foundation School 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 Foundation School 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 school year of the district 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 Foundation School 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. 42.004. ADMINISTRATION OF PROGRAM. (a) The commissioner shall take such action and require such reports consistent with this chapter as may be necessary to implement and administer the Foundation School Program. (b) The commissioner may adopt rules necessary to implement and administer the Foundation School Program. Sec. 42.005. AVERAGE DAILY ATTENDANCE. (a) In this chapter, average daily attendance is: (1) 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; or (2) for a district that operates under a flexible year program under Section 29.0821, the quotient of the sum of attendance for each actual day of instruction as permitted by Section 29.0821(b)(1) divided by the number of actual days of instruction as permitted by Section 29.0821(b)(1). (b) A school district that experiences a decline of more than two percent in average daily attendance shall be funded on the basis of an average daily attendance equal to 98 percent of the actual average daily attendance of the preceding school year. (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. (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) An open-enrollment charter school is not entitled to funding based on an adjustment under Subsection (b). Sec. 42.006. EQUALIZED FUNDING ELEMENTS. (a) The Legislative Budget Board shall adopt rules, subject to appropriate notice and opportunity for public comment, for the calculation for each year of a biennium of the equalized funding elements, in accordance with Subsection (c), necessary to achieve the state policy under Section 42.001. (b) Before each regular session of the legislature, the board shall report the equalized funding elements to the commissioner and the legislature. (c) The funding elements must include: (1) accreditation allotment amounts for the purposes of Section 42.101 that represent the cost per student of a regular education program that meets all 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 the programs authorized under Subchapter C, with the program funding level expressed as total dollar amounts for each program and the specific dollar amount to be provided for each eligible student or course for the appropriate year; (4) the tax rate to be used in determining a school district's local share under Section 42.306(a); (5) the maximum district enrichment tax rate for purposes of Section 42.252; and (6) the amount to be appropriated for the school facilities assistance program under Chapter 46. (d) The board shall conduct a study of the funding elements each biennium, as appropriate. 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 comply with all legal mandates and regulations without increasing district tax rates. (e) Notwithstanding Subsection (d), the board shall contract for a comprehensive study of the funding elements. The board shall report the results of the study to the commissioner and the legislature not later than December 1, 2008. This subsection expires January 1, 2009.
[Sections 42.007-42.100 reserved for expansion]
SUBCHAPTER B. BASIC PROGRAM
Sec. 42.101. ACCREDITATION ALLOTMENT AND SPECIAL STUDENT ALLOTMENTS. (a) For each student in average daily attendance, not including the time a student spends each day in special education programs in an instructional arrangement other than mainstream, a school district is entitled to an accreditation allotment of: (1) $4,550, if the student is enrolled below the ninth grade level; or (2) $5,550, if the student is enrolled at or above the ninth grade level. (b) An accreditation allotment in a greater amount for any school year may be provided by appropriation. (c) In addition to the accreditation allotment, a school district is entitled to special student allotments in the manner specified under Subchapter C.
[Sections 42.102-42.150 reserved for expansion]
SUBCHAPTER C. SPECIAL STUDENT ALLOTMENTS
Sec. 42.151. SPECIAL EDUCATION ALLOTMENTS. (a) In this section: (1) "Full-time equivalent student" means 30 hours of contact a week between a student and special education program personnel. (2) "Special education program" means a program under Subchapter A, Chapter 29. (b) For each student in average daily attendance in a special education program in a mainstream instructional arrangement, a school district is entitled, in addition to the accreditation allotment under Section 42.101, to an annual allotment of $254. (c) For each full-time equivalent student in average daily attendance in a special education program in an instructional arrangement other than a mainstream instructional arrangement, a school district is entitled to an annual allotment in the following amount, based on the student's instructional arrangement: (1) $12,685, for a student in a homebound instructional arrangement; (2) $7,611, for a student in a hospital class instructional arrangement; (3) $12,685, for a student in a speech therapy instructional arrangement; (4) $7,611, for a student in a resource room instructional arrangement; (5) $7,611, for a student in a self-contained, mild and moderate, regular campus instructional arrangement; (6) $7,611, for a student in a self-contained, severe, regular campus instructional arrangement; (7) $6,850, for a student in an off-home-campus instructional arrangement; (8) $4,313, for a student in a nonpublic day school; (9) $5,835, for a student in a vocational adjustment class; (10) $10,148, for a student 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; and (11) $7,104, for a student who resides in a state school. (d) 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. (e) 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. (f) 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. (g) 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. (h) Funds allocated under this section, 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. (i) 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. (j) Each year, the agency shall make and disseminate to each school district a list of those districts that maintain 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. (k) A school district that provides an extended year program required by federal law for special education students who may regress is entitled to receive, for each full-time equivalent student in average daily attendance, funds in an amount equal to 75 percent, or a lesser percentage determined by the commissioner, of the sum of the accreditation allotment and the additional allotment for the student's instructional arrangement under this section 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 subsection may not exceed $10 million per year. A school district may use funds received under this subsection only in providing an extended year program. (l) 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. 42.152. ACCELERATED PROGRAMS ALLOTMENT. (a) A school district is entitled to an annual allotment for the costs of providing accelerated programs in an amount determined by the formula:
APA = 665 X ADA X PR
where: "APA" is the amount of the district's allotment; "ADA" is the district's total number of students in average daily attendance; and "PR" is the percentage of the district's total number of students enrolled in prekindergarten through grade level eight who participate in the national free or reduced-price lunch program as reported through the Public Education Information Management System (PEIMS) for the current school year or the percentage determined in accordance with commissioner rule if no campus in the district with students enrolled in prekindergarten through grade level eight participates in the national free or reduced-price lunch program. (b) The legislature may provide by appropriation for a greater allotment than the amount prescribed by Subsection (a). (c) In addition to the allotment provided by Subsection (a), the legislature may also provide funding by appropriation for any program or activity formerly funded under Section 42.152, as that section existed on January 1, 2005. Funding provided under this subsection is not considered a special student allotment for purposes of Sections 42.301 and 42.302 or any other provision in this chapter that refers to special student allotments. Sec. 42.153. TRANSITIONAL PROGRAM ALLOTMENT. For each student in average daily attendance in a bilingual education or special language program under Subchapter B, Chapter 29, a district is entitled to an annual allotment of $450 or a greater amount for any school year provided by appropriation. Sec. 42.154. CAREER AND TECHNOLOGY EDUCATION ALLOTMENT. For each student in average daily attendance in an approved career and technology education program in grades seven through 12, a district is entitled to an annual allotment of $178 for each annual credit hour the student is enrolled in the program, or a greater amount for any school year provided by appropriation. Sec. 42.155. PUBLIC EDUCATION GRANT ALLOTMENT. (a) Except as provided by Subsection (b), for each 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, the district in which the student attends school is entitled to an annual allotment of $250 or a greater amount for any school year provided by appropriation. (b) The total number of allotments under this section to which a school 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.
[Sections 42.156-42.170 reserved for expansion]
Sec. 42.171. RESTRICTIONS ON USE OF ALLOTMENTS. (a) Unless specifically provided otherwise by this code, but subject to Section 42.172, a school district is not required to use amounts allotted under this subchapter for the program for which the amounts were allotted. (b) Any restriction specifically imposed under this subchapter on a school district's use of an amount allotted under this subchapter applies equally to the amount by which the allotment is adjusted under Section 42.301 or 42.302. Sec. 42.172. MAINTENANCE OF EFFORT. (a) Notwithstanding any other provision of this code, but subject to Subsection (b), a school district may not spend in any school year for a program or service listed below an amount per student in average daily attendance that is less than the amount the district spent for that program or service per student in average daily attendance during the 2004-2005 school year: (1) a special education program under Subchapter A, Chapter 29; (2) 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; (3) a bilingual education or special language program under Subchapter B, Chapter 29; (4) a career and technology education program in grades nine through 12 or a career and technology education program for students with disabilities in grades seven through 12 under Sections 29.182, 29.183, and 29.184; or (5) a gifted and talented program under Subchapter D, Chapter 29. (b) The commissioner may authorize a school district to spend less than the amount required by this section if the commissioner, considering the district's unique circumstances, determines that the requirement imposes an undue hardship on the district.
[Sections 42.173-42.200 reserved for expansion]
SUBCHAPTER D. TRANSPORTATION ALLOTMENT
Sec. 42.201. TRANSPORTATION ALLOTMENT. (a) Subject to Subsection (b), a school district is entitled to a transportation allotment in an amount determined by whichever of the following formulas results in the greatest allotment: (1) TA = ADA x 100; or (2) TA = ADA x 100 x (DMS/ADMS) where: "TA" is the allotment to which the district is entitled; "ADA" is the number of students in average daily attendance in the district; "DMS" is the district number of square miles per student in average daily attendance, which is computed by dividing the number of square miles in the district by the number of students in average daily attendance in the district; and "ADMS" is the average district number of square miles per student in average daily attendance, which is computed by dividing the sum of each school district's number of square miles per student in average daily attendance by the number of districts in the state. (b) A school district may not receive a transportation allotment that exceeds $1,000 per student in average daily attendance. Sec. 42.202. 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. 42.203. USE OF TRANSPORTATION ALLOTMENT. A school district is not required to use funds allotted under this subchapter in providing transportation services.
[Sections 42.204-42.220 reserved for expansion]
SUBCHAPTER E. NEW INSTRUCTIONAL FACILITY ALLOTMENT
Sec. 42.221. 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. 42.222. DEFINITION. In this subchapter, "instructional facility" has the meaning assigned by Section 46.001. Sec. 42.223. 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 or a greater amount provided by appropriation. Sec. 42.224. 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 or a greater amount provided by appropriation. (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. 42.225. PRORATION OF ALLOTMENTS. 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 in the manner provided by Section 42.313(f). Sec. 42.226. APPLICABILITY TO CERTAIN DISTRICTS. A school district subject to Section 42.401 that elects to purchase average daily attendance credit under Subchapter D, Chapter 41, is entitled to a credit, in the amount of the allotments to which the district is entitled under this subchapter, against the total amount required under Section 41.093 for the district to purchase attendance credits.
[Sections 42.227-42.240 reserved for expansion]
SUBCHAPTER F. INSTRUCTIONAL MATERIALS AND
TECHNOLOGY ALLOTMENT
Sec. 42.241. INSTRUCTIONAL MATERIALS AND TECHNOLOGY ALLOTMENT. (a) For each student in average daily attendance, a school district is entitled to an annual allotment of $150. (b) Funds allotted under this section may be used only to purchase approved instructional materials, including online instructional materials. (c) This section applies beginning with the 2006-2007 school year. This subsection expires September 1, 2007.
[Sections 42.242-42.250 reserved for expansion]
SUBCHAPTER G. ENRICHMENT PROGRAM
Sec. 42.251. PURPOSE. The purpose of the enrichment program component of the Foundation School Program is to provide each school district with the opportunity to supplement the basic program at a level of its own choice. An allotment under this subchapter may be used for any legal purpose other than capital outlay or debt service. Sec. 42.252. ALLOTMENT. (a) In this section, "wealth per student" means a school district's taxable value of property, as determined under Subchapter M, Chapter 403, Government Code, divided by the number of students in specially adjusted average daily attendance in the district. (b) Each school district is guaranteed a specified amount per student in specially adjusted average daily attendance in state and local funds for each cent of enrichment tax effort up to the maximum level specified in this subchapter. The amount of state support, subject only to the maximum amount under Section 42.253, is determined by the formula:
GYA = (GL X SPADA X DETR X 100) - LR
where: "GYA" is the guaranteed yield amount of state enrichment funds to be allocated to the district; "GL" is the dollar amount guaranteed level of state and local enrichment funds per student in specially adjusted average daily attendance 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, or a greater amount for any school year provided by appropriation; "SPADA" is the number of students in specially adjusted average daily attendance, which is computed by dividing the sum of the district's allotments under Subchapters B, C, and D by the accreditation allotment specified by Section 42.101(a)(1) for the applicable year; "DETR" is the district enrichment tax rate of the school district, which is determined by dividing the total amount of maintenance and operations taxes collected by the school district for the applicable school year, as provided by Subsection (c), by the quotient of the district's taxable value of property for the preceding tax year as determined 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 as determined under Subchapter M, Chapter 403, Government Code, divided by 100. (c) For purposes of this section: (1) the total amount of maintenance and operations taxes collected by the school district does not include the amount of: (A) the district's local share under Section 42.306; or (B) taxes paid into a tax increment fund under Chapter 311, Tax Code; (2) school district taxes for which credit is granted under Section 31.035, 31.036, or 31.037, Tax Code, or under Subchapter D, Chapter 313, Tax Code, are considered taxes collected by the school district as if the taxes were paid when the credit for the taxes was granted; and (3) the total amount of maintenance and operations taxes collected for an applicable school year by a school district with alternate tax dates, as authorized by Section 26.135, Tax Code, is the amount of taxes collected on or after January 1 of the year in which the school year begins and not later than December 31 of the same year. Sec. 42.253. DISTRICT ENRICHMENT TAX. (a) The district enrichment tax rate may not exceed $0.10 per $100 of valuation. (a-1) Notwithstanding Subsection (a): (1) the district enrichment tax rate may not exceed: (A) for the 2005 tax year, the rate of $0.02 per $100 of valuation; (B) for the 2006 tax year, the rate of $0.04 per $100 of valuation; (C) for the 2007 tax year, the rate of $0.06 per $100 of valuation; and (D) for the 2008 tax year, the rate of $0.08 per $100 of valuation. (b) A school district's enrichment tax rate must be approved by the voters in accordance with Section 45.003. (c) Subsection (a-1) and this subsection expire January 1, 2009. Sec. 42.254. COMPUTATION OF ENRICHMENT AID FOR DISTRICT ON MILITARY INSTALLATION OR AT STATE SCHOOL. State enrichment assistance under this subchapter for a school district located on a federal military installation or at Moody State School is computed using the average district enrichment tax rate and property value per student of school districts in the county, as determined by the commissioner.
[Sections 42.255-42.300 reserved for expansion]
SUBCHAPTER H. ADDITIONAL ADJUSTMENTS; FINANCING THE PROGRAM
Sec. 42.301. COST OF EDUCATION ADJUSTMENT. (a) The amounts of the accreditation allotments under Subchapter B, each special student allotment under Subchapter C, and the transportation allotment under Subchapter D are adjusted to reflect the geographic variation in known resource costs and costs of education due to factors beyond the control of the school district. The amount of the adjustment is 50 percent of the total amount that would result from application of the cost of education index adopted under Subsection (b), or a greater amount for any school year provided by appropriation. (b) The Legislative Budget Board shall adopt a cost of education index based on a statistical analysis conducted on a revenue neutral basis that is designed to isolate the independent effects of uncontrollable factors on the compensation that school districts must pay, including teacher salaries and other benefits. The analysis must include, at a minimum, variations in teacher characteristics, teacher work environments, and the economic and social conditions of the communities in which teachers reside. (b-1) For the 2005-2006 school year, the cost of education index for purposes of Subsection (a) is based on the average of the teacher fixed effects index in the 2004 report commissioned by the Joint Select Committee on Public School Finance of the 78th Legislature and the index used to determine a school district's adjustment for the 2004-2005 school year. For the 2006-2007 school year, the cost of education index for purposes of Subsection (a) is the teacher fixed effects index in the 2004 report commissioned by the Joint Select Committee on Public School Finance of the 78th Legislature. This subsection expires September 1, 2007. (c) The Legislative Budget Board shall biennially update the cost of education index required by this section. The Legislative Budget Board shall submit the updated index to the legislature not later than December 1 of each even-numbered year. Sec. 42.302. SMALL AND MID-SIZED DISTRICT ADJUSTMENT. (a) The amounts of the accreditation allotments under Subchapter B, each special student allotment under Subchapter C, and the transportation allotment under Subchapter D of certain small and mid-sized school districts are adjusted in accordance with this section to reflect district costs related to the district's size. In this section: (1) "T" is the district's total sum after adjustment for size of the district; (2) "ADA" is the number of students in average daily attendance for which the district is entitled to an accreditation allotment under Section 42.101; and (3) "SA" is the sum of the district's accreditation allotments under Subchapter B, each special student allotment under Subchapter C, and transportation allotments under Subchapter D. (b) The sum of the total accreditation allotments, any special student allotments under Subchapter C, and the transportation allotment under Subchapter D 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:
T = (1 + ((1,600 - ADA) X .0004)) X SA
(c) The sum of total accreditation allotments, any special student allotments under Subchapter C, and the transportation allotment under Subchapter D 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:
T = (1 + ((1,600 - ADA) X .00025)) X SA
(d) The sum of the total accreditation allotments, any special student allotments under Subchapter C, and the transportation allotment under Subchapter D 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 adjusted allotment: (1) the formula in Subsection (b) or (c) for which the district is eligible; or (2) T = (1 + ((5,000 - ADA) X .000025)) X SA (e) The commissioner may make the adjustment authorized by Subsection (d)(2) only if the district is not subject to additional equalization under Section 42.401. For purposes of this subsection, the adjustments provided by Subsection (d)(2) and Section 42.301 are not used in determining whether the district is subject to additional equalization under Section 42.401. Sec. 42.303. SPARSITY ADJUSTMENT. (a) Notwithstanding Sections 42.101 and 42.302: (1) a school district that has fewer than 130 students in average daily attendance is entitled to an adjusted accreditation allotment 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 eight 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 accreditation allotment on the basis of 75 students in average daily attendance; and (3) a school district that offers a kindergarten through grade six 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 accreditation allotment on the basis of 60 students in average daily attendance. (b) For purposes of computing an adjusted accreditation allotment under Subsection (a)(1): (1) the school district is entitled to an accreditation allotment under Section 42.101(a)(1) determined by dividing the number of students in actual average daily attendance who are enrolled below the ninth grade level by the district's total actual average daily attendance and multiplying the resulting quotient by 130; and (2) the school district is entitled to an accreditation allotment under Section 42.101(a)(2) determined by dividing the number of students in actual average daily attendance who are enrolled at or above the ninth grade level by the district's total actual average daily attendance and multiplying the resulting quotient by 130. Sec. 42.304. FINANCING: GENERAL RULE. (a) The sum of the accreditation allotments under Subchapter B and the additional allotments under Subchapters C, D, E, and F constitutes the tier one allotments. The sum of the tier one allotments and the enrichment program allotments under Subchapter G constitutes the total cost of the Foundation School Program. (b) The program shall be financed by: (1) state funds appropriated for the purposes of public school education; (2) ad valorem tax revenue generated by an equalized uniform school district effort; (3) ad valorem tax revenue generated by local school district effort for an enrichment program in accordance with Subchapter G; and (4) state available school funds distributed in accordance with law. Sec. 42.305. ADDITIONAL STATE AID FOR AD VALOREM TAX CREDITS UNDER TEXAS ECONOMIC DEVELOPMENT ACT. For each school year, a school district, including a school district that is otherwise ineligible for state aid under this chapter, is entitled to state aid in an amount equal to the amount of all tax credits credited against ad valorem taxes of the district in that year under Subchapter D, Chapter 313, Tax Code. Sec. 42.306. LOCAL SHARE OF PROGRAM COST (TIER ONE). (a) Each school district's share of the Foundation School Program is determined by the following formula:
LS = TR X DPV
where: "LS" is the school district's local share; "TR" is a tax rate which for each hundred dollars of valuation is an effective tax rate of $1.00, or a lesser rate for any school year provided by appropriation; and "DPV" is the taxable value of property in the school district for the preceding tax year determined under Subchapter M, Chapter 403, Government Code. (b) The commissioner shall adjust the values reported in the official report of the comptroller as required by Section 5.09(a), Tax Code, to reflect reductions in taxable value of property resulting from natural or economic disaster after January 1 in the year in which the valuations are determined. The decision of the commissioner is final. An adjustment does not affect the local share of any other school district. (c) A school district that adopts a maintenance and operations tax rate sufficient to raise its total local share of the Foundation School Program is eligible to receive the full amount of the tier one allotment to which the district is entitled under this chapter. (d) If a school district adopts a maintenance and operations tax rate that is less than the rate prescribed by Subsection (a), the district's tier one allotment is adjusted by a percentage determined by dividing the district's adopted tax rate by the rate prescribed by Subsection (a) and multiplying the resulting quotient by 100. The commissioner shall determine the amount of the tier one allotment to which a district is entitled under this subsection. The commissioner's determination is final and may not be appealed. (e) In implementing any provision of this title that refers to a school district's local share or tier one allotment: (1) the local share of a district described by Subsection (d) is based on the tax rate adopted by the district under that subsection; and (2) the tier one allotment of a district described by Subsection (d) is the proportionate amount provided by that subsection. (f) A school district's adopted maintenance and operations tax rate, including any enrichment tax rate under Subchapter G, may not exceed the maximum rate specified by Section 45.003(d). Sec. 42.307. ADJUSTMENT FOR RAPID DECLINE IN TAXABLE VALUE OF PROPERTY. (a) For purposes of Chapter 46 and this chapter, and to the extent money specifically authorized to be used under this section is available, the commissioner shall adjust the taxable value of property in a school district that, due to factors beyond the control of the board of trustees, experiences a rapid decline in the tax base used in computing taxable values in excess of four percent of the tax base used in the preceding year. (b) To the extent that a sufficient amount of money is not available to fund all adjustments under this section, the commissioner shall reduce adjustments in the manner provided by Section 42.313(f) so that the total amount of adjustments equals the amount of money available to fund the adjustments. (c) A decision of the commissioner under this section is final and may not be appealed. Sec. 42.308. ADJUSTMENT FOR OPTIONAL HOMESTEAD EXEMPTION. (a) In any school year, the commissioner may not provide funding under this chapter based on a school district's taxable value of property computed in accordance with Section 403.302(d)(2), Government Code, unless: (1) funds are specifically appropriated for purposes of this section; or (2) the commissioner determines that the total amount of state funds appropriated for purposes of the Foundation School Program for the school year exceeds the amount of state funds distributed to school districts in accordance with Section 42.313 based on the taxable values of property in school districts computed in accordance with Section 403.302(d), Government Code, without any deduction for residence homestead exemptions granted under Section 11.13(n), Tax Code. (b) In making a determination under Subsection (a)(2), the commissioner shall: (1) notwithstanding Section 42.313(b), reduce the entitlement under this chapter of a school district whose final taxable value of property is higher than the estimate under Section 42.314 and make payments to school districts accordingly; and (2) give priority to school districts that, due to factors beyond the control of the board of trustees, experience a rapid decline in the tax base used in calculating taxable values in excess of four percent of the tax base used in the preceding year. (c) In the first year of a state fiscal biennium, before providing funding as provided by Subsection (a)(2), the commissioner shall ensure that sufficient appropriated funds for purposes of the Foundation School Program are available for the second year of the biennium, including funds to be used for purposes of Section 42.307. (d) If the commissioner determines that the amount of funds available under Subsection (a)(1) or (2) does not at least equal the total amount of state funding to which districts would be entitled if state funding under this chapter were based on the taxable values of property in school districts computed in accordance with Section 403.302(d)(2), Government Code, the commissioner may, to the extent necessary, provide state funding based on a uniform lesser fraction of the deduction under Section 403.302(d)(2), Government Code. (e) The commissioner shall notify school districts as soon as practicable as to the availability of funds under this section. Sec. 42.309. ADJUSTED PROPERTY VALUE FOR DISTRICTS NOT OFFERING ALL GRADE LEVELS. For purposes of this chapter, the taxable value of property of a school district that contracts for students residing in the district to be educated in another district under Section 25.039(a) is adjusted by applying the formula:
ADPV = DPV - (TN/.015)
where: "ADPV" is the district's adjusted taxable value of property; "DPV" is the taxable value of property in the district for the preceding tax year determined under Subchapter M, Chapter 403, Government Code; and "TN" is the total amount of tuition required to be paid by the district under Section 25.039 for the school year for which the adjustment is made, not to exceed the amount specified by commissioner rule under Section 25.039(b). Sec. 42.310. EFFECT OF APPRAISAL APPEAL. (a) If the final determination of an appeal under Chapter 42, Tax Code, results in a reduction in the taxable value of property that exceeds five percent of the total taxable value of property in the school district for the same tax year determined under Subchapter M, Chapter 403, Government Code, the commissioner shall request the comptroller to adjust its taxable property value findings for that year consistent with the final determination of the appraisal appeal. (b) If the district would have received a greater amount from the Texas education fund for the applicable school year using the adjusted value, the commissioner shall add the difference to subsequent distributions to the district from the Texas education fund. An adjustment does not affect the local share of any other district. Sec. 42.311. ADDITIONAL TRANSITIONAL AID. (a) Notwithstanding any other provision of this subtitle, and provided that a school district imposes a tax at a minimum rate specified by the commissioner, a school district is entitled to the amount of state revenue necessary to maintain state and local revenue per student in average daily attendance in an amount equal to the sum of: (1) the amount of state and local revenue per student in average daily attendance for maintenance and operation of the district available to the district, including any amounts the district received under Rider 82, page III-23, Chapter 1330, Acts of the 78th Legislature, Regular Session, 2003 (the General Appropriations Act), during the 2004-2005 school year; and (2) an amount equal to three percent of the amount described by Subdivision (1). (b) The commissioner shall determine the minimum tax rate for a school district under Subsection (a) on the basis of the tax rate adopted by the district for maintenance and operations for the 2004-2005 school year. (c) The commissioner shall determine the amount of state funds to which a school district is entitled under this section. The commissioner's determination is final and may not be appealed. Sec. 42.312. TEMPORARY LIMITATIONS ON AID. (a) Notwithstanding any other provision of this subtitle, the commissioner shall withhold from a school district the amount of state funds necessary to ensure that the district does not receive an amount of state and local revenue per student in average daily attendance that is greater than the following percentage of the amount to which the district is entitled under Section 42.311(a)(1): (1) 108 percent for the 2005-2006 school year; (2) 116 percent for the 2006-2007 school year; and (3) 124 percent for the 2007-2008 school year. (b) The commissioner shall determine the amount of state funds required to be withheld under this section. The commissioner's determination is final and may not be appealed. (c) This section expires September 1, 2008. Sec. 42.313. 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, D, E, and F, as adjusted in accordance with this subchapter; (2) the amount of money to which a school district is entitled under Subchapter G; (3) the amount of money allocated to the district from the available school fund; (4) the amount of the district's tier one local share under Section 42.306; and (5) the amount of each district's enrichment program local revenue under Section 42.252. (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 42.314, 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 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 42.314 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. (c) Each school district is entitled to an amount equal to the difference for that district between the sum of Subsections (a)(1) and (a)(2) and the sum of Subsections (a)(3), (a)(4), and (a)(5). (d) The commissioner shall approve warrants to each school district equaling the amount of its entitlement, except as provided by this section. Warrants for all money expended according to this chapter shall be approved and transmitted to treasurers or depositories of school districts in the same manner as warrants for state available fund payments are transmitted. The total amount of the warrants issued under this section may not exceed the total amount appropriated for Foundation School 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 tax rate, student enrollment, or taxable value of property used in determining the amount of state funds to which the district is entitled are 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 is less than the amount of money to which school districts are entitled for that year, the commissioner shall reduce the total amount of 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) Not later than March 1 each year, the commissioner shall determine the actual amount of state funds to which each school district is entitled under this chapter 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 tax rate, student enrollment, or taxable value of property, the commissioner shall adjust the district's entitlement for the next fiscal year accordingly. (h) The legislature may appropriate funds necessary for increases under Subsection (g) from funds that the comptroller, at any time during the fiscal year, finds are available. (i) The commissioner shall compute for each school district the total amount by which the district's allocation of state funds is increased or reduced under Subsection (g) and shall certify that amount to the district. Sec. 42.314. 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 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. 42.315. 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 the authority of 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. 42.316. PAYMENTS FROM TEXAS EDUCATION FUND. (a) In this section: (1) "Category 1 school district" means a school district having a wealth per student of less than one-half of the statewide average wealth per student. (2) "Category 2 school district" means a school district having a wealth per student of at least one-half of the statewide average wealth per student but not more than the statewide average wealth per student. (3) "Category 3 school district" means a school district having a wealth per student of more than the statewide average wealth per student. (4) "Wealth per student" means the taxable property values reported by the comptroller to the commissioner under Section 42.306 divided by the number of students in average daily attendance. (b) Payments from the Texas education fund to each category 1 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. (c) Payments from the Texas education fund to each category 2 school district shall be made as follows: (1) 22 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) 18 percent of the yearly entitlement of the district shall be paid in an installment to be made on or before the 25th day of October; (3) 9.5 percent of the yearly entitlement of the district shall be paid in an installment to be made on or before the 25th day of November; (4) 7.5 percent of the yearly entitlement of the district shall be paid in an installment to be made on or before the 25th day of April; (5) 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 May; (6) 10 percent of the yearly entitlement of the district shall be paid in an installment to be made on or before the 25th day of June; (7) 13 percent of the yearly entitlement of the district shall be paid in an installment to be made on or before the 25th day of July; and (8) 15 percent of the yearly entitlement of the district shall be paid in an installment to be made after the fifth day of September and not later than the 10th day of September of the calendar year following the calendar year of the payment made under Subdivision (1). (d) Payments from the Texas education fund to each category 3 school district shall be made as follows: (1) 45 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) 35 percent of the yearly entitlement of the district shall be paid in an installment to be made on or before the 25th day of October; and (3) 20 percent of the yearly entitlement of the district shall be paid in an installment to be made after the fifth day of September and not later than the 10th day of September of the calendar year following the calendar year of the payment made under Subdivision (1). (e) The amount of any installment required by this section may be modified to provide a school district with the proper amount to which the district may be entitled by law and to correct errors in the allocation or distribution of funds. If an installment under this section is required to be equal to other installments, the amount of other installments may be adjusted to provide for that equality. (f) Except as provided by Subsection (c)(8) or (d)(3), any previously unpaid additional funds from prior years owed to a district shall be paid to the district together with the September payment of the current year entitlement. Sec. 42.317. 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 42.318-42.400 reserved for expansion]
SUBCHAPTER I. ADDITIONAL EQUALIZATION
Sec. 42.401. DISTRICTS SUBJECT TO ADDITIONAL EQUALIZATION. (a) Except as provided by Subsection (b), a school district in which the district's local share under Section 42.306 exceeds the district's tier one allotment under Section 42.304 shall be consolidated by the commissioner under Subchapter H, Chapter 41. (b) As an alternative to consolidation under Subchapter H, Chapter 41, a school district described by Subsection (a) may elect to purchase average daily attendance credit in the manner provided by Subchapter D, Chapter 41.
[Sections 42.402-42.500 reserved for expansion]
SUBCHAPTER J. EDUCATOR EXCELLENCE INCENTIVE PROGRAM
Sec. 42.501. EDUCATOR EXCELLENCE INCENTIVE PROGRAM. (a) The commissioner shall establish an educator excellence incentive program under which school districts, in accordance with locally developed plans approved by the commissioner, provide incentive payments to employees who demonstrate success in adding value to student achievement. (b) Except as provided by Subsection (c), each year a school district shall use an amount equal to at least one percent of the district's total state and local expenditures for maintenance and operations to provide incentive payments to employees in accordance with this subchapter. (c) A school district may elect to use a portion of the amount described by Subsection (b) to provide stipends to teachers assigned as mentors under Section 21.458. (d) The commissioner shall adopt rules necessary to implement this subchapter. In adopting rules, the commissioner shall encourage local flexibility in designing incentive plans that promote student achievement. Sec. 42.502. MINIMUM CRITERIA FOR LOCAL INCENTIVE PLANS. (a) A school district shall develop a local incentive plan for rewarding academic improvement and achievement in the district and submit the plan to the commissioner for approval. (b) A local incentive plan must be designed to reward individuals, campuses, or organizational units such as grade levels at elementary schools or academic departments at high schools. (c) A local incentive plan must provide for incentive payments to classroom teachers and may provide for incentive payments to other employees. (d) The primary criteria for making incentive payments to employees under a local incentive plan must be based on objective measures of student achievement, and the plan must provide for incentive payments to be awarded on the basis of high achievement, incremental growth in achievement, or both. A local incentive plan may also consider other indicators of employee performance, such as teacher evaluations conducted by principals or parents. (e) A local incentive plan must be developed through a process that considers comments of classroom teachers in the district. Sec. 42.503. EMPLOYMENT CONTRACTS. (a) A school district shall provide in employment contracts that qualifying employees may receive an incentive payment under the local incentive plan. (b) The district shall indicate that any incentive payment distributed is considered a bonus for performance and not an entitlement as part of an employee's salary. Sec. 42.504. DECISION BY BOARD OF TRUSTEES. A decision by the board of trustees or the board's designee in providing an incentive payment under a local incentive plan approved under this subchapter is final and may not be appealed. SECTION 1A.02. The heading to Chapter 41, Education Code, is amended to read as follows: CHAPTER 41. EQUALIZATION ACTIONS [EQUALIZED WEALTH LEVEL] SECTION 1A.03. Section 41.006(a), Education Code, is amended to read as follows: (a) The commissioner may adopt rules necessary for the implementation of this chapter. The rules may provide for the commissioner to make necessary adjustments to the provisions of Chapter 42, including providing for the commissioner to make an adjustment in the funding element established by Section 42.252 [42.302], at the earliest date practicable, to the amount the commissioner believes, taking into consideration options exercised by school districts under Section 42.401 [this chapter] and estimates of student enrollments, will match appropriation levels. SECTION 1A.04. Section 41.008(a), Education Code, is amended to read as follows: (a) The governing board of a school district that results from consolidation under this chapter[, including a consolidated taxing district under Subchapter F,] for the tax year in which the consolidation occurs may determine whether to adopt a homestead exemption provided by Section 11.13, Tax Code, and may set the amount of the exemption, if adopted, at any time before the school district adopts a tax rate for that tax year. This section applies only to an exemption that the governing board of a school district is authorized to adopt or change in amount under Section 11.13, Tax Code. SECTION 1A.05. Section 41.009(a), Education Code, is amended to read as follows: (a) A tax abatement agreement executed by a school district that is involved in consolidation [or in detachment and annexation of territory] under this chapter is not affected and applies to the taxation of the property covered by the agreement as if executed by the district within which the property is included. SECTION 1A.06. Section 41.010, Education Code, is amended to read as follows: Sec. 41.010. TAX INCREMENT OBLIGATIONS. The payment of tax increments under Chapter 311, Tax Code, is not affected by the consolidation of territory [or tax bases or by annexation] under this chapter. In each tax year a school district paying a tax increment from taxes on property over which the district has assumed taxing power is entitled to retain the same percentage of the tax increment from that property that the district in which the property was located before the consolidation [or annexation] could have retained for the respective tax year. SECTION 1A.07. Section 41.013(a), Education Code, is amended to read as follows: (a) A [Except as provided by Subchapter G, a] decision of the commissioner under this chapter is appealable under Section 7.057. SECTION 1A.08. Section 41.091, Education Code, is amended to read as follows: Sec. 41.091. AGREEMENT. A school district subject to Section 42.401 [with a wealth per student that exceeds the equalized wealth level] may execute an agreement with the commissioner to purchase attendance credits in an amount equal to the lesser of: (1) the difference between the district's local share under Section 42.306 and the district's tier one allotment under Section 42.304; or (2) the amount equal to 35 percent of the district's total maintenance and operations tax revenue for the school year, including any enrichment revenue under Subchapter G, Chapter 42 [sufficient, in combination with any other actions taken under this chapter, to reduce the district's wealth per student to a level that is equal to or less than the equalized wealth level]. SECTION 1A.09. Section 41.093(a), Education Code, is amended to read as follows: (a) The cost of each credit is an amount equal to the greater of: (1) the amount of the district's maintenance and operations tax revenue per student in [weighted] average daily attendance for the school year for which the contract is executed; or (2) the amount of the statewide district average of maintenance and operations tax revenue per student in [weighted] average daily attendance for the school year preceding the school year for which the contract is executed. SECTION 1A.10. Section 41.251, Education Code, is amended to read as follows: Sec. 41.251. COMMISSIONER ORDER. If the commissioner is required under Section 42.401 [41.004] to order the consolidation of districts, the consolidation is governed by this subchapter. The commissioner's order shall be effective on a date determined by the commissioner, but not later than the earliest practicable date after November 8. SECTION 1A.11. Section 41.252, Education Code, is amended by amending Subsections (a) and (c) and adding Subsection (d) to read as follows: (a) In selecting the districts to be consolidated with a district subject to Section 42.401 [that has a property wealth greater than the equalized wealth level], the commissioner shall select one or more districts with a local share under Section 42.306 [wealth per student] that, when consolidated, will result in a consolidated district that is not subject to Section 42.401 [with a wealth per student equal to or less than the equalized wealth level]. In achieving that result, the commissioner shall give priority to school districts in the following order: (1) first, to the contiguous district that has the lowest local share percentage [wealth per student] and is located in the same county; (2) second, to the district that has the lowest local share percentage [wealth per student] and is located in the same county; (3) third, to a contiguous district not subject to Section 42.401 [with a property wealth below the equalized wealth level] that has requested the commissioner to consider [that] it for inclusion [be considered] in a consolidation plan; (4) fourth, to include as few districts as possible that are not subject to Section 42.401 and [fall below the equalized wealth level within the consolidation order that] have not requested the commissioner to be included in a consolidation plan; (5) fifth, to the district that has the lowest local share percentage [wealth per student] and is located in the same regional education service center area; and (6) sixth, to a district that has a tax rate similar to that of the district subject to Section 42.401 [that has a property wealth greater than the equalized wealth level]. (c) In applying the selection criteria specified by Subsection (a), if more than two districts are to be consolidated, the commissioner shall select the third and each subsequent district to be consolidated by treating the district subject to Section 42.401 [that has a property wealth greater than the equalized wealth level] and the district or districts previously selected for consolidation as one district. (d) In this section, "local share percentage" means a percentage determined by dividing a school district's local share under Section 42.306 by the district's tier one allotment under Section 42.304. SECTION 1A.12. Section 41.257, Education Code, is amended to read as follows: Sec. 41.257. APPLICATION OF SMALL AND SPARSE ADJUSTMENTS AND TRANSPORTATION ALLOTMENT. The budget of the consolidated district must apply the benefit of the adjustment or allotment to the schools of the consolidating district to which Section 42.302, 42.303, or Subchapter D, Chapter 42, [42.103, 42.105, or 42.155] would have applied in the event that the consolidated district still qualifies as a small or sparse district. SECTION 1A.13. Section 45.003, Education Code, is amended by amending Subsections (a) and (d) and adding Subsections (d-1), (d-2), (e), (f), (g), and (h) to read as follows: (a) Bonds described by Section 45.001 may not be issued and taxes described by 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]. (d) A proposition submitted to authorize the levy of maintenance taxes must include the question of whether the governing board or commissioners court may levy, assess, and collect annual ad valorem taxes for the further maintenance of public schools, at a rate not to exceed the rate, which may be not more than $1.10 [$1.50] on the $100 valuation of taxable property in the district, stated in the proposition. (d-1) Notwithstanding Subsection (d), the maximum rate under that subsection is: (1) for the 2005 tax year, $1.02 on the $100 valuation of taxable property; (2) for the 2006 tax year, $1.04 on the $100 valuation of taxable property; (3) for the 2007 tax year, $1.06 on the $100 valuation of taxable property; and (4) for the 2008 tax year, $1.08 on the $100 valuation of taxable property. (d-2) Subsection (d-1) and this subsection expire January 1, 2009. (e) An election held before June 1, 2005, authorizing a maintenance tax, other than a tax described by Section 45.001, at a rate of at least $1.00 on the $100 valuation of taxable property in the district is sufficient to authorize a rate not to exceed $1.00. (f) A school district must obtain voter authorization in an election held on or after June 1, 2005, before the district may levy an ad valorem tax for the maintenance and enrichment of the public schools at a rate that exceeds the rate of $1.00 on the $100 valuation of taxable property in the district. (g) A school district must obtain additional voter authorization in an election each time the district adopts a tax rate for the maintenance and enrichment of the district that exceeds the rate levied by the district in the preceding tax year. (h) Notwithstanding any other provision of law, a district permitted by special law on January 1, 2005, to impose an ad valorem tax at a rate greater than $1.50 may continue to impose a rate that is $0.50 less than the rate previously authorized.
PART B. SCHOOL DISTRICT EFFICIENCY
SECTION 1B.01. Subchapter A, Chapter 11, Education Code, is amended by adding Section 11.003 to read as follows: Sec. 11.003. ADMINISTRATIVE EFFICIENCY. (a) The commissioner shall develop and implement a program allowing a school district board of trustees to enter into an agreement with another district or a regional education service center for a cooperative arrangement regarding administrative services, including transportation, food service, purchasing, and payroll functions. The program may include reasonable incentives to encourage districts to enter into an agreement, as determined by the commissioner. (b) An agreement under this section must contain an explanation of how the cooperative arrangement would allow a participating school district to reduce costs, operate more efficiently, and improve educational quality. (c) This section does not limit a school district's authority to enter into any other agreement authorized by law.
ARTICLE 2. EDUCATIONAL EXCELLENCE
PART A. EDUCATOR QUALITY
SECTION 2A.01. Subchapter B, Chapter 21, Education Code, is amended by adding Section 21.0461 to read as follows: Sec. 21.0461. TEMPORARY CERTIFICATE FOR SUPERINTENDENT OR PRINCIPAL. (a) The board may issue a temporary certificate under this section for: (1) assistant principal; (2) principal; or (3) superintendent. (b) A candidate for certification under this section must: (1) hold a baccalaureate or advanced degree from an institution of higher education; (2) have significant management and leadership experience, as determined by the board of trustees of the school district that will employ the person under the temporary certificate; and (3) perform satisfactorily on the appropriate examination prescribed under Section 21.048. (c) A school district may require that a person who is employed by the district and who holds a certificate issued under this section complete a training program. (d) A certificate issued to a person under this section is valid only in the school district in which the person is initially employed after receiving the certificate. (e) A certificate issued under this section: (1) expires on the third anniversary of the date on which the certificate was issued; and (2) is not renewable. (f) The board shall issue a standard certificate to a person who holds a temporary certificate issued under this section if the school district employing the person under the temporary certificate: (1) has employed the person for at least three years in the capacity for which the person seeks a standard certificate; and (2) has recommended the person to the board and favorably reviewed, primarily using objective measures of student performance and improvement in the district, the person's performance. (g) A school district employing a person who holds a temporary certificate issued under this section must provide the person with intensive support during the person's first year of employment with the district, including: (1) mentoring; and (2) intensive, high-quality professional development. (h) For purposes of this section, the board by rule may determine the criteria a school district board of trustees shall use to determine whether a candidate for certification under this section has significant management and leadership experience. SECTION 2A.02. Section 21.054, Education Code, is amended by amending Subsection (b) and adding Subsection (c) to read as follows: (b) Continuing education for principals must be based on an individual assessment of the knowledge, skills, and proficiencies necessary to perform successfully as a principal, as identified in Section 21.046. As part of a principal's compliance with continuing education requirements under this section, a principal must attend advanced management training courses or programs as prescribed by board rule. An individualized professional growth plan shall be developed as a result of the assessment and shall be used exclusively for professional growth purposes. The assessment results and the growth plan may only be released with the approval of the principal assessed. Each certified principal shall participate in the assessment process and professional growth activities at least once every five years. (c) The board, in consultation with business schools, departments, or programs at institutions of higher education, shall propose rules to govern the approval and accountability of advanced management training courses or programs required under this section. In proposing a rule under this section, the board shall require that a person conducting a course or program have recognized expertise in business management. SECTION 2A.03. Section 21.402, Education Code, is amended by amending Subsections (a), (c), and (d) and adding Subsections (c-1) and (c-2) 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, prescribed by Subsection (c) [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 available to a district eligible to receive state assistance under Section 42.302 with an enrichment tax rate, 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 H.B. No. 3343, Acts of the 77th Legislature, Regular Session, 2001]. (c) The minimum monthly salary under this section is [factors per step are] as follows:Years Experience 0 1 2 MonthlySalary $2,524[.5656] $2,581[.5790] $2,639[.5924] [Factor] Years Experience 3 4 5 MonthlySalary $2,696[.6058] $2,817[.6340] $2,938[.6623] [Factor] Years Experience 6 7 8 MonthlySalary $3,059[.6906] $3,172[.7168] $3,278[.7416] [Factor] Years Experience 9 10 11 MonthlySalary $3,379[.7651] $3,473[.7872] $3,564[.8082] [Factor] Years Experience 12 13 14 MonthlySalary $3,649[.8281] $3,728[.8467] $3,805[.8645] [Factor] Years Experience 15 16 17 MonthlySalary $3,876[.8811] $3,944[.8970] $4,008[.9119] [Factor] Years Experience 18 19 20 and over MonthlySalary $4,068[.9260] $4,126[.9394] $4,180[.9520] [Factor] (c-1) Notwithstanding Subsection (a), for the 2005-2006 school year, a classroom teacher, full-time librarian, full-time counselor certified under Subchapter B, or full-time school nurse is entitled to a monthly salary that is at least equal to the sum of: (1) the monthly salary the employee would have received for the 2005-2006 school year under the district's salary schedule for the 2004-2005 school year, if that schedule had been in effect for the 2005-2006 school year, including any local supplement and any money representing a career ladder supplement the employee would have received in the 2005-2006 school year; and (2) $100. (c-2) Subsection (c-1) and this subsection expire September 1, 2006. (d) A classroom teacher, full-time librarian, full-time counselor certified under Subchapter B, or full-time school nurse employed by a school district in the 2005-2006 [2000-2001] school year is, as long as the employee is employed by the same district, entitled to a salary that is at least equal to the salary the employee received for the 2005-2006 [2000-2001] school year. SECTION 2A.04. Subchapter J, Chapter 21, Education Code, is amended by adding Section 21.458 to read as follows: Sec. 21.458. MENTORS. (a) Each school district may assign as a mentor to each classroom teacher who has less than two years of teaching experience a teacher who: (1) teaches in the same school; (2) to the extent practicable, teaches the same subject or grade level, as applicable; and (3) meets the qualifications prescribed by commissioner rules adopted under Subsection (b). (b) The commissioner shall adopt rules necessary to administer this section, including rules concerning the duties and qualifications of a teacher who serves as a mentor. The rules concerning qualifications must require that to serve as a mentor a teacher must have at least three complete years of teaching experience with a proven record of superior value-added student achievement as demonstrated under Section 39.034. (c) From the funds appropriated to the agency for purposes of this section, the commissioner shall adopt rules to implement this section. In adopting rules under this subsection, the commissioner shall rely on mentoring programs that, through external evaluation, have demonstrated success. This subsection expires January 1, 2006. SECTION 2A.05. Section 21.054, Education Code, as added by this Act, applies beginning with the 2006-2007 school year.
PART B. STATE GOVERNANCE
SECTION 2B.01. Subchapter A, Chapter 7, Education Code, is amended by adding Sections 7.007-7.009 to read as follows: Sec. 7.007. 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 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. (c) Annually, the commissioner shall review the Public Education Information Management System 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 system, 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. (d) The commissioner's rules must ensure that the Public Education Information Management System links student performance data to other related information for purposes of efficient and effective allocation of school resources. Sec. 7.008. STATEWIDE STUDENT ENROLLMENT, ATTENDANCE, AND ACHIEVEMENT TRACKING SYSTEM. (a) Each school district shall participate in a system meeting standards approved by the commissioner to track each student enrolled in a public school in this state. A student tracking system must: (1) produce detailed reports for agency officials and policy-makers and update information as applicable on each student's: (A) enrollment; (B) attendance; (C) achievement, including course or grade completion and assessment instrument results; (D) receipt of special education services, including placement in a special education program and the individualized education program developed; (E) individual graduation plans; and (F) specific reason for leaving a school or school district, such as transferring, graduating, or dropping out of school; and (2) to facilitate the electronic transfer of student records and the evaluation and improvement of educational programs in the state, permit an authorized state or district official to electronically retrieve information about a particular student as necessary. (b) Each school district shall use the student tracking system. (c) The commissioner may solicit and accept grant funds to maintain the student tracking system and to make the system available to school districts. Sec. 7.009. CONTRACT FOR STUDENT TRACKING SYSTEM; CONFIDENTIALITY OF STUDENT INFORMATION. (a) To assist school districts in complying with Section 7.008, the agency may contract with a public or private entity that develops tracking systems or electronic transfer systems. The third-party contractor may produce software or other electronic tools or host an Internet website to collect and compile data and produce reports meeting standards approved by the commissioner as provided by Section 7.008. (b) In order to develop and evaluate the data, the third-party contractor may collect data from each school district under the contract, including data that is confidential under state or federal law. Confidential data collected by the contractor does not lose its character as confidential information because of its collection by the contractor, and providing that data to the contractor does not constitute a release of the information by the school district. (c) The contractor and its employees are subject to any state or federal law governing the release of or providing access to any confidential information to the same extent as the school district from which the data is collected. The contractor may not release or distribute the data to any other person in a form that contains confidential information. (d) Confidential information may be used by the contractor solely for the purposes provided by Section 7.008 and must be destroyed immediately when no longer needed for those purposes.
PART C. SCHOOL DISTRICT GOVERNANCE AND OPERATION
SECTION 2C.01. (a) Section 11.059, Education Code, is amended to read as follows: Sec. 11.059. TERMS. (a) A trustee of an independent school district serves a term of [three or] four years. (b) [Elections for trustees with three-year terms shall be held annually. The terms of one-third of the trustees, or as near to one-third as possible, expire each year. [(c)] Elections for trustees [with four-year terms] shall be held on the uniform election date in November [biennially]. The terms of one-half of the trustees, or as near to one-half as possible, expire every two years. (c) [(d)] A board policy must state the schedule on which specific terms expire. (b) Section 41.001(d), Election Code, is amended to read as follows: (d) A general election of officers of a city, school district, junior college district, or hospital district may not be held on the February or September uniform election date. A general election of officers of an independent school district may not be held on the February, May, or September uniform election date. SECTION 2C.02. Section 25.0811(a), Education Code, is amended to read as follows: [(a)] A school district shall [may not] begin instruction for students for a school year on the first Tuesday after Labor Day [before the week in which August 21 falls. For purposes of this subsection, Sunday is considered the first day of the week]. SECTION 2C.03. (a) Section 11.059, Education Code, as amended by this Act, applies beginning with a school district trustee election scheduled for 2006. (b) Except as provided by Subsection (c) of this section, a school district trustee election that on the effective date of this Act is scheduled to be held in 2006 or 2007 must be held on November 7, 2006, or November 6, 2007. (c) If, under Subsection (b) of this section, the positions of more than one-half of the trustees or as near to one-half as possible would be scheduled for election on November 7, 2006, or November 6, 2007, the trustees holding those positions shall draw lots to determine, as appropriate, which positions are subject to election in 2006 or 2007 and which are subject to election in 2008 or 2009. (d) To implement the changes made to Section 11.059, Education Code, by this Act, a person may serve a term as school district trustee that is longer than the term for which the person was elected.
PART D. ACCOUNTABILITY
SECTION 2D.01. Subchapter A, Chapter 7, Education Code, is amended by adding Section 7.010 to read as follows: Sec. 7.010. BEST PRACTICES; CLEARINGHOUSE. (a) The agency shall establish a clearinghouse of information relating to the best practices of school districts for curriculum development, classroom instruction, bilingual education, special language programs, and business practices. (b) The agency shall: (1) allow each school district to submit examples of the district's best practices for: (A) curriculum development and classroom instruction, including best practices regarding scope and sequence of education; (B) bilingual education and special language programs; and (C) business practices, including descriptions of effective, efficient practices; (2) organize the best practices for curriculum development and classroom instruction by each grade level and each subject in the required curriculum under Section 28.002; (3) organize the best practices for business practices with priority given to descriptions of effective, efficient practices provided by districts rated exemplary or recognized under Subchapter D, Chapter 39; and (4) periodically update information described by this section as the agency determines necessary to provide timely information regarding best practices. (c) The agency may include in the clearinghouse any information that the agency determines to be relevant to the best practices of school districts. (d) The agency shall make available on its Internet website the best practices information described by this section. The information must be easily accessible by school districts and interested members of the public. (e) Based on the measure of progress toward English language proficiency under Section 29.065, the commissioner shall determine which school districts offer the most effective bilingual education and special language programs and make the information available as provided by this section. (f) The agency shall contract for the services of one or more third-party contractors to develop a system of collecting and evaluating best practices of 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 school district practices in awarding a contract under this subsection. (g) The agency shall implement this section not later than September 1, 2006. This subsection expires January 1, 2007. SECTION 2D.02. Subchapter A, Chapter 11, Education Code, is amended by adding Section 11.004 to read as follows: Sec. 11.004. APPLICABILITY OF TITLE TO EXEMPLARY DISTRICTS AND CAMPUSES. A school district or campus rated exemplary under Section 39.072 is subject only to the prohibitions, restrictions, and requirements of this title that apply to an open-enrollment charter school under Section 12.104(b). SECTION 2D.03. Section 25.005(b), Education Code, is amended to read as follows: (b) A reciprocity agreement must: (1) address procedures for: (A) transferring student records; (B) awarding credit for completed course work; and (C) permitting a student to satisfy the requirements of Section 39.025 through successful performance on comparable end-of-course or other exit-level assessment instruments administered in another state; and (2) include appropriate criteria developed by the agency. SECTION 2D.04. Section 29.081(b), Education Code, is amended to read as follows: (b) Each district shall provide accelerated instruction to a student enrolled in the district who has taken an end-of-course [the secondary exit-level] assessment instrument administered under Section 39.023(c) and has not performed satisfactorily on the assessment instrument [each section] or who is at risk of dropping out of school. SECTION 2D.05. Section 29.202, Education Code, is amended to read as follows: Sec. 29.202. ELIGIBILITY. (a) In this section, "adequate yearly progress standard" means a standard: (1) determined by the commissioner and approved by the United States Department of Education as provided by the No Child Left Behind Act of 2001 (Pub. L. No. 107-110); and (2) used to measure various indicators of educational success to determine the progress of a campus towards academic achievement. (b) A student is eligible to receive a public education grant or to attend another public school in the district in which the student resides under this subchapter if the student is assigned to attend a public school campus: (1) at which 50 percent or more of the students did not perform satisfactorily on an assessment instrument administered under Section 39.023(a) or (c) in any two of the preceding three years; [or] (2) that was, at any time in the preceding three years, considered low-performing under Section 39.132; or (3) that has not met the adequate yearly progress standard for the same indicator of educational success for the preceding two years. (c) [(b)] After a student has used a public education grant to attend a school in a district other than the district in which the student resides,[: [(1)] the student does not become ineligible for the grant if the school on which the student's initial eligibility is based no longer meets the criteria under Subsection (b) [(a); and [(2) the student becomes ineligible for the grant if the student is assigned to attend a school that does not meet the criteria under Subsection (a)]. SECTION 2D.06. Subchapter G, Chapter 29, Education Code, is amended by adding Section 29.2021 to read as follows: Sec. 29.2021. CONFLICT OF LAWS. To the extent of a conflict between this subchapter and a provision of Section 1116, No Child Left Behind Act of 2001 (20 U.S.C. Section 6316), as described by Subsection (a), the No Child Left Behind Act of 2001 prevails. SECTION 2D.07. Section 29.203(f), Education Code, is amended to read as follows: (f) The school district in which a student resides shall provide each student attending a school in another district under this subchapter transportation free of charge to and from the school the student would otherwise attend, except as provided by Section 1116, No Child Left Behind Act of 2001 (20 U.S.C. Section 6316). SECTION 2D.08. Section 30.021(e), Education Code, is amended to read as follows: (e) The school shall cooperate with public and private agencies and organizations serving students and other persons with visual impairments in the planning, development, and implementation of effective educational and rehabilitative service delivery systems associated with educating students with visual impairments. To maximize and make efficient use of state facilities, funding, and resources, the services provided in this area may include conducting a cooperative program with other agencies to serve students who have graduated from high school by completing all academic requirements applicable to students in regular education, excluding satisfactory performance on the end-of-course [exit-level] assessment instruments required by commissioner rule under Section 39.025(a) [instrument], who are younger than 22 years of age on September 1 of the school year and who have identified needs related to vocational training, independent living skills, orientation and mobility, social and leisure skills, compensatory skills, or remedial academic skills. SECTION 2D.09. Sections 39.023(a) and (c), Education Code, are amended to read as follows: (a) The agency shall adopt or develop appropriate criterion-referenced assessment instruments designed to assess essential knowledge and skills in reading, writing, mathematics, social studies, and science. All students, except students assessed under Subsection (b) or (l) or exempted under Section 39.027, shall be assessed in: (1) mathematics, annually in grades three through seven without the aid of technology and in grade [grades] eight [through 11] with the aid of technology on any assessment instruments that include algebra; (2) reading, annually in grades three through eight [nine]; (3) writing, including spelling and grammar, in grades four and seven; (4) [English language arts, in grade 10; [(5)] social studies, in grade [grades] eight [and 10]; (5) [(6)] science, in grades five and[,] eight[, and 10]; and (6) [(7)] any other subject and grade required by federal law. (c) The agency shall also adopt end-of-course [secondary exit-level] assessment instruments for secondary-level courses in Algebra I, Algebra II, Geometry, Biology, Chemistry, Physics, Integrated Physics and Chemistry, English I, English II, English III, World Geography, World History, and United States History. A school district may adopt a policy that a student may not receive course credit for a course listed in this subsection until the student performs satisfactorily on the end-of-course assessment for that course [designed to be administered to students in grade 11 to assess essential knowledge and skills in mathematics, English language arts, social studies, and science. The mathematics section must include at least Algebra I and geometry with the aid of technology. The English language arts section must include at least English III and must include the assessment of essential knowledge and skills in writing. The social studies section must include early American and United States history. The science section must include at least biology and integrated chemistry and physics. The assessment instruments must be designed to assess a student's mastery of minimum skills necessary for high school graduation and readiness to enroll in an institution of higher education]. If a student is in a special education program under Subchapter A, Chapter 29, the student's admission, review, and dismissal committee shall determine whether any allowable modification is necessary in administering to the student an assessment instrument required under this subsection or whether the student should be exempted under Section 39.027(a)(2). The State Board of Education shall administer the assessment instruments. The State Board of Education shall adopt a schedule for the administration of end-of-course [secondary exit-level] assessment instruments. Each student who did not perform satisfactorily on any end-of-course [secondary exit-level] assessment instrument when initially tested shall be given multiple opportunities to retake that assessment instrument. [A student who performs at or above a level established by the Texas Higher Education Coordinating Board on the secondary exit-level assessment instruments is exempt from the requirements of Section 51.306.] SECTION 2D.10. Subchapter B, Chapter 39, Education Code, is amended by adding Section 39.0232 to read as follows: Sec. 39.0232. COMPUTER-ADAPTIVE ASSESSMENT. (a) The agency shall provide for assessment instruments required under Section 39.023 to be designed so that those assessment instruments can be computer-adaptive. (b) To the extent practicable and appropriate, the agency shall require school districts to administer to students the computer-adaptive assessment instruments. (c) The agency shall implement this section not later than March 1, 2006. This subsection expires September 1, 2006. SECTION 2D.11. Section 39.025, Education Code, is amended to read as follows: Sec. 39.025. SECONDARY-LEVEL [EXIT-LEVEL] PERFORMANCE REQUIRED. (a) The commissioner shall adopt rules specifying the end-of-course assessment instruments for secondary-level courses administered under Section 39.023(c) on which a student must perform satisfactorily to receive a high school diploma. A student may not receive a high school diploma until the student has performed satisfactorily on those [the secondary exit-level] assessment instruments [for English language arts, mathematics, social studies, and science administered under Section 39.023(c)]. This subsection does not require a student to demonstrate readiness to enroll in an institution of higher education. (b) Each time an end-of-course [a secondary exit-level] assessment instrument is administered, a student who has not been given a high school diploma because of a failure to perform satisfactorily on the assessment instrument for that subject area may retake the assessment instrument. (c) A student who has been denied a high school diploma under Subsections (a) and (b) and who subsequently performs satisfactorily on each necessary end-of-course [secondary exit-level] assessment instrument shall be issued a high school diploma. (d) The commissioner shall by rule adopt a transition plan to implement the amendments made by __.B. No. __, Acts of the 79th Legislature, Regular Session, 2005, to this section and Sections 39.023(a) and (c) and 39.051(b)(5). The rules must provide for the administration of end-of-course assessment instruments adopted under Section 39.023(c) to begin as soon as practicable but not later than the 2008-2009 school year. During the period under which the transition to end-of-course assessment instruments is made: (1) the commissioner may retain, administer, and use for campus and district ratings under Subchapter D any assessment instrument required by Section 39.023(a) or (c), as that section existed before amendment by __.B. No. __, Acts of the 79th Legislature, Regular Session, 2005; and (2) the agency may defer releasing assessment instrument questions and answer keys as required by Section 39.023(e) to the extent necessary to develop additional assessment instruments. (e) Rules adopted under Subsection (d) must require that each student who will be subject to the requirements of Subsection (a) is entitled to notice of the specific requirements applicable to the student. Notice under this subsection must be provided not later than the date the student enters the ninth grade. Subsection (d) and this subsection expire September 1, 2009. SECTION 2D.12. Subchapter B, Chapter 39, Education Code, is amended by adding Section 39.0261 to read as follows: Sec. 39.0261. COLLEGE PREPARATION ACHIEVEMENT ASSESSMENTS. (a) In addition to the assessment instruments otherwise authorized or required by this subchapter, a school district shall administer to students in grades 8, 10, and 12 an established, valid, and reliable system of nationally normed and curriculum-based educational planning and achievement assessment instruments with the following characteristics: (1) an integrated series of standards and curriculum-based achievement assessment instruments, with the grade 12 assessment instrument currently accepted by this state's colleges and universities for use in determining admissions; and (2) a common content continuum and score scale in the assessed areas of reading, English, mathematics, and science across the assessment instruments administered at each grade level. (b) The agency shall: (1) select and approve vendors of the specific assessment instruments administered under this section; and (2) pay from its operating budget all costs associated with administration of the assessment instruments. (c) The agency shall compile the results of any assessment instrument administered under this section and make the results available through the Public Education Information Management System (PEIMS). SECTION 2D.13. Subchapter B, Chapter 39, Education Code, is amended by adding Section 39.034 to read as follows: Sec. 39.034. MEASURE OF VALUE-ADDED STUDENT ACHIEVEMENT ON ASSESSMENT INSTRUMENTS. (a) The commissioner by rule shall adopt a method by which the agency may measure value-added student achievement by tracking changes in a student's performance from one school year to the next on an assessment instrument required under this subchapter. (b) Each year, for each student who takes an assessment instrument required under Section 39.023(a), (b), or (l), the agency shall use the method adopted under Subsection (a) to compare the student's results on the assessment instrument to the student's results on any assessment instrument for that subject the student has taken during the preceding school year. (c) The agency shall maintain a record of the comparisons made under this section. Each year the agency shall: (1) provide the record to the school the student attends; and (2) provide to each teacher a record of all students who were: (A) assessed on an assessment instrument; and (B) taught by that teacher in the subject for which the assessment instrument was administered. (d) The commissioner shall implement this section not later than September 1, 2006. This subsection expires January 1, 2008. SECTION 2D.14. Section 39.051(b), Education Code, as amended by Chapters 433 and 805, Acts of the 78th Legislature, Regular Session, 2003, is reenacted and amended to read as follows: (b) Performance on the indicators adopted under this section shall be compared to state-established standards. The degree of change from one school year to the next in performance on each indicator adopted under this section shall also be considered. The indicators must be based on information that is disaggregated by race, ethnicity, gender, and socioeconomic status and must include: (1) the results of assessment instruments required under Sections 39.023(a), (c), and (l), aggregated by grade level and subject area; (2) dropout rates, including dropout rates and district completion rates for grade levels 9 through 12, computed in accordance with standards and definitions adopted by the National Center for Education Statistics of the United States Department of Education; (3) high school graduation rates, computed in accordance with standards and definitions adopted in compliance with the [federal] No Child Left Behind Act of 2001 (Pub. L. No. 107-110); (4) student attendance rates; (5) the percentage of graduating students who attain scores on the end-of-course [secondary exit-level] assessment instruments required under Subchapter B that are equivalent to a passing score on the assessment [test] instrument required under Section 51.3062 [51.306]; (6) the percentage of graduating students who meet the course requirements established for the recommended high school program by State Board of Education rule; (7) the measure of progress toward English language proficiency under Section 29.065, for students of limited English proficiency, as defined by Section 29.052; (8) value-added student achievement, as measured under Section 39.034; (9) the results of the Scholastic Assessment Test (SAT), the American College Test (ACT), articulated postsecondary degree programs described by Section 61.852, and certified workforce training programs described by Chapter 311, Labor Code; (10) [(8)] the percentage of students, aggregated by grade level, provided accelerated instruction under Section 28.0211(c), the results of assessments administered under that section, the percentage of students promoted through the grade placement committee process under Section 28.0211, the subject of the assessment instrument on which each student failed to perform satisfactorily, and the performance of those students in the school year following that promotion on the assessment instruments required under Section 39.023; (11) [(9)] for students who have failed to perform satisfactorily on an assessment instrument required under Section 39.023(a) or (c), the numerical progress of those students on subsequent assessment instruments required under those sections, aggregated by grade level and subject area; (12) [(10)] the percentage of students exempted, by exemption category, from the assessment program generally applicable under this chapter; [and] (13) [(11)] the percentage of students of limited English proficiency exempted from the administration of an assessment instrument under Sections 39.027(a)(3) and (4); and (14) the percentage of students in a special education program under Subchapter A, Chapter 29, assessed through assessment instruments developed or adopted under Section 39.023(b). SECTION 2D.15. Section 39.051(d), Education Code, is amended to read as follows: (d) Annually, the commissioner shall define exemplary, recognized, and unacceptable performance for each academic excellence indicator included under Subsections (b)(1) through (9) [(6)] and shall project the standards for each of those levels of performance for succeeding years. For the indicator under Subsection (b)(10) [(b)(7)], the commissioner shall define exemplary, recognized, and unacceptable performance based on student performance for the period covering both the current and preceding academic years. In defining exemplary, recognized, and unacceptable performance for the indicators under Subsections (b)(2) and (4) [(3)], the commissioner may not consider as a dropout or as a student who has failed to attend school a student whose failure to attend school results from: (1) the student's expulsion under Section 37.007; and (2) as applicable: (A) adjudication as having engaged in delinquent conduct or conduct indicating a need for supervision, as defined by Section 51.03, Family Code; or (B) conviction of and sentencing for an offense under the Penal Code. SECTION 2D.16. Section 39.052(b), Education Code, is amended to read as follows: (b) The report card shall include the following information: (1) where applicable, the academic excellence indicators adopted under Sections 39.051(b)(1) through (12) [(9)]; (2) average class size by grade level and subject; (3) the administrative and instructional costs per student, computed in a manner consistent with Section 44.0071; (4) a summary of the district's significant noninstructional expenditures, as determined under Section 44.0072; and (5) [(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. SECTION 2D.17. Section 39.131, Education Code, is amended by amending Subsection (a) and adding Subsection (c) to read as follows: (a) If a district does not satisfy the accreditation criteria, the commissioner shall take any of the following actions, listed in order of severity, to the extent the commissioner determines necessary: (1) issue public notice of the deficiency to the board of trustees; (2) order a hearing conducted by the board of trustees of the district for the purpose of notifying the public of the unacceptable performance, the improvements in performance expected by the agency, and the sanctions that may be imposed under this section if the performance does not improve; (3) order the preparation of a student achievement improvement plan that addresses each academic excellence indicator for which the district's performance is unacceptable, the submission of the plan to the commissioner for approval, and implementation of the plan; (4) order a hearing to be held before the commissioner or the commissioner's designee at which the president of the board of trustees of the district and the superintendent shall appear and explain the district's low performance, lack of improvement, and plans for improvement; (5) arrange an on-site investigation of the district; (6) appoint an agency monitor to participate in and report to the agency on the activities of the board of trustees or the superintendent; (7) appoint a conservator to oversee the operations of the district; (8) appoint a management team to direct the operations of the district in areas of unacceptable performance or require the district to obtain certain services under a contract with another person; (9) if a district has been rated as academically unacceptable for a period of one year or more, appoint a board of managers to exercise the powers and duties of the board of trustees; (10) if a district has been rated as academically unacceptable for a period of two years or more: (A) annex the district to one or more adjoining districts under Section 13.054; or (B) in the case of a home-rule school district [or open-enrollment charter school], order closure of all programs operated under the district's [or school's] charter; or (11) if a district has been rated as academically unacceptable for a period of two years or more due to the district's dropout rates, impose sanctions designed to improve high school completion rates, including: (A) ordering the development of a dropout prevention plan for approval by the commissioner; (B) restructuring the district or appropriate school campuses to improve identification of and service to students who are at risk of dropping out of school, as defined by Section 29.081; (C) ordering lower student-to-counselor ratios on school campuses with high dropout rates; and (D) ordering the use of any other intervention strategy effective in reducing dropout rates, including mentor programs and flexible class scheduling. (c) The commissioner shall order the closure of all programs operated under the charter of an open-enrollment charter school if a majority of the campuses operated by the charter holder have received an unsatisfactory rating as determined by the commissioner for a period of two years or more. SECTION 2D.18. Section 39.132, Education Code, is amended to read as follows: Sec. 39.132. SANCTIONS FOR CAMPUSES. (a) If a campus performance is below any standard under Section 39.073(b), the campus is considered a low-performing campus. The commissioner may permit the campus to participate in an innovative redesign of the campus to improve campus performance or may take any of the other following actions, listed in order of severity, to the extent the commissioner determines necessary: (1) issue public notice of the deficiency to the board of trustees; (2) order a hearing conducted by the board of trustees at the campus for the purpose of: (A) notifying the public of the unacceptable performance, the improvements in performance expected by the agency, and the sanctions that may be imposed under this section if the performance does not improve within a designated period of time; and (B) soliciting public comment on the initial steps being taken to improve performance; (3) order the preparation of a report regarding the parental involvement program at the campus and a plan describing strategies for improving parental involvement at the campus; (4) order the preparation of a report regarding the effectiveness of the district- and campus-level planning and decision-making committees established under Subchapter F, Chapter 11, and a plan describing strategies for improving the effectiveness of those committees; (5) order the preparation of a student achievement improvement plan that addresses each academic excellence indicator for which the campus's performance is unacceptable, the submission of the plan to the commissioner for approval, and implementation of the plan; (6) order a hearing to be held before the commissioner or the commissioner's designee at which the president of the board of trustees, the superintendent, and the campus principal shall appear and explain the campus's low performance, lack of improvement, and plans for improvement; or (7) appoint a special campus intervention team to: (A) conduct a comprehensive on-site evaluation of the campus to determine the cause for the campus's low performance and lack of progress; (B) recommend actions, including reallocation of resources and technical assistance, changes in school procedures or operations, staff development for instructional and administrative staff, intervention for individual administrators or teachers, waivers from state statute or rule, or other actions the team considers appropriate; (C) assist in the development of a campus plan for student achievement; and (D) assist the commissioner in monitoring the progress of the campus in implementing the campus plan for improvement of student achievement. (b) If[; or [(8) if] a campus has been a low-performing campus for a period of one year or more, the commissioner shall require the campus to take the actions described by Subsections (a)(1), (2), and (5) [appoint a board of managers composed of residents of the district to exercise the powers and duties of the board of trustees of the district in relation to the campus]. (c) [(b)] If a campus has been a low-performing campus for a period of two consecutive years or more: (1) a student assigned to attend the campus is eligible to transfer to another campus as provided by Subchapter G, Chapter 29; and (2)[,] the commissioner shall order the closure of the district or charter program on the campus or reconstitute the campus. (d) In reconstituting a [the] campus under Subsection (c), the commissioner shall appoint a special management [campus intervention] team to supervise the reconstitution. The management team shall decide [be assembled for the purpose of deciding] which educators may be retained at that campus. A principal who has been employed by the campus in that capacity during the two-year low-performing period may not be retained at that campus. A teacher of a subject assessed by an assessment instrument under Section 39.023 may be retained only if the teacher has a record of value-added student achievement as measured under Section 39.034. If an educator is not retained, the educator may be assigned to another position in the district. (e) The special management team shall: (1) implement the best practices of campuses for curriculum development and classroom instruction, including bilingual education and special education programs, if appropriate, and business practices; and (2) provide technical assistance based on scientifically based research, including data analysis, identification and implementation strategies, and budget analysis, to strengthen and improve the instructional program at the campus. SECTION 2D.19. Section 39.183, Education Code, is amended to read as follows: Sec. 39.183. REGIONAL AND DISTRICT LEVEL REPORT. 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 regional and district level report covering the preceding two school years and containing: (1) a summary of school district compliance with the student/teacher ratios and class-size limitations prescribed by Sections 25.111 and 25.112, including: (A) the number of campuses and classes at each campus granted an exception from Section 25.112; and (B) the performance rating under Subchapter D of each campus granted an exception from Section 25.112; (2) a summary of the exemptions and waivers granted to school districts under Section 7.056 or 11.004 [39.112] and a review of the effectiveness of each campus or district following deregulation; (3) an evaluation of the performance of the system of regional education service centers based on the indicators adopted under Section 8.101 and client satisfaction with services provided under Subchapter B, Chapter 8; (4) an evaluation of accelerated instruction programs offered under Section 28.006, including an assessment of the quality of such programs and the performance of students enrolled in such programs; and (5) the number of classes at each campus that are currently being taught by individuals who are not certified in the content areas of their respective classes. SECTION 2D.20. Section 39.202(b), Education Code, is amended to read as follows: (b) The system must include uniform indicators adopted by the commissioner by which to measure a district's financial management performance. In adopting uniform indicators, the commissioner shall: (1) identify indicators the commissioner considers critical; and (2) include in the indicators identified under Subdivision (1) an indicator relating to a district's instructional costs. SECTION 2D.21. The heading to Section 39.203, Education Code, is amended to read as follows: Sec. 39.203. DISTRICT REPORTING. SECTION 2D.22. Section 39.203(b), Education Code, is amended to read as follows: (b) The annual financial management report must include: (1) a description of the district's financial management performance based on a comparison, provided by the agency, of the district's performance on the indicators adopted under Section 39.202(b) to: (A) state-established standards; and (B) the district's previous performance on the indicators; [and] (2) any descriptive information required by the commissioner; and (3) a total sum of expenditures made by the district reconciled with a detailed statement of all expenditures made, by category, as prescribed by the commissioner. SECTION 2D.23. Subchapter I, Chapter 39, Education Code, is amended by adding Section 39.2031 to read as follows: Sec. 39.2031. CAMPUS REPORTING. (a) The commissioner shall develop, as part of the system under this subchapter, a reporting procedure under which: (1) each campus is required to prepare and distribute an annual financial management report; and (2) the report is made easily accessible to interested members of the public. (b) The annual financial management report must include: (1) any difference between the foundation school program allotments received and actual campus expenditures; and (2) separate reporting of: (A) the actual expenditures for personnel working on the campus; (B) the operation and maintenance of the campus; and (C) services that cannot be allocated at the campus level, including: (i) any shared services by campuses; and (ii) support services, administrative assistance, and management services provided at the district level. (c) Expenditures reported under Subsection (b)(2)(C) must be identified as administrative, instructional, or support in purpose. SECTION 2D.24. Subchapter A, Chapter 44, Education Code, is amended by adding Section 44.0072 to read as follows: Sec. 44.0072. NONINSTRUCTIONAL EXPENDITURES. (a) Each fiscal year, a school district shall compute and report through the Public Education Information Management System (PEIMS) to the commissioner: (1) the district's significant noninstructional expenditures for the preceding fiscal year, as determined by the commissioner; and (2) any money spent by the district during the preceding fiscal year on dues or contributions to a noninstructional group, club, committee, organization, or association, including dues or contributions used for the purpose of lobbying. (b) The commissioner may determine, in a manner consistent with Section 44.0071, whether an expenditure is noninstructional. SECTION 2D.25. Section 51.3062(q), Education Code, is amended to read as follows: (q) A student who has achieved scores [a score] set by the board on end-of-course assessment instruments [an exit-level assessment instrument] required under Section 39.023 is exempt from the requirements of this section. The exemption is effective for the three-year period following the date a student takes the last assessment instrument required for purposes of this section and achieves the standard set by the board. This subsection does not apply during any period for which the board designates the end-of-course assessment instruments [exit-level assessment instrument] required under Section 39.023 as the primary assessment instrument under this section, except that the three-year period described by this subsection remains in effect for students who qualify for an exemption under this subsection [section] before that period. SECTION 2D.26. A reference in the Education Code to an end-of-course assessment instrument administered under Section 39.023(c), Education Code, includes a secondary exit-level assessment instrument administered under that section as provided by Section 39.025(d), Education Code, as added by this Act. SECTION 2D.27. (a) Not later than the 2006-2007 school year, the Texas Education Agency shall collect information concerning: (1) the measure of progress toward English language proficiency for purposes of Section 39.051(b)(7), Education Code, as amended by this Act; and (2) value-added student achievement for purposes of Section 39.051(b)(8), Education Code, as amended by this Act. (b) Not later than the 2007-2008 school year, the Texas Education Agency shall include, in evaluating the performance of school districts, campuses, and open-enrollment charter schools under Subchapter D, Chapter 39, Education Code: (1) the measure of progress toward English language proficiency under Section 39.051(b)(7), Education Code, as amended by this Act; and (2) value-added student achievement under Section 39.051(b)(8), Education Code, as amended by this Act. SECTION 2D.28. The commissioner of education shall develop and implement the reporting procedures for campuses to prepare and distribute annual financial management reports under Section 39.2031, Education Code, as added by this Act, not later than September 1, 2006.
PART E. BILINGUAL EDUCATION AND SPECIAL LANGUAGE PROGRAMS
SECTION 2E.01. Section 28.006(j), Education Code, is amended to read as follows: (j) No more than 15 percent of the funds certified by the commissioner under Subsection (i) may be spent on indirect costs. The commissioner shall evaluate the programs that fail to meet the standard of performance under Section 39.051(b)(10) [39.051(b)(7)] and may implement sanctions under Subchapter G, Chapter 39. The commissioner may audit the expenditures of funds appropriated for purposes of this section. The use of the funds appropriated for purposes of this section shall be verified as part of the district audit under Section 44.008. SECTION 2E.02. Section 29.056(g), Education Code, is amended to read as follows: (g) A district may transfer a student of limited English proficiency out of a bilingual education or special language program for the first time or a subsequent time if the student is able to participate equally in a regular all-English instructional program as determined by: (1) tests administered at the end of each school year to determine the extent to which the student has developed oral and written language proficiency and specific language skills in both the student's primary language and English; (2) satisfactory performance on the reading assessment instrument under Section 39.023(a) or the English I or II assessment instrument under Section 39.023(c), as applicable, with the assessment instrument administered in English, or, if the student is enrolled in the first or second grade, an achievement score at or above the 40th percentile in the reading and language arts sections of an English standardized test approved by the agency; and (3) other indications of a student's overall progress, including criterion-referenced test scores, subjective teacher evaluation, and parental evaluation. SECTION 2E.03. Subchapter B, Chapter 29, Education Code, is amended by adding Section 29.065 to read as follows: Sec. 29.065. MEASURE OF PROGRESS TOWARD ENGLISH LANGUAGE PROFICIENCY. The commissioner by rule shall develop a longitudinal measure of progress toward English language proficiency under which a student of limited English proficiency is evaluated from the time the student enters public school until, for two consecutive school years, the student scores at a specific level determined by the commissioner on the reading assessment instrument under Section 39.023(a) or the English I or II assessment instrument under Section 39.023(c), as applicable. The commissioner shall: (1) as part of the measure of progress, include student advancement from one proficiency level to a higher level under the reading proficiency in English assessment system developed under Section 39.027(e) and from the highest level under that assessment system to the level determined by the commissioner under this section on the reading assessment instrument under Section 39.023(a) or the English I or II assessment instrument under Section 39.023(c), as applicable; and (2) to the extent practicable in developing the measure of progress, use applicable research and analysis done in developing an annual measurable achievement objective as required by Section 3122, No Child Left Behind Act of 2001 (20 U.S.C. Section 6842). SECTION 2E.04. Sections 39.072(b) and (c), Education Code, are amended to read as follows: (b) The academic excellence indicators adopted under Sections 39.051(b)(1) through (10) [(7)] and the district's current special education compliance status with the agency shall be the main considerations of the agency in the rating of the district under this section. Additional criteria in the rules may include consideration of: (1) compliance with statutory requirements and requirements imposed by rule of the State Board of Education under specific statutory authority that relate to: (A) reporting data through the Public Education Information Management System (PEIMS); (B) the high school graduation requirements under Section 28.025; or (C) an item listed in Sections 7.056(e)(3)(C)-(I) that applies to the district; (2) the effectiveness of the district's programs for special populations; and (3) the effectiveness of the district's career and technology programs. (c) The agency shall evaluate against state standards and shall, not later than August 1 of each year, report the performance of each campus in a district and each open-enrollment charter school on the basis of the campus's performance on the indicators adopted under Sections 39.051(b)(1) through (10) [(7)]. Consideration of the effectiveness of district programs under Subsection (b)(2) or (3) must be based on data collected through the Public Education Information Management System for purposes of accountability under this chapter and include the results of assessments required under Section 39.023. SECTION 2E.05. Sections 39.073(a) and (b), Education Code, are amended to read as follows: (a) The agency shall annually review the performance of each district and campus on the indicators adopted under Sections 39.051(b)(1) through (10) [(7)] and determine if a change in the accreditation status of the district is warranted. The commissioner may determine how all indicators adopted under Section 39.051(b) may be used to determine accountability ratings and to select districts and campuses for acknowledgment. (b) Each annual review shall include an analysis of the indicators under Sections 39.051(b)(1) through (10) [(6)] to determine district and campus performance in relation to: (1) standards established for each indicator; (2) required improvement as defined under Section 39.051(c); and (3) comparable improvement as defined by Section 39.051(c). SECTION 2E.06. Section 39.074(e), Education Code, is amended to read as follows: (e) If an annual review indicates low performance on one or more of the indicators under Sections 39.051(b)(1) through (10) [(7)] of one or more campuses in a district, the agency may conduct an on-site evaluation of those campuses only.
PART F. HIGH ACADEMIC ACHIEVEMENT PROGRAMS
SECTION 2F.01. Subchapter D, Chapter 29, Education Code, is amended by adding Section 29.127 to read as follows: Sec. 29.127. TEXAS GOVERNOR'S SCHOOLS. (a) In this section, "public senior college or university" has the meaning assigned by Section 61.003. (b) A Texas governor's school is a summer residential program for high-achieving high school students. A Texas governor's school program may include any or all of the following educational curricula: (1) mathematics and science; (2) humanities; or (3) leadership and public policy. (c) A public senior college or university may apply to the commissioner to administer a Texas governor's school program under this section. The commissioner shall give preference to a public senior college or university that applies in cooperation with a nonprofit association. The commissioner shall give additional preference if the nonprofit association receives foundation school funds that may be used to finance the program. (d) The commissioner may approve an application under this section only if the applicant: (1) applies within the period and in the manner required by rule adopted by the commissioner; (2) submits a program proposal that includes: (A) a curriculum consistent with Subsection (b); (B) criteria for selecting students to participate in the program; (C) a statement of the length of the program, which must be at least three weeks; and (D) a statement of the location of the program; (3) agrees to use a grant under this section only for the purpose of administering a program; and (4) satisfies any other requirements established by rule adopted by the commissioner. (e) From funds appropriated for the purpose, the commissioner may make a grant to pay the costs of administering a Texas governor's school program to a public senior college or university whose application is approved under this section. (f) The commissioner may adopt other rules necessary to implement this section. SECTION 2F.02. Section 39.051, Education Code, is amended by adding Subsection (b-1) to read as follows: (b-1) In addition to the indicators adopted under Subsection (b), the State Board of Education shall adopt the following indicators relating to high academic achievement to be considered in assigning a district an exemplary performance rating under Section 39.072: (1) the percentage of students, disaggregated by race, ethnicity, gender, and socioeconomic status, who are enrolled in an educational program for gifted and talented students; (2) student results on advanced placement and international baccalaureate examinations, including the percentage of students scoring three or higher on the advanced placement examinations and the percentage of students scoring four or higher on the international baccalaureate examinations; (3) student results on the Scholastic Assessment Test (SAT) and the American College Test (ACT); (4) the percentage of students scoring in the top five percent on nationally recognized norm-referenced assessment instruments; (5) the percentage of high school students enrolled in an advanced course; (6) the percentage of students achieving commended performance, as determined by the State Board of Education, on an assessment instrument required under Section 39.023(a), (c), or (l); (7) the percentage of students completing the recommended or advanced high school program established under Section 28.025; and (8) the percentage of the district's graduating students who enroll in an institution of higher education for the academic year following graduation. SECTION 2F.03. Section 39.053(a), Education Code, is amended to read as follows: (a) Each board of trustees shall publish an annual report describing the educational performance of the district and of each campus in the district that includes uniform student performance and descriptive information as determined under rules adopted by the commissioner. The annual report must also include: (1) campus performance objectives established under Section 11.253 and the progress of each campus toward those objectives, which shall be available to the public; (2) the performance rating for the district as provided under Section 39.072(a) and the performance rating of each campus in the district as provided under Section 39.072(c); (3) the district's current special education compliance status with the agency; (4) a statement of the number, rate, and type of violent or criminal incidents that occurred on each district campus, to the extent permitted under the Family Educational Rights and Privacy Act of 1974 (20 U.S.C. Section 1232g); (5) information concerning school violence prevention and violence intervention policies and procedures that the district is using to protect students; [and] (6) the findings that result from evaluations conducted under the Safe and Drug-Free Schools and Communities Act of 1994 (20 U.S.C. Section 7101 et seq.) and its subsequent amendments; [and] (7) information received under Section 51.403(e) for each high school campus in the district, presented in a form determined by the commissioner; and (8) information relating to high academic achievement in the district, as determined by the district's performance on the indicators under Section 39.051(b-1). SECTION 2F.04. Section 39.072, Education Code, is amended by adding Subsection (c-1) to read as follows: (c-1) For purposes of assigning a district, campus, or open-enrollment charter school a performance rating of exemplary under this section, the agency shall consider the district's, campus's, or school's performance on the indicators relating to high academic achievement under Section 39.051(b-1). This information is in addition to any other indicators or factors considered by the agency in assigning a performance rating. SECTION 2F.05. Section 39.0721(c), Education Code, is amended to read as follows: (c) The performance standards on which a gold performance rating is based should include: (1) student proficiency on: (A) assessment instruments administered under Sections 39.023(a), (c), and (l); and (B) other measures of proficiency determined by the commissioner; (2) student performance on one or more nationally recognized norm-referenced assessment instruments; (3) improvement in student performance; (4) performance on indicators relating to high academic achievement under Section 39.051(b-1); (5) [(4)] in the case of middle or junior high school campuses, student proficiency in mathematics, including algebra; and (6) [(5)] in the case of high school campuses: (A) the extent to which graduating students are academically prepared to attend institutions of higher education; (B) the percentage of students who take advanced placement tests and student performance on those tests; and (C) the percentage of students who take and successfully complete advanced academic courses or college-level course work offered through dual credit programs provided under agreements between high schools and institutions of higher education. SECTION 2F.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 a disciplinary [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 a disciplinary [an] alternative education program established under Section 37.008; (B) the average length of a student's placement in a disciplinary [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 a disciplinary [an] alternative education program; and (D) the dropout rates of students who have been placed in a disciplinary [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 of school districts computed under Section 44.0071; (17) a summary of the effect of deregulation, including exemptions and waivers granted under Section 7.056 or 11.004 [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) a statement of the percentage of students scoring at the proficient and advanced levels on the National Assessment of Educational Progress; and (22) any additional information considered important by the commissioner or the State Board of Education. SECTION 2F.O7. (a) Not later than the 2006-2007 school year, the Texas Education Agency shall collect information concerning high academic achievement for purposes of Section 39.051(b-1), Education Code, as added by this Act. (b) Not later than the 2007-2008 school year, the Texas Education Agency shall include information concerning high academic achievement for purposes of Section 39.051(b-1), Education Code, as added by this Act, in evaluating the performance of school districts, campuses, and open-enrollment charter schools under Subchapter D, Chapter 39, Education Code. (c) Not later than the 2007-2008 school year, the Texas Education Agency shall include the information required by Section 39.182(a)(21), Education Code, as amended by this Act, in the agency's comprehensive annual report under Section 39.182, Education Code.
ARTICLE 3. CONFORMING AMENDMENTS
SECTION 3.01. Section 7.024(a), Education Code, is amended to read as follows: (a) The investment capital fund consists of money appropriated by the legislature for that purpose [transferred to the fund as provided by Section 42.152(l)]. The agency shall administer the fund. The purposes of this fund are to assist eligible public schools to implement practices and procedures consistent with deregulation and school restructuring in order to improve student achievement and to help schools identify and train parents and community leaders who will hold the school and the school district accountable for achieving high academic standards. SECTION 3.02. Section 7.055(b)(34), Education Code, is amended to read as follows: (34) The commissioner shall perform duties in connection with equalization actions [the equalized wealth level] under Chapter 41. SECTION 3.03. Section 8.051(d), Education Code, is amended to read as follows: (d) Each regional education service center shall maintain core services for purchase by school districts and campuses. The core services are: (1) training and assistance in teaching each subject area assessed under Section 39.023; (2) training and assistance in providing: (A) each program that qualifies for a funding allotment under Section 42.151, 42.152, or 42.153[, or 42.156]; or (B) a gifted and talented program under Subchapter D, Chapter 29; (3) assistance specifically designed for a school district rated academically unacceptable under Section 39.072(a) or a campus whose performance is considered unacceptable based on the indicators adopted under Section 39.051; (4) training and assistance to teachers, administrators, members of district boards of trustees, and members of site-based decision-making committees; (5) assistance specifically designed for a school district that is considered out of compliance with state or federal special education requirements, based on the agency's most recent compliance review of the district's special education programs; and (6) assistance in complying with state laws and rules. SECTION 3.04. Section 11.158(a), Education Code, is amended to read as follows: (a) The board of trustees of an independent school district may require payment of: (1) a fee for materials used in any program in which the resultant product in excess of minimum requirements becomes, at the student's option, the personal property of the student, if the fee does not exceed the cost of materials; (2) membership dues in student organizations or clubs and admission fees or charges for attending extracurricular activities, if membership or attendance is voluntary; (3) a security deposit for the return of materials, supplies, or equipment; (4) a fee for personal physical education and athletic equipment and apparel, although any student may provide the student's own equipment or apparel if it meets reasonable requirements and standards relating to health and safety established by the board; (5) a fee for items of personal use or products that a student may purchase at the student's option, such as student publications, class rings, annuals, and graduation announcements; (6) a fee specifically permitted by any other statute; (7) a fee for an authorized voluntary student health and accident benefit plan; (8) a reasonable fee, not to exceed the actual annual maintenance cost, for the use of musical instruments and uniforms owned or rented by the district; (9) a fee for items of personal apparel that become the property of the student and that are used in extracurricular activities; (10) a parking fee or a fee for an identification card; (11) a fee for a driver training course, not to exceed the actual district cost per student in the program for the current school year; (12) a fee for a course offered for credit that requires the use of facilities not available on the school premises or the employment of an educator who is not part of the school's regular staff, if participation in the course is at the student's option; (13) a fee for a course offered during summer school, except that the board may charge a fee for a course required for graduation only if the course is also offered without a fee during the regular school year; (14) a reasonable fee for transportation of a student who lives within two miles of the school the student attends to and from that school[, except that the board may not charge a fee for transportation for which the school district receives funds under Section 42.155(d)]; or (15) a reasonable fee, not to exceed $50, for costs associated with an educational program offered outside of regular school hours through which a student who was absent from class receives instruction voluntarily for the purpose of making up the missed instruction and meeting the level of attendance required under Section 25.092. SECTION 3.05. Section 12.013(b), Education Code, is amended to read as follows: (b) A home-rule school district is subject to: (1) a provision of this title establishing a criminal offense; (2) a provision of this title relating to limitations on liability; and (3) a prohibition, restriction, or requirement, as applicable, imposed by this title or a rule adopted under this title, relating to: (A) the Public Education Information Management System (PEIMS) to the extent necessary to monitor compliance with this subchapter as determined by the commissioner; (B) educator certification under Chapter 21 and educator rights under Sections 21.407, 21.408, and 22.001; (C) criminal history records under Subchapter C, Chapter 22; (D) student admissions under Section 25.001; (E) school attendance under Sections 25.085, 25.086, and 25.087; (F) inter-district or inter-county transfers of students under Subchapter B, Chapter 25; (G) elementary class size limits under Section 25.112, in the case of any campus in the district that is considered low-performing under Section 39.132; (H) high school graduation under Section 28.025; (I) special education programs under Subchapter A, Chapter 29; (J) bilingual education under Subchapter B, Chapter 29; (K) prekindergarten programs under Subchapter E, Chapter 29; (L) safety provisions relating to the transportation of students under Sections 34.002, 34.003, 34.004, and 34.008; (M) computation and distribution of state aid under Chapters 31, 42, and 43; (N) extracurricular activities under Section 33.081; (O) health and safety under Chapter 38; (P) public school accountability under Subchapters B, C, D, and G, Chapter 39; (Q) equalization [equalized wealth] under Section 42.401 [Chapter 41]; (R) a bond or other obligation or tax rate under Chapters 42, 43, and 45; and (S) purchasing under Chapter 44. SECTION 3.06. Section 12.106(a), Education Code, is amended to read as follows: (a) A charter holder is entitled to receive for the open-enrollment charter school funding under Chapter 42 as if the school were a school district without a tier one local share for purposes of Section 42.306 [42.253] and without any local revenue ("LR") for purposes of Section 42.252 [42.302]. In determining funding for an open-enrollment charter school: (1) the adjustment [, adjustments] under Section 42.301 is [Sections 42.102, 42.103, 42.104, and 42.105 and the district enrichment tax rate ("DTR") under Section 42.302 are based on] the [average] adjustment, if any, for the school district in which the school is located; (2) the adjustments under Sections 42.302 and 42.303 are the average adjustments under those sections for the state; and (3) the district enrichment tax rate under Section 42.252 is the average district enrichment tax rate for the state. SECTION 3.07. Section 13.054(f), Education Code, is amended to read as follows: (f) For five years beginning with the school year in which the annexation occurs, the commissioner shall annually adjust the local share [fund assignment] of a district to which territory is annexed under this section by multiplying the enlarged district's local share [fund assignment] computed under Section 42.306 [42.252] by a fraction, the numerator of which is the number of students residing in the district preceding the date of the annexation and the denominator of which is the number of students residing in the district as enlarged on the date of the annexation. SECTION 3.08. Sections 13.282(a) and (b), Education Code, are amended to read as follows: (a) The amount of incentive aid payments may not exceed the difference between: (1) the sum of the entitlements computed under Section 42.313 [42.253] that would have been paid to the districts included in the reorganized district if the districts had not been consolidated; and (2) the amount to which the reorganized district is entitled under Section 42.313 [42.253]. (b) If the reorganized district is not eligible for an entitlement under Section 42.313 [42.253], the amount of the incentive aid payments may not exceed the sum of the entitlements computed under Section 42.313 [42.253] for which the districts included in the reorganized district were eligible in the school year when they were consolidated. SECTION 3.09. Section 21.410(h), Education Code, is amended to read as follows: (h) A grant a school district receives under this section is in addition to any funding the district receives under Chapter 42. The commissioner shall distribute funds under this section with the Foundation School Program payment to which the district is entitled as soon as practicable after the end of the school year as determined by the commissioner. A district to which Section 42.401 [Chapter 41] applies is entitled to the grants paid under this section. The commissioner shall determine the timing of the distribution of grants to a district that does not receive Foundation School Program payments. SECTION 3.10. Section 21.411(h), Education Code, is amended to read as follows: (h) A grant a school district receives under this section is in addition to any funding the district receives under Chapter 42. The commissioner shall distribute funds under this section with the Foundation School Program payment to which the district is entitled as soon as practicable after the end of the school year as determined by the commissioner. A district to which Section 42.401 [Chapter 41] applies is entitled to the grants paid under this section. The commissioner shall determine the timing of the distribution of grants to a district that does not receive Foundation School Program payments. SECTION 3.11. Section 21.412(h), Education Code, is amended to read as follows: (h) A grant a school district receives under this section is in addition to any funding the district receives under Chapter 42. The commissioner shall distribute funds under this section with the Foundation School Program payment to which the district is entitled as soon as practicable after the end of the school year as determined by the commissioner. A district to which Section 42.401 [Chapter 41] applies is entitled to the grants paid under this section. The commissioner shall determine the timing of the distribution of grants to a district that does not receive Foundation School Program payments. SECTION 3.12. Section 21.413(h), Education Code, as added by Section 2, Chapter 430, Acts of the 78th Legislature, Regular Session, 2003, is amended to read as follows: (h) A grant a school district receives under this section is in addition to any funding the district receives under Chapter 42. The commissioner shall distribute funds under this section with the Foundation School Program payment to which the district is entitled as soon as practicable after the end of the school year as determined by the commissioner. A district to which Section 42.401 [Chapter 41] applies is entitled to the grants paid under this section. The commissioner shall determine the timing of the distribution of grants to a district that does not receive Foundation School Program payments. SECTION 3.13. Section 22.004(c), Education Code, is amended to read as follows: (c) The cost of the coverage provided under the program described by Subsection (a) shall be paid by the state, the district, and the employees in the manner provided by Chapter 1579 [Article 3.50-7], Insurance Code. The cost of coverage provided under a plan adopted under Subsection (b) shall be shared by the employees and the district using the contributions by the state described by Subchapter F, Chapter 1579 [Section 9, Article 3.50-7], Insurance Code[, or by Article 3.50-8, Insurance Code]. SECTION 3.14. Section 29.008(b), Education Code, is amended to read as follows: (b) Except as provided by Subsection (c), costs of an approved contract for residential placement may be paid from a combination of federal, state, and local funds. The local share of the total contract cost for each student is that portion of the local tax effort that exceeds the district's local share [fund assignment] under Section 42.306 [42.252], divided by the average daily attendance in the district. If the contract involves a private facility, the state share of the total contract cost is that amount remaining after subtracting the local share. If the contract involves a public facility, the state share is that amount remaining after subtracting the local share from the portion of the contract that involves the costs of instructional and related services. For purposes of this subsection, "local tax effort" means the total amount of money generated by taxes imposed for debt service and maintenance and operation less any amounts paid into a tax increment fund under Chapter 311, Tax Code. SECTION 3.15. Section 29.014(d), Education Code, is amended to read as follows: (d) The accreditation [basic] allotment for a student enrolled in a district to which this section applies is adjusted by: (1) the cost of education adjustment under Section 42.301 [42.102] for the school district in which the district is geographically located; and (2) any other appropriate factor adopted by the commissioner [the weight for a homebound student under Section 42.151(a)]. SECTION 3.16. Section 29.087(j), Education Code, is amended to read as follows: (j) For purposes of funding under Chapters [41,] 42[,] and 46, a student attending a program authorized by this section may be counted in attendance only for the actual number of hours each school day the student attends the program, in accordance with Sections 25.081 and 25.082. SECTION 3.17. Section 29.203(b), Education Code, is amended to read as follows: (b) A school district is entitled to the allotment provided by Section 42.155 [42.157] for each eligible student using a public education grant. [If the district has a wealth per student greater than the guaranteed wealth level but less than the equalized wealth level, a school district is entitled under rules adopted by the commissioner to additional state aid in an amount equal to the difference between the cost to the district of providing services to a student using a public education grant and the sum of the state aid received because of the allotment under Section 42.157 and money from the available school fund attributable to the student.] SECTION 3.18. Effective September 1, 2006, Section 31.025(a), Education Code, is amended to read as follows: (a) The State Board of Education shall set a limit on the cost that may be paid using state funds [from the state textbook fund] for a textbook placed on the conforming or nonconforming list for a particular subject and grade level. The board may not reject a textbook for placement on the conforming or nonconforming list because the textbook's price exceeds the limit established under this subsection. SECTION 3.19. Effective September 1, 2006, Section 31.1031, Education Code, is amended to read as follows: Sec. 31.1031. SHORTAGE OF REQUISITIONED TEXTBOOKS. If a school district or open-enrollment charter school does not have a sufficient number of copies of a textbook used by the district or school for use during the following school year, and a sufficient number of additional copies will not be available from the depository or the publisher within the time specified by Section 31.151(a)(8), the district or school is entitled to: (1) be reimbursed by the state [from the state textbook fund], at a rate and in the manner provided by State Board of Education or commissioner rule, for the purchase of a sufficient number of used adopted textbooks; or (2) return currently used textbooks to the commissioner in exchange for sufficient copies, if available, of other textbooks on the conforming or nonconforming list to be used during the following school year. SECTION 3.20. Effective September 1, 2006, Section 31.105, Education Code, is amended to read as follows: Sec. 31.105. SALE OF TEXTBOOKS. The board of trustees of a school district or governing body of an open-enrollment charter school may sell textbooks, other than electronic textbooks, to a student or another school at the state contract price. The district shall send money from the sale of textbooks to the commissioner as required by the commissioner. The commissioner shall deposit the money in the Texas education [state textbook] fund. SECTION 3.21. Effective September 1, 2006, Section 31.151(d), Education Code, is amended to read as follows: (d) A penalty collected under this section shall be deposited to the credit of the Texas education [state textbook] fund. SECTION 3.22. Effective September 1, 2006, Section 31.152(b), Education Code, is amended to read as follows: (b) A school trustee, administrator, or teacher commits an offense if the person accepts a gift, favor, or service that: (1) is given to the person or the person's school; (2) might reasonably tend to influence a trustee, administrator, or teacher in the selection of a textbook; and (3) could not be lawfully purchased with state funds [from the state textbook fund]. SECTION 3.23. Section 32.161(b), Education Code, is amended to read as follows: (b) To the extent possible considering other statutory requirements, the commissioner and agency shall encourage the use of textbook funds and any other funds provided to school districts for technology [and technology allotment funds under Section 31.021(b)(2)] in a manner that facilitates the development and use of the portal. SECTION 3.24. Section 32.005, Education Code, is amended by amending Subsection (a) and adding Subsection (d) to read as follows: (a) Each school district is entitled to an allotment of $70 [$30] for each student in average daily attendance or a different amount for any year provided by appropriation. (d) This section expires August 1, 2006. SECTION 3.25. Section 34.002(c), Education Code, is amended to read as follows: (c) A school district that fails or refuses to meet the safety standards for school buses established under this section is ineligible to share in the transportation allotment under Subchapter D, Chapter 42, [Section 42.155] until the first anniversary of the date the district begins complying with the safety standards. SECTION 3.26. Section 37.0061, Education Code, is amended to read as follows: Sec. 37.0061. FUNDING FOR ALTERNATIVE EDUCATION SERVICES IN JUVENILE RESIDENTIAL FACILITIES. A school district that provides education services to pre-adjudicated and post-adjudicated students who are confined by court order in a juvenile residential facility operated by a juvenile board is entitled to count such students in the district's average daily attendance for purposes of receipt of state funds under the Foundation School Program. [If the district has a wealth per student greater than the guaranteed wealth level but less than the equalized wealth level, the district in which the student is enrolled on the date a court orders the student to be confined to a juvenile residential facility shall transfer to the district providing education services an amount equal to the difference between the average Foundation School Program costs per student of the district providing education services and the sum of the state aid and the money from the available school fund received by the district that is attributable to the student for the portion of the school year for which the district provides education services to the student.] SECTION 3.27. Section 39.031, Education Code, is amended to read as follows: Sec. 39.031. COST. (a) The commissioner shall set aside an appropriate amount from the Foundation School Program to pay the cost of preparing, administering, or grading the assessment instruments and the [shall be paid from the funds allotted under Section 42.152, and each district shall bear the cost in the same manner described for a reduction in allotments under Section 42.253. If a district does not receive an allotment under Section 42.152, the commissioner shall subtract the cost from the district's other foundation school fund allotments. [(b) The] cost of releasing the question and answer keys under Section 39.023(e) [shall be paid from amounts appropriated to the agency]. (b) After setting aside an appropriate amount in accordance with this section, the commissioner shall reduce each district's tier one allotments proportionately. A reduction in tier one allotments under this subsection does not affect the computation of guaranteed level of state and local enrichment funds per student in average daily attendance per cent of tax effort under Section 42.252. (c) Any amount set aside under this section must be approved by the Legislative Budget Board and the governor's office of budget, planning, and policy. SECTION 3.28. Section 39.134, Education Code, is amended to read as follows: Sec. 39.134. COSTS PAID BY DISTRICT. The costs of providing a monitor, conservator, management team, or special campus intervention team shall be paid by the district. If the district fails or refuses to pay the costs in a timely manner, the commissioner may: (1) pay the costs using amounts withheld from any funds to which the district is otherwise entitled; or (2) recover the amount of the costs in the manner provided for recovery of an overallocation of state funds under Section 42.317 [42.258]. SECTION 3.29. Section 43.002(b), Education Code, is amended to read as follows: (b) Of the amounts available for transfer from the general revenue fund to the available school fund for the months of January and February of each fiscal year, no more than the amount necessary to enable the comptroller to distribute from the available school fund an amount equal to 9-1/2 percent of the estimated annual available school fund apportionment to category 1 school districts, as defined by Section 42.316 [42.259], and 3-1/2 percent of the estimated annual available school fund apportionment to category 2 school districts, as defined by Section 42.316 [42.259], may be transferred from the general revenue fund to the available school fund. Any remaining amount that would otherwise be available for transfer for the months of January and February shall be transferred from the general revenue fund to the available school fund in equal amounts in June and in August of the same fiscal year. SECTION 3.30. Section 44.004, Education Code, is amended by adding Subsection (b-1) and amending Subsections (e) and (i) to read as follows: (b-1) The notice of the public meeting to discuss and adopt the budget and the proposed tax rate may not be smaller than one-quarter page of a standard-size or a tabloid-size newspaper, and the headline on the notice must be in 18-point or larger type. (e) A person who owns taxable property in a school district is entitled to an injunction restraining the collection of taxes by the district if the district has not complied with the requirements of Subsections (b) and (b-1)[, (c),] and [(d), and], if applicable, Subsection (i), and the failure to comply was not in good faith. An action to enjoin the collection of taxes must be filed before the date the school district delivers substantially all of its tax bills. (i) A school district that uses a certified estimate, as authorized by Subsection (h), may adopt a budget at the public meeting designated in the notice prepared using the estimate, but the district may not adopt a tax rate before the district receives the certified appraisal roll for the district required by Section 26.01(a), Tax Code. After receipt of the certified appraisal roll, the district must publish a revised notice and hold another public meeting before the district may adopt a tax rate that exceeds[: [(1)] the rate proposed in the notice prepared using the estimate[; or [(2) the district's rollback rate determined under Section 26.08, Tax Code, using the certified appraisal roll]. SECTION 3.31. Section 46.003(a), Education Code, is amended to read as follows: (a) For each year, except as provided by Sections 46.005 and 46.006, a school district is guaranteed a specified amount per student in state and local funds for each cent of tax effort, up to the maximum rate under Subsection (b), to pay the principal of and interest on eligible bonds issued to construct, acquire, renovate, or improve an instructional facility. The amount of state support is determined by the formula:
FYA = (FYL X ADA X BTR X 100) - (BTR X (DPV/100))
where: "FYA" is the guaranteed facilities yield amount of state funds allocated to the district for the year; "FYL" is the dollar amount guaranteed level of state and local funds per student per cent of tax effort, which is $35 or a greater amount for any year provided by appropriation; "ADA" is the greater of the number of students in average daily attendance, as determined under Section 42.005, in the district or 400; "BTR" is the district's bond tax rate for the current year, which is determined by dividing the amount budgeted by the district for payment of eligible bonds by the quotient of the district's taxable value of property as determined under Subchapter M, Chapter 403, Government Code, [or, if applicable, Section 42.2521,] divided by 100; and "DPV" is the district's taxable value of property as determined under Subchapter M, Chapter 403, Government Code[, or, if applicable, Section 42.2521]. SECTION 3.32. Section 46.006(g), Education Code, is amended to read as follows: (g) In this section, "wealth per student" means a school district's taxable value of property as determined under Subchapter M, Chapter 403, Government Code, [or, if applicable, Section 42.2521,] divided by the district's average daily attendance as determined under Section 42.005. SECTION 3.33. Sections 46.009(b), (e), and (f), Education Code, are amended to read as follows: (b) If the amount appropriated for purposes of this subchapter for a year is less than the total amount determined under Subsection (a) for that year, the commissioner shall: (1) transfer from the Foundation School Program to the instructional facilities program the amount by which the total amount determined under Subsection (a) exceeds the amount appropriated; and (2) reduce each district's Texas education [foundation school] fund allocations in the manner provided by Section 42.313(f) [42.253(h)]. (e) Section 42.317 [42.258] applies to payments under this subchapter. (f) If a school district would have received a greater amount under this subchapter for the applicable school year using the adjusted value determined under Section 42.310 [42.257], the commissioner shall add the difference between the adjusted value and the amount the district received under this subchapter to subsequent distributions to the district under this subchapter. SECTION 3.34. Section 46.013, Education Code, is amended to read as follows: Sec. 46.013. MULTIPLE ALLOTMENTS PROHIBITED. A school district is not entitled to state assistance under this subchapter based on taxes with respect to which the district receives state assistance under Subchapter G [F], Chapter 42. SECTION 3.35. Section 46.032(a), Education Code, is amended to read as follows: (a) Each school district is guaranteed a specified amount per student in state and local funds for each cent of tax effort to pay the principal of and interest on eligible bonds. The amount of state support, subject only to the maximum amount under Section 46.034, is determined by the formula:
EDA = (EDGL X ADA X EDTR X 100) - (EDTR X (DPV/100))
where: "EDA" is the amount of state funds to be allocated to the district for assistance with existing debt; "EDGL" is the dollar amount guaranteed level of state and local funds per student per cent of tax effort, which is $35 or a greater amount for any year provided by appropriation; "ADA" is the number of students in average daily attendance, as determined under Section 42.005, in the district; "EDTR" is the existing debt tax rate of the district, which is determined by dividing the amount budgeted by the district for payment of eligible bonds 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 "DPV" is the district's taxable value of property as determined under Subchapter M, Chapter 403, Government Code[, or, if applicable, under Section 42.2521]. SECTION 3.36. Section 46.037, Education Code, is amended to read as follows: Sec. 46.037. MULTIPLE ALLOTMENTS PROHIBITED. A school district is not entitled to state assistance under this subchapter based on taxes with respect to which the district receives state assistance under Subchapter G [F], Chapter 42. SECTION 3.37. Section 56.208, Education Code, is amended to read as follows: Sec. 56.208. FUNDING. (a) The Early High School Graduation Scholarship program is financed under the Foundation School Program. [Funding for the state tuition credits is not subject to the provisions of Sections 42.253(e) through (k).] (b) The commissioner of education shall reduce the total annual amount of Texas education [foundation school] fund payments made to a school district by an amount equal to F x A, where: (1) "F" is the lesser of one or the quotient of the district's local share for the preceding school year under Section 42.306 [42.252] divided by the tier one allotment under Section 42.304 [amount of money to which the district was entitled under Subchapters B and C, Chapter 42,] for the preceding school year; and (2) "A" is the amount of state tuition credits under this subchapter applied by institutions of higher education on behalf of eligible persons who graduated from the district that has not been used to compute a previous reduction under this subsection. (c) A school district that does not receive Texas education [foundation school] fund payments during a year in which the commissioner would otherwise withhold money from the district under Subsection (b) shall remit an amount equal to the amount that would be withheld under Subsection (b) to the comptroller for deposit to the credit of the Texas education [foundation school] fund. SECTION 3.38. Section 105.301(e), Education Code, is amended to read as follows: (e) The academy is not subject to the provisions of this code, or to the rules of the Texas Education Agency, regulating public schools, except that: (1) professional employees of the academy are entitled to the limited liability of an employee under Section 22.0511, 22.0512, or 22.052; (2) a student's attendance at the academy satisfies compulsory school attendance requirements; and (3) for each student enrolled, the academy is entitled to allotments from the foundation school program under Chapter 42 as if the academy were a school district without a tier one local share for purposes of Section 42.306 [42.253]. SECTION 3.39. Section 403.093(d), Government Code, is amended to read as follows: (d) The comptroller shall transfer from the general revenue fund to the Texas education [foundation school] fund an amount of money necessary to fund the foundation school program as provided by Chapter 42, Education Code. The comptroller shall make the transfers in installments as necessary to comply with Section 42.316 [42.259], Education Code. An installment must be made not earlier than two days before the date an installment to school districts is required by Section 42.316 [42.259], Education Code, and must not exceed the amount necessary for that payment. SECTION 3.40. Section 403.302(k), Government Code, is amended to read as follows: (k) For purposes of Section 42.308 [42.2522], Education Code, the comptroller shall certify to the commissioner of education: (1) a final value for each school district computed without any deduction for residence homestead exemptions granted under Section 11.13(n), Tax Code; and (2) a final value for each school district computed after deducting one-half the total dollar amount of residence homestead exemptions granted under Section 11.13(n), Tax Code. SECTION 3.41. Section 404.121(1), Government Code, is amended to read as follows: (1) "Cash flow deficit" for any period means the excess, if any, of expenditures paid and transfers made from the general revenue fund in the period, including payments provided by Section 42.316 [42.259], Education Code, over taxes and other revenues deposited to the fund in the period, other than revenues deposited pursuant to Section 403.092, that are legally available for the expenditures and transfers. SECTION 3.42. Section 822.201(c), Government Code, is amended to read as follows: (c) Excluded from salary and wages are: (1) expense payments; (2) allowances; (3) payments for unused vacation or sick leave; (4) maintenance or other nonmonetary compensation; (5) fringe benefits; (6) deferred compensation other than as provided by Subsection (b)(3); (7) compensation that is not made pursuant to a valid employment agreement; (8) payments received by an employee in a school year that exceed $5,000 for teaching a driver education and traffic safety course that is conducted outside regular classroom hours; (9) the benefit replacement pay a person earns as a result of a payment made under Subchapter B or C, Chapter 661; (10) stipends paid to teachers in accordance with Section 42.501(c), Education Code; [contributions to a health reimbursement arrangement account received by an employee under Article 3.50-8, Insurance Code; and] (11) amounts received under the educator excellence incentive program under Subchapter J, Chapter 42, Education Code; and (12) any compensation not described by Subsection (b). SECTION 3.43. Section 2175.304(c), Government Code, is amended to read as follows: (c) The procedures established under Subsection (b) must give preference to transferring the property directly to a public school or school district or to an assistance organization designated by the school district before disposing of the property in another manner. If more than one public school or school district or assistance organization seeks to acquire the same property on substantially the same terms, the system, institution, or agency shall give preference to a public school that is considered low-performing by the commissioner of education or to a school district that has a relatively low [taxable] wealth per student, as determined by the commissioner of education [that entitles the district to an allotment of state funds under Subchapter F, Chapter 42, Education Code], or to the assistance organization designated by such a school district. SECTION 3.44. Section 1579.251, Insurance Code, is amended by amending Subsection (a) and adding Subsection (c) to read as follows: (a) The state shall assist employees of participating school districts and charter schools in the purchase of group health coverage under this chapter by providing for each covered employee the amount of $900 each state fiscal year or a greater amount as provided by the General Appropriations Act. The state contribution shall be distributed through the school finance formulas under Chapters 41 and 42, Education Code, and used by school districts and charter schools to pay contributions under a group health coverage plan for employees [as provided by Sections 42.2514 and 42.260, Education Code]. (c) A school district or charter school that does not participate in the program is entitled to state assistance computed and distributed as provided by Subsection (a). State funds received under this subsection must be used to pay for employee health coverage. SECTION 3.45. Section 1581.702, Insurance Code, is amended to read as follows: Sec. 1581.702. ADDITIONAL SUPPORT. The state shall provide additional support for a school district to which this section applies in an amount computed by multiplying the total amount of supplemental compensation that district employees would have received [by district employees] under Chapter 1580, as it existed on January 1, 2005, by 0.062. SECTION 3.46. Section 6.02(b), Tax Code, is amended to read as follows: (b) A taxing unit that has boundaries extending into two or more counties may choose to participate in only one of the appraisal districts. In that event, the boundaries of the district chosen extend outside the county to the extent of the unit's boundaries. To be effective, the choice must be approved by resolution of the board of directors of the district chosen. [The choice of a school district to participate in a single appraisal district does not apply to property annexed to the school district under Subchapter C or G, Chapter 41, Education Code, unless: [(1) the school district taxes property other than property annexed to the district under Subchapter C or G, Chapter 41, Education Code, in the same county as the annexed property; or [(2) the annexed property is contiguous to property in the school district other than property annexed to the district under Subchapter C or G, Chapter 41, Education Code.] SECTION 3.47. Section 21.02(a), Tax Code, is amended to read as follows: (a) Except as provided by [Subsection (b) and] Sections 21.021, 21.04, and 21.05, tangible personal property is taxable by a taxing unit if: (1) it is located in the unit on January 1 for more than a temporary period; (2) it normally is located in the unit, even though it is outside the unit on January 1, if it is outside the unit only temporarily; (3) it normally is returned to the unit between uses elsewhere and is not located in any one place for more than a temporary period; or (4) the owner resides (for property not used for business purposes) or maintains the owner's [his] principal place of business in this state (for property used for business purposes) in the unit and the property is taxable in this state but does not have a taxable situs pursuant to Subdivisions (1) through (3) [of this section]. SECTION 3.48. Section 39.901(d), Utilities Code, is amended to read as follows: (d) Not later than May 1 of each year, subject to Section 39.903(b), the commission shall transfer from the system benefit fund to the Texas education [foundation school] fund the amount determined by the Texas Education Agency under Subsection (b) to the extent that funds are available. Amounts transferred from the system benefit fund under this section may be appropriated only for the support of the Foundation School Program and are available, in addition to any amounts allocated by the General Appropriations Act, to finance actions under Section 42.307 [41.002(b) or 42.2521], Education Code.
ARTICLE 4. REPEALER; APPLICABILITY; EFFECTIVE DATE
SECTION 4.01. (a) Sections 1-3 and 57, Chapter 201, Acts of the 78th Legislature, Regular Session, 2003, are repealed. (b) Chapter 313, Acts of the 78th Legislature, Regular Session, 2003, is repealed. (c) Section 1.01, Chapter 366, Acts of the 78th Legislature, Regular Session, 2003, is repealed. (d) The following provisions of the Education Code are repealed: (1) Subchapters B, C, E, F, and G, Chapter 41; (2) Chapter 42, as it existed on January 1, 2005; and (3) Sections 21.357, 21.402(b) and (e), 25.0811(b) and (c), 29.203(c) and (g), 33.002, 39.023(j), 39.024(e), 39.112, 41.001, 41.002, 41.003, 41.0031, 41.004, 41.007, 41.009(b), 41.011, 41.092, 41.099, 41.252(b), 44.004(c) and (d), and 105.301(f). (e) Effective September 1, 2006, Section 31.021, Education Code, is repealed. (f) Sections 403.302(j) and 466.355(c), Government Code, are repealed. (g) The following provisions of the Insurance Code are repealed: (1) Section 1579.253(b); (2) Chapter 1580; (3) Section 1581.053(b); and (4) Subchapter C, Chapter 1581. (h) Sections 21.02(b), 26.08, and 313.029, Tax Code, are repealed. SECTION 4.02. Except as otherwise provided by this Act, this Act applies beginning with the 2005-2006 school year. SECTION 4.03. Except as otherwise provided by this Act, this Act takes effect September 1, 2005. This Act takes effect only if H.B. No. 3, Acts of the 79th Legislature, Regular Session, 2005, becomes law. If that bill does not become law, this Act has no effect.