By: Shapiro S.B. No. 963
A BILL TO BE ENTITLED
AN ACT
relating to the establishment of and liability for failing to
comply with certain administrative and instructional ratios for
public school districts.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 42, Education Code, is amended by adding
Subchapters D and D-1 to read as follows:
SUBCHAPTER D. LIMIT ON ADMINISTRATIVE COSTS
Sec. 42.201. DEFINITIONS. In this subchapter:
(1) "Adjusted group standard" means the acceptable
administrative cost ratio for each school district as determined
under Section 42.202.
(2) "Administrative cost ratio" means a school
district's administrative costs divided by its instructional
costs, expressed as a percentage.
(3) "Administrative costs" means operating expenses
made from funds other than federal funds associated with managing,
planning, directing, coordinating, and evaluating a school
district in accordance with Accounting functions 21 - Instructional
Leadership and 41 - General Administration, as described in the
Financial Accountability System Resource Guide, Bulletin 679,
Module 1: Financial Accounting and Reporting, first edition,
published by the Texas Education Agency.
(4) "Instructional costs" means operating expenses
made from funds other than federal funds associated with
teacher-student instruction in accordance with Accounting
functions 11 - Instruction, 12 - Instructional Resources and Media
Services, 13 - Curriculum Development and Instructional Staff
Development, and 31 - Guidance, Counseling and Evaluation Services,
as described in the Financial Accountability System Resource Guide,
Bulletin 679, Module 1: Financial Accounting and Reporting, first
edition, published by the Texas Education Agency.
Sec. 42.202. ADMINISTRATIVE COST RATIO. (a) The
commissioner by rule shall determine annually an administrative
cost ratio for each of the following categories of school
districts:
(1) school districts with fewer than 500 students in
average daily attendance;
(2) school districts with 500 to 999 students in
average daily attendance;
(3) school districts with 1,000 to 4,999 students in
average daily attendance;
(4) school districts with 5,000 to 9,999 students in
average daily attendance; and
(5) school districts with 10,000 or more students in
average daily attendance.
(b) The commissioner may adjust the administrative cost
ratio of a school district to allow for additional administrative
costs required by:
(1) the sparsity of the district; or
(2) students with special needs.
Sec. 42.203. NOTIFICATION OF NONCOMPLIANCE. (a) Not later
than February 1 of each year, the commissioner shall notify each
school district of the requirements and standards for determining
the administrative cost ratio for the following year.
(b) Not later than May 1 of each year, agency staff shall
conduct a desk audit of expenditure data provided for the preceding
year and available through the Public Education Information
Management System (PEIMS) to identify each district that has an
administrative cost ratio for that year that exceeds the applicable
adjusted group standard. The commissioner shall provide notice not
later than May 15 of each year to each district that exceeds the
applicable adjusted group standard. The notice must inform the
district that the district's administrative costs are excessive and
that the district is required to reduce administrative costs to the
level of the applicable adjusted group standard for the following
school year.
Sec. 42.204. PLAN FOR COMPLIANCE; WAIVER. (a) Not later
than the 60th day after the date a school district receives the
notice under Section 42.203(b), the district shall provide to the
commissioner a description of the district's plan to comply with
the applicable adjusted group standard for the following year or a
request for a waiver with an explanation for the district's
inability to comply with the applicable adjusted group standard.
(b) The commissioner may grant a waiver to a district that
exceeds its administrative cost ratio if the excess is justified by
unusual circumstances.
(c) Not later than August 15 of each year, the commissioner
shall notify a district that provides a plan or requests a waiver
under this section whether the district is required to take further
action.
Sec. 42.205. WITHHOLDING OF STATE AID. (a) Unless the
commissioner has granted a waiver in response to a school district
request under Section 42.204, the commissioner shall withhold from
the tier one allotments of a district that fails to reduce
administrative costs to the level required by this subchapter an
amount equal to the amount by which the district's administrative
costs exceed the amount permitted by the applicable adjusted group
standard. The commissioner shall withhold funds under this
subsection from the foundation school fund payments to the district
in the year following the year in which the plan to reduce
administrative costs was to be implemented. If a school district
does not receive a tier one allotment, the district shall remit an
amount equal to the excess to the comptroller for deposit to the
credit of the foundation school fund.
(b) A school district shall include a statement of any
amount withheld or remitted under Subsection (a) in the district
report required by Section 39.053.
SUBCHAPTER D-1. MINIMUM INSTRUCTIONAL EXPENDITURES AND HOURS
Sec. 42.221. DEFINITIONS. In this subchapter:
(1) "Adjusted group standard" means an acceptable
ratio for each school district as determined under Section 42.222.
(2) "Direct instructional expenditure ratio" means a
school district's direct instructional expenditures divided by its
total expenditures, expressed as a percentage.
(3) "Instructional employee ratio" means the number of
hours spent by a school district's employees in providing direct
classroom instruction divided by the total number of hours worked
by all district employees, expressed as a percentage.
Sec. 42.222. DIRECT INSTRUCTIONAL EXPENDITURE AND
INSTRUCTIONAL EMPLOYEE RATIOS. The commissioner by rule shall
determine annually a minimum direct instructional expenditure
ratio and a minimum instructional employee ratio for each of the
following categories of school districts:
(1) school districts with fewer than 500 students in
average daily attendance;
(2) school districts with 500 to 999 students in
average daily attendance;
(3) school districts with 1,000 to 4,999 students in
average daily attendance;
(4) school districts with 5,000 to 9,999 students in
average daily attendance; and
(5) school districts with 10,000 or more students in
average daily attendance.
Sec. 42.223. NOTIFICATION OF NONCOMPLIANCE. (a) Not later
than February 1 of each year, the commissioner shall notify each
school district of the requirements and standards for determining
the ratios under Section 42.222 for the following year.
(b) Not later than May 1 of each year, agency staff shall
conduct a desk audit of expenditure data provided under Section
44.0071 for the preceding year and available through the Public
Education Information Management System (PEIMS) to identify each
district that has a ratio for that year that fails to comply with
the applicable adjusted group standard. The commissioner shall
provide notice not later than May 15 of each year to each district
that fails to comply with the applicable adjusted group standard.
The notice must inform the district that the district has failed to
comply with the applicable adjusted group standard and that the
district is required to increase direct instructional expenditures
or direct classroom hours to the level of the applicable adjusted
group standard for the following school year.
Sec. 42.224. PLAN FOR COMPLIANCE; WAIVER. (a) Not later
than the 60th day after the date a school district receives the
notice under Section 42.223(b), the district shall provide to the
commissioner a description of the district's plan to comply with
the applicable adjusted group standard for the following year or a
request for a waiver with an explanation for the district's
inability to comply with the applicable adjusted group standard.
(b) The commissioner may grant a waiver to a district that
fails to comply with a ratio under this subchapter if the
noncompliance is justified by unusual circumstances.
(c) Not later than August 15 of each year, the commissioner
shall notify a district that provides a plan or requests a waiver
under this section whether the district is required to take further
action.
Sec. 42.225. WITHHOLDING OF STATE AID. (a) Unless the
commissioner has granted a waiver in response to a school district
request under Section 42.224, the commissioner shall withhold funds
from the tier one allotments of a district that fails to increase
direct instructional expenditures or direct classroom hours to the
level necessary for compliance with the applicable adjusted group
standard. If the district has failed to increase direct
instructional expenditures, the commissioner shall withhold the
amount by which the direct instructional expenditures required by
the applicable adjusted group standard exceed the district's direct
instructional expenditures. If the district has failed to increase
direct classroom hours, the commissioner shall withhold an amount
equal to the amount of the district's average expenditure per hour
for direct instructional activities, as computed under Section
44.0071(c), multiplied by the number of hours by which the number of
classroom instruction hours required by the applicable adjusted
group standard exceeds the district's direct classroom hours.
(b) The commissioner shall withhold funds under Subsection
(a) from the foundation school fund payments to the district in the
year following the year in which the plan to comply with the
applicable adjusted group standard was to be implemented. If a
school district does not receive a tier one allotment, the district
shall remit an amount equal to the adjusted amount to the
comptroller for deposit to the credit of the foundation school
fund.
(c) A school district shall include a statement of any
amount withheld or remitted under this section in the district
report required by Section 39.053.
SECTION 2. This Act applies beginning with the 2005-2006
school year, and a school district becomes subject to the
withholding of state funds as provided by Subchapters D and D-1,
Chapter 42, Education Code, as added by this Act, beginning with the
2005-2006 school year.
SECTION 3. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2005.