82(R) SB 1581 - Engrossed version

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	By: Ogden	S.B. No. 1581

A BILL TO BE ENTITLED

AN ACT

relating to state fiscal matters, and certain public health

matters, related to public and higher education; providing

penalties.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

ARTICLE 1. ADMINISTRATIVE MATTERS CONCERNING INSTITUTIONS OF

HIGHER EDUCATION

SECTION 1.01. Section 51.003, Education Code, is amended by

amending Subsection (b) and adding Subsection (f) to read as

follows:

(b) The funds shall either be deposited in the depository

bank or banks or invested as authorized by Chapter 2256, Government

Code (Public Funds Investment Act). Funds that are to be deposited

in the depository bank or banks must be deposited within seven days

from the date of receipt by the institution [~~collection~~].

(f) Notwithstanding any other provision of this section,

the governing board of each institution may maintain unsecured

deposits in a foreign bank as necessary to support the

institution's operations in a foreign country. The foreign bank

must:

(1) be licensed and supervised by a central bank;

(2) be audited annually by an accounting firm that

follows international financial reporting standards; and

(3) maintain a capital to total assets ratio that is

not less than the greater of four percent or the minimum tier 1

capital to total assets ratio required for depository institutions

insured by the Federal Deposit Insurance Corporation.

SECTION 1.02. Subchapter A, Chapter 51, Education Code, is

amended by amending Section 51.005 and adding Sections 51.010,

51.011, and 51.012 to read as follows:

Sec. 51.005. REPORTS. Each institution of higher education

[~~(a)~~ ~~True and full accounts shall be kept by the governing board~~

~~and by the employees of the institution of all funds collected from~~

~~all sources and of all sums paid out and the persons to whom and the~~

~~purposes for which the sums are paid. The governing board~~] shall

prepare [~~annually print~~] a complete annual financial report as

prescribed by Section 2101.011, Government Code [~~of all the sums~~

~~collected, all expenditures, and all sums remaining on hand. The~~

~~report shall show the true condition of all funds as of the August~~

~~31 preceding as well as the collections and expenditures for the~~

~~preceding year.~~

[~~(b)~~ ~~Reports under this section must be in a form approved~~

~~jointly by the coordinating board and the comptroller. The~~

~~accounting and classification procedures of each institution must~~

~~be consistent with uniform procedures prescribed for that purpose~~

~~by the coordinating board and the comptroller. The requirements~~

~~imposed by the coordinating board and the comptroller must be~~

~~designed to reduce paperwork and duplicative reports.~~

[~~(c)~~ ~~The governing board shall furnish one copy of the~~

~~report each to the governor, comptroller of public accounts, state~~

~~auditor, Texas Higher Education Coordinating Board, Legislative~~

~~Budget Board, House Appropriations Committee, Senate Finance~~

~~Committee, and Legislative Reference Library. A copy of the report~~

~~shall be submitted to the comptroller by the deadline established~~

~~by the comptroller or the General Appropriations Act as necessary~~

~~to prepare an audited comprehensive financial report.~~ ~~The~~

~~governing board shall retain five copies of the report for~~

~~distribution to legislators or other state officials on request~~].

Sec. 51.010. COLLECTION OF DELINQUENT OBLIGATIONS. If

under the rules adopted by the attorney general under Chapter 2107,

Government Code, an institution of higher education is not required

to refer a delinquent obligation for collection to the attorney

general, the institution is not required to expend resources for

further collection efforts if, considering the amount, security,

likelihood of collection, expense, and available resources, the

institution determines that further collection should not be

actively pursued.

Sec. 51.011. DISPOSITION OF SMALL CREDIT BALANCES.

(a) This section applies to a credit balance of less than $25 held

by an institution of higher education that is presumed abandoned

under Chapter 72, Property Code.

(b) An institution of higher education may maintain an

unclaimed money fund and transfer to that fund a credit balance to

which this section applies. A deposit to the unclaimed money fund

does not affect the ownership of the amount deposited. The

institution shall:

(1) adopt procedures for owners to make and receive

payments of claims against the fund; and

(2) maintain a database that permits members of the

public to search for ownership of unclaimed funds.

persons establishing ownership of amounts transferred to the fund

and shall hold and account for the unclaimed money fund as

educational and general funds of the institution. If the fund

balance is insufficient to pay a valid claim, the institution shall

pay the claim from the institution's other educational and general

funds.

(d) Each fiscal year, after deducting funds sufficient to

pay anticipated expenses of and claims against the unclaimed money

fund, the institution shall use the balance of the fund as other

educational and general funds of the institution.

(e) In consultation with institutions of higher education,

the comptroller by rule may establish minimum requirements for

notice to owners of unclaimed money deposited in the unclaimed

money fund and for charges for that notice. The rules may not

provide stricter requirements than the comptroller applies for

amounts of less than $25 in the custody of the comptroller under

Chapter 74, Property Code.

(f) If an institution of higher education maintains an

unclaimed money fund under this section, Chapter 74, Property Code,

does not apply to a credit balance to which this section applies.

Sec. 51.012. PAYMENTS BY ELECTRONIC FUNDS TRANSFER OR

ELECTRONIC PAY CARD. An institution of higher education may make

any payment, including a payment of salary or wages, through

electronic funds transfer or by electronic pay card.

SECTION 1.03. Section 65.42, Education Code, is amended to

read as follows:

Sec. 65.42. DELINQUENT ACCOUNTS; VENUE. A suit by The

University of Texas System on its own behalf or on behalf of a

component institution of The University of Texas System to recover

a delinquent loan, account, or debt owed to The University of Texas

System or a component institution of The University of Texas System

must [~~may~~] be brought in Travis County.

SECTION 1.04. Section 1231.001, Government Code, is amended

by amending Subdivision (2) and adding Subdivision (3) to read as

follows:

(2) "State security" means:

(A) an obligation, including a bond, issued by:

(i) a state agency;

(ii) an entity that is expressly created by

statute and has statewide jurisdiction; or

(iii) an entity issuing the obligation on

behalf of this state or on behalf of an entity described by

Subparagraph (i) or (ii);

(B) an installment sale or lease-purchase

obligation that is issued by or on behalf of an entity described by

Paragraph (A) and that has:

(i) a stated term of more than five years;

(ii) an initial principal amount of more

than $250,000; or

issued under Chapter 53, Education Code, at the request of or for

the benefit of an institution of higher education [~~as defined by~~

~~Section 61.003, Education Code,~~] other than a public junior

college.

(3) "Institution of higher education" has the meaning

assigned by Section 61.003, Education Code.

SECTION 1.05. Section 1231.041, Government Code, is amended

to read as follows:

Sec. 1231.041. APPROVAL OF STATE SECURITY. (a) Except as

otherwise provided by this section, an [An] entity, including a

state agency, may not issue a state security unless:

(1) the board approves the issuance; or

(2) the security is exempted under law, including a

board rule adopted under Section 1231.022(2).

(b) A state security issued by an institution of higher

education, or issued at the request of or for the benefit of an

institution of higher education, is not subject to board approval

unless the general revenue of the state is pledged to the payment of

the security.

SECTION 1.06. Section 74.001, Property Code, is amended by

adding Subsection (c) to read as follows:

held by an institution of higher education in an unclaimed money

fund under Section 51.011, Education Code.

SECTION 1.07. Section 51.923, Education Code, is amended to

read as follows:

Sec. 51.923. QUALIFICATIONS OF CERTAIN BUSINESS ENTITIES TO

ENTER INTO CONTRACTS WITH AN INSTITUTION OF HIGHER EDUCATION.

(a) In this section:

(1) "Business entity" [~~"Corporation"~~] means any

entity recognized by law through which business is conducted,

including a sole proprietorship, partnership, firm, corporation,

limited liability company, holding company, joint stock company,

receivership, or trust [~~a corporation for profit organized under~~

~~the laws of this state or under laws other than the laws of this~~

~~state~~].

(2) "Governing board" has the meaning assigned by

Section 61.003 [~~of this code~~].

(3) "Institution of higher education" has the meaning

assigned by Section 61.003 [~~of this code~~].

(4) "Nonprofit corporation" means any organization

exempt from federal income tax under Section 501 of the Internal

Revenue Code of 1986 that does not distribute any part of its income

to any member, director, or officer.

(b) A nonprofit corporation is not disqualified from

entering into a contract or other transaction with an institution

of higher education even though one or more members of the governing

board of the institution of higher education also serves as a

member, [or] director, officer, or employee of the nonprofit

corporation.

from entering into a contract or other transaction with an

institution of higher education even though one or more members of

the governing board of the institution of higher education have an

interest in the business entity, subject to Subsection (d) [~~also~~

~~serves as a stockholder or director of the corporation provided~~

~~that no member of the governing board owns or has a beneficial~~

~~interest in more than five percent of the corporation's outstanding~~

~~capital stock and further provided that the contract or transaction~~

~~is:~~

[~~(1)~~ ~~an affiliation, licensing, or sponsored research~~

~~agreement; or~~

[~~(2)~~ ~~awarded by competitive bidding or competitive~~

~~sealed proposals~~].

(d) An institution of higher education is not prohibited

from entering into a contract or other transaction with a business

entity in which a member of the governing board of the institution

of higher education has an interest if the interest is not a

substantial interest or, if the interest is a substantial interest,

the [~~described in this section if any~~] board member [~~having an~~

~~interest described in this section in the contract or transaction~~]

discloses that interest in a meeting held in compliance with

Chapter 551, Government Code, and refrains from voting on the

contract or transaction requiring board approval. Any such

contract or transaction requiring board approval must be approved

by an affirmative majority of the board members voting on the

contract or transaction.

(e) For purposes of this section, a member of a governing

board has a substantial interest in a business entity if:

(1) the member owns 10 percent or more of the voting

stock or shares of the business entity or owns either 10 percent or

more or $15,000 or more of the fair market value of the business

entity;

(2) funds received by the member from the business

entity exceed 10 percent of the member's gross income for the

previous year;

(3) the member is an officer of the business entity or

a member of the governing board of the business entity; or

(4) an individual related to the member in the first

degree by consanguinity or affinity, as determined under Chapter

573, Government Code, has an interest in the business entity as

described by Subdivision (1), (2), or (3).

(f) A violation of this section does not render an action of

the governing board voidable unless the contract or transaction

that was the subject of the action would not have been approved by

the governing board without the vote of the member who violated this

section.

SECTION 1.08. Section 51.9335, Education Code, is amended

by amending Subsections (d) and (f) and adding Subsections (g) and

(h) to read as follows:

(d) Subtitle D, Title 10, Government Code, and Subchapter B,

Chapter 2254, Government Code, do not apply to the acquisition of

goods and services under this section, except that an institution

of higher education must comply with any provision of those laws, or

a rule adopted under a provision of those laws, [~~To the extent of~~

~~any conflict, this section prevails over any other law, including~~

~~Chapters 2155, 2156, 2157, 2158, 2167, and 2170, Government Code,~~

~~except a law or rule~~] relating to contracting with historically

underutilized businesses or relating to the procurement of goods

and services from persons with disabilities. An institution of

higher education may, but is not required to, acquire goods or

services as provided by Subtitle D, Title 10 [~~Chapters 2155, 2156,~~

~~2157, 2158, 2167, and 2170~~], Government Code.

(f) This section does not apply to professional services as

defined by Section 2254.002, Government Code. Professional

services shall be procured in accordance with Subchapter A, Chapter

2254, Government Code.

(g) An institution of higher education may adopt rules and

procedures for the acquisition of goods or services.

(h) In any contract for the acquisition of goods and

services to which an institution of higher education is a party, a

provision required by applicable law to be included in the contract

is considered to be a part of the executed contract without regard

to:

(1) whether the provision appears on the face of the

contract; or

(2) whether the contract includes any provision to the

contrary.

SECTION 1.09. Subchapter Z, Chapter 51, Education Code, is

amended by adding Sections 51.9336 and 51.9337 to read as follows:

Sec. 51.9336. ELECTRONIC AND DIGITAL SIGNATURES. (a) An

institution of higher education or university system, as those

terms are defined by Section 61.003, shall determine whether, and

the extent to which, the institution or system will send and accept

electronic or digital signatures to and from other persons and

otherwise create, generate, communicate, store, process, use, and

rely on electronic or digital signatures. The institution or

system may adopt rules and procedures governing the use of

electronic or digital signatures.

(b) To the extent of any conflict, this section prevails

over Chapter 322, Business & Commerce Code, and rules and

guidelines adopted under that chapter.

Sec. 51.9337. INTERAGENCY CONTRACTS FOR INFORMATION

RESOURCE TECHNOLOGIES. (a) In this section, "institution of

higher education" and "university system" have the meanings

assigned by Section 61.003.

(b) Section 2054.119, Government Code, does not apply to an

interagency contract for information resources technologies

between two or more institutions of higher education or between an

institution of higher education or university system and one or

more state agencies, institutions of higher education, or

university systems.

SECTION 1.10. Section 51.966, Education Code, is amended by

amending Subsection (c) and adding Subsection (d) to read as

follows:

an institution of higher education or university system purchasing

insurance under this section.

(d) In [~~As used in~~] this section, "governing board," [~~and~~]

"institution of higher education," and "university system" have the

meanings assigned by Section 61.003.

SECTION 1.11. Subchapter C, Chapter 791, Government Code,

is amended by adding Section 791.035 to read as follows:

Sec. 791.035. CONTRACTS WITH INSTITUTIONS OF HIGHER

EDUCATION OR UNIVERSITY SYSTEMS. (a) A local government and an

institution of higher education or university system may contract

with one another to perform any governmental functions and

services. If the terms of the contract provide for payment based on

cost recovery, any law otherwise requiring competitive procurement

does not apply to the functions and services covered by the

contract.

(b) In this section, "institution of higher education" and

"university system" have the meanings assigned by Section 61.003,

Education Code.

SECTION 1.12. Section 2054.008, Government Code, is amended

by adding Subsection (c) to read as follows:

must provide written notice to the Legislative Budget Board under

Subsection (b) only if the cost of the major information system

exceeds $1 million. In this subsection, "university system" has

the meaning assigned by Section 61.003, Education Code.

SECTION 1.13. Subsection (n), Section 2155.078, Government

Code, is amended to read as follows:

(n) This section does not apply to an institution [~~a medical~~

~~and dental unit~~] to which Section 51.9335, Education Code, applies

or to an institution to which Section 73.115, Education Code,

applies.

SECTION 1.14. Subchapter Z, Chapter 51, Education Code, is

amended by adding Section 51.9611 to read as follows:

Sec. 51.9611. PAYROLL DEDUCTIONS FOR EMPLOYEES OF

UNIVERSITY SYSTEM OR INSTITUTION OF HIGHER EDUCATION. (a) In this

section, "institution of higher education" and "university system"

have the meanings assigned by Section 61.003.

(b) The governing board of a university system, or of an

institution of higher education that is not a component institution

of a university system, may authorize employees of the system or

institution, as applicable, to elect a payroll deduction for any

purpose that the governing board determines serves a public purpose

and benefits employees. The board may adopt policies and

procedures governing payroll deductions under this section. A

payroll deduction under this section is in addition to payroll

deductions authorized by other law.

written request of the employee, and the request must state the

amount to be deducted and the entity to which the deducted amount is

to be transferred. A payroll deduction is in effect until revoked

in writing by the employee, but the policies and procedures of the

system or institution, as applicable, may provide for enrollment

periods.

(d) A university system or institution of higher education

may collect an administrative fee to cover the costs of making a

deduction.

SECTION 1.15. Subsection (a), Section 1601.004, Insurance

Code, is amended to read as follows:

(a) In this chapter, "dependent," with respect to an

individual eligible to participate in the uniform program under

Section 1601.101 or 1601.102, means the individual's:

(1) spouse;

(2) unmarried child younger than 25 years of age; and

(3) child of any age who the system determines lives

with or has the child's care provided by the individual on a regular

basis if the child is mentally retarded or physically incapacitated

to the extent that the child is dependent on the individual for care

or support, as determined by the system, and:

(A) if the child is at least 25 years of age, the

child's coverage under this chapter has not lapsed, and the child

was enrolled as a participant in the health benefits coverage under

the uniform program on the date of the child's 25th birthday; or

(B) if the child is a child of an individual

eligible to participate as an employee under Section 1601.101, at

the time of the individual's initial enrollment in health benefits

coverage under the uniform program the child is at least 25 years of

age and is enrolled in comparable coverage, as determined by the

system, under the individual's previous health benefits coverage.

SECTION 1.16. Subchapter C, Chapter 1601, Insurance Code,

is amended by adding Section 1601.111 to read as follows:

Sec. 1601.111. PROGRAMS PROMOTING DISEASE PREVENTION,

WELLNESS, AND HEALTH. A system may establish premium discounts,

surcharges, rebates, or a revision in otherwise applicable

copayments, coinsurance, or deductibles, or any combination of

those incentives, for an individual who participates in

system-approved programs promoting disease prevention, wellness,

and health.

SECTION 1.17. Subsection (d), Section 1601.201, Insurance

Code, is amended to read as follows:

(d) Subsection (c) does not prohibit a system from

contributing, from money not appropriated from the general revenue

fund, amounts in excess of the amount specified by that subsection

for:

(1) an individual employed by the system in a position

that as a condition of employment requires the individual to be

enrolled as a student in the system in graduate level courses; or

(2) an individual who is a tenured faculty member with

whom the system has entered into a phased retirement agreement

under which the individual will work less than 40 hours a week for a

specified period of time at the end of which the individual will

retire.

SECTION 1.18. Subchapter C, Chapter 61, Education Code, is

amended by adding Section 61.0573 to read as follows:

Sec. 61.0573. PROJECTS EXEMPT FROM BOARD APPROVAL. (a) In

this section, "project" means the acquisition of improved or

unimproved real property or the construction, repair, or

rehabilitation of a building or other facility.

(b) Board approval of a project at an institution of higher

education is not required under Section 61.0572 or 61.058 if the

institution notifies the board of the project and certifies to the

board that:

(1) the institution meets the current published board

standards applicable to the institution for space need, usage

efficiency, deferred maintenance, and critical deferred

maintenance or the board has approved the institution's plan to

correct any deficiencies in the institution's compliance with those

applicable standards;

(2) the project meets current published board

standards applicable to the project for cost, efficiency, and space

use;

(3) the project is identified on the institution's

campus master plan, as submitted to the board; and

(4) the institution has no deficiencies according to

the board's most recent facilities audit or the board has approved

the institution's plan to correct any such deficiencies.

submitted under Subsection (b) and notify the institution whether

the certification is sufficient and whether the information

certified is consistent with the records of the board. If the staff

review determines that the certification is sufficient and that the

information certified is consistent with the records of the board,

the project is considered approved by the board.

(d) This section does not apply to a project that is a new

branch campus or a new higher education center.

SECTION 1.19. Subsection (c), Section 2166.302, Government

Code, is amended to read as follows:

by and for the Texas Department of Transportation or an institution

of higher education or university system. In this subsection,

"institution of higher education" and "university system" have the

meanings assigned by Section 61.003, Education Code.

SECTION 1.20. Subsection (c-1), Section 2166.403,

Government Code, is amended to read as follows:

(c-1) For a project constructed by and for a state

institution of higher education, the [~~governing body of the~~]

institution shall, during the planning phase of the proposed

construction for the project, verify [~~in an open meeting~~] the

economic feasibility of incorporating into the building's design

and proposed energy system alternative energy devices for space

heating and cooling functions, water heating functions, electrical

load functions, and interior lighting functions. The [~~governing~~

~~body of the~~] institution shall determine the economic feasibility

of each function listed in this subsection by comparing the

estimated cost of providing energy for the function, based on the

use of conventional design practices and energy systems, with the

estimated cost of providing energy for the function, based on the

use of alternative energy devices, during the economic life of the

building.

SECTION 1.21. Subsection (b), Section 2167.001, Government

Code, is amended to read as follows:

(b) This chapter does not apply to:

(1) radio antenna space;

(2) residential space for a Texas Department of Mental

Health and Mental Retardation program;

(3) residential space for a Texas Youth Commission

program;

(4) space to be used for less than one month for

meetings, conferences, conventions, seminars, displays,

examinations, auctions, or similar purposes;

(5) district office space for members of the

legislature;

(6) space used by the Texas Workforce Commission;

(7) residential property acquired by the Texas

Department of Housing and Community Affairs or the Texas State

Affordable Housing Corporation that is offered for sale or rental

to individuals and families of low or very low income or families of

moderate income;

(8) except as provided by Section 2167.007, [~~classroom~~

~~and instructional~~] space for a university system or [an]

institution of higher education; or

(9) space leased by the Texas Veterans Commission to

administer the veterans employment services program.

SECTION 1.22. Section 33.06, Tax Code, is amended by adding

Subsection (g) to read as follows:

(g) If the ownership interest of an individual entitled to a

deferral under this section is a life estate, a lien for the

deferred tax attaches to the estate of the life tenant, and not to

the remainder interest, if the owner of the remainder is an

institution of higher education that has not consented to the

deferral. In this subsection, "institution of higher education"

has the meaning assigned by Section 61.003, Education Code. This

subsection does not apply to a deferral for which the individual

entitled to the deferral filed the affidavit required by Subsection

(b) before September 1, 2011.

SECTION 1.23. Section 552.123, Government Code, is amended

to read as follows:

Sec. 552.123. EXCEPTION: NAME OF APPLICANT FOR CHIEF

EXECUTIVE OFFICER OF INSTITUTION OF HIGHER EDUCATION. The name of

an applicant for the position of chief executive officer of an

institution of higher education, and other information that would

tend to identify the applicant, is excepted from the requirements

of Section 552.021, except that the governing body of the

institution must give public notice of the name or names of the

finalists being considered for the position at least 21 days before

the date of the meeting at which final action or vote is to be taken

on the employment of the person.

SECTION 1.24. Subsection (b), Section 95.006, Health and

Safety Code, is amended to read as follows:

(b) The advisory committee is composed of:

(1) the following representatives appointed by the

executive director of the office:

(A) one representative of the office;

(B) one representative of the Texas Education

Agency;

Society;

(D) one representative of the American Diabetes

Association;

(E) [~~one representative who is a member of the~~

~~board of regents of The University of Texas--Pan American;~~

[~~(F)~~] one school nurse representative from an

urban school located within the boundaries of a regional education

service center;

(F) [~~(G)~~] one parent or guardian of a child who

resides within the boundaries of a regional education service

center; and

(G) [~~(H)~~] one person with knowledge and

experience in health care in school settings; and

(2) the following representatives appointed by the

chairman of the council:

(A) one representative of the council;

(B) one representative of the Texas Medical

Association;

representative from a school district located within the boundaries

of a regional education service center;

(D) one school principal representative from a

school district located within the boundaries of a regional

education service center; and

(E) one school nurse representative from a rural

school located within the boundaries of a regional education

service center.

SECTION 1.25. Subsections (a) and (c), Section 2.03,

Chapter 670, Acts of the 72nd Legislature, Regular Session, 1991

(Article 4477-7j, Vernon's Texas Civil Statutes), are amended to

read as follows:

(a) On or after the effective date of this Act, the

Commissioners Court of Gaines County shall appoint three persons,

the governing body of the city of Seminole shall appoint two

persons, and the governing body of the city of Seagraves shall

appoint two persons to serve as initial directors of the district.

The four persons appointed by the governing bodies of the cities of

Seminole and Seagraves shall represent the municipalities within

the county, and the three persons appointed by the Commissioners

Court of Gaines County shall represent the unincorporated areas of

the county. [~~In addition, the board of regents of The University of~~

~~Texas System shall appoint one person to serve as an ex-officio,~~

~~nonvoting director of the district.~~]

governing bodies of the cities of Seminole and Seagraves shall each

appoint one initial director to serve a term expiring on May 1 of

the first year after the year in which the original appointment is

made. In addition, the Commissioners Court of Gaines County shall

appoint two initial directors and the governing bodies of the

cities of Seminole and Seagraves shall each appoint one initial

director to serve terms expiring on May 1 of the second year after

the year in which the original appointment is made. [~~The initial~~

~~ex-officio member serves a term expiring on May 1 of the second year~~

~~after the year in which the original appointment is made.~~]

Successor directors serve two-year terms.

SECTION 1.26. Subsection (a), Section 3.01, Chapter 670,

Acts of the 72nd Legislature, Regular Session, 1991 (Article

4477-7j, Vernon's Texas Civil Statutes), is amended to read as

follows:

(a) The district is governed by a board of directors

composed of seven voting members [~~and one ex-officio nonvoting~~

~~member~~] who are appointed as provided by this Act. However, the

district shall change to a system of electing the voting directors

if:

(1) the Commissioners Court of Gaines County and the

governing bodies of the cities of Seminole and Seagraves each pass a

resolution calling for the election of the directors; or

(2) the board receives a petition signed by at least

150 registered voters of Gaines County calling for the election of

the directors.

SECTION 1.27. Subsection (d), Section 51.403, Education

Code, is amended to read as follows:

(d) For purposes of this subsection, "small classes" [~~Each~~

~~institution shall file with its governing board and the~~

~~coordinating board a small class report, excluding individual~~

~~instruction courses, indicating department, course number, title~~

~~of course, and the name of the instructor. "Small classes," for the~~

~~purpose of this report,~~] are undergraduate-level courses with less

than 10 registrations, and graduate-level courses with less than 5

registrations. No small classes shall be offered in any

institution except as authorized by the appropriate governing

board, within the guidelines established by the Coordinating Board.

SECTION 1.28. Subchapter H, Chapter 51, Education Code, is

amended by adding Section 51.406 to read as follows:

Sec. 51.406. EXPIRATION OF CERTAIN REPORTING REQUIREMENTS

APPLICABLE TO INSTITUTIONS OF HIGHER EDUCATION AND UNIVERSITY

SYSTEMS. (a) In this section, "university system" has the meaning

assigned by Section 61.003.

(b) To the extent that any of the following laws require

reporting by a university system or an institution of higher

education, a university system or institution of higher education

is not required to make the report on or after September 1, 2013,

unless legislation enacted by the 83rd Legislature that becomes law

expressly requires the institution or system to make the report:

(1) Section 7.109;

(2) Section 33.083;

(3) Section 51.0051;

(4) Section 59.07;

(5) Section 130.086;

(6) Section 325.007, Government Code;

(7) Section 669.003, Government Code;

(8) Section 2005.007, Government Code;

(9) Section 2052.103, Government Code;

(10) Section 2054.097, Government Code;

(11) Section 2101.011, Government Code;

(12) Section 2102.009, Government Code;

(13) Chapter 2114, Government Code; and

(14) Section 2205.041, Government Code.

Higher Education Coordinating Board, in effect on June 1, 2011,

that requires reporting by a university system or an institution of

higher education has no effect on or after September 1, 2013, unless

the rule or policy is affirmatively and formally readopted before

that date by formal administrative rule published in the Texas

Code. This subsection does not apply to:

(1) a rule or policy for which the authorizing statute

is listed in Subsection (b);

(2) a rule or policy for which the authorizing statute

is repealed on or before September 1, 2013, by legislation enacted

by the legislature that becomes law; or

(3) a report required under any of the following laws:

(A) Section 51.005;

(B) Section 51.3062;

(D) Section 56.039;

(E) Section 61.051(k);

(F) Section 61.059; or

(G) Section 62.095(b).

SECTION 1.29. Section 51.914, Education Code, is amended to

read as follows:

Sec. 51.914. PROTECTION OF CERTAIN INFORMATION. (a) In

order to protect the actual or potential value, the following

information is [~~shall be~~] confidential and is [~~shall~~] not [be]

subject to disclosure under Chapter 552, Government Code, or

otherwise:

(1) all information relating to a product, device, or

process, the application or use of such a product, device, or

process, and all technological and scientific information

(including computer programs) developed in whole or in part at a

state institution of higher education, regardless of whether

patentable or capable of being registered under copyright or

trademark laws, that have a potential for being sold, traded, or

licensed for a fee;

(2) any information relating to a product, device, or

process, the application or use of such product, device, or

process, and any technological and scientific information

(including computer programs) that is the proprietary information

of a person, partnership, corporation, or federal agency that has

been disclosed to an institution of higher education solely for the

purposes of a written research contract or grant that contains a

provision prohibiting the institution of higher education from

disclosing such proprietary information to third persons or

parties; or

(3) the plans, specifications, blueprints, and

designs, including related proprietary information, of a

scientific research and development facility that is jointly

financed by the federal government and a local government or state

agency, including an institution of higher education, if the

facility is designed and built for the purposes of promoting

scientific research and development and increasing the economic

development and diversification of this state.

(b) Information maintained by or for an institution of

higher education that would reveal the institution's plans or

negotiations for commercialization or research, or that consists of

unpublished research results or data, is not subject to Chapter

552, Government Code, unless the information has been published, is

patented, or is otherwise subject to an executed license, sponsored

research agreement, or research contract or grant. In this

subsection, "institution of higher education" has the meaning

assigned by Section 61.003.

SECTION 1.30. Subsection (h), Section 61.051, Education

Code, is amended to read as follows:

(h) The board shall make continuing studies of the needs of

the state for research and designate the institutions of higher

education to perform research as needed. The board shall also

maintain an inventory of all institutional and programmatic

research activities being conducted by the various institutions,

whether state-financed or not. Once a year, on dates prescribed by

the board, each institution of higher education shall report to the

board all research conducted at that institution during the last

preceding year. The submission by an institution of the

institution's response to the National Science Foundation's annual

Higher Education Research and Development Survey satisfies the

requirements of this section. All reports required by this

subsection shall be made subject to the limitations imposed by

security regulations governing defense contracts for research.

SECTION 1.31. Section 61.0582, Education Code, is amended

by adding Subsection (f) to read as follows:

(f) This section does not apply to a university system that

maintains an ongoing system-wide capital improvement program

approved by the system's board of regents.

SECTION 1.32. Section 130.152, Education Code, is amended

to read as follows:

Sec. 130.152. CRITERIA FOR PROGRAMS FOR THE DISADVANTAGED.

A junior college may develop programs to serve persons from

backgrounds of economic or educational deprivation by submission of

a plan based on the following criteria to the Texas Higher Education

Coordinating Board[~~, Texas College and University System~~]:

(1) an instructional program that accommodates the

different learning rates of students and compensates for prior

economic and educational deprivation;

(2) an unrestricted admissions policy allowing the

enrollment of any person 18 years of age or older with a high school

diploma or its equivalent who can reasonably be expected to benefit

from instruction;

(3) the assurance that all students, regardless of

their differing programs of study, will be considered, known, and

recognized as full members of the student body, provided that the

administrative officers of a junior college may deny admission to a

prospective student or attendance of an enrolled student if, in

their judgment, the person [he] would not be competent to benefit

from a program of the college, or would by the person's [~~his~~]

presence or conduct create a disruptive atmosphere within the

college not consistent with the statutory purposes of the college;

(4) [~~the submission of a plan for a financial aid~~

~~program which removes to the maximum extent possible the financial~~

~~barriers to the educational aspirations of the citizens of this~~

~~state;~~

[~~(5)~~ ~~an annual evaluation report based on scientific~~

~~methods and utilizing control groups wherever possible to be~~

~~submitted to the coordinating board at the end of each school year,~~

~~covering each remedial-compensatory course or program offered at~~

~~the college;~~

[~~(6)~~] any other criteria consistent with the

provisions of this subchapter specified by the coordinating board;

and

(5) [~~(7)~~] a junior college must obtain approval of the

coordinating board [~~Coordinating Board, Texas College and~~

~~University System,~~] before offering any courses under the

provisions of this Act.

SECTION 1.33. Section 401.042, Government Code, is amended

by adding Subsection (c) to read as follows:

education, the offices of the governor and the Legislative Budget

Board shall review the forms for higher education legislative

appropriations requests to identify opportunities to improve

efficiency, provide better transparency of funding sources,

eliminate unnecessary or duplicative requirements, and otherwise

reduce the cost or difficulty of providing information related to

appropriations requests.

SECTION 1.34. Subchapter L, Chapter 403, Government Code,

is amended by adding Section 403.2715 to read as follows:

Sec. 403.2715. UNIVERSITY SYSTEMS AND INSTITUTIONS OF

HIGHER EDUCATION. (a) In this section, "institution of higher

education" and "university system" have the meanings assigned by

Section 61.003, Education Code.

(b) Except as provided by this section, this subchapter does

not apply to a university system or institution of higher

education.

shall account for all personal property as defined by the

comptroller under Section 403.272. At all times, the property

records of a university system or institution of higher education

must accurately reflect the personal property possessed by the

system or institution.

(d) The chief executive officer of each university system or

institution of higher education shall designate one or more

property managers. The property manager shall maintain the records

required and be the custodian of all personal property possessed by

the system or institution.

(e) Sections 402.273(h), 403.275, and 403.278 apply to a

university system or institution of higher education.

SECTION 1.35. Subsection (d), Section 2101.0115,

Government Code, is amended by adding Subdivision (4) to read as

follows:

(4) "Institution of higher education" and "university

system" have the meanings assigned by Section 61.003, Education

Code.

SECTION 1.36. Section 2101.0115, Government Code, is

amended by adding Subsection (e) to read as follows:

(e) This section does not apply to an institution of higher

education or university system.

SECTION 1.37. Subsection (c), Section 2254.028, Government

Code, is amended to read as follows:

consulting services contract to be entered into by an institution

of higher education other than a public junior college if the

institution includes in the invitation published under Section

2254.029 a finding by the chief executive officer of the

institution that the consulting services are necessary and an

explanation of that finding.

SECTION 1.38. Section 2254.0301, Government Code, is

amended to read as follows:

Sec. 2254.0301. CONTRACT NOTIFICATION. (a) A state agency

shall provide written notice to the Legislative Budget Board of a

contract for consulting services if the amount of the contract,

including an amendment, modification, renewal, or extension of the

contract, exceeds $14,000. The notice must be on a form prescribed

by the Legislative Budget Board and filed not later than the 10th

day after the date the entity enters into the contract.

(b) This section does not apply to a university system or

institution of higher education. In this subsection, "institution

of higher education" and "university system" have the meanings

assigned by Section 61.003, Education Code.

SECTION 1.39. Subsection (f), Section 388.005, Health and

Safety Code, is amended to read as follows:

(f) This section does not apply to a state agency or an

institution of higher education that the State Energy Conservation

Office determines [~~that~~], before September 1, 2007, adopted a plan

for conserving energy under which the agency or institution

established a percentage goal for reducing the consumption of

electricity. The exemption provided by this section applies only

while the agency or institution has an energy conservation plan in

effect and only if the agency or institution submits reports on the

conservation plan each year [~~calendar quarter~~] to the governor, the

Legislative Budget Board, and the State Energy Conservation Office.

SECTION 1.40. Section 412.053, Labor Code, is amended by

adding Subsection (c) to read as follows:

education or university system. In this subsection, "institution

of higher education" and "university system" have the meanings

assigned by Section 61.003, Education Code.

SECTION 1.41. Subsection (d), Section 31.153, Natural

Resources Code, is amended to read as follows:

(d) Each state agency, other than an institution of higher

education, annually at the time set by the division, shall furnish

the Texas Historical Commission with a photograph and information

that specifies and identifies the age of each building:

(1) that was acquired by the agency after the date of

the preceding annual submission and that is at least 45 years old on

the date of the current submission; or

(2) that is possessed by the agency and has become 45

years old since the date the information was previously submitted.

SECTION 1.42. (a) The following laws are repealed

effective September 1, 2011:

(1) Section 51.216, Education Code;

(2) Subsections (b) and (c), Section 51.403, Education

Code;

(3) Section 51.4033, Education Code;

(4) Section 61.0815, Education Code;

(5) Section 61.086, Education Code;

(6) Subsection (c), Section 61.087, Education Code;

(7) Section 62.098, Education Code;

(8) Section 1434.054, Government Code;

(9) Section 2107.005, Government Code;

(10) Subsection (c), Section 412.042, Labor Code; and

(11) Subsection (c), Section 3.01, Chapter 670, Acts

of the 72nd Legislature, Regular Session, 1991 (Article 4477-7j,

Vernon's Texas Civil Statutes).

(b) The following provisions of the Education Code are

repealed effective September 1, 2013:

(1) Section 51.859;

(2) Subsection (e), Section 51.917;

(3) Subsection (d), Section 51.968;

(4) Subsection (h), Section 54.203;

(5) Subsection (c), Section 56.034;

(6) Subsection (j), Section 56.079;

(7) Subsection (c), Section 61.066;

(8) Subsection (d), Section 63.003;

(9) Section 63.004;

(10) Section 63.103;

(11) Subsection (m), Section 86.52;

(12) Section 88.210;

(13) Section 106.54;

(14) Section 142.005;

(15) Section 143.006;

(16) Section 147.005;

(17) Section 148.005; and

(18) Section 153.008.

SECTION 1.43. (a) This section governs a conflict between

this article and any other Act of the 82nd Legislature, Regular

Session, 2011, without regard to the relative dates of enactment.

(b) If this article and any other Act repeal the same

statute, the earlier effective date of repeal controls.

repeals, the repeal controls.

SECTION 1.44. Section 51.011, Education Code, as added by

this article, applies to credit balances held by a public

institution of higher education on or after the effective date of

this article.

SECTION 1.45. This article takes effect immediately if this

Act 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 article takes effect September 1, 2011.

ARTICLE 2. FISCAL MATTERS CONCERNING ADVANCED PLACEMENT

SECTION 2.01. Subsection (h), Section 28.053, Education

Code, is amended to read as follows:

(h) The commissioner may enter into agreements with the

college board and the International Baccalaureate Organization to

pay for all examinations taken by eligible public school students.

An eligible student is a student [~~one~~] who:

(1) takes a college advanced placement or

international baccalaureate course at a public school or who is

recommended by the student's principal or teacher to take the test;

and

(2) demonstrates financial need as determined in

accordance with guidelines adopted by the board that are consistent

with the definition of financial need adopted by the college board

or the International Baccalaureate Organization.

ARTICLE 3. FISCAL MATTERS CONCERNING EARLY HIGH SCHOOL GRADUATION

SECTION 3.01. Subchapter K, Chapter 56, Education Code, is

amended by adding Section 56.2012 to read as follows:

Sec. 56.2012. EXPIRATION OF SUBCHAPTER; ELIGIBILITY

CLOSED. (a) This subchapter expires September 1, 2017.

(b) Notwithstanding Section 56.203, a person may not

receive an award under this subchapter if the person graduates from

high school on or after September 1, 2011.

SECTION 3.02. Subsection (b), Section 54.213, Education

Code, is amended to read as follows:

(b) [~~Savings to the foundation school fund that occur as a~~

~~result of the Early High School Graduation Scholarship program~~

~~created in Subchapter K, Chapter 56, and that are not required for~~

~~the funding of state credits for tuition and mandatory fees under~~

~~Section 56.204 or school district credits under Section 56.2075~~

~~shall be used first to provide tuition exemptions under Section~~

~~54.212. Any of those savings remaining after providing tuition~~

~~exemptions under Section 54.212 shall be used to provide tuition~~

~~exemptions under Section 54.214.~~] The Texas Education Agency shall

[~~also~~] accept and make available to provide tuition exemptions

under Section 54.214 gifts, grants, and donations made to the

agency for that purpose. The commissioner of education shall

transfer those funds to the Texas Higher Education Coordinating

Board to distribute to institutions of higher education that

provide exemptions under that section [~~Payment of funds under this~~

~~subsection shall be made in the manner provided by Section 56.207~~

~~for state credits under Subchapter K, Chapter 56~~].

SECTION 3.03. Section 56.210, Education Code, is repealed.

ARTICLE 4. FISCAL MATTERS CONCERNING TUITION EXEMPTIONS

SECTION 4.01. Subsection (c), Section 54.214, Education

Code, is amended to read as follows:

person must:

(1) be a resident of this state;

(2) be a school employee serving in any capacity;

(3) for the initial term or semester for which the

person receives an exemption under this section, have worked as an

educational aide for at least one school year during the five years

preceding that term or semester;

(4) establish financial need as determined by

coordinating board rule;

(5) be enrolled at the institution of higher education

granting the exemption in courses required for teacher

certification in one or more subject areas determined by the Texas

Education Agency to be experiencing a critical shortage of teachers

at the public schools in this state [~~at the institution of higher~~

~~education granting the exemption~~];

(6) maintain an acceptable grade point average as

determined by coordinating board rule; and

(7) comply with any other requirements adopted by the

coordinating board under this section.

SECTION 4.02. The change in law made by this article applies

beginning with tuition and fees charged for the 2011 fall semester.

Tuition and fees charged for a term or semester before the 2011 fall

semester are covered by the law in effect during the term or

semester for which the tuition and fees are charged, and the former

law is continued in effect for that purpose.

ARTICLE 5. FISCAL MATTERS CONCERNING CERTAIN DISTRIBUTIONS TO

INSTITUTIONS OF HIGHER EDUCATION

SECTION 5.01. Subchapter A, Chapter 63, Education Code, is

amended by adding Section 63.0035 to read as follows:

Sec. 63.0035. PARTIAL LIQUIDATION OF INSTITUTION'S SHARE;

DISTRIBUTION OF FUND AFTER LIQUIDATION. (a) Subject to

appropriation of the appropriate amounts, the board of regents of

The University of Texas System shall transfer to each institution

that is entitled in a state fiscal year to receive a distribution

from the permanent fund established under this subchapter a

one-time liquidation distribution for the state fiscal year ending

August 31, 2012, and, for that fiscal year and each subsequent

fiscal year, a reduced annual distribution as provided by this

section.

(b) The board of regents of The University of Texas System,

not later than November 1, 2011, shall:

(1) calculate the amount of each liquidation

distribution in accordance with this section; and

(2) provide to all institutions entitled to receive a

distribution from the permanent fund established under this

subchapter written notice specifying:

(A) the amount of the liquidation distribution to

be made to each institution in the state fiscal year ending August

31, 2012; and

(B) the amounts of the other distributions to be

made in that fiscal year to each institution under this section from

the per capita account and the formula account described by

Subsection (c).

fiscal year ending August 31, 2012, the permanent fund shall be

segregated into two accounts, the per capita account and the

formula account. Notwithstanding any other law, distributions in

that fiscal year and in subsequent fiscal years shall be made in

accordance with this section and not in accordance with Section

63.003(a). The amount segregated into the per capita account is

equal to 70 percent of the total value of the fund at the end of the

preceding state fiscal year. The formula account is composed of the

remaining 30 percent of that total value at the end of that

preceding fiscal year.

(d) A liquidation distribution is an amount equal to

one-third of the institution's fractional share of the value of the

per capita account. An institution's fractional share of the per

capita account is determined by multiplying the amount segregated

into the per capita account by a fraction, the numerator of which is

one and the denominator of which is the number of institutions that

are entitled to receive a distribution from the permanent fund

established under this subchapter.

(e) In the state fiscal year ending August 31, 2012, and in

each subsequent fiscal year, the annual amount appropriated for

distribution from the investment of the per capita account shall be

distributed in equal shares to each institution.

(e-1) Subsection (e) does not apply to the amounts

distributed as liquidation distributions in the state fiscal year

ending August 31, 2012.

(f) In each state fiscal year in which distributions are

made from the per capita account under Subsection (e), the amount

appropriated for distribution from the investment of the formula

account shall be distributed in equal portions with respect to each

of the following categories, with each institution receiving a

share in each category proportionate to the amount that the

institution spent in that category in the preceding state fiscal

biennium as determined by the institution's annual financial

report, compared to the total spending of all institutions listed

in Section 63.002(c) in that category in the preceding biennium:

(1) instructional expenditures;

(2) research expenditures; and

(3) unsponsored charity care.

(g) Except as otherwise provided by this section:

(1) Section 63.003(b) applies to amounts appropriated

for distribution under Subsections (e) and (f) of this section; and

(2) Sections 63.003(c) and (d) apply to amounts

appropriated for distribution under Subsection (f) of this section.

(h) The comptroller in consultation with the board of

regents of The University of Texas System shall establish

procedures to implement this section. A liquidation distribution

shall be made in accordance with those procedures and in

consultation with the institutions receiving the liquidation

distribution.

(i) Any direct costs associated with liquidation

distributions, including discounts on investment dispositions and

related expenses realized by the permanent fund, shall be deducted

in equal portions from the amounts of the liquidation

distributions. The procedures established under Subsection (h)

must provide for the minimization of any costs associated with

making the liquidation distributions considering the liquidity of

the investment assets of the fund.

(j) Notwithstanding other provisions of this subchapter,

the amount distributed to an institution under this section as a

liquidation distribution is under the exclusive control of the

governing board of the institution and may be used by the

institution in any manner for any lawful purpose. The comptroller

shall establish procedures to ensure that a liquidation

distribution to Baylor College of Medicine is used for public

purposes consistent with a contract in effect under Section 61.092.

SECTION 5.02. Subsection (d), Section 63.003, Education

Code, is amended to read as follows:

(d) For the purposes of this section or Section 63.0035,

Baylor College of Medicine may receive funds [~~under Subsection~~

~~(a)(2)~~] only if the institution provides the comptroller with an

independently audited schedule of information that substantially

complies with the reporting requirements issued by the comptroller

for other eligible institutions [~~under Subsection (a)(2)~~].

Information under this subsection must be supplied not later than

the time other eligible institutions are required to submit similar

information.

ARTICLE 6. FISCAL MATTERS CONCERNING DUAL HIGH SCHOOL AND JUNIOR

COLLEGE CREDIT

SECTION 6.01. Subsection (c), Section 130.008, Education

Code, is amended to read as follows:

high school student in a course offered for joint high school and

junior college credit under this section, excluding a course for

which the student attending high school may receive course credit

toward the physical education curriculum requirement under Section

28.002(a)(2)(C), shall be included in the contact hours used to

determine the junior college's proportionate share of the state

money appropriated and distributed to public junior colleges under

Sections 130.003 and 130.0031, even if the junior college waives

all or part of the tuition or fees for the student under Subsection

(b).

SECTION 6.02. This article applies beginning with funding

for the 2011 fall semester.

ARTICLE 7. FEE ON NONSETTLING MANUFACTURERS OF TOBACCO PRODUCTS

SECTION 7.01. (a) Chapter 161, Health and Safety Code, is

amended by adding Subchapter V to read as follows:

SUBCHAPTER V. FEE ON CIGARETTES AND CIGARETTE TOBACCO PRODUCTS

MANUFACTURED BY CERTAIN COMPANIES

Sec. 161.601. PURPOSE. The purpose of this subchapter is

to:

(1) recover health care costs to the state imposed by

nonsettling manufacturers;

(2) prevent nonsettling manufacturers from

undermining this state's policy of reducing underage smoking by

offering cigarettes and cigarette tobacco products at prices that

are substantially below the prices of cigarettes and cigarette

tobacco products of other manufacturers;

(3) protect the tobacco settlement agreement and

funding, which has been reduced because of the growth of sales of

nonsettling manufacturer cigarettes and cigarette tobacco

products, for programs that are funded wholly or partly by payments

to this state under the tobacco settlement agreement and recoup for

this state settlement payment revenue lost because of sales of

nonsettling manufacturer cigarettes and cigarette tobacco

products; and

(4) provide funding for certain health-related

institutions of higher education for any purpose the legislature

determines.

Sec. 161.602. DEFINITIONS. In this subchapter:

(1) "Brand family" means each style of cigarettes or

cigarette tobacco products sold under the same trademark. The term

includes any style of cigarettes or cigarette tobacco products that

have a brand name, trademark, logo, symbol, motto, selling message,

recognizable pattern of colors, or other indication of product

identification that is identical to, similar to, or identifiable

with a previously known brand of cigarettes or cigarette tobacco

products.

(2) "Cigarette" means any product that contains

nicotine and is intended to be burned or heated under ordinary

conditions of use. The term includes:

(A) a roll of tobacco wrapped in paper or another

substance that does not contain tobacco;

(B) tobacco, in any form, that is functional in a

product that, because of the product's appearance, the type of

tobacco used in the filler, or the product's packaging and

labeling, is likely to be offered to or purchased by a consumer as a

cigarette; or

containing tobacco that, because of the product's appearance, the

type of tobacco used in the filler, or the product's packaging and

labeling, is likely to be offered to or purchased by a consumer as a

cigarette.

(3) "Cigarette tobacco product" means roll-your-own

tobacco or tobacco that, because of the tobacco's appearance, type,

packaging, or labeling, is suitable for use in making cigarettes

and is likely to be offered to or purchased by a consumer for that

purpose.

(4) "Distributor" has the meaning assigned by Section

154.001 or 155.001, Tax Code, as appropriate.

(5) "Manufacturer" means a person that manufactures,

fabricates, or assembles cigarettes for sale or distribution. For

purposes of this subchapter, the term includes a person that is the

first importer into the United States of cigarettes and cigarette

tobacco products manufactured, fabricated, or assembled outside

the United States.

(6) "Nonsettling manufacturer" means a manufacturer

of cigarettes that did not sign the tobacco settlement agreement.

(7) "Nonsettling manufacturer cigarettes" means

cigarettes manufactured, fabricated, assembled, or imported by a

nonsettling manufacturer.

(8) "Nonsettling manufacturer cigarette tobacco

products" means cigarette tobacco products manufactured,

fabricated, assembled, or imported by a nonsettling manufacturer.

(9) "Tobacco settlement agreement" means the

Comprehensive Settlement Agreement and Release filed on January 16,

1998, in the United States District Court, Eastern District of

Texas, in the case styled The State of Texas v. The American Tobacco

Co., et al., No. 5-96CV-91, and all subsequent amendments.

Sec. 161.603. FEE IMPOSED. (a) A fee is imposed on the

sale, use, consumption, or distribution in this state of:

(1) nonsettling manufacturer cigarettes if a stamp is

required to be affixed to a package of those cigarettes under

Chapter 154, Tax Code;

(2) nonsettling manufacturer cigarettes that are

sold, purchased, or distributed in this state but that are not

required to have a stamp affixed to a package of those cigarettes

under Chapter 154, Tax Code;

(3) nonsettling manufacturer cigarette tobacco

products that are subject to the tax imposed by Section 155.0211,

Tax Code; and

(4) nonsettling manufacturer cigarette tobacco

products that are sold, purchased, or distributed in this state but

that are not subject to the tax imposed by Section 155.0211, Tax

Code.

(b) The fee imposed by this section does not apply to

cigarettes or cigarette tobacco products that are:

(1) included in computing payments due to be made by a

settling manufacturer under the tobacco settlement agreement; or

(2) sold, purchased, or otherwise distributed in this

state for retail sale outside this state.

other privilege, license, fee, or tax required or imposed by state

law.

(d) Except as otherwise provided by this subchapter, the fee

imposed by this subchapter is imposed, collected, paid,

administered, and enforced in the same manner, taking into account

that the fee is imposed on nonsettling manufacturers, as the taxes

imposed by Chapters 154 and 155, Tax Code, as appropriate.

Sec. 161.604. RATE OF FEE. (a) Except as provided by

Subsection (b), the fee is imposed at the rate of 2.15 cents for:

(1) each nonsettling manufacturer cigarette; and

(2) each 0.09 ounce of nonsettling manufacturer

cigarette tobacco product.

(b) On January 1 of each year, the comptroller shall

increase the rate of the tax prescribed by Subsection (a) by the

greater of:

(1) three percent; or

(2) the percentage increase in the most recent annual

revised Consumer Price Index for All Urban Consumers, as published

by the Federal Bureau of Labor Statistics of the United States

Department of Labor.

Sec. 161.605. NONSETTLING MANUFACTURER CIGARETTES AND

CIGARETTE TOBACCO PRODUCTS FOR RETAIL SALE OUTSIDE THIS STATE.

(a) Except as provided by Subsection (b), a person may not

transport or cause to be transported from this state nonsettling

manufacturer cigarettes or cigarette tobacco products for retail

sale in another state unless:

(1) the packages of the cigarettes or cigarette

tobacco products bear the tax stamps of the state in which the

cigarettes or cigarette tobacco products are to be sold and the

stamps are affixed in accordance with the laws of that state; or

(2) if the state does not require a tax stamp, all

excise taxes imposed on the cigarettes or cigarette tobacco

products by the state in which they are to be sold have been paid in

accordance with the laws of that state.

(b) A person is not required to affix a tax stamp of another

state or pay the excise tax of another state before transporting the

nonsettling manufacturer cigarettes or cigarette tobacco products

out of this state if:

(1) the state the cigarettes or cigarette tobacco

products are being transported to prohibits that action; and

(2) the cigarettes or cigarette tobacco products are

being sold to a wholesaler licensed by that state.

Sec. 161.606. DISTRIBUTOR'S REPORT. (a) A distributor

required to file a report under Section 154.210 or 155.111, Tax

Code, shall, in addition to the information required by those

sections, include in that required report, as appropriate:

(1) the number and denominations of stamps affixed to

individual packages of nonsettling manufacturer cigarettes during

the preceding month;

(2) the amount of nonsettling manufacturer cigarette

tobacco products subject to the tax imposed by Section 155.0211,

Tax Code, during the preceding month;

(3) the number of individual packages of nonsettling

manufacturer cigarettes and the amount of nonsettling manufacturer

cigarette tobacco products not subject to the tax imposed by

Chapter 154, Tax Code, or Section 155.0211, Tax Code, sold or

purchased in this state or otherwise distributed in this state for

sale in the United States;

(4) the number of individual packages of nonsettling

manufacturer cigarettes and the amount of nonsettling manufacturer

cigarette tobacco products transported or caused to be transported

outside this state during the preceding month;

(5) if Subdivision (4) applies, the name and address

of the persons receiving the cigarettes or cigarette tobacco

products outside this state; and

(6) any other information the comptroller considers

necessary or appropriate to determine the amount of the fee imposed

by this subchapter or to enforce this subchapter.

(b) The information required by Subsection (a) must be

itemized for each place of business and by manufacturer and brand

family.

section shall be enforced in the same manner as the requirement to

deliver to or file with the comptroller a report required under

Section 154.210 or 155.111, Tax Code, as appropriate.

(d) Information obtained from a report provided under

Subsection (a) regarding cigarettes or cigarette tobacco products

sold, purchased, or otherwise distributed by a nonsettling

manufacturer may be disclosed by the comptroller to that

manufacturer or to the authorized representative of the

manufacturer.

Sec. 161.607. NOTICE AND PAYMENT OF FEE. (a) Each month,

not later than the 20th day after the date the comptroller receives

the information required by Section 161.606, the comptroller shall:

(1) compute the amount of the fee imposed by this

subchapter that each nonsettling manufacturer owes for that

reporting period based on that information and any other

information available to the comptroller; and

(2) mail to each nonsettling manufacturer a notice of

the amount of fees the manufacturer owes.

(b) Not later than the 15th day of the month after the month

in which the comptroller mails a nonsettling manufacturer a notice

under Subsection (a), the nonsettling manufacturer shall send to

the comptroller the amount of the fee due according to the notice.

Sec. 161.608. DIRECTORY OF COMPLYING MANUFACTURERS.

(a) The comptroller shall develop, maintain, and publish on the

comptroller's Internet website a directory listing of all

nonsettling manufacturers that have complied with this subchapter.

(b) The comptroller shall provide the list described by

Subsection (a) to any person on request.

Sec. 161.609. PREPAYMENT BEFORE OFFERING NONSETTLING

MANUFACTURER CIGARETTES OR CIGARETTE TOBACCO PRODUCTS FOR SALE OR

DISTRIBUTION IN THIS STATE. (a) If cigarettes or cigarette

tobacco products of a nonsettling manufacturer are not offered for

sale or distribution in this state on September 1, 2011, the

nonsettling manufacturer may not offer those cigarettes or

cigarette tobacco products for sale or distribution in this state

after that date unless the manufacturer first prepays the fee

imposed by this subchapter for sales of cigarettes and cigarette

tobacco products that will occur in the first calendar month in

which they are sold or distributed in this state.

(b) The amount a nonsettling manufacturer is required to

prepay under this section is equal to the greater of:

(1) the rate prescribed by Section 161.604 in effect

on that date multiplied by:

(A) the number of cigarettes the comptroller

reasonably projects that the nonsettling manufacturer will sell or

distribute in this state during that calendar month; and

(B) each 0.09 ounce of nonsettling manufacturer

cigarette tobacco products the comptroller reasonably projects

that the nonsettling manufacturer will sell or distribute in this

state during that calendar month; or

(2) $50,000.

cigarettes or cigarette tobacco products that are:

(1) included in computing payments due to be made by a

settling manufacturer under the tobacco settlement agreement; or

(2) sold, purchased, or otherwise distributed in this

state for retail sale outside this state.

(d) The comptroller may require a nonsettling manufacturer

to provide any information reasonably necessary to determine the

prepayment amount.

(e) The comptroller shall establish procedures to:

(1) reimburse a nonsettling manufacturer if the actual

sales or distributions in the first calendar month are less than the

projected sales or distributions; and

(2) require additional payments if the actual sales or

distributions in the first calendar month are greater than the

projected sales or distributions.

(f) A nonsettling manufacturer shall pay the fee imposed by

this subchapter in the manner provided by Section 161.607 beginning

in the second calendar month in which the manufacturer offers the

cigarettes or cigarette tobacco products for sale or distribution

in this state.

Sec. 161.610. REPORT TO ATTORNEY GENERAL BEFORE OFFERING

NONSETTLING MANUFACTURER CIGARETTES OR CIGARETTE TOBACCO PRODUCTS

FOR SALE OR DISTRIBUTION IN THIS STATE. (a) In addition to

prepaying the fee required by Section 161.609, a nonsettling

manufacturer described by Section 161.609(a) shall, before the date

the cigarettes or cigarette tobacco products are offered for sale

or distribution in this state, provide to the attorney general on a

form prescribed by the attorney general:

(1) the nonsettling manufacturer's complete name,

address, and telephone number;

(2) the date that the nonsettling manufacturer will

begin offering cigarettes or cigarette tobacco products for sale or

distribution in this state;

(3) the names of the brand families of the cigarettes

or cigarette tobacco products that the nonsettling manufacturer

will offer for sale or distribution in this state;

(4) a statement that the nonsettling manufacturer

intends to comply with this subchapter; and

(5) the name, address, telephone number, and signature

of an officer of the nonsettling manufacturer attesting to all of

the included information.

(b) The attorney general shall make the information

provided under this section available to the comptroller.

Sec. 161.611. PENALTIES FOR NONCOMPLIANCE.

(a) Cigarettes and cigarette tobacco products of a nonsettling

manufacturer that has not complied with this subchapter, including

full payment of the fee imposed by this subchapter, shall be treated

as cigarettes or tobacco products for which the tax assessed by

Chapter 154 or 155, Tax Code, as appropriate, has not been paid, and

the manufacturer is subject to all penalties imposed by those

chapters for violations of those chapters.

(b) The comptroller shall provide to a nonsettling

manufacturer, each distributor authorized to affix stamps under

Chapter 154, Tax Code, and the attorney general a notice of the

manufacturer's noncompliance with this subchapter if the

manufacturer:

(1) does not pay in full the fee imposed by this

subchapter; or

(2) is not included on the directory required by

Section 161.608.

directory required by Section 161.608, or on receipt of the notice

of a nonsettling manufacturer's noncompliance, a distributor may

not:

(1) pay the tax imposed by Chapter 154 or 155, Tax

Code, as appropriate;

(2) affix to a package of cigarettes the stamp

required by Section 154.041, Tax Code; or

(3) otherwise purchase, sell, or distribute

cigarettes manufactured by the nonsettling manufacturer in this

state.

(d) If the comptroller determines that the nonsettling

manufacturer that is the subject of a notice provided under

Subsection (b) later complies with this subchapter, the comptroller

shall provide to the nonsettling manufacturer, each distributor

authorized to affix stamps under Chapter 154, Tax Code, and the

attorney general a notice that the nonsettling manufacturer is in

compliance with this subchapter.

Sec. 161.612. APPOINTMENT OF AGENT FOR SERVICE OF PROCESS.

A nonsettling manufacturer shall appoint and engage a resident

agent for service of process.

Sec. 161.613. AUDIT OR INSPECTION. The comptroller or

attorney general is entitled to conduct reasonable periodic audits

or inspections of the financial records of a nonsettling

manufacturer to ensure compliance with this subchapter.

Sec. 161.614. REVENUE DEPOSITED IN PERMANENT HEALTH FUND.

The revenue from the fee imposed by this subchapter shall be

deposited in the state treasury to the credit of the permanent

health fund for higher education under Subchapter A of Chapter 63,

Education Code. The annual amounts deposited shall be distributed

for any purpose the legislature determines and shall not be subject

to the requirements of Chapter 63, Education Code.

Sec. 161.615. APPLICATION OF SUBCHAPTER. This subchapter

applies without regard to Section 154.022, Tax Code, or any other

law that might be read to create an exemption for interstate sales.

(b) Not later than September 30, 2011, a nonsettling

manufacturer, as that term is defined by Section 161.602, Health

and Safety Code, as added by this section, that is offering

cigarettes or cigarette tobacco products for sale or distribution

in this state on September 1, 2011, shall provide to the attorney

general on a form prescribed by the attorney general:

(1) the nonsettling manufacturer's complete name,

address, and telephone number;

(2) the date that the nonsettling manufacturer began

offering cigarettes or cigarette tobacco products for sale or

distribution in this state;

(3) the names of the brand families of the cigarettes

or cigarette tobacco products that the nonsettling manufacturer

offers for sale or distribution in this state;

(4) a statement that the nonsettling manufacturer

intends to comply with Subchapter V, Chapter 161, Health and Safety

Code, as added by this section; and

(5) the name, address, telephone number, and signature

of an officer of the nonsettling manufacturer attesting to all of

the included information.

provided under Subsection (b) of this section available to the

comptroller of public accounts of the State of Texas.

(d) Notwithstanding any other provision of this Act, this

section takes effect September 1, 2011.

ARTICLE 8. FISCAL MATTERS CONCERNING THE STATE COMPRESSION

PERCENTAGE

SECTION 8.01. Section 42.2516, Education Code, is amended

by adding Subsection (b-2) to read as follows:

(b-2) If a school district adopts a maintenance and

operations tax rate that is below the rate equal to the product of

the state compression percentage multiplied by the maintenance and

operations tax rate adopted by the district for the 2005 tax year,

the commissioner shall reduce the district's entitlement under this

section in proportion to the amount by which the adopted rate is

less than the rate equal to the product of the state compression

percentage multiplied by the rate adopted by the district for the

2005 tax year. The reduction required by this subsection applies

beginning with the maintenance and operations tax rate adopted for

the 2009 tax year.

ARTICLE 9. FISCAL MATTERS RELATING TO PUBLIC SCHOOL

FINANCE AND PREKINDERGARTEN PROGRAMS

SECTION 9.01. Effective September 1, 2011, Section 12.106,

Education Code, is amended by amending Subsection (a) and adding

Subsection (a-3) to read as follows:

(a) A charter holder is entitled to receive for the

open-enrollment charter school funding under Chapter 42 equal to

the greater of:

(1) the percentage specified by Section 42.2516(i)

multiplied by the amount of funding per student in weighted average

daily attendance, excluding enrichment funding under Sections

42.302(a-1)(2) and (3), as they existed on January 1, 2009, that

would have been received for the school during the 2009-2010 school

year under Chapter 42 as it existed on January 1, 2009, and an

additional amount of the percentage specified by Section 42.2516(i)

multiplied by $120 for each student in weighted average daily

attendance; or

(2) the amount of funding per student in weighted

average daily attendance, excluding enrichment funding under

Section 42.302(a), to which the charter holder would be entitled

for the school under Chapter 42 if the school were a school district

without a tier one local share for purposes of Section 42.253 and

without any local revenue for purposes of Section 42.2516.

(a-3) In determining funding for an open-enrollment charter

school under Subsection (a), the commissioner shall apply the

regular program adjustment factor provided under Section 42.101 to

calculate the regular program allotment to which a charter school

is entitled.

SECTION 9.02. Effective September 1, 2016, Subsection (a),

Section 12.106, 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 equal to

[~~the greater of:~~

[~~(1)~~ ~~the amount of funding per student in weighted~~

~~average daily attendance, excluding enrichment funding under~~

~~Sections 42.302(a-1)(2) and (3), as they existed on January 1,~~

~~2009, that would have been received for the school during the~~

~~2009-2010 school year under Chapter 42 as it existed on January 1,~~

~~2009, and an additional amount of $120 for each student in weighted~~

~~average daily attendance; or~~

[~~(2)~~] the amount of funding per student in weighted

average daily attendance, excluding enrichment funding under

Section 42.302(a), to which the charter holder would be entitled

for the school under Chapter 42 if the school were a school district

without a tier one local share for purposes of Section 42.253 [~~and~~

~~without any local revenue for purposes of Section 42.2516~~].

SECTION 9.03. Effective September 1, 2011, Section 21.402,

Education Code, is amended by amending Subsections (a), (b), (c),

and (c-1) and adding Subsection (i) 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 in addition to other

factors, as determined by commissioner rule, 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 the basic allotment as provided by Section

42.101 (a) or (b) for a school district with a maintenance and

operations tax rate at least equal to the state maximum compressed

tax rate, as defined by Section 42.101 (a) [~~state and local funds~~

~~per weighted student, including funds provided under Section~~

~~42.2516, available to a district eligible to receive state~~

~~assistance under Section 42.302 with a maintenance and operations~~

~~tax rate per $100 of taxable value equal to the product of the state~~

~~compression percentage, as determined under Section 42.2516,~~

~~multiplied by $1.50, except that the amount of state and local funds~~

~~per weighted student does not include the amount attributable to~~

~~the increase in the guaranteed level made by Chapter 1187, Acts of~~

~~the 77th Legislature, Regular Session, 2001~~].

(b) Not later than June 1 of each year, the commissioner

shall determine the basic allotment and resulting monthly salaries

to be paid by school districts as provided by Subsection (a) [~~amount~~

~~of state and local funds per weighted student available, for~~

~~purposes of Subsection (a), to a district described by that~~

~~subsection for the following school year~~].

.5464

[~~.6226~~]

.5582

[~~.6360~~]

.5698

[~~.6492~~]

.5816

[~~.6627~~]

.6064

[~~.6909~~]

.6312

[~~.7192~~]

.6560

[~~.7474~~]

.6790

[~~.7737~~]

.7008

[~~.7985~~]

.7214

[~~.8220~~]

.7408

[~~.8441~~]

.7592

[~~.8650~~]

.7768

[~~.8851~~]

.7930

[~~.9035~~]

.8086

[~~.9213~~]

.8232

[~~.9380~~]

.8372

[~~.9539~~]

.8502

[~~.9687~~]

.8626

[~~.9828~~]

.8744

[~~.9963~~]

.8854

[~~1.009~~]

(c-1) Notwithstanding Subsections [~~Subsection~~] (a) and

(b)[~~, for the 2009-2010 and 2010-2011 school years~~], each school

district shall pay a monthly salary to [~~increase the monthly salary~~

of] each classroom teacher, full-time speech pathologist,

full-time librarian, full-time counselor certified under

Subchapter B, and full-time school nurse that is at least equal to

the following monthly salary or the monthly salary determined by

the commissioner under Subsections (a) and (b), whichever is [by

~~the~~] greater [of]:

Years of

Monthly

Experience

Salary

2,732

2,791

2,849

2,908

3,032

3,156

3,280

3,395

3,504

3,607

3,704

3,796

3,884

3,965

4,043

4,116

4,186

4,251

4,313

4,372

20 & Over

4,427

[~~(1) $80; or~~

[~~(2)~~ ~~the maximum uniform amount that, when combined with any~~

~~resulting increases in the amount of contributions made by the~~

~~district for social security coverage for the specified employees~~

~~or by the district on behalf of the specified employees under~~

~~Section 825.405, Government Code, may be provided using an amount~~

~~equal to the product of $60 multiplied by the number of students in~~

~~weighted average daily attendance in the school during the~~

~~2009-2010 school year.~~]

(i) Not later than January 1, 2013, the commissioner shall

submit to the governor, the lieutenant governor, the speaker of the

house of representatives, and the presiding officer of each

legislative standing committee with primary jurisdiction over

primary and secondary education a written report that evaluates and

provides recommendations regarding the salary schedule. This

subsection expires September 1, 2013.

SECTION 9.031. Effective September 1, 2016, Section 21.402,

Education Code, is amended by amending Subsection (a) and adding

Subsection (e-1) to read as follows:

(a) Except as provided by Subsection (d), (e-1) [~~(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 in addition to other

factors, as determined by commissioner rule, 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 the basic allotment as provided by Section

42.101(a) or (b) for a school district with a maintenance and

operation tax rate at least equal to the state maximum compressed

tax rate, as defined by Section 42.101(a) [~~state and local funds per~~

~~weighted student, including funds provided under Section 42.2516,~~

~~available to a district eligible to receive state assistance under~~

~~Section 42.302 with a maintenance and operations tax rate per $100~~

~~of taxable value equal to the product of the state compression~~

~~percentage, as determined under Section 42.2516, multiplied by~~

~~$1.50, except that the amount of state and local funds per weighted~~

~~student does not include the amount attributable to the increase in~~

~~the guaranteed level made by Chapter 1187, Acts of the 77th~~

~~Legislature, Regular Session 2001~~].

(e-1) If the minimum monthly salary determined under

Subsection (a) for a particular level of experience is less than the

minimum monthly salary for that level of experience in the

preceding year, the minimum monthly salary is the minimum monthly

salary for the preceding year.

SECTION 9.04. Section 29.1532, Education Code, is amended

by amending Subsection (a) and adding Subsections (d) and (e) to

read as follows:

(a) A school district's prekindergarten program shall be

designed to develop skills necessary for success in the regular

public school curriculum, including language, mathematics, [~~and~~]

social, and school readiness skills that are aligned with the Texas

Prekindergarten Guidelines approved by the commissioner.

(d) A school district's prekindergarten program must

demonstrate effectiveness in preparing children for kindergarten

according to a school readiness certification system established by

the commissioner. The commissioner may waive participation in the

certification system for a school district whose prekindergarten

program otherwise demonstrates effectiveness in preparing students

for kindergarten.

(e) The commissioner may adopt rules as necessary to

implement this section.

SECTION 9.05. Section 29.154, Education Code, is amended to

read as follows:

Sec. 29.154. EVALUATION OF PREKINDERGARTEN PROGRAMS.

(a) The commissioner [~~of education, in consultation with the~~

~~commissioner of human services,~~] shall:

(1) monitor and evaluate prekindergarten programs as

to their developmental appropriateness and the development of

school readiness, as aligned with the Texas Prekindergarten

Guidelines approved by the commissioner and a school readiness

certification system established by the commissioner;

(2) [~~. The commissioners shall also~~] evaluate the

potential for coordination on a statewide basis of prekindergarten

programs with government-funded early childhood care and education

programs such as child care administered under Chapter 44, Human

Resources Code, and federal Head Start programs; and

(3) [~~. That evaluation shall use recommendations~~

~~contained in the report to the 71st Legislature required by Chapter~~

~~717, Acts of the 70th Legislature, Regular Session, 1987. For the~~

~~purpose of providing cost-effective care for children during the~~

~~full workday with developmentally appropriate curriculum, the~~

~~commissioners shall investigate the use of existing child-care~~

~~program sites as prekindergarten sites. Following the evaluation~~

~~required by this section, the commissioners,~~] in cooperation with

school districts and other program administrators, [~~shall~~]

integrate programs, staff, and program sites for prekindergarten,

child-care, and federal Head Start programs to the greatest extent

possible.

(b) The commissioner or an entity acting under a contract

with the commissioner shall provide technical assistance to

implement proven school readiness components to a school district

operating a prekindergarten program under this subchapter that is

not certified by the commissioner following two consecutive review

cycles. The commissioner is not required to provide assistance to a

school district under this subsection if funding is not available.

implement this section.

SECTION 9.06. Subsection (a), Section 41.002, Education

Code, is amended to read as follows:

(a) A school district may not have a wealth per student that

exceeds:

(1) the wealth per student that generates the amount

of maintenance and operations tax revenue per weighted student

available to a district with maintenance and operations tax revenue

per cent of tax effort equal to the maximum amount provided per cent

under Section 42.101(a) [~~42.101~~], for the district's maintenance

and operations tax effort equal to or less than the rate equal to

the product of the state compression percentage, as determined

under Section 42.2516, multiplied by the maintenance and operations

tax rate adopted by the district for the 2005 tax year;

(2) the wealth per student that generates the amount

of maintenance and operations tax revenue per weighted student

available to the Austin Independent School District, as determined

by the commissioner in cooperation with the Legislative Budget

Board, for the first six cents by which the district's maintenance

and operations tax rate exceeds the rate equal to the product of the

state compression percentage, as determined under Section 42.2516,

multiplied by the maintenance and operations tax rate adopted by

the district for the 2005 tax year, subject to Section 41.093(b-1);

(3) $319,500, for the district's maintenance and

operations tax effort that exceeds the first six cents by which the

district's maintenance and operations tax effort exceeds the rate

equal to the product of the state compression percentage, as

determined under Section 42.2516, multiplied by the maintenance and

operations tax rate adopted by the district for the 2005 tax year.

SECTION 9.07. Section 42.003, Education Code, is amended by

amending Subsection (b) and adding Subsection (b-1) to read as

follows:

(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

that participates in a school readiness certification system

established by the commissioner or that has received a waiver from

participation under Section 29.1532(d).

(b-1) For the 2012-2013 school year, the commissioner may

withhold from a school district an amount of the funds appropriated

to the district for allotments for prekindergarten students

enrolled in a classroom that participates in a school readiness

certification system established by the commissioner to pay the

costs of the district's participation in the school readiness

certification system. The commissioner may also withhold an amount

of revenue to which a school district is otherwise entitled under

Section 42.2516 to ensure that each school district in this state

pays a comparable amount of the costs of participation in the

system. This subsection expires September 1, 2013.

SECTION 9.08. The heading to Section 42.101, Education

Code, is amended to read as follows:

Sec. 42.101. BASIC AND REGULAR PROGRAM ALLOTMENTS

[~~ALLOTMENT~~].

SECTION 9.09. Effective September 1, 2011, Section 42.101,

Education Code, is amended by amending Subsections (a) and (b) and

adding Subsections (c) and (c-1) to read as follows:

(a) The basic [~~For each student in average daily attendance,~~

~~not including the time students spend each day in special education~~

~~programs in an instructional arrangement other than mainstream or~~

~~career and technology education programs, for which an additional~~

~~allotment is made under Subchapter C, a district is entitled to an~~]

allotment is an amount equal to the lesser of $4,765 or the amount

that results from the following formula:

A = $4,765 X (DCR/MCR)

where:

"A" is the resulting amount for [~~allotment to which~~] a

district [~~is entitled~~];

"DCR" is the district's compressed tax rate, which is the

product of the state compression percentage, as determined under

Section 42.2516, multiplied by the maintenance and operations tax

rate adopted by the district for the 2005 tax year; and

"MCR" is the state maximum compressed tax rate, which is the

product of the state compression percentage, as determined under

Section 42.2516, multiplied by $1.50.

(b) A greater amount for any school year for the basic

allotment under Subsection (a) may be provided by appropriation.

allotment equal to the amount that results from the following

formula:

RPA = ADA X AA X RPAF

where:

"RPA" is the regular program allotment to which the district

is entitled;

"ADA" is the number of students in average daily attendance

in a district, not including the time students spend each day in

special education programs in an instructional arrangement other

than mainstream or career and technology education programs, for

which an additional allotment is made under Subchapter C;

"AA" is the district's adjusted basic allotment, as

determined under Section 42.102 and, if applicable, as further

adjusted under Section 42.103; and

"RPAF" is the regular program adjustment factor, which is

1.00 or a different amount established by appropriation.

(c-1) Notwithstanding Subsection (c), the regular program

adjustment factor ("RPAF") is 0.98 for the 2011-2012 and 2012-2013

school years. This subsection expires September 1, 2013.

SECTION 9.10. Effective September 1, 2015, Subsection (a),

Section 42.101, Education Code, is amended to read as follows:

(a) The basic [~~For each student in average daily attendance,~~

~~not including the time students spend each day in special education~~

~~programs in an instructional arrangement other than mainstream or~~

~~career and technology education programs, for which an additional~~

~~allotment is made under Subchapter C, a district is entitled to an~~]

allotment is an amount equal to the lesser of $4,900 [~~$4,765~~] or the

amount that results from the following formula:

A = $4,900 [~~$4,765~~] X (DCR/MCR)

where:

"A" is the resulting amount for [~~allotment to which~~] a

district [~~is entitled~~];

"DCR" is the district's compressed tax rate, which is the

product of the state compression percentage, as determined under

Section 42.2516, multiplied by the maintenance and operations tax

rate adopted by the district for the 2005 tax year; and

"MCR" is the state maximum compressed tax rate, which is the

product of the state compression percentage, as determined under

Section 42.2516, multiplied by $1.50.

SECTION 9.11. Effective September 1, 2016, Subsection (a),

Section 42.101, Education Code, is amended to read as follows:

(a) The basic [~~For each student in average daily attendance,~~

~~not including the time students spend each day in special education~~

~~programs in an instructional arrangement other than mainstream or~~

~~career and technology education programs, for which an additional~~

~~allotment is made under Subchapter C, a district is entitled to an~~]

allotment is an amount equal to the lesser of $5,000 [~~$4,765~~] or the

amount that results from the following formula:

A = $5,000 [~~$4,765~~] X (DCR/MCR)

where:

"A" is the resulting amount for [~~allotment to which~~] a

district [~~is entitled~~];

"DCR" is the district's compressed tax rate, which is the

product of the state compression percentage, as determined under

Section 42.2516, multiplied by the maintenance and operations tax

rate adopted by the district for the 2005 tax year; and

"MCR" is the state maximum compressed tax rate, which is the

product of the state compression percentage, as determined under

Section 42.2516, multiplied by $1.50.

SECTION 9.12. Section 42.105, Education Code, is amended to

read as follows:

Sec. 42.105. SPARSITY ADJUSTMENT. Notwithstanding

Sections 42.101, 42.102, and 42.103, a school district that has

fewer than 130 students in average daily attendance shall be

provided a regular program [~~an adjusted basic~~] allotment on the

basis of 130 students in average daily attendance if it 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. A

district offering a kindergarten through grade 8 program whose

preceding or current year's average daily attendance was at least

50 students or which is 30 miles or more by bus route from the

nearest high school district shall be provided a regular program

[~~an adjusted basic~~] allotment on the basis of 75 students in average

daily attendance. An average daily attendance of 60 students shall

be the basis of providing the regular program [~~adjusted basic~~]

allotment if a district offers a kindergarten through grade 6

program and has preceding or current year's average daily

attendance of at least 40 students or is 30 miles or more by bus

route from the nearest high school district.

SECTION 9.13. Subsection (a), Section 42.251, Education

Code, is amended to read as follows:

(a) The sum of the regular program [~~basic~~] allotment under

Subchapter B and the special allotments under Subchapter C,

computed in accordance with this chapter, constitute the tier one

allotments. The sum of the tier one allotments and the guaranteed

yield allotments under Subchapter F, computed in accordance with

this chapter, constitute the total cost of the Foundation School

Program.

SECTION 9.14. Subchapter E, Chapter 42, Education Code, is

amended by adding Section 42.2514 to read as follows:

Sec. 42.2514. ADDITIONAL STATE AID FOR TAX INCREMENT

FINANCING PAYMENTS. 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 the district is required to pay into the tax increment

fund for a reinvestment zone under Section 311.013(n), Tax Code.

SECTION 9.15. Effective September 1, 2011, Section 42.2516,

Education Code, is amended by amending Subsections (b), (d), and

(f-2) and adding Subsection (i) to read as follows:

(b) Notwithstanding any other provision of this title, a

school district that imposes a maintenance and operations tax at a

rate at least equal to the product of the state compression

percentage multiplied by the maintenance and operations tax rate

adopted by the district for the 2005 tax year is entitled to at

least the amount of state revenue necessary to provide the district

with the sum of:

(1) the percentage specified by Subsection (i) of the

amount, as calculated under Subsection (e), [~~the amount~~] of state

and local revenue per student in weighted average daily attendance

for maintenance and operations that the district would have

received during the 2009-2010 school year under Chapter 41 and this

chapter, as those chapters existed on January 1, 2009, at a

maintenance and operations tax rate equal to the product of the

state compression percentage for that year multiplied by the

maintenance and operations tax rate adopted by the district for the

2005 tax year;

(2) the percentage specified by Subsection (i) of an

amount equal to the product of $120 multiplied by the number of

students in weighted average daily attendance in the district; and

(3) [~~an amount equal to the amount the district is~~

~~required to pay into the tax increment fund for a reinvestment zone~~

~~under Section 311.013(n), Tax Code, in the current tax year; and~~

[~~(4)~~] any amount to which the district is entitled

under Section 42.106.

(d) In determining the amount to which a district is

entitled under Subsection (b)(1), the commissioner shall:

(1) include the percentage specified by Subsection (i)

of any amounts received by the district during the 2008-2009 school

year under Rider 86, page III-23, Chapter 1428 (H.B. 1), Acts of the

80th Legislature, Regular Session, 2007 (the General

Appropriations Act); and

(2) for a school district that paid tuition under

Section 25.039 during the 2008-2009 school year, reduce the amount

to which the district is entitled by the amount of tuition paid

during that school year.

(f-2) The rules adopted by the commissioner under

Subsection (f-1) must:

(1) require the commissioner to determine, as if this

section did not exist, the effect under Chapter 41 and this chapter

of a school district's action described by Subsection (f-1)(1),

(2), (3), or (4) on the total state revenue to which the district

would be entitled or the cost to the district of purchasing

sufficient attendance credits to reduce the district's wealth per

student to the equalized wealth level; and

(2) require an increase or reduction in the amount of

state revenue to which a school district is entitled under

Subsection (b)(1) [~~(b)~~] that is substantially equivalent to any

change in total state revenue or the cost of purchasing attendance

credits that would apply to the district if this section did not

exist.

(i) The percentage to be applied for purposes of Subsections

(b)(1) and (2) and Subsection (d)(1) is 93.50 percent for the

2011-2012 school year and 92.35 percent for each subsequent school

year. A different percentage for any school year may be established

by appropriation.

SECTION 9.16. Effective September 1, 2016, the heading to

Section 42.2516, Education Code, is amended to read as follows:

Sec. 42.2516. STATE COMPRESSION PERCENTAGE [~~ADDITIONAL~~

~~STATE AID FOR TAX REDUCTION~~].

SECTION 9.17. Effective September 1, 2016, Subsection (a),

Section 42.2516, Education Code, is amended to read as follows:

(a) In this title [~~section~~], "state compression percentage"

means the percentage[~~, as determined by the commissioner,~~] of a

school district's adopted maintenance and operations tax rate for

the 2005 tax year that serves as the basis for state funding [~~for~~

~~tax rate reduction under this section~~]. If the state compression

percentage is not established by appropriation for a school year,

the [~~The~~] commissioner shall determine the state compression

percentage for each school year based on the percentage by which a

district is able to reduce the district's maintenance and

operations tax rate for that year, as compared to the district's

adopted maintenance and operations tax rate for the 2005 tax year,

as a result of state funds appropriated for [~~distribution under~~

~~this section for~~] that year from the property tax relief fund

established under Section 403.109, Government Code, or from another

funding source available for school district property tax relief.

SECTION 9.18. Effective September 1, 2011, Subsection (a),

Section 42.25161, Education Code, is amended to read as follows:

(a) The commissioner shall provide South Texas Independent

School District with the amount of state aid necessary to ensure

that the district receives an amount of state and local revenue per

student in weighted average daily attendance that is at least the

percentage specified by Section 42.2516(i) of $120 greater than the

amount the district would have received per student in weighted

average daily attendance during the 2009-2010 school year under

this chapter, as it existed on January 1, 2009, at a maintenance and

operations tax rate equal to the product of the state compression

percentage multiplied by the maintenance and operations tax rate

adopted by the district for the 2005 tax year, provided that the

district imposes a maintenance and operations tax at that rate.

SECTION 9.19. Subchapter E, Chapter 42, Education Code, is

amended by adding Section 42.2525 to read as follows:

Sec. 42.2525. ADJUSTMENTS FOR CERTAIN DEPARTMENT OF DEFENSE

DISTRICTS. The commissioner is granted the authority to ensure

that Department of Defense school districts do not receive more

than an eight percent reduction should the federal government

reduce appropriations.

SECTION 9.20. Effective September 1, 2011, Subsection (h),

Section 42.253, Education Code, is amended to read as follows:

(h) If the amount appropriated for the Foundation School

Program for the second year of a state fiscal biennium is less than

the amount to which school districts are entitled for that year, the

commissioner shall certify the amount of the difference to the

Legislative Budget Board not later than January 1 of the second year

of the state fiscal biennium. The Legislative Budget Board shall

propose to the legislature that the certified amount be transferred

to the foundation school fund from the economic stabilization fund

and appropriated for the purpose of increases in allocations under

this subsection. If the legislature fails during the regular

session to enact the proposed transfer and appropriation and there

are not funds available under Subsection (j), the commissioner

shall adjust [~~reduce~~] the total amounts due to each school district

under this chapter and the total amounts necessary for each school

district to comply with the requirements of Chapter 41 [~~amount of~~

~~state funds allocated to each district~~] by an amount determined by

applying to each district, including a district receiving funds

under Section 42.2516, the same percentage adjustment so that the

total amount of the adjustment to all districts [~~a method under~~

~~which the application of the same number of cents of increase in tax~~

~~rate in all districts applied to the taxable value of property of~~

~~each district, as determined under Subchapter M, Chapter 403,~~

~~Government Code,~~] results in an amount [~~a total levy~~] equal to the

total adjustment necessary [~~reduction~~]. The following fiscal year:

(1) [,] a district's entitlement under this section is

increased by an amount equal to the adjustment [~~reduction~~] made

under this subsection; and

(2) the amount necessary for a district to comply with

the requirements of Chapter 41 is reduced by an amount equal to the

adjustment made under this subsection.

SECTION 9.21. Effective September 1, 2016, Subsection (h),