83R7700 SMH/KKA-D

By: Duncan S.B. No. 1686

A BILL TO BE ENTITLED

AN ACT

relating to public school finance matters, including the imposition of a state ad valorem tax for elementary and secondary school purposes and a school district ad valorem enrichment tax.

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

ARTICLE 1. STATE AD VALOREM TAX

SECTION 1.01. Chapter 45, Education Code, is amended by adding Subchapter K to read as follows:

SUBCHAPTER K. STATE AD VALOREM TAX

Sec. 45.351. STATE AD VALOREM TAX. (a) As provided by Section 3-a, Article VII, Texas Constitution, a state ad valorem tax for elementary and secondary school purposes is imposed on all taxable property in this state.

(b) The tax is imposed at the rate of $1 per $100 of taxable value of property subject to the tax.

(b-1) This subsection applies only to the taxation by the state of property that has taxable situs in a school district that imposed a maintenance and operations ad valorem tax for the 2013 tax year at a rate less than $1 per $100 of taxable value of property subject to the tax. Notwithstanding Subsection (b), for the 2014 tax year the state ad valorem tax is imposed at the rate equal to the sum of the maintenance and operations ad valorem tax rate of the district for the 2013 tax year and 20 percent of the difference between the rate of $1 per $100 of taxable value and the maintenance and operations ad valorem tax rate of the district for the 2013 tax year. For each of the subsequent three tax years, the state ad valorem tax is imposed at the rate equal to the sum of the rate for the preceding tax year and 20 percent of the difference between the rate of $1 per $100 of taxable value and the maintenance and operations ad valorem tax rate of the district for the 2013 tax year. This subsection expires January 1, 2018.

(c) Except as otherwise provided by law, the state shall be treated, for purposes of the state ad valorem tax, as a taxing unit under Title 1, Tax Code.

Sec. 45.352. APPRAISAL OF PROPERTY. (a) Property subject to the state ad valorem tax shall be appraised by the appraisal district that appraises property for taxation by the school district in which the property has taxable situs under Chapter 21, Tax Code.

(b) Except as otherwise provided by that title, property subject to the state ad valorem tax shall be appraised in the manner provided by Title 1, Tax Code, for the appraisal of property that is subject to ad valorem taxation by a school district.

Sec. 45.353. TAX COLLECTION. (a) The assessor and collector for each school district shall assess and collect, as applicable, state ad valorem taxes imposed on property included on the appraisal roll for state taxation certified to the comptroller and to the assessor for that school district under Section 26.01, Tax Code, unless the governing body of the school district contracts with an official, taxing unit, or political subdivision of this state for the assessment or collection of the ad valorem taxes of the district, in which event the official, taxing unit, or political subdivision that assesses or collects taxes for the school district shall also assess or collect, as applicable, the state ad valorem taxes.

(b) Each assessor or collector of state ad valorem taxes is entitled to be reimbursed by the comptroller for the actual costs incurred by the assessor or collector in assessing or collecting state ad valorem taxes. However, an assessor or collector is not entitled to be reimbursed for any amount that is greater than the additional incremental costs incurred in assessing or collecting the state ad valorem taxes.

(c) The comptroller shall:

(1) prescribe methods of accounting for and remitting state ad valorem taxes;

(2) prescribe methods for establishing an assessor's or collector's additional incremental costs incurred in assessing or collecting state ad valorem taxes;

(3) prescribe and furnish forms for periodic reports relating to state ad valorem taxes; and

(4) periodically examine the records of each assessor or collector of state ad valorem taxes to verify the accuracy of any reports required under this subsection.

(d) The comptroller may require an assessor or collector of state ad valorem taxes to give a bond to the state, conditioned on the faithful performance of the person's duties as assessor or collector, in the amount the comptroller considers appropriate to protect the state from potential losses with regard to assessment or collection of state ad valorem taxes.

Sec. 45.354. DUTIES AND POWERS OF COMPTROLLER. (a) Except as otherwise provided by this subchapter, a duty imposed on or power granted to the governing body of a taxing unit by Title 1, Tax Code, may, for purposes of the state ad valorem tax, be exercised by the comptroller. A reference to the presiding officer of a governing body in Title 1, Tax Code, is a reference to the comptroller for the purposes of the state ad valorem tax.

(b) The comptroller may delegate to the assessor or collector for a school district any function of the comptroller with respect to the assessment or collection of the state ad valorem tax and may designate a school district assessor or collector as the comptroller's agent for purposes of administration of assessment or collection of the state ad valorem tax.

Sec. 45.355. ADMINISTRATION AND REFUND ACCOUNTS. The comptroller shall deposit to the credit of the general revenue fund in appropriately designated accounts an amount of revenue collected from the state ad valorem tax to pay for the expenses of administering this subchapter and for the payment of tax refunds that may become payable.

Sec. 45.356. NONAPPLICABILITY OF CERTAIN OTHER TAX LAWS. Title 2, Tax Code, does not apply to the state ad valorem tax.

Sec. 45.357. TAX INCREMENT FINANCING. Except as otherwise provided by Section 311.0131, Tax Code, the state may not pay any portion of the tax increment produced by the state into the tax increment fund for a reinvestment zone designated under Chapter 311, Tax Code.

Sec. 45.358. TAX ABATEMENT. (a) Except as otherwise provided by this section, the state may not participate in tax abatement under Section 311.0125 or 311.013(g) or Chapter 312, Tax Code.

(b) If school district property taxes on property located in the taxing jurisdiction of a school district are abated under a tax abatement agreement entered into by the school district under Chapter 312, Tax Code, the terms of the agreement regarding the portion of the value of the property that is to be exempted from taxation in each year of the agreement apply to the taxation of the property by the state. A modification of the agreement by the parties to the agreement under Section 312.208, Tax Code, that increases the portion of the value of the property that is to be exempted from taxation or that extends the duration of the agreement does not apply to the imposition of the state ad valorem tax unless the modification was entered into before January 1, 2013.

SECTION 1.02. Subchapter A, Chapter 6, Tax Code, is amended by adding Section 6.038 to read as follows:

Sec. 6.038. STATE PARTICIPATION. (a) The comptroller and the state do not participate in the election of the board of directors of an appraisal district, the governance or management of the district, or the determination of the district's finances and budget.

(b) The comptroller by rule shall establish guidelines and criteria under which, if the comptroller finds that generally accepted appraisal standards and practices were not used by the appraisal district appraising property subject to the state ad valorem tax or that the appraised values assigned to property subject to that tax are invalid, the comptroller may:

(1) withhold payment of all or part of the portion of the amount of the budget of the appraisal district that is allocated to the state until the district takes appropriate actions to remedy the deficiencies in appraisals found by the comptroller; or

(2) direct that all or any part of the portion of the amount of the budget of the district allocated to the state be applied to remedying those deficiencies.

SECTION 1.03. Section 6.06(d), Tax Code, is amended to read as follows:

(d) The state and each [Each] taxing unit participating in the district are each [is] allocated a portion of the amount of the budget equal to the proportion that the total dollar amount of property taxes imposed in the district by the state or taxing unit for the tax year in which the budget proposal is prepared bears to the sum of the total dollar amount of property taxes imposed in the district by the state and each participating unit for that year. For purposes of this subsection, only state ad valorem taxes imposed in a school district or portion of a school district for which the appraisal district appraises property for taxation are considered as state ad valorem taxes imposed in the district. If a taxing unit participates in two or more districts, only the taxes imposed in a district are used to calculate the unit's cost allocations in that district. If the number of real property parcels in a taxing unit is less than 5 percent of the total number of real property parcels in the district and the taxing unit imposes in excess of 25 percent of the total amount of the property taxes imposed in the district by all of the participating taxing units for a year, the unit's allocation may not exceed a percentage of the appraisal district's budget equal to three times the unit's percentage of the total number of real property parcels appraised by the district.

SECTION 1.04. Sections 11.13(b) and (c), Tax Code, are amended to read as follows:

(b) An adult is entitled to exemption from taxation by the state for elementary and secondary public school purposes or by a school district of $15,000 of the appraised value of the adult's residence homestead, except that $10,000 of the exemption does not apply to an entity operating under former Chapter 17, 18, 25, 26, 27, or 28, Education Code, as those chapters existed on May 1, 1995, as permitted by Section 11.301, Education Code.

(c) In addition to the exemption provided by Subsection (b) [of this section], an adult who is disabled or is 65 years of age or older is entitled to an exemption from taxation by the state for elementary and secondary public school purposes or by a school district of $10,000 of the appraised value of the adult's [his] residence homestead.

SECTION 1.05. Section 11.14, Tax Code, is amended by adding Subsection (f) to read as follows:

(f) Subsection (c) does not apply to the comptroller or to the state ad valorem tax.

SECTION 1.06. The heading to Section 11.26, Tax Code, is amended to read as follows:

Sec. 11.26. LIMITATION OF SCHOOL TAXES [TAX] ON HOMESTEADS OF INDIVIDUALS WHO ARE ELDERLY OR DISABLED.

SECTION 1.07. Section 11.26, Tax Code, is amended by amending Subsections (a), (a-1), (b), (g), (h), (j), (k), and (o) and adding Subsection (g-1) to read as follows:

(a) The tax officials shall appraise the property to which this section applies and calculate taxes as on other property, but if the tax so calculated exceeds the limitation imposed by this section, the tax imposed is the amount of the tax as limited by this section, except as otherwise provided by this section. The state or a [A] school district may not increase the total annual amount of ad valorem tax it imposes on the residence homestead of an individual 65 years of age or older or on the residence homestead of an individual who is disabled, as defined by Section 11.13, above the amount of the tax it imposed in the first tax year in which the individual qualified that residence homestead for the applicable exemption provided by Section 11.13(c) for an individual who is 65 years of age or older or is disabled. If the individual qualified that residence homestead for the exemption after the beginning of that first year and the residence homestead remains eligible for the same exemption for the next year, and if the state or school district taxes imposed on the residence homestead in the next year are less than the amount of taxes the state or school district, as applicable, imposed in that first year, the state or [a] school district may not subsequently increase the total annual amount of ad valorem taxes it imposes on the residence homestead above the amount it imposed in the year immediately following the first year for which the individual qualified that residence homestead for the same exemption, except as provided by Subsection (b). [If the first tax year the individual qualified the residence homestead for the exemption provided by Section 11.13(c) for individuals 65 years of age or older was a tax year before the 1997 tax year, the amount of the limitation provided by this section is the amount of tax the school district imposed for the 1996 tax year less an amount equal to the amount determined by multiplying $10,000 times the tax rate of the school district for the 1997 tax year, plus any 1997 tax attributable to improvements made in 1996, other than improvements made to comply with governmental regulations or repairs.]

(a-1) If the first tax year the individual qualified the residence homestead for the exemption provided by Section 11.13(c) for individuals who are disabled or are 65 years of age or older was a tax year before the 2014 tax year, except as provided by Subsection (b):

(1) the amount of the limitation provided by this section on state taxes is the amount of tax the school district in which the property is located imposed for the 2013 tax year plus any 2014 state taxes attributable to improvements made in 2013, other than improvements made to comply with governmental regulations or repairs; and

(2) the amount of the limitation provided by this section on school district taxes is the amount of tax the school district imposed for the 2013 tax year less the amount of state taxes imposed in the 2014 tax year, plus any 2014 school taxes attributable to improvements made in 2013, other than improvements made to comply with governmental regulations or repairs. [Notwithstanding the other provisions of this section, if in the 2007 tax year an individual qualifies for a limitation on tax increases provided by this section on the individual's residence homestead and the first tax year the individual or the individual's spouse qualified for an exemption under Section 11.13(c) for the same homestead was the 2006 tax year, the amount of the limitation provided by this section on the homestead in the 2007 tax year is equal to the amount computed by:

[(1) multiplying the amount of tax the school district imposed on the homestead in the 2006 tax year by a fraction the numerator of which is the tax rate of the district for the 2007 tax year and the denominator of which is the tax rate of the district for the 2006 tax year; and

[(2) adding any tax imposed in the 2007 tax year attributable to improvements made in the 2006 tax year as provided by Subsection (b) to the lesser of the amount computed under Subdivision (1) or the amount of tax the district imposed on the homestead in the 2006 tax year.]

(b) If an individual makes improvements to the individual's residence homestead, other than improvements required to comply with governmental requirements or repairs, the state or the school district may increase the tax on the homestead in the first year the value of the homestead is increased on the appraisal roll because of the enhancement of value by the improvements. The amount of the tax increase is determined by applying the current tax rate to the difference in the assessed value of the homestead with the improvements and the assessed value it would have had without the improvements. A limitation imposed by this section then applies to the increased amount of tax until more improvements, if any, are made.

(g) Except as provided by Subsection (b), if an individual who receives a limitation on tax increases imposed by this section, including a surviving spouse who receives a limitation under Subsection (i), subsequently qualifies a different residence homestead for the same exemption under Section 11.13, the state or a school district may not impose ad valorem taxes on the subsequently qualified homestead in a year in an amount that exceeds the amount of taxes the state or the school district would have imposed on the subsequently qualified homestead in the first year in which the individual receives that same exemption for the subsequently qualified homestead had the limitation on tax increases imposed by this section not been in effect, multiplied by a fraction the numerator of which is the total amount of [school district] taxes imposed by the state or the school district, as applicable, on the former homestead in the last year in which the individual received that same exemption for the former homestead and the denominator of which is the total amount of taxes the state or the school district, as applicable, [taxes that] would have [been] imposed on the former homestead in the last year in which the individual received that same exemption for the former homestead had the limitation on tax increases imposed by this section not been in effect.

(g-1) Subsection (g) does not apply to a residence homestead to which this subsection applies. Except as provided by Subsection (b), if an individual who receives a limitation on tax increases imposed by this section in a tax year before the 2014 tax year, including a surviving spouse who receives a limitation under Subsection (i), subsequently qualifies a different residence homestead for an exemption under Section 11.13(c) and the first year in which the subsequently qualified homestead qualifies for the exemption is a tax year after the 2013 tax year:

(1) the state may not impose taxes on the subsequently qualified homestead in an amount that exceeds the amount of taxes the state would have imposed on the subsequently qualified homestead in the first year in which the individual receives that exemption for the subsequently qualified homestead had the limitation on tax increases imposed by this section not been in effect, multiplied by a fraction the numerator of which is the total amount of school district taxes imposed on the former homestead in the last year in which the individual received that exemption for the former homestead and the denominator of which is the total amount of school district taxes that would have been imposed on the former homestead in the last year in which the individual received that exemption for the former homestead had the limitations on tax increases imposed by this section not been in effect; and

(2) the school district may not impose taxes on the subsequently qualified homestead in an amount that exceeds the positive amount, if any, by which the limitation on state taxes calculated under Subdivision (1) exceeds the amount of state taxes imposed in the first year in which the subsequently qualified homestead receives the exemption.

(h) An individual who receives a limitation on tax increases under this section, including a surviving spouse who receives a limitation under Subsection (i), and who subsequently qualifies a different residence homestead for an exemption under Section 11.13(c) [11.13], or an agent of the individual, is entitled to receive from the chief appraiser of the appraisal district in which the former homestead was located a written certificate providing the information necessary to determine whether the individual may qualify for that same limitation on the subsequently qualified homestead under Subsection (g) or (g-1) and to calculate the amount of taxes the state and the school district may impose on the subsequently qualified homestead.

(j) If an individual who qualifies for an exemption provided by Section 11.13(c) for an individual 65 years of age or older dies in the first year in which the individual qualified for the exemption and the individual first qualified for the exemption after the beginning of that year, except as provided by Subsection (k), the amount to which the surviving spouse's state or school district taxes are limited under Subsection (i) is the amount of state or school district taxes, as applicable, imposed on the residence homestead in that year determined as if the individual qualifying for the exemption had lived for the entire year.

(k) If in the first tax year after the year in which an individual dies in the circumstances described by Subsection (j) the amount of [school district] taxes imposed by the state or the school district on the residence homestead of the surviving spouse is less than the amount of state or school district taxes, as applicable, imposed in the preceding year as limited by Subsection (j), in a subsequent tax year the surviving spouse's state or school district taxes on that residence homestead are limited to the amount of taxes imposed by the state or the school district, as applicable, in that first tax year after the year in which the individual dies.

(o) Notwithstanding Subsections (a)[, (a-3),] and (b), an improvement to property that would otherwise constitute an improvement under Subsection (b) is not treated as an improvement under that subsection if the improvement is a replacement structure for a structure that was rendered uninhabitable or unusable by a casualty or by wind or water damage. For purposes of appraising the property in the tax year in which the structure would have constituted an improvement under Subsection (b), the replacement structure is considered to be an improvement under that subsection only if:

(1) the square footage of the replacement structure exceeds that of the replaced structure as that structure existed before the casualty or damage occurred; or

(2) the exterior of the replacement structure is of higher quality construction and composition than that of the replaced structure.

SECTION 1.08. Section 21.03(a), Tax Code, is amended to read as follows:

(a) If personal property that is taxable by this state or a taxing unit of this state is used continually outside this state, whether regularly or irregularly, the appraisal office shall allocate to this state the portion of the total market value of the property that fairly reflects its use in this state.

SECTION 1.09. Section 21.031(a), Tax Code, is amended to read as follows:

(a) If a vessel or other watercraft that is taxable by this state or a taxing unit of this state is used continually outside this state, whether regularly or irregularly, the appraisal office shall allocate to this state the portion of the total market value of the vessel or watercraft that fairly reflects its use in this state. The appraisal office shall not allocate to this state the portion of the total market value of the vessel or watercraft that fairly reflects its use in another state or country, in international waters, or beyond the Gulfward boundary of this state.

SECTION 1.10. Sections 22.28(a) and (b), Tax Code, are amended to read as follows:

(a) Except as otherwise provided by Section 22.30, the chief appraiser shall impose a penalty on a person who fails to timely file a rendition statement or property report required by this chapter in an amount equal to 10 percent of the total amount of taxes imposed on the property for that year by the state, if the property has taxable situs in a school district or portion of a school district for which the appraisal district appraises property for taxation, and by the other taxing units participating in the appraisal district. The chief appraiser shall deliver by first class mail a notice of the imposition of the penalty to the person. The notice may be delivered with a notice of appraised value provided under Section 25.19, if practicable.

(b) The chief appraiser shall certify to the assessor for the state and each other taxing unit participating in the appraisal district that imposes taxes on the property that a penalty imposed under this chapter has become final. The assessor shall add the amount of the penalty to the original amount of tax imposed on the property and shall include that amount in the tax bill for that year. The penalty becomes part of the tax on the property and is secured by the tax lien that attaches to the property under Section 32.01.

SECTION 1.11. Sections 22.29(a) and (d), Tax Code, are amended to read as follows:

(a) The chief appraiser shall impose an additional penalty on the person equal to 50 percent of the total amount of taxes imposed on the property for the tax year of the statement or report by the state, if the property has taxable situs in a school district or portion of a school district for which the appraisal district appraises property for taxation, and by the other taxing units participating in the appraisal district if it is finally determined by a court that:

(1) the person filed a false statement or report with the intent to commit fraud or to evade the tax; or

(2) the person alters, destroys, or conceals any record, document, or thing, or presents to the chief appraiser any altered or fraudulent record, document, or thing, or otherwise engages in fraudulent conduct, for the purpose of affecting the course or outcome of an inspection, investigation, determination, or other proceeding before the appraisal district.

(d) The chief appraiser may retain a portion of a penalty collected under this section, not to exceed 20 percent of the amount of the penalty, to cover the chief appraiser's costs of collecting the penalty. The chief appraiser shall distribute the remainder of the penalty to the state and each other taxing unit participating in the appraisal district that imposes taxes on the property in proportion to the state's or the taxing unit's share of the total amount of taxes imposed on the property by the state and all other taxing units participating in the district used to determine the amount of the penalty.

SECTION 1.12. Section 23.23(a), Tax Code, is amended to read as follows:

(a) Notwithstanding the requirements of Section 25.18 and regardless of whether the appraisal office has appraised the property and determined the market value of the property for the tax year, an appraisal office may increase the appraised value of a residence homestead for a tax year to an amount not to exceed the lesser of:

(1) the market value of the property for the most recent tax year that the market value was determined by the appraisal office; or

(2) the sum of:

(A) for purposes of taxation by the state, five percent of the appraised value of the property for the preceding tax year, and for purposes of taxation by any other taxing unit, 10 percent of the appraised value of the property for the preceding tax year;

(B) the appraised value of the property for the preceding tax year for purposes of taxation by the applicable taxing unit; and

(C) the market value of all new improvements to the property.

SECTION 1.13. Section 23.46(d), Tax Code, is amended to read as follows:

(d) A tax lien attaches to the land on the date the sale or change of use occurs to secure payment of the additional tax and interest imposed by Subsection (c) [of this section] and any penalties incurred. The lien exists in favor of the state and all taxing units for which the additional tax is imposed.

SECTION 1.14. Sections 23.55(b) and (p), Tax Code, are amended to read as follows:

(b) A tax lien attaches to the land on the date the change of use occurs to secure payment of the additional tax and interest imposed by this section and any penalties incurred. The lien exists in favor of the state and all taxing units for which the additional tax is imposed.

(p) The sanctions provided by Subsection (a) do not apply to real property transferred to an organization described by Section 11.181(a) if the organization converts the real property to a use for which the real property is eligible for an exemption under Section 11.181(a). This subsection does not apply to the sanctions provided by Subsection (a) in connection with a change in use described by this subsection that are due to a county or school district or the state unless the governing body of the county or school district or the comptroller, as applicable, waives the sanctions in the manner required by law for official action by the body or comptroller.

SECTION 1.15. Section 23.76(b), Tax Code, is amended to read as follows:

(b) A tax lien attaches to the land on the date the change of use occurs to secure payment of the additional tax and interest imposed by this section and any penalties incurred. The lien exists in favor of the state and all taxing units for which the additional tax is imposed.

SECTION 1.16. Section 23.86(b), Tax Code, is amended to read as follows:

(b) A tax lien attaches to the land on the date the change of use occurs or the deed restriction expires to secure payment of the additional tax and interest imposed by this section and any penalties incurred. The lien exists in favor of the state and all taxing units for which the additional tax is imposed.

SECTION 1.17. Section 23.96(b), Tax Code, is amended to read as follows:

(b) A tax lien attaches to the property on the date the deed restriction expires to secure payment of the additional tax and interest imposed by this section and any penalties incurred. The lien exists in favor of the state and all taxing units for which the additional tax is imposed.

SECTION 1.18. Section 23.9807(c), Tax Code, is amended to read as follows:

(c) A tax lien attaches to the land on the date the change of use occurs to secure payment of the additional tax and interest imposed by this section and any penalties incurred. The lien exists in favor of the state and all taxing units for which the additional tax is imposed.

SECTION 1.19. Section 25.19(b), Tax Code, is amended to read as follows:

(b) The chief appraiser shall separate real from personal property and include in the notice for each:

(1) a list of the taxing units other than the state in which the property is taxable and, if the property is appraised by the appraisal district for state taxation, a statement that the property is subject to the state tax for elementary and secondary public school purposes;

(2) the appraised value of the property in the preceding year;

(3) the taxable value of the property in the preceding year for:

(A) each taxing unit taxing the property; and

(B) state taxation for elementary and secondary public school purposes, if the property is appraised by the appraisal district for state taxation;

(4) the appraised value of the property for the current year and the kind and amount of each partial exemption, if any, approved for the current year;

(5) if the appraised value is greater than it was in the preceding year, the amount of tax that would be imposed on the property on the basis of the tax rate for each taxing unit other than the state for the preceding year;

(6) in italic typeface, the following statement: "The Texas Legislature does not set the amount of your local taxes. Your local property tax burden is decided by your locally elected officials, and all inquiries concerning your local taxes should be directed to those officials";

(7) a detailed explanation of the time and procedure for protesting the value;

(8) the date and place the appraisal review board will begin hearing protests; and

(9) a brief explanation that the governing body of each local taxing unit decides whether [or not] taxes on the property will increase and the appraisal district only determines the value of the property.

SECTION 1.20. The heading to Section 26.01, Tax Code, is amended to read as follows:

Sec. 26.01. SUBMISSION OF ROLLS TO STATE AND TAXING UNITS.

SECTION 1.21. Sections 26.01(a), (c), and (d), Tax Code, are amended to read as follows:

(a) By July 25, the chief appraiser shall prepare and certify to the assessor for each taxing unit participating in the appraisal district that part of the appraisal roll for the appraisal district that lists the property taxable by the unit. By that date the chief appraiser shall prepare and certify to the comptroller and to the assessor for each school district that participates in the appraisal district that part of the appraisal roll for the appraisal district that lists property for which the appraisal district appraises the property for state taxation. The part certified to the comptroller and school district assessor is the appraisal roll for state taxes. The part certified to the assessor is the appraisal roll for the taxing unit. The chief appraiser shall consult with the assessor for each taxing unit and the comptroller and notify each taxing unit and the comptroller in writing by April 1 of the form in which the roll will be provided to each unit and to the comptroller.

(c) The chief appraiser shall prepare and certify to the assessor for each taxing unit and the comptroller a listing of those properties that [which] are taxable by that unit or the state, as applicable, but that [which] are under protest and therefore not included on the appraisal roll approved by the appraisal review board and certified by the chief appraiser. This listing shall include the appraised market value, productivity value (if applicable), and taxable value as determined by the appraisal district and shall also include the market value, taxable value, and productivity value (if applicable) as claimed by the property owner filing the protest if available. If the property owner does not claim a value and the appraised value of the property in the current year is equal to or less than its value in the preceding year, the listing shall include a reasonable estimate of the market value, taxable value, and productivity value (if applicable) that would be assigned to the property if the taxpayer's claim is upheld. If the property owner does not claim a value and the appraised value of the property is higher than its appraised value in the preceding year, the listing shall include the appraised market value, productivity value (if applicable) and taxable value of the property in the preceding year, except that if there is a reasonable likelihood that the appraisal review board will approve a lower appraised value for the property than its appraised value in the preceding year, the chief appraiser shall make a reasonable estimate of the taxable value that would be assigned to the property if the property owner's claim is upheld. The taxing unit shall use the lower value for calculations as prescribed in Sections 26.04 and 26.041 [of this code].

(d) The chief appraiser shall prepare and certify to the assessor for each taxing unit and the comptroller a list of those properties of which the chief appraiser has knowledge that are reasonably likely to be taxable by that unit or the state, as applicable, but that are not included on the appraisal roll certified to the assessor or the comptroller under Subsection (a) or included on the listing certified to the assessor or the comptroller under Subsection (c). The chief appraiser shall include on the list for each property the market value, appraised value, and kind and amount of any partial exemptions as determined by the appraisal district for the preceding year and a reasonable estimate of the market value, appraised value, and kind and amount of any partial exemptions for the current year. Until the property is added to the appraisal roll, the assessor for a [the] taxing unit shall include each property on the list in the calculations prescribed by Sections 26.04 and 26.041, and for that purpose shall use the lower market value, appraised value, or taxable value, as appropriate, included on or computed using the information included on the list for the property.

SECTION 1.22. Chapter 26, Tax Code, is amended by adding Section 26.011 to read as follows:

Sec. 26.011. PROVISIONS NOT APPLICABLE TO STATE TAX. Sections 26.04, 26.041, 26.05, 26.051, 26.06, 26.07, and 26.08 do not apply to the state ad valorem tax or to the comptroller.

SECTION 1.23. Section 26.09(c), Tax Code, is amended to read as follows:

(c) The tax is calculated by:

(1) subtracting from the appraised value of a property as shown on the appraisal roll for a taxing [the] unit or the state the amount of any partial exemption allowed the property owner that applies to appraised value to determine taxable [net appraised] value; and

(2) [multiplying the net appraised value by the assessment ratio to determine assessed value;

[(3) subtracting from the assessed value the amount of any partial exemption allowed the property owner to determine taxable value; and

[(4)] multiplying the taxable value by the applicable tax rate.

SECTION 1.24. Section 26.12, Tax Code, is amended by adding Subsection (e) to read as follows:

(e) For purposes of this section, the state is not a taxing unit.

SECTION 1.25. Section 26.15(c), Tax Code, is amended to read as follows:

(c) At any time, the governing body of a taxing unit, on motion of the assessor for the unit or of a property owner, shall direct by written order changes in the tax roll to correct errors in the mathematical computation of a tax. The assessor shall enter the corrections ordered by the governing body. The comptroller may order changes in the state tax roll to correct errors in the mathematical computation of the state ad valorem tax.

SECTION 1.26. Section 31.11(a), Tax Code, is amended to read as follows:

(a) If a taxpayer applies to the tax collector of a taxing unit for a refund of an overpayment or erroneous payment of taxes, the collector for the unit determines that the payment was erroneous or excessive, and the auditor for the unit or the comptroller in the case of the state ad valorem tax agrees with the collector's determination, the collector or, for state taxes, the comptroller shall refund the amount of the excessive or erroneous payment from available current tax collections or from funds appropriated by the unit or the state, as appropriate, for making refunds. For taxes other than state taxes [However], the collector may not make the refund unless:

(1) in the case of a collector who collects taxes for one taxing unit, the governing body of the taxing unit also determines that the payment was erroneous or excessive and approves the refund if the amount of the refund exceeds:

(A) $5,000 for a refund to be paid by a county with a population of two million or more; or

(B) $500 for a refund to be paid by any other taxing unit; or

(2) in the case of a collector who collects taxes for more than one taxing unit, the governing body of the taxing unit that employs the collector also determines that the payment was erroneous or excessive and approves the refund if the amount of the refund exceeds:

(A) $5,000 for a refund to be paid by a county with a population of two million or more; or

(B) $2,500 for a refund to be paid by any other taxing unit.

SECTION 1.27. Sections 32.01(a) and (d), Tax Code, are amended to read as follows:

(a) On January 1 of each year, a tax lien attaches to property to secure the payment of all taxes, penalties, and interest ultimately imposed for the year by the state or a taxing unit on the property, whether or not the taxes are imposed in the year the lien attaches. The lien to secure the payment of state ad valorem taxes and applicable penalties and interest exists in favor of the state. The lien to secure the payment of taxes imposed by a taxing unit and applicable penalties and interest exists in favor of the [each] taxing unit having power to tax the property.

(d) The lien under this section is perfected on attachment and, except as provided by Section 32.03(b), perfection requires no further action by the state or taxing unit.

SECTION 1.28. Section 33.01(a), Tax Code, is amended to read as follows:

(a) A delinquent tax, including a delinquent state ad valorem tax, incurs a penalty of six percent of the amount of the tax for the first calendar month it is delinquent plus one percent for each additional month or portion of a month the tax remains unpaid prior to July 1 of the year in which it becomes delinquent. However, a tax delinquent on July 1 incurs a total penalty of twelve percent of the amount of the delinquent tax without regard to the number of months the tax has been delinquent. A delinquent tax continues to incur the penalty provided by this subsection as long as the tax remains unpaid, regardless of whether a judgment for the delinquent tax has been rendered.

SECTION 1.29. Subchapter A, Chapter 33, Tax Code, is amended by adding Section 33.12 to read as follows:

Sec. 33.12. COLLECTION OF DELINQUENT STATE AD VALOREM TAXES; PENALTY. (a) The collector for a school district has the same powers and duties regarding the collection of delinquent state ad valorem taxes imposed on property having taxable situs in the school district as the collector has regarding delinquent school district taxes on that property.

(b) The attorney who represents a school district to enforce the collection of delinquent school district taxes represents the state to enforce the collection of delinquent state ad valorem taxes imposed on property having taxable situs in the school district. If the governing body of a school district contracts with a private attorney to enforce the collection of delinquent school district ad valorem taxes, the contract applies to the collection of delinquent state ad valorem taxes on property taxable by that school district without further action. The compensation of the private attorney for collecting delinquent state ad valorem taxes is equal to a percentage of the amount collected that represents the portion of that amount attributable to the additional penalty provided by Subsection (c). If the governing body of a school district enters into a contract with an official, taxing unit, or political subdivision of this state for the collection of the ad valorem taxes of the school district that includes the collection of delinquent school district taxes, the contract applies to the collection of delinquent state ad valorem taxes on property taxable by that school district without further action.

(c) State ad valorem taxes that remain delinquent on July 1 of the year in which they become delinquent incur an additional penalty to defray costs of collection if the collection of the delinquent taxes is covered by a contract with a private attorney under Subsection (b). The amount of the penalty is the amount of the compensation specified in the contract.

(d) A tax lien attaches in favor of the state to the property on which the tax is imposed to secure payment of the penalty.

(e) The person responsible for collecting the delinquent state ad valorem tax shall deliver a notice of delinquency and of the penalty to the property owner at least 30 and not more than 60 days before July 1.

(f) Sections 6.30, 33.07, and 33.08 do not apply to the state ad valorem tax.

SECTION 1.30. Sections 33.21(a) and (b), Tax Code, are amended to read as follows:

(a) A person's personal property is subject to seizure for the payment of a delinquent tax, penalty, and interest the person [he] owes the state or a taxing unit on property.

(b) A person's personal property is subject to seizure for the payment of a tax imposed by the state or other [a] taxing unit on the person's property before the tax becomes delinquent if:

(1) the collector discovers that property on which the tax has been or will be imposed is about to be:

(A) removed from the county; or

(B) sold in a liquidation sale in connection with the cessation of a business; and

(2) the collector knows of no other personal property in the county from which the tax may be satisfied.

SECTION 1.31. Section 33.23(b), Tax Code, is amended to read as follows:

(b) A bond may not be required of the state or other [a] taxing unit for issuance or delivery of a tax warrant, and a fee or court cost may not be charged for issuance or delivery of a warrant.

SECTION 1.32. Section 33.44(b), Tax Code, is amended to read as follows:

(b) For purposes of joining a county, citation may be served on the county [tax] assessor-collector. For purposes of joining any other taxing unit, citation may be served on the officer charged with collecting taxes for the unit or on the presiding officer or secretary of the governing body of the unit. For purposes of joining the state, citation shall be served on the school district collector who collects state ad valorem taxes on the property. Citation may be served by certified mail, return receipt requested. A person on whom service is authorized by this subsection may waive the issuance and service of citation in behalf of the person's [his] taxing unit.

SECTION 1.33. Section 34.04(b), Tax Code, is amended to read as follows:

(b) A copy of the petition shall be served, in the manner prescribed by Rule 21a, Texas Rules of Civil Procedure, [as amended,] or that rule's successor, on all parties to the underlying action not later than the 20th day before the date set for a hearing on the petition. If the state is a party to the underlying action, the copy of the petition to be served on the state shall be served on the school district collector who collects state ad valorem taxes on the subject property. The attorney who represents the state to enforce the collection of delinquent state ad valorem taxes in the school district in which the property is located shall represent the state at the hearing.

SECTION 1.34. The heading to Chapter 41, Tax Code, is amended to read as follows:

CHAPTER 41. ADMINISTRATIVE [LOCAL] REVIEW

SECTION 1.35. Section 41.03, Tax Code, is amended to read as follows:

Sec. 41.03. CHALLENGE BY STATE OR TAXING UNIT. (a) The state or another [A] taxing unit is entitled to challenge before the appraisal review board:

(1) the level of appraisals of any category of property in the district or in any territory in the district, but not the appraised value of a single taxpayer's property;

(2) an exclusion of property from the appraisal records;

(3) a grant in whole or in part of a partial exemption;

(4) a determination that land qualifies for appraisal as provided by Subchapter C, D, E, or H, Chapter 23; or

(5) failure to identify the taxing unit as one in which a particular property is taxable.

(b) If the state or other [a] taxing unit challenges a determination that land qualifies for appraisal under Subchapter H, Chapter 23, on the ground that the land is not located in an aesthetic management zone, critical wildlife habitat zone, or streamside management zone, the state or other taxing unit must first seek a determination letter from the director of the Texas Forest Service. The appraisal review board shall accept the letter as conclusive proof of the type, size, and location of the zone.

SECTION 1.36. Subchapter A, Chapter 41, Tax Code, is amended by adding Sections 41.031 and 41.032 to read as follows:

Sec. 41.031. CHALLENGE BY STATE. The state is entitled to challenge before the appraisal review board the exclusion of property from the appraisal roll for state ad valorem taxes.

Sec. 41.032. REPRESENTATION OF STATE. The comptroller represents the state in a challenge by the state under this subchapter. The comptroller may delegate that function to the appropriate school district assessor or collector.

SECTION 1.37. Section 41.06(a), Tax Code, is amended to read as follows:

(a) The secretary of the appraisal review board shall deliver to the comptroller on behalf of the state and to the presiding officer of the governing body of each taxing unit other than the state entitled to appear at a challenge hearing written notice of the date, time, and place fixed for the hearing. The secretary shall deliver the notice not later than the 10th day before the date of the hearing.

SECTION 1.38. Section 41.07(d), Tax Code, is amended to read as follows:

(d) The board shall deliver by certified mail a notice of the issuance of the order and a copy of the order to the taxing unit. If the order of the board excludes property from the appraisal roll for state ad valorem taxes, the board shall also deliver a notice of issuance and a copy of the order to the comptroller and the appropriate school district assessor in the manner prescribed by the comptroller.

SECTION 1.39. Section 41.47(d), Tax Code, is amended to read as follows:

(d) The board shall deliver by certified mail a notice of issuance of the order and a copy of the order to the property owner and the chief appraiser. If the order of the board excludes property from the appraisal roll for state ad valorem taxes, the board shall also deliver a notice of issuance and a copy of the order to the comptroller and the appropriate school district assessor in the manner prescribed by the comptroller.

SECTION 1.40. Subchapter A, Chapter 42, Tax Code, is amended by adding Section 42.032 to read as follows:

Sec. 42.032. RIGHT OF APPEAL BY COMPTROLLER. (a) The comptroller is entitled to appeal an order of the appraisal review board excluding property from the appraisal roll for state ad valorem taxes.

(b) The attorney general shall represent the comptroller in an appeal under this section. The attorney general may delegate its duties under this section to a county or district attorney or may contract with a private attorney for the performance of those duties.

SECTION 1.41. Sections 42.06(a) and (c), Tax Code, are amended to read as follows:

(a) To exercise the party's right to appeal an order of an appraisal review board, a party other than a property owner must file written notice of appeal within 15 days after the date the party receives the notice required by Section 41.47 or, in the case of a taxing unit or the comptroller, by Section 41.07 that the order appealed has been issued. To exercise the right to appeal an order of the comptroller, a party other than a property owner must file written notice of appeal within 15 days after the date the party receives the comptroller's order. A property owner is not required to file a notice of appeal under this section.

(c) If the chief appraiser, a taxing unit, [or] a county, or the comptroller appeals[, the chief appraiser, if the appeal is of] an order of the appraisal review board, the chief appraiser [or the comptroller, if the appeal is of an order of the comptroller,] shall deliver a copy of the notice to the property owner whose property is involved in the appeal. If the appeal is of an order of the comptroller, the comptroller shall deliver a copy of the notice to the property owner. The chief appraiser or the comptroller shall deliver the copy of the notice within 10 days after the date the notice is filed.

SECTION 1.42. Sections 42.43(a), (b), (b-1), (c), (e), (g), and (h), Tax Code, are amended to read as follows:

(a) If the final determination of an appeal that decreases a property owner's tax liability occurs after the property owner has paid the owner's [his] taxes, the taxing unit and the comptroller, if the property is subject to the state ad valorem tax, shall refund to the property owner the difference between the amount of taxes paid and amount of taxes for which the property owner is liable.

(b) For a refund made under this section, the taxing unit or the comptroller shall include with the refund interest on the amount refunded calculated at an annual rate that is equal to the sum of two percent and the most recent prime rate quoted and published by the Federal Reserve Board as of the first day of the month in which the refund is made, but not more than a total of eight percent, calculated from the delinquency date for the taxes until the date the refund is made.

(b-1) A taxing unit or the comptroller may not send a refund made under this section before the earlier of:

(1) the 21st day after the final determination of the appeal; or

(2) the date the property owner files the form prescribed by Subsection (i) with the taxing unit or the comptroller.

(c) Notwithstanding Subsection (b), if a taxing unit or the comptroller does not make a refund, including interest, required by this section before the 60th day after the date the chief appraiser certifies a correction to the appraisal roll under Section 42.41, the taxing unit or the comptroller shall include with the refund interest on the amount refunded at an annual rate of 12 percent, calculated from the delinquency date for the taxes until the date the refund is made. A refund is not considered made under this section until sent to the proper person as provided by this section.

(e) Except as provided by Subsection (f) or (g), a taxing unit or the comptroller shall send a refund made under this section to the property owner.

(g) If a form prescribed by the comptroller under Subsection (i) is filed with a taxing unit or the comptroller before the 21st day after the final determination of an appeal that requires a refund be made, the taxing unit or the comptroller shall send the refund to the person and address designated on the form.

(h) A separate form must be filed with a taxing unit or the comptroller under Subsection (g) for each appeal to which the property owner is a party. A form may be revoked in a written revocation filed with the taxing unit or the comptroller by the property owner.

SECTION 1.43. Sections 43.01 and 43.04, Tax Code, are amended to read as follows:

Sec. 43.01. AUTHORITY TO BRING SUIT. The comptroller or a [A] taxing unit may sue the appraisal district that appraises property for the state or the unit to compel the appraisal district to comply with the provisions of this title, rules of the comptroller, or other applicable law.

Sec. 43.04. SUIT TO COMPEL COMPLIANCE WITH DEADLINES. The comptroller or the governing body of a taxing unit may sue the chief appraiser or members of the appraisal review board, as applicable, for failure to comply with the deadlines imposed by Section 25.22(a), 26.01(a), or 41.12. If the court finds that the chief appraiser or appraisal review board failed to comply for good cause shown, the court shall enter an order fixing a reasonable deadline for compliance. If the court finds that the chief appraiser or appraisal review board failed to comply without good cause, the court shall enter an order requiring the chief appraiser or appraisal review board to comply with the deadline not later than the 10th day after the date the judgment is signed. In a suit brought under this section, the court may enter any other order the court considers necessary to ensure compliance with the court's deadline or the applicable statutory requirements. Failure to obey an order of the court is punishable as contempt.

SECTION 1.44. Chapter 311, Tax Code, is amended by adding Section 311.0131 to read as follows:

Sec. 311.0131. SCHOOL DISTRICT ANNUAL OBLIGATION TO TAX INCREMENT FUND; STATE PAYMENT OF PORTION OF OBLIGATION. (a) This section applies only to a reinvestment zone created before September 1, 1999, for which a school district enters into an agreement under Section 311.013(f) with the governing body of the municipality that created the zone to pay into the tax increment fund for the zone a portion of the school district's tax increment produced from property located in the zone.

(b) Notwithstanding the terms of the agreement regarding the portion of the school district's tax increment required to be paid into the fund, in each year, the portion of the school district's tax increment the school district is required to pay into the fund is the school district annual obligation for the school district for that year calculated under Subsection (c).

(c) The municipality that created the zone or the municipality's designee shall calculate the school district annual obligation for a school district by applying the applicable school district's tax rate for the 2012 tax year to the captured appraised value for the school district for the year for which the obligation is calculated and multiplying that amount by the percentage of the school district's tax increment for the year for which the obligation is calculated that the school district agreed to pay into the tax increment fund in that year under Section 311.013(f).

(d) The school district annual obligation for each year shall be apportioned between the school district and the state in proportion to the amount of taxes each of those entities imposes on the captured appraised value for the zone in that year as calculated under this subsection. The amount of taxes the state imposes on that captured appraised value is calculated by multiplying the rate of the state ad valorem tax rate for that year by the captured appraised value for the state. The amount of taxes the school district imposes on that captured appraised value used in making the apportionment is calculated by multiplying the school district local fund assignment tax rate for that year by the captured appraised value for the school district. The tax increment base for the state under Section 311.012 is determined as if this section were in effect for the year in which the reinvestment zone was created.

(e) If more than one school district imposes taxes on property in a reinvestment zone, the school district annual obligation for each school district and the portion of that obligation that the state is required to pay under this section shall be calculated separately for the portion of the property in the reinvestment zone located in each school district.

(f) The comptroller shall verify the payments to be made by the state under this section and shall retain from state property tax collections sufficient funds to make the calculated payments. From the retained funds, the comptroller shall pay to the school district or, if required by the agreement, to the municipality the portion of the school district annual obligation apportioned to the state under Subsection (c).

(g) On receipt of the state's portion of the school district annual obligation by a school district, the school district promptly shall pay the state's portion to the municipality. At the time of payment of the state's portion to the municipality, the school district shall pay to the municipality any unpaid balance of the school district's portion of the school district annual obligation.

(h) Amounts paid to a municipality under Subsections (f) and (g) shall be deposited to the credit of the tax increment fund on behalf of the school district.

(i) This section ceases to apply to a reinvestment zone on the earlier date specified by Section 311.017(a)(1) or (2) for the reinvestment zone. If the agreement provides that the termination date may be extended, the state's obligation to pay a portion of the school district annual obligation ceases on the date the school district ceases to be required to pay any tax increment produced by the school district into the tax increment fund for the zone.

SECTION 1.45. Subchapter A, Chapter 313, Tax Code, is amended by adding Section 313.010 to read as follows:

Sec. 313.010. REPORT TO LEGISLATURE. (a) Not later than December 1, 2014, the Legislative Budget Board shall submit a report to the legislature that includes recommended changes to this chapter to provide incentives and credits relating to the state ad valorem tax that are consistent with the purposes described by Section 313.003.

(b) This section expires January 1, 2015.

SECTION 1.46. Section 403.302(j), Government Code, is amended to read as follows:

(j) For purposes of Chapter 42, Education Code, the comptroller shall certify to the commissioner of education:

(1) a final value for each school district computed on a residence homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, of $5,000;

(2) a final value for each school district computed on:

(A) a residence homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, of $15,000; and

(B) the effect of the additional limitation on tax increases under Section 1-b(d), Article VIII, Texas Constitution, as proposed by H.J.R. No. 4, 75th Legislature, Regular Session, 1997; and

(3) a final value for each school district computed on the effect of the reduction of the limitation on tax increases to reflect any reduction in the school district tax rate as provided by Section 11.26(a-1), [(a-2), or (a-3),] Tax Code, as applicable.

ARTICLE 2. PUBLIC SCHOOL FINANCE; ENRICHMENT TAX

SECTION 2.01. Section 11.1511(c), Education Code, is amended to read as follows:

(c) The board may:

(1) issue bonds and levy, pledge, assess, and collect an annual ad valorem tax to pay the principal and interest on the bonds as authorized under Sections 45.001 and 45.003;

(2) levy, assess, and collect an annual ad valorem tax for enrichment [maintenance and operation] of the district as authorized under Sections 45.002 and 45.003;

(3) employ a person to assess or collect the district's taxes as authorized under Section 45.231; and

(4) enter into contracts as authorized under this code or other law and delegate contractual authority to the superintendent as appropriate.

SECTION 2.02. Section 12.013(b), Education Code, is amended to read as follows:

(b) A home-rule school district is subject to:

(1) a provision of this title establishing a criminal offense;

(2) a provision of this title relating to limitations on liability; and

(3) a prohibition, restriction, or requirement, as applicable, imposed by this title or a rule adopted under this title, relating to:

(A) the Public Education Information Management System (PEIMS) to the extent necessary to monitor compliance with this subchapter as determined by the commissioner;

(B) educator certification under Chapter 21 and educator rights under Sections 21.407, 21.408, and 22.001;

(C) criminal history records under Subchapter C, Chapter 22;

(D) student admissions under Section 25.001;

(E) school attendance under Sections 25.085, 25.086, and 25.087;

(F) inter-district or inter-county transfers of students under Subchapter B, Chapter 25;

(G) elementary class size limits under Section 25.112, in the case of any campus in the district that fails to satisfy any standard under Section 39.054(e);

(H) high school graduation under Section 28.025;

(I) special education programs under Subchapter A, Chapter 29;

(J) bilingual education under Subchapter B, Chapter 29;

(K) prekindergarten programs under Subchapter E, Chapter 29;

(L) safety provisions relating to the transportation of students under Sections 34.002, 34.003, 34.004, and 34.008;

(M) computation and distribution of state aid under Chapters 31, 42, and 43;

(N) extracurricular activities under Section 33.081;

(O) health and safety under Chapter 38;

(P) public school accountability under Subchapters B, C, D, E, and J, Chapter 39;

(Q) [equalized wealth under Chapter 41;

[(R)] a bond or other obligation or tax rate under Chapters 42, 43, and 45; and

(R) [(S)] purchasing under Chapter 44.

SECTION 2.03. Section 12.029(b), Education Code, is amended to read as follows:

(b) If [Except as provided by Subchapter H, Chapter 41, if] two or more school districts having different status, one of which is home-rule school district status, consolidate into a single district, the petition under Section 13.003 initiating the consolidation must state the status for the consolidated district. The ballot shall be printed to permit voting for or against the proposition: "Consolidation of (names of school districts) into a single school district governed as (status of school district specified in the petition)."

SECTION 2.04. Section 12.106(a), Education Code, is amended to read as follows:

(a) A charter holder is entitled to receive for the open-enrollment charter school funding under Chapter 42 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].

SECTION 2.05. Section 21.402(a), Education Code, as effective until September 1, 2017, is amended to read as follows:

(a) Except as provided by Subsection (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)].

SECTION 2.06. Section 21.402(a), Education Code, as effective September 1, 2017, is amended to read as follows:

(a) Except as provided by Subsection (e-1) 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)].

SECTION 2.07. Section 21.410(h), Education Code, is amended to read as follows:

(h) A grant a school district receives under this section is in addition to the [any] funding the district receives under Chapter 42. The commissioner shall distribute funds under this section with the Foundation School Program payment to which the district is entitled as soon as practicable after the end of the school year as determined by the commissioner. [A district to which Chapter 41 applies is entitled to the grants paid under this section. The commissioner shall determine the timing of the distribution of grants to a district that does not receive Foundation School Program payments.]

SECTION 2.08. Section 21.411(h), Education Code, is amended to read as follows:

(h) A grant a school district receives under this section is in addition to the [any] funding the district receives under Chapter 42. The commissioner shall distribute funds under this section with the Foundation School Program payment to which the district is entitled as soon as practicable after the end of the school year as determined by the commissioner. [A district to which Chapter 41 applies is entitled to the grants paid under this section. The commissioner shall determine the timing of the distribution of grants to a district that does not receive Foundation School Program payments.]

SECTION 2.09. Section 21.412(h), Education Code, is amended to read as follows:

(h) A grant a school district receives under this section is in addition to the [any] funding the district receives under Chapter 42. The commissioner shall distribute funds under this section with the Foundation School Program payment to which the district is entitled as soon as practicable after the end of the school year as determined by the commissioner. [A district to which Chapter 41 applies is entitled to the grants paid under this section. The commissioner shall determine the timing of the distribution of grants to a district that does not receive Foundation School Program payments.]

SECTION 2.10. Section 21.413(h), Education Code, is amended to read as follows:

(h) A grant a school district receives under this section is in addition to the [any] funding the district receives under Chapter 42. The commissioner shall distribute funds under this section with the Foundation School Program payment to which the district is entitled as soon as practicable after the end of the school year as determined by the commissioner. [A district to which Chapter 41 applies is entitled to the grants paid under this section. The commissioner shall determine the timing of the distribution of grants to a district that does not receive Foundation School Program payments.]

SECTION 2.11. Section 29.008(b), Education Code, is amended to read as follows:

(b) Except as provided by Subsection (c), costs of an approved contract for residential placement may be paid from a combination of federal, state, and local funds. The local share of the total contract cost for each student is [that portion of the local tax effort that exceeds] the district's local tax effort [fund assignment under Section 42.252,] divided by the average daily attendance in the district. If the contract involves a private facility, the state share of the total contract cost is that amount remaining after subtracting the local share. If the contract involves a public facility, the state share is that amount remaining after subtracting the local share from the portion of the contract that involves the costs of instructional and related services. For purposes of this subsection, "local tax effort" means the total amount of money generated by taxes imposed for debt service and enrichment [maintenance and operation] less any amounts paid into a tax increment fund under Chapter 311, Tax Code.

SECTION 2.12. Section 29.203(b), Education Code, is amended to read as follows:

(b) A school district is entitled to the allotment provided by Section 42.157 for each eligible student using a public education grant. [If the district has a wealth per student greater than the guaranteed wealth level but less than the equalized wealth level, a school district is entitled under rules adopted by the commissioner to additional state aid in an amount equal to the difference between the cost to the district of providing services to a student using a public education grant and the sum of the state aid received because of the allotment under Section 42.157 and money from the available school fund attributable to the student.]

SECTION 2.13. Section 30.003(b), Education Code, is amended to read as follows:

(b) If the student is admitted to the school for a full-time program for the equivalent of two long semesters, the district's share of the cost is an amount equal to the sum of the dollar amount of enrichment [maintenance] and debt service taxes imposed by the district for that year divided by the district's average daily attendance for the preceding year and a dollar amount determined by the commissioner.

SECTION 2.14. Section 37.0061, Education Code, is amended to read as follows:

Sec. 37.0061. FUNDING FOR ALTERNATIVE EDUCATION SERVICES IN JUVENILE RESIDENTIAL FACILITIES. A school district that provides education services to pre-adjudicated and post-adjudicated students who are confined by court order in a juvenile residential facility operated by a juvenile board is entitled to count such students in the district's average daily attendance for purposes of receipt of state funds under the Foundation School Program. [If the district has a wealth per student greater than the guaranteed wealth level but less than the equalized wealth level, the district in which the student is enrolled on the date a court orders the student to be confined to a juvenile residential facility shall transfer to the district providing education services an amount equal to the difference between the average Foundation School Program costs per student of the district providing education services and the sum of the state aid and the money from the available school fund received by the district that is attributable to the student for the portion of the school year for which the district provides education services to the student.]

SECTION 2.15. Section 42.007(c), Education Code, is amended to read as follows:

(c) The funding elements must include:

(1) a basic allotment for the purposes of Section 42.101 that[, when combined with the guaranteed yield component provided by Subchapter F,] represents the cost per student of a regular education program that meets all mandates of law and regulation;

(2) adjustments designed to reflect the variation in known resource costs and costs of education beyond the control of school districts;

(3) appropriate program cost differentials and other funding elements for the programs authorized under Subchapter C, with the program funding level expressed as dollar amounts and as weights applied to the adjusted basic allotment for the appropriate year;

(4) the maximum guaranteed level of qualified state and local funds per student for the purposes of Subchapter F;

(5) the enrichment [and facilities] tax rate under Subchapter F;

(6) the computation of students in weighted average daily attendance under Section 42.302; and

(7) the amount to be appropriated for the school facilities assistance program under Chapter 46.

SECTION 2.16. Section 42.009, Education Code, is amended to read as follows:

Sec. 42.009. DETERMINATION OF FUNDING LEVELS. (a) Not later than July 1 of each year, the commissioner shall determine for each school district whether the estimated amount of state and local funding per student in weighted average daily attendance to be provided to the district under this chapter [the Foundation School Program for maintenance and operations] for the following school year is less than the amount provided to the district for the 2010-2011 school year. If the amount estimated to be provided is less, the commissioner shall certify the percentage decrease in funding to be provided to the district.

(b) In making the determinations regarding funding levels required by Subsection (a), the commissioner shall:

(1) make adjustments as necessary to reflect changes in a school district's enrichment [maintenance and operations] tax rate; and

(2) [for a district required to take action under Chapter 41 to reduce its wealth per student to the equalized wealth level, base the determinations on the district's net funding levels after deducting any amounts required to be expended by the district to comply with Chapter 41; and

[(3)] determine a district's weighted average daily attendance in accordance with this chapter as it existed on January 1, 2011.

SECTION 2.17. Section 42.101(a), Education Code, as effective until September 1, 2015, is amended to read as follows:

(a) The basic 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 a district;

["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 2.18. Section 42.101(a), Education Code, as effective September 1, 2015, is amended to read as follows:

(a) 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 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 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 2.19. Section 42.101(c-3), Education Code, is amended to read as follows:

(c-3) The regular program adjustment factor ("RPAF") is 0.98 for the 2013-2014 and 2014-2015 school years or a greater amount established by appropriation, not to exceed 1.0. This subsection and Subsection [Subsections] (c)[, (c-1), and (c-2)] expire September 1, 2015.

SECTION 2.20. Section 42.251(b), Education Code, is amended to read as follows:

(b) The program shall be financed by:

(1) ad valorem tax revenue generated by the state ad valorem tax under Section 3-a, Article VII, Texas Constitution [an equalized uniform school district effort];

(2) enrichment ad valorem tax revenue generated by local school district effort [in excess of the equalized uniform school district effort];

(3) state available school funds distributed in accordance with law; and

(4) state funds appropriated for the purposes of public school education and allocated to each district in an amount sufficient to finance the cost of each district's Foundation School Program not covered by other funds specified in this subsection.

SECTION 2.21. Section 42.25161(a), 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 maintenance and operations [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 of state and local maintenance and operations revenue 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 for the 2009-2010 school year, as established under former Section 42.2516, 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 2.22. Section 42.2521(a), Education Code, is amended to read as follows:

(a) For purposes of Chapter [Chapters 41 and] 46 and this chapter, and to the extent money specifically authorized to be used under this section is available, the commissioner shall adjust the taxable value of property in a school district that, due to factors beyond the control of the board of trustees, experiences a rapid decline in the tax base used in calculating taxable values in excess of four percent of the tax base used in the preceding year.

SECTION 2.23. Section 42.2523(a), Education Code, is amended to read as follows:

(a) For purposes of Chapter [Chapters 41 and] 46 and this chapter, the commissioner shall adjust the taxable value of property of a school district all or part of which is located in an area declared a disaster area by the governor under Chapter 418, Government Code, as necessary to ensure that the district receives funding based as soon as possible on property values as affected by the disaster.

SECTION 2.24. Sections 42.2524(c) and (d), Education Code, are amended to read as follows:

(c) The commissioner may provide reimbursement under this section only if funds are available for that purpose [as follows:

[(1) reimbursement for a school district not required to take action under Chapter 41 may be provided] from:

(1) [(A)] amounts appropriated for that purpose, including amounts appropriated for those districts for that purpose to the disaster contingency fund established under Section 418.073, Government Code; or

(2) [(B)] Foundation School Program funds available for that purpose, based on a determination by the commissioner that the amount appropriated for the Foundation School Program, including the facilities component as provided by Chapter 46, exceeds the amount to which districts are entitled under this chapter and Chapter 46[; and

[(2) reimbursement for a school district required to take action under Chapter 41 may be provided from funds described by Subdivision (1)(B) if funds remain available after fully reimbursing each school district described by Subdivision (1) for its disaster remediation costs].

(d) If the amount of money available for purposes of reimbursing school districts [not required to take action under Chapter 41] is not sufficient to fully reimburse each district's disaster remediation costs, the commissioner shall reduce the amount of assistance provided to each of those districts proportionately. [If the amount of money available for purposes of reimbursing school districts required to take action under Chapter 41 is not sufficient to fully reimburse each district's disaster remediation costs, the commissioner shall reduce the amount of assistance provided to each of those districts proportionately.]

SECTION 2.25. Sections 42.253(a), (c), and (h), Education Code, are amended to read as follows:

(a) For each school year the commissioner shall determine:

(1) the amount of money to which a school district is entitled under Subchapters B and C;

(2) the amount of money to which a school district is entitled under Subchapter F;

(3) the amount of money allocated to the district from the available school fund; and

(4) [the amount of each district's tier one local share under Section 42.252; and

[(5)] the amount of each district's tier two local share under Section 42.302.

(c) Each school district is entitled to an amount equal to the difference for that district between the sum of Subsections (a)(1) and (a)(2) and the sum of Subsections (a)(3) and[,] (a)(4)[, and (a)(5)].

(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 and open-enrollment charter schools 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 the total amounts due to each school district and open-enrollment charter school under this chapter [and the total amounts necessary for each school district to comply with the requirements of Chapter 41] by an amount determined by applying to each district and school[, including a district receiving funds under Section 42.2516,] the same percentage adjustment to the total amount of state and local revenue due to the district or school under this chapter [and Chapter 41] so that the total amount of the adjustment to all districts and schools results in an amount equal to the total adjustment necessary. The following fiscal year, [:

[(1)] a district's or school's entitlement under this section is increased by an amount equal to the adjustment 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 necessary to ensure the district's full recovery of the adjustment made under this subsection].

SECTION 2.26. Sections 42.2531(a), (b), and (c), Education Code, are amended to read as follows:

(a) The commissioner may make adjustments to amounts due to a school district under this chapter or Chapter 46[, or to amounts necessary for a district to comply with the requirements of Chapter 41,] as provided by this section.

(b) A school district that has a major taxpayer, as determined by the commissioner, that because of a protest of the valuation of the taxpayer's property fails to pay all or a portion of the ad valorem taxes due to the district may apply to the commissioner to have the district's taxable value of property or ad valorem tax collections adjusted for purposes of this chapter or Chapter [41 or] 46. The commissioner may make the adjustment only to the extent the commissioner determines that making the adjustment will not:

(1) in the fiscal year in which the adjustment is made, cause the amount to which school districts are entitled under this chapter to exceed the amount appropriated for purposes of the Foundation School Program for that year; and

(2) if the adjustment is made in the first year of a state fiscal biennium, cause the amount to which school districts are entitled under this chapter for the second year of the biennium to exceed the amount appropriated for purposes of the Foundation School Program for that year.

(c) The commissioner shall recover the benefit of any adjustment made under this section by making offsetting adjustments in the school district's taxable value of property or ad valorem tax collections for purposes of this chapter or Chapter [41 or] 46 on a final determination of the taxable value of property that was the basis of the original adjustment, or in the second school year following the year in which the adjustment is made, whichever is earlier.

SECTION 2.27. Section 42.257(b), Education Code, is amended to read as follows:

(b) If the district would have received a greater amount from the foundation school fund for the applicable school year using the adjusted value, the commissioner shall add the difference to subsequent distributions to the district from the foundation school fund. [An adjustment does not affect the local fund assignment of any other district.]

SECTION 2.28. Section 42.258(a-1), Education Code, is amended to read as follows:

(a-1) Notwithstanding Subsection (a), the agency may recover an overallocation of state funds over a period not to exceed the subsequent five school years if the commissioner determines that the overallocation was the result of exceptional circumstances reasonably caused by statutory changes to Chapter [41 or] 46 or this chapter and related reporting requirements.

SECTION 2.29. Sections 42.259(b) and (f), Education Code, are amended to read as follows:

(b) Payments from the foundation school fund to each [category 1] school district shall be made as follows:

(1) 15 percent of the yearly entitlement of the district shall be paid in an installment to be made on or before the 25th day of September of a fiscal year;

(2) 80 percent of the yearly entitlement of the district shall be paid in eight equal installments to be made on or before the 25th day of October, November, December, January, March, May, June, and July; and

(3) five percent of the yearly entitlement of the district shall be paid in an installment to be made on or before the 25th day of February.

(f) Any [Except as provided by Subsection (c)(8) or (d)(3), any] previously unpaid additional funds from prior fiscal years owed to a district shall be paid to the district together with the September payment of the current fiscal year entitlement.

SECTION 2.30. Section 42.260(b), Education Code, is amended to read as follows:

(b) For each year, the commissioner shall certify to each school district or participating charter school the amount of additional funds to which the district or school is entitled due to the increase made by Chapter 1187 (H.B. 3343) [H.B. No. 3343], Acts of the 77th Legislature, Regular Session, 2001, to[:

[(1) the equalized wealth level under Section 41.002; or

[(2)] the guaranteed level of state and local funds per weighted student per cent of tax effort under Section 42.302.

SECTION 2.31. Sections 42.302(a), (a-1), (b), (c), (d), and (e), Education Code, are amended to read as follows:

(a) Each school district is guaranteed a specified amount per weighted student in state and local funds for each cent of tax effort [over that required for the district's local fund assignment] up to the maximum tax rate permitted under Section 45.003 [level specified in this subchapter]. The amount of state support[, subject only to the maximum amount under Section 42.303,] is determined by the formula:

GYA = (GL X WADA X DTR X 100) - LR

where:

"GYA" is the guaranteed yield amount of state funds to be allocated to the district;

"GL" is the dollar amount guaranteed level of state and local funds per weighted student per cent of tax effort, which is an amount described by Subsection (a-1) or a greater amount for any year provided by appropriation;

"WADA" is the number of students in weighted average daily attendance, which is calculated by dividing the sum of the school district's allotments under Subchapters B and C, less any allotment to the district for transportation, any allotment under Section 42.158 or 42.160, and 50 percent of the adjustment under Section 42.102, by the basic allotment for the applicable year;

"DTR" is the district enrichment tax rate of the school district, which is determined by subtracting the amount [amounts] specified by Subsection (b) from the total amount of enrichment [maintenance and operations] taxes collected by the school district for the applicable school year and dividing the difference by the quotient of the district's taxable value of property as determined under Subchapter M, Chapter 403, Government Code, or, if applicable, under Section 42.2521, divided by 100; and

"LR" is the local revenue, which is determined by multiplying "DTR" by the quotient of the district's taxable value of property as determined under Subchapter M, Chapter 403, Government Code, or, if applicable, under Section 42.2521, divided by 100.

(a-1) [In this section, "wealth per student" has the meaning assigned by Section 41.001.] For purposes of Subsection (a), the dollar amount guaranteed level of state and local funds per weighted student per cent of tax effort ("GL") for a school district is:

(1) the greater of the amount of district tax revenue per weighted student per cent of tax effort that would be available to the Austin Independent School District, as determined by the commissioner in cooperation with the Legislative Budget Board, if the reduction of the limitation on tax increases as provided by Section 11.26(a-1), [(a-2), or (a-3),] Tax Code, did not apply, or the amount of district tax revenue per weighted student per cent of tax effort used for purposes of this subdivision in the preceding school year, for the first six cents of [by which] the district's enrichment [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]; and

(2) $31.95, for the district's enrichment [maintenance and operations] tax effort that exceeds the amount of tax effort described by Subdivision (1).

(b) In computing the district enrichment tax rate of a school district, the total amount of enrichment [maintenance and operations] taxes collected by the school district does not include the amount of[:

[(1) the district's local fund assignment under Section 42.252; or

[(2)] taxes paid into a tax increment fund under Chapter 311, Tax Code.

(c) For purposes of this section, school district enrichment taxes for which credit is granted under Section 31.035, 31.036, or 31.037, Tax Code, are considered taxes collected by the school district as if the taxes were paid when the credit for the taxes was granted.

(d) For purposes of this section, the total amount of enrichment [maintenance and operations] taxes collected for an applicable school year by a school district with alternate tax dates, as authorized by Section 26.135, Tax Code, is the amount of taxes collected on or after January 1 of the year in which the school year begins and not later than December 31 of the same year.

(e) For purposes of this section, school district enrichment taxes for which credit is granted under Subchapter D, Chapter 313, Tax Code, are considered taxes collected by the school district as if the taxes were paid when the credit for the taxes was granted.

SECTION 2.32. Section 43.002(b), Education Code, is amended to read as follows:

(b) Of the amounts available for transfer from the general revenue fund to the available school fund for the months of January and February of each fiscal year, no more than the amount necessary to enable the comptroller to distribute from the available school fund an amount equal to 9-1/2 percent of the estimated annual available school fund apportionment to [category 1] school districts[, as defined by Section 42.259, and 3-1/2 percent of the estimated annual available school fund apportionment to category 2 school districts, as defined by Section 42.259,] may be transferred from the general revenue fund to the available school fund. Any remaining amount that would otherwise be available for transfer for the months of January and February shall be transferred from the general revenue fund to the available school fund in equal amounts in June and in August of the same fiscal year.

SECTION 2.33. Sections 44.004(c) and (c-1), Education Code, are amended to read as follows:

(c) The notice of public meeting to discuss and adopt the budget and the proposed tax rate may not be smaller than one-quarter page of a standard-size or a tabloid-size newspaper, and the headline on the notice must be in 18-point or larger type. Subject to Subsection (d), the notice must:

(1) contain a statement in the following form:

"NOTICE OF PUBLIC MEETING TO DISCUSS BUDGET AND PROPOSED TAX RATE

"The (name of school district) will hold a public meeting at (time, date, year) in (name of room, building, physical location, city, state). The purpose of this meeting is to discuss the school district's budget that will determine the tax rate that will be adopted. Public participation in the discussion is invited." The statement of the purpose of the meeting must be in bold type. In reduced type, the notice must state: "The tax rate that is ultimately adopted at this meeting or at a separate meeting at a later date may not exceed the proposed rate shown below unless the district publishes a revised notice containing the same information and comparisons set out below and holds another public meeting to discuss the revised notice.";

(2) contain a section entitled "Comparison of Proposed Budget with Last Year's Budget," which must show the difference, expressed as a percent increase or decrease, as applicable, in the amounts budgeted for the preceding fiscal year and the amount budgeted for the fiscal year that begins in the current tax year for each of the following:

(A) maintenance and operations;

(B) enrichment;

(C) debt service; and

(D) [(C)] total expenditures;

(3) contain a section entitled "Total Appraised Value and Total Taxable Value," which must show the total appraised value and the total taxable value of all property and the total appraised value and the total taxable value of new property taxable by the district in the preceding tax year and the current tax year as calculated under Section 26.04, Tax Code;

(4) contain a statement of the total amount of the outstanding and unpaid bonded indebtedness of the school district;

(5) contain a section entitled "Comparison of Proposed Rates with Last Year's Rates," which must:

(A) show in rows the tax rates described by Subparagraphs (i)-(iii), expressed as amounts per $100 valuation of property, for columns entitled "Enrichment [Maintenance & Operations]," "Interest & Sinking Fund," and "Total," which is the sum of "Enrichment [Maintenance & Operations]" and "Interest & Sinking Fund":

(i) the school district's "Last Year's Rate";

(ii) the "Rate to Maintain Same Level of Enrichment [Maintenance & Operations] Revenue & Pay Debt Service," which:

(a) in the case of "Enrichment [Maintenance & Operations]," is the tax rate that, when applied to the current taxable value for the district, as certified by the chief appraiser under Section 26.01, Tax Code, and as adjusted to reflect changes made by the chief appraiser as of the time the notice is prepared, would impose taxes in an amount that, when added to state funds to be distributed to the district under Subchapter F, Chapter 42, would provide the same amount of enrichment [maintenance and operations] taxes and state funds distributed under Subchapter F, Chapter 42, per student in average daily attendance for the applicable school year that was available to the district in the preceding school year; and

(b) in the case of "Interest & Sinking Fund," is the tax rate that, when applied to the current taxable value for the district, as certified by the chief appraiser under Section 26.01, Tax Code, and as adjusted to reflect changes made by the chief appraiser as of the time the notice is prepared, and when multiplied by the district's anticipated collection rate, would impose taxes in an amount that, when added to state funds to be distributed to the district under Chapter 46 and any excess taxes collected to service the district's debt during the preceding tax year but not used for that purpose during that year, would provide the amount required to service the district's debt; and

(iii) the "Proposed Rate";

(B) contain fourth and fifth columns aligned with the columns required by Paragraph (A) that show, for each row required by Paragraph (A):

(i) the "Local Enrichment Revenue per Student," which is computed by multiplying the district's total taxable value of property, as certified by the chief appraiser for the applicable school year under Section 26.01, Tax Code, and as adjusted to reflect changes made by the chief appraiser as of the time the notice is prepared, by the total enrichment tax rate, and dividing the product by the number of students in average daily attendance in the district for the applicable school year; and

(ii) the "State Revenue per Student," which is computed by determining the amount of state aid received or to be received by the district under Chapters 42, 43, and 46 and dividing that amount by the number of students in average daily attendance in the district for the applicable school year; and

(C) contain an asterisk after each calculation for "Interest & Sinking Fund" and a footnote to the section that, in reduced type, states "The Interest & Sinking Fund tax revenue is used to pay for bonded indebtedness on construction, equipment, or both. The bonds, and the tax rate necessary to pay those bonds, were approved by the voters of this district.";

(6) contain a section entitled "Comparison of Proposed Levy with Last Year's Levy on Average Residence," which must:

(A) show in rows the information described by Subparagraphs (i)-(iv), rounded to the nearest dollar, for columns entitled "Last Year" and "This Year":

(i) "Average Market Value of Residences," determined using the same group of residences for each year;

(ii) "Average Taxable Value of Residences," determined after taking into account the limitation on the appraised value of residences under Section 23.23, Tax Code, and after subtracting all homestead exemptions applicable in each year, other than exemptions available only to disabled persons or persons 65 years of age or older or their surviving spouses, and using the same group of residences for each year;

(iii) "Last Year's Rate Versus Proposed Rate per $100 Value"; and

(iv) "Taxes Due on Average Residence," determined using the same group of residences for each year; and

(B) contain the following information: "Increase (Decrease) in Taxes" expressed in dollars and cents, which is computed by subtracting the "Taxes Due on Average Residence" for the preceding tax year from the "Taxes Due on Average Residence" for the current tax year;

(7) contain the following statement in bold print: "Under state law, the dollar amount of school taxes imposed on the residence of a person 65 years of age or older or of the surviving spouse of such a person, if the surviving spouse was 55 years of age or older when the person died, may not be increased above the amount paid in the first year after the person turned 65, regardless of changes in tax rate or property value.";

(8) contain the following statement in bold print: "Notice of Rollback Rate: The highest tax rate the district can adopt before requiring voter approval at an election is (the school district rollback rate determined under Section 26.08, Tax Code). This election will be automatically held if the district adopts a rate in excess of the rollback rate of (the school district rollback rate)."; and

(9) contain a section entitled "Fund Balances," which must include the estimated amount of interest and sinking fund balances and the estimated amount of maintenance and operation or general fund balances remaining at the end of the current fiscal year that are not encumbered with or by corresponding debt obligation, less estimated funds necessary for the operation of the district before the receipt of the first payment under Chapter 42 in the succeeding school year.

(c-1) The notice described by Subsection (c) must state in a distinct row or on a separate or individual line for each of the following taxes:

(1) the proposed rate of the school district's enrichment [maintenance] tax described by Section 45.003, under the heading "Enrichment [Maintenance] Tax"; and

(2) if the school district has issued ad valorem tax bonds under Section 45.001, the proposed rate of the tax to pay for the bonds, under the heading "School Debt Service Tax Approved by Local Voters."

SECTION 2.34. Section 45.002, Education Code, is amended to read as follows:

Sec. 45.002. ENRICHMENT [MAINTENANCE] TAXES. (a) The governing board of an independent school district, including the city council or commission that has jurisdiction over a municipally controlled independent school district, the governing board of a rural high school district, and the commissioners court of a county, on behalf of each common school district under its jurisdiction, may levy, assess, and collect annual ad valorem taxes for the purpose of providing an enriched educational program [further maintenance of public schools] in the district, subject to Section 45.003.

(b) A reference in law to a school district maintenance tax or rate or a maintenance and operations tax or rate means an enrichment tax or rate authorized by this section.

SECTION 2.35. Section 45.003(d), Education Code, is amended to read as follows:

(d) A proposition submitted to authorize the levy of enrichment [maintenance] taxes must include the question of whether the governing board or commissioners court may levy, assess, and collect annual ad valorem enrichment taxes [for the further maintenance of public schools,] at a rate not to exceed the rate stated in the proposition. For any year, the enrichment [maintenance] tax rate per $100 of taxable value adopted by the district may not exceed the rate [equal to the sum] of $0.17 [and the product of the state compression percentage, as determined under Section 42.2516, multiplied by $1.50].

SECTION 2.36. Section 45.104(a), Education Code, is amended to read as follows:

(a) The board of trustees of any school district may pledge its delinquent taxes levied for enrichment [maintenance] purposes for specific past, current, and future school years as security for a loan, and may evidence any such loan with negotiable notes, and the delinquent taxes pledged shall be applied against the principal and interest of the loan. Negotiable notes issued under this subsection must mature not more than 20 years from their date.

SECTION 2.37. Section 45.108(a), Education Code, is amended to read as follows:

(a) Independent or consolidated school districts may borrow money for the purpose of paying maintenance expenses and may evidence those loans with negotiable notes, except that the loans may not at any time exceed 75 percent of the previous year's income. The notes may be payable from and secured by a lien on and pledge of any available funds of the district, including proceeds of an enrichment [a maintenance] tax. The term "maintenance expenses" or "maintenance expenditures" as used in this section means any lawful expenditure of the school district other than payment of principal of and interest on bonds. The term includes all costs incurred in connection with environmental cleanup and asbestos cleanup and removal programs implemented by school districts or in connection with the maintenance, repair, rehabilitation, or replacement of heating, air conditioning, water, sanitation, roofing, flooring, electric, or other building systems of existing school properties. Notes issued pursuant to this section may be issued to mature in not more than 20 years from their date. Notes issued for a term longer than one year must be treated as "debt" as defined in Section 26.012(7), Tax Code.

SECTION 2.38. Sections 45.109(c) and (d), Education Code, are amended to read as follows:

(c) The consideration for a contract under this section may be paid from any source available to the independent school district. If voted as provided by this section, the district may pledge to the payment of the contract an annual enrichment [maintenance] tax in an amount sufficient, without limitation, to provide all of the consideration. If voted and pledged, the enrichment [maintenance] tax shall be assessed, levied, and collected annually in the same manner as provided by general law applicable to independent school districts for other enrichment [maintenance] taxes.

(d) An enrichment [A maintenance] tax may not be pledged to the payment of any contract under this section or assessed, levied, or collected unless an election is held in the district and the enrichment [maintenance] tax is favorably voted by a majority of the qualified voters of the district voting at the election. The election order for an election under this subsection must include the polling place or places and any other matters considered advisable by the board of trustees.

SECTION 2.39. Section 45.111(b), Education Code, is amended to read as follows:

(b) The governing body of the district shall provide for the payment of the certificates issued under this section by appropriating and pledging local school funds derived from enrichment [maintenance] taxes levied and assessed under Section [Sections] 45.002 and maintenance taxes levied and assessed under Section 130.122; Chapter 273, Acts of the 53rd Legislature, Regular Session, 1953 (Article 2784g, Vernon's Texas Civil Statutes); or other similar law that limits the amount of tax that may be levied for enrichment or maintenance purposes, as distinguished from bond requirements. The appropriation and pledge may be in the nature of a continuing irrevocable pledge to apply the first moneys collected annually from the tax levy to the payment of the obligations or by the irrevocable present levy and appropriation of the amount of the enrichment or maintenance tax required to meet the annual debt service requirements of the obligations, in which event the governing body shall covenant to annually set aside the amount in the annual tax levy, showing the same is a portion of the enrichment or maintenance tax. The governing body shall annually budget the amount required to pay the principal and interest of the obligations that may be scheduled to become due in any fiscal year. This section may not be construed as permitting the levy of an enrichment or [a] maintenance tax in excess of the amount approved by the qualified voters of the district.

SECTION 2.40. Section 45.156(c), Education Code, is amended to read as follows:

(c) The consideration payable by the district under a contract may be paid from any source available to the district. If voted, the district may pledge to the payment of the contract an annual enrichment [maintenance] tax in an amount sufficient, without limitation, to provide all or part of the consideration. If voted and pledged, the enrichment [maintenance] tax shall be assessed, levied, and collected annually in the same manner as provided by general law applicable to independent school districts for other enrichment [maintenance] taxes. An enrichment [A maintenance] tax may not be pledged to the payment of any contract or assessed, levied, or collected unless an election is held in the district, and the enrichment [maintenance] tax for that purpose is favorably voted by a majority of the qualified voters of the district. The election order for an election under this subsection must include the polling place or places and any other matters considered advisable by the board of trustees.

SECTION 2.41. Section 45.251(2), Education Code, is amended to read as follows:

(2) "Foundation School Program" means the program established under Chapters [41,] 42[,] and 46, or any successor program of state appropriated funding for school districts in this state.

SECTION 2.42. Section 45.261(a), Education Code, is amended to read as follows:

(a) If the commissioner orders payment from the money appropriated to the Foundation School Program on behalf of a school district [that is not required to reduce its wealth per student under Chapter 41], the commissioner shall direct the comptroller to withhold the amount paid from the first state money payable to the district. [If the commissioner orders payment from the money appropriated to the Foundation School Program on behalf of a school district that is required to reduce its wealth per student under Chapter 41, the commissioner shall increase amounts due from the district under that chapter in a total amount equal to the amount of payments made on behalf of the district under this subchapter.] Amounts withheld [or received] under this subsection shall be used for the Foundation School Program.

SECTION 2.43. Section 46.003(d), Education Code, is amended to read as follows:

(d) The amount budgeted by a district for payment of eligible bonds may include:

(1) bond taxes collected in the current school year;

(2) bond taxes collected in a preceding school year in excess of the amount necessary to pay the district's share of actual debt service on bonds in that year, provided that the taxes were not used to generate other state financial assistance for the district; [or]

(3) enrichment [maintenance and operations] taxes collected in the current school year or a preceding school year in excess of the amount eligible to be used to generate other state financial assistance for the district; or

(4) maintenance and operations taxes collected in a preceding school year in excess of the amount eligible to be used to generate other state financial assistance for the district.

SECTION 2.44. Section 46.004(a), Education Code, is amended to read as follows:

(a) A district may receive state assistance in connection with a lease-purchase agreement concerning an instructional facility. For purposes of this subchapter:

(1) taxes levied for purposes of enrichment [maintenance and operations] that are necessary to pay a district's share of the payments under a lease-purchase agreement for which the district receives state assistance under this subchapter are considered to be bond taxes; and

(2) payments under a lease-purchase agreement are considered to be payments of principal of and interest on bonds.

SECTION 2.45. Section 46.032(c), Education Code, is amended to read as follows:

(c) The amount budgeted by a district for payment of eligible bonds may include:

(1) bond taxes collected in the current school year;

(2) bond taxes collected in a preceding school year in excess of the amount necessary to pay the district's share of actual debt service on bonds in that year, provided that the taxes were not used to generate other state financial assistance for the district; [or]

(3) enrichment [maintenance and operations] taxes collected in the current school year or a preceding school year in excess of the amount eligible to be used to generate other state financial assistance for the district; or

(4) maintenance and operations taxes collected in a preceding school year in excess of the amount eligible to be used to generate other state financial assistance for the district.

SECTION 2.46. Section 78.10(g), Education Code, is amended to read as follows:

(g) For each student enrolled in the academy, the academy is entitled to allotments from the foundation school fund under Chapter 42 as if the academy were a school district [without a tier one local share for purposes of Section 42.253]. If in any academic year the amount of the allotments under this subsection exceeds the amount of state funds paid to the academy in the first fiscal year of the academy's operation, the commissioner of education shall set aside from the total amount of funds to which school districts are entitled under Section 42.253(c) an amount equal to the excess amount and shall distribute that amount to the academy. After deducting the amount set aside and paid to the academy by the commissioner of education under this subsection, the commissioner of education shall reduce the amount to which each district is entitled under Section 42.253(c) in the manner described by Section 42.253(h). A determination of the commissioner of education under this subsection is final and may not be appealed.

SECTION 2.47. Section 87.208, Education Code, is amended to read as follows:

Sec. 87.208. SEABORNE CONSERVATION CORPS. If the board of regents of The Texas A&M University System administers a program that is substantially similar to the Seaborne Conservation Corps as it was administered by the board during the 1998-1999 school year, the program is entitled, for each student enrolled, to allotments from the Foundation School Program under Chapter 42 as if the program were a school district[, except that the program has a local share applied that is equivalent to the local fund assignment of the school district in which the principal facilities of the program are located].

SECTION 2.48. Section 87.505(g), Education Code, is amended to read as follows:

(g) For each student enrolled in the academy, the academy is entitled to allotments from the foundation school fund under Chapter 42 as if the academy were a school district [without a tier one local share for purposes of Section 42.253]. If in any academic year the amount of the allotments under this subsection exceeds the amount of state funds paid to the academy in the first fiscal year of the academy's operation, the commissioner of education shall set aside from the total amount of funds to which school districts are entitled under Section 42.253(c) an amount equal to the excess amount and shall distribute that amount to the academy. After deducting the amount set aside and paid to the academy by the commissioner of education under this subsection, the commissioner of education shall reduce the amount to which each district is entitled under Section 42.253(c) in the manner described by Section 42.253(h). A determination of the commissioner of education under this subsection is final and may not be appealed.

SECTION 2.49. Section 96.707(k), Education Code, is amended to read as follows:

(k) For each student enrolled in the academy, the academy is entitled to allotments from the Foundation School Program under Chapter 42 as if the academy were a school district[, except that the academy has a local share applied that is equivalent to the local fund assignment of the Beaumont Independent School District].

SECTION 2.50. Section 105.301(e), Education Code, is amended to read as follows:

(e) The academy is not subject to the provisions of this code, or to the rules of the Texas Education Agency, regulating public schools, except that:

(1) professional employees of the academy are entitled to the limited liability of an employee under Section 22.0511, 22.0512, or 22.052;

(2) a student's attendance at the academy satisfies compulsory school attendance requirements; and

(3) for each student enrolled, the academy is entitled to allotments from the foundation school program under Chapter 42 as if the academy were a school district [without a tier one local share for purposes of Section 42.253].

SECTION 2.51. Section 403.302(a), Government Code, is amended to read as follows:

(a) The comptroller shall conduct a study using comparable sales and generally accepted auditing and sampling techniques to determine the total taxable value of all property in each school district. The study shall determine the taxable value of all property and of each category of property in the district and the productivity value of all land that qualifies for appraisal on the basis of its productive capacity and for which the owner has applied for and received a productivity appraisal. [The comptroller shall make appropriate adjustments in the study to account for actions taken under Chapter 41, Education Code.]

SECTION 2.52. Section 21.01, Tax Code, is amended to read as follows:

Sec. 21.01. REAL PROPERTY. Real property is taxable by a taxing unit if located in the unit on January 1[, except as provided by Chapter 41, Education Code].

SECTION 2.53. Section 21.02(a), Tax Code, is amended to read as follows:

(a) Except as provided by Subsection [Subsections (b) and] (e) and by Sections 21.021, 21.04, and 21.05, tangible personal property is taxable by a taxing unit if:

(1) it is located in the unit on January 1 for more than a temporary period;

(2) it normally is located in the unit, even though it is outside the unit on January 1, if it is outside the unit only temporarily;

(3) it normally is returned to the unit between uses elsewhere and is not located in any one place for more than a temporary period; or

(4) the owner resides (for property not used for business purposes) or maintains the owner's principal place of business in this state (for property used for business purposes) in the unit and the property is taxable in this state but does not have a taxable situs pursuant to Subdivisions (1) through (3) [of this subsection].

SECTION 2.54. Section 26.08(n), Tax Code, is amended to read as follows:

(n) For purposes of this section, the rollback tax rate of a school district [whose maintenance and operations tax rate for the 2005 tax year was $1.50 or less per $100 of taxable value] is:

(1) for the 2014 [2006] tax year:

(A) for a district whose maintenance and operations ad valorem tax rate for the 2013 tax year was at least $1 per $100 of taxable value, the sum of the following:

(i) the rate that is equal to the greater of $0.04 per $100 of taxable value or the difference between the maintenance and operations ad valorem tax rate of the district for the 2013 tax year and the rate of $1 per $100 of taxable value; and

(ii) the district's current debt rate; and

(B) for a district whose maintenance and operations ad valorem tax rate for the 2013 tax year was less than $1 per $100 of taxable value, the district's current debt rate; [, the sum of the rate that is equal to 88.67 percent of the maintenance and operations tax rate adopted by the district for the 2005 tax year, the rate of $0.04 per $100 of taxable value, and the district's current debt rate; and]

(2) for the 2015, 2016, and 2017 [2007 and subsequent] tax years:

(A) for a district described by Subdivision (1)(A), the sum of the following:

(i) the rate described by Subdivision (1)(A)(i);

(ii) the rate that is equal to the sum of the differences for the 2014 and each subsequent tax year between the adopted tax rate of the district for that year if the rate was approved at an election under this section and the rollback tax rate of the district for that year; and

(iii) the district's current debt rate; and

(B) for a district described by Subdivision (1)(B), the sum of the following:

(i) the rate that is equal to the sum of the differences for the 2014 and each subsequent tax year between the adopted tax rate of the district for that year if the rate was approved at an election under this section and the rollback tax rate of the district for that year; and

(ii) the district's current debt rate; and

(3) for the 2018 and subsequent tax years:

(A) for a district described by Subdivision (1)(A), the sum of the following:

(i) the rate described by Subdivision (1)(A)(i);

(ii) the rate that is equal to the sum of the differences for the 2014 and each subsequent tax year between the adopted tax rate of the district for that year if the rate was approved at an election under this section and the rollback tax rate of the district for that year; and

(iii) the district's current debt rate; and

(B) for a district described by Subdivision (1)(B), the sum of the following:

(i) the rate that is equal to the greater of $0.04 per $100 of taxable value or the sum of the differences for the 2014 and each subsequent tax year between the adopted tax rate of the district for that year if the rate was approved at an election under this section and the rollback tax rate of the district for that year; and

(ii) the district's current debt rate[, the lesser of the following:

[(A) the sum of the following:

[(i) the rate per $100 of taxable value that is equal to the product of the state compression percentage, as determined under Section 42.2516, Education Code, for the current year and $1.50;

[(ii) the rate of $0.04 per $100 of taxable value;

[(iii) the rate that is equal to the sum of the differences for the 2006 and each subsequent tax year between the adopted tax rate of the district for that year if the rate was approved at an election under this section and the rollback tax rate of the district for that year; and

[(iv) the district's current debt rate; or

[(B) the sum of the following:

[(i) the effective maintenance and operations tax rate of the district as computed under Subsection (i) or (k), as applicable;

[(ii) the rate per $100 of taxable value that is equal to the product of the state compression percentage, as determined under Section 42.2516, Education Code, for the current year and $0.06; and

[(iii) the district's current debt rate].

SECTION 2.55. Section 312.210(b), Tax Code, is amended to read as follows:

(b) A tax abatement agreement with the owner of real property or tangible personal property that is located in the reinvestment zone described by Subsection (a) and in a school district [that has a wealth per student that does not exceed the equalized wealth level] must exempt from taxation:

(1) the portion of the value of the property in the amount specified in the joint agreement among the municipality, county, and junior college district; and

(2) an amount equal to 10 percent of the maximum portion of the value of the property that may under Section 312.204(a) be otherwise exempted from taxation.

ARTICLE 3. REPEALER; TRANSITION; EFFECTIVE DATE

SECTION 3.01. (a) The following provisions of the Education Code are repealed:

(1) Section 7.055(b)(34);

(2) Section 8.056;

(3) Sections 13.054(f) and (g);

(4) Section 29.203(g);

(5) Chapter 41;

(6) Sections 42.101(c-1) and (c-2);

(7) Section 42.158(e);

(8) Section 42.160(b);

(9) Section 42.2516;

(10) Section 42.252;

(11) Section 42.2523(c);

(12) Sections 42.2524(f) and (g);

(13) Section 42.253(c-1);

(14) Sections 42.259(a), (c), and (d);

(15) Section 42.261;

(16) Sections 42.302(a-2) and (f);

(17) Section 42.303; and

(18) Section 45.003(f).

(b) The following sections of Chapter 4 (S.B. 1), Acts of the 82nd Legislature, 1st Called Session, 2011, which are effective September 1, 2017, are repealed:

(1) Section 57.03, which amended Section 12.106(a), Education Code;

(2) Section 57.18, which amended the heading to Section 42.2516, Education Code;

(3) Section 57.19, which amended Section 42.2516(a), Education Code;

(4) Section 57.23, which amended Section 42.253(h), Education Code;

(5) Section 57.29, which amended Section 26.08(i), Tax Code; and

(6) Section 57.32, which repealed the following provisions:

(A) Sections 41.0041, 42.25161, 42.2523(c), 42.2524(g), 42.253(c-1), and 42.261, Education Code;

(B) Sections 42.2516(b), (b-1), (b-2), (c), (d), (e), (f), (f-1), (f-2), (f-3), and (i), Education Code; and

(C) Sections 26.08(i-1) and (j), Tax Code.

(c) The following provisions of the Tax Code are repealed:

(1) Sections 11.26(a-2) and (a-3);

(2) Sections 21.02(b) and (c);

(3) Section 25.25(k);

(4) Sections 26.08(i), (i-1), (j), (o), and (p); and

(5) Section 312.210(c).

SECTION 3.02. (a) Sections 45.002 and 45.003, Education Code, as amended by this Act, apply beginning with the 2014 tax year.

(b) The changes in law made by this Act to Sections 45.002 and 45.003, Education Code, do not affect the authority of a school district to collect and use delinquent ad valorem taxes authorized under those sections for the 2013 or an earlier tax year.

SECTION 3.03. Except as otherwise provided by this Act, the changes in law made by this Act to the Education Code apply beginning with the 2014-2015 school year.

SECTION 3.04. The changes in law made by this Act to Chapter 41, Tax Code, apply only to a challenge or protest under that chapter for which the challenge petition or notice of protest is filed on or after the effective date of this Act. A challenge or protest for which the challenge petition or notice of protest was filed before the effective date of this Act is covered by the law in effect when the petition or notice was filed, and the former law is continued in effect for that purpose.

SECTION 3.05. The changes in law made by this Act apply to each tax year that begins on or after January 1, 2014. The changes in law do not apply to a tax year that begins before January 1, 2014, and the law as it existed before January 1, 2014, is continued in effect for purposes of taxes imposed in that tax year.

SECTION 3.06. This Act takes effect January 1, 2014, but only if the constitutional amendment proposed by the 83rd Legislature, Regular Session, 2013, imposing a state property tax for public education, authorizing the legislature to establish for purposes of that tax a limit on the maximum appraised value of a residence homestead of 105 percent of the appraised value of the property for the preceding tax year, prohibiting school district property taxes for maintenance purposes, and authorizing school district property taxes for educational enrichment is approved by the voters. If that amendment is not approved by the voters, this Act has no effect.