TITLE education

Part II. Texas Education Agency

Chapter 105. Foundation School Program

Subchapter B. Use of State Funds

19 TAC §105.12

The Texas Education Agency (TEA) proposes new §105.12, concerning administration of the Foundation School Program. The new section would explain the authorized use of state aid for acquisitions, renovation, repairs, and maintenance of facilities.

Senate Bill 4, 76th Texas Legislature, 1999, amended the Texas Education Code (TEC), §42.301, relating to the use of the guaranteed yield component for capital outlay and debt service. The bill prohibits use of the guaranteed yield component for capital outlay and debt service. Clarification of the appropriate use of state aid for these purposes is necessary because of the impact of the amendment to TEC, §42.301, upon school districts' capacity to service outstanding and future debt obligations and to purchase, improve, renovate, lease, and incur other costs related to facilities. New §105.12 would specify the appropriate use of state aid by school districts. A technical change is also proposed to change the title of Chapter 105, Subchapter B, to read "Use of State Funds."

The TEA is also proposing an amendment to 19 TAC §109.41, which is filed in a separate submission. Section 109.41 adopts by reference the "Financial Accountability System Resource Guide." The proposed amendment to the Financial Accounting and Reporting Module of the "Resource Guide" would also explain the authorized use of undesignated state aid under the TEC, Chapter 42, Subchapter B.

Joe Wisnoski, coordinator for school finance and fiscal analysis, has determined that for the first five-year period the section is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section. Proposed new §105.12 would not directly affect the amount of school district costs under the Foundation School Program. The new section may achieve cost efficiencies because clarifying the appropriate use of state aid may result in lower interest rates under financing arrangements.

Mr. Wisnoski and Criss Cloudt, associate commissioner for policy planning and research, have determined that for each year of the first five years the section is in effect the public benefit anticipated as a result of enforcing the section will be improving financial accountability for educational programs in the Texas school system and keeping financial management practices current with changes in state law and federal rules and regulations. There will not be an effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the section as proposed.

Comments on the proposal may be submitted to Criss Cloudt, Policy Planning and Research, 1701 North Congress Avenue, Austin, Texas 78701, (512)463-9701. Comments may also be submitted electronically to rules@tmail.tea.state.tx.us or faxed to (512) 475-3499. All requests for a public hearing on the proposed section submitted under the Administrative Procedure Act must be received by the commissioner of education not more than 15 calendar days after notice of a proposed change in the section has been published in the Texas Register .

The new section is proposed under the Texas Education Code, §42.004, which authorizes the State Board of Education to implement rules to administer the Foundation School Program.

The new section implements the Texas Education Code, §42.004.

§105.12.Basic Allotment.

A school district may use state aid received pursuant to the Texas Education Code (TEC), Chapter 42, Subchapter B, and indirect costs as defined in §105.11 of this title (relating to Maximum Allowable Indirect Cost) for any lawful purpose, including operations and using, purchasing, or acquiring real property or land; improving real property; constructing or equipping buildings; renovating real property; repairing real property; or maintaining real property. A school district may fund obligations from state aid received pursuant to the TEC, Chapter 42, Subchapter B, including reduction of bond tax by deposit into the district debt service fund, lease purchase agreements, and public property finance contracts authorized under the Local Government Code, §271.004 and §271.005; time warrants issued pursuant to the TEC, §45.103; maintenance notes issued pursuant to the TEC, §45.108; and contracts issued pursuant to the TEC, §44.901.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on July 12, 1999.

TRD-9904150

Criss Cloudt

Associate Commissioner, Policy Planning and Research

Texas Education Agency

Earliest possible date of adoption: August 22,1999

For further information, please call: (512) 463-9701

Chapter 109. Budgeting, Accounting, and Auditing

Subchapter C. Adoptions By Reference

19 TAC §109.41

The Texas Education Agency (TEA) proposes an amendment to §109.41, concerning the "Financial Accountability System Resource Guide." The section adopts by reference the "Financial Accountability System Resource Guide" as the TEA's official rule. The "Resource Guide" describes rules for financial accounting such as financial reporting; budgeting; purchasing; auditing; site-based decision making; data collection and reporting; and management. Public school districts use the "Resource Guide" to meet the accounting, auditing, budgeting, and reporting requirements as set forth in the Texas Education Code and other state statutes relating to public school finance. The "Resource Guide" is available at www.tea.state.tx.us/school.finance/ on the TEA website.

The proposed amendment to §109.41 changes the date from "December 1998" to "September 1999" to reflect the effective date of the proposed amendments to the "Financial Accountability System Resource Guide." Under §109.41(b), the commissioner of education shall amend the "Financial Accountability System Resource Guide," adopting it by reference, as needed. The proposed amendments to the "Resource Guide" include changes to financial accounting and reporting guidelines. The amendments are necessary to implement new 19 TAC §105.12 that explains authorized use of undesignated state aid under the Texas Education Code, Chapter 42, Subchapter B. Undesignated state aid under the Texas Education Code, Chapter 42, Subchapter B, may be used for any lawful purpose, including the acquisition, renovation, repairs and maintenance of facilities and necessary sites, and capital purchases.

The TEA is also proposing new 19 TAC §105.12, which is filed in a separate submission. The new section would specify appropriate use of state aid by school districts.

Joe Wisnoski, coordinator for school finance and fiscal analysis, has determined that for the first five-year period the section is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section.

Mr. Wisnoski and Criss Cloudt, associate commissioner for policy planning and research, have determined that for each year of the first five years the section is in effect the public benefit anticipated as a result of enforcing the section will be improving financial accountability for educational programs in the Texas school system and keeping financial management practices current with changes in state law and federal rules and regulations. There will not be an effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the section as proposed.

Comments on the proposal may be submitted to Criss Cloudt, Policy Planning and Research, 1701 North Congress Avenue, Austin, Texas 78701, (512)463-9701. Comments may also be submitted electronically to rules@tmail.tea.state.tx.us or faxed to (512) 475-3499. All requests for a public hearing on the proposed section submitted under the Administrative Procedure Act must be received by the commissioner of education not more than 15 calendar days after notice of a proposed change in the section has been published in the Texas Register .

The amendment is proposed under the Texas Education Code, §§7.055, 44.001, 44.007, and 44.008, which authorize the commissioner of education to establish advisory guidelines relating to fiscal management of a school district and the State Board of Education to establish a standard school fiscal accounting system in conformity with generally accepted accounting principles.

The proposed amendment implements the Texas Education Code, §§7.055, 44.001, 44.007, and 44.008.

§109.41.Financial Accountability System Resource Guide.

(a)

The rules for financial accounting are described in the official Texas Education Agency publication, Financial Accountability System Resource Guide, as amended September 1999 [ December 1998 ] , which is adopted by this reference as the agency's official rule. A copy is available for examination during regular office hours, 8:00 a.m. to 5:00 p.m., except holidays, Saturdays, and Sundays, at the Texas Education Agency, 1701 North Congress Avenue, Austin, Texas 78701.

(b)

The commissioner of education shall amend the Financial Accountability System Resource Guide and this section adopting it by reference, as needed. The commissioner shall inform the State Board of Education of the intent to amend the Resource Guide and of the effect of proposed amendments before submitting them to the Office of the Secretary of State as proposed rule changes.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on July 12, 1999.

TRD-9904151

Criss Cloudt

Associate Commissioner, Policy Planning and Research

Texas Education Agency

Earliest possible date of adoption: August 22,1999

For further information, please call: (512) 463-9701