Part 2.
TEXAS EDUCATION AGENCY
Chapter 33.
STATEMENT OF INVESTMENT OBJECTIVES, POLICIES, AND GUIDELINES OF THE TEXAS PERMANENT SCHOOL FUND
19 TAC §§33.5, 33.15, 33.25, 33.35
The State Board of Education (SBOE) proposes amendments to §§33.5,
33.15, 33.25, and 33.35, concerning the Texas Permanent School Fund (PSF).
The rules establish investment objectives, policies, and guidelines for the
PSF. The proposed amendments would primarily update the rules to incorporate
recommended changes to the Long-Term Strategic Asset Allocation Plan of the
Permanent School Fund.
The Texas Education Code (TEC), §7.102(c)(31), states that the SBOE
may invest the PSF within the limits of the authority granted by the Texas
Constitution, Article VII, §5, and the TEC, Chapter 43.
The Long-Term Strategic Asset Allocation Plan of the PSF was originally
adopted by the SBOE on October 8, 1994. The SBOE has amended, discussed, and
reviewed the plan as needed since its original adoption. During its April
28, 2006, meeting, the SBOE directed the development of five work plans for
consideration at the July 2006 meeting using a proposed asset allocation as
a general guideline for the SBOE to adopt changes to the current plan. At
its April 2006 meeting, the SBOE agreed to schedule a work session prior to
the July 2006 meeting to review and discuss various background issues related
to the asset allocation plan of the PSF. The work session was held on June
14, 2006. Direction given by the SBOE during the June 14 work session was
incorporated into the proposed amendments considered during the July 2006
SBOE meeting. Changes to the asset allocation plan were approved by the SBOE
on July 7, 2006. The following proposed amendments approved for first reading
and filing authorization by the SBOE on July 7, 2006, would update 19 TAC
Chapter 33 to incorporate changes made to the asset allocation plan. In addition,
the proposed amendments include recommended adjustments to the code of ethics
and the securities lending guidelines.
Section 33.5, Code of Ethics, would be amended to include reference to
an additional statute relating to ethics and disclosure requirements and to
standardize reporting dates to match those of the state. Specifically, reference
to Texas Government Code, Chapter 2263, would be added to subsection (e)(1);
reporting periods and due dates for expenditure and disclosure reports would
be modified in subsection (l)(2)(J), (K), and (M); and clarification about
transactions between PSF service providers and/or consultants would be added
in subsection (n). The expenditure report form, adopted in rule in subsection
(l)(2)(J), would also be amended to reflect the changes in reporting periods.
Section 33.15, Objectives, would be amended to include the new asset class
objectives. An update to reflect the name change for the performance presentation
standards would be made in subsection (c)(2). Subsection (c) would also be
modified to add new paragraphs (8) - (11) for new asset class objectives relating
to real estate, private equity, absolute return, and real return funds, respectively.
Numbering and cross references would be modified accordingly. Subsection (d)(3)
would also be revised to include these new objectives.
Section 33.25, Permissible and Restricted Investments and General Guidelines
for Investment Managers, would be amended to accommodate the new asset classes
and to clarify language on existing guidelines. Subsection (a) would be modified
to add the new asset class objectives relating to real estate, private equity,
absolute return, and real return funds as permissible investments, with appropriate
renumbering and technical edits as necessary. Language related to government
sponsored agencies would be clarified in subsection (b)(10). Language to reflect
current Index guidelines, including rating by Fitch, would be updated in subsection
(b)(13). Language in subsection (c)(2)(D) would permit a varying degree of
discretionary authority for specialist advisors.
Section 33.35, Guidelines for the Custodian and the Securities Lending
Agent, would be amended to include the extension of the maturity of floating
rate notes to three years and to add language to strengthen the program in
general. Modifications throughout paragraph (2)(H) would be made to update,
correct, and strengthen specific guidelines applicable to the PSF securities
lending program.
In accordance with Texas Education Code (TEC), §43.0031(c), a copy
of the proposed amendment to 19 TAC §33.5 will be provided to the Texas
Ethics Commission and the state auditor for review and comment. Comments from
the commission or state auditor will be presented to the SBOE for consideration
prior to final adoption.
Holland Timmins, executive administrator and chief investment officer of
the Texas Permanent School Fund, has determined that for the first five-year
period the amendments are in effect there will be no fiscal implications for
state or local government (TEA and school districts) as a result of enforcing
or administering the amendments.
Mr. Timmins has determined that for each year of the first five years the
amendments are in effect the public benefit anticipated as a result of enforcing
the amendments would be provisions supporting the management and investment
of the PSF. The objective of the changes is to revise the asset allocation
to improve the total return and reduce the risk of the portfolio which would
support a higher distribution. The distribution of the PSF will flow to the
school districts and reduce the tax burden to the public and the state of
Texas. There will be no effect on small businesses. There is no anticipated
economic cost to persons who are required to comply with the proposed amendments.
Comments on the proposal may be submitted to Cristina De La Fuente-Valadez,
Policy Coordination Division, Texas Education Agency, 1701 North Congress
Avenue, Austin, Texas 78701, (512) 475-1497. Comments may also be submitted
electronically to
rules@tea.state.tx.us
or
faxed to (512) 463-0028. All requests for a public hearing on the proposed
amendments submitted under the Administrative Procedure Act must be received
by the commissioner of education not more than 15 calendar days after notice
of the proposal has been published in the
Texas Register
.
The amendments are proposed under the Texas Education Code, §7.102(c)(31)
and (33), which authorize the State Board of Education to invest the PSF within
the limits of the authority granted by the Texas Constitution, Article VII, §5,
and to adopt rules as necessary for the administration of the program; and §43.0031,
which authorize the State Board of Education to adopt and enforce an ethics
policy that provides standards of conduct relating to the management and investment
of the Permanent School Fund; and the Texas Constitution, Article VII, §5(f).
The amendments implement the Texas Education Code, §7.102(c)(31) and
(33), and §43.0031, and the Texas Constitution, Article VII, §5(f).
§33.5.Code of Ethics.
(a) - (d)
(No change.)
(e)
General ethical standards.
(1)
SBOE Members and PSF Service Providers must comply with
all applicable laws, specifically, the following statutes: Texas Government
Code,
Chapter 2263 (Ethics and Disclosure Requirements for Outside Financial
Advisors and Service Providers),
§825.211 (Certain Interests in
Loans, Investments, or Contracts Prohibited), §572.051 (Standards of
Conduct for Public Servants), §552.352 (Distribution of Confidential
Information), §572.058 (Private Interest in Measure or Decision; Disclosure;
Removal from Office for Violation), §572.054 (Representation by Former
Officer or Employee of Regulatory Agency Restricted), §572.002 (General
Definitions), §572.004 (Definition: Regulation), and Chapter 305 (Registration
of Lobbyists); and Texas Penal Code, Chapter 36 (Bribery, Corrupt Influence,
and Gifts to Public Servants) and Chapter 39 (Abuse of Office, Official Misconduct).
The omission of any applicable statute listed in this paragraph does not excuse
violation of its provisions.
(2) - (8)
(No change.)
(f) - (k)
(No change.)
(l)
Gifts and entertainment.
(1)
(No change.)
(2)
Acceptance of gifts.
(A) - (I)
(No change.)
(J)
A PSF Service Provider shall file a report annually on
April
[
(i) - (ii) (No change.)
(iii) an employee of the TEA or of a nonprofit corporation
created under the Texas Education Code, §43.006.
Figure: 19 TAC §33.5(l)(2)(J)(iii) (.pdf)
(K) A PSF Service Provider shall file a report annually with
the TEA's PSF office, in the format specified by the PSF staff, on or before
April
[
(i) - (v)
(No change.)
(L)
(No change.)
(M)
Each SBOE Member and each PSF Service Provider shall, no
later than
April
[
(m)
(No change.)
(n)
Transactions between PSF Service Providers and/or consultants.
(1)
(No change.)
(2)
PSF Service Providers and/or consultants to the SBOE who
provide advice regarding investment and management of the PSF shall report
to the SBOE on a quarterly basis all investment transactions or trades and
any fees or compensation paid
or received
in connection with the
transactions or trades with another PSF Service Provider or a person who acts
as a consultant to the SBOE regarding investment and management of the PSF.
(o) - (s)
(No change.)
§33.15.Objectives.
(a) - (b)
(No change.)
(c)
Investment rate of return and risk objectives.
(1)
(No change.)
(2)
Investment rates of return shall adhere to the
Chartered
Financial Analyst (CFA) Institute Global Investment Performance Standards
(GIPS)
[
(3) - (7)
(No change.)
(8)
The objective of the real estate
fund shall be to earn, over time, an average annual total rate of return that
meets or exceeds that of a representative benchmark index in U.S. dollars,
combining income and capital appreciation, while maintaining an acceptable
risk level compared to that of the representative benchmark index.
(9)
The objective of the private
equity fund shall be to earn, over time, an average annual total rate of return
that meets or exceeds that of a representative benchmark or a targeted internal
rate of return in U.S. dollars, combining income and capital appreciation,
while maintaining an acceptable risk level compared to that of the representative
benchmark.
(10)
The objective of the absolute
return fund shall be to earn, over time, an average annual total rate of return
that meets or exceeds that of a representative benchmark index in U.S. dollars,
combining income and capital appreciation, while maintaining an acceptable
risk level compared to that of the representative benchmark index.
(11)
The objective of the real
return fund shall be to earn, over time, an average annual total rate of return
that meets or exceeds that of a representative benchmark index in U.S. dollars,
combining income and capital appreciation, while maintaining an acceptable
risk level compared to that of the representative benchmark index.
(12)
[
(13)
[
(d)
Asset allocation policy.
(1) - (2)
(No change.)
(3)
The SBOE Committee on School Finance/Permanent School Fund,
with the advice of the PSF investment staff, shall review the provisions of
this section at least annually and, as needed, rebalance the assets of the
portfolio according to the asset allocation rebalancing procedure specified
in the PSF Investment Procedures Manual. The SBOE Committee on School Finance/Permanent
School Fund shall consider the industry diversification and the percentage
allocation [
(A) - (B)
(No change.)
(C)
domestic fixed income; [
(D)
real estate;
(E)
private equity;
(F)
absolute return;
(G)
real return; and
(H)
[
(4) - (5)
(No change.)
§33.25.Permissible and Restricted Investments and General Guidelines for Investment Managers.
(a)
Permissible investments.
(1) - (2)
(No change.)
(3)
Real estate is considered to
be investments in real properties, as well as investments in real estate related
securities and real estate related debt. Common property types associated
with real estate investments are, but not limited to, apartments, office buildings,
retail centers, infrastructure, timberlands, and industrial parks.
(4)
Private equity is considered
to be, but not limited to, venture capital, buy-out investing, mezzanine financing,
and distressed debt.
(5)
Absolute returns are investments
in a diversified bundle of primarily marketable investment strategies that
seek positive returns, regardless of market direction.
(6)
Real returns are investments
that target a return that exceed the rate of inflation, measured by the Consumer
Price Index (CPI), by a premium.
(7)
[
(8)
[
(9)
[
(b)
Prohibited transactions and restrictions. Unless the SBOE
gives its written approval, the following prohibited transactions and restrictions
apply for all PSF managers:
(1) - (9)
(No change.)
(10)
engaging in any purchasing transaction, after which the
cumulative market value of fixed income securities or cash equivalent securities
in a single corporation (excluding the U.S. government
,
[
(11) - (12)
(No change.)
(13)
purchasing any fixed income security not rated
investment
grade by at least two of the following ratings agencies:
at least BBB-
by Standard & Poor's
,
[
(14) - (20)
(No change.)
(c)
General guidelines for investment managers.
(1)
(No change.)
(2)
As fiduciaries of the PSF, investment managers shall discharge
their duties solely in the interests of the PSF according to the prudent expert
rule, engaging in activities that include the following.
(A) - (C)
(No change.)
(D)
Discretionary investment authority. Subject to the provisions
of this chapter, any investment manager of marketable securities or other
investments, retained by the PSF, shall have full discretionary investment
authority over the assets for which the manager is responsible.
Specialist
advisors retained for alternative asset investments may have a varying degree
of discretionary authority, which will be outlined in the respective management
contract.
(d)
(No change.)
§33.35.Guidelines for the Custodian and the Securities Lending Agent.
Completing custodial and security lending functions in an accurate
and timely manner is necessary for effective investment management and accurate
records.
(1)
(No change.)
(2)
A securities lending agent for the PSF shall have the following
responsibilities.
(A) - (G)
(No change.)
(H)
Comply with restrictions on types of securities lending
transactions or eligible investments of cash collateral or any other restrictions
imposed by the SBOE or the PSF investment staff.
Unless the SBOE gives
its written approval, the following guidelines apply to the PSF Securities
Lending Program.
Cash collateral reinvestment guidelines must meet the
following standards.
(i)
Permissible investments.
(I)
U.S. Government and U.S. Agencies, under the following
criteria:
(-a-) - (-b-)
(No change.)
(-c-)
maximum
three-year
[
(-d-)
(No change.)
(II)
Bank obligations, under the following criteria:
(-a-)
time deposits with maximum 60-day maturity on fixed rate
or
three-year maturity for
floating rate, with maximum reset period
of 60 days
and use a standard repricing index such as LIBOR, Federal
Funds, Treasury Bills, or commercial paper
;
(-b-)
negotiable Certificates of Deposit with maximum 397-day
maturity on fixed rate or
three-year maturity for
floating rate,
with maximum reset period of 90 days
and use a standard repricing index
such as LIBOR, Federal Funds, Treasury Bills, or commercial paper
;
(-c-)
bank notes with maximum 397-day maturity on fixed rate
or
three-year
[
(-d-)
(No change.)
(-e-)
banks with at least $25 billion in assets with a short-term
rating of "Tier 1" as defined in clause (ii)(IV) of this subparagraph
for fixed rate and AA2 and AA by Moody's Investor Service and Standard &
Poor's Corporation for floating rate
. In addition, placements can be
made in branches within the following countries:
(-1-) - (-4-)
(No change.)
(-f-)
(No change.)
(III) - (IV)
(No change.)
(V)
Asset backed securities, under the following criteria:
(-a-)
(No change.)
(-b-)
maximum
three-year
[
(-c-)
rated Aaa and AAA by Moody's Investor Service and Standard
&
[
(VI)
Corporate debt (other than commercial paper), under the
following criteria:
(-a-) - (-b-)
(No change.)
(-c-)
maximum
three-year
[
(-d-)
issuers or guarantor's short-term obligations must be
rated "Tier 1" as defined in clause (ii)(IV) of this subparagraph
for
fixed rate and AA2 and AA by Moody's Investor Service and Standard & Poor's
Corporation for floating rate
; and
(-e-)
(No change.)
(VII)
Reverse repurchase agreements, under the following criteria:
(-a-)
counterparty must be "Tier 1" rated as defined in clause
(ii)(IV) of this subparagraph
for fixed rate and AA2 and AA by Moody's
Investor Service and Standard & Poor's Corporation for floating rate
or
be a "Primary Dealer" in Government Securities as per the New York Federal
Reserve Bank;
(-b-) - (-c-)
(No change.)
(-d-)
collateral must be marked to market daily and maintained
at the following margin levels;
(-1-) - (-2-)
(No change.)
(-3-)
corporate debt (other than commercial paper) at 105%
rated at least AA2/AA or better by Moody's Investor Service and Standard
&
[
(-e-) - (-g-)
(No change.)
(VIII)
Foreign sovereign debt, under the following criteria:
(-a-)
any security issued by or fully guaranteed as to payment
of principal and interest by a foreign government whose sovereign debt is
rated AA2/AA or better by Moody's Investor Service and Standard
&
[
(-b-) - (-c-)
(No change.)
(IX)
(No change.)
(ii)
Investment parameters.
(I) - (VI)
(No change.)
(VII)
Interest and principal only
(IO, PO) stripped mortgages are not permitted.
(VIII)
[
(IX)
Complex derivative or structured
securities, including, but not limited to, the following are not permitted:
(-a-)
inverse floating rate notes;
(-b-)
defined range floating rate notes;
(-c-)
trigger notes; and
(-d-)
set-up notes.
(I) - (J)
(No change.)
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 17, 2006.
TRD-200603766
Cristina De La Fuente-Valadez
Director, Policy Coordination
Texas Education Agency
Earliest possible date of adoption: August 27, 2006
For further information, please call: (512) 475-1497
Subchapter C. GENERAL EDUCATIONAL DEVELOPMENT
19 TAC §§89.42, 89.43, 89.47
The State Board of Education (SBOE) proposes amendments to §§89.42,
89.43, and 89.47, concerning general educational development (GED). The rules
provide for high school equivalency testing in the state, including the establishment
of testing centers, eligibility requirements for the Texas Certificate of
High School Equivalency and the GED Test, and requirements for issuance of
the certificate.
Texas Education Code (TEC), §7.111, High School Equivalency Examinations,
requires the SBOE to provide for the administration of high school equivalency
examinations, including administration by the adjutant general's department
for specified students. TEC, §7.111, also requires the SBOE by rule to
establish and require payment of a fee as a condition to the issuance of a
high school equivalency certificate and a copy of the scores of the examinations.
The fee must be reasonable and designed to cover the administrative costs
of issuing the certificate and a copy of the scores. In accordance with statute,
the SBOE rules in 19 TAC Chapter 89, Subchapter C, address and implement statute.
The proposed amendments to 19 TAC Chapter 89, Subchapter C, would incorporate
provisions relating to legislation passed during the 79th Texas Legislature,
2005, and would provide necessary clarifications and updates identified during
the recent statutorily-required review of rules in 19 TAC Chapter 89, as follows.
In 19 TAC §89.42, Official Testing Centers, proposed changes would
be made to align provisions in the rule with the American Council of GED Testing
Services (GEDTS) program and contract updates. Affected provisions include
the following changes. Subsection (a) would include changes relating to the
location of testing centers, number of copies of the annual contract that
must be sent to the center, and required signatures on the contract. Subsection
(b) would include changes to remove the requirement to maintain test records
permanently. Subsection (d) would include changes to add inventory requirements
of tests administered at addendum sites. Subsection (g) would include changes
to modify required documentation for official testing centers and add assurances
that must be provided to the GEDTS. The proposed amendment to 19 TAC §89.42
would also include a technical correction in subsection (e).
In addition, the proposed amendment to 19 TAC §89.42 would modify
subsection (c) to clarify the educational requirements for chief examiners
that are designated by institutions of higher learning to align with those
currently required of school districts and ESCs.
A school district and ESC must designate a certified counselor to serve
as a chief examiner. According to the State Board for Educator Certification
(SBEC) rule in 19 TAC Chapter 239, Student Services Certificates, Subchapter
A, School Counselor Certificate, certification as a Kindergarten-Grade 12
school counselor requires successful completion of an approved Texas school
counselor program, two years of classroom teaching experience, the school
counselor exam, and a master's degree. This school counselor certification
includes the functional areas of regular education school counselor, vocational
counselor, and special education counselor.
Currently, 19 TAC §89.42(c) states that the administrative officer
of an institution of higher learning must designate a professional person
with a background in testing and counseling to serve as the chief examiner;
however, the rule does not specify or clarify the educational requirements
of a "professional person," although it is implied by the school district
or ESC designation of a "certified counselor" as the chief examiner. The proposed
amendment in 19 TAC §89.42(c) would provide this clarification.
In 19 TAC §89.43, Eligibility for a Texas Certificate of High School
Equivalency, the proposed amendment would incorporate provisions relating
to legislation passed during the 79th Texas Legislature, 2005, that provides
for Seaborne ChalleNGe Corp members who are 16 years of age to be administered
the GED examination. Subsection (a)(2) would be reorganized for clarity.
In 19 TAC §89.47, Issuance of the Certificate, the proposed amendment
made in subsection (c) would establish that the $5.00 paid for processing
a request for a duplicate GED certificate would be nonrefundable. Currently,
individuals are required to pay a fee of $5.00 for each request for a duplicate
certificate. In some cases, requests are received from individuals who either
(1) did not pass the GED, and thus, no certificate exists or (2) took the
GED in another state. The Texas Education Agency (TEA) incurs costs for personnel
and other operating expenses relating to processing these requests regardless
of whether the individual actually has a GED certificate on record at the
TEA. The TEA incurs additional costs to return the $5.00 fee to such individuals.
The proposal to make the fee nonrefundable would establish a cost savings
for the use of public resources.
Ernest Zamora, associate commissioner for support services, has determined
that for the first five-year period the amendments are in effect there will
be fiscal implications for the state as a result of enforcing or administering
the amendments. A savings of approximately $6,000 would be realized for each
of the first five years by reducing the amount of time spent by personnel
in three different departments that are currently tasked with processing refunds.
In addition, establishing a $5.00 nonrefundable fee would result in an estimated
increase in revenue of $3,000 for each of the next five fiscal years. This
estimate is based upon an average of 600 requests for refunds processed each
year in fiscal years 2004 and 2005 to return the $5.00 fee for certificates
not on record with the TEA. There will be no fiscal implications for local
government (school districts or institutions of higher learning) as a result
of the proposed amendments.
Dr. Zamora has determined that for each year of the first five years the
amendments are in effect the public benefit anticipated as a result of enforcing
the amendments would be alignment of provisions with national program and
contract standards, clarification of the education standards for chief examiners,
and establishment of a cost savings for the use of public resources. In addition,
students enrolled in the Seaborne ChalleNGe Corps who are at least 16 years
old would benefit by being eligible to test for the certificate of high school
equivalency in accordance with SBOE rules. There will be no effect on small
businesses. There is anticipated economic cost to persons who are required
to comply with the proposed amendments. An individual who requests a duplicate
certificate that is not on record with the TEA would not be refunded the $5.00.
Comments on the proposal may be submitted to Cristina De La Fuente-Valadez,
Policy Coordination Division, Texas Education Agency, 1701 North Congress
Avenue, Austin, Texas 78701, (512) 475-1497. Comments may also be submitted
electronically to
rules@tea.state.tx.us
or
faxed to (512) 463-0028. All requests for a public hearing on the proposed
amendments submitted under the Administrative Procedure Act must be received
by the commissioner of education not more than 15 calendar days after notice
of the proposal has been published in the
Texas Register
.
The amendments are proposed under the Texas Education Code, §7.111,
which authorizes the SBOE to provide for the administration of high school
equivalency examinations and to by rule establish and require payment of a
fee as a condition to the issuance of a high school equivalency certificate
and a copy of the scores of the examinations. The statute further states that
the fee must be reasonable and designed to cover the administrative costs
of issuing the certificate and a copy of the scores.
The amendments implement the Texas Education Code, §7.111.
§89.42.Official Testing Centers.
(a)
When authorized by the Texas Education Agency (TEA), official
testing centers shall be established by annual contract with an accredited
school district, institution of higher learning, or education service center
(ESC). The testing center must be located at a high school in an accredited
district, [
(b)
The chief administrative officer of the school, institution
of higher learning, or ESC at which an official testing center is established
must agree [
(c)
The administrative officer of a school district or ESC
must designate a certified counselor, and the administrative officer of an
institution of higher learning must designate a professional person with a
master's degree with a
background in
teaching, training,
testing
, or
[
(d)
A testing center may transport restricted test material
to correctional facilities, health facilities, or schools if authorization
to do so has been obtained. The chief administrative officer of an institution
housing an official testing center and the administrator of the correctional
facility, health facility, or school must request authorization to provide
the testing services from TEA. Only the exact number of tests
plus one
needed at a test session may be transported
to the addendum site
. Testing services at correctional or health facilities shall be limited
to inmates or patients of the facility, and the tests must be administered
by an employee of the school district, institution of higher learning, or
ESC housing the test center.
To maintain the integrity of the test, a
complete inventory of all secure testing materials shall be conducted:
(1)
before leaving the official
GED testing center;
(2)
upon arrival at the addendum
site;
(3)
immediately before and after
the test administration;
(4)
before departure from the addendum
site; and
(5)
upon return to the official
GED testing center.
(e)
The authorization to function as an official testing center
may be withdrawn by TEA when a center has failed to maintain the integrity
of the testing program. The TEA may suspend testing at a center if restricted
test material is reported missing or if conditions reported by the TEA
site
[
(f)
An official testing center may charge a fee for test administration.
The amount of the fee shall be determined by the administration or board of
the school district, institution of higher learning, or ESC.
(g)
The administration or board of an institution housing an
official testing center shall have a written policy concerning the operation
of the center
, a written emergency plan, and a testing schedule
.
[
(1)
appropriate resources;
(2)
suitable physical facilities;
(3)
adequate staffing;
(4)
full testing support services;
(5)
cooperation with the GEDTS;
(6)
financial management; and
(7)
test security.
§89.43.Eligibility for a Texas Certificate of High School Equivalency.
(a)
An applicant for a certificate of high school equivalency
shall meet the following requirements.
(1)
Residence. The applicant must be a resident of Texas or
a member of the United States armed forces stationed at a Texas installation.
(2)
Age. [
(A)
The applicant must be 18 years
old.
(B)
An applicant who is 17 years
of age is eligible with parental or guardian consent. An applicant who is
17 years of age must present written permission signed by the applicant's
parent or guardian. An applicant who is 17 years of age and married, who has
entered military service, who has been declared an adult by the court, or
who has otherwise legally severed the child/parent relationship is not required
to present parent or guardian permission to be tested.
(C)
An applicant who is at least
16 years of age may test if recommended by a public agency having supervision
or custody under a court order. Recommendations must include the applicant's
name and date of birth and must be signed by an official of the public agency
having supervision or custody of the person under a court order. An applicant
who is at least 16 years old may also test if:
(i)
required to take the examination under a justice
or municipal court order issued under the Code of Criminal Procedure, Article
45.054(a)(1)(C) (formerly codified as Family Code, §54.021(d)(1)(B));
(ii)
enrolled in a Job Corps training program under
the Workforce Investment Act of 1998 (29 United States Code, §§2801
et seq.) and its subsequent amendments; or
(iii)
enrolled in the adjutant general's department's
Seaborne ChalleNGe Corps.
(3)
Educational status. The applicant must not have received
a high school diploma from an accredited high school in the United States.
The applicant must not be enrolled in school, unless the applicant is enrolled
in a High School Equivalency Program (HSEP) approved by the Texas Education
Agency (TEA). A student who is 17 years of age is eligible to test if the
student is enrolled in an HSEP approved by the TEA. The student must comply
with the provisions of the HSEP.
(4)
Minimum test scores. An applicant must achieve the appropriate
minimum standard scores in effect at the time the applicant tested as established
by the American Council on Education's General Educational Development Testing
Service.
(b)
Test centers shall verify that any person being tested
meets the eligibility requirements in this section.
§89.47.Issuance of the Certificate.
(a)
Test scores shall be accepted as official only when reported
directly by official testing centers, the Defense Activity for Nontraditional
Education Support, directors of Veterans Administration hospitals, and, in
special cases, by the General Educational Development [
(b)
Following review for eligibility and approval, certificates
will be issued directly to clients. A nonrefundable fee of $15 will be assessed
for issuance of a certificate and a copy of test scores. A permanent file
shall be maintained for all certificates issued.
(c)
Duplicate certificates will be issued upon [
(d)
The certificate of high school equivalency shall indicate
the version of the test taken by the applicant: audiotape, large print, Braille,
English, French, or Spanish.
(e)
The state
General Educational Development (GED)
[
(1)
an applicant does not meet eligibility requirements under §89.43
of this title (relating to Eligibility for a Texas Certificate of High School
Equivalency);
(2)
the applicant in any way violates security of the restricted
test material;
(3)
the applicant presents fraudulent identification or is
not who he or she purports to be;
(4)
the applicant uses another person's certificate or test
scores in an attempt to defraud; or
(5)
the applicant willingly allows another person to use his
or her certificate or test scores in an attempt to defraud.
(f)
In the case of nonissuance or cancellation of a certificate,
the applicant shall be notified in writing by the GED administrator that the
certificate will not be issued or may be canceled.
(g)
An applicant who has been notified that his or her certificate
will not be issued or may be canceled may appeal to the state GED administrator
within 30 days of receiving written notification.
(h)
If, after further review, the state GED administrator does
not approve issuance of the certificate or cancels a certificate, this decision
may be appealed to the commissioner of education under Chapter 157 of this
title (relating to Hearings and Appeals).
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 17, 2006.
TRD-200603767
Cristina De La Fuente-Valadez
Director, Policy Coordination
Texas Education Agency
Earliest possible date of adoption: August 27, 2006
For further information, please call: (512) 475-1497
Subchapter AA. ACCOUNTABILITY AND PERFORMANCE MONITORING
19 TAC §97.1004
(Editor's Note: In accordance with Government Code, §2002.014,
which permits the omission of material which is "cumbersome, expensive, or
otherwise inexpedient," Figure: 19 TAC §97.1004(b) is not included in
the print version of the Texas Register. The Figure is available in the on-line
edition of the July 28, 2006, issue of the Texas Register.)
The Texas Education Agency (TEA) proposes an amendment
to §97.1004, concerning adequate yearly progress (AYP). The section establishes
provisions related to AYP and sets forth the process for evaluating campus
and district AYP status. The section also adopts the most recently published
AYP Guide. The proposed amendment would adopt applicable excerpts of the
Under the accountability provisions in the federal No Child Left Behind
Act, all public school campuses, school districts, and the state are evaluated
for AYP. Districts, campuses, and the state are required to meet AYP criteria
on three measures: reading/English language arts, mathematics, and either
graduation rate (for high schools and districts) or attendance rate (for elementary
and middle/junior high schools). If a campus, district, or state that is receiving
Title I, Part A funds fails to meet AYP for two consecutive years, that campus,
district, or state is subject to certain requirements such as offering supplemental
educational services, offering school choice, or taking corrective actions.
To implement these requirements, the agency developed the AYP Guide. Agency
legal counsel has determined that the commissioner of education should take
formal rulemaking action to place into the
Texas
Administrative Code
procedures related to AYP.
Through 19 TAC §97.1004, adopted effective July 14, 2005, the commissioner
exercised rulemaking authority to establish provisions related to AYP and
set forth the process for evaluating campus and district AYP status. Portions
of each AYP Guide have been adopted beginning with the 2004 AYP Guide, and
the intent is to annually update 19 TAC §97.1004 to incorporate provisions
from the most recently published AYP Guide.
The proposed amendment to 19 TAC §97.1004 would update the rule to
adopt applicable excerpts,
Sections II-V
,
of the
2006 Adequate Yearly Progress Guide
,
dated July 2006. These excerpted sections describe specific features of the
system, AYP measures and standards, and appeals. In 2006, the U.S. Department
of Education approved changes to specific components of the AYP system, including
the areas addressed in the applicable excerpts of the 2006 AYP Guide. Examples
of approved changes include an agreement requiring a decrease in the federal
cap on alternative assessment proficient results and the establishment of
specific procedures to address evaluation and reporting of information regarding
students displaced by Hurricanes Katrina and Rita.
The proposed amendment to 19 TAC §97.1004 would also amend subsection
(a) to correct reference to the measure for reading/English language arts.
Subsection (d) would be modified to specify that the AYP Guide adopted for
each previous school year prior to 2006-2007 will remain in effect with respect
to that school year.
Criss Cloudt, associate commissioner for accountability and data quality,
has determined that for the first five-year period the amendment is in effect
there will be no fiscal implications for state and local government as a result
of enforcing or administering the amendment.
Dr. Cloudt has determined that for each year of the first five years the
amendment is in effect the public benefit anticipated as a result of enforcing
the amendment will be to continue to inform the public of the AYP rating procedures
for the public schools. There will be no effect on small businesses. There
is no anticipated economic cost to persons who are required to comply with
the proposed amendment.
The public comment period on the proposal begins July 28, 2006, and ends
August 27, 2006. Comments on the proposal may be submitted to Cristina De
La Fuente-Valadez, Policy Coordination Division, Texas Education Agency, 1701
North Congress Avenue, Austin, Texas 78701, (512) 475-1497. Comments may also
be submitted electronically to
rules@tea.state.tx.us
or faxed to (512) 463-0028. All requests for a public hearing on the
proposed amendment submitted under the Administrative Procedure Act must be
received by the commissioner of education not more than 15 calendar days after
notice of the proposal has been published in the
Texas Register
.
The amendment is proposed under the Texas Education Code (TEC), §7.055(b)(32),
which authorizes the commissioner to perform duties in connection with the
public school accountability system as prescribed by TEC, Chapter 39; TEC, §39.073,
which authorizes the commissioner to determine how all indicators adopted
under TEC, §39.051(b), may be used to determine accountability ratings;
and TEC, §39.075(a)(4), which authorizes the commissioner to conduct
special accreditation investigations in response to state and federal program
requirements.
The amendment implements the Texas Education Code, §§7.055(b)(32),
39.073, and 39.075(a)(4).
§97.1004.Adequate Yearly Progress.
(a)
In accordance with the federal No Child Left Behind Act
and Texas Education Code, §§7.055(b)(32), 39.073, and 39.075, all
public school campuses, school districts, and the state are evaluated for
Adequate Yearly Progress (AYP). Districts, campuses, and the state are required
to meet AYP criteria on three measures:
reading/English language arts
[
(b)
The determination of AYP for school districts and charter
schools in
2006
[
Figure: 19 TAC §97.1004(b) (.pdf)
(c)
The specific criteria and calculations used in AYP are
established annually by the commissioner of education and communicated to
all school districts and charter schools.
(d)
The specific criteria and calculations used in the AYP
Guide adopted for the school year prior to
2006-2007
[
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 17, 2006.
TRD-200603768
Cristina De La Fuente-Valadez
Director, Policy Coordination
Texas Education Agency
Earliest possible date of adoption: August 27, 2006
For further information, please call: (512) 475-1497
19 TAC §97.1005
(Editor's Note: In accordance with Government Code, §2002.014,
which permits the omission of material which is "cumbersome, expensive, or
otherwise inexpedient," Figure: 19 TAC §97.1005(b) is not included in
the print version of the Texas Register. The Figure is available in the on-line
edition of the July 28, 2006, issue of the Texas Register.)
The Texas Education Agency (TEA) proposes an amendment
to §97.1005, concerning accountability and performance monitoring. The
section describes the purpose of the Performance-Based Monitoring Analysis
System (PBMAS) and manner in which school districts and charter school performance
is reported. The section also adopts the most recently published PBMAS Manual.
The proposed amendment would adopt applicable excerpted sections of the PBMAS
2006 Manual, dated June 8, 2006.
House Bill 3459, 78th Texas Legislature, 2003, added the Texas Education
Code (TEC), §7.027, limiting and redirecting monitoring done by the TEA
to that required to ensure school district and charter school compliance with
federal law and regulations; financial accountability, including compliance
with grant requirements; and data integrity for purposes of the Public Education
Information Management System (PEIMS) and accountability under TEC, Chapter
39. Legislation passed in 2005 renumbered TEC, §7.027, to TEC, §7.028.
To meet this monitoring requirement, the TEA developed the PBMAS, which is
used in conjunction with other evaluation systems, to monitor performance
and program effectiveness of special programs in school districts and charter
schools.
Agency legal counsel has determined that the commissioner of education
should take formal rulemaking action to place into the
Texas Administrative Code
procedures related to the PBMAS. Given the
statewide application of the PBMAS and the existence of sufficient statutory
authority for the commissioner of education to formally adopt rules in this
area, portions of each annual PBMAS Manual have been adopted since the first
PBMAS Manual was developed in 2004-2005. The PBMAS evolves from year to year,
and the intent is to annually update 19 TAC §97.1005 to refer to the
most recently published PBMAS Manual.
The proposed amendment to 19 TAC §97.1005 would update the current
rule by adopting excerpted sections of the PBMAS 2006 Manual, dated June 8,
2006. These excerpted sections describe the specific criteria and calculations
that will be used to assign 2006 PBMAS performance levels. In 2006, two new
PBMAS indicators are previewed: one in the bilingual education/English as
a Second Language program area that measures English language proficiency
rates and one in the special education program area that measures student
participation in one of the new statewide assessments. A new Annual Measurable
Achievement Objective is implemented in the No Child Left Behind program area.
Changes to the PBMAS indicators for 2006 are marked
"New!"
for easy reference.
The proposed amendment would also amend language in subsection (a) to update
the TEC reference to reflect action taken by the legislature in 2005 to renumber
the statute. In addition, subsection (d) would be modified to specify that
the PBMAS manual adopted for each previous school year prior to 2006-2007
will remain in effect with respect to that school year.
Criss Cloudt, associate commissioner for accountability and data quality,
has determined that for the first five-year period the amendment is in effect
there will be no fiscal implications for state and local government as a result
of enforcing or administering the amendment.
Dr. Cloudt has determined that for each year of the first five years the
amendment is in effect the public benefit anticipated as a result of enforcing
the amendment will be to continue informing the public of the existence of
annual manuals specifying PBMAS procedures by including this rule in the
The public comment period on the proposal begins July 28, 2006, and ends
August 27, 2006. Comments on the proposal may be submitted to Cristina De
La Fuente-Valadez, Policy Coordination Division, Texas Education Agency, 1701
North Congress Avenue, Austin, Texas 78701, (512) 475-1497. Comments may also
be submitted electronically to
rules@tea.state.tx.us
or faxed to (512) 463-0028. All requests for a public hearing on the
proposed amendment submitted under the Administrative Procedure Act must be
received by the commissioner of education not more than 15 calendar days after
notice of the proposal has been published in the
Texas Register
.
The amendment is proposed under the Texas Education Code, §7.028,
which authorizes the agency to monitor as necessary to ensure school district
and charter school compliance with state and federal law and regulations.
The amendment implements the Texas Education Code, §7.028.
§97.1005.Performance-Based Monitoring Analysis System.
(a)
In accordance with Texas Education Code,
§7.028(a)
[
(b)
The assignment of performance levels for school districts
and charter schools in the
2006
[
Figure: 19 TAC §97.1005(b) (.pdf)
(c)
The specific criteria and calculations used in the PBMAS
are established annually by the commissioner of education and communicated
to all school districts and charter schools.
(d)
The specific criteria and calculations used in the
annual
PBMAS manual adopted for the school
years
[
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 17, 2006.
TRD-200603769
Cristina De La Fuente-Valadez
Director, Policy Coordination
Texas Education Agency
Earliest possible date of adoption: August 27, 2006
For further information, please call: (512) 475-1497
January
] 15 of each year on the expenditure report
provided in this subsection entitled "Report of Expenditures of Persons Providing
Services to the State Board of Education Relating to the Management and Investment
of the Permanent School Fund." The report shall be for the time period beginning
on
January 1
[
December 1 of the previous year
] and ending
on
December 31 of the previous year
[
November 30 of the current
year
]. The expenditure report must describe in detail any expenditure
of more than $50 made by the person on behalf of:
January
] 15 of each year. The report will be deemed
to be filed when it is actually received. The report shall be for the time
period beginning on
January 1
[
December 1 of the previous
year
] and ending on
December 31 of the previous year
[
November 30 of the current year
]. It shall list any individuals who
served in any of the following capacities at any time during the reporting
period:
January
] 15, file an annual report
affirmatively disclosing any violation of this code of ethics known to that
person during the
time period beginning January 1 and ending December
31 of the
previous year which has not previously been disclosed in writing
to the commissioner of education for distribution to all board members, or
affirmatively state that the person has no knowledge of any such violation.
For purposes of this subparagraph only, "SBOE Member" means only the individual
elected official.
Association for Investment Management and Research-Performance
Presentation Standards (AIMR-PPS)
] guidelines in calculating and reporting
investment performance return information.
(8)
] The objective of the short-term
cash fund shall be to provide liquidity for the timely payment of security
transactions, while earning a competitive return. The expected return, over
time, shall meet or exceed that of the representative benchmark index, while
maintaining an acceptable risk level compared to that of the representative
benchmark index.
(9)
] Notwithstanding the risk parameters
specified in paragraphs
(4) - (12)
[
(4) - (8)
] of this
subsection, consideration shall be given to marginal risk variances exceeding
the representative benchmark indices if returns are commensurate with the
risk levels of the respective portfolios.
between fixed income and equity securities
] within
the following asset classes:
and
]
(D)
] cash.
(3)
] Cash equivalents are securities
with maturities of less than or equal to one year that are considered to include
interest bearing or discount instruments of the U.S. government or its agencies,
money market funds, corporate discounted instruments, corporate-issued commercial
paper, time deposits of U.S. or foreign banks, bankers acceptances, and fully
collateralized repurchase agreements. Both U.S. and foreign offerings are
permitted. All residual cash in the Texas Permanent School Fund (PSF) portfolio
must be swept and invested on a daily basis.
(4)
] Any form of investment or nonpublicly
traded investment may be considered by the State Board of Education (SBOE)
based on risk and return characteristics, provided the investment is consistent
with PSF goals and objectives.
(5)
] The
SBOE
[
State Board of Education (SBOE)
] may approve currency hedging strategies
for the international portfolios and delineate the related procedures in the
"Standards of Performance" section of the PSF Investment Procedures Manual.
or
] its
federal
agencies
, and government sponsored
enterprises
) exceeds 2.5% of the PSF total market value or 5.0% of
the manager's total portfolio market value;
and
] Baa3 by Moody's,
and BBB by Fitch,
subject to the provisions in the PSF Investment Procedures
Manual related to the fixed income portfolio mandates regarding quality and
duration;
397-day
] maturity
on floating rate, with maximum reset period of 90 days
and use a standard
repricing index such as London InterBank Offered Rate (LIBOR), Federal Funds,
Treasury Bills, or commercial paper
; and
maximum 397-day
] maturity on floating
rate, with maximum reset period of 90 days
and use a standard repricing
index such as LIBOR, Federal Funds, Treasury Bills, or commercial paper
;
397-day
] weighted
average life on floating rate, with maximum reset period of 90 days
and use a standard repricing index such as LIBOR, Federal Funds, Treasury
Bills, or commercial paper
; and [
;
]
and
] Poor's Corporation at time of purchase. One AAA
rating may suffice if only rated by one Nationally Recognized Securities Rating
Organization (NRSRO).
397-day
] maturity
on floating rate, with maximum rest period of 90 days
and use a standard
repricing index such as LIBOR, Federal Funds, Treasury Bills, or commercial
paper
;
and
] Poor's Corporation at time of purchase;
and
] Poor's Corporation at time of purchase. Securities
must be delivered to Lending Agent or a third party under a Tri-Party agreement;
(VII)
] Mortgage backed securities
are not permitted.
Chapter 89.
ADAPTATIONS FOR SPECIAL POPULATIONS
an adult learning center,
] an accredited institution
of higher learning, or ESC. The chief administrative officer of a school,
institution of higher learning, or ESC desiring to provide the General Educational
Development (GED) testing service to residents in the community must request
authorization to do so from TEA. If the need for a testing center in the location
exists, the appropriate agency official, in writing, shall inform the American
Council on Education that the establishment of an official testing center
is authorized at that particular institution. The center shall be sent [
four copies of
] an annual contract, together with order forms and other
material, relating to the operation of the testing center. The contract forms
must be signed by the chief administrative officer of the school, institution
of higher learning, or ESC
, and the chief examiner
.
to maintain test records permanently,
] to provide appropriate
storage for restricted test materials[
,
] and to provide a suitable
place for administering the test. Each center is responsible for selecting
and ordering test materials.
and
] counseling, to serve as chief examiner. The person
designated as chief examiner shall not be involved in preparing persons for
the examinations. The chief administrative officer must obtain prior authorization
from TEA to change the chief examiner or the location of a testing center.
The person designated as chief examiner must attend annual training conducted
by TEA.
monitoring
] visit indicate that the testing center
is in violation of State Board of Education (SBOE) rules or requirements of
the American Council on Education.
This policy must provide that the chief administrative officer or chief
examiner of the testing center shall prepare an annual report concerning the
center for review by the administration or board of each institution. The
report must include the number of tests administered and fees received.
]
Each official testing center must provide the following assurances to the
GED Testing Service:
The applicant must be 18 years old. An applicant
who is 17 years of age is eligible with parental or guardian consent. An applicant
who is 17 years of age must present written permission signed by the applicant's
parent or guardian. An applicant who is 17 years of age and married, who has
entered military service, who has been declared an adult by the court, or
who has otherwise legally severed the child/parent relationship is not required
to present parent or guardian permission to be tested. An applicant who is
at least 16 years of age may test if recommended by a public agency having
supervision or custody under a court order. Recommendations must include the
applicant's name and date of birth and must be signed by an official of the
public agency having supervision or custody of the person under a court order.
An applicant who is at least 16 years old may also test if required to take
the examination under a justice or municipal court order issued under the
Code of Criminal Procedure, Article 45.054(a)(1)(C) (formerly codified as
Family Code, §54.021(d)(1)(B)), or if enrolled in a Job Corps training
program under the Workforce Investment Act of 1998 (29 United States Code, §§2801
et seq.) and its subsequent amendments.
]
(GED)
] Testing
Service
(GEDTS)
.
written
] request from the client. The client is required to pay a
nonrefundable
fee of
$5.00
[
$5
] for each request for a duplicate
certificate.
GED
] administrator may disapprove issuance of a certificate or may cancel
a certificate under the following conditions:
Chapter 97.
PLANNING AND ACCOUNTABILITY
reading/language arts
] , mathematics, and either graduation
rate (for high schools and districts) or attendance rate (for elementary and
middle/junior high schools). The performance of a school district, campus,
or the state is reported through indicators of AYP status established by the
commissioner of education.
2005
] is based on specific criteria
and calculations, which are described in excerpted sections of the
2006
[
2005
] AYP Guide provided in this subsection.
2005-2006
] remain in effect for all purposes, including accountability, data
standards, and audits, with respect to that school year.
§7.027(a)
] , the purpose of the Performance-Based
Monitoring Analysis System (PBMAS) is to report annually on the performance
of school districts and charter schools in selected program areas: bilingual
education/English as a Second Language, career and technology education, special
education, and certain Title programs under the federal No Child Left Behind
Act. The performance of a school district or charter school is reported through
indicators of student performance and program effectiveness and corresponding
performance levels established by the commissioner of education.
2005
] PBMAS is based
on specific criteria and calculations, which are described in excerpted sections
of the PBMAS
2006
[
2005
] Manual provided in this subsection.
year
] prior to
2006-2007
[
2005-2006
] remain in effect
for all purposes, including accountability and performance monitoring, data
standards, and audits, with respect to that school year.