PROPOSED RULES Before an agency may permanently adopt a new or amended section or repeal an existing section, a proposal detailing the action must be published in the Texas Register at least 30 days before action is taken. The 30-day time period gives interested persons an opportunity to review and make oral or written comments on the section. Also, in the case of substantive action, a public hearing must be granted if requested by at least 25 persons, a governmental subdivision or agency, or an association having at least 25 members. Symbology in proposed amendments. New language added to an existing section is indicated by the use of bold text. [Brackets] indicate deletion of existing material within a section. TITLE 19. EDUCATION Part II. Texas Education Agency Chapter 33. Investment Program of the Permanent School Fund 19 TAC sec.sec.33.1, 33.10, 33.15, 33.20, 33.25, 33.30, 33.35, 33. 40, 33.45, 33.50, 33.60, 33.65, 33.70, 33.75, 33.85, 33.90, 33.95, 33.100, 33. 105 (Editor's note: The text of the following sections proposed for repeal will not be published. The sections may be examined in the offices of the Texas Education Agency or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.) The Texas Education Agency (TEA) proposes the repeal of ssec.33.1, 33.10, 33.15, 33.20, 33.25, 33.30, 33.35, 33.40, 33.45, 33.50, 33.60, 33.65, 33.70, 33.75, 33.85, 33.90, 33.95, 33.100, and 33.105, concerning the Texas Permanent School Fund (PSF). The sections establish investment objectives, policies, and guidelines for the PSF. The repeals are necessary to allow the State Board of Education (SBOE) to adopt new sections that will implement the strategic asset allocation plan the SBOE approved in October 1994. The TEA is proposing new Chapter 33 in a separate submission. Carlos Resendez, executive administrator of the PSF, has determined that for the first five-year period the repeals are in effect there will be no fiscal implications as a result of enforcing or administering the repeals. Mr. Resendez and Criss Cloudt, executive associate commissioner for policy planning and information management, have determined that for each year of the first five years the repeals are in effect the public benefit anticipated as a result of enforcing the repeals will be that the SBOE will adopt new rules causing the income of the PSF to flow to school districts and reduce the tax burden to the public and the state. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the rules as proposed. Comments on the proposal may be submitted to Criss Cloudt, Policy Planning and Information Management, 1701 North Congress Avenue, Austin, Texas 78701, (512) 463-9701. All requests for a public hearing on the proposed repeal 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 rules has been published in the Texas Register. The repeals are proposed under the Texas Constitution, Article VII, sec.5(d), which authorizes the SBOE to manage the PSF assets. The repeals implement the Texas Constitution, Article VII, sec.5(d). sec.33.1. Investment Authority. sec.33.10. Goal and Objectives for the Permanent School Fund. sec.33.15. Definition of Investment Programs. sec.33.20. Long-Range Diversiification Pattern. sec.33.25. Approved List of Corporations for Security Purchases. sec.33.30. Equity Transactions. sec.33.35. Fixed Income Transactions. sec.33.40. Approved Brokerage Firms for Equity Transactions. sec.33.45. Brokerage Firms for Fixed Income Transactions. sec.33.50. Cash Management. sec.33.60. Items Requiring State Board of Education Approval. sec.33.65. Committees. sec.33.70. Investment Counsel. sec.33.75. Investment Staff. sec.33.85. Provision for Emergency Action. sec.33.90. Investment Operating Manual. sec.33.95. System of Internal Controls. sec.33.100. Proxies. sec.33.105. Guarantee Program for School District Bonds. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 25, 1995. TRD-9501021 Criss Cloudt Executive Associate Commissioner, Policy Planning and Information Management Texas Education Agency Earliest possible date of adoption: March 3, 1995 For further information, please call: (512) 463-9701 Chapter 33. Statement of Investment Objectives, Policies, and Guidelines 19 TAC sec.sec.33.1, 33.5, 33.10, 33.15, 33.20, 33.25, 33.30, 33. 35, 33.40, 33.45, 33.50, 33.55, 33.60, 33.65 The Texas Education Agency (TEA) proposes new sec.sec.33.1, 33.5, 33.10, 33. 15, 33.20, 33.25, 33.30, 33.35, 33.40, 33.45, 33.50, 33.55, 33.60, and 33.65, concerning the Texas Permanent School Fund (PSF). The sections establish investment objectives, policies, and guidelines for the PSF and are necessary to implement the strategic asset allocation plan the State Board of Education (SBOE) approved in October 1994. The TEA is proposing the repeal of current Chapter 33 in a separate submission. Carlos Resendez, executive administrator of the PSF, has determined that for the first five-year period the rules are in effect there will be fiscal implications as a result of enforcing or administering the rules. The effect on state government will be an estimated additional cost of $726,598 in fiscal year (FY) 1995; $10,015,020 in FY 1996; $15,181,009 in FY 1997; $17,871,298 in FY 1998, and $20,649,815 in FY 1999. In addition, the PSF will experience an estimated decrease in revenue of $27 million in FY 1996; $78 million in FY 1997; $141 million in FY 1998; and $214 million in FY 1999. There will be no decrease in revenue for FY 1995. The decreases in revenue will be offset by estimated capital gains of $100 million in FY 1995; $200 million in FY 1996; and $400 million in FYs 1997-1999. The estimated implications for PSF revenue assume a 5.0% portfolio reallocation per year from fixed income securities to equities. The effect on local government cannot be accurately determined at this time. Mr. Resendez and Criss Cloudt, executive associate commissioner for policy planning and information management, have determined that for each year of the first five years the rules are in effect the public benefit anticipated as a result of enforcing the rules will be that the income of the PSF will flow to school districts and reduce the tax burden to the public and the state. There will be no effect on small businesses. The anticipated economic cost to persons who are required to comply with the rules as proposed cannot be accurately determined at this time. Comments on the proposal may be submitted to Criss Cloudt, Policy Planning and Information Management, 1701 North Congress Avenue, Austin, Texas 78701, (512) 463-9701. All requests for a public hearing on the proposed rules 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 rules has been published in the Texas Register. The new rules are proposed under the Texas Constitution, Article VII, sec.5(d), which authorizes the SBOE to manage the PSF assets. The new rules implement the Texas Constitution, Article VII, sec.5(d). sec.33.1. Constitutional Authority and Constitutional Restrictions. The Texas Permanent School Fund (PSF) shall be invested according to the Texas Constitution, Article VII, sec.5(d), under the direction of the State Board of Education (SBOE). sec.33.5. Code of Ethics. (a) Fiduciary responsibility. The members of the State Board of Education (SBOE) serve as fiduciaries of the Texas Permanent School Fund (PSF) and are responsible for prudently investing its assets. The SBOE members or anyone acting on their behalf shall comply with the provisions of this section, the Texas Constitution, Texas statutes, and all other applicable provisions governing the responsibilities of a fiduciary. (b) Compliance with constitution and code of ethics. The SBOE members are public officials governed by the provisions of the Texas Government Ethics Act, as stated in the Texas Government Code, Chapter 572, and the standards of conduct and conflict of interest procedures of the Texas Education Agency (TEA). (c) Persons affected by this section. A reference to an SBOE member includes the SBOE member and each member of his or her immediate family (spouse or children), members of a firm with which they are associated, or individuals with whom they have a financial association. (d) Assets affected by this section. The provisions of this section apply to all PSF assets, both publicly and nonpublicly traded investments. (e) Disclosure. An SBOE member shall not participate in a discussion or vote on a matter in which the member has direct or indirect financial interest. In addition, an SBOE member shall fully disclose any substantial interest, as defined in the Texas Government Code, Chapter 572, in any publicly or nonpublicly traded PSF investment. (f) Prohibitions against direct placement. For purposes of this chapter, the term "direct placement" (with respect to investments that are not publicly traded) is defined as a direct sale of securities, generally to institutional investors, without the use of underwriters. No SBOE member shall: (1) have a financial interest in a direct placement investment of the PSF; (2) serve as an officer, director, or employee of an entity in which a direct placement investment is made by the PSF; (3) serve as a consultant to, or receive any fee, commission or payment from, an entity in which a direct placement investment is made by the PSF; (4) act as a representative or agent of a third party in dealing with a PSF manager or consultant; (5) be employed for two years after the end of his or her term on the SBOE with an organization in which the PSF invested, unless the organization's stock or other evidence of ownership is traded on the public stock or bond exchanges. (g) In addition to the prohibitions specified in subsections (a)-(f) of this section, no SBOE member shall solicit support on behalf of another political candidate from a PSF manager, consultant, or staff member. The manager, consultant, or staff member shall report any such incident in writing to the commissioner of education for distribution to all SBOE members. (h) Responsibilities of investment managers and consultants. Each investment manager retained by the PSF shall be notified in writing of the code of ethics contained in this section and the related conflict of interest laws of Texas. Any future investment shall strictly conform to this code of ethics. The manager or consultant shall report in writing any suggestion or offer by an SBOE member to deviate from the provisions of this section to the commissioner of education for distribution to all SBOE members. An investment manager, consultant, or other person retained in a fiduciary capacity must comply with the provisions of this section. (i) Hiring external professionals. The SBOE may contract with private professional investment managers to help make PSF investments. The SBOE has the authority and responsibility to hire other external professionals, including custodians or consultants. The SBOE shall comply with the provisions of the Texas Government Act, as stated in the Texas Government Code, Chapter 572, and the standards of conduct and conflict of interest procedures of the TEA when hiring an external professional. The SBOE shall select each professional based solely on merit and subject to the provisions of sec.33.55 of this title (relating to Standards for Selecting Consultants, Investment Managers, Custodians, and Other Professionals To Provide Outside Expertise for the Texas Permanent School Fund). sec.33.10. Purposes of Texas Permanent School Fund Assets and the Statement of Investment Policy. (a) The purpose of the Texas Permanent School Fund (PSF), as defined by the Texas Constitution, shall be to support and maintain an efficient system of public free schools. The State Board of Education (SBOE) views the PSF as a perpetual institution. Consistent with its perpetual nature, the PSF shall be an endowment fund with a long-term investment horizon. The SBOE shall strive to manage the PSF consistently with respect to the following: generating income for the benefit of the public free schools of Texas, the growth of the corpus of the PSF, protecting capital, and balancing the needs of present and future generations of Texas school children. (b) The purposes of the investment policy statement are to: (1) specify the investment objectives, policies, and guidelines the SBOE considers appropriate and prudent, considering the needs of the PSF, and to comply with the Texas Constitution by directing PSF assets. Although the PSF is not subject to the provisions of the Employee Retirement Income Security Act (ERISA) of 1974, as amended, the SBOE intends to comply with the provisions of ERISA regarding fiduciary responsibility to the greatest extent possible. Further, the provisions of the Uniform Management of Institutional Funds Act, as stated in the Texas Property Code, sec.sec.163.001-163.009, shall apply, to the extent they are consistent with the provisions of the Texas Constitution, Article VII, governing the operation of the PSF; (2) establish SBOE performance criteria for an investment manager; (3) communicate the investment objectives, guidelines, and performance criteria to the SBOE, PSF investment staff and managers, and all other parties; (4) guide the ongoing oversight of PSF investment and test compliance with the Texas Constitution and other applicable statutes; (5) document that the SBOE is fulfilling its responsibilities for managing PSF investments solely in the interests of the PSF; and (6) document that the SBOE is fulfilling its responsibilities under Texas law. sec.33.15. Responsible Parties and Their Duties. (a) The Texas Constitution, Article VII, sec.sec.1-8, establishes the Available School Fund, the Texas Permanent School Fund (PSF), and the State Board of Education (SBOE), and specifies the standard of care SBOE members must exercise in managing PSF assets. In addition, the constitution directs the legislature to establish suitable provisions for supporting and maintaining an efficient public free school system, and defines the composition of the perpetual public school fund. The Texas Education Code, Chapter 15, regulates the use of state funds to support public schools, and the provisions of this chapter govern the investment objectives, policies, and guidelines of the PSF. (b) The SBOE shall be responsible for overseeing all aspects of the PSF and may employ any of the following parties, whose duties and responsibilities are as follows. (1) An investment manager is a person, firm, corporation, bank, or insurance company the SBOE retains to manage a portion of the PSF assets under specified guidelines. (2) A custodian is an organization, normally a bank, the SBOE retains to safekeep, and provide accurate and timely reports of, PSF assets. (3) A consultant is a person or firm the SBOE retains to advise the PSF based on professional expertise. (4) Investment counsel is a person or firm retained under criteria specified in the PSF Investment Procedures Manual to advise PSF investment staff and the SBOE Committee on the Permanent School Fund within the policy framework established by the SBOE. Counsel may advise PSF internal managers regarding various issues, including: selecting companies in different industries; specific stock or corporate bond issues or other investment instruments; and timing of purchases and sales. Counsel advises on the economic and market environment and asset allocation and provides PSF investment staff direction on diversifying investments between asset classes and among respective industries. (5) A performance measurement consultant is a person or firm retained to provide the SBOE Committee on the Permanent School Fund an analysis of the PSF portfolio performance. The outside portfolio performance measurement service firm shall perform the analysis on a quarterly or as-needed basis. Quarterly reports shall be distributed to each member of the SBOE Committee on the Permanent School Fund, and a representative of the firm shall be available as necessary to brief the committee. (6) The Internal Audit Division of the Texas Education Agency (TEA) reviews the internal control procedures of the PSF Investment Office annually at the direction of the SBOE. The division conducts the audit according to standards advocated by the Institute of Internal Auditors, Inc., and reports all findings to the commissioner of education. The purpose of the internal audit shall be to evaluate the controls over assets and test compliance with TEA rules and procedures. (7) The State Auditor's Office is an independent state agency that performs an annual financial audit of the TEA at the direction of the Texas Legislature. The financial audit, conducted according to generally accepted auditing standards, is designed to test compliance with generally accepted accounting principles. The state auditor performs tests of the transactions of the PSF Investment Office as part of this annual audit, including compliance with governing statutes and SBOE policies and directives. (8) The SBOE may retain independent external auditors to review the PSF accounts annually or on an as-needed basis. (c) The SBOE shall meet on a regular or as-needed basis to conduct the affairs of the PSF. (d) In case of emergency or urgent public necessity, the SBOE Committee on the Permanent School Fund or the SBOE, as appropriate, may hold an emergency meeting under the Texas Government Code, sec.551.045. (e) The SBOE shall have the following exclusive duties: (1) determining the strategic asset allocation mix between asset classes based on the attending economic conditions and the PSF goals and objectives; (2) ratifying the investment transactions pertaining to the purchase, sale, or reinvestment of fixed income, equity, or cash securities by all internal and external managers for the current reporting period; (3) appointing members to the SBOE Investment Advisory Committee; (4) approving all contracts with external professional investment managers, financial advisors, financial consultants, or other external professionals employed to help the SBOE invest the PSF; (5) approving the performance measurement contract with a well recognized and reputable firm employed to evaluate and analyze PSF investment results. The service shall compare investment results to the written investment objectives of the SBOE and also compare the investment of the PSF with the investment of other public and private funds against market indices and by managerial style; (6) setting policies, objectives, and guidelines for investing PSF assets; and (7) representing the PSF to the state. (f) The SBOE may establish committees to administer the affairs of the PSF. The duties and responsibilities of any committee established shall be specified in the PSF Investment Procedures Manual. (g) The PSF shall have an executive administrator, with a staff to be adjusted as necessary, who functions directly with the SBOE through the SBOE Committee on the Permanent School Fund concerning investment matters, and who functions as part of the internal operation under the commissioner of education. At all times, the PSF executive administrator and staff shall invest PSF assets as directed be the SBOE according to the Texas Constitution and all other applicable Texas statutes, as amended, and SBOE rules governing the operation of the PSF. The PSF staff shall: (1) administer the PSF according to SBOE goals and objectives; (2) execute all directives, policies, and procedures from the SBOE and the SBOE Committee on the Permanent School Fund; (3) keep records and provide a continuous and accurate accounting of all PSF transactions, revenues, and expenses and provide reports on the status of the PSF portfolio; (4) advise any officials, investment firms, or other interested parties about the powers, limitations, and prohibitions regarding PSF investments that have been placed on the SBOE or PSF investment staff by statutes, attorney general opinions and court decisions, or by SBOE policies and operating procedures; (5) continuously research all internally managed securities held by the PSF and report to the SBOE Committee on the Permanent School Fund or the SBOE any information requested, including reports and statistics on the PSF, for the purpose of administering the PSF; (6) establish and maintain a procedures manual that implements this section to be approved by the SBOE; (7) make recommendations regarding investment and policy matters to the SBOE Committee on the Permanent School Fund and the SBOE; (8) establish and maintain accounting policies and internal control procedures concerning all receipts, disbursements and investments of the PSF, according to the procedures adopted by the SBOE. sec.33.20. Objectives. (a) Investment objectives. (1) Investment objectives have been formulated based on the following considerations: (A) the anticipated financial needs of the Texas public free school system in light of expected future contributions to the Texas Permanent School Fund (PSF); (B) the need to preserve capital; (C) the risk tolerance set by the State Board of Education (SBOE) and the need for diversity; (D) observations about historical rates of return on various asset classes; (E) assumptions about current and projected capital market and general economic conditions and expected levels of inflation; (F) the need to invest according to the prudent person rule; and (G) the need to document investment objectives, guidelines, and performance standards. (2) Investment objectives represent desired results and are long-term in nature, covering typical market cycles of three to five years. Any shortfall should be explainable in terms of general economic and capital market conditions. (3) The investment objectives are consistent with generally accepted standards of fiduciary responsibility. (4) Under the provisions of this chapter, investment managers shall have discretion and authority to implement security selection and timing. (b) Goal and objectives for the PSF. (1) Goal. The goal of the SBOE for the PSF shall be to obtain the greatest amount of income and capital appreciation consistent with the safety of principal, in light of the strategic asset allocation plan adopted. To achieve this goal, PSF investment shall be carefully administered at all times. (2) Objectives. (A) The preservation and safety of principal shall be a primary consideration in PSF investment. (B) Fixed income securities shall be purchased at the highest yield consistent with the preservation and safety of principal, emphasizing current rather than deferred income. (C) To the extent possible, the PSF administrators shall hedge against inflation by purchasing equities that emphasize stability and growth of future earnings and dividends rather than current return. (D) Securities, except investments for cash management purposes as specified in sec.33.25 of this title (relating to Permissible and Restricted Investments and General Guidelines for Investment Managers), shall be selected for investment on the basis of long-term investment merits rather than short-term gains. (c) Investment rate of return and risk objectives. (1) Because the education needs of the future generations of Texas school children are long-term in nature and directly related to income growth and income potential, the return objective of the PSF shall also be long-term and focused on maintaining asset growth while preserving real capital value. Maintaining value under an income and capital appreciation concept encompasses a policy that over the long term will provide the PSF a positive return when adjusted for inflation and spending. (2) Investment rates of return shall be based on a time-weighted calculation, compounded and annualized over a rolling period of three to five years, and shall take into account all cash income plus realized and unrealized capital gains and losses, and calculated gross and net of fees and expenses. (3) The overall risk level of PSF assets in terms of potential for price fluctuation shall not be extreme. The primary means of achieving such a risk profile are: (A) a broad diversification among asset classes that, as nearly as possible, react independently through varying economic and market circumstances; (B) careful control of risk level within each asset class by avoiding over- concentration and not taking extreme positions against the market averages; and (C) a degree of emphasis on stable growth. (4) Over time, the volatility of returns (or risk) for the total fund, as measured by standard deviation of investment returns, should be less than the risk from comparable investments in market indices in the proportion in which the PSF invests. (5) The objective of the domestic equity fund shall be to earn, over time, an average annual total rate of return that exceeds that of a representative benchmark index, combining dividends and capital appreciation, while maintaining a lower risk level than that of the representative benchmark index. (6) The objective of the international equity fund shall be to earn, over time, an average annual total rate of return that exceeds that of a representative international benchmark index in U.S. dollars, combining dividends and capital appreciation, while maintaining a lower risk level than that of the representative benchmark index. (7) The objective of the domestic fixed income fund shall be to earn, over time, an average annual total rate of return that exceeds that of a representative benchmark index, combining interest income and capital appreciation, while maintaining a lower risk level than that of the representative benchmark index. (8) The objective of the international fixed income fund shall be to earn, over time, an average annual total rate of return that exceeds the return of a representative Non-U.S. world benchmark index in U.S. dollars, combining interest income and capital appreciation, while maintaining a lower risk level than that of the representative benchmark index. (9) 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 exceed that of the representative benchmark index, while maintaining a lower risk level than that of the representative benchmark index. (10) Notwithstanding the risk parameters specified in paragraphs (4) -(9) 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. (d) Asset allocation policy. (1) The SBOE shall adopt and implement a strategic asset allocation plan based on a well diversified, balanced investment approach that uses a broad range of asset classes indicated by the following characteristics of the PSF: (A) the long-term nature of the PSF; (B) the spending policy of the PSF; (C) the relatively low liquidity requirements of the PSF; (D) the investment preferences and risk tolerance of the SBOE; (E) the rate of return objectives; and (F) the diversification objectives of the PSF, specified in the Texas Constitution, Article VII, sec.5(d), the Texas Education Code, Chapter 15, and the provisions of this chapter. (2) The strategic asset allocation plan shall contain guideline percentages, at market value of the total fund's assets, to be invested in various asset classes. The target mix may not be attainable at a specific point in time since actual asset allocation will be dictated by current and anticipated market conditions, as well as the overall directions of the SBOE. (3) The SBOE Committee on the 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 the Permanent School Fund shall consider the industry diversification and the percentage allocation between fixed income and equity securities within the following asset classes: (A) domestic equities; (B) international equities; (C) domestic fixed income; (D) international fixed income; and (E) cash. (4) Investments shall not exceed the strategic ranges the SBOE establishes for each asset class. (5) Periodically, the SBOE shall allocate segments of the total fund to each investment manager and specify guidelines, investment objectives, and standards of performance that apply to those assets. sec.33.25. Permissible and Restricted Investments and General Guidelines for Investment Managers. (a) Permissible investments. (1) Equities are considered to be common or preferred corporate stocks; corporate bonds, debentures, or preferreds that may be converted into corporate stock; and investment trusts. Stocks listed on well recognized or principal U.S. or foreign exchanges are permitted. (2) Fixed income securities are considered to be U.S. or foreign treasury or government agency obligations, U.S. or foreign corporate bonds, asset- or mortgage-backed securities, taxable municipal obligations, Canadian bonds, Yankee bonds, supranational bonds (denominated in U.S. dollars), and 144A securities. The 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. (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 new form of investment or new 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. (b) Prohibited transactions and restrictions. Unless the SBOE gives its written approval, the following prohibited transactions and restrictions apply for all PSF managers: (1) short sales of any kind; (2) purchasing letter or restricted stock; (3) buying or selling on margin; (4) engaging in purchasing or writing options or similar transactions; (5) purchasing or selling futures on commodities contracts; (6) borrowing money, or pledging or otherwise encumbering PSF assets; (7) purchasing the equity or debt securities of the portfolio manager's organization or an affiliated organization; (8) engaging in any purchasing transaction, after which the cumulative market value of common stock in a single corporation exceeds 2.5% of the PSF total market value or 5.0% of the manager's total portfolio market value; (9) engaging in any purchasing transaction, after which the cumulative number of shares of common stock in a single corporation held by the PSF exceeds 5.0% of the outstanding voting stock of that issuer; (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 or its agencies) exceeds 2.5% of the PSF total market value or 5.0% of the manager's total portfolio market value; (11) purchasing tax exempt bonds; (12) purchasing guaranteed investment contracts (GICs) from an insurance company or bank investment contracts (BICs) from a bank not rated at least AAA by Standard & Poor's or Moody's; (13) purchasing any fixed income security not rated at least BBB-by Standard & Poor's or Baa3 by Moody's, subject to the provisions in the PSF Investment Procedures Manual related to the fixed income portfolio mandates regarding quality and duration; (14) purchasing short-term money market instruments rated below A-1 or P-1 by Standard and Poor's and Moody's, respectively; (15) engaging in any transaction that results in unrelated business taxable income (excluding current holdings); (16) engaging in any transaction considered a "prohibited transaction" under the Internal Revenue Code or the Employee Retirement Income Security Act (ERISA); (17) purchasing precious metals or other commodities; (18) engaging in any transaction that would leverage a manager's position; (19) lending securities owned by the PSF, but held in custody by another party, such as a bank custodian, to any other party for any purpose, unless lending securities according to a separate written agreement the SBOE approved; and (20) purchasing fixed income securities without a stated par value amount due at maturity. (c) General guidelines for investment managers. (1) Each investment manager retained to manage a portion of PSF assets shall be aware of, and operate within, the provisions of this chapter and all applicable Texas statutes. (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) Diversification. The investment policy shall be to diversify each manager's common stock portfolio by participating in industries and companies with above average prospects or sound fundamentals. (B) Securities trading. (i) Each manager shall send copies of each transaction record to the PSF investment staff and custodians. (ii) Each manager shall be required to reconcile the accounts under management on a monthly basis with the PSF investment staff and custodians. (iii) Each manager shall be responsible for complying fully with PSF policies for trading securities and selecting brokerage firms, as specified in sec.33.40 of this title (relating to Trading and Brokerage Policy). In particular, the emphasis of security trading shall be on best execution; that is, the highest proceeds to the PSF and the lowest costs, net of all transaction expenses. Placing orders shall be based on the financial viability of the brokerage firm and the assurance of prompt and efficient execution. (iv) The SBOE shall require each external manager to indemnify the PSF for all failed trades not due to the negligence of the PSF or its custodian. (C) Acknowledgments in writing. (i) Each external investment manager retained by the PSF must be a person, firm, or corporation registered as an investment adviser under the Investment Adviser Act of 1940, a bank as defined in the Act, or an insurance company qualified to do business in more than one state, and must acknowledge its fiduciary responsibility in writing. A firm registered with the Securities and Exchange Commission (SEC) must annually provide a copy of its Form ADV, Section II. (ii) The SBOE may require each external manager to obtain coverage for errors and omissions in an amount set by the SBOE, but the coverage shall be at least the greater of $500,000 or 1.0% of the assets managed, not exceeding $10 million. The manager shall annually provide evidence in writing of the existence of the coverage. (iii) Each external manager may be required by the SBOE to obtain fidelity bonds, fiduciary liability insurance, or both. (iv) Each manager shall acknowledge in writing receiving a copy of, and agreeing to comply with, the provisions of this chapter. (D) 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. (d) Reporting procedures for investment managers. The investment manager shall: (1) prepare a monthly report for delivery to the SBOE, the SBOE Committee on the Permanent School Fund, and the PSF investment staff that shall include, in the appropriate format, items requested by the SBOE. The reports shall cover any change in the firm's structure, professional team, or product offerings; the firm's economic review; a review of recent and anticipated investment activity; an analysis of major changes that have occurred in the investment markets and in the portfolio, particularly since the last report; a detail of the portfolio holdings and each transaction that has been completed or is in process since the last report; and a summary of the key characteristics of the PSF portfolio. Periodically, the PSF investment staff shall provide the investment manager a detailed description of, and format for, these reports; (2) when requested by the SBOE Committee on the Permanent School Fund, make a presentation describing the professionals retained for the PSF, the investment process used for the PSF portfolio under the manager's responsibility, and any related issues; (3) when requested by the PSF investment staff, meet to discuss the management of the portfolio, new developments, and any related matters; and (4) implement a specific investment process for the PSF. The manager shall describe the process and its underlying philosophy in an attachment to its investment management agreement with the PSF and manage according to this process until the PSF and manager agree in writing to any change. sec.33.30. Standards of Performance. (a) The State Board of Education (SBOE) Committee on the Permanent School Fund shall set and maintain performance standards for the total fund, the equity fund, the fixed income fund, and the cash fund of the Texas Permanent School Fund (PSF), and all investment managers based on criteria that include the following: (1) time horizon; (2) real rate of return; (3) representative benchmark index; (4) volatility of returns (or risk), as measured by standard deviation; and (5) universe comparison. (b) The SBOE Committee on the Permanent School Fund shall develop and implement the procedures necessary to establish and recommend to the SBOE the performance standards criteria. (c) Performance standards shall be included in the PSF Investment Procedures Manual. sec.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) A custodian shall have the following responsibilities regarding the segments of the funds for which the custodian is responsible: (A) provide complete custody and depository services for the designated accounts; (B) provide for investment of any cash on a daily basis to avoid uninvested amounts; (C) implement the investment actions in a timely and effective manner as directed by the investment managers; (D) collect all realizable income and principal and properly report the information on the periodic statements to the Texas Permanent School Fund (PSF) investment staff, the investment managers, or other appropriate parties; (E) provide monthly and annual accounting statements, as well as on-line, real-time accounting, that includes all transactions. Accounting shall be based on accurate security values for cost and market value and provided within a time frame acceptable to the State Board of Education (SBOE); (F) report to the PSF investment staff situations in which security pricing is either not possible or subject to considerable uncertainty; (G) distribute all proxy voting materials to the PSF investment staff in a timely manner; (H) provide research and assistance to the SBOE and the PSF investment staff on all issues related to accounting and administration; (I) confirm that the depth of resources and personnel associated with the designated funds are comparable to those of the nation's leading custodial banks. (2) A securities lending agent for the PSF shall have the following responsibilities: (A) provide complete transaction reporting for the designated funds; (B) provide a monthly accounting, as well as on-line, real-time accounting for securities lending transactions, based on accurate security values; (C) report to the PSF investment staff any irregular situation that is outside the standard of practice for securities lending or inconsistent with the provisions of the securities lending agreement; (D) implement a securities lending program for the PSF in a manner that does not impair any rights of the PSF by virtue of PSF ownership in securities; (E) as requested, provide research and assistance to the SBOE and the PSF investment staff on all issues related to accounting and administration; (F) provide indemnification to the PSF satisfactory to the SBOE in the event of default on securities lending transactions; (G) fully disclose all revenues and other fees associated with the securities lending program; (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; (I) provide a copy of the investment policy governing the custodian's securities lending program, as amended, to the PSF investment staff; (J) confirm that the depth of resources and personnel associated with the designated funds are comparable to those of the nation's leading securities lending agents. sec.33.40. Trading and Brokerage Policy. (a) Security transaction policy. (1) The following principles shall guide all Texas Permanent School Fund (PSF) transactions. (A) Best execution and lowest cost must apply to each PSF trade. (B) Ongoing efforts must be made to reduce trading costs, in terms of both commissions and market impact, provided the investment returns of the PSF are not jeopardized. (2) The State Board of Education (SBOE) may enter into brokerage commission recapture agreements or soft dollar agreements. (3) The SBOE may evaluate transaction activity annually through a trading cost analysis. (b) Directed Trades. The SBOE may adopt directed trade procedures for the PSF portfolio according to procedures developed by the SBOE Committee on the Permanent School Fund. (c) Guidelines for selecting a brokerage firm. (1) Introduction and basic principles. (A) The SBOE intends that any transaction of publicly traded security occur through a brokerage firm or automated trading system, regardless of location, to obtain the lowest transaction cost consistent with best execution. (B) Each investment manager shall be responsible for selecting brokerage firms or automated trading systems through which PSF trading shall be completed. The selections must meet PSF guidelines and be for the exclusive benefit of the PSF. (2) Guidelines for selection. The broker or dealer firm must: (A) have appropriate trading and comprehensive, proprietary, in-house research capabilities and market expertise; (B) be in compliance with applicable federal and Texas laws related to conducting business as a broker or dealer; (C) be a member in good standing of the major financial exchanges; (D) have on-site, in-house trading capability and direct access to major markets; (E) have in-house access to trading support equipment; (F) trade for competitive rates that provide the lowest transaction cost consistent with best execution; (G) be financially able to accommodate a capital commitment trade over an industry standard settlement period; (H) have the ability and record to clear and settle trades without unnecessary delays or fails; and (I) have been in business as a broker or dealer for a reasonable period of time to ensure financial and operational stability. (3) A broker or dealer firm may have an independent contractual relationship with a historically underutilized business. (4) Review and evaluation. At least annually, the SBOE Committee on the Permanent School Fund shall review the brokerage firms used by PSF investment managers and all transactions for compliance with the provisions of this section. sec.33.45. Proxy Voting Policy. The State Board of Education (SBOE) recognizes its fiduciary obligations with respect to the voting of proxies of companies with securities that are owned by the Texas Permanent School Fund (PSF). Because the issues related to proxy voting are complex and directly impact investment values, the SBOE believes the PSF is best suited to vote the proxies of shares held in the PSF portfolio. Therefore, as part of the PSF investment policy, the SBOE instructs the PSF executive administrator and investment staff to vote all of the PSF proxies of companies according to the following guidelines. (1) Routine matters. Routine proxy proposals shall be voted in support of company proposals unless there is a clear reason not to do so. Routine matters include: (A) electing directors; (B) determining the size of a board; (C) changing a corporate name; (D) appointing an auditor; (E) splitting stock; (F) amending articles of incorporation that are required to comply with federal or state regulation; and (G) changing the date, time, or location of an annual meeting. (2) Business matters. Business proposals that do not eliminate the rights of shareholders, especially minority shareholders, or the status of securities held, including ownership status, shall not be treated as routine; rather, they shall be carefully analyzed. These issues may be voted with management. However, business proposals that are nonroutine or would impair the economic interests of shareholders shall be voted against management. Examples of such proposals include: (A) requests to alter bylaws to require a super majority to approve mergers; (B) anti-takeover proposals that could restrict tender offers or deny majority owners from exercising judgment; (C) proposals to dilute existing shares by issuing substantially more stock without adequate explanation by management; and (D) proposals that would enrich management excessively or substantially increase compensation awards or employment contracts to senior management that become effective when ownership of the company changes (also known as "golden parachute" awards). (3) Other matters. On all other matters, the PSF executive administrator and investment staff shall vote proxies judged to be in the best interests of the PSF. (4) At the conclusion of the annual proxy season, the PSF executive administrator shall advise the SBOE of all instances in which the PSF executive administrator voted against management. sec.33.50. Socially and Politically Responsible Investment Policy. Investments shall be considered based on the prudent person rule and the provisions of this chapter. Investments shall provide the highest return commensurate with the lowest risk and shall be diversified. sec.33.55. Standards for Selecting Consultants, Investment Managers, Custodians, and Other Professionals To Provide Outside Expertise for the Fund. The State Board of Education (SBOE) may retain qualified professionals to assist in investment and related matters. (1) Basis for selection. The SBOE shall retain professional assistance based solely on the demonstrated ability of the professional to provide the expertise or assistance needed. For each type of expertise, relevant and objective criteria shall be established to judge and select experts. (2) Types of expertise for consideration. Examples of professionals or specialized expertise the SBOE may retain include: investment managers, accountants, consultants, legal counsel, custodians, security lending agents, and system specialists. (3) Process for selecting professional assistance. The SBOE shall establish and maintain in the Texas Permanent School Fund (PSF) Procedures Manual an objective process for selecting expertise or assistance. The SBOE Committee on the Permanent School Fund shall periodically review the process to ensure it reflects SBOE objectives. sec.33.60. Performance and Review Procedures. As requested by the State Board of Education (SBOE) or Texas Permanent School Fund (PSF) investment staff, evaluation and periodic investment reports shall supply critical information on a continuing basis, such as the amount of trading activity, investment performance, cash positions, diversification ratios, rates of return, and other perspectives of the portfolios. The reports shall address compliance with investment policy guidelines. (1) Performance measurements. The SBOE Committee on the Permanent School Fund shall review at least quarterly the performance of each investment manager portfolio of the PSF in terms of the provisions of this chapter. The investment performance review shall include comparisons with representative benchmark indices, a broad universe of investment managers, and the consumer price index. A time-weighted return formula (which minimizes the effect of contributions and withdrawals) shall be used for investment return analysis. The review also may include quarterly performance analysis and comparisons of retained firms. The services of an outside, independent consulting firm that provides performance measurement and evaluation shall be retained. (2) Meeting and reports. At least annually, the SBOE Committee on the Permanent School Fund shall meet with the PSF investment managers and custodian to review their responsibilities, the PSF portfolio, and investment results in terms of the provisions of this chapter. (3) Review and modification of investment policy statement. The SBOE Committee on the Permanent School Fund shall review the provisions of this chapter at least once a year to determine if modifications are necessary or desirable. Upon approval by the SBOE, any modifications shall be promptly reported to all investment managers and other responsible parties. (4) Compliance with this chapter and Texas statutes. Annually, the SBOE Committee on the Permanent School Fund shall confirm that the PSF and each of its managed portfolios have complied with the provisions of this chapter concerning exclusions imposed by the SBOE, proxy voting, and trading and brokerage selection. (5) Significant events. The SBOE must be notified promptly if any of the following events occur within the custodian or external investment manager organizations: (A) any event that is likely to adversely impact to a significant degree the management, professionalism, integrity, or financial position of the custodian or investment manager. A custodian must report the loss of an account of $500 million or more. An investment manager must report the loss of an account of $25 million or more; (B) a loss of one or more key people; (C) a significant change in investment philosophy; (D) the addition of a new portfolio manager on the sponsor's account; or (E) a change in ownership or control, through any means, of the custodian or investment manager; (F) any violation of policy. sec.33.65. Guarantee Program for School District Bonds. (a) The commissioner of education shall administer the guarantee program for school district bonds according to the provisions of the Texas Education Code, Chapter 20, Subchapter E. (b) A school district seeking the guarantee of eligible bonds shall apply to the commissioner of education. The district shall submit, in a form specified by the commissioner of education, the information required under the Texas Education Code, sec.20.905(b), and this section and any additional information the commissioner may require. The application shall be accompanied by a fee to be set by the commissioner of education and approved by the State Board of Education (SBOE). (c) Under the Texas Education Code, sec.20.906, the commissioner of education shall investigate the applicant school district's accreditation status and financial status. A district must be accredited and financially sound to be eligible for approval by the commissioner of education. (1) The commissioner's review shall include the following: (A) the purpose of the bond issue; (B) the district's accreditation status and compliance with statutes and rules of the Central Education Agency; and (C) the district's financial status and stability, including approval of the bonds by the attorney general under the provisions of the Texas Education Code, sec.20.06 and sec.20.09(d). (2) A district applying for approval for the guarantee of refunding bonds must be accredited and comply with the following. (A) The district must demonstrate that issuing the bonds will result in a total interest saving to the district, if the refunding bonds are to be issued under the Texas Education Code, sec.20.05. (B) If the refunding bonds do not meet the requirements of subparagraph (A) of this paragraph, the district must demonstrate to the satisfaction of the commissioner of education that the refunding is otherwise beneficial to the district. (3) Under Texas Civil Statutes, Article 717k, a district may issue combination new money bonds and refunding bonds in a single guarantee bond issue and sell the issue at a private sale. (d) If necessary to successfully operate the guarantee program, the commissioner of education may allocate specific holdings of the Texas Permanent School Fund (PSF) to specific bond issues guaranteed under this section. This allocation shall not prejudice the right of the State Board of Education (SBOE) to dispose of the holdings according to law and requirements applicable to the fund; however, the SBOE shall ensure that holdings of the PSF are available for a substitute allocation sufficient to meet the purposes of the initial allocation. This allocation shall not affect any rights of the bond holders under law. (e) If, in the judgment of the commissioner of education, it becomes necessary or advisable to limit the total amount of bonds that may be guaranteed under this program, the commissioner may further investigate the proposed issues submitted for approval. (1) The commissioner of education shall determine whether to guarantee an issue based on considerations that may include the following: (A) purpose of the bond issue and the district's need for the bond issue; (B) whether the bonds to be issued are new issues or refunding bonds; (C) the repayment plan for bonds; (D) the percentage of savings to the district represented by the refunding bonds, if any; or (E) any other consideration that, in the judgment of the commissioner, would enable the commissioner to make a decision in the best interest of the bond guarantee program and Texas school districts. (2) The commissioner of education may limit approval of the guarantee to a district with a bond rating below the "AAA" category, as rated by a nationally recognized municipal bond rating service. When a rating is issued by more than one service, the lower of the two ratings shall be used to determine whether the school district shall be eligible for the guarantee. (f) The guarantee shall be completely removed when bonds guaranteed by this program are defeased, and such a provision shall be specifically stated in the bond resolution. If bonds guaranteed by this program are defeased, the district shall notify the commissioner of education in writing within ten calendar days of the action. (g) For bonds issued before August 15, 1993, a school district seeking the guarantee of eligible bonds shall certify that, on the date of issuance of any bond, no funds received by the district from the Available School Fund are reasonably expected to be used directly or indirectly to pay the principal or interest on, or the tender or retirement price of, any bond of the political subdivision or to fund a reserve or placement fund for any such bond. (h) For bonds guaranteed before December 1, 1993, if a school district cannot pay the maturing or matured principal or interest on a guaranteed bond, the commissioner of education shall cause the amount needed to pay the principal or interest to be transferred to the district's paying agent solely from the Texas Permanent School Fund and not from the Available School Fund. The commissioner also shall direct the comptroller of public accounts to withhold the amount paid, plus interest, from the first state money payable to the district, excluding payments from the Available School Fund. (i) For bonds issued after August 15, 1993, and guaranteed on or after December 1, 1993, if a school district cannot pay the maturing or matured principal or interest on a guaranteed bond, the commissioner of education shall cause the amount needed to pay the principal or interest to be transferred to the district's paying agent from the Texas Permanent School Fund. The commissioner also shall direct the comptroller of public accounts to withhold the amount paid, plus interest, from the first state money payable to the district, regardless of source, including the Available School Fund. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 25, 1995. TRD-9501022 Criss Cloudt Executive Associate Commissioner, Policy Planning and Information Management Texas Education Agency Earliest possible date of adoption: March 3, 1995 For further information, please call: (512) 463-9701 TITLE 22. EXAMINING BOARDS Part XVIII. Texas State Board of Podiatry Examiners Chapter 371. Examinations 22 TAC sec.371.12 The Texas State Board of Podiatry Examiners proposes an amendment to sec.371.12, concerning Assistance with Examinations. The amendment is being proposed in effort to ensure the fairness and equality of the podiatric oral or practical examination process. Allen M. Hymans, Executive Director, has determined that for the first five- year period the rule is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the rule. Mr. Hymans also has determined that for each year of the first five years the rule is in effect the public benefit anticipated as a result of enforcing the rule will be the setting of requirements for proctors who assist with examinations. No additional cost is anticipated for the podiatrists or the public. Comments on the proposal may be submitted to Janie Alonzo, Staff Services Officer I, Texas State Board of Podiatry Examiners, 3420 Executive Center Drive, Suite 305, Austin, Texas 78731. The amendment is proposed under Texas Civil Statutes, Articles 4568(j) and 4590(e), which provide the Texas State Board of Podiatry Examiners with the authority to adopt all reasonable or necessary rules, regulations, and by-laws not inconsistent with the law regulating the practice of podiatry, the laws of this state, or of the United States; to govern its proceedings and activities, the regulation of the practice of podiatry, and the enforcement of the law regulating the practice of podiatry. No other statute is affected by this amendment. sec.371.12. Assistance with Examinations. [(a)] When the oral or practical portion of the examination is conducted by the board, other licensed podiatrists or other duly qualified personnel,
    may assist [when the number of examinees might cause the examination to exceed a reasonable length of time]. [(b) A podiatrist who assists the board in examinations shall be licensed in Texas and shall have at least five years of active practice. If possible, such assistants shall be past members of the board. [(c) The majority of any panel that gives the practical or oral portion of the examination shall be current board members. [(d) Only current board members shall decide whether an examinee passes or fails.] This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 11, 1995. TRD-9500472 Janie Alonzo Staff Services Officer I Texas State Board of Podiatry Examiners Earliest possible date of adoption: March 3, 1995 For further information, please call: (512) 794-0145 Chapter 373. Identification of Practice 22 TAC sec.373.5 The Texas State Board of Podiatry Examiners proposes an amendment to sec.373.5, concerning Professional Corporations. The amendment is being proposed in effort to update the designations a professional corporation can use to include Professional Association as indicated in House Bill 548. Allen M. Hymans, Executive Director, has determined that for the first five- year period the rule is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the rule. Mr. Hymans also has determined that for each year of the first five years the rule is in effect the public benefit anticipated as a result of enforcing the rule will be better protection for the citizens of Texas. No additional cost is anticipated for the podiatrists or the public. Comments on the proposal may be submitted to Janie Alonzo, Staff Services Officer I, Texas State Board of Podiatry Examiners, 3420 Executive Center Drive, Suite 305, Austin, Texas 78731. The amendment is proposed under Texas Civil Statutes, Articles 4568(j) and 4590(e), which provide the Texas State Board of Podiatry Examiners with the authority to adopt all reasonable or necessary rules, regulations, and by-laws not inconsistent with the law regulating the practice of podiatry, the laws of this state, or of the United States; to govern its proceedings and activities, the regulation of the practice of podiatry, and the enforcement of the law regulating the practice of podiatry. House Bill 548, Texas Professional Association Act is affected by this amendment. sec.373.5. Professional Corporations.
      The name of a professional corporation created for the practice of podiatry shall include one of the following suffixes: (1)-(5) (No change.) (6) (Name), Professional Association
        [Company]; (7) (Name), P.A.
          [Co.]. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 11, 1995. TRD-9500473 Janie Alonzo Staff Services Officer I Texas State Board of Podiatry Examiners Earliest possible date of adoption: March 3, 1995 For further information, please call: (512) 794-0145 Chapter 378. Continuing Education 22 TAC sec.378.3 The Texas State Board of Podiatry Examiners proposes an amendment to sec.378.3, concerning Method of Approval of Hours for Continuing Education. The amendment is being proposed in an effort to help clarify how the board will accept hours. Allen M. Hymans, Executive Director, has determined that for the first five- year period the rule is in effect there will no fiscal implications for state or local government as a result of enforcing of administering the rule. Mr. Hymans also has determined that for each year of the first five years the rule is in effect the public benefit anticipated as a result of enforcing the rule will be to ensure that all podiatrists are receiving credit for actual attendance at seminars and not just home study courses. No additional cost is anticipated for the podiatrists or the public. Comments of the proposal may be submitted to Janie Alonzo, Staff Services Officer I, Texas State Board of Podiatry Examiners, 3420 Executive Center Drive, Suite 305, Austin, Texas 78731. The amendment is proposed under Texas Civil Statutes, Articles 4568(j) and 4590(e), which provide the Texas State Board of Podiatry Examiners with the authority to adopt all reasonable or necessary rules, regulations, and by-laws not inconsistent with the law regulating the practice of podiatry, the laws of this state, or of the United States; to govern its proceedings and activities, the regulation of the practice of podiatry, and the enforcement of the law regulating the practice of podiatry. The Podiatry Practice Act, 4571, sec.1(c) is affected by this amendment. sec.378.3. Method of Approval of Hours. (a) Any program approved by the Council on Podiatric Medical Education of the American Podiatric Medical Association may
            [shall] be approved by the Texas State Board of Podiatry Examiners. (b)-(e) (No change.) This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 11, 1995. TRD-9500474 Janie Alonzo Staff Services Officer I Texas State Board of Podiatry Examiners Earliest possible date of adoption: March 3, 1995 For further information, please call: (512) 794-0145 Chapter 381. Analgesia 22 TAC sec.381.1 (Editor's note: The text of the following section proposed for repeal will not be published. The section may be examined in the offices of the Texas State Board of Podiatry Examiners or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.) The Texas State Board of Podiatry Examiners proposes the repeal of sec.381. 1, concerning relative analgesia. The repeal is being proposed because the rules are very vague and are being updated by the Board. Allen M. Hymans, Executive Director, has determined that for the first five- year period the repeal is in effect there will be no fiscal implications for state or local government as a result of enforcing of administering the repeal. Mr. Hymans also has determined that for each year of the first five years the repeal is in effect the public benefit anticipated as a result of repealing the rule will be better protection for the citizens of Texas with the new rules being updated. Comments on the proposal may be submitted to Janie Alonzo, Staff Services Officer I, Texas State Board of Podiatry Examiners, 3420 Executive Center Drive, Suite 305, Austin, Texas 78731. The repeal is proposed under Texas Civil Statutes, Articles 4568(j) and 4590(e), which provide the Texas State Board of Podiatry Examiners with the authority to adopt all reasonable or necessary rules, regulations, and by-laws not inconsistent with the law regulating the practice of podiatry, the laws of this state, or of the United States; to govern its proceedings and activities, the regulation of the practice of podiatry, and the enforcement of the law regulating the practice of podiatry. No other statute is affected by this repeal. sec.381.1. Relative Analgesia. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 11, 1995. TRD-9500475 Janie Alonzo Staff Services Officer I Texas State Board of Podiatry Examiners Earliest possible date of adoption: March 3, 1995 For further information, please call: (512) 794-0145 22 TAC sec.sec.381.1-381.5, 381.7, 381.8 The Texas State Board of Podiatry Examiners proposes new ssec.381.1-381.5, 381.7, and 381.8, concerning relative analgesia. The new rules are being proposed in effort to better protect the citizens of Texas. Allen M. Hymans, Executive Director, has determined that for the first five- year period the rules are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the rules. Mr. Hymans also has determined that for each year of the first five years the rules are in effect the public benefit anticipated as a result of enforcing the rules will be better protection for the citizens of Texas. The cost of compliance with these sections will be for individuals only who wish to administer Nitrous Oxide Oxygen Inhalation Conscious Sedation for an initial charge of $25 and a renewal fee of $5.00 each year. Comments on the proposal may be submitted to Janie Alonzo, Staff Services Officer I, Texas State Board of Podiatry Examiners, 3420 Executive Center Drive, Suite 305, Austin, Texas 78731. The new rules are proposed under Texas Civil Statutes, Articles 4568(j) and 4590(e), which provide the Texas State Board of Podiatry Examiners with the authority to adopt all reasonable or necessary rules, regulations, and by-laws not inconsistent with the law regulating the practice of podiatry, the laws of this state, or of the United States; to govern its proceedings and activities, the regulation of the practice of podiatry, and the enforcement of the law regulating the practice of podiatry. No other statute is affected by these new sections. sec.381.1. Relative Analgesia Nitrous Oxide/Oxygen Inhalation Conscious Sedation. Conscious sedation is the production, by pharmacological or non- pharmacological methods, or a combination thereof, of an altered level of consciousness in a patient. Conscious sedation of a patient by nitrous oxide is the administration by inhalation of a combination of nitrous oxide and oxygen producing a minimally depressed level of consciousness while retaining the patient's ability to maintain a patent airway independently and continuously, and to respond appropriately to physical stimulation and verbal command. sec.381.2. Direct Supervision.
              Conscious sedation of a patient by nitrous oxide shall be induced, maintained, and continuously supervised only by the podiatric physician or by the assistant under continuous direct supervision of the podiatric physician. The nitrous oxide shall not be flowing if the podiatric physician is not present in the room. sec.381.3. Equipment Safety Criteria. Equipment used must meet the following safety criteria: The gas machine must have: (1) 30% minimum oxygen flow; (2) Glass flow tubes; (3) Nitrous oxide fail-safe (will not flow without oxygen); (4) Automatic room air intake in the event the bag is empty; (5) Non-rebreathing check valve; (6) Oxygen flush; and (7) Auxiliary oxygen outlet with one demand valve resuscitation assembly per office. sec.381.4. Office Safety Equipment and Medical Supplies. (a) All podiatric physicians administering nitrous oxide must have a functioning vacuum system (in case of vomiting or aspiration). (b) All podiatric physicians administering nitrous oxide must have a scavenger system (to collect nitrous oxide in the office). (c) All podiatric physicians administering nitrous oxide must have appropriate emergency drugs and equipment for resuscitation. (d) The office should be equipped with a manifold to provide for protection against overpressure. The manifold must be equipped with an audible alarm system. The machine must have a service check on a three-year basis, and a copy of the service check is to be filed with the office of the Texas State Board of Podiatry Examiners. (e) There must be a method of locking the nitrous oxide tanks at night. sec.381.5. Nitrous Oxide/Oxygen Inhalation Conscious Sedation Permit. (a) To employ nitrous oxide/oxygen inhalation conscious sedation for any medical purpose, the podiatric physician must obtain a permit from the Texas State Board of Podiatry Examiners. (b) Any podiatrist who is employing nitrous oxide/oxygen inhalation conscious sedation on the effective date of this regulation must apply for the permit in order to continue using nitrous oxide/oxygen inhalation conscious sedation. (c) The Texas State Board of Podiatry Examiners may at any time at its own discretion require an on-site office evaluation to determine that all standards regarding nitrous oxide/oxygen inhalation conscious sedation are being met. (d) Once a permit for nitrous oxide/oxygen inhalation conscious sedation is issued, the Texas State Board of Podiatry Examiners shall automatically renew the permit annually, unless the Board determines that for good cause an evaluation of the permit is appropriate, and of which the permit holder shall be promptly and fully informed so as to prevent inadvertent use of the technique when the permit status is in question. A permit will not be renewed if a current three-year certificate of inspection of the gas machine is not filed with the Board. (e) When statutory authority exists, the Texas State Board of Podiatry Examiners shall collect annually, along with the annual license renewal fee from each permit holder, a renewal fee of $5.00, beginning with the license renewal fees due for the fiscal year 1996. New permits shall be issued at a fee of $25, beginning with the license fees due for the fiscal year 1995. (f) When a permit is issued, it must be clearly displayed in the office alongside the original license. sec.381.7. Auxiliary Personnel.
                All auxiliary personnel employed in Texas in an office of a podiatric physician and who shall assist in the nitrous oxide/oxygen inhalation conscious sedation procedure shall be trained in basic life support and shall have annual reviews of emergency protocols, contents and use of emergency equipment, and basic cardiopulmonary resuscitation. Documentation verifying these annual reviews shall be maintained in the office of the podiatric physician who employs the auxiliary personnel and shall be submitted upon demand to the Texas State Board of Podiatry Examiners. sec.381.8. Pre-operative Evaluation.
                  The podiatric physician shall evaluate and document in the patient's medical record, prior to the nitrous oxide/oxygen inhalation conscious sedation procedure, the patient's health and medical status to insure that nitrous oxide/oxygen inhalation conscious sedation is medically appropriate. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 11, 1995. TRD-9500476 Janie Alonzo Staff Services Officer I Texas State Board of Podiatry Examiners Earliest possible date of adoption: March 3, 1995 For further information, please call: (512) 794-0145 Part XXX. Texas State Board of Examiners of Perfusionists Chapter 761. Perfusionists 22 TAC sec.sec.761.1-761.13, 761.15-761.19 The Texas State Board of Examiners of Perfusionists proposes new sec.sec.761. 1-761.13 and sec.sec.761.15-761.19. The sections cover requirements for registration as a licensed perfusionist and provisional licensed perfusionist; define terms; set standards and fees for licensure; establish procedures for licensure, examination, and continuing education; and provide procedures for denial, revocation, or suspension of a license. Jo Whittenberg, executive secretary, has determined that there will be fiscal implications as a result of administering these sections. The effect on state government will be an estimated additional cost of $15,000 for fiscal year 1995 and $9,000 each year for fiscal years 1996-1999. There will be an estimated increase in revenue equal to the additional cost amounts for those fiscal years which will compensate for the additional costs. There will be no fiscal implications for local governments. Ms. Whittenberg also has determined that each year of the first five years the sections as proposed are in effect the public benefits anticipated as a result of enforcing these sections will be the regulation of perfusionists which will safeguard public health, safety, and welfare by providing a means by which the public can identify providers of perfusion services that meet minimum standards of competence. There will be no effect on small businesses as a result of enforcing or promulgating these sections. There will be no effect on local employment in the state. The anticipated economic cost to persons who are licensed under these sections as proposed will be payment of the fees described in these sections. Comments on the proposal may be submitted to Jo Whittenberg, Executive Secretary, Texas State Board of Examiners of Perfusionists, 1100 West 49th Street, Austin, Texas 78756-3183, (512) 834-6751. Comments will be accepted for 30 days from the date of publication in the Texas Register of the proposed sections. A public hearing will be held on February 1, 1995, at 1:00 p.m., Texas Department of Health, Exchange Building, 8407 Wall Street, Suite S-402, Austin, Texas. The new sections are proposed under Texas Civil Statutes, Article 4512e, sec.7, which provide the Texas State Board of Perfusionists with the authority to adopt rules concerning the regulation and licensure of perfusionist. These sections implement the Licensed Perfusionists Act, Texas Civil Statutes, Article 4512e. sec.761.1. Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. Act-The Licensed Perfusionists Act, Texas Civil Statutes, Article 4529e. APA-The Administrative Procedure Act, Government Code. Board-The Texas State Board of Examiners of Perfusionists. Board of Health -The Texas Board of Health. Cardiopulmonary Surgery -Surgery pertaining to the heart, great vessels, or lungs. Commissioner-The Commissioner of Health. Contested Case -A proceeding in accordance with APA and this chapter, including, but not restricted to, rule enforcement and licensing, in which the legal rights, duties, or privileges of a party are to be determined by the board after an opportunity for an adjudicative hearing. Delegated authority -As defined in the Texas Medical Practice Act, Texas Civil Statutes, Article 4495b, sec.3.06(d)(1) and the rules pertaining thereto adopted by the Texas State Board of Medical Examiners. Department-The Texas Department of Health. Extracorporeal circulation -The diversion of a patient's blood through a heart-lung machine or a similar device that assumes the functions of the patient's heart, lungs, or both. Formal hearing -A formal hearing or proceeding in accordance with this chapter and includes a contested case. Formally trained -Completion of an organized educational activity which: (A) includes supervised and directed instruction specific to the perfusion procedures to be performed by the individual; (B) includes specific objectives, activities and an evaluation of competency; and (C) is specifically supervised and directed by another individual qualified to provide the training and supervision. Health care professional-A licensed perfusionist, provisional licensed perfusionist, or any person licensed, certified, or registered by the state in a health-related profession. Hearing examiner -A person duly designated and appointed who conducts formal hearings under this chapter on behalf of the board. Licensed perfusionist -A person licensed under the Act who practices perfusion. Licensed physician -A physician licensed under Texas Civil Statutes, Article 4495b, by the Texas State Board of Medical Examiners. Licensee-A person who holds a current license as a perfusionist or provisional licensed perfusionist issued by the board. Perfusion-The function necessary for the support, treatment, measurement, or supplementation of the cardiovascular, circulatory, or respiratory system, or a combination of those activities, and to ensure the safe management of physiologic functions by monitoring the parameters of the system under an order and under the supervision of a licensed physician, including: (A) the use of extracorporeal circulation, cardiopulmonary support techniques, and other therapeutic and diagnostic technologies; (B) counterpulsation, ventricular assistance, or autotransfusion (including blood conservation techniques), administration of cardioplegia, and isolated limb perfusion; (C) the use of techniques involving blood management, advanced life support, and other related functions; and (D) in the performance of the acts described in this subsection: (i) the administration of: (I) pharmacological and therapeutic agents; or (II) blood products or anesthetic agents through the extracorporeal circuit or through an intravenous line as ordered by a physician; (ii) the performance and use of: (I) anticoagulation analysis; (II) physiologic analysis; (III) blood gas and chemistry analysis; (IV) hematocrit analysis; (V) hypothermia; (VI) hyperthermia; (VII) hemoconcentration; and (VIII) hemodilution; and (iii) the observation of signs and symptoms related to perfusion services, the determination of whether the signs and symptoms exhibit abnormal characteristics, and the implementation of appropriate reporting, perfusion protocols, or changes in or the initiation of emergency procedures. Perfusionist-An individual who practices perfusion. Perfusion protocols -Perfusion-related policies and protocols developed or approved by a licensed health facility or a physician through collaboration with administrators, licensed perfusionists, and other health professionals. Pleading-Any written allegation filed by a party concerning its claim or position. Provisional licensed perfusionist-A person provisionally licensed under this Act. sec.761.2. The Board's Operation. (a) Purpose. This section sets out the organization and administration and other general procedures and policies governing the operation of the board. (b) Officers. (1) Chairman. (A) The chairman shall preside at all board meetings at which he or she is in attendance and perform all duties prescribed by law or board rules. (B) The chairman is authorized by the board to make day-to-day minor decisions regarding board activities in order to facilitate the responsiveness and effectiveness of the board. (C) The chairman shall serve as an ex-officio member of all committees except the complaint committee. (2) Vice-chairman. (A) The vice-chairman shall perform the duties of the chairman in case of the absence or disability of the chairman. (B) In case the office of chairman becomes vacant, the vice-chairman shall serve until a successor is elected. (c) Meetings. (1) The board shall hold at least two regular meetings and additional meetings as necessary during each year, at such designated date, place, and time as may be determined by the chairman. (2) Special meetings may be called by the chairman at such times, dates, and places as become necessary for the transaction of board business. (3) Meetings shall be announced and conducted under the provisions of the Texas Open Meetings Act, Texas Government Code, Chapter 551. (d) Quorum. A quorum of the board necessary to conduct official business is five members. (e) Transaction of official business. (1) The board may transact official business only when in a legally constituted meeting with a quorum present. (2) The board shall not be bound in any way by any statement or action on the part of any board or staff member except when a statement or action is in pursuance of specific instructions of the board. (3) Board action shall require a majority vote of those members present and voting. (f) Policy against discrimination. The board shall make decisions in the discharge of its statutory authority without discrimination based on any person's race, creed, gender, religion, national origin, geographical distribution, age, physical condition, or economic status. (g) Impartiality. Any board member who is unable to be impartial in any proceeding before the board, such as that pertaining to an applicant's eligibility for licensure or a complaint against or a violation by a licensee, shall so declare this to the board and shall not participate in any board proceedings involving that individual. (h) Attendance. (1) The policy of the board is that members shall attend regular and committee meetings as scheduled. (2) The board may report to the governor and the Texas Sunset Advisory Commission the attendance records of members. (3) Except in case of emergency, board members shall notify the executive secretary at least 48 hours prior to the scheduled meeting if unable to be present. (4) Except in case of emergency, the executive secretary shall notify the chairman at least 48 hours prior to the scheduled meeting if unable to be present. (i) Reimbursement for expense. (1) A board member is entitled to a per diem payment at the rate set by the General Appropriations Act for each day that the member engages in the business of the board. (2) A board member is entitled to compensation for transportation expenses as provided by the General Appropriations Act. (3) Payment to board members of per diem and transportation expenses shall be requested on official state travel vouchers which have been approved by the executive secretary. (4) Board-approved requests for board staff for out-of-state travel for board activities shall be approved by the Associate Commissioner for Health Care Quality and Standards of the department on appropriate forms. (5) Attendance at conventions, meetings, and seminars must be clearly related to the performance of board duties and show a benefit to the state. (j) Rules of order. The latest edition of Roberts Rules of Order shall be the basis of parliamentary decisions except where otherwise provided by these board rules. (k) Agendas. (1) The executive secretary shall prepare and submit to each member of the board, prior to each meeting, an agenda which includes items requested by members, items required by law, unfinished business, and other matters of board business which have been approved for discussion by the chairman. (2) The official agenda of a meeting shall be filed with the Texas Secretary of State in accordance with the Texas Open Meetings Act, Texas Government Code, Chapter 551. (l) Minutes. (1) Drafts of the minutes of each meeting shall be forwarded to each member of the board for review and comments prior to approval by the board. (2) After approval by the board, the minutes of any board meeting are official only when affixed with the original signatures of the chairman and the executive secretary. (3) The official minutes of board meetings shall be kept in the office of the executive secretary and shall be available to any person desiring to examine them during regular office hours. (m) Official records. (1) All official records of the board including application materials, except files containing information considered confidential under the provisions of the Texas Open Records Act, Texas Government Code, Chapter 552 shall be open for inspection during regular office hours. (2) A person desiring to examine official records shall be required to identify himself and sign statements listing the records requested and examined. (3) Official records may not be taken from board offices; however, persons may obtain photocopies of files upon written request and by paying the cost per page set by the department. Payment shall be made prior to release of the records. (n) Elections. (1) At the meeting held nearest to February 1 of each odd-numbered year, the board shall elect by a majority vote of those members present and voting, a chairman and a vice-chairman. (2) A vacancy which occurs in the offices of chairman or vice-chairman shall be filled, for the duration of the unexpired term, by a majority vote of those members present and voting at the next board meeting. (3) A board member shall not serve more than two consecutive terms in the office of chairman or vice chairman. (o) Committees. (1) The board or the chairman with the approval of the board may establish committees deemed necessary to assist the board in carrying out its duties and responsibilities. (2) The chairman may appoint the members of the board to serve on committees and may designate the committee chairman. (3) The chairman of the board may appoint nonboard members to serve as committee members on a consultant or voluntary basis, subject to board approval. (4) Committee chairmen shall make regular reports to the board in interim written reports or at regular meetings, as needed. (5) Committees shall direct all reports or other materials to the executive secretary for distribution. (6) Committees shall meet when called by the chairman of the committee or when so directed by the board. (7) The following standing committees shall be appointed by the newly elected chairman each odd-numbered year to serve a term of two years. (A) The rules committee shall be composed of at least two board members who are licensed perfusionists and one public member of the board. The committee shall review all board rules at least once annually to ensure that the rules are current in relation to perfusionist practice, and may recommend and propose adoption of rules to the board. The committee shall consider all petitions for adoption of rules and shall recommend disposition of these petitions to the board in accordance with subsection (t) of this section. (B) The complaint committee shall be composed of one board member who is a licensed perfusionist and one public member of the board. The committee may review complaints received by the board and shall recommend action to be taken on complaints in accordance with sec.761.16 of this title (relating to Violations, Complaints, and Subsequent Board Actions). (p) Official seal. The official seal of the board shall consist of two concentric circles with the words "Texas State Board of Examiners of Perfusionists" circularly arranged about the inner edge of the outermost circle, and in the center of the innermost circle there shall be a five-pointed star, surrounded by the live oak and olive branches common to official state seals. (q) Registry. (1) Each year the executive secretary shall publish a registry of current licensees. (2) The registry shall include, but not be limited to, the name of current licensees. (3) An original copy of the registry will be available for inspection by licensees and members of the public in the office of the executive secretary. Upon receipt of a written request and payment of a fee, the executive secretary shall furnish at cost a copy to a licensee or member of the public. The cost of a copy of the registry or any portion thereof shall be in accordance with the cost guidelines of the department. (r) Consumer information. The executive secretary with the approval of the board shall publish information of consumer interest which describes the regulatory functions of the board, board procedures to handle and resolve consumer complaints, and the profession of perfusion. (s) Fees. (1) The board has established reasonable and necessary fees to provide the funds to support the activities listed in paragraph (2) of this subsection and other activities required by the Act. (2) Schedule of fees for licensure as a perfusionist and a provisional licensed perfusionist is as follows: (A) application and initial license fees-$150; (B) license fee for upgrade of provisional licensed perfusionist-$75; (C) renewal fee-$75; (D) late renewal fee-$50; and (E) license certificate and identification card replacement fee-$10. (3) An applicant whose check for the application fee is not honored by the financial institution may reinstate the application by remitting to the board a money order or check for guaranteed funds within 30 days of the date of receipt of the board's notice. An application will be considered incomplete until the fee has been received and cleared through the appropriate financial institution. (4) A licensee whose check for the renewal fee is not honored by the financial institution may remit to the board a money order or check for guaranteed funds within 30 days of the date of receipt of the board's notice. Otherwise, the license shall not be renewed. If a renewal card has already been issued, it shall be subject to revocation. (5) Fees paid to the board by applicants are not refundable. (6) Any remittance submitted to the board in payment of a required fee must be in the form of a personal check, certified check, or money order. (7) The board shall make periodic reviews of its fee schedule and make any adjustments necessary to provide funds to meet its expenses without creating an unnecessary surplus. Such adjustments shall be through rule amendments. (t) Petition for adoption of a rule. (1) Purpose. The rule's purpose is to delineate the board's procedures for the submission, consideration, and disposition of a petition to the board to adopt a rule. (2) Submission of the petition. (A) Any person may petition the board to adopt a rule. (B) The petition shall be in writing, shall contain the petitioner's name and address, and shall describe the rule and the reason for it; however, if the executive secretary determines that further information is necessary to assist the board in reaching a decision, the executive secretary may require that the petitioner resubmit the petition and that it contain: (i) a brief explanation of the proposed rule; (ii) the text of the proposed rule prepared in a manner to indicate the words to be added or deleted from the current text, if any; (iii) a statement of the statutory or other authority under which the rule is to be promulgated; and (iv) the public benefits anticipated as a result of adopting the rule or the anticipated injury or inequity which would result from the failure to adopt the proposed rule. (C) The board may deny a petition which does not contain the information in subparagraph (B) of this paragraph if the executive secretary determines that it is necessary. (D) The petition shall be mailed or delivered to the executive secretary, Texas State Board of Examiners of Perfusionists, 1100 West 49th Street, Austin, Texas 78756-3183. (3) Consideration and disposition of the petition. (A) The executive secretary shall submit a completed petition to the board for its consideration. (B) Within 60 days after receipt of the petition by the executive secretary, or within 60 days after receipt of a resubmitted petition in accordance with paragraph (2)(B)(i)-(iv) of this subsection, the board shall either: (i) deny the petition; or (ii) initiate rule-making procedures by referring the petition to the rules committee for its recommendation. The committee shall report its recommendations to the board at its next regular meeting. (C) The board may deny parts of the petition or institute rule making procedures on parts of the petition. (D) If the board denies the petition, the executive secretary shall give the petitioner written notice of the board's action, including the reason(s). (E) If the board initiates rule-making procedures in accordance with the Administrative Procedure Act, sec.5, the version of the rule which the board proposes may differ from the version proposed by the petitioner. (4) Subsequent petitions to adopt the same or similar rules. All initial petitions for the adoption of a rule shall be presented to and decided by the board in accordance with the provisions of paragraphs (2) and (3) of this subsection. The board may refuse to consider any subsequent petition for the adoption of the same or similar rule submitted within six months after the date of the initial petition. sec.761.3. The Profession of Perfusion. (a) Purpose. The rules on the profession of perfusion shall establish the standards of professional and ethical conduct required of a licensee. (b) Code of ethics. These rules shall constitute a code of ethics as authorized by the Act, sec.6(b)(1). (1) Professional representation and responsibilities. (A) A licensee shall not misrepresent any professional qualifications or credentials. (B) A licensee shall not make any false or misleading claims pertaining to the indications and efficacy of the practice of perfusion. (C) A licensee shall not permit the use of his or her name for the purpose of certifying that perfusion services have been rendered unless that licensee has provided those services. (D) A licensee shall not promote or endorse products in a manner that is false or misleading. (E) A licensee shall disclose to the reimbursing entity any personal gain or profit from any supply, procedure or service. (F) A licensee shall have the responsibility of reporting alleged misrepresentations or violations of board rules to the board's executive secretary. (G) A licensee shall comply with any order relating to the licensee which is issued by the board. (H) A licensee shall not aid or abet the practice or misrepresentation of an unlicensed person when that person is required to have a license under the Act. (I) A licensee shall not make any false, misleading, or deceptive claims in any advertisement, announcement, or presentation relating to the services of the licensee. (J) A licensee shall not interfere with an investigation or disciplinary proceeding by willful misrepresentation of facts to the board or its authorized representative or by the use of threats or harassment against any person. (K) A licensee shall conform to the Code of Ethics of the American Board of Cardiovascular Perfusion which is summarized as follows. (i) The perfusionist who willfully misstates fact during the application, examination, or recertification processes is guilty of unethical conduct. Likewise the willful misstatement of fact regarding the title or membership in a professional community is considered unethical conduct. (ii) The perfusionist who consciously fails to promote both the safety and protection of the public is guilty of unethical conduct. (iii) The perfusionist who willfully disregards the patient for monetary gain is guilty of unethical conduct. Examples of such conduct are unjustified reimbursement for services performed or prejudicial compensation. (iv) The perfusionist who shows willful disregard for sound patient care by acts of omission is guilty of unethical conduct. (v) The ethical perfusionist shall subscribe to all other applicable ethical standards of the medical community. (vi) The perfusionist accepts the responsibility for subscribing to the preceding Code of Ethics and for reporting unethical professional conduct. (L) A licensed perfusionist shall supervise a provisional licensed perfusionist in accordance with sec.761. 9 of this title (relating to Provisional Licensed Perfusionist). (2) Professional relationships. (A) A licensee shall make known to a prospective reimbursing entity the important aspects of the professional relationship including fees and arrangements for payment which might affect the reimbursing entity's decision to enter into the relationship. (B) A licensee shall bill a reimbursing entity in the manner agreed to by the licensee and entity in accordance with 42 United States Code, sec.1395nn, relating to the anti-kickback statute and the Health and Safety Code, sec.161. 091, relating to illegal renumeration. (C) A licensee shall not receive or give a commission or rebate or any other form of renumeration for the referral of professional services. (D) A licensee shall disclose to the reimbursing entity any interest in commercial enterprises relating to the practice of perfusion which the licensee promotes for the purpose of personal gain or profit. (E) A licensee shall practice perfusion without discrimination based on race, creed, gender, religion, national origin, or age. (F) A licensee shall not violate any provision of any federal or state statute relating to confidentiality of patient communications and records. (G) A licensee shall not engage in sexual contact with a patient. The term "sexual contact" means any type of sexual behavior described in the Texas Penal Code, Chapters 21, 22 or 43 and includes sexual intercourse. (3) Billing information required; prohibited practices. (A) On the written request of a patient, a patient's guardian, a patient's parent if the patient is a minor, or the billing entity, a licensee shall provide, in plain language, a written explanation of the charges for acts of perfusion previously made on a bill or statement for the patient. This requirement applies even if the charges are to be paid by a third party. (B) A licensee may not persistently or flagrantly overcharge or overtreat a patient. (4) Sanctions. A licensee shall be subject to disciplinary action by the board if under the Crime Victims Compensation Act, Texas Civil Statutes, Article 8309- 1 the licensee is issued a public letter of reprimand, is assessed a civil penalty by a court, or has an administrative penalty imposed by the attorney general's office. (c) Disclosure. A licensee shall make a reasonable attempt to notify each patient of the name, mailing address, and telephone number of the board for the purpose of directing complaints to the board by providing notification: (1) on each written contract for services of a licensee; or (2) on a sign prominently displayed in the primary place of business of each licensee; or (3) in a bill for service provided by a licensee to a patient or reimbursing entity. (d) Unlawful false, misleading, or deceptive advertising. (1) A licensee shall not use advertising that is false, misleading, or deceptive or that is not readily subject to verification. (2) False, misleading, or deceptive advertising or advertising that is not readily subject to verification includes advertising that: (A) makes a material misrepresentation of fact or omits a fact necessary to make the statement as a whole not materially misleading; (B) makes a representation likely to create an unjustified expectation about the results of a health care service or procedure; (C) compares a health care professional's services with another health care professional's services unless the comparison can be factually substantiated; (D) contains a testimonial; (E) causes confusion or misunderstanding as to the credentials, education, or licensure of a perfusionist; (F) advertises or represents that health care insurance deductibles or copayments may be waived or are not applicable to health care services to be provided if the deductibles or copayments are required; (G) advertises or represents that the benefits of a health benefit plan will be accepted as full payment when deductibles or copayments are required; (H) makes a representation that is designed to take advantage of the fears or emotions of a particularly susceptible type of patient; or (I) advertises or represents, in the use of a professional name a title or professional identification that is expressly or commonly reserved to or used by another profession or professional. sec.761.4. Educational Requirements for Licensure. (a) Purpose. The purpose of this section is to set out the educational requirements for examination and licensure as a perfusionist or a provisional licensed perfusionist. (b) General. (1) The board shall approve as meeting licensure requirements a perfusion education program that has educational standards that are as stringent as those established by the Accreditation Committee for Perfusion Education (AC-PE) and approved by the Commission on Accreditation of Allied Health Education Programs (CAAHEP) or their successors. (2) Degrees and course work received in foreign countries shall be acceptable only if the degree or coursework has educational standards that are as stringent as those established by the AC-PE and approved by CAAHEP or their successors. (3) A foreign training program shall be acceptable only if it has educational standards as stringent as those established by the AC-PE and approved by the CAAHEP or their successors. (4) In the event that an educational deficiency is present, an applicant will have one year in which to complete the additional course work acceptable to the board before the application will be voided and the applicant will be required to reapply and to pay an additional application fee. sec.761.5. Examination for Perfusionist Licensure. (a) Purpose. The purpose of this section is to establish rules governing the procedures for examinations of applicants for licensure as a perfusionist. (b) Frequency. Examinations will be administered for the board at least once each year by a designee of the board. (c) Requirements. (1) The executive secretary shall notify an applicant when all requirements for licensure have been met except the taking and passing of the required examination. The board shall forward or cause to be forwarded an examination registration form to each approved applicant as soon as the application has been approved. (2) An applicant who wishes to take a scheduled examination must complete the examination registration form which must be received by the board or designee by the deadline established by the board. The fee shall be paid to the designee of the board. (3) The examination for licensure shall be an examination approved by the board. A designee of the board shall administer and grade examinations and report to the board if the applicant has passed or failed the examination. (4) If an applicant has already successfully completed the required examination, the applicant shall not be required to be reexamined, provided the applicant furnishes the board a copy of the test results indicating that the applicant passed the examination and proof that he or she has been certified by the American Board of Cardiovascular Perfusion for some time period within three years immediately preceding date of application. (5) An applicant who fails four examinations may not reapply. (6) An applicant who has failed four examinations may choose as an alternative method for demonstrating competency to reaccomplish the educational and testing requirements. sec.761.6. Exemptions. Exemption are set out in Section 17 of the Act. sec.761.7. Application Procedures. (a) Purpose. The purpose of this section is to set out the application procedures for examination and licensure to establish qualifications of an applicant as one of the criteria for approval for licensure as provided for in the Act, sec.7(b)(2), and to set forth the criteria by which the board shall determine the qualifications of applicants for licensure. (b) Fitness of applicants for perfusion licensure. (1) In determining the qualifications of applicants for licensure the board may request and consider any of the following: (A) evaluations of supervisors or instructors; (B) evaluations of employers or professional associations; (C) allegations of clients; (D) transcripts or findings from official court, hearing or investigative proceedings; and (E) any other information which the board considers pertinent to determining the qualifications of an applicant. (2) The substantiation of any of the following items related to an applicant may be, as the board determines, the basis for the denial of licensure of the applicant: (A) lack of the necessary skills and abilities to provide adequate perfusion services; (B) misrepresentation of professional qualifications or associations; (C) misrepresentation of perfusion services and the efficacy of perfusion services to clients; (D) use of misleading advertising or false advertising; (E) violation of any provision of any federal or state statute relating to confidentiality of client communication and records; (F) abuse of alcohol or drugs or the use of illegal drugs of any kind in any manner which detrimentally affects the provision of perfusion services; and (G) any misrepresentation in application or other materials submitted to the board. (c) General. (1) An applicant must submit a sworn application and all required information and documentation of credentials on official board forms. (2) The board will not consider an application as officially submitted until the applicant pays the application fee. The application and initial license fee of $150 must accompany the application form. (3) The executive secretary will send a notice listing the additional materials required to an applicant who does not complete the application in a timely manner. An application not completed within 30 days after the date of the board's notice may be void. (d) Required application materials. (1) The application form shall contain: (A) specific information regarding personal data, social security number, date of birth, place of employment, other state licenses and certifications held, misdemeanor and felony convictions, educational and training background, and work experience; (B) a statement that the applicant has read the Act and board rules and agrees to abide by them; (C) the applicant's permission to the board to seek any information or references it deems fit to determine the applicant's qualifications and fitness; (D) a statement that the applicant, if issued a license, shall return the license certificate and license identification card to the board upon the revocation or suspension of the license; (E) a statement that the applicant understands that fees submitted in the licensure process are nonrefundable; (F) a statement that the applicant understands that materials submitted in the licensure process become the property of the board and are nonreturnable; and (G) the signature of the applicant which has been dated and notarized. (2) Applicants must submit official transcript(s) from an approved perfusion education program or from a program with requirements as stringent as those established by the Accreditation Committee for Perfusion Education (AC-PE) and approved by the Commission on Accreditation of Allied Health Education Programs (CAAHEP) or their successors. (3) If submitting an equivalent program, the burden is on an applicant to establish that program requirements are as stringent as those established by the AC-PE and approved by the CAAHEP or their successors. (4) Applicants must submit a full-face photo, a minimum in size of 1 1/2 inches by 1 1/2 inches, signed on the reverse side with the applicant's signature as it appears on the application. The photograph must have been taken within the two-year period prior to application. (5) If an applicant is or has been licensed, certified, or registered in another state, territory, or jurisdiction, the applicant must submit information required by the board concerning that license, certificate or registration on official board forms. (6) Curriculum vitae, resumes, and other documentation of the applicant's credentials may be submitted. (7) An applicant applying for licensing by endorsement shall submit a copy of the license or certificate by which the reciprocal license is requested and the name and address of the licensing or certifying agency. (8) An applicant for provisional licensed perfusionist must have his or her supervising licensed perfusionist sign the application form. sec.761.8. Determination of Eligibility. (a) The board may delegate approval of applications for licensing to a committee of the board or the executive secretary. (b) The board may deny the application if the person has: (1) not completed the requirements in sec.761.4 of this title (relating to Educational Requirements for Licensure); (2) failed to pass the examination prescribed by the board as set out in sec.761.5 of this title (relating to Examination for Perfusionist Licensure), if applicable; (3) failed to remit any applicable fees required in s761.2(s) of this title (relating to The Board's Operation); (4) failed or refused to properly complete or submit any application form(s) or endorsement(s), or deliberately presented false information on the application form, or any other form or document required by the board to verify the applicant's qualifications for licensure; (5) been in violation of the Act, the Code of Ethics, or any other provision of this title; (6) been convicted of a felony or misdemeanor if the crime directly relates to the duties and responsibilities of a licensee as set out in sec.761. 15 of this title (relating to Licensing of Persons with Criminal Backgrounds to be A Perfusionist and Provisional Licensed Perfusionist); (7) had a license, registration, certificate, or certification to practice perfusion in another state or jurisdiction which has been suspended, revoked, or otherwise restricted by the licensing entity or American Board of Cardiovascular Perfusion; or (8) demonstrated lack of necessary skills and ability to provide adequate perfusion services. (c) If after review, the committee under guidance provided by the board determines that the application should not be approved, the executive secretary shall give the applicant written notice of the reason for the proposed decision and of the opportunity for a formal hearing. The notice and hearing shall be in accordance with sec.761.16 of this title (relating to Violations, Complaints, and Subsequent Board Actions). (d) An applicant whose application has been denied under subsection (b)(4), (5), (6), (7), or (8) of this section shall be permitted to reapply after a period to be determined by the board. The applicant shall submit with the reapplication, proof satisfactory to the board, of compliance with all rules of the board and the provisions of the Act in effect at the time of reapplication. (e) Processing procedures are as follows. (1) Time periods. The board shall comply with the following procedures in processing application for licensure and renewal. (A) The following periods of time shall apply from the date of receipt of an application until the date of issuance of a written notice that the application is complete and accepted for filing or that the application is deficient and additional specific information is required. A written notice stating that the application has been approved may be sent in lieu of the notice of acceptance of a complete application. The time periods are as follows: (i) letter of acceptance of application for licensure -14 working days; (ii) letter of application deficiency-14 working days; and (iii) issuance of license renewal after receipt of documentation of all renewal requirements-30 working days. (B) The following periods of time shall apply from the receipt of the last item necessary to complete the application until the date of issuance of written notice approving or denying the application. For the purpose of this section, an application is not considered complete until any required examination has been successfully completed by the applicant. The time periods for denial include notification of the proposed decision and of the opportunity, if required, to show compliance with law and of the opportunity for a formal hearing. The time periods are as follows: (i) letter of approval examination-20 working days; (ii) initial letter of approval for licensure (exam waived)-20 working days; (iii) letter of denial of licensure-20 working days; (iv) issuance of license renewal after receipt of documentation of all renewal requirements-30 working days. (2) Reimbursement of fees. (A) In the event an application is not processed in the time periods stated in paragraph (1) of this subsection, the applicant has the right to request reimbursement of all fees paid in that particular application process. Application for reimbursement shall be made to the executive secretary. If the executive secretary does not agree that the time period has been violated or finds that good cause existed for exceeding the time period, the request will be denied. (B) Good cause for exceeding the time period is considered to exist if: (i) the number of applications for licensure and licensure renewal exceeds by 15% or more the number of applications processed in the same calendar quarter the preceding year; or (ii) another public or private entity relied upon by the board in the application process caused the delay; or (iii) any other condition exists giving the board good cause for exceeding the time period. (3) Appeal. If a request for reimbursement under paragraph (2) of this subsection is denied by the executive secretary, the applicant may appeal to the chairman of the board for a timely resolution of any dispute arising from a violation of the time periods. The applicant shall give written notice to the chairman at the address of the board that the applicant requests full reimbursement of all fees paid in that particular application process because the application was not processed within the applicable time period. The executive secretary shall submit a written report of the facts related to the processing of the application and of any good cause for exceeding the applicable time period to the chairman of the board. The chairman shall provide written notice of the chairman's decision to the applicant and the executive secretary. An appeal shall be decided in the applicant's favor if the applicable time period was exceeded and good cause was not established. If the appeal is decided in favor of the applicant, full reimbursement of all fees paid in that particular application process shall be made. (4) Contested cases. The time periods for contested cases related to the denial of licensure or license renewals are not included within the time periods stated in paragraph (1) of this subsection. The time period for conducting a contested case hearing runs from the date the department receives a written request for a hearing and ends when the decision of the board is final and appealable. A hearing may be completed within one to four months, but may extend for a longer period of time depending on the particular circumstances of the hearing. sec.761.9. Provisional Licensed Perfusionist. (a) Supervision. The purpose of this section is to set out the nature and the scope of the supervision provided for a provisional licensed perfusionist. (1) To meet licensure and license renewal requirements, a provisional licensed perfusionist shall be under the supervision and direction of a currently licensed perfusionist who resides in Texas. (2) Supervision and direction shall be defined as procedural guidance provided by a licensed perfusionist and need not be on site. (3) The supervising licensed perfusionist must sign the application for a provisional license and the application for renewal of the provisional license. (b) Termination. The supervising licensed perfusionist must submit written notification of termination of supervision to the board and the supervisee within 14 days of when supervision has ceased. The provisional licensed perfusionist shall make a good faith effort to ensure that the supervising licensed perfusionist submits an appropriate notification. (c) Changes. Any change in the supervision shall be submitted in writing. The signature of the supervising licensed perfusionist shall be included in the written notice. (d) Required supervisor. A provisional licensed perfusionist must have a supervising licensed perfusionist at all times whether or not the provisional licensed perfusionist is actively employed. (e) Time limits. A provisional license is valid for one year from the date it is issued and may be renewed annually for not more than five times by the procedures set out at sec.761.13 of this title (relating to License Renewal). sec.761.10. Grandfather Period. (a) The grandfather period begins on January 1, 1995 and expires September 1, 1995. (b) The board may issue an annual license without an examination to a person actively engaged in the practice of perfusion, on or prior to January 1, 1993, so long as the person submits proof satisfactory to the board that the person meets one of the following requirements: (1) the person, as of January 1, 1994, was operating cardiopulmonary bypass systems during cardiopulmonary surgery in a health care facility(ies) licensed in the United States as the person's primary function and had been operating the systems since January 1, 1989; or (2) the person, as of January 1, 1995, has had at least five years experience operating cardiopulmonary bypass systems during cardiopulmonary surgery in a health care facility(ies) licensed in the United States since January 1, 1986; or (3) the person has successfully completed a perfusion education program accredited by the Accreditation Committee for Perfusion Education (AC-PE) and approved by the Commission on Accreditation of Allied Health Education Programs, (CAAHEP) or its predecessors, after January 1, 1989, and holds as of the application date a certificate as a certified clinical perfusionist issued by the American Board of Cardiovascular Perfusion (ABCP). (c) The applicant must provide proof of such practice by submitting to the board the following: (1) properly completed official forms as required in sec.761.7 of this title (relating to Application Procedures); and (2) applicants applying under subsection (b)(1) of this section must submit a clinical activity documentation report form(s) documenting his or her operation of cardiopulmonary bypass systems during cardiopulmonary surgery in a licensed health care facility on January 1, 1994, and the operation of said system as a primary function for each year since January 1, 1989. The applicant shall submit board forms which includes: (A) documentation of the dates, medical record numbers, procedure, surgeon and facility recording 25 cases per calendar year; and (B) a signed statement of verification of status as a perfusionist at a licensed health care facility on January 1, 1994; (3) applicants applying under subsection (b)(2) of this section must submit a clinical activity(ies) documentation report form(s) documenting clinical activity(ies) in the field of perfusion for five years beginning January 1, 1986, through December 31, 1993. The applicant shall submit board forms showing the dates, medical record numbers, procedures, surgeon, and facility recording 25 cases per calendar year. (4) applicants applying under subsection (b)(3) of this section must submit, an official board form documenting completion of a perfusion education program and current certification as a certified clinical perfusionist; and (5) applicants applying under the subsection (b)(1) or (2) of this section, may submit verification of annual recertification by the ABCP in lieu of documentation of 25 cases per year. (d) Primary function and experience shall be defined as the person performing as the primary perfusionist for at least 25 perfusion cases utilizing cardiopulmonary bypass procedures during cardiopulmonary surgery during each calendar year. (e) All application materials and fees required under this section must be received by the board office or bear a postmark on correspondence to the board prior to September 1, 1995. (f) Time deadlines are established by statutory authority and are the responsibility of the applicant. sec.761.11. Licensing After Examination. (a) Purpose. The purpose of this section is to set out the licensing procedures after completion of the entire examination. (b) Issuance of licenses. (1) The board shall send each applicant who has been approved and who has passed the examinations, if applicable, a form to complete and return with the upgrade fee, if applicable. (2) Upon receiving an applicant's form and fee, the board shall issue a license certificate and license identification card containing a license number. (c) Replacement. The board shall replace a lost, damaged, or destroyed license certificate or identification card upon a written request from the licensee and payment of the license replacement fee. Requests shall include a statement detailing the loss or destruction of the licensee's original license or identification card or be accompanied by the damaged certificate or card. (d) License certificates. (1) The board shall prepare and provide to each licensee a license certificate and identification card which contains the licensee's name, license number, and expiration date. (2) Official license certificates shall be signed by the executive secretary. Official identification cards shall be signed by the executive secretary and the licensee. (3) Any certificate or identification card issued by the board remain the property of the board and must be surrendered to the board on demand. (4) The license certificate must be displayed in an appropriate and public manner as follows. (A) The license certificate shall be displayed in the primary office or place of employment of the licensee. (B) In the absence of a primary office or place of employment, or when the licensee is employed at multiple locations, the licensee shall carry a current identification card. (5) Neither the licensee nor anyone else shall display a photocopy of a license certificate or carry a photocopy of an identification card in lieu of the original document. A photocopy shall be clearly marked as a copy across the face of the document. (6) Neither the licensee nor anyone else shall make any alteration on a license certificate or identification card. (e) Upgrading a provisional license. The purpose of this subsection is to set out the procedure to upgrade from provisional licensed perfusionist to licensed perfusionist. (1) The provisional licensed perfusionist shall submit to the board a photocopy of the examination results from the American Board of Cardiovascular Perfusion and a written request to upgrade. (2) The provisional licensed perfusionist who successfully completes the licensing examination shall surrender to the board the provisional license certificate and provisional license identification card, and submit the license fee for upgrade of provisional licensed perfusionist to licensed perfusionist. (3) If the provisional licensed perfusionist is not eligible for upgrade, the executive secretary shall notify the provisional licensed perfusionist in writing of the reasons for denial and the additional documentation needed to meet the minimum requirements for licensure as a licensed perfusionist. sec.761.12. Changes of Name or Address. (a) The purpose of this section is to set out the responsibilities and procedures for name and address changes. (b) The licensee shall notify the board of changes in name or preferred mailing address within 30 days of such change(s). (c) Notification of address changes shall be made in writing including the name, mailing address, and zip codes, and be mailed to the executive secretary. (d) Before another license certificate and identification card will be issued by the board, notification of name changes must be mailed to the executive secretary and shall include a duly executed affidavit and a copy of a marriage certificate, court decree evidencing such change, or a Social Security card reflecting the new name. The licensee shall return any previously issued license certificate and identification card and remit the appropriate replacement fee as set out in sec.761.2(s) of this title (relating to The Board's Operation). sec.761.13. License Renewal. (a) Purpose. The purpose of this section is to set out the rules governing license renewal. (b) General. (1) When issued, a license is valid until the licensee's next birth month. (2) A licensee must renew the license annually. (3) The renewal date of a license shall be the last day of the licensee's birth month. (4) Each licensee is responsible for renewing the license before the expiration date and shall not be excused from paying additional fees or penalties. Failure to receive notification from the executive secretary prior to the expiration date of the license shall not excuse failure to file for renewal or late renewal. (5) The board shall not renew the license of the licensee who is in violation of the Act or board rules at the time of application for renewal. (6) The board shall deny renewal of the license of a licensee if renewal is prohibited by the Education Code, sec.57.491 relating to student loan default. (7) The board shall deny renewal of the license of a licensee for whom a contested case is pending until resolution of the case, but such individual remains licensed pending resolution of the contested case, if timely application for renewal is made. (c) License renewal requirements. (1) At least 30 days prior to the expiration date of a person's license, the executive secretary shall send notice to the licensee at the address in the board's records of the expiration date of the license, the amount of the renewal fee due, and a license renewal form which the licensee must complete and return to the board with the required renewal fee. The return of the completed renewal form in accordance with the requirements of paragraph (3) of this subsection shall be considered confirmation of the receipt of renewal notification. (2) The license renewal form for all licensees shall require the provision of the preferred mailing address, primary employment address and telephone number, and misdemeanor and felony convictions. The license renewal form for the provisional licensed perfusionist shall be signed by the supervising licensed perfusionist and indicate whether the supervisor and supervisee have complied with this chapter. (3) A licensee has renewed the license when the licensee has mailed the renewal form and the required renewal fee to the executive secretary prior to the expiration date of the license. The postmark date shall be considered as the date of mailing. (4) The board shall issue to a licensee who has met all requirements for renewal a license certificate and identification card. (d) Late renewal requirements. (1) The executive secretary shall inform a person who has not renewed a license after a period of more than 90 days after the expiration of the license of the amount of the fee required for renewal and the date the license expired. (2) A person whose license has expired for not more than two years may renew the license by submitting the license renewal form and appropriate late renewal fees to the executive secretary. The renewal is effective if it is mailed to the executive secretary within two years after the expiration date of the license. The postmark date shall be considered as the date of mailing. (3) A person whose license has been expired two years or more may not renew the license. The person may obtain a new license by complying with the current requirements and procedures for obtaining an original license. (e) Expiration of license. (1) A person whose license has expired may not use the title or represent or imply that he has the title of "licensed perfusionist" or "provisional licensed perfusionist" or use the letters "LP" or "PLP", and may not use any facsimile of those titles in any manner. (2) A person who fails to renew a license after two years is required to surrender the license certificate and license identification card to the board. (f) Active duty. If a licensee fails to timely renew his or her license on or after August 1, 1990, and the licensee is or was on active duty with the armed forces of the United States of America, the licensee may renew the license in accordance with this subsection. (1) Renewal of the license may be requested by the licensee, the licensee's spouse, or an individual having power of attorney from the licensee. The renewal form shall include a current address and telephone number for the individual requesting the renewal. (2) Renewal may be requested before or after expiration of the license. (3) A copy of the official orders or other official military documentation showing that the licensee is or was on active duty shall be filed with the board along with the renewal form. (4) A copy of the power of attorney from the licensee shall be filed with the board along with the renewal form if the individual having the power of attorney executes any of the documents required in this subsection. (5) A licensee renewing under this subsection shall pay the applicable renewal fee, but not the reinstatement fee or any penalty fee. sec.761.15. Licensing of Persons with Criminal Backgrounds to Be A Perfusionist and Provisional Licensed Perfusionist. (a) Purpose. This section is designed to establish guidelines and criteria on the eligibility of person(s) with criminal backgrounds to obtain licenses as perfusionists or provisional perfusionists. (b) Criminal convictions which directly relate to the profession of perfusion. (1) The board may suspend or revoke an existing license, disqualify a person from receiving a license, or deny to a person the opportunity to be examined for a license because of a person's conviction of a felony or misdemeanor if the crime directly relates to the duties and responsibilities of a licensee. (2) In considering whether a criminal conviction directly relates to the occupation of a licensed perfusionist or provisional licensed perfusionist, the board shall consider: (A) the nature and seriousness of the crime; (B) the relationship of the crime to the purposes for licensure as a perfusionist or provisional perfusionist. The following felonies and misdemeanors listed in clauses (i)-(iv) of this subparagraph relate to the license of a perfusionist or provisional perfusionist because these criminal offenses indicate an inability or a tendency to be unable to perform as a licensed perfusionist or a provisional licensed perfusionist: (i) the misdemeanor of knowingly or intentionally acting as a licensed perfusionist or provisional licensed perfusionist without a license under the Act, sec.15; (ii) a misdemeanor or a felony offense involving moral turpitude; (iii) a conviction relating to Medicare or Medicaid fraud; (iv) a misdemeanor or felony offense under the following titles of the Texas Penal Code: (I) offenses against the person (Title 5); (II) offenses against property (Title 7); (III) offenses against public order and decency (Title 9); (IV) offenses against public health, safety, and morals (Title 10); (V) offenses of attempting or conspiring to commit any of the offenses in this subsection (Title 4); and (VI) insurance claim fraud under the Penal Code, sec.32. 55; and (v) the misdemeanors and felonies listed in clauses (i) -(iii) of this subparagraph are not inclusive in that the board may consider other particular crimes in special cases in order to promote the intent of the Act and these sections; (C) the extent to which a license might offer an opportunity to engage in further criminal activity of the same type as that in which the person previously had been involved; and (D) the relationship of the crime to the ability or capacity required to perform the duties and discharge the responsibilities of a licensed perfusionist or provisional licensed perfusionist. In making this determination, the board will apply the criteria outlined in Texas Civil Statutes, Article 6252-13c, sec.4(c)(1)-(7). (c) Procedures for revoking, suspending, or denying a license to persons with criminal backgrounds. (1) The board's executive secretary will give written notice to the person that the board intends to deny, suspend, or revoke the license in accordance with the provisions of the Administrative Procedure Act and Texas Government Code, Chapter 2001, and the board's formal hearing procedures, sec.761.16 of this title (relating to Violations, Complaints, and Subsequent Board Actions) and sec.761.17 of this title (relating to Formal Hearings). (2) If the board denies, suspends, or revokes an application for a license under this section, the executive secretary will give the person written notice: (A) of the reasons for the decision; and (B) that the person, after exhausting administrative appeals, may appeal in a district court of Travis County, Texas. sec.761.16. Violations, Complaints, and Subsequent Board Actions. (a) Purpose. The purpose of this section is to set out: (1) violations and prohibited actions under the Act and the board rules; (2) procedures for filing complaints alleging violations and prohibited actions under the Act or rules; (3) the board's investigation of complaints; and (4) board actions against a person or licensee when violations and prohibited actions have occurred. (b) Types of violations and prohibited actions. (1) A person may not knowingly or intentionally represent or imply that he or she has the title of "licensed perfusionist" or "provisional licensed perfusionist" or use the letters "LP" or "PLP" or any facsimile of those titles in any manner unless the person holds an appropriate license issued under the Act. (2) A person may not intentionally or knowingly represent or imply that he or she has the title of "certified clinical perfusionist" or use the letters "CCP" or any facsimile of that title in any manner unless the person is certified as a certified clinical perfusionist by the American Board of Cardiovascular Perfusion. (3) A licensee may not issue an insufficient funds check and fail to redeem such instrument within 10 days after being given written notice by the board. (4) A licensee may not violate any of the provisions of the Act or any rules adopted by the board. (c) Filing of complaints. (1) Anyone may complain to the board alleging that a person has committed an action prohibited under the Act or that a licensee has violated the Act or a board rule. (2) A person wishing to complain about a prohibited act or alleged violation against a licensee or other person acting as a perfusionist shall notify the executive secretary. The initial notification of a complaint may be in writing, by telephone, or by personal visit to the executive secretary's office. The mailing address is Texas State Board of Examiners of Perfusionists, 1100 West 49th Street, Austin, Texas 78756-3183, 1-800-942-5540. (3) Upon receipt of a complaint, the executive secretary shall send to the complainant an acknowledgment letter and the board's complainant form, which the complainant will be requested to complete and return to the executive secretary before further action can be taken. If the complaint is made by a visit to the executive secretary's office, the form may be given to the complainant at that time; however, it must be completed and returned to the executive secretary before further action can be taken. Copies of the complaint form may be obtained from the Texas State Board of Examiners of Perfusionists, 1100 West 49th Street, Austin, Texas 78756-3183. (4) Anonymous written complaints shall be investigated by the executive secretary provided that the complainant provides sufficient information. (d) Investigation of complaints. (1) The executive secretary on behalf of the board is responsible for handling complaints. (2) If the executive secretary determines that the complaint does not come within the board's jurisdiction, the executive secretary shall advise the complainant and, if possible, refer the complainant to the appropriate governmental agency for handling such complaints. (3) The executive secretary, on behalf of the board, shall, at least as frequently as quarterly, notify the parties to the complaint of the status of the complaint until its final disposition. (4) If an investigation is initiated, the investigator shall always attempt to contact the complainant to discuss the complaint. (5) The board shall use a private investigator only if the department's investigators available to the board have a conflict of interest or are not available to respond to a complaint in a timely manner. (e) Actions by executive secretary. (1) The executive secretary alone or with the concurrence of the Complaint Committee may take one or more of the following actions: (A) determine that an allegation is groundless and dismiss the complaint; or (B) determine that a nonlicensed person has committed a prohibited action under subsection (b) of this section. The complaint committee shall consider the seriousness and the effects of the violation and shall initiate one of the following actions: (i) attempt to resolve the complaint by requesting the violator to stop the action immediately. If the violator complies, the executive secretary may close the complaint file; or (ii) with the concurrence of the board chairman, ask the attorney general, district attorney, or county attorney to take appropriate legal action against the violator; or (C) determine that a licensee has violated the Act or a board rule and propose denial of renewal, revocation, or suspension of the license, reprimand, or probation of the license suspension. (2) Whenever the executive secretary dismisses a complaint or closes a complaint file, the executive secretary will give a summary report of the final action to the board, the complainant, and the accused party. (f) Formal hearings. (1) The formal hearing shall be conducted according to the hearing procedures in sec.761.17 of this title (relating to Formal Hearings) and sec.761.15 of this title (relating to Licensing of Persons with Criminal Backgrounds to Be A Perfusionist and Provisional Licensed Perfusionist), if the latter is applicable. (2) To initiate formal hearing procedures, the executive secretary shall give the applicant or licensee written notice of the opportunity for hearing. The notice shall state the basis for the proposed action. Within ten days after receipt of the notice, the applicant or licensee may give written notice to the executive secretary that the applicant or licensee wants a hearing. (A) If the person fails to respond within ten days after receipt of the notice of opportunity, the person is deemed to have waived the hearing. If the hearing has been waived, the executive secretary may recommend to the board that the license be suspended or revoked, the license suspension be probated, the licensee renewal be denied or the application be denied. The board may take the final action which the board deems appropriate. (B) If the person requests a hearing within ten days after receiving the notice of opportunity for hearing, the executive secretary shall request the department's office of general counsel to initiate formal hearing procedures. (3) After a formal hearing is conducted, the board, meeting in quorum and by a majority of those present and voting, will determine the necessary final action after receiving the hearing officer's recommendation. The complaint committee members shall not participate in the final action. (g) Final action by the board. (1) If the board suspends the license, the suspension remains in effect until the board determines that the reasons for the suspension no longer exist. (2) During the time of suspension, the former license holder shall return the license certificate and license identification card to the board. (3) Upon showing of good cause by the former license holder, the board may probate the license suspension. (4) If a suspension overlaps a license renewal period, the former license holder must comply with the normal renewal procedures in these rules; however, the license will not be renewed until the board determines that the reasons for suspension have been removed. (5) If the board revokes the license, the former license holder must reapply in order to obtain a new license. The board will not issue a new license until the board determines that the reasons for revocation have been removed. The board may require an investigation and a recommendation from the executive secretary to assist the board in making its decision. (6) Upon revocation, the former license holder shall return the license certificate and license identification card to the board. (h) Surrender of license. (1) A licensee may offer his or her license for surrender to the board office. The executive secretary will notify the licensee that the license has been received. (2) When a licensee has offered the surrender of his or her license after a complaint has been filed alleging violations of the Act or this chapter, and the executive secretary has accepted such a surrender, that surrender is deemed to be the result of a formal disciplinary action. (3) A license which has been surrendered may not be reinstated; however, that person may apply for a new license in accordance with the Act and this chapter. (i) Monitoring of licensees. The executive secretary shall monitor each licensee against whom a board order is issued to ascertain that the licensee performs the required acts. sec.761.17. Formal Hearings. (a) Purpose. This section covers the formal hearing procedures and practices that will be used by the board in handling suspensions, revocation of license, denial of licenses, probating a license suspension, and reprimanding a licensee. Such hearing will be conducted pursuant to the contested case provisions of the Administrative Procedure Act (APA), Chapter 2001, Texas Government Code, and will be held by the State Office of Administrative Hearings. (b) Notice requirements. (1) Notice of the hearing shall be given according to the notice requirements of APA. (2) If a party fails to appear or be represented at a hearing after receiving notice, the hearing examiner may proceed with the hearing or take whatever action is fair and appropriate under the circumstances. (3) All parties shall timely notify the hearing examiner of any changes in their mailing addresses. (c) Parties to the hearing. (1) The parties to the hearing shall be the applicant or licensee and the complaints committee or executive secretary, as appropriate. (2) A party may appear personally or be represented by counsel or both. (d) Prehearing conferences. (1) In a contested case, the hearing examiner, on his own motion or the motion of a party, may direct the parties to appear at a specified time and place for a conference prior to the hearing for the purpose of: (A) the formulation and simplification of issues; (B) the necessity or desirability of amending the pleading; (C) the possibility of making admissions or stipulations; (D) the procedure at the hearing; (E) specifying the number of witnesses; (F) the mutual exchange of prepared testimony and exhibits; (G) the designation of parties; and (H) other matters which may expedite the hearing. (2) The hearing examiner shall have the minutes of the conference recorded in an appropriate manner and shall issue whatever orders are necessary covering the said matters or issues. (3) Any action taken at the prehearing conference may be reduced to writing, signed by the parties, and made a part of the record. (e) Assessing the cost of a court reporter and the record of the hearing. (1) In the event a court reporter is utilized in the making of the record of the proceedings, the board shall bear the cost of the per diem or other appearance fee for such reporter. (2) The board may prepare, or order the preparation of, a transcript (statement of facts) of the hearing upon the written request of any party. The board may pay the cost of the transcript or assess the cost to one or more parties. (3) In the event a final decision of the board is appealed to the district court wherein the board is required to transmit to the reviewing court a copy of the record of the hearing proceeding, or any part thereof, the board may require the appealing party to pay all or part of the cost of preparation of the original or a certified copy of the record of the board proceedings that is required to be transmitted to the reviewing court. (f) Disposition of case. Unless precluded by law, informal disposition may be made of any contested case by agreed settlement order or default order. (g) Agreements in writing. No stipulation or agreement between the parties with regard to any matter involved in any proceeding shall be enforced unless it shall have been reduced to writing and signed by the parties or their authorized representatives, dictated into the record during the course of a hearing, or incorporated in an order bearing their written approval. This rule does not limit a party's ability to waive, modify, or stipulate away any right or privilege afforded by these sections. (h) Final orders or decisions. (1) The final order or decision will be rendered by the board. The board is not required to adopt the recommendation of a hearing examiner and may take action as it deems appropriate and lawful. (2) All final orders or decisions shall be in writing and shall set forth the findings of fact and conclusions required by law. (3) All final orders shall be signed by the executive secretary and the chairman of the board; however, interim orders may be issued by the hearing examiner. (4) A copy of all final orders and decisions shall be timely provided to all parties as required by law. (i) Motion for rehearing. A motion for rehearing shall be governed by APA, sec.2001.146, Texas Government Code and shall be addressed to the board and filed with the executive secretary. (j) Appeals. All appeals from final board orders or decisions shall be governed by APA, Subchapter G, Texas Government Code and communications regarding any appeal shall be to the executive secretary. sec.761.18. Informal Disposition. (a) Informal disposition of any complaint or contested case involving a licensee or an applicant for licensure may be made through an informal settlement conference held to determine whether an agreed settlement order may be approved. (b) If the executive secretary or the complaints committee of the board determines that the public interest might be served by attempting to resolve a complaint or contested case by an agreed order in lieu of a formal hearing, the provisions of this section shall apply. A licensee or applicant may request an informal settlement conference; however, the decision to hold a conference shall be made by the executive secretary or the complaints committee. (c) An informal conference shall be voluntary. It shall not be a prerequisite to a formal hearing. (d) The executive secretary shall decide upon the time, date, and place of the settlement conference and provide written notice to the licensee or applicant of the same. Notice shall be provided no less than ten days prior to the date of the conference by certified mail, return receipt requested to the last known address of the licensee or applicant or by personal delivery. The ten days shall begin on the date of mailing or personal delivery. The licensee or applicant may waive the ten-day notice requirement. (1) The notice shall inform the licensee or applicant of the following: (A) the nature of the alleged violation; (B) that the licensee may be represented by legal counsel; (C) that the licensee or applicant may offer the testimony of witnesses and present other evidence as may be appropriate; (D) that a representative of the Office of the Attorney General will be requested to attend the proceeding; (E) that the licensee's or applicant's attendance and participation is voluntary; (F) that the complainant may be present; and (G) that the settlement conference shall be cancelled if the licensee or applicant notifies the executive secretary that he or she or his or her legal counsel will not attend. (2) A copy of the board's rules concerning informal disposition shall be enclosed with the notice of the settlement conference. (e) The notice of the settlement conference shall be sent by certified mail, return receipt requested, to the complainant at his or her last known address or personally delivered to the complainant. The complainant shall be informed that he or she may appear and testify or may submit a written statement for consideration at the settlement conference. The complainant shall be notified if the conference is cancelled. (f) Members of the complaints committee may be present at a settlement conference. (g) The settlement conference shall be informal and shall not follow the procedures established in this chapter for contested cases and formal hearings. (h) The licensee, the licensee's attorney, and board staff may question witnesses, make relevant statements, present statements of persons not in attendance, and present such other evidence as may be appropriate. (i) An attorney from the Office of the Attorney General will be requested to attend each settlement conference. The board members or executive secretary may call upon the board attorney at any time for assistance in the settlement conference. (j) The licensee shall be afforded the opportunity to make statements that are material and relevant. (k) Access to the board's investigative file may be prohibited or limited in accordance with the Texas Government Code, Chapter 552 and the APA. (l) At the discretion of the executive secretary or the committee members, a tape recording may be made of none or all of the settlement conference. (m) The complainant shall not be considered a party in the settlement conference but shall be given the opportunity to be heard if the complainant attends. Any written statement submitted by the complainant shall be reviewed at the conference. (n) At the conclusion of the settlement conference, the executive secretary may make recommendations for informal disposition of the complaint or contested case. The recommendations may include any disciplinary action authorized by the Act. The executive secretary may also conclude that the board lacks jurisdiction, conclude that a violation of the Act or this chapter has not been established, or refer the matter for further investigation. (o) The licensee or applicant may either accept or reject at the conference the settlement recommendations. If the recommendations are accepted, an agreed settlement order shall be prepared by the board office or the board's legal counsel and forwarded to the licensee or applicant. The order shall contain agreed findings of fact and conclusions of law. The licensee or applicant shall execute the order and return the signed order to the board office within ten days of his or her receipt of the order. If the licensee or applicant fails to return the signed order within the stated time period, the inaction shall constitute rejection of the settlement recommendations. (p) If the licensee or applicant rejects the proposed settlement, the matter shall be referred to the executive secretary for appropriate action. (q) If the licensee or applicant signs and accepts the recommendations, the agreed order shall be submitted to the entire board for its approval. Placement of the agreed order on the board agenda shall constitute only a recommendation for approval by the board. (r) The identity of the licensee or applicant shall not be made available to the board until after the board has reviewed and accepted the agreed order unless the licensee or applicant chooses to attend the board meeting. The licensee or applicant shall be notified of the date, time, and place of the board meeting at which the proposed agreed order will be considered. Attendance by the licensee or applicant is voluntary. (s) Upon an affirmative majority vote, the board shall enter an agreed order approving the accepted settlement recommendations. The board may not change the terms of a proposed order but may only approve or disapprove an agreed order unless the licensee or applicant is present at the board meeting and agrees to other terms proposed by the board. (t) If the board does not approve a proposed agreed order, the licensee or applicant and the complainant shall be so informed. The matter shall be referred to the executive secretary for other appropriate action. (u) A licensee's opportunity for an informal conference under this section shall satisfy the requirement of the Texas Government Code, Chapter 2001.054(c). (1) If the executive secretary or complaints committee determines that an informal conference shall not be held, the executive secretary shall give written notice to the licensee or applicant of the facts or conduct alleged to warrant the intended disciplinary action and the licensee or applicant shall be given the opportunity to show, in writing and as described in the notice, compliance with all requirements of the Act and this chapter. (2) The complainant shall be sent a copy of the written notice described in paragraph (1) of this subsection. The complainant shall be informed that he or she may also submit a written statement to the board. sec.761.19. Default Orders. (a) If a right to a hearing is waived under sec.761.16(f)(2)(A) of this title (relating to Violations, Complaints, and Subsequent Board Actions) or sec.761.17(b)(2) of this title (relating to Formal Hearings), the board shall consider an order taking appropriate disciplinary action against the licensee as described in the written notice to the licensee or applicant. (b) The licensee or applicant and the complainant shall be notified of the date, time, and place of the board meeting at which the default order will be considered. Attendance is voluntary. (c) Upon an affirmative majority vote, the board shall enter an order taking appropriate action. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 24, 1995. TRD-9501019 Shannon E. Ballard Chairman Texas State Board of Examiners of Perfusionists Earliest possible date of adoption: March 3, 1995 For further information, please call: (512) 834-6751