TITLE 34.PUBLIC FINANCE

Part 1. COMPTROLLER OF PUBLIC ACCOUNTS

Chapter 5. FUNDS MANAGEMENT (FISCAL AFFAIRS)

Subchapter E. CLAIMS PROCESSING--PURCHASE VOUCHERS

34 TAC §5.54

The Comptroller of Public Accounts proposes amendments to §5.54, concerning consulting services contracts.

The primary purpose of the amendments is to conform §5.54 to the changes made to the consulting services statutes during recent legislative sessions.

During the 75th Legislature, 1997, Senate Bill 645 raised the threshold for determining whether a consulting services contract is a "major consulting services contract."

During the 76th Legislature, 1999, Senate Bill 176 amended the consulting services statutes to require a state agency to notify the Legislative Budget Board in writing after the agency contracts for consulting services if the amount of the contract, including any amendment, modification, renewal, or extension, exceeds $14,000. Any failure to comply with this requirement renders the contract void.

During the 76th Legislature, 1999, House Bill 3211 extended to twenty days the deadline for a state agency's filing of certain information with the secretary of state after the agency renews, amends, or extends a major consulting services contract. The bill also deleted the authorization for a state agency to make payments under a consulting services contract that violated certain procedural requirements of the consulting services statutes after the agency cured the violation.

During the 78th Legislature, 2003, Senate Bill 1652 amended the consulting services statutes so that an institution of higher education's consulting services contract is categorized as a "major consulting services contract" only if the value of the contract exceeds $25,000. The bill also exempted an institution's major consulting services contract from the requirement to obtain a finding of fact from the governor's Budget and Planning Office if the institution includes in its invitation for offers both a finding of necessity by the institution's chief executive officer and an explanation of that finding.

The second purpose of the amendments is to require a state agency to provide the comptroller upon request with a reference to the pages in the Texas Register that demonstrate the agency's compliance with certain publication requirements concerning consulting services contracts.

The third purpose of the amendments is to delete provisions that merely repeat the consulting services statutes.

The fourth purpose of the amendments is to change the supporting documentation requirements that apply when a payment is made under a consulting services contract.

The final purpose of the amendments is to make several non-substantive or technical improvements to §5.54.

John Heleman, Chief Revenue Estimator, has determined that for the first five-year period the amendments will be in effect, there will be no foreseeable implications relating to costs or revenues of the state or local governments.

Mr. Heleman also has determined that for each year of the first five years the amendments are in effect, the public benefit anticipated as a result of adopting the amendments will be helping administer the statute that governs state agency purchases of consulting services. The amendments would not have an adverse effect on small businesses or micro-businesses. There is no significant economic cost to individuals who are required to comply with the amendments.

Comments on the proposal may be addressed to Joani Bishop, Manager of Claims Division, P.O. Box 13528, Austin, Texas 78711. If a person wants to ensure that the comptroller considers and responds to a comment made about this proposal, then the person must ensure that the comptroller receives the comment not later than the 30th day after the issue date of the Texas Register in which this proposal appears. If the 30th day is a state or national holiday, Saturday, or Sunday, then the first workday after the 30th day is the deadline.

The amendments are proposed under Government Code, §2254.039(a), which requires the comptroller to adopt rules to implement and administer Government Code, Chapter 2254, Subchapter B.

The amendments implement Government Code, Chapter 2254, Subchapter B.

§5.54.Consulting Services Contracts.

(a) Definitions. In [ The following words and terms, when used in ] this section : [ , shall have the following meanings, unless the context clearly indicates otherwise. ]

(1) "Consultant" has the meaning assigned by Government Code, §2254.021(3).

(2) [ (1) ] "Consulting service" means a [ Consulting service--A ] study conducted for a state agency or advice provided to a state agency under a contract that does not involve the traditional relationship of employer and employee. The term does not include a routine service that is necessary to the functioning of a state agency's programs.

(3) [ (2) ] "Executive director" means the [ Executive director--The ] individual who is the chief administrative officer of a state agency. The term excludes a member of a governing body.

[ (3) Executive head--]

[ (A) the elected or appointed state official who is authorized by law to administer a state agency if the agency is not headed by a governing body; or]

[ (B) the executive director of a state agency if the agency is headed by a governing body.]

(4) "Institution of higher education" has the meaning assigned by Education Code, §61.003 except the term does not include a public junior college or a community college. [ Major consulting services contract--A consulting services contract for which it is reasonably foreseeable that the value of the contract will exceed $10,000. ]

(5) "Major consulting services contract" has the meaning assigned by Government Code, §2254.021(2). [ Person--Includes an individual, a corporation, an organization, a government or governmental subdivision or agency, a business trust, an estate, a trust, a partnership, an association, and any other legal entity. ]

(6) "State agency" has the meaning assigned by Government Code, §2151.002(2). [ Private consultant--A person that provides or proposes to provide a consulting service. ]

(7) "USAS" means the uniform statewide accounting system. [ State agency-- ]

[ (A) any department, commission, board, office, or other agency in the executive branch of state government created by the constitution or a statute of this state, except the Texas High-Speed Rail Authority;]

[ (B) the Supreme Court of Texas, the Court of Criminal Appeals of Texas, a court of appeals, or the Texas Judicial Council; or]

[ (C) a university system or an institution of higher education as defined in the Education Code, §61.003, other than a public junior college.]

(b) Applicability of this section. This section applies to a consulting service only to the extent Government Code, Chapter 2254, Subchapter B, applies to that service. [ a state agency purchases with funds: ]

[ (1) appropriated by the Texas legislature;]

[ (2) derived from the exercise of the statutory duties of a state agency, regardless of whether the Texas legislature has appropriated those funds; or]

[ (3) received from the federal government, unless the application of a federal law or regulation conflicts with the application of this section.]

[ (c) Exemptions.]

[ (1) This section does not apply to consulting services provided by:]

[ (A) a practitioner of a professional service as defined under the Texas Government Code, §2254.002(2), Professional Services Procurement Act;]

[ (B) a private legal counsel;]

[ (C) an investment counselor;]

[ (D) an actuary;]

[ (E) a medical service provider; or]

[ (F) a dental service provider.]

[ (2) This paragraph applies if the governing board of a retirement system trust fund determines that consulting services are necessary for the performance of the board's constitutional fiduciary duties. Unless paragraph (1) of this subsection makes this section inapplicable to those services, only the requirements of subsection (i)(1) of this section apply to the purchase of the services.]

[ (3) The comptroller, the governor, and the General Services Commission may jointly decide to subject the purchase of a particular consulting service to the procedures required by Texas Civil Statutes, Article 601b, State Purchasing and General Services Act, Article 3, instead of the procedures required by this section. They may make this decision only if:]

[ (A) they conclude that using the procedures required by the State Purchasing and General Services Act, Article 3, would be more advantageous to the state; and]

[ (B) they each adopt by rule a memorandum of understanding that states the substance of their decision.]

(c) [ (d) ] Effect of noncompliance with this section or applicable statutes .

(1) If a state agency contracts for a consulting service [ services ] or renews, amends, or extends a consulting services contract without complying with the requirements of subsection (d) [ subsections (h), (i)(1), and (j) ] of this section and Government Code, §§2254.029, 2254.030, 2254.0301, and 2254.033 , then the contract, renewal, amendment, or extension is void.

[ (2) A major consulting services contract that a state agency enters into without first obtaining the finding of fact from the governor's Budget and Planning Office as required by subsection (g)(3) of this section is void.]

[ (3) If a private consultant contracts with a state agency without complying with the requirements of subsection (m)(1)-(3) of this section, then the contract is void.]

(2) [ (4) ] If [ When ] a contract, renewal, amendment, or extension is void under paragraph (1) of this subsection, then the comptroller may not:

(A) draw a warrant or transmit funds to satisfy an obligation under the contract, renewal, amendment, or extension; or

(B) reimburse a state agency for a payment made under the contract, renewal, amendment, or extension.

(3) [ (5) ] If [ When ] a contract, renewal, amendment, or extension is void under paragraph (1) of this subsection, then a state agency may not make any payments under the contract, renewal, amendment, or extension from any state or federal funds held in or outside the state treasury [ until the agency has complied with subsections (h), (i)(1), and (j) of this section, as applicable ].

[ (e) Necessity for consulting services. A state agency may use a private consultant only if:]

[ (1) there is a substantial need for the consulting services; and]

[ (2) the agency cannot adequately perform the consulting services with its own personnel or through a contract with another state agency.]

[ (f) Selection of private consultants.]

[ (1) In selecting a private consultant, a state agency shall:]

[ (A) base its choice on demonstrated competence, knowledge, and qualifications, and on the reasonableness of the proposed fee for the services; and]

[ (B) if other considerations are equal, give preference to a private consultant whose primary place of business is within the state or who will manage the consulting engagement wholly from an office in the state.]

[ (2) A state agency may not accept a person's offer or proposal to provide consulting services to the agency if:]

[ (A) the person received compensation from the agency to participate in the preparation of the specifications or request for proposals on which the offer is based; and]

[ (B) the person would receive compensation from the agency for providing the services.]

[ (g) Notice of intent to employ a private consultant. Before entering into a major consulting services contract, a state agency shall:]

[ (1) notify the Legislative Budget Board and the governor's Budget and Planning Office of the agency's intent to contract with a private consultant;]

[ (2) give information to the Legislative Budget Board and the governor's Budget and Planning Office to demonstrate that the agency has complied or will comply with subsections (e) and (f)(1) of this section; and]

[ (3) obtain a finding of fact from the governor's Budget and Planning Office that the consulting services are necessary.]

[ (h) Publication before entering into a major consulting services contract.]

[ (1) Not later than the 30th day before the date it enters into a major consulting services contract, a state agency shall file a document with the secretary of state for publication in the Texas Register. The document must:]

[ (A) invite private consultants to provide offers of consulting services to the agency;]

[ (B) identify the individual employed by the agency who should be contacted by a private consultant who intends to provide an offer;]

[ (C) specify the closing date for the receipt of offers; and]

[ (D) describe the procedure by which the state agency will award the contract.]

[ (2) If the consulting services sought by a state agency relate to services previously provided by a private consultant, the agency must disclose that fact in the invitation for offers required by paragraph (1)(A) of this subsection. If the agency intends to award the contract to the private consultant that previously provided the services unless a better offer is received, the agency must also disclose this intention in the invitation for offers.]

[ (i) Publication and notification after entering into a major consulting services contract.]

[ (1) Not later than the tenth day after the date of entering into a major consulting services contract, a state agency shall file with the secretary of state for publication in the Texas Register:]

[ (A) a description of the activities that the private consultant will conduct;]

[ (B) the name and business address of the private consultant;]

[ (C) the total value of the contract;]

[ (D) the beginning and ending dates of the contract; and]

[ (E) the dates on which documents, films, recordings, or reports that the private consultant is required to present to the agency are due.]

[ (2) The General Appropriations Act for the fiscal biennium ending August 31, 1995, contains the following provision. A state agency must provide the information listed in paragraph (1)(A) - (E) of this subsection to the Legislative Budget Board, the House Appropriations Committee, the Senate Finance Committee, and other appropriate legislative committees. The agency must provide the information not later than the tenth day after the date the agency enters into the major consulting services contract.]

(d) [ (j) ] Renewals, amendments, or extensions[ , or amendments ] of consulting services contracts.

(1) A state agency must comply with this paragraph when the agency intends to renew , amend, or extend a major consulting services contract.

(A) If the renewal contract itself is not a major consulting services contract or if the contract after the amendment or extension is no longer a major consulting service contract , then the agency shall file the information required by Government Code, §2254.030 [ subsection (i)(1) of this section ] with the secretary of state for publication in the Texas Register . The information must be filed not later than the 20th [ tenth ] day after either the date the renewal contract is entered into or the date the original contract is amended or extended .

(B) If the renewal contract itself is a major consulting services contract or if the contract after the amendment or extension is still a major consulting services contract , then the agency shall comply with the requirements of Government Code, §2254.028(a) and §2254.029 [ subsections (g) and (h) of this section ].

(2) A state agency that intends to renew , amend, or extend a consulting services contract that is not a major consulting services contract shall comply with the requirements of Government Code, §2254.028(a) and §2254.029 [ subsections (g) and (h) of this section ] if the original contract and either the renewal contract , the amendment, or the extension have a reasonably foreseeable value totaling more than $15,000 if the agency is not an institution of higher education or $25,000 if the agency is an institution of higher education [ $10,000 ].

[ (3) A state agency must comply with this paragraph when the agency intends to extend or amend a major consulting services contract.]

[ (A) If the contract after the amendment or extension is no longer a major consulting services contract, then the agency shall file the information required by subsection (i)(1) of this section with the secretary of state for publication in the Texas Register. The information must be filed not later than the tenth day after the date the contract is amended or extended.]

[ (B) If the contract after the amendment or extension is still a major consulting services contract, then the agency shall comply with the requirements of subsections (g) and (h) of this section.]

[ (4) A state agency that intends to extend or amend a consulting services contract that is not a major consulting services contract shall comply with the requirements of subsections (g) and (h) of this section if the original contract and the amendment or extension have a reasonably foreseeable value totaling more than $10,000.]

[ (k) Dividing contracts. A state agency may not divide a consulting services contract or a renewal, amendment, or extension of a consulting services contract into more than one contract, renewal, amendment, or extension to avoid the requirements of this section.]

[ (l) Reporting of financial interests.]

[ (1) This subsection applies only to an officer or employee of a state agency who has a financial interest or who is related within the second degree of consanguinity or affinity to an individual who has a financial interest in a private consultant that submits an offer to provide consulting services to the agency. For the purpose of this subsection, degrees of relationship must be determined in accordance with the Texas Government Code, Chapter 573.]

[ (2) An officer or employee of a state agency shall report the financial interest to the executive head of the agency not later than the tenth day after the date on which the private consultant submits the offer.]

[ (3) This subsection applies to all consulting services contracts and renewals, amendments, and extensions of those contracts.]

[ (m) Consulting services provided by former state employees.]

[ (1) Paragraphs (2) and (3) of this subsection apply only to an individual who has been employed by a state agency at anytime during the two years preceding the date on which the individual offers to perform a consulting service for a state agency.]

[ (2) An individual shall disclose in an offer to perform a consulting service for a state agency:]

[ (A) the nature of the individual's employment with the agency or another state agency;]

[ (B) the date the employment was terminated; and]

[ (C) the annual rate of compensation for the employment at the time of termination.]

[ (3) A state agency that accepts an offer to provide consulting services from an individual described in paragraph (1) of this subsection must include, in the information filed under subsection (i)(1) of this section, a statement about:]

[ (A) the individual's employment with a state agency; and]

[ (B) the nature of that employment.]

[ (4) Notwithstanding anything else in this section, a state department or agency may not use funds appropriated by the General Appropriations Act to make a payment under a consulting services contract with an individual who was employed by that department or agency at anytime during the 12 months before the contract was entered into.]

[ (n) Archives.]

[ (1) After a state agency's contract with a private consultant has ended, the agency shall, upon request, supply the Legislative Budget Board and the governor's Budget and Planning Office with a copy of each document, film, recording, or report developed by the consultant under the contract.]

[ (2) A state agency shall file with the Texas State Library a copy of each document, film, recording, or report developed by the private consultant.]

[ (o) Actions by state agencies on recommendations from private consultants. As part of the biennial budgetary hearing process conducted by the Legislative Budget Board and the governor's Budget and Planning Office, a state agency shall report to each of them on any actions taken in response to the recommendations of any private consultant with whom the agency contracts during the previous biennium.]

[ (p) Emergency purchases of consulting services. A state agency that needs private consulting services before compliance with this section can be completed because of an unforeseen emergency shall comply with the governor's rules about emergency waivers of the requirements of this section.]

[ (q) Mixed contracts. This section applies to a contract that involves both consulting and other services if the primary objective of the contract is the acquisition of consulting services.]

[ (r) Competitive bidding. This section neither requires nor prohibits the use of competitive bidding procedures to purchase consulting services.]

(e) [ (s) ] Procurement of consulting services by the Texas Building and Procurement [ General Services ] Commission.

[ (1) At the request of a state agency, the General Services Commission is required to procure consulting services for the agency.]

[ (2) ] If [ When ] the Texas Building and Procurement [ General Services ] Commission procures a consulting service [ services ] for a state agency under Government Code, §2254.040, then [ : ]

[ (A) the commission may require the agency to reimburse the commission for the costs incurred by the commission in procuring the services; and]

[ (B) ] the commission must comply with any [ the ] requirements of this section and Government Code, Chapter 2254, Subchapter B that would apply if the agency were procuring the consulting service [ services ] directly.

(f) [ (t) ] Purchase document requirements.

(1) In addition to the requirements of paragraph (2) of this subsection, the purchase document submitted to the comptroller that requests payment under a contract subject to that paragraph must be supported by the following documentation [ This paragraph applies when a purchase document is submitted to the comptroller that requests a payment under a consulting services contract that is not a major consulting services contract. The document must contain the following information in the appropriate descriptive/legal text screen of USAS and be supported by the following documentation ]:

(A) a copy of the original contract and, if the contract has been renewed, amended, or extended, a copy of the renewal, amendment, or extension [ the reasonably foreseeable value of the contract ];

(B) a copy of any written notice provided to the Legislative Budget Board under Government Code, §2254.0301 if the amount of the contract, including any renewal, amendment, or extension, exceeds $14,000; and [ the cumulative total of prior payments made under the contract; ]

(C) a statement that the payment complies with Government Code, §§2155.004(a) - (b), 2254.026, 2254.027, and 2254.033. [ a copy of the contract if the copy has not already been provided to the comptroller; and ]

[ (D) a statement that the payment complies with subsections (e), (f), and (m) of this section.]

(2) This paragraph applies when a purchase document is submitted to the comptroller that requests a payment under either a major consulting services contract (or a renewal, amendment, or extension of a major consulting services contract) or a contract that was not originally a major consulting services contract but whose value after renewal, amendment, or extension totals more than $15,000 if the payer is not an institution of higher education or $25,000 if the payer is an institution of higher education. In addition to the requirements of paragraph (1) of this subsection, the [ . The ] document must [ contain the following information in the appropriate descriptive/legal text screen of USAS and ]be supported by the following documentation:

[ (A) the reasonably foreseeable value of the contract;]

[ (B) the cumulative total of prior payments made under the contract;]

[ (C) a copy of the contract if the copy has not already been provided to the comptroller;]

(A) [ (D) ] a reference to the volume and page numbers [ number ] of the Texas Register in which the requirements of Government Code, §2254.029 and §2254.030, and, if applicable, Government Code, §2254.028(c) and §2254.033(b) [ subsections (h), (i)(1), and, if applicable, (m)(3) of this section ] were fulfilled; and

(B) [ (E) ] a copy of the governor's finding of fact that the consulting services are necessary if the finding is required by Government Code, §§2254.028, 2254.031(a)(2), or 2254.031(c)(2), or by any combination of those statutes. [ copy has not already been provided to the comptroller; and ]

[ (F) a statement that the payment complies with subsections (e), (f), and (m) of this section.]

[ (3) This paragraph applies when a purchase document is submitted to the comptroller that requests a payment under a renewed consulting services contract if the original contract was a major consulting services contract.]

[ (A) This subparagraph applies if the renewal contract itself is not a major consulting services contract. The document must contain the following information in the appropriate descriptive/legal text screen of USAS and be supported by the following documentation:]

[ (i) the reasonably foreseeable value of the original contract;]

[ (ii) the reasonably foreseeable value of the renewal contract;]

[ (iii) the cumulative total of prior payments made under the original contract;]

[ (iv) the cumulative total of prior payments made under the renewal contract;]

[ (v) a copy of the original contract if the copy has not already been provided to the comptroller;]

[ (vi) a copy of the renewal contract if the copy has not already been provided to the comptroller;]

[ (vii) the volume and page number of the Texas Register in which the requirements of subsections (h), (i)(1), and, if applicable, (m)(3) of this section were fulfilled when the original contract was entered into;]

[ (viii) the volume and page number of the Texas Register in which the requirements of subsection (j)(1)(A) of this section were fulfilled when the renewal contract was entered into;]

[ (ix) a copy of the governor's finding of fact that the consulting services under the original contract are necessary if the copy has not already been provided to the comptroller; and]

[ (x) a statement that the payment complies subsections (e), (f), and (m) of this section.]

[ (B) This subparagraph applies if the renewal contract itself is a major consulting services contract. The document must contain the following information in the appropriate descriptive/legal text screen of USAS and be supported by the following documentation:]

[ (i) the reasonably foreseeable value of the original contract;]

[ (ii) the reasonably foreseeable value of the renewal contract;]

[ (iii) the cumulative total of prior payments made under the original contract;]

[ (iv) the cumulative total of prior payments made under the renewal contract;]

[ (v) a copy of the original contract if the copy has not already been provided to the comptroller;]

[ (vi) a copy of the renewal contract if the copy has not already been provided to the comptroller;]

[ (vii) volume and page number of the Texas Register in which the requirements of subsections (h), (i)(1), and, if applicable, (m)(3) of this section were fulfilled when the original contract was entered into;]

[ (viii) the volume and page number of the Texas Register in which the requirements of subsection (j)(1)(B) of this section were fulfilled when the renewal contract was entered into;]

[ (ix) a copy of the governor's finding of fact that the consulting services under the original contract are necessary if the copy has not already been provided to the comptroller;]

[ (x) a copy of the governor's finding of fact that the consulting services under the renewal contract are necessary if the copy has not already been provided to the comptroller; and]

[ (xi) a statement that the payment complies with subsections (e), (f), and (m) of this section.]

[ (4) This paragraph applies when a purchase document is submitted to the comptroller that requests a payment under a renewed consulting services contract if the original contract was not a major consulting services contract.]

[ (A) This subparagraph applies if the original contract and the renewal have a reasonably foreseeable value totaling more than $10,000. The document must contain the following information in the appropriate descriptive/legal text screen of USAS and be supported by the following documentation:]

[ (i) the reasonably foreseeable value of the original contract;]

[ (ii) the reasonably foreseeable value of the renewal contract;]

[ (iii) the cumulative total of prior payments made under the original contract;]

[ (iv) the cumulative total of prior payments made under the renewal contract;]

[ (v) a copy of the original contract if the copy has not already been provided to the comptroller;]

[ (vi) a copy of the renewal contract if the copy has not already been provided to the comptroller;]

[ (vii) the volume and page number of the Texas Register in which the requirements of subsection (j)(2) of this section were fulfilled when the renewal contract was entered into;]

[ (viii) a copy of the governor's finding of fact that the consulting services under the renewal contract are necessary if the copy has not already been provided to the comptroller; and]

[ (ix) a statement that the payment complies with subsections (e), (f), and (m) of this section.]

[ (B) This subparagraph applies if the original contract and the renewal have a reasonably foreseeable value totaling $10,000 or less. The document must contain the following information in the appropriate descriptive/legal text screen of USAS and be supported by the following documentation:]

[ (i) the reasonably foreseeable value of the original contract;]

[ (ii) the reasonably foreseeable value of the renewal contract;]

[ (iii) the cumulative total of prior payments made under the original contract;]

[ (iv) the cumulative total of prior payments made under the renewal contract;]

[ (v) a copy of the original contract if the copy has not already been provided to the comptroller;]

[ (vi) a copy of the renewal contract if the copy has not already been provided to the comptroller;]

[ (vii) a statement that the payment complies with subsections (e), (f), and (m) of this section.]

[ (5) This paragraph applies when a purchase document is submitted to the comptroller that requests a payment under an extended or an amended consulting services contract if the original contract was a major consulting services contract.]

[ (A) This subparagraph applies if the contract after the extension or amendment is still a major consulting services contract. The document must contain the following information in the appropriate descriptive/legal text screen of USAS and be supported by the following documentation:]

[ (i) the reasonably foreseeable value of the original contract;]

[ (ii) the reasonably foreseeable value of the contract after the extension or amendment;]

[ (iii) the cumulative total of prior payments made under the original contract;]

[ (iv) the cumulative total of prior payments made under the contract after the extension or amendment took effect;]

[ (v) a copy of the original contract if the copy has not already been provided to the comptroller;]

[ (vi) a copy of the extension or amendment if the copy has not already been provided to the comptroller;]

[ (vii) the volume and page number of the Texas Register in which the requirements of subsections (h), (i)(1), and, if applicable, (m)(3) of this section were fulfilled when the original contract was entered into;]

[ (viii) the volume and page number of the Texas Register in which the requirements of subsection (j)(3)(B) of this section were fulfilled when the extension or amendment was entered into;]

[ (ix) a copy of the governor's finding of fact that the consulting services under the original contract are necessary if the copy has not already been provided to the comptroller; and]

[ (x) a copy of the governor's finding of fact that the consulting services under the contract after the extension or amendment are necessary if the copy has not already been provided to the comptroller; and]

[ (xi) a statement that the payment complies with subsections (e), (f), and (m) of this section.]

[ (B) This subparagraph applies if the contract after the extension or amendment is no longer a major consulting services contract. The document must contain the following information in the appropriate descriptive/legal text screen of USAS and be supported by the following documentation:]

[ (i) the reasonably foreseeable value of the original contract;]

[ (ii) the reasonably foreseeable value of the contract after the extension or amendment;]

[ (iii) the cumulative total of prior payments made under the original contract;]

[ (iv) the cumulative total of prior payments made under the contract after the extension or amendment took effect;]

[ (v) a copy of the original contract if the copy has not already been provided to the comptroller;]

[ (vi) a copy of the extension or amendment if the copy has not already been provided to the comptroller;]

[ (vii) the volume and page number of the Texas Register in which the requirements of subsections (h), (i)(1), and, if applicable, (m)(3) of this section were fulfilled when the original contract was entered into;]

[ (viii) the volume and page number of the Texas Register in which the requirements of subsection (j)(3)(A) of this section were fulfilled when the extension, or amendment was entered into;]

[ (ix) a copy of the governor's finding of fact that the consulting services under the original contract are necessary if the copy has not already been provided to the comptroller; and]

[ (x) a statement that the payment complies with subsections (e), (f), and (m) of this section.]

[ (6) This paragraph applies when a purchase document is submitted to the comptroller that requests a payment under an extended or an amended consulting services contract if the original contract was not a major consulting services contract.]

[ (A) This subparagraph applies if the original contract and the extension or amendment have a reasonably foreseeable value totaling more than $10,000. The document must contain the following information in the appropriate descriptive/legal text screen of USAS and be supported by the following documentation:]

[ (i) the reasonably foreseeable value of the original contract;]

[ (ii) the reasonably foreseeable value of the extension or amendment;]

[ (iii) the cumulative total of prior payments made under the original contract;]

[ (iv) the cumulative total of prior payments made under the contract after the extension or amendment took effect;]

[ (v) a copy of the original contract if the copy has not already been provided to the comptroller;]

[ (vi) a copy of the extension or amendment if the copy has not already been provided to the comptroller;]

[ (vii) the volume and page number of the Texas Register in which the requirements of subsections (j)(4) and, if applicable, (m)(3) of this section were fulfilled when the extension or amendment was entered into;]

[ (viii) a copy of the governor's finding of fact that the consulting services under the extension or amendment are necessary if the copy has not already been provided to the comptroller; and]

[ (ix) a statement that the payment complies with subsections (e), (f), and (m) of this section.]

[ (B) This subparagraph applies if the original contract and the extension or amendment have a reasonably foreseeable value totaling $10,000 or less. The document must contain the following information in the appropriate descriptive/legal text screen of USAS and be supported by the following documentation:]

[ (i) the reasonably foreseeable value of the original contract;]

[ (ii) the reasonably foreseeable value of the extension or amendment;]

[ (iii) the cumulative total of prior payments made under the original contract;]

[ (iv) the cumulative total of prior payments made under the contract after the extension or amendment took effect;]

[ (v) a copy of the original contract if the copy has not already been provided to the comptroller;]

[ (vi) a copy of the extension or amendment if the copy has not already been provided to the comptroller; and]

[ (vii) a statement that the payment complies with subsections (e), (f), and (m) of this section.]

(3) [ (7) ] A [ When a ] state agency that has received the governor's [ an ] emergency waiver of the requirements of Government Code, Chapter 2254, Subchapter B must include [ this section from the governor, the agency must submit ] a copy of the [ emergency ] waiver in the supporting documentation for the contract for which the waiver was received [ with each purchase document submitted to the comptroller to request a payment under the consulting services contract covered by the waiver ].

(4) A state agency shall retain the supporting documentation required by this paragraph and provide that documentation to the comptroller as required by §5.51 of this title (relating to Requirements for Purchase Documents).

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

Filed with the Office of the Secretary of State on March 20, 2006.

TRD-200601703

Martin Cherry

Chief Deputy General Counsel

Comptroller of Public Accounts

Earliest possible date of adoption: April 30, 2006

For further information, please call: (512) 475-0387


Part 3. TEACHER RETIREMENT SYSTEM OF TEXAS

Chapter 41. HEALTH CARE AND INSURANCE PROGRAMS

Subchapter C. TEXAS SCHOOL EMPLOYEES GROUP HEALTH (TRS-ACTIVECARE)

34 TAC §§41.42 - 41.44, 41.53

(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 Teacher Retirement System of Texas or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

The Board of Trustees (Board) of the Teacher Retirement System of Texas (TRS) proposes the repeal of the following rules concerning certain TRS pass-through funding programs that have been transferred or are unfunded: 34 TAC §41.42, relating to the payment of supplemental compensation; 34 TAC §41.43, relating to the payment of state assistance for meeting minimum effort; 34 TAC §41.44, relating to the payment of additional support for certain school districts paying Social Security taxes; and 34 TAC §41.53, relating to the waiting period for supplemental compensation.

Recent legislation (Senate Bill 1691 and Senate Bill 1863, 79th Texas Legislature, Regular Session) transfers the functions and duties relating to the compensation supplementation program from TRS to the Texas Education Agency (TEA), effective September 1, 2005. As of this date, TRS has completed all functions relating to the compensation supplementation program, including the final payment of fiscal year 2005 supplemental compensation. Accordingly, the Board proposes to repeal related TRS rules §41.42, concerning the payment of supplemental compensation, and §41.53, concerning the waiting period for supplemental compensation.

The payment of state assistance for meeting minimum effort was established during the 77th Texas Legislature, Regular Session, by Texas Insurance Code Article 3.50-9, now recodified as Chapter 1581 of the Texas Insurance Code. Funding for this assistance was provided through fiscal year 2004; no funding has since been provided by the Texas Legislature. Future funding for this assistance does not seem likely to occur. Accordingly, the Board proposes to repeal related TRS rule §41.43, concerning the payment of state assistance for meeting minimum effort.

The payment of additional support for certain school districts paying Social Security taxes was also established during the 77th Texas Legislature, Regular Session, by Texas Insurance Code Article 3.50-9, recodified as Chapter 1581 of the Texas Insurance Code. Funding for this support was provided through fiscal year 2003; no funding has since been provided by the Texas Legislature. Future funding for this support does not appear likely to occur. Accordingly, the Board proposes to repeal related TRS rule §41.44, concerning the payment of additional support for certain school districts paying Social Security taxes.

Tony C. Galaviz, TRS Chief Financial Officer, estimates that for each year of the first five years the proposed repeals will be in effect, there will be no foreseeable implications relating to cost or revenues of state or local governments as a result of enforcing or administering the repeals.

Mr. Galaviz has also determined that, for each of the first five years the repeals as proposed will be in effect, the anticipated public benefit will be the avoidance of confusion concerning TRS pass-through funding programs that have been transferred or are unfunded. There will be no measurable economic cost to persons required to comply with the proposed repeals. Because there will be no measurable effect on a local economy or local employment because of the proposed repeals, no local employment impact statement is required under §2001.022, Government Code. Moreover, there will be no adverse economic effect on small businesses or micro-businesses as a result of enforcing the repealed sections as proposed.

Comments on the proposed repeals may be submitted in writing to Ronnie Jung, Executive Director, 1000 Red River, Austin, Texas 78701. The deadline for comments is 30 days after publication in the Texas Register .

Statutory Authority: The repeals are proposed under §825.102, Government Code, which authorizes the Board to adopt rules for the administration of TRS funds and for the transaction of Board business; in addition, the repeal of TRS §41.44 is proposed under §1581.703, Insurance Code, which authorizes TRS to adopt rules as necessary to implement Chapter 1581, Subchapter O, Insurance Code, relating to additional support for certain school districts paying Social Security taxes.

Cross-Reference to Statute: For the proposed repeals of §41.42 and §41.53--Act of May 27, 2005, 79th Legislature, Regular Session, Senate Bill 1691, §56, Chapter 1359, and Act of May 29, 2005, 79th Legislature, Regular Session, Senate Bill 1863, §18.07, Chapter 899, which transfer the functions and duties of TRS with respect to the compensation supplementation program established under Chapter 1580, Insurance Code, and other applicable law, and any appropriation relating to that program are transferred to TEA and providing that a reference in law to TRS with respect to the compensation supplementation program means TEA; for the proposed repeal of §41.43--Chapter 1581, Subchapter C, Insurance Code, relating to state assistance for meeting minimum effort; and for the proposed repeal of §41.44--Chapter 1581, Subchapter O, Insurance Code, relating to additional support for certain school districts paying Social Security taxes.

§41.42.Payment of Supplemental Compensation.

§41.43.Payment of State Assistance for Meeting Minimum Effort.

§41.44.Payment of Additional Support for Certain School Districts Paying Social Security Taxes.

§41.53.Waiting Period for Supplemental Compensation.

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

Filed with the Office of the Secretary of State on March 15, 2006.

TRD-200601670

Ronnie G. Jung

Executive Director

Teacher Retirement System of Texas

Earliest possible date of adoption: April 30, 2006

For further information, please call: (512) 542-6438


Part 11. OFFICE OF THE FIRE FIGHTERS' PENSION COMMISSIONER

Chapter 308. BENEFITS FROM THE TEXAS EMERGENCY SERVICES RETIREMENT SYSTEM

34 TAC §§308.1 - 308.3

The State Board of Trustees of the Texas Emergency Services Retirement System proposes to amend 34 Texas Administrative Code Chapter 308, §§308.1 - 308.3, governing benefits from the Texas Emergency Services Retirement System (System). The rule amendment is effective January 1, 2007.

The proposed amendment would reduce benefits for volunteer fire fighters and EMS personnel in departments that participate in the System. The proposed amendment to §308.1 would reduce benefits by eliminating partial vesting for active members with less than 10 years of qualified service. The proposed amendment to §308.2 reduces the benefit formula compound interest rate from 7% to 6.2% for all years of qualified service over 15 years. The amendment to §308.2 also provides a procedure for initiating and terminating benefits. The amendment to §308.3 clarifies the amount of disability payments.

If adopted, the amendment would "grandfather" active member's vested accrued benefits for retirement, termination, or death as of December 31, 2006. The System would calculate the amount of every vested member's vested accrued benefit as of December 31, 2006 and keep a record of this amount as each person's minimum benefit. Upon termination, death, or retirement, the System would pay the larger of the benefits under the new reduced benefit formula and the minimum benefit. Vested terminated members at the effective date of the changes would not be affected by the rule amendment.

The actuarial effect of the amended rule was determined by the actuarial firm of Rudd and Wisdom, Inc. As of August 31, 2004, Rudd and Wisdom, Inc. reported that the Fund is not adequately financed on an actuarially sound basis and that the Fund had an annual contribution deficiency of $1.2 million for the year beginning September 1, 2004. By special actuarial study of February 27, 2006, Rudd and Wisdom, Inc. estimated that the amendment would reduce the annual required contributions for a 30-year amortization of the System's unfunded actuarial accrued liability by $282,642. This would result in just slightly more reduction in the required contributions than necessary to have an amortization period of exactly 30 years anticipating maximum state contributions for 30 years.

Kevin Deiters, Program Director, has determined that for the first five years that the amended rules are in effect that state and local contributions to the pension system will increase. Although the amendments to Chapter 308 will reduce actuarial liabilities, the Rudd and Wisdom actuarial analysis is based upon the Board's adoption of amendments to §310.6 increasing minimum contribution rates to $36 per member per month by September 1, 2011. Under the proposed amendment to §310.6, total local contributions in the years 2006 through 2010 will increase by $1.8 million from $8.2 million to $10.0 million. Total state contributions will increase by $585 thousand from $2.7 million to $3.3 million. There is no anticipated economic cost to small businesses or individuals by the adoption of the amendments.

Mr. Deiters has also determined that for each year of the first five year period the amendments are in effect the public benefit anticipated will be to protect the vested accrued benefits of current members of the retirement system while improving the ability of the pension system to pay future pension benefits. Changes in the retirement formula and vesting period will reduce future pension benefit payments and improve the long-term actuarial status of the system. The elimination of partial vesting for service under 10 years increase the retention of experienced firefighters and EMS personnel in participating departments.

Comments on the proposal may be submitted in writing to Lisa Ivie Miller, Commissioner, Office of the Fire Fighter Pension Commissioner, P.O. Box 12577, Austin, Texas 78711-2577 no later than May 15, 2006. Comments may also be submitted electronically to rules@ffpc.state.tx.us or faxed to (512) 936-3480.

The amendments are proposed under the statutory authority of Title 8, Government Code, Subtitle H Texas Emergency Services Retirement System.

No other statutes, articles, or codes are affected by the proposed amendments.

§308.1.Eligibility for Retirement Annuity.

(a) A member is eligible to retire and receive a service retirement annuity with full benefits from the pension system when the member has at least 15 years of qualified service credited in the system and has attained the age of 55.

(b) Partial vesting to receive a service retirement annuity accrues at the following rates:

(1) 50 [ 25 ] percent after the first 10 [ five ] years of credited qualified service; and

[ (2) five percent a year for the next five years of credited qualified service; and]

(2) [ (3) ] 10 percent a year for the next five years of credited qualified service.

(c) Vested retirement benefits, including partially vested benefits, are nonforfeitable. A retirement benefit also becomes nonforfeitable when a member attains normal retirement age or, to the extent funded, on the termination or partial termination of the pension system or the complete discontinuance of contributions to the pension system. A person whose retirement benefit met a partial vesting requirement as it existed on December 31, 2006, is eligible to retain that eligibility and the base amount of that benefit as it existed on that date.

§308.2.Service Retirement Annuity.

(a) In this section, normal retirement age is the later of the month a member completes 15 years of credited qualified service or attains the age of 55, and early retirement age is the age of 55.

(b) A member who has terminated service with all participating departments may apply for a service retirement annuity by filing an application for retirement with the commissioner. The application may not be filed more than one calendar month before the date the member wishes to retire and must designate a retirement date, which may not precede the date of filing or the date of first eligibility to retire. The effective date of a member’s retirement is the first day of the calendar month after which a member files an application that meets the requirements of this subsection.

(c) The local board of trustees shall hold a hearing on an application for service retirement within 15 days of the date of notice by the commissioner of the filing of the application.

(d) A monthly service retirement annuity is payable for the period beginning on the effective date of retirement through the month in which the retiree dies but is not payable for any month for which the retiree was eligible to retire but did not.

(e) [ (b) ] A service retirement annuity is payable in equal monthly installments to a member who terminates service after attaining early retirement age or normal retirement age, subject to the vesting requirements of §308.1 of this title.

(f) [ (c) ] Except as otherwise provided by this section, the monthly service retirement annuity is equal to six times the governing body's average monthly contribution during the retiring member's term of qualified service.

(g) [ (d) ] For credited qualified service in excess of 15 years, a retiring member is entitled to receive an additional 6.2 [ seven ] percent of the annuity compounded annually and adjusted for days or months of credited qualified service that constitute less than a year.

(h) Notwithstanding subsection (g) of this section, a person who had more than 15 years of qualified service as of December 31, 2006, is entitled to a service retirement annuity computed as the greater of the amount that existed on that date or the amount computed under the formula in effect on the date the person terminates service with all participating departments.

§308.3.Disability Retirement Annuity.

(a) Except as otherwise provided by §864.004 and §865.006, Government Code, and this section, a member whose disability results from performing emergency service duties is entitled to a monthly annuity during the period of the disability in an amount equal to $300 plus $50 for every $12 increase in contributions made since participation began [ paid ] by the governing body for which the person was performing emergency service duties at the time of the disability.

(b) An increase in contributions by a governing body after the payment of a monthly annuity begins does not increase the amount of the annuity.

(c) Disability benefits are prorated for portions of months during which a person is disabled.

(d) A local board shall report to the commissioner, in a manner provided by the pension system, a determination of temporary disability not later than the 45th day after the date the disability begins.

(e) A person receiving temporary disability benefits who does not apply to the Social Security Administration for certification as permanently disabled before the second anniversary of the date of determination of temporary disability or, if the person does not participate in the social security program, to a medical board selected by the state board for alternative certification is subject to termination of disability benefit payments if the person is not certified by the Social Security Administration or the medical board within the period provided by §864.004, Government Code.

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

Filed with the Office of the Secretary of State on March 20, 2006.

TRD-200601705

Kevin Deiters

Program Director

Office of the Fire Fighters' Pension Commissioner

Proposed date of adoption: May 16, 2006

For further information, please call: (512) 936-3472


Chapter 310. ADMINISTRATION OF THE TEXAS EMERGENCY SERVICES RETIREMENT SYSTEM

34 TAC §§310.5, 310.6, 310.8

The State Board of Trustees of the Texas Emergency Services Retirement System proposes to amend 34 Texas Administrative Code Chapter 310, §§310.5, 310.6, and 310.8, governing administration of the Texas Emergency Services Retirement System (System). The rule amendment is effective September 1, 2006.

The proposed amendment to §310.6 increases minimum pension contribution rates by $4 per month per member in each of the years following September 1, 2006. This is the first increase in the statewide minimum pension contribution rate since the pension fund was created in 1977. The current minimum contribution rate is $12 per member per month and this minimum rate has lost over two-thirds of its purchasing power to inflation since 1977.

The adoption of the higher contribution rates will allow the System to provide qualified firefighters and emergency services personnel with higher pension, disability, and death benefits.

The proposed amendment to §310.8 establishes the Automated Clearing House (ACH) legal framework of rules and procedures as the preferred method of electronic payment of pension contributions.

The actuarial effect of the amended rule was determined by the actuarial firm of Rudd and Wisdom, Inc. As of August 31, 2004, Rudd and Wisdom, Inc. reported that the Fund is not adequately financed on an actuarially sound basis and that the Fund had an annual contribution deficiency of $1.2 million for the year beginning September 1, 2004. By special actuarial study of February 27, 2006, Rudd and Wisdom, Inc. estimated that the amendment would reduce the annual required contributions for a 30-year amortization of the System's unfunded actuarial accrued liability by $282,642. This would result in just slightly more reduction in the required contributions than necessary to have an amortization period of exactly 30 years anticipating maximum state contributions for 30 years.

Kevin Deiters, Program Director, has determined that for the first five years that the amended rules are in effect that state and local contributions to the pension system will increase. Under the proposed amendment to §310.6, total local contributions in the years 2006 through 2010 will increase by $1.8 million from $8.2 million to $10.0 million. Total state contributions will increase by $585 thousand from $2.7 million to $3.3 million. There is no anticipated economic cost to small businesses or individuals by the adoption of the amendments.

Mr. Deiters has also determined that for each year of the first five year period the amendments are in effect the public benefit anticipated as a result of the adoption of the amendments will be to provide participating departments with improved benefits to recruit volunteer fire fighters and emergency services personnel to protect local communities.

Comments on the proposal may be submitted in writing to Lisa Ivie Miller, Commissioner, Office of the Fire Fighter Pension Commissioner, P.O. Box 12577, Austin, Texas 78711-2577 no later than May 15, 2006. Comments may also be submitted electronically to rules@ffpc.state.tx.us or faxed to (512) 936-3480.

The amendments are proposed under the statutory authority of Title 8, Government Code, Subtitle H Texas Emergency Services Retirement System.

No other statutes, articles, or codes are affected by the proposed amendments.

§310.5.Local Board of Trustees.

(a) A local board annually shall elect a chair, vice chair and secretary.

(b) A meeting of a local board is subject to the Texas Open Meetings [ opening meetings ] law (Chapter 551, Government Code).

§310.6.Local Contributions.

(a) Except as otherwise provided by this section, each participating department shall contribute at least $12 for each month or a portion of a month a member performs emergency services for the department. A participating department may elect to make contributions at a greater rate by notifying the commissioner of the rate. Contributions are payable for each month or portion of a month of service regardless of whether the member receives a year of qualified service. Contributions are payable as provided by §865.014, Government Code, and §310.8 of this title.

(b) The minimum contribution rate for a department that begins participation in the pension system after September 1, 2005, is $36.

(c) The minimum monthly contribution rate for a department participating in the pension system on September 1, 2005, is subject to increase according to the following schedule:

(1) on September 1, 2006, $16;

(2) on September 1, 2007, $20;

(3) on September 1, 2008, $24;

(4) on September 1, 2009, $28;

(5) on September 1, 2010, $32; and

(6) on September 1, 2011, $36.

(d) [ (c) ] Contributions are payable during a period of temporary disability or when leave is taken under the Family and Medical Leave Act of 1993 (29 U.S.C. §2601 et seq.), but are not payable when a member is performing active military duty, although the member receives credit for qualified service when performing active military duty.

(e) [ (d) ] Contributions required under this section are not considered compensation to the members for whom they are made.

§310.8.Billings.

(a) The commissioner shall bill governing bodies of participating departments and governing bodies of municipalities for which the commissioner is administering pensions under the Texas Local Fire Fighters Retirement Act quarterly on the last business day of November, February, May, and August.

(b) Each billing shall include, as appropriate, charges for:

(1) monthly contributions for participating members;

(2) prior service contributions;

(3) the cost of, and any administrative fee for administering pensions under the Texas Local Fire Fighters Retirement Act;

(4) late-payment interest charges; and

(5) unpaid administrative penalties.

(c) At least 30 days before the last day of each quarter, the commissioner shall send to the chair of the local board of each participating department a pension roster report that includes the name of each person who performs emergency services for the department and is identified as a member of the pension system.

(d) The chair of the local board or the administrative head of the department shall verify the accuracy of the report, make needed changes in the roster, and return the report to the commissioner not later than the fifth day before the last day of the quarter.

(e) Payments under a billing issued under this section become due within 30 days of the invoice date. Late payments accrue interest at the current actuarially assumed rate of investment return on fund assets.

(f) In this section:

(1) The term "ACH" (Automated Clearing House) means the legal framework of rules and operational procedures adopted by financial institutions for the electronic transfer of funds.

(2) The term "ACH Credit" means an ACH transaction initiated by the governing body of a participating department for the electronic transfer of funds from the account of the governing body to the account of the pension system.

(3) The term "ACH Debit" means an ACH transaction initiated by the pension system for the electronic transfer of funds from the account of the governing body of a participating department to the account of the pension system.

(4) The term "electronic transfer of funds" means the transfer of funds, other than by check, draft or similar paper instrument, that is initiated electronically to order, instruct, or authorize a financial institution to debit or to credit an account.

(5) The term "pre-authorized direct debit" means the method available to the governing body of a participating department for electronically paying required contributions by granting a continuing authorization to the pension system to initiate an ACH Debit each quarter for the electronic transfer of funds from the designated bank account of the governing body to the account of the pension system in an amount equal to the contributions required to be paid based on the quarterly report as filed.

(6) The term "wire transfer" generally means a single transaction, initiated by the governing body of a participating department, in which funds are electronically transferred to the account of the pension system using the Federal Reserve Banking System rather than the ACH.

(g) Amounts required to be contributed to the pension system in accordance with Chapter 865 of the Texas Government Code may be made by pre-authorized direct debits (ACH Debits). ACH Credits and wire transfers may not be used to transfer funds to the pension system except as authorized under subsection (j) of this section.

(h) The governing body of a participating department may elect to use the preauthorized direct debit method of payment by filing a signed authorization agreement with the pension system in which the governing body has designated a single bank account from which all transfers will be made.

(i) The authorization agreement entered into for this purpose constitutes continuing authority for the pension system to initiate a direct debit of the governing body's designated bank account each quarter and is effective with respect to each quarterly report of the governing body, whether filed by mail or by electronic transmission.

(j) An authorization agreement remains in effect until the pension system receives either a written revocation of the agreement, or a subsequent written agreement, which automatically revokes the existing authorization. A new authorization agreement must be filed if there is any change in the designated bank account. The pension system, in its sole discretion, may terminate the authorization agreement by mailing written notice to the governing body. Thereafter, the governing body must remit all contributions by check or other monetary means approved by the commissioner. The alternative method of payment may include a fee to recover the cost of administering this subsection.

(k) Following receipt of a roster report filed under an unrevoked authorization agreement, the pension system will initiate an ACH Debit in the amount required to be contributed for that period based on the report; however the actual transfer of funds from the governing body's designated account will not occur before the due date of the report.

(l) The receipt of a quarterly roster report filed under an unrevoked authorization agreement is considered to be receipt by the pension system of the amount required to be contributed for the period based on that report if there are sufficient funds available for transfer from the governing body's designated account on the later of the due date of the report or the date the report is received. An ACH Debit that is reversed by a governing body or that fails because sufficient funds are not available for transfer constitutes nonpayment of the required contributions with respect to that report and, thereafter, the required contributions will not be considered to have been received until the day the funds are actually transferred to the account of the pension system. A governing body failing to timely file the required information or remit the required contributions by the due date of the report is subject to a penalty for late reporting in accordance with §310.9 of this title.

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

Filed with the Office of the Secretary of State on March 20, 2006.

TRD-200601706

Kevin Deiters

Program Director

Office of the Fire Fighters' Pension Commissioner

Proposed date of adoption: May 16, 2006

For further information, please call: (512) 936-3472