Proposed Sections 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 any action may be 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 sections, 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 1. ADMINISTRATION Part IV. Office of the Secretary of State Chapter 79. Corporations General Information and Correspondence 1 TAC sec.79.18 The Office of the Secretary of State proposes new sec.79.18, concerning the abandonment of a merger filed with a delayed effective date and upon the receipt of an abandonment of filing prior to the effectiveness of the merger. Lorna Wassdorf, special assistant, Statutory Filings Division, has determined that for the first five-year period the rules will be in effect, there will be no fiscal implications for state or local government as a result of enforcing or administering the section. Ms. Wassdorf also has determined that for each year of the first five years the section is in effect the public benefit anticipated as a result of enforcing the section is the elimination of confusion resulting from duplicate entity names. There will be no effect on small businesses. The anticipated economic cost of persons required to comply with the proposed rules is the filing fee assessed if the entity name must be changed. Comments on the proposal may be submitted to Lorna S. Wassdorf, Special Assistant, Statutory Filings Division, P.O. Box 13697, Austin, Texas 78711-3697. The new section is proposed under Article 9.03 of the Texas Business Corporation Act which provides the Office of the Secretary of State the authority to adopt rules of practice reasonably necessary to carry out its ministerial duties under the Act. sec.79.18. Mergers with Delayed Effective Dates. (a) Upon the filing of a merger with a delayed effective date, the computer records of the secretary of state will be changed to show the filing of the merger, the date of the filing, the future date on which the merger will be effective or a code indicating that the effectiveness is based on a future condition, and the name of the surviving entity or entities. In addition, at the time of such filing: (A) the status of any entities on file with the secretary of state merging out of existence will be changed from active to inactive; (B) the status of any entities, if any, to be created and filed with the secretary of state by the terms of the plan of merger shall appear in the active records of the secretary of state; and (C) any amendments to the articles of incorporation of the surviving entity or entities, if any, will be recorded in the records of the secretary of state. (b) Upon filing of the merger: (A) the names of any entities on file with the secretary of state which are merging out of existence will not appear in the active records and will not be a bar to reservation or registration of an entity name or creation of an entity under a name which is the same as, deceptively similar to, or similar to the name of the merging entity; (B) the names of any entities to be created and filed with the secretary of state by the terms of the plan of merger will appear in the active records of the secretary of state and will be a bar to reservation or registration of any entity name or creation of an entity under a name which is the same as, deceptively similar to, or similar to the names of the entities to be created by the plan of merger; and (C) if the plan of merger provides for a change of name of any of the surviving entities on file with the secretary of state, the new names of the entities will appear in the active records of the secretary of state and will be a bar to reservation or registration of any entity name or creation of an entity under a name which is the same as, deceptively similar to, or similar to any new name of the entities as provided by the plan of merger. (c) If a plan of merger is abandoned in accordance with a statutory provision for abandonment, the secretary of state: (A) will change the status of the entities filed with the secretary of state which would have merged out of existence to active on the computer records of the agency and record the filing of the abandonment. If the names of these entities are not available, the entities must file articles of amendment or take other action to change the entity name or bring the name into compliance with applicable statutory provisions as a condition to acceptance of the abandonment; and (B) will change the status of all entities that would have been created and filed with the secretary of state by the terms of the plan of merger to non- active on the computer records of the agency. 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 December 5, 1991. TRD-9115227 Lorna Wassdorf Special Assistant, Statutory Filings Division Office of the Secretary of State Earliest possbile date of adoption: January 13, 1992 For further information, please call: (512) 463-5586 TITLE 19. EDUCATION Part I. Texas Higher Education Coordinating Board Chapter 1. Agency Administration Subchapter A. General Provisions 19 TAC sec.1.6 (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 Higher Education Coordinating Board or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.) The Texas Higher Education Coordinating Board proposes the repeal of sec.1.6, concerning Optional Retirement Program Eligibility. The rule is being repealed and moved to Chapter 25, sec.25.2. James McWhorter, assistant commissioner for administration, 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 or administering the repeal. Mr. McWhorter 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 enforcing the repeal will be to move the rule to Chapter 25, sec.25.2 and include it with the other optional retirement rules. Chapter 25 was named "Administrative Council," but will not be called "Retirement Annuity Programs." There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the repeal as proposed. Comments on the proposal may be submitted to Kenneth H. Ashworth, Commissioner of Higher Education, Texas Higher Education Coordinating Board, P.O. Box 12788, Austin, Texas 78711. The repeal is proposed under the Texas Government Code, s830.002(c), which provides the Texas Higher Education Coordinating Board with the authority to repeal the rule regarding Optional Retirement Program Eligibility. sec.1.6. Optional Retirement Program Eligibility. 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 December 3, 1991. TRD-9115234 James McWhorter Assistant Commissioner Texas Higher Education Coordinating Board Proposed date of adoption: January 31, 1992 For further information, please call: (512) 483-6160 Chapter 5. Program Development Subchapter S. Transfer of Lower Division Course Credit 19 TAC sec.sec.5.390-5.393 The Texas Higher Education Coordination Board proposes new sec.sec.5.390-5.393, concerning transfer of lower division course credit. The new rules respond to the recommendation in the Texas Performance Review. The adoption of these rules should enhance the transferability of credit from community colleges to university by requiring universities to identify comparable courses in its catalog. The rules provide a penalty for lack of compliance. Bill Sanford, assistant commissioner for universities and health affairs, has determined that for the first five-year period the sections are in effect there will be fiscal implications for state government as a result of enforcing or administering the sections. The Texas Performance Review estimated cost savings to the state of $14.4 million per year. There will be no effect on local government. Mr. Sanford also has determined that for each year of the first five years the sections are in effect the public benefit anticipated as a result of enforcing the sections will be that students will be able to complete their college education more quickly and at less cost. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the sections as proposed. Comments on the proposal may be submitted to Kenneth H. Ashworth, Commissioner of Higher Education, Texas Higher Education Coordinating Board, P.O. Box 12788, Austin, Texas 78711. The new sections are proposed under the Texas Education Code, Texas Civil Statutes, sec.61.051(g) and sec.61.078(e), which provide the Texas Higher Education Coordinating Board with the authority to adopt rules regarding transfer of lower division course credit. sec.5.390. General Provisions.
    All lower division academic courses shall be fully transferable among public institutions and must count toward the same degree at any public college or university in Texas. sec.5.391. Requirements and Limitations. (a) Each institution of higher education shall identify in its undergraduate catalog each lower division course that is substantially equivalent to an academic course listed in the current edition of the "Community College General Academic Course Guide Manual." (b) Each university must identify at least 45 semester credit hours of academic courses that are substantially equivalent to courses listed in the "Community College General Academic Course Guide Manual" and that fulfill the lower- division portion of the institution's core curriculum. (c) All public colleges and universities must accept transfer of credit for successfully completed courses identified in subsections (a) and (b) as of this section applicable to an associate or baccalaureate degree in the same manner as credit awarded to non-transfer students in that major. (d) Each institution shall be required to accept in transfer into a baccalaureate degree the number of lower division credit hours in a major which are allowed for their non-transfer students in that major; however, the provisions in paragraphs (1) -(3) of this subsection shall apply. (1) No institution shall be required to accept in transfer more credit hours in a major than the number set out in the applicable Coordinating Board approved transfer curriculum for that major, as prescribed by the current issue of the Coordinating Board's guide to transfer curricula and transfer of credit, Transfer of Credit Policies and Curricula. (2) In any major for which there is no Coordinating Board approved transfer curriculum, no institution shall be required to accept in transfer more lower division course credit in the major applicable to a baccalaureate degree than the institution allows its non-transfer students in that major. (3) A university may deny the transfer of credit in courses with a grade of "D" as applicable to the student's major. (e) All senior institutions of higher education in Texas shall provide support services for transfer students equivalent to those provided to non- transfer students regularly enrolled at the institutions, including an orientation program for transfer students equivalent to that provided for entering freshman enrollees. (f) No university shall be required to accept in transfer or toward a degree, more than 66 semester credit hours of academic credits earned by a student in a community college. Universities, however, may choose to accept additional credit hours. sec.5.392. Penalty for Noncompliance with Transfer Rules.
      If it is determined by the Coordinating Board that an institution inappropriately or unnecessarily required a student to retake a course that is substantially equivalent to a course already taken at another institution, in violation of the provisions of 19 TAC sec.5.372, formula funding for credit hours in the repeated course will be deducted from the institution's appropriations. sec.5.393. Resolution of Transfer Disputes for Lower-Division Courses. (a) The following procedures shall be followed by public institutions of higher education in the resolution of credit transfer disputes involving lower-division courses. (1) If an institution of higher education does not accept course credit earned by a student at another institution of higher education, the receiving institution shall give written notice to the student and to the sending institution that transfer of the course credit is denied. (2) The two institutions and the student shall attempt to resolve the transfer of the course credit in accordance with board rules and/or guidelines. (3) If the transfer dispute is not resolved to the satisfaction of the student or the sending institution within 45 days after the date the student received written notice of denial, the institution whose credit is denied for transfer shall notify the commissioner of the denial. (b) The commissioner of higher education or the commissioner's designee shall make the final determination about the dispute concerning the transfer of course credit and give written notice of the determination to the involved student and institutions. (c) All public institutions of higher education shall publish the procedures described in subsections (a) and (b) of this section in their undergraduate course catalogs. (d) All public institutions of higher education shall furnish data to the board on transfer disputes as the board may require in accord with its statutory responsibilities under the Education Code, sec.61.078(e). 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 December 3, 1991. TRD-9115239 James McWhorter Assistant Commissioner for Administration Texas Higher Education Coordinating Board Earliest possible date of adoption: January 31, 1992 For further information, please call: (512) 483-6160 Chapter 17. Campus Planning and Physical Facilities Development Subchapter B. Application for Approval of New Construction and Major Repair and Rehabilitation 19 TAC sec.17.44 The Texas Higher Education Coordinating Board proposes an amendment to sec.17.44, concerning application form. The amendment to the rule is being made so that changes in the construction project application form do not have to be approved by the board. The amendment gives the staff and the institutions more flexibility in assembling information necessary to analyze a construction request. Don Brown, deputy commissioner, has determined that for the first five-year period the section is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section. Mr. Brown also has determined that for each year of the first five years the section is in effect the public benefit anticipated as a result of enforcing the section will be that this rule will accelerate and make more efficient the Coordinating Board's process for reviewing construction projects at public universities, technical colleges, and medical and dental units. It also will ensure that decisions about whether to provide state funding to maintain space leased by higher education institutions takes state-wide needs into account. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the section as proposed. Comments on the proposal may be submitted to Kenneth H. Ashworth, Commissioner of Higher Education, Texas Higher Education Coordinating Board, P.O. Box 12788, Austin, Texas 78711. The amendment is proposed under the Texas Education Code, Texas Civil Statutes, sec.sec.61.0572, 61.0581, 61.0582, and 61.0583, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules regarding application form. sec.17.44. Application Form.
        Application forms and guidelines
          for requesting Coordinating Board approval will be provided by the Coordinating Board and shall call for the following information: (1) handicapped accessibility statement of intent
            [type of facility proposed]; (2) letter of assurance that the project has been designed to improve utilization of energy using the Governor's Energy Management Center Standards
              [a description of the project and a statement of need for it]; (3) for projects that would add space that will generate state funding, a letter from the chairperson of the institution's governing board certifying that the need for new construction is at least equal to the need to acquire additional or more modern instructional and research equipment
                [appropriate financial data, including total cost]; (4) verification that the project is included in the institution's most recent campus master plan update on file at the Coordinating Board
                  [institutional role and scope]; (5) other information on the proposed project that is needed by the board's staff to prepare recommendations to the board
                    [inclusion of project in campus master plan on file at the Coordinating Board]; (6) other information that the requesting institution may wish to provide to ensure a full understanding of the proposed project
                      [utilization of space]; [(7) certificate of compliance with Texas Civil Statutes, Article 601b, Article 7, on elimination of architectural barriers to the handicapped; [(8) additional remarks as necessary;] [(9) date project approved by institutional governing board; [(10) assurance the project has been designed to improve utilization of energy using the Governor's Energy Management Center Standards; and [(11) letter from the chairperson of the institution's governing board certifying that the need for new construction that would require formula funding is at least equal to the need to acquire additional or more modern instructional and research equipment.] 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 December 3, 1991. TRD-9115229 James McWhorter Assistant Commissioner Texas Higher Education Coordinating Board Proposed date of adoption: January 31, 1992 For further information, please call: (512) 483-6160 19 TAC sec.17.45 The Texas Higher Education Coordinating Board proposes new sec.17.45, concerning energy conservation projects. The new rule is proposed to incorporate the board's authorized procedure since April 1990, expediting the approval of energy conservation projects at universities, technical colleges, and health science centers. Under this procedure, the Campus Planning Committee can approve repair and rehabilitation projects that have been approved by the Energy Management Center at the Governor's Office. This procedure reduces the delay that can occur between the creation of a proposal to save energy and completion of the necessary renovation. Don Brown, deputy commissioner, has determined that for the first five-year period the section is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section. Mr. Brown also has determined that for each year of the first five years the section is in effect the public benefit anticipated as a result of enforcing the section will be that this rule will accelerate and make more efficient the Coordinating Board's process for reviewing construction projects at public universities, technical colleges, and medical and dental units. It also will ensure that decisions about whether to provide state funding to maintain space leased by higher education institutions take state-wide needs into account. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the section as proposed. Comments on the proposal may be submitted to Kenneth H. Ashworth, Commissioner of Higher Education, Texas Higher Education Coordinating Board, P.O. Box 12788, Austin, Texas 78711. The new section is proposed under the Texas Education Code, Texas Civil Statutes, sec.sec.61.0572, 61.058, 61.0582, and 61.0583, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules regarding energy conservation projects. sec.17.45. Energy Conservation Projects. For the purpose of encouraging repair and rehabilitation projects that improve energy conservation in higher education facilities, the following procedure may be used to review the board approval energy conservation projects approved for funding by the Energy Management Center of the Governor's Office. (1) The Energy Management Center of the Governor's Office periodically will submit to the Coordinating Board lists of the projects it has approved for funding at universities. (2) The Coordinating Board staff reviews the projects to verify that none would result in a net addition of education and general space or would be in conflict with standards for repair and rehabilitation projects. (3) The staff submits the list of projects to the Campus Planning Committee for its approval on behalf of the full board. (4) If the committee approves the list of projects the staff will notify the Governor's Office and the institutions whose projects have been approved. (5) The committee may refer to the full board any projects it does not wish to approve that cost more than $600,000. 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 December 3, 1991. TRD-9115230 James McWhorter Assistant Commissioner Texas Higher Education Coordinating Board Proposed date of adoption: January 31, 1992 For further information, please call: (512) 483-6160 19 TAC sec.17.46 The Texas Higher Education Coordinating Board proposes new sec.17.46, concerning special approval procedure. The new rule is proposed to establish a special approval procedure for certain projects that is intended to remove the need for the full board to consider projects that generally present no significant problem and do not require the expenditure of state funds for operation and maintenance. The types of proposals that may bed appropriate for such a special approval procedure may be as follows: auxiliary enterprise projects being acquired, constructed or renovated without the use of state funds. In addition, no state funds may be used to operate and maintain such projects; and major repair and rehabilitation of existing education and general buildings that will not add education and general space and whose total cost is not more than $3 million. Don Brown, deputy commissioner, has determined that for the first five-year period the section is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section. Mr. Brown also has determined that for each year of the first five years the section is in effect the public benefit anticipated as a result of enforcing the section will be that the rules will accelerate and make more efficient the Coordinating Board's process for reviewing construction projects at public universities, technical colleges, and medical and dental units. It also will ensure that decisions about whether to provide state funding to maintain space leased by higher education institutions take state-wide needs into account. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the section as proposed. Comments on the proposal may be submitted to Kenneth H. Ashworth, Commissioner of Higher Education, Texas Higher Education Coordinating Board, P.O. Box 12788, Austin, Texas 78711. The new section is proposed under the Texas Education Code, Texas Civil Statutes, sec.sec.61.0572, 61.058, 61.0582, and 61.0583, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules regarding special approval procedure. sec.17.46. Special Approval Procedure. (a) Under this procedure the Coordinating Board delegates to the Campus Planning Committee the review and approval of the following types of projects: (1) auxiliary enterprise projects being acquired, constructed, or renovated without the use of state funds. In addition, no state funds may be used to operate and maintain such projects; (2) major repair and rehabilitation of existing education and general space and whose total project cost is no more than $3 million. (b) The Campus Planning Committee will be guided in its decision in part by its judgment as to whether or not the full board would approve the project were the request being brought to the board at this time. The committee may approve a request, or refer the request to the next meeting of the board. The committee shall report all actions to the board at its next meeting. The action by the committee will be final, subject to appeal to the full board at its next meeting. 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 December 3, 1991. TRD-9115231 James McWhorter Assistant Commissioner Texas Higher Education Coordinating Board Proposed date of adoption: January 31, 1992 For further information, please call: (512) 483-6160 Subchapter C. Requesting Coordinating Board Endorsement of Real Property Acquisitions 19 TAC sec.17.68 The Texas Higher Education Coordinating Board proposes new sec.17.68, concerning leased or rented real property that generates formula funding. Establishment of a rule requiring that educational space acquired by institutions of higher education through rental or lease agreements will be approved by the Coordinating Board before being included on the facilities inventory for formula funding. The rule would require the board approval of such actions because of the cost such additions can represent to the state. Don Brown, deputy commissioner has determined that for the first five-year period the section is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section. Mr. Brown also has determined that for each year of the first five years the section is in effect the public benefit anticipated as a result of enforcing the section will be that rules will accelerate and make more efficient the Coordinating Board's process for reviewing construction projects at public universities, technical colleges, and medical and dental units. It also will ensure that decisions about whether to provide state funding to maintain space leased by higher education institutions takes state-wide needs into account. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the section as proposed. Comments on the proposal may be submitted to Kenneth H. Ashworth, Commissioner of Higher Education, Texas Higher Education Coordinating Board, P.O. Box 12788, Austin, Texas 78711. The new section is proposed under the Texas Education Code, Texas Civil Statutes, sec.sec.61.0572, 61.058, 61.0582, and 61.0583, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules regarding leased or rental real property that generates formula funding. sec.17.68. Leased or Rental Real Property that Generates Formula Funding.
                        The Coordinating Board shall review for approval any improved real property whose use is obtained by rental or lease whenever an institution seeks to place the property on its educational and general facilities inventory to generate formula funding, if the property contains at least 3,000 square feet of educational and general space. 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 December 3, 1991. TRD-9115232 James McWhorter Assistant Commissioner Texas Higher Education Coordinating Board Proposed date of adoption: January 31, 1992 For further information, please call: (512) 483-6160 Subchapter D. Audits of Education and General Facilities 19 TAC sec.17.81 The Texas Higher Education Coordinating Board proposes new sec.17.81, concerning periodic audits of educational and general facilities. The new section will provide inclusion in board rules of the statutory provisions for audits of higher education facilities. The Coordinating Board's Sunset Bill gave the board responsibility for conducting a periodic audit of educational and general space. The bill also requires the board to verify that projects it has approved were built and paid for as approved by the Coordinating Board. Don Brown, deputy commissioner has determined that for the first five-year period the section is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section. Mr. Brown also has determined that for each year of the first five years the section is in effect the public benefit anticipated as a result of enforcing the section will be that the rules will accelerate and make more efficient the Coordinating Board's process for reviewing construction projects at public universities, technical colleges, and medical and dental units. It also will ensure that decisions about whether to provide state funding to maintain space leased by higher education institutions takes state-wide needs into account. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the section as proposed. Comments on the proposal may be submitted to Kenneth H. Ashworth, Commissioner of Higher Education, Texas Higher Education Coordinating Board, P.O. Box 12788, Austin, Texas 78711. The new section is proposed under the Texas Education Code, Texas Civil Statutes, sec.sec.61.0572, 61.058, 61.0582, and 61.0583, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules regarding periodic audits of educational and general facilities. sec.17.81. Periodic Audits of Educational and General Facilities. (a) The board's staff periodically shall conduct a comprehensive audit of all educational and general facilities on the campuses of public universities, medical and dental units, and Texas State Technical Colleges to verify the accuracy of the facilities inventory for each of those institutions. (b) The board shall verify the accuracy of the square footage reported in each institution's budget request in relation to the facilities inventory. (c) The audit must include a periodic review of construction projects to confirm that: (1) a project has received prior approval by the board if required by the Texas Education Code, sec.61.058; and (2) an approved project is completed as specified in the request to the board for approval of the project. (d) The board shall report its findings concerning the audits conducted to the Legislative Budget Board and the audited institutions. 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 December 3, 1991. TRD-9115233 James McWhorter Assistant Commissioner Texas Higher Education Coordinating Board Proposed date of adoption: January 31, 1992 For further information, please call: (512) 483-6160 Chapter 21. Student Services Subchapter G. Hinson-Hazlewood College Student Loan Program 19 TAC sec.sec.21.53, 21.54, 21.55, 21.62 The Texas Higher Education Coordinating Board proposes amendments to sec.sec.21. 53, 21.54, 21.55, and 21.62, concerning the Hinson-Hazlewood College Student Loan Program. The amendments will incorporate changes necessitated by the passage of Senate Bill 20 in the Second Called Session of the 72nd Legislature; they will also clarify that the Coordinating Board will determine the quality of an institution's credit rating regarding loan applicants. The changes mandated by Senate Bill 20 are necessary in order for the program to comply with state law. The credit rating evaluation of institutions is needed to help control loan defaults. Mack Adams, assistant commissioner for student services, has determined that for the first five-year period the sections are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the sections. Mr. Adams also has determined that for each year of the first five years the sections are in effect the public benefit anticipated as a result of enforcing the sections will be that without the changes, loans under new bonding resolutions could not be made. Without the credit evaluation change, loans could be made to inappropriate borrowers, thus increasing the default rate for the program. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the sections as proposed. Comments on the proposal may be submitted to Kenneth H. Ashworth, Commissioner of Higher Education, Texas Higher Education Coordinating Board, P.O. Box 12788, Austin, Texas 78711. The amendments are proposed under the Texas Education Code, sec.52.54, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules regarding the Hinson-Hazelwood College Student Loan Program. sec.21.53. Definitions.
                          The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise. Auxiliary fund -The student loan auxiliary fund authorized in the Texas Education Code, Chapter 52, Subchapter F, subject to passage of the constitutional amendment on November 5, 1991, authorizing the sale of general obligation bonds for funding. Fund-The Texas opportunity plan fund as created by the Texas Constitution, Article III, s50b; the student loan revenue bond fund authorized in the Texas Education Code, Chapter 56, Subchapter H; and/or the student loan auxiliary fund, authorized in the Texas Education Code, Chapter 52, Subchapter F
                            . Revenue bond fund-The student loan revenue bond fund, authorized in the Texas Education Code, Chapter 56, Subchapter H. sec.21.54. Governing Provisions of Loans. (a)-(b) (No change.) (c) Unless otherwise specified in this subchapter, these rules apply to loans made from the Texas opportunity plan fund, the revenue bond fund, and the auxiliary fund. sec.21.55. Eligible Institution. (a) (No change.) (b) Student attending other institutions. Any student attending an institution other than an eligible institution as set forth in subsection (a) of this section may be eligible for a loan made from the fund under the governing provisions of the GSLP providing the postsecondary institution: (1)-(5) (No change.) (6) has a good credit rating as determined by the board. (c)-(f) (No change.) sec.21.62. Loan Interest. (a)-(b) (No change.) (c) CALP. The interest rate charged for loans shall be set from time to time by the commissioner, shall be simple interest, and shall accrue on the outstanding principal balance from the date of disbursement. Principal and interest become due and payable in monthly installments six months after the student ceases to be enrolled at least half time as determined by the institution , except that current interest on loans made from the revenue bond fund is due and payable no less frequently than quarterly for the life of the loan.
                              These loans are not eligible for interest subsidy. (d)-(f)(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 December 3, 1991. TRD-9115241 James McWhorter Assistant Commissioner for Administration Texas Higher Education Coordinating Board Earliest possible date of adoption: January 31, 1992 For further information, please call: (512) 483-6160 Subchapter J. The Physician Education Loan Repayment Program 19 TAC sec.sec.21.251, 21.254, 21.260 The Texas Higher Education Coordinating Board proposes amendments to sec.sec.21. 251, 21.254, and 21.260, concerning the Physician Education Loan Repayment Program. The amendments will allow physicians employed by federally-funded community health centers in Texas to qualify for program benefits whether or not the community health centers are located in federally-defined health manpower shortage areas. Presently all but two community health centers are located in health manpower shortage areas; all serve low-income people. The proposed change will have the effect of helping to recruit physicians willing to practice in community health centers. Mack Adams, assistant commissioner for student services, has determined that for the first five-year period the sections are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the sections. Mr. Adams also has determined that for each year of the first five years the sections are in effect the public benefit anticipated as a result of enforcing the sections will be that there will be improved services in community health centers. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the sections as proposed. Comments on the proposal may be submitted to Kenneth H. Ashworth, Commissioner of Higher Education, Texas Higher Education Coordinating Board, P.O. Box 12788, Austin, Texas 78711. The amendments are proposed under the Texas Education Code, sec.61.537, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules regarding the Physician Education Loan Repayment Program. sec.21.251. Purpose. The purpose of the Physician Student Loan Repayment Program is to encourage qualified physicians to practice medicine in designated areas of the state or for specified state agencies. The purpose of the state- funded portion of the program is to encourage qualified physicians to practice medicine in a medically underserved area that is economically depressed or rural or for the Texas Department of Health, the Texas Department of Mental Health and Mental Retardation, the Texas Department of Corrections, or the Texas Youth Commission or a Community Health Center
                                . The purpose of the federally funded portion is to encourage qualified physicians to practice in areas of highest need in Texas. sec.21.254. Definitions. The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise. Community Health Center-Any facility in Texas which, under provisions of the United States Public Health Services Act, sec. s329, 330, and 340, provides health care to the community in which it is located, the migrant, and the homes using federal funds. sec.21.260. State-funded Physician Education Loan Repayment Program. (a) The state-funded Physician Education Loan Repayment Program is limited to repayments on education loans on behalf of physicians who practice in economically depressed or rural medically underserved areas of Texas or for one of the following state agencies: (1)-(4) (No change.) (5) a community health center in Texas. (b) (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 December 3, 1991. TRD-9115240 James McWhorter Assistant Commissioner Texas Higher Education Coordinating Board Proposed date of adoption: January 31, 1992 For further information, please call: (512) 483-6160 Chapter 25. Administrative Council Subchapter A. General Provisions 19 TAC sec.sec.25.1-25.18 (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 Higher Education Coordinating Board or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.) The Texas Higher Education Coordinating Board proposes the repeal of Chapter 25, Subchapter A, sec.sec.25.1-25.18, concerning general provisions. The entire subchapter is being repealed because House Bill 2 transferred all but the four largest programs to the group insurance program for state agency employees administered by the Employees Retirement System. The Administrative Council's statutory authority was deleted effective September 1, 1991. James McWhorter, assistant commissioner for administration, has determined that for the first five-year period the repeals are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the repeals. Mr. McWhorter also has 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 not be applicable, as the public is relatively unaffected by these particular sections. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the repeals as proposed. Comments on the proposal may be submitted to Kenneth H. Ashworth, Commissioner of Higher Education, Texas Higher Education Coordinating Board, P.O. Box 12788, Austin, Texas 78711. The repeals are proposed under the Texas Government Code, sec.830.002(c) which provides the Texas Higher Education Coordinating Board with the authority to repeal the rules regarding General Provisions of the Administrative Council. sec.25.1. The Administrative Council. sec.25.2. Terms of Office-Administrative Council. sec.25.3. Vacancy-Administrative Council. sec.25.4. Election of Officers-Administrative Council. sec.25.5. Appointment of Committees-Administrative Council. sec.25.6. Meetings-Administrative Council. sec.25.7. Visitor Participation in Administrative Council. sec.25.8. The Advisory Committee. sec.25.9. Terms of Office-Advisory Committee. sec.25.10. Vacancy-Advisory Committee. sec.25.11. Election Process-Advisory Committee. sec.25.12. Election of Officers-Advisory Committee. sec.25.13. Appointments of Subcommittees-Advisory Committee. sec.25.14. Meetings-Advisory Committee. sec.25.15. Open Meetings. sec.25.16. Open Records. sec.25.17. Administrative Costs. sec.25.18. Petition for the Adoption of Rules. 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 December 3, 1991. TRD-9115235 James McWhorter Assistant Commissioner Texas Higher Education Coordinating Board Proposed date of adoption: January 31, 1992 For further information, please call: (512) 483-6160 Chapter 25. Retirement Annuity Programs Subchapter A. Retirement Annuity Programs 19 TAC sec.sec.25.1-25.10 The Texas Higher Education Coordinating Board proposes new sec.sec.25.1-25.10, concerning the Retirement Programs. A provision of House Bill 2, 72nd Legislature, Regular Session, transferred the responsibility for oversight of the Optional Retirement Program (ORP) from the Administrative Council to the Coordinating Board effective September 1, 1991. The proposed rules are essentially the rules which were adopted by the Administrative Council with amendments based on legislative requirements from the 72nd session (i.e. inclusion of the Commissioner of Education as an eligible ORP participant and transfer of oversight to the board). James McWhorter, assistant commissioner for administration, has determined that for the first five-year period the sections are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the sections. Mr. McWhorter also has determined that for each year of the first five years the sections are in effect the public benefit anticipated as a result of enforcing the sections will be that there will be centralized oversight of the ORP programs which is required by the statute to provide for greater uniformity of procedures for administration of ORP and the tax-sheltered annuity program. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the sections as proposed. Comments on the proposal may be submitted to Kenneth H. Ashworth, Commissioner of Higher Education, Texas Higher Education Coordinating Board, P.O. Box 12788, Austin, Texas 78711. The new sections are proposed under the Texas Government Code, sec.830.002(c) which provides the Texas Higher Education Coordinating Board with the authority to adopt the proposed rules regarding Retirement Annuity Programs. sec.25.1. Purpose. It is the purpose of these rules to carry out the Coordinating Board's responsibilities pursuant to Chapter 830, Texas Government Code, to provide for greater uniformity of procedures for administration of retirement annuity insurance programs available to employees of Texas state colleges and universities through the optional retirement programs and tax sheltered annuity programs. sec.25.2. ORP Eligibility Standards. (a) The governing board of each institution of higher education shall provide an opportunity to participate in the Optional Retirement Program (ORP) to all faculty members in the component institutions governed by the board. The State Board of Education shall provide an opportunity to participate in the Optional Retirement Program to the commissioner of education. (b) Governing boards shall use any of the following definitions of a full-time faculty member for determining eligibility for participation in the Optional Retirement Program. (1) A member of the faculty whose duties include teaching or research shall mean all persons whose specific assignments are made for the purpose of conducting instruction or research as a principal activity (or activities), and who hold titles of professor, associate professor, assistant professor, instructor, lecturer, or equivalent faculty title. (2) An administrator responsible for teaching and research faculty shall mean deans, directors, associate deans, assistant deans, chairpersons, or heads of academic departments if their principal activity is planning, organizing, and directing the activities of faculty as defined in paragraph (1) of this section. (3) A member of the administrative staff of the Texas Higher Education Coordinating Board shall mean a member of the Texas Higher Education Coordinating Board staff whose assignments would require college graduation and prior experience in higher education or experience of such kind and amounts to provide a comparable background, whose national mobility requirements are similar to those of faculty and who fills a position that is the subject of a nationwide search in the academic community. (4) A professional librarian, a president, a chancellor, a vice-president, a vice-chancellor shall mean a librarian with a degree in library science, presidents, chancellors, vice-presidents, vice-chancellors, deputy chancellors, associate and assistant vice presidents, associate and assistant vice- chancellors or the equivalent. (5) Other professional staff person shall mean administrative and professional positions that are generally and customarily recruited by advertising in national publications such as the Chronicle of Higher Education or in newsletters of national professional associations or at meetings of such associations. In addition, each administrative or professional position must be at a salary rate equivalent to the rate for faculty for the institution. (A) Administrative positions shall normally report to the office of a chancellor, president, vice-chancellor, vice-president, or dean. Incumbents in such positions serve as director or other administrative head of a major department or budget entity. Incumbents of such positions must be: (i) appointed by the governing board or the chief administrative officer of the institution, or his/her delegate; and (ii) responsible for the preparation and administration of the budget, policies, and programs of the department or entity. (B) Professional positions shall include positions in nationally recognized fields which require advanced degrees and/or specialized professional or artistic training, experience, and achievement. These would include titles such as physicians, athletic coaches, engineers, and lawyers. (c) For purposes of determining initial eligibility for ORP, the term "full- time" shall mean employment for the standard full-time workload established by the institution at a rate comparable to the rate of compensation for other persons in similar positions for a definite period of four and one-half months or a full semester of more than four calendar months. sec.25.3. ORP Standards. (a) An employee shall be considered vested in the ORP on the first day of the second year of participation in one or more optional retirement plans operating in one or more Texas public institutions of higher education or the Central Education Agency. For purposes of this subsection, a year shall mean twelve cumulative full months. A full calendar month of leave without pay shall not be included in the calculation of such year. An academic faculty member shall be credited the three summer months toward vesting in the ORP provided the faculty member teaches the spring semester immediately preceding the summer and the fall semester immediately following the same summer. (b) Once a participant has vested in the ORP in accordance with subsection (a) of this section, such participant's vesting status shall not be affected by any partial or total withdrawals made after termination of participation in the ORP under subsection (j) of this section or attainment of age 70-1/2 years. Upon reemployment in a public institution of higher education in Texas, a vested participant shall not be required to satisfy the vesting period again. (c) An ORP participant who terminates employment in all public institutions of higher education in Texas prior to satisfying the vesting requirements in subsection (a) of this section shall, upon reemployment in an ORP eligible position, retain credit for previous ORP participation. Such credit shall not be affected by any partial or total withdrawals made after termination participation in the ORP under subsection (j) of this section or attainment of age 70-1/2 years. (d) A new employee who is eligible to participate in the ORP for the first time is automatically enrolled in the Teacher Retirement System (TRS) until an election to participate in the ORP is made. (e) Election to participate in the ORP must be made before the 91st day after becoming eligible. Failure to elect the ORP during the 90-day period will require an individual to remain in the TRS for the remainder of his or her employment in Texas public higher education. (f) An employee who elects to participate in the ORP may withdraw his or her accumulated contributions (plus interest) from the TRS. Contributions refunded by the TRS to ORP participants are not restricted as to their use by the employee. However, such refund may not be transferred to an ORP carrier. (g) After electing the ORP, an ORP participant is not thereafter eligible for membership in the TRS (except as provided in subsection (i) of this section) unless the individual terminates employment covered by the ORP and becomes employed in any Texas public educational institution or agency that is not part of the ORP and therefore requires TRS membership. Such an individual, upon becoming reemployed in Texas public higher education, may not resume participation in the ORP. (h) An ORP participant who vests in the ORP in accordance with subsection (a) of this section and subsequently becomes employed in an institution of higher education in Texas in a position not eligible for the ORP shall, nevertheless, continue to participate in the ORP and shall not be eligible for TRS membership. (i) An ORP participant who has not satisfied the vesting requirements in subsection (a) of this section and becomes employed in an institution of higher education in Texas in a position not eligible for the ORP, shall be required to return to membership in the TRS. (j) An individual terminates participation in the ORP only upon death, retirement, or termination of employment in all public institutions of higher education in Texas. (k) Benefits under the ORP are available only if the participant terminates participation in the program as provided by subsection (j) of this section or if the participant attains the age of 70-1/2 years. (l) No contract issued under the ORP may provide for loans, cash surrender, or contain any other provision which permits the availability of benefits prior to a participant's attainment of age 70-1/2 years or termination as an employee in the public institutions of higher education in Texas. In the event benefits are made available prior to termination of employment or attainment of age 70-1/2 years, the institution may require the company to redeposit funds to the employee's account as if no withdrawal had been made. The institution may require the company to provide written verification to the institution that the account has been fully restored with no adverse impact to the employee. The institution may suspend a company from doing further business at the institution at any time a company fails to comply with the provisions of this subsection. (m) Contributions as required by law by participants in the ORP shall be made on a salary reduction basis. (n) Contracts issued under the ORP shall include a provision that the ORP carrier is responsible for qualifying domestic relations orders and paying benefits in accordance with sec.830.107, Chapter 830, Title 8, Texas Government Code. sec.25.4. TSA Eligibility Standards. Employees who are eligible for participation in the Teacher Retirement System or the Optional Retirement Program shall also be eligible to purchase tax sheltered annuities, within limits established by the Internal Revenue Service, through payroll reduction. sec.25.5. Transfer of Carriers. Employees who are eligible to participate in the optional retirement program or tax sheltered annuity program and who are already participating in such program shall be allowed the option of continuing such participation with the same carrier whenever such employee transfers from one institution of higher education to another or from the Central Education Agency. The Central Education Agency shall accept the transfer of a participant's optional retirement program from an institution of higher education if the participant becomes commissioner of education. sec.25.6. Number of Authorized Carriers. Each institution of higher education must provide a selection of at least four optional retirement program carriers which are qualified and admitted to do business in this state, and a selection of at least four tax sheltered annuity program carriers which are qualified and admitted to do business in this state. sec.25.7. Change of Carriers and Salary Reduction Agreements. Each institution shall offer not less than two occasions during the year in which an employee may make a change in his or her optional retirement program carrier or tax sheltered annuity program carrier and/or enter into a new salary reduction agreement. The dates for these occasions will be at the discretion of the institution. An employee may enter into a new salary reduction agreement on only one such occasion per calendar year. sec.25.8. Solicitation Practices.
                                  Each institution shall establish the following procedures related to solicitation practices. (1) Representatives from approved companies shall be permitted to make sales presentations to eligible employees on the premises of institutions of higher education but only at the employee's request, as guests of the employee and administration and shall abide by each institution's applicable rules and regulations. (2) Providing of gifts and monetary rewards directly or indirectly by representatives of approved companies for information on newly hired employees shall be prohibited. (3) Representatives of approved companies shall be responsible for providing appropriate sales literature and service at locations as designated by each institution's administration. Campus bulk mailing or telephone campaigning shall be prohibited in institutions of higher education. (4) Institutions of higher education shall reserve the right to restrict solicitation privileges of representatives from approved companies based on violations of solicitation regulations of this section and each institution's applicable rules and regulations. sec.25.9. Auditing Procedures. (a) Each institution shall require that companies who enroll Optional Retirement Program (ORP) participants and receive contributions must submit, at least annually, a report or reports to each participant containing: (1) for all accounts: (A) name and address of participant; (B) identifying number; (C) total payments received this reporting period; (D) expense charges this reporting period; (E) net payments this reporting period; (F) total value of account at end of this reporting period; and (G) net cash surrender value of account at end of this reporting period reflecting all potential charges against the account if it were surrendered for cash as of the last day of this reporting period; (2) for fixed annuity accounts, the following additional information: (A) interest rate or rates paid on this account from the previous reporting period to the end of the current reporting period; and (B) where multilevel rates of interest were paid on an account, a breakdown showing the amount in the participant's account at each interest level, the amount of interest earned at each interest level, and the rates of interest; (3) for variable annuity and custodial accounts, the following additional information: (A) units of each fund or investment or account purchased this reporting period; (B) total units of each fund or investment or account in the account at end of this reporting period; and (C) value of unit of each fund or investment or account at end of this reporting period. (b) Each institution shall require that companies who enroll the ORP participants and receive contributions must submit confirmation of receipt of funds directly to each participant at least quarterly. The reports shall contain the date and amount of each payment received during the reporting period. (c) Each institution shall require that companies who enroll the ORP participants and receive contributions must, immediately upon execution of a transfer from one fund or investment or account to another fund or investment or account, submit a confirmation directly to the participant. This confirmation shall include all transfer information, including a statement of the charges made for the transfer, if any. (d) The ORP payments shall be forwarded to companies within 10 business days of the legal availability of funds. Where possible, the state share of the payment should be forwarded with the employee share to which it applies. Where that is not possible, the employees' share should be forwarded upon withholding and the state share forwarded upon receipt. sec.25.10. Reporting Requirements. (a) Each institution shall annually submit a report to the Texas Higher Education Coordinating Board that includes information concerning the number of participants and eligible positions and the amount of contributions. (b) Each institution shall keep records, make certifications, and furnish to the Texas Higher Education Coordinating Board information and reports as required by the board to enable it to carry out its functions under Chapter 830, Texas Government Code. 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 December 3, 1991. TRD-9115238 James McWhorter Assistant Commissioner Texas Higher Education Coordinating Board Proposed date of adoption: January 31, 1992 For further information, please call: (512) 483-6160 Subchapter B. Administration of the Texas State College and University Employees Uniform Insurance Benefits Program 19 TAC sec.sec.25.31-25.58 (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 Higher Education Coordinating Board or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.) The Texas Higher Education Coordinating Board proposes the repeal of Chapter 25, Subchapter B, sec.sec.25.31-25.58, concerning administration of the Texas State College and University Employees Uniform Insurance Benefits Program. The entire subchapter is being repealed because House Bill 2 transferred all but the four largest programs to the group insurance program for state agency employees administered by the Employees Retirement System. The Administrative Council's statutory authority was deleted effective September 1, 1991. James McWhorter, assistant commissioner for administration, has determined that for the first five-year period the repeals are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the repeals. Mr. McWhorter, also has 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 not be applicable, as the public is relatively unaffected by these particular sections. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the repeals as proposed. Comments on the proposal may be submitted to Kenneth H. Ashworth, Commissioner of Higher Education, Texas Higher Education Coordinating Board, P.O. Box 12788, Austin, Texas 78711. The repeals are proposed under the Texas Government Code, sec.830.002(c) which provides the Texas Higher Education Coordinating Board with the authority to repeal the rules regarding administration of the Texas State College and University Employees Uniform Insurance Benefits Program. sec.25.31. Purpose. sec.25.32. Definitions. sec.25.33. Basic Coverage Standards. sec.25.34. Basic Procedural Land Administrative Practices. sec.25.35. Administrative Costs. sec.25.36. Existing Institutional Insurance Programs. sec.25.37. Authorized Carriers. sec.25.38. Bidding Contracts. sec.25.39. Selection of Carrier. sec.25.40. Contract Review; Correction of Deficiencies. sec.25.41. Participation of Two or More Institutions in One Program. sec.25.42. Additional Coverage Beyond Basic Coverage Standards. sec.25.43. Benefit Certificates. sec.25.44. Annual Report. sec.25.45. Reinsurance. sec.25.46. Annual Accounting by Carrier. sec.25.47. Exemption from Execution. sec.25.48. Death Claims. sec.25.49. Automatic Coverage. sec.25.50. Coverage for Dependents. sec.25.51. Payment of Premiums. sec.25.52. Certification of Amount Necessary to Pay Employer Contribution. sec.25.53. Administrative Costs for Administration of the Act. sec.25.54. Studies, Reports, Records, and Audits. sec.25.55. Effective Date for Basic Coverages. sec.25.56. Continuation of Coverage. sec.25.57. Cafeteria Plan. sec.25.58. Cafeteria Plan 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 December 3, 1991. TRD-9115236 James McWhorter Assistant Commissioner Texas Higher Education Coordinating Board Proposed date of adoption: January 31, 1992 For further information, please call: (512) 483-6160 Subchapter C. Administration of Retirement Annuity Programs 19 TAC sec.sec.25.71-25.78 (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 Higher Education Coordinating Board or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.) The Texas Higher Education Coordinating Board proposes the repeal of Chapter 25, Subchapter C, sec.sec.25.71-25.78, concerning Administration of Retirement Annuity Programs. The entire subchapter is being repealed because House Bill 2 transferred all but the four largest programs to the group insurance program for state agency employees administered by the Employees Retirement System. The Administrative Council's statutory authority was deleted effective September 1, 1991. James McWhorter, assistant commissioner for administration, has determined that for the first five-year period the repeals are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the repeals. Mr. McWhorter, also has 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 not be applicable, as the public is relatively unaffected by these particular sections. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the repeals as proposed. Comments on the proposal may be submitted to Kenneth H. Ashworth, Commissioner of Higher Education, Texas Higher Education Coordinating Board, P.O. Box 12788, Austin, Texas 78711. The repeals are proposed under the Texas Government Code, sec.830.002(c) which provides the Texas Higher Education Coordinating Board with the authority to repeal the rules regarding Administration of Retirement Annuity Programs. sec.25.71. Purpose. sec.25.72. ORP Standards. sec.25.73. TSA Eligibility Standards. sec.25.74. Transfer of Carriers. sec.25.75. Number of Authorized Carriers. sec.25.76. Change of Carriers and Salary Reduction Agreements. sec.25.77. Solicitation Practices. sec.25.78. Auditing Procedures. 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 December 3, 1991. TRD-9115237 James McWhorter Assistant Commissioner Texas Higher Education Coordinating Board Proposed date of adoption: January 31, 1992 For further information, please call: (512) 483-6160 Part II. Texas Education Agency Chapter 89. Adaptations for Special Populations Subchapter B. Remedial and Compensatory Instruction 19 TAC sec.89.41 The Texas Education Agency (TEA) proposes an amendment to sec.89.41, concerning the definition of remedial and compensatory instruction. The section is being amended at the request of the State Board of Education to incorporate the principles of accelerated learning as the goal of compensatory and remedial programs. Madeleine Manigold, assistant commissioner for programs, has determined that for the first five-year period the proposed section will be in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section. Ms. Manigold and Criss Cloudt, director for planning coordination, have determined that for each year of the first five years the proposed section will be in effect the public benefit anticipated as a result of enforcing the section will be that the goals and school district responsibilities relative to state compensatory education programs will be clearly articulated in state policy. There will be no effect on small businesses. There will be no economic cost to persons required to comply with the section as proposed. Comments on the proposal may be submitted to Criss Cloudt, Planning Coordination, 1701 North Congress Avenue, Austin, Texas 78701, (512) 463-9701. All requests for a public hearing on the proposed section submitted in accordance with the Administrative Procedure and Texas Register Act must be received by the commissioner of education not more than 15 calendar days after notice of a proposed change in the section has been published in the Texas Register. The amendment is proposed under the Texas Education Code, sec.21.557, which provides the State Board of Education with the authority to adopt standards for school district compensatory and remedial instructional programs. sec.89.41. Definition of Remedial and Compensatory Instruction. (a) The goal of remedial and compensatory programs is to accelerate instruction in order to close the performance gap between identified students and other students by providing unity of purpose toward a common set of goals, and empowering all participants of the school community with the authority to take responsibility for building on strengths of students to achieve desired learner outcomes.
                                    Remedial and compensatory education programs shall satisfy the following standards: (1) a written policy for use of state compensatory funds that includes eligibility requirements for participation in the program for students in prekindergarten through grade 12, a description of the program and services, and a plan to coordinate state compensatory education funds with local, federal, and other state funds; (2) annual review of the progress of each student being served and the redirection of funds and services as necessary to ensure student learning; and (3) an increased percentage of students mastering all three areas of the student assessment program as required in the Texas Education Code, sec.21.551, until all students have achieved mastery. (b)-(f) (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 November 22, 1991. TRD-9115375 Criss Cloudt Director, Planning Coordination Texas Education Agency Earliest possible date of adoption: January 13, 1992 For further information, please call: (512) 463-9701 Chapter 137. Teacher Education Subchapter M. 1987 Program Requirements for Preparation of School Personnel for Initial Certificates and Endorsements 19 TAC sec.137.559 The Texas Education Agency (TEA) proposes an amendment to sec.137.559, concerning endorsements to Texas teacher certificates. The amendment deletes the use of the Language Proficiency Instrument (LPI) to assess oral proficiency of persons seeking a bilingual endorsement, and removes the requirement to take the College Level Examination Program (CLEP) Test for assessing written proficiency in Spanish for bilingual teachers. It is the contention of the agency that to some extent, the skills measured on the CLEP Test overlap those on the Examination for the Certification of Educators in Texas (ExCET) Bilingual Test. In addition, the State Board of Education recently adopted the Texas Oral Proficiency Text (TOPT) for assessing oral proficiency of persons who will teach Spanish or French as another language and who use Spanish in a bilingual classroom setting. Marvin Veselka, assistant commissioner for assessment, has determined that for the first five-year period the proposed section will be in effect there will be no fiscal implications as a result of enforcing or administering the section. There will be no fiscal implications for state government because the development costs for the Texas Oral Proficiency Test (TOPT) have already been incurred, and consequently, no state funds are anticipated in the near future for this purpose. Costs associated with the administration and scoring of the TOPT are funded by registration fees from the teacher certification testing programs. There will be no fiscal implications for local government. Mr. Veselka and Criss Cloudt, director for planning coordination, have determined that for each year of the first five years the proposed section will be in effect the public benefit anticipated as a result of enforcing the section will be the standardization of oral proficiency testing for all teachers who use Spanish in the classroom, and the elimination of the duplication of the oral skills testing. There will be no effect on small businesses. There is an anticipated savings of $38 per individual for individuals who are seeking the bilingual endorsement, because the CLEP test will no longer be required. Comments on the proposal may be submitted to Criss Cloudt, Planning Coordination, 1701 North Congress Avenue, Austin, Texas, 78701, (512) 463-9701. All requests for a public hearing on the proposed section submitted in accordance with the Administrative Procedure and Texas Register Act must be received by the commissioner of education not more than 15 calendar days after notice of a proposed change in the section has been published in the Texas Register. The amendment is proposed under the Texas Education Code, sec.13.031(c), which provides the State Board of Education with the authority to adopt rules under which the Commission on Standards for the Teaching Profession shall recommend standards for teacher education and certification for certified personnel in public school districts operating elementary and/or secondary schools. sec.137.559. Endorsements. (a)-(b) (No change.) (c) Program requirements for endorsement in delivery system areas. (1) Bilingual education. (A) Certificate requirements. The bilingual education endorsement may be added to valid teacher certificate, special education certificates, or vocational certificates which require a college degree. (B) Professional development. The professional development sequence for the bilingual education endorsement shall consist of: [(i) Oral and written proficiency in the language of the target population as measured by examinations approved by the Central Education Agency. [(I) Oral proficiency shall be determined by the Language Proficiency Interview (LPI) with a passing score of level three. [(II) Written proficiency shall be determined by the College Level Examination Program (CLEP) with a passing score of 50.] (i)
                                      [(ii)] 12 semester hours at the graduate or undergraduate level after the bachelor's degree in the following areas: (I) language acquisitions and development in childhood (psycholinguistics) ; (II) teaching language arts and reading in the language of the target populations; (III) teaching English as a second language, including reading and oral communication; and (IV) teaching mathematics, science, and social studies in the language of the target population. (ii)
                                        [(iii)] One year of successful classroom teaching experience on a permit in an approved bilingual education program. (2)-(8) (No change.) (d) (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 November 22, 1991. TRD-9115376 Criss Cloudt Director, Planning Coordination Texas Education Agency Earliest possible date of adoption: January 13, 1992 For further information, please call: (512) 463-9701 TITLE 22. EXAMINING BOARDS Part XI. Board of Nurse Examiners Chapter 215. Nurse Education 22 TAC sec.215.1, sec.215.3 The Board of Nurse Examiners proposes amendments to sec.215.1 and sec.215.3, concerning definitions and accreditation. The Board of Nurse Examiners is proposing amendments to their definition and accreditation rules for education regarding the accreditation procedure used to evaluate a program of professional nursing education. An accreditation task force was convened to study the educational rules and to recommend possible changes to eliminate on-site visits to those programs who are also visited and accredited by the National League for Nursing (NLN). Louise Waddill, Ph.D., R.N., executive director, has determined that for the first five-year period the sections are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the sections. Ms. Waddill also has determined that for each year of the first five years the sections are in effect the public benefit anticipated as a result of enforcing the sections will be that the staff of the Board of Nurse Examiners will not duplicate the accreditation processes and thus will allow the consultants to devote more time to those programs not meeting the criteria of the board. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the sections as proposed. Comments on the proposal may be submitted to Louise Waddill, R.N., Ph.D., Executive Director, Board of Nurse Examiners, Box 140466, Austin, Texas 78714. The amendments are proposed under Texas Civil Statutes, Article 4514, sec.1, which provide the Board of Nurse Examiners, with the authority to make and enforce all rules and regulations necessary for the performance of its duties and conducting of proceeding before it. sec.215.1. Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. Board survey
                                          [Survey] visit-An on-site visit of a nursing program[, including clinical facilities,] by a board representative for the purpose of evaluating the program of learning and gathering data to support whether the program is meeting the board's requirements as specified in sec.sec.215. 1- 215.19 of this title (relating to Definitions; New Programs; Accreditation; Pass Rate of Graduates on the National Council Licensure Examination for Registered Nurses; Administration and Organization; Faculty Qualifications-Diploma and Associate Degree Programs; Faculty Qualification; Faculty Development and Evaluation; Philosophy and Objectives; Curriculum; Curriculum Changes and Expansion of Nursing Program; Extended Campus; Students; Educational Resources and Facilities; Clinical Resources; Records and Reports; and Total Program Evaluation). sec.215.3. Accreditation. (a)-(b) (No change.) (c) Accreditation procedure. The continuing accreditation status of a
                                            [each] program shall be determined annually by the board [either] on the basis of a board
                                              survey visit , National League for Nursing (NLN) accreditation and/or
                                                review of annual report. (1) NLN accreditation. The board may accept NLN accreditation in lieu of a board survey visit after a program is fully accredited by the board. (2)
                                                  [(1)] Board survey
                                                    [Survey] visit. Each nursing program that is not NLN accredited
                                                      will be visited at least every six years after full accreditation has been granted [or at any time deemed necessary by the board]. A written report of the visit together with the annual report submitted by the director will be reviewed by the board at a regularly scheduled meeting. The decisions of the board concerning the accreditation status of the program will be sent to the director and the chief administrative officer of the controlling institution. (3) Other survey visits. Each nursing program may be visited at any time deemed necessary by the board. (4)
                                                        [(2)] Review of annual report. When a program is not visited by a board representative during an academic year, the accreditation status is determined by the board on the basis of the annual report of the program and other pertinent data. 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 December 4, 1991. TRD-9115215 Louise Waddill, Ph.D., R.N. Executive Director Board of Nurse Examiners Earliest possible date of adoption: January 13, 1992 For further information, please call: (512) 835-8650 TITLE 28. INSURANCE Part I. Texas Department of Insurance Chapter 1. General Administration Subchapter F. Summary Procedures for Routine Matters 28 TAC sec.sec.1.702-1.705 The Texas Department of Insurance proposes amendments to ssec.1.702-1.705, concerning activities which have been designated for summary procedure disposition pursuant to the Texas Insurance Code, Article 1.33. The amendments add a class of activities, automobile individual risk submissions, to the list of activities which are deemed to be routine, voluminous, repetitive, noncontroversial, and of limited interest to persons other than those immediately involved. These amendments also correct a typographical error, and re-number the list of activities and make other changes of an editorial nature in adding to the list of activities which come under the rule. Kae T. Patrick, manager of the automobile office, has determined that for the first five-year period the sections are in effect there will be no fiscal implications for state or local government as a result of administering the sections. Ms. Patrick also has determined that for each year of the first five years the sections are in effect the public benefit anticipated as a result of enforcing the sections will be the more efficient and expeditious processing of filings for automobile individual risk submissions. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the sections as proposed. Comments may be submitted to Kae T. Patrick, Manager of the Automobile Office, Mail Code 104-lA, Texas Department of Insurance, P.O. Box 149093, Austin, Texas 78714-9093. The amendments are proposed under Texas Insurance Code, Article 1.04, which provides the State Board of Insurance with the authority to determine policy and rules in accordance with the laws of this State; Article 1.33, which allows the State Board of Insurance, by rule, to create a summary procedure and designate agency activities that are routine to be handled through delegation by deputy commissioner and other personnel as the board may designate; and Article 5.01, which authorizes the board to alter or amend any and all automobile rates. sec.1.702. Designated Activities.
                                                          The following statutorily prescribed applications are designated for summary procedure disposition: (1)-(3) (No change.) (4) auto individual risk submissions. applications to change rates, forms, or deductibles for motor vehicle insurance on an individual risk basis pursuant to the Insurance Code, Article 5.01; (5)
                                                            [(4)] Subchapter B, (a) rates. average (a) rate applications filed for the types of insurance specified in the Insurance Code Articles 5.13 and 5.15-1, pursuant to the Insurance Code, Article 5.15; (6)
                                                              [(5)] Subchapter B, excess rate or umbrella. excess rate or umbrella applications for the types of insurance specified in the Insurance Code, Article 5.13, filed pursuant to the Insurance Code, Article 5.15. (7)
                                                                [(6)] Subchapter B, consent to rate. applications to charge a rate or premium greater than the standard rate or premium approved by the board for the types of insurance specified in the Insurance Code, Article 5.13, pursuant to the Insurance Code, Article 5.15(d); (8)
                                                                  [(7)] rates in excess of maximum for fire and allied lines insurance. applications to charge rates for fire and allied lines insurance at rates in excess of the maximum rates promulgated by the board for any specific risk pursuant to the Insurance Code, Article 5.26(a); (9)
                                                                    [(8)] highly protected risk rating plans. application for approval as a highly protected risk rating plan for fire and allied lines insurance pursuant to the Insurance Code, Article 5.26; (10)
                                                                      [(9)] no promulgated rates provided. review of cases where no rate of premium is fixed or determined by the board for fire and allied lines insurance for certain risks or classes of risks as permitted by the Insurance Code, Article 5.31 and Article 5.36; (11)
                                                                        [(10)] excess inland marine. applications to write regulated lines under the Insurance Code, Article 5.53, at rates in excess of the standard and uniform rates that have been approved by the board pursuant to the Insurance Code, Article 5.53; sec.1.703. Delegation. The Texas Department
                                                                          [State Board] of Insurance hereby delegates to the following deputy commissioners administration over the filings designated in paragraphs (1)-(3) of this section. (1) (No change.) (2) Deputy commissioner of casualty insurance is responsible for all of the following filings: (A) (No change.) (B) sec.1.702(4) of this title (relating to Designated Activities), auto individual risk submissions; (C)
                                                                            [B] sec.1.702(5)
                                                                              [(4)] of this title (relating to Designated Activities), Subchapter B, (a) rates; (D)
                                                                                [(C)] sec.1.702(6)
                                                                                  [(5)] of this title (relating to Designated Activities), Subchapter B, excess or umbrella; and (E)
                                                                                    [D] sec.1.702(7)
                                                                                      [(6)] of this title (relating to Designated Activities), Subchapter B, consent to rate. (3) Deputy commissioner of property insurance is responsible for all of the following filings: (A) sec.1.702(8)
                                                                                        [(7)] of this title (relating to Designated Activities), fire and allied lines excess rates; (B) sec.1. 702(9)
                                                                                          [(8)] of this title (relating to Designated Activities), highly protected risk rating plans; (C) sec.1.702(10)
                                                                                            [(9)] of this title (relating to Designated Activities), no promulgated rates provided; and (D) sec.1.702(11)
                                                                                              [(10)] of this title (relating to Designated Activities), inland marine excess rate. sec.1.704. Summary Procedure; Notice. (a) (No change.) (b) Notice of decision. For sec.1.702(1) and (3)- (11)
                                                                                                [(10)] of this title (relating to Designated Activities), the appropriate deputy commissioner shall record any decision by causing the appropriate filing, application, or form to be stamped either "approved by" or "disapproved by" (name of the appropriate deputy) deputy commissioner of insurance (appropriate division) and the date and by causing the decision to be recorded by a like stamp of a file copy, by a microfilm or microfiche copy, or by recording said decision in the agency's computer files and causing said stamped filing, application, or form to be mailed to the applicant. For 1.702(2) of this title, the appropriate deputy commissioner shall indicate a positive decision by causing the appropriate license to be mailed to the applicant, and by causing the decision to be recorded in the agency's computer files. Notice of any proposed negative decision with respect to sec.1.702(2) of this title shall be in accordance with subsection (a) of this section. sec.1.705. Review. (a) (No change.) (b) Any person affected by any action under s1.702
                                                                                                  (3) -(11)
                                                                                                    [(10)] [sec.1.703] of this title (relating to Designated Activities
                                                                                                      [Delegation]), may petition the Texas Department
                                                                                                        [State Board] of Insurance for a hearing to review the matter. The petition shall contain an identification of the matter complained or and a petitioner's statement, including a rebuttal of the deputy commissioner's decision with specific particularity to inform the board and any interested persons of the petitioner's reasons and arguments. The petition shall be filed with the chief clerk, Texas Department
                                                                                                          [State Board] of Insurance. The review shall be de novo pursuant to the Administrative Procedure and Texas Register Act. 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 December 4, 1991. TRD-9115200 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Earliest possible date of adoption: January 13, 1992 For further information, please call: (512) 463-6328 Chapter 3. Life, Accident, and Health Insurance and Annuities Subchapter A. Requirements for Filing of Policy Forms, Riders, Amendments, and Endorsements for Life, Accident and Health Insurance and Annuities 28 TAC sec.3.3 The Texas Department of Insurance proposes an amendment to sec.3.3(d), concerning requirements for filing of policy forms, riders, amendments, and endorsements for life, accident, and health insurance and annuities. The amendment changes the requirements for such filings, deleting current requirements, and replacing deleted language with more extensive requirements. The amendment is necessary to enable the Texas Department of Insurance to more accurately determine whether the benefits provided under a policy form are unreasonable in relation to the premium charged or whether the reserve required by Insurance Code, Article 6.01, is not maintained by the insurer on the policies issued upon the policy form. In accordance with Insurance Code, Article 3.42, sec.1(j) and sec.(g), the proposed rules will enable the department to evaluate policy forms, riders, amendments, and endorsements for life, accident, and health insurance and annuities. The information filed will assist the department in determining whether previous approval of a policy form may be withdrawn. New subsection (d)(1) requires a company resubmitting forms due to a previous disapproval of the forms to correct the resubmitted forms rather than attaching endorsements, amendments, and/or riders. New subsection (d)(2) requires the application to be submitted with each policy, rider, endorsement, or amendment form submitted for approval. New subsection (d)(3) requires that a readability test score be submitted with each form and further requires an explanation when the score exceeds the equivalent of a 10th grade education level. New subsection (d)(4) requires each policy form submitted to be accompanied by an outline of coverage together with a readability score for the outline of coverage. New subsection (d)(5) requires a statement describing the marketing approach be submitted for each form filing. New subsection (d)(6)(A) outlines the information which must be submitted with each form and upon any change in the premium rates for any form. New subsection (d)(6)(B) outlines the actuarial information that must be submitted which includes a description of the reserving method, loss information, and aggregate lifetime loss ratios. New subsection (d)(6)(C) requires an actuarial certification to be submitted and specifies the language required for the certification. Rhonda Myron, deputy insurance commissioner for the life group, has determined that for the first five-year period the section in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the sections, and there will be no effect on local employment or local economy. Ms. Myron, also has determined that for each year of the first five years the section is in effect the public benefit anticipated as a result of enforcing the section will be a more efficient and complete means of review of individual accident and health insurance policy forms. The department will receive the information in a more timely manner, and staff can review supporting documentation at once rather than as documents are provided upon request. Ms. Myron has determined there will be no anticipated economic cost to persons who are required to comply with the sections as proposed or to small businesses; most of the information required to be submitted by the amendment is already provided upon request by Department of Insurance staff; the rule places the burden on insurers to provide the information with each filing rather than in response to follow-up requests. The extent to which the proposed amendments will yield greater or lesser control of costs for any particular insurer will depend on the manner previously utilized by the insurer in achieving compliance with the Insurance Code, Article 3.42 and the current rule. Comments on the proposal may be submitted to Rhonda Myron, Deputy Insurance Commissioner for the Life Group, Mail Code 106-1D, Texas Department of Insurance, 333 Guadalupe Street, P.O. Box 149104, Austin, Texas 78714-9104. The amendment is proposed under the Insurance Code, Article 3.42 sec.(g) and sec.(j), which authorizes the State Board of Insurance to establish standards by which previous approval of a policy form may be withdrawn and which authorizes the board to adopt such reasonable rules and regulations as are necessary to implement and accomplish the specific provisions of the Article, and under Texas Civil Statutes, Article 6252-13a, sec.4 and sec.5, which authorize and require each state administrative agency to adopt rules of practice setting forth the nature and requirements of available procedures, and prescribes the procedure for the adoption of rules by any state administrative agency. sec.3.3. Specific Additional Submission Requirements. (a)-(c) (No change.) (d) Individual accident and health forms. (1) Resubmitted forms. If the company resubmits forms for filing and approval due to a previous disapproval of any such form or in response to requested corrections necessary for compliance, all objections shall be corrected in the resubmitted forms and shall not be corrected by attaching endorsements, amendments, and/or riders. (2) Applications. Each policy, rider, endorsement, or amendment form submitted for filing and approval shall include a copy of the application that will be used with the form. (3) Readability. Each form submitted shall be accompanied by a statement specifying the readability test applied to the form. The resulting readability test score, on the outline of coverage, shall also be stated. If the readability test score exceeds the equivalent of a 10th grade education level, an explanation detailing the reasons for such score shall be provided. (4) Outlines of coverage. An appropriate outline of coverage shall be filed with each policy form submitted. A statement specifying the readability test used and the resulting readability score for the outline of coverage shall be filled with each form submitted. (5) Marketing. A statement clearly describing the marketing approach to be used by the company in marketing each form (policy, rider, etc.) shall be included with each filing. (6) Premium rates, premium rate changes, and actuarial information. (A) Premium rate information shall be furnished in duplicate with each form submitted and upon any change (increase and/or decrease) in the premium rates for any form. Premium rate information shall include at least the following: (i) a statement listing the specific form numbers for which the premium rate information is submitted, along with the applicable approval date for such forms and a brief description of the insurance coverage and benefits provided under each form on the listing; (ii) for each new form filing, the applicable premium rate tables and/or schedules for each class and any fees, assessments, dues, or other considerations included in the premium for the insurance; (iii) a detailed description of all criteria used (by the insurer) as a basis to establish differing "classes" which would provided for different premium rate charges for essentially the same set of benefits under the policy form and/or forms and a delineation of all specific rating classes established by said criteria; (iv) for each premium rate change request, the following additional information shall be included with the request: (I) a statement specifying the percentage change (increase or decrease) in premium rates; (II) current and revised premium rate tables and/or schedules for each class along with an explanation detailing the applicability to in-force coverage and newly issued coverage; (III) a breakdown of the component rating factors (i.e. medical inflation, benefit utilization, leveraging effects of deductibles) considered in determining the premium rate change; (IV) an explanation of any pooling of risks under various policy forms, including the form numbers and type of coverage provided by those forms; (V) an explanation for any differences in the premium rate change (increase or decrease) being applied to all insureds covered for essentially the same set of benefits under the policy form and/or forms; (VI) a chronological description detailing past rate changes that have been made for each class since the policy inception date or during the past 10 years, whichever is of lesser duration; (VII) the specific dates when the premium rate changes will be effective for all insureds and classes. (B) The following actuarial information shall be filed with each policy form filing and each premium rate change filing: (i) a description of the reserving methodology; (ii) loss information for: (I) actual (past) annual experience since the policy inception date (first date of issuance in Texas) of the policy form; and (II) expected (future) experience for the remainder of the period for which rates are computed to provide coverage; and (iii) an estimate of the aggregate lifetime loss ratio (i.e. the loss ratios expected to be realized over the entire period for which rates are computed to provide coverage). These loss ratios must be calculated from the combined (past and future) loss information required in clause (i) and (ii) of this subparagraph. All loss information (inclusive of past experience of previous ceding insurers) must be Texas resident specific and shall include premiums earned and claims incurred. In computing premiums earned, such premiums shall be "gross premiums" as defined in Insurance Code Article 4.11, sec.2(c), when computing claims incurred, any expenses shall be excluded from such computation. In new policy form filings or when credible company experience does not exist, alternative loss information may be substituted for actual Texas resident loss information, if acceptable to the commissioner. (C) An actuarial certification, by a qualified actuary, that includes a statement that the benefits provided under the policy form (or other benefit form, if applicable) are reasonable in relation to the premium charged. [(1) Objections to the forms submitted for approval shall be corrected through resubmission rather than by attachment of riders or endorsements. [(2) Any policy form, rider, or endorsement which is to be issued with the application attached shall have a copy of the application form attached at the date of submission. [(3) The appropriate outline of coverage shall be filed with each policy form submission. The readability test applied and the resulting score of outline of coverage must also be filed. [(4) A brief statement of the marketing approach to be used shall be filed. [(5) The rate schedule to be utilized with each individual accident and sickness policy shall be filed in duplicate at the time the policy form is submitted for approval. All rate increases shall be filed in duplicate. Rate increases exceeding 150% require actuarial data to substantiate the increase. [(6) Supporting actuarial data shall be submitted with all Medicare supplement policy rate filings.] [(7) Any supplemental coverage policy form submitted for approval shall be accompanied by a letter, signed by an officer of the company, certifying that the policy shall be market only as supplemental coverage as it is defined in sec.3.3080 of this title (relating to Supplemental Coverage).] 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 December 4, 1991. TRD-9115197 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Earliest possible date of adoption: January 13, 1992 For further information, please call: (512) 463-6328 Subchapter GG. Minimum Reserve Standards for Individual and Group Accident and Health Insurance 28 TAC sec.sec.3.7001-3.7010 The Texas Department of Insurance proposes new sec.sec.3.7001-3.7010, concerning minimum reserve standards for individual and group accident and health insurance. The new sections are proposed as Subchapter GG of Chapter 3, concerning life, accident, and health insurance and annuities. Sections 3.7001- 3. 7008 track model rules adopted by the National Association of Insurance Commissioners (NAIC). The sections set forth standards for claim reserves, premium reserves, and contract reserves. However, it is believed the greatest impact will be in the area of contract reserves which are not presently being generated by all insurers, particularly small domestic insurers which do little or no out-of-state business. Larger insurers generally already establish reserves which would meet the requirements for contract reserves. This is true in part because over 50% of states already require reserves in accordance with the NAIC model rules or similar standards. By increasing reserve requirements, it is expected that insolvencies of affected insurers will entail less of a loss to policyholders and the Texas Life, Accident, Health and Hospital Service Insurance Guaranty Association. The sections also provide a severability clause if any or a portion of sec.3.7001-3.7009 is declared invalid or of invalid application to any person or circumstance. Mike Boerner, valuation actuary, actuarial division, has determined that there will be fiscal implications as a result of enforcing or administering these sections. There are expected to be fiscal implications to state government as a result of these sections. To the extent that additional reserves are required for any insurer which eventually becomes insolvent, the insolvency will not be as severe as would otherwise be the case and premium tax credits as a result of guaranty association assessments will be less because the needed assessments will be less. There are expected to be no additional fiscal implications for state government. Any additional work for actuaries at the Texas Department of Insurance is expected to be absorbed by existing staff or offset by a reduction in workload for agency staff involved in work relating to insurance company insolvencies. There are expected to be no fiscal implications to local government as a result of these sections. There is expected to be no cost of compliance with these sections for small businesses except that an insurance company which also meets the definition of a small business will incur additional costs if it is not already generating the reserves required by these sections. The increased cost will come from the requirements for contract reserves. It is believed that insurers are presently establishing appropriate reserves for premiums and claims which are generally already sufficient to comply with these sections. However, some insurers do not presently establish, and are not specifically required to establish, contract reserves sufficient to meet the requirements of these sections. The cost to comply with these sections for insurers which currently do not establish contract reserves and which are small businesses is expected to be a result of the requirement for contract reserves and is estimated as follows: First year start up costs, including the expenses of an actuary and equipment, are expected to be between $20,000 and $30,000. Continuing actuarial review after the first year is expected to range from 1/10 of one cent to two cents of each premium dollar, depending on the volume of business, for the lines of coverage to which these sections apply. Assuming plausible termination rates of 25%, 17.5%, 14% and 12% for each of the first four policy years, required contract reserve increases will be approximately 0% of premiums for the first policy year, 0% of premiums for the second policy year (except for long-term care insurance, where such reserving requirements would be approximately 20% of second year premiums), approximately 5.0% of third year premiums (except for long-term care insurance, where such reserving requirements would be approximately 35% of third year premiums), and approximately 10% of fourth year premiums and approximately 8.0% of fifth year premiums (except for long-term care insurance, where such reserve requirements would be approximately 25% for the fourth year and 25% for the fifth year). Such contract reserves continue to increase after the fifth year and begin to decrease in later years as the reserve build up is applied towards claims where any excess is returned to surplus. Assuming a company with $100,000 of premiums at issue for the lines of insurance to which these sections apply, and assuming plausible termination rates of 25%, 17.5%, 14% and 12% for each of the first four policy years respectively, the anticipated contract reserve increases plus expenses are as follows: approximately $25,000 the first policy year (computer and actuarial start-up costs); approximately $750 for the second policy year (except for long- term care insurance, where the cost would be approximately $16,500); approximately $4,331 for the third policy year (except for long-term care, where the cost would be approximately $22,894); approximately $6,386 for the fourth policy year (except for long-term care, where the cost would be approximately $14,367); and approximately $4,683 for the fifth policy year (except for long- term care, where the cost would be approximately $12,643). The contract reserve increases plus expenses per $100 of sales or premiums collected (except for long-term care insurance) for an insurer with only $100, 000 of premium at issue, would be $25 for the first policy year; $1.00 for the second policy year $7.00 for the third policy year; $12 for the fourth policy year; and $10 for the fifth policy year. However, the amounts attributable to reserves, or $5.00 out of $7.00 for the third policy year, $10 out of $12 for the fourth policy year and $8.00 out of $10 for the fifth policy year would ultimately be applied towards claims in later policy years where any excess would be returned to the company's surplus. The contract reserve increases plus expenses per $100 of sales or premiums collected for long-term care insurance for an insurer with $100,000 of premium at issue would be approximately $25 for the first policy year; $22 for the second policy year; $37 for the third policy year; $27 for the fourth policy year; and $27 for the fifth policy year. However, the amounts attributable to reserves, or $20 out of $22 for the second policy year; $35 out of $37 for the third policy year; $25 out of $27 for the fourth policy year and $25 out of $27 for the fifth policy year would ultimately be applied towards claims in later policy years where any excess would be returned to the company's surplus. Assuming a company with $100 million in premium volume, at issue, the contract reserve increases plus expenses per $100 of sales (premiums collected) is expected to be $0.025 for the first policy year; $0.05 for the second policy year; $5.10 for the third policy year; $10.10 for the fourth policy year; and $8. 10 for the fifth policy year (for long-term Care insurance, the amounts would be $20.10, $35.10, $25.10 and $25.10 for the second through fifth policy years respectively). Again, the amounts attributable to reserves are expected ultimately to be applied towards claims in later policy years where any excess would be returned to the company's surplus. Mr. Boerner also has determined that for each year of the first five years the sections are in effect the public benefit anticipated as a result of enforcing the sections will be stronger standards for reserves for individual and group accident and health insurance coverage. However, many insurance companies are already establishing reserves which are sufficient to comply with these sections. It is believed that, as a general rule, virtually all solvent insurers which generate reserves in an appropriate manner are establishing reserves which are enough to comply with these sections for unearned premium and claim reserves. However, this is not always true for contract reserves particularly for small insurers which do not engage in business in other states. Larger insurers generally already establish contract reserves sufficient to satisfy these sections at least in part because more than one-half the states require reserves in accordance with these or similar standards. The requirements for contract reserves will apply to policies with a duration of more than two years. These are generally guaranteed renewable or noncancelable policies. Medicare supplement policies usually are guaranteed renewable or noncancelable and are a good example of the type of policy that will be most affected by these sections. Based on 1989 annual statement data from the NAIC for guaranteed renewable business a comparison was made between small domestic life insurers (less than $20 million in assets), medium domestic life insurers ($20 million-$100 million in assets) and large domestic life insurers (over $100 million in assets). This comparison showed that the small insurers were holding only four cents in contract reserves for each dollar of premium written whereas the medium and large insurers were holding 43.6 cents and 60.7 cents respectively in contract reserves for each dollar of premium written. Small insurers were holding significantly lower contract reserves for guaranteed renewable business even in light of the fact that they wrote one-third of the premium dollars for this business when compared to the premiums written for the medium and large domestic life insurance companies. This regulation satisfies a good portion of the NAIC Financial Accreditation Standard number 10 by prescribing minimum standards establishment of contract reserves (active life reserves), unearned premium reserves, and claim reserves. The anticipated economic cost to persons who are required to comply with these sections is expected to be the cost to these insurers required to comply and establish contract reserves and who do not currently establish such reserves. The cost estimated for establishing contract reserves is estimated as follows: For the first policy year, the cost for actuarial services and system development is expected to be $20,000-$30,000; no contract reserves are required during the first policy year. For the second policy year, an actuarial review cost of approximately $.05 of one cent to one cent of each premium dollar is anticipated for the lines of insurance affected by these sections; no contract reserves are required for the second policy year (except for long-term care insurance, where reserves are expected to be 20% of premiums). For the third policy year, a reserve increase in the amount of approximately 5.0% of premiums is expected (except for long-term care insurance, where the reserve increase is expected to be 35% of premiums) plus an actuarial review cost of approximately 1/10 of one cent to two cents of each premium dollar for the lines of insurance affected by these sections. For the fourth policy year, an increase in reserves in the amount of approximately 10% of premiums (except for long-term care insurance, where the increase is expected to be 25% of premiums) is expected plus an actuarial review cost of approximately 1/10 of one cent to two cents of each premium dollar for the lines of insurance affected by these sections. For the fifth policy year, an increase in reserves in the amount of approximately 8. 0% of premiums (except for long-term care insurance, where the increase is expected to be 25% of premiums) is expected plus an actuarial review cost of approximately 1/10 of one cent to two cents of each premium dollar for the lines of insurance affected by these sections. Once again it should be stressed that the amounts attributable to reserves are expected ultimately to be applied towards claims where any excess would be returned to the company's surplus. Comments may be submitted to Mike Boerner, Valuation Actuary, Actuarial Division, Texas Department of Insurance, Mail Code 304-3A, 333 Guadalupe, Austin, Texas 78701. The new sections are proposed under the Insurance Code, Article 21.39, which requires that the State Board of Insurance adopt the current formula for establishing reserves applicable to each line of insurance as recommended by the National Association of Insurance Commissioners and also requires that all companies writing the line of insurance to which each National Association of Insurance Commissioner's formula is applicable, shall establish reserves in compliance therewith. The sections are also proposed under the Insurance Code, Articles 10.07, 18.08, 19.06 and 22.18, which applies the requirements of the Insurance Code, Article 21.39 to certain types of insurers. The sections are also proposed under the Insurance Code, Article 21.39 which are additional to the provisions of that article heretofore specified and which requires insurers to establish certain reserves. The sections are also proposed under the Insurance Code, Article 1.10(1), which requires the State Board of Insurance to see that all laws respecting insurance and insurance companies are faithfully executed. sec.3.7001. Introduction. (a) Scope and general standards. (1) These standards apply to all individual and group accident and health insurance coverages except credit insurance. (2) When an insurer determines that adequacy of its health insurance reserves requires reserves in excess of the minimum standards specified in these sections, such increased reserves must be held and must be considered the minimum reserves for that insurer. (3) With respect to any block of contracts, or with respect to an insurer's health business as a whole, a prospective gross premium valuation is the ultimate test of reserve adequacy as of a given valuation date. Such a gross premium valuation would take into account, for contracts in force, in a claims status, or in a continuation of benefits status on the valuation date, the present value as of the valuation date of: all expected benefits unpaid, all expected expenses unpaid, and all unearned or expected premiums, adjusted for future premium increases reasonably expected to be put into effect. (4) Such a gross premium valuation must be performed whenever a significant doubt exists as to reserve adequacy with respect to any major block of contracts, or with respect to the insurer's health business as a whole. In the event inadequacy is found to exist, immediate loss recognition must be made and the reserves restored to adequacy. Adequate reserves (inclusive of claim, premium, and contract reserves, if any) must be held with respect to all contracts, regardless of whether contract reserves are required for such contracts under these standards. (5) Whenever minimum reserves, as defined in these standards, exceed reserve requirements as determined by a prospective gross premium valuation, such minimum reserves remain the minimum requirement under these standards. (b) Categories of reserves. The following sections set forth minimum standards for three categories of health insurance reserves: sec.3.7002 of this title (relating to Claim Reserves); sec.3.7003 of this title (relating to Premium Reserves); and sec.3.7004 of this title (relating to Contract Reserves). Adequacy of an insurer's health insurance reserves is to be determined on the basis of all three categories combined. However, the standards in these sections emphasize the importance of determining appropriate reserves for each of the three categories separately. (c) Sections 3.7006, 3.7007, 3.7008 and 3.7009. Sections 3.7006 and 3. 7007 of this title (relating to Specific Standards for Morbidity, Interest and Mortality; and Glossary of Technical Terms Used) are an integral part of the standards specified in sec.sec.3.7001-3.7005 of this title (relating to Introduction; Claims Reserves; Premium Reserves; Contract Reserves and Reinsurance). Section 3.7008 of this title (relating to Reserves for Waiver of Premium) is supplementary and is not part of the standards as such, but is included for explanatory and illustrative purposes only. Section 3.7006 of this title contains specific minimum standards with respect to morbidity, interest and mortality, which apply to claim reserves according to year of incurral and to contract reserves according to year of issue. Section 3.7007 title consists of a glossary of technical terms used. Section 3.7008 of this title is supplementary and deals with waiver of premium reserves. For the purchase of existing business under certain circumstances, see sec.3.7009 of this title (relating to Purchase or Assumption of Existing Business). sec.3.7002. Claim Reserves. (a) General. (1) Claim reserves are required for all incurred but unpaid claims on all health insurance policies. (2) Appropriate claim expense reserves are required with respect to the estimated expense of settlement of all incurred but unpaid claims. (3) All such reserves for prior valuation years must be tested for adequacy and reasonableness along the lines of claim runoff schedules in accordance with the statutory financial statement including consideration of any residual unpaid liability. (b) Minimum standards for claim reserves. (1) Disability income. (A) Interest. The maximum interest rate for claim reserves is specified in sec.3.7006 of this title (relating to Specific Standards for Morbidity, Interest and Mortality). (B) Morbidity. Minimum standards with respect to morbidity are those specified in sec.3.7006 of this title; except that, at the option of the insurer, for claims with a duration from date of disablement of less than two years, reserves may be based on the insurer's experience, if such experience is considered credible, or upon other assumptions designed to place a sound value on the liabilities. (C) Duration of disablement. For contracts with an elimination period, the duration of disablement should be measured as dating from the time that benefits would have begun to accrue had there been no elimination period. (2) All other benefits. (A) Interest. The maximum interest rate for claim reserves is specified in sec.3.7006 of this title. (B) Morbidity or other contingency. The reserve must be based on the insurer's experience, if such experience is considered credible, or upon other assumptions designed to place a sound value on the liabilities. (c) Claim reserve methods generally. Any generally accepted or reasonable actuarial method or combination of methods may be used to estimate all claim liabilities. The methods used for estimating liabilities generally may be aggregate methods, or various reserve items may be separately valued. Approximations based on groupings and averages may also be employed. Adequacy of the claim reserves, however, shall be determined in the aggregate. sec.3.7003. Premium Reserves. (a) General. (1) Unearned premium reserves are required for all contracts with respect to the period of coverage for which premiums, other than premiums paid in advance, have been paid beyond the date of valuation. (2) If premiums due and unpaid are carried as an asset, such premiums must be treated as premiums in force, subject to unearned premium reserve determination. The value of unpaid commissions, premium taxes, and the cost of collection associated with due and unpaid premiums must be carried as an offsetting liability. (3) The gross premiums paid in advance for a period of coverage commencing after the next premium due date which follows the date of valuation may be appropriately discounted to the valuation date and shall be held either as a separate liability or as an addition to the unearned premium reserve which would otherwise be required as a minimum. (b) Minimum standards for unearned premium reserves. (1) The minimum unearned premium reserve with respect to any contract is the pro rata unearned modal premium that applies to the premium period beyond the valuation date, with such premium determined on the basis of: (A) the valuation net modal premium on the contract reserve basis applying to the contract; or (B) the gross modal premium for the contract if no contract reserve applies. (2) However, in no event may the sum of the unearned premium and contract reserves for all contracts of the insurer subject to contract reserve requirements be less than the gross modal unearned premium reserve on all such contracts, as of the date of valuation. Such reserve may never be less than the expected claims for the period beyond the valuation date represented by such unearned premium reserve, to the extent not provided for elsewhere. (c) Premium reserve methods generally. The insurer may employ suitable approximations and estimates, including, but not limited to, groupings, averages, and aggregate estimation, in computing premium reserves. Such approximations or estimates should be tested periodically to determine their continuing adequacy and reliability. sec.3.7004. Contract Reserves. (a) General. (1) Contract reserves are required, unless otherwise specified in paragraph (2) of this subsection for: (A) all individual and group contracts with which level premiums are used; or (B) all individual and group contracts with respect to which, due to the gross premium pricing structure at issue, the value of the future benefits at any time exceeds the value of any appropriate future valuation net premiums at that time. The values specified in this subparagraph must be determined on the basis specified in subsection (b) of this section. (2) Contracts not requiring a contract reserve are as follows: (A) contracts which cannot be continued after one year from issue; or (B) contracts already in force on the effective date of these standards for which no contract reserve was required under the immediately preceding standards. (3) The contract reserve is in addition to claim reserves and premium reserves. (4) The methods and procedures for contract reserves must either be consistent with those for claim reserves for any contract, or else appropriate adjustment must be made when necessary to assure provision for the aggregate liability. The definition of the date of incurral must be the same in both determinations. (b) Minimum standards for contract reserves. (1) Basis. (A) Morbidity or other contingency. Minimum standards with respect to morbidity are those set forth in sec.3.7006 of this title (relating to Specific Standards for Morbidity, Interest and Mortality). Valuation net premiums used under each contract must have a structure consistent with the gross premium structure at issue of the contract as this relates to advancing age of insured, contract duration, and period for which gross premiums have been calculated. Contracts for which tabular morbidity standards are not specified in sec.3.7006 of this title shall be valued using tables established for reserve purposes by a qualified actuary and acceptable to the commissioner. (B) Drafting note. The consistency between the gross premium structure and the valuation net premium is required only at issue, because the impact on such consistency after issue of regulatory restrictions on premium rate increases is still under study. (C) Interest. The maximum interest rate is specified in sec.3.7006 of this title. (D) Termination rates. Termination rates used in the computation of reserves shall be on the basis of a mortality table as specified in sec.3.7006 of this title except as noted in this subparagraph. Under contracts for which premium rates are not guaranteed, and where the effects of insurer underwriting are specifically used by policy duration in the valuation morbidity standard, total termination rates may be used at ages and durations where these exceed specified mortality table rates, but not in excess of the lesser of: 80% of the total termination rate used in the calculation of the gross premiums, or eight percent. Where a morbidity standard specified in sec.3.7006 of this title is on an aggregate basis, such morbidity standard may be adjusted to reflect the effect of insurer underwriting by policy duration. The adjustments must be appropriate to the underwriting and be acceptable to the commissioner. (E) Reserve method. For insurance except long-term care, the minimum reserve is the reserve calculated on the two-year full preliminary term method; that is, under which the terminal reserve is zero at the first and also the second contract anniversary. For long-term care insurance, the minimum reserve is the reserve calculated on the one-year full preliminary term method. The two-year preliminary term method may be applied only in relation to the date of issue of a contract. Reserve adjustments introduced later, as a result of rate increases, revisions in assumptions (e.g., projected inflation rates) or for other reasons, are to be applied immediately as of the effective date of adoption of the adjusted basis. (F) Negative reserves. Negative reserves on any benefit may be offset against positive reserves for other benefits in the same contract, but the total contract reserve with respect to all benefits combined may not be less than zero. (c) Alternative valuation methods and assumptions generally. Provided the contract reserve on all contracts to which an alternative method or basis is applied is not less in the aggregate than the amount determined according to the applicable standards specified in subsection (b) of this section, an insurer may use any reasonable assumptions as to interest rates, termination and/or mortality rates, and rates of morbidity or other contingency. Also, subject to the preceding condition, the insurer may employ methods other than the methods stated in subsection (b) of this section in determining a sound value of its liabilities under such contracts, including, but not limited to the following: the net level premium method; the one-year full preliminary term method; prospective valuation on the basis of actual gross premiums with reasonable allowance for future expenses; the use of approximations such as those involving age groupings, groupings of several years of issue, average amounts of indemnity, grouping of similar contract forms; the computation of the reserve for one contract benefit as a percentage of, or by other relation to, the aggregate contract reserves exclusive of the benefit or benefits so valued; and the use of a composite annual claim cost for all or any combination of the benefits included in the contracts valued. (d) Tests for adequacy and reasonableness of contract reserves. Annually, an appropriate review must be made of the insurer's prospective contract liabilities on contracts valued by tabular reserves, to determine the continuing adequacy and reasonableness of the tabular reserves giving consideration to future gross premiums. The insurer shall make appropriate increments to such tabular reserves if such tests indicate that the basis of such reserves is no longer adequate; subject, however, to the minimum standards of subsection (b) of this section. In the event a company has a contract or a group of related similar contracts, for which future gross premiums will be restricted by contract, insurance department regulations, or for other reasons, such that the future gross premiums reduced by expenses for administration, commissions, and taxes will be insufficient to cover future claims, the company shall establish contract reserves for such shortfall in the aggregate. sec.3.7005. Reinsurance. Increases to, or credits against reserves carried, arising because of reinsurance assumed or reinsurance ceded, must be determined in a manner consistent with these minimum reserve standards and with all applicable provisions of the reinsurance contracts which affect the insurer's liabilities. sec.3.7006. Specific Standards for Morbidity, Interest and Mortality. (a) Morbidity. (1) Minimum morbidity standards for valuation of specified individual contract health insurance benefits are as follows. (A) Disability income benefits due to accident or sickness. (i) Contract reserves. (I) Contracts issued on or after January 1, 1965, and prior to January 1, 1990: The 1964 Commissioners Disability Table (64 CDT). The 1964 Commissioners Disability Table (64 CDT) is adopted by reference for use in the manner indicated in these sections. (II) Contracts issued on or after January 1, 1990: The 1985 Commissioners Individual Disability Tables A (85CIDA); or The 1985 Commissioners Individual Disability Tables B (85CIDB). The 1985 Commissioners Individual Disability Tables A (85CIDA) and the 1985 Commissioners Individual Disability Tables B (85CIDB) are adopted by reference for use in the manner indicated in these sections. (III) Each insurer shall elect, with respect to all individual contracts issued in any one statement year, whether it will use Tables A (85CIDA) or Tables B (85CIDB) as the minimum standard. The insurer may, however, elect to use the other tables with respect to any subsequent statement year. (ii) Claim reserves. The minimum morbidity standard in effect for contract reserves on currently issued contracts, as of the date the claim is incurred. (B) Hospital benefits, surgical benefits, and maternity benefits (scheduled benefits or fixed time period benefits only). (i) Contract reserves. (I) Contracts issued on or after January 1, 1955, and before January 1, 1982: The 1956 Intercompany Hospital-Surgical Tables. The 1956 Intercompany Hospital- Surgical Tables are adopted by reference for use as indicated in these sections. (II) Contracts issued on or after January 1, 1982: The 1974 Medical Expense Tables, Table A, Transactions of the Society of Actuaries, Volume XXX, page 63. Refer to the paper (in the same volume, page 9) to which this table is appended, including its discussions, for methods of adjustment for benefits not directly valued in Table A: "Development of the 1974 Medical Expense Benefits," Houghton and Wolf. The 1974 Medical Expense Tables, Table A is adopted by reference for use in the manner indicated in these sections. (ii) Claim reserves. No specific standard. See subparagraph (E) of this paragraph. (C) Cancer expense benefits (scheduled benefits or fixed time period benefits only). (i) Contract reserves. Contracts issued on or after January 1, 1986: The 1985 NAIC Cancer Claim Cost Tables. The 1985 NAIC Cancer Claim Cost Tables are adopted by reference for use in the manner specified in these sections. (ii) Claim reserves. No specific standard. See subparagraph (E) of this paragraph. (D) Accidental death benefits. (i) Contract reserves. Contracts issued on or after January 1, 1965: The 1959 Accidental Death Benefits Table. The 1959 Accidental Death Benefits Table is adopted by reference for use in the manner specified in these sections. (ii) Claim reserves. Actual amount incurred. (E) Other individual contract benefits. (i) Contract reserves. For all other individual contract benefits, morbidity assumptions are to be determined as provided in the reserve standards. (ii) Claim reserves. For all benefits other than disability, claim reserves are to be determined as provided in the standards. (2) Minimum morbidity standards for valuation of specified group contract health insurance benefits are as follows. (A) Disability income benefits due to accident or sickness. (i) Contract reserves. Contracts issued prior to January 1, 1990: The same basis, if any, as that employed by the insurer as of January 1, 1990. Contracts issued on or after January 1, 1990: The 1987 Commissioners Group Disability Income Table (87CGDT). The 1987 Commissioners Group Disability Income Table (87CGDT) is adopted herein by reference. (ii) Claim reserves. For claims incurred on or after January 1, 1990: The 1987 Commissioners Group Disability Income Table (87CGDT); For claims incurred prior to January 1, 1990: Use of the 87CGDT is optional. (B) Other group contract benefits. (i) Contract reserves. For all other group contract benefits, morbidity assumptions are to be determined as provided in the reserve standards. (ii) Claim reserves. For all benefits other than disability, claim reserves are to be determined as provided in the standards. (b) Interest. (1) For contract reserves the maximum interest rate is the maximum rate permitted by law in the valuation of whole life insurance issued on the same date as the health insurance contract. (2) For claim reserves the maximum interest rate is the maximum rate permitted by law in the valuation of whole life insurance issued on the same date as the claim incurral date. (c) Mortality. The mortality basis used must be according to a table (but without use of selection factors) permitted by law for the valuation of whole life insurance issued on the same date as the health insurance contract. (d) Tables. Copies of the 1964 Disability Table (64 CDT); the 1985 Commissioners Individual Disability Tables A (85CIDA); the 1985 Commissioners Individual Disability Tables B (85CIDB); the 1956 Intercompany Hospital-Surgical Tables; the 1974 Medical Expense Tables, Table A; the 1985 NAIC Cancer Claim Cost Tables; the 1959 Accidental Death Benefits Table; and the 1987 Commissioners Group Disability Income Table (87CGDT) may be obtained by contacting the Actuarial Division, Texas Department of Insurance, P.O. Box 149104, Mail Code 304-3A, Austin, Texas 78714-9104. sec.3.7007. Glossary of Technical Terms Used. The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise. Annual-claim cost -The net annual cost per unit of benefit before the addition of expenses, including claim settlement expenses, and a margin for profit or contingencies. For example, the annual claim cost for a $100 monthly disability benefit, for a maximum disability benefit period of one year, with an elimination period of one week, with respect to a male at age 35, in a certain occupation might be $12, while the gross premium for this benefit might be $18. The additional $6.00 would cover expenses and profit or contingencies. Claims accrued -That portion of claims incurred on or prior to the valuation date which result in liability of the insurer for the payment of benefits for medical services which have been rendered on or prior to the valuation date, and for the payment of benefits for days of hospitalization and days of disability which have occurred on or prior to the valuation date, which the insurer has not paid as of the valuation date, but for which it is liable, and will have to pay after the valuation date. This liability is sometimes referred to as a liability for "accrued" benefits. A claim reserve, which represents an estimate of this accrued claim liability, must be established. Claims reported -When an insurer has been informed that a claim has been incurred, if the date reported is on or prior to the valuation date, the claim is con for annual statement purposes. Claims unaccrued -That portion of claims incurred on or prior to the valuation date which result in liability of the insurer for the payment of benefits for medical services expected to be rendered after the valuation date, and for benefits expected to be payable for days of hospitalization and days of disability occurring after the valuation date. This liability is sometimes referred to as a liability for unaccrued benefits. A claim reserve, which represents an estimate of the unaccrued claim payments expected to be made (which may or may not be discounted with interest), must be established. Claims unreported -When an insurer has not been informed, on or before the valuation date, concerning a claim that has been incurred on or prior to the valuation date, the claim is considered as an unreported claim for annual statement purposes. Date of disablement -The earliest date the insured is considered as being disabled under the definition of disability in the contract, based on a doctor's evaluation or other evidence. Normally this date will coincide with the start of any elimination period. Elimination period -A specified number of days, weeks, or months starting at the beginning of each period of loss, during which no benefits are payable. Gross premium-The amount of premium charged by the insurer. It includes the net premium (based on claim-cost) for the risk, together with any loading for expenses, profit, or contingencies. Group insurance -The term group insurance includes blanket insurance and franchise insurance and any other forms of group insurance. Level premium-A premium calculated to remain unchanged throughout either the lifetime of the policy, or for some shorter projected period of years. The premium need not be guaranteed; in which case, although it is calculated to remain level, it may be changed if any of the assumptions on which it was based are revised at a later time. Generally, the annual claim costs are expected to increase each year and the insurer, instead of charging premiums that correspondingly increase each year, charges a premium calculated to remain level for a period of years or for the lifetime of the contract. In this case the benefit portion of the premium is more than needed to provide for the cost of benefits during the earlier years of the policy and less than the actual cost in the later years. The building of a prospective contract reserve is a natural result of level premiums. Long-term care insurance-Any insurance policy or rider advertised, marketed, offered, or designed to provide coverage for not less than 12 consecutive months for each covered person on an expense incurred, indemnity, prepaid, or other basis: for one or more necessary or medically necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services, provided in a setting other than an acute care unit of a hospital. Such term also includes a policy or rider which provides for payment of benefits based upon cognitive impairment or the loss of functional capacity. Long-term care insurance may be issued by insurers; fraternal benefit societies; nonprofit health, hospital, and medical service corporations; prepaid health plans; health maintenance organizations, or any similar organization to the extent they are otherwise authorized to issue life or health insurance. Long-term care insurance shall not include any insurance policy which is offered primarily to provide basic Medicare supplement coverage, basic hospital expense coverage, basic medical- surgical expense coverage, hospital confinement indemnity coverage, major medical expense coverage, disability income or related asset-protection coverage, accident only coverage, specified disease or specified accident coverage, or limited benefit health coverage. Modal premium-This refers to the premium paid on a contract based on a premium term which could be annual, semi-annual, quarterly, monthly, or weekly. Thus if the annual premium is $100 and if, instead, monthly premiums of $9.00 are paid then the modal premium is $9.00. Negative reserve -Normally the terminal reserve is a positive value. However, if the values of the benefits are decreasing with advancing age or duration it could be a negative value, called a negative reserve. Preliminary term reserve method-Under this method of valuation the valuation net premium for each year falling within the preliminary term period is exactly sufficient to cover the expected incurred claims of that year, so that the terminal reserves will be zero at the end of the year. As of the end of the preliminary term period, a new constant valuation net premium (or stream of changing valuation premiums) becomes applicable such that the present value of all such premiums is equal to the present value of all claims expected to be incurred following the end of the preliminary term period. Present value of amounts not yet due on claims-The reserve for "claims unaccrued" (see definition), which may be discounted at interest. Qualified actuary -A member in good standing of the American Academy of Actuaries. Reserve-The term "reserve" is used to include all items of benefit liability, whether in the nature of incurred claim liability or in the nature of contract liability relating to future periods of coverage, and whether the liability is accrued or unaccrued. An insurer under its contracts promises benefits which result in: (A) claims which have been incurred, that is, for which the insurer has become obligated to make payment, on or prior to the valuation date. On these claims, payments expected to be made after the valuation date for accrued and unaccrued benefits are liabilities of the insurer which should be provided for by establishing claim reserves; or (B) claims which are expected to be incurred after the valuation date. Any present liability of the insurer for these future claims should be provided for by the establishment of contract reserves and unearned premium reserves. Terminal reserve -This is the reserve at the end of a contract year, and is defined as the present value of benefits expected to be incurred after that contract year minus the present value of future valuation net premiums. Unearned premium reserve-This reserve values that portion of the premium paid or due to the insurer which is applicable to the period of coverage extending beyond the valuation date. Thus if an annual premium of $120 was paid on November 1, $20 would be earned as of December 31 and the remaining $100 would be unearned. The unearned premium reserve could be on a gross basis as in this example, or on a valuation net premium basis. Valuation net modal premium-This is the modal fraction of the valuation net annual premium that corresponds to the gross modal premium in effect on any contract to which contract reserves apply. Thus if the mode of payment in effect is quarterly, the valuation net modal premium is the quarterly equivalent of the valuation net annual premium. sec.3.7008. Reserves for Waiver of Premium. (a) This section contains supplementary explanatory material. (b) Waiver of premium reserves involve several special considerations. First, the disability valuation tables promulgated by the National Association of Insurance Commissioners are based on exposures that include contracts on premium waiver as in-force contracts. Hence, contract reserves based on these tables are not reserves on "active lives" but rather reserves on contracts "in force." This is true for the 1964 CDT and for both the 1985 CIDA and CIDB tables. Accordingly, tabular reserves using any of these tables should value reserves on the following basis. (1) Claim reserves should include reserves for premiums expected to be waived, valuing as a minimum the valuation net premium being waived. (2) Premium reserves should include contracts on premium waiver as in-force contracts, valuing as a minimum the unearned modal valuation net premium being waived. (3) Contract reserves should include recognition of the waiver of premium benefit in addition to other contract benefits provided for, valuing as a minimum the valuation net premium to be waived. (c) If an insurer is, instead, valuing reserves on what is truly an active life table, or if a specific valuation table is not being used but the insurer's gross premiums are calculated on a basis that includes in the projected exposure only those contracts for which premiums are being paid, then it may not be necessary to provide specifically for waiver of premium reserves. Any insurer using such a true "active life" basis should carefully consider, however, whether or not additional liability should be recognized on account of premiums waived during periods of disability or during claim continuation. sec.3.7009. Purchase or Assumption of Existing Business. Notwithstanding any other provision of these sections, including sec.3. 7004 of this title (relating to Contract Reserves), any company licensed in Texas purchasing or assuming by assumption certificate any existing business on or after the effective date of these rules must establish reserves based upon the original dates of issue for such business in accordance with these rules. sec.3.7010. Severability. If any provision of s3.7001-3.7009 of this title (relating to introduction; Claim Reserves; Premium Reserves; Contract Reserves; Reinsurance, Specific Standards for Morbidity, Interest and Mortality; Glossary of Technical Terms Used; Reserves for Waiver of Premium; Purchase or Assumption of Existing Business; and Severability) or the applicability of those sections to any person or circumstance is held invalid for any reason, the invalidity shall not affect the other provisions or any other application of those sections which can be given effect without the invalid provisions or application. To this end, any and all provisions of these sections are declared to be severable. 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 December 4, 1991. TRD-9115201 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Earliest possible date of adoption: January 13, 1992 For further information, please call: (512) 463-6328 Chapter 19. Agent's Licensing Subchapter O. Procedures and Requirements for Reinsurance Intermediarie (Brokers and Risk Managers) Licensed Under the Reinsurance Intermediary Act 28 TAC sec.sec.19.1401-19.1407 The Texas Department of Insurance proposes new sec.sec.19.1401-19.1407, concerning the licensure and activities of brokers and managers who are licensed under the Reinsurance Intermediary Act, Texas Insurance Code, Article 21.07-7. These sections are necessary to implement the provisions of Article 21.07-7 and to provide effective regulation of reinsurance intermediaries. New sec.19.1401 sets out the purpose and scope of these new sections and sec.19.1402 defines the terms used in these new sections. Section 19.1403 contains the requirements for bonds or errors and omissions policies filed in compliance with these new sections and Texas Insurance Code, Article 21.07-7. New sec.19.1404 contains the requirements for interim profit-sharing by a manager and sec.19.1405 contains the requirements for the form of audited statements. New sec.19.1406 describes the fees for the examinations required by Texas Insurance Code, Article 21.07-7, sec.9 and sec.19.1407 describes the contract which must be entered into as required by Article 21.07-7. That section, among other things, requires that a copy of the contract and the approval of the insurer's board of directors or attorney-in-fact be filed with the commissioner for approval at least 30 days before the insurer assumes or cedes any business through the manager. Section 19. 1407 also requires that the contract must meet the minimum requirements specified in the Texas Insurance Code, Article 21.07-7, sec.6, and provides that failure to file complete and accurate information is grounds for disapproval of the contract by the commissioner. Section 19.1407 provides that any disapproval by the commissioner of any contract shall set forth the specific reasons for such disapproval and that any amended contract containing material changes in the provisions of a contract filed with the commissioner, must be filed with the commissioner for approval as though it were a new contract. The section also describes the manner in which the contract must be filed with the department and describes the proper mailing code for such filing. Jack Evins, deputy commissioner for licensing, has determined that for the first five-year period the sections are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the sections and there will be no effect on local employment or local economy. Mr. Evins also has determined that for each year of the first five years the sections are in effect, the public benefit anticipated as a result of enforcing the sections will be more effective regulation of reinsurance intermediaries. Mr. Evins has determined that for each year of the first five years the sections are in effect there will be fiscal implications for reinsurance intermediaries. The costs for reinsurance intermediaries to comply with the provisions requiring the filing of a bond or errors or omissions policy are estimated to be $2,000 per year for brokers and $5,000 for each year for managers; and the expenses in connection with the approval of reinsurance intermediary contracts are anticipated to be $10-$20 for each year, for mailing costs required by these rules. It is not anticipated that there will be any greater fiscal implications for small businesses as a result of complying with these sections than for larger businesses on a cost-per-employee basis. Comments on the proposal may be submitted to Jack Evins, Deputy Commissioner for Licensing, Texas Department of Insurance, Mail Code 105-SA, 333 Guadalupe, P. O. Box 149104, Austin, Texas 78701-1904. The new sections are proposed under the Texas Insurance Code, Article 1.04, which provides general rulemaking authority for the Texas Department of Insurance; and under Texas Insurance Code, Article 21.07-7, sec.11, which provides that the board may adopt reasonable rules necessary to implement Article 21.07-7; and Texas Civil Statutes, Article 6252-13a, sec.4 and sec.5 which require and authorize each state administrative agency to adopt rules of practice setting forth the nature and requirements of available procedures, and prescribe the procedure for adoption of rules by state administrative agencies. sec.19.1401. Purpose and Scope. These rules govern the licensure and activities of brokers and managers who are licensed under the Reinsurance Intermediary Act, Texas Insurance Code, Article 21.07-7. These sections are supplementary to and cumulative of existing statutes. In the case of an ambiguity or contradiction between any of the sections in these rules and any statute, the provisions of the statute prevail. sec.19.1402. Definitions. The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise. Board-The State Board of Insurance. Broker-A person other than an officer or employee of an insurer, who solicits, negotiates, or places reinsurance business on behalf of an insurer and who may not exercise the authority to bind reinsurance on behalf of that insurer. Commercially domiciled insurer-A foreign or alien insurer authorized to do business in this state that during its three preceding fiscal years taken together, or any lesser period of time if it has been licensed to transact business in this state only for that lesser period of time, has written an average of more gross premiums in this state than it has written in its state of domicile during the same period with those gross premiums constituting 20% or more of its total gross premiums everywhere in the United States for that three- year or lesser period, as reported in its three most recent annual statements. Commissioner-The commissioner of insurance. Insurer-A commercially domiciled insurer or other person legally organized in this state to do business as an insurance company, including: (A) a capital stock company; (B) a mutual company; (C) a title insurance company; (D) a fraternal benefit society; (E) a local mutual aid association; (F) a statewide mutual assessment company; (G) a county mutual insurance company; (H) a Lloyd's plan company; (I) a reciprocal or interinsurance exchange; (J) a stipulated premium insurance company; (K) a group hospital service company; (L) a farm mutual insurance company; and (M) a risk retention group. Manager-A person who has authority to bind reinsurance or who manages all or part of the reinsurance business of an insurer, including the management of a separate division, department, or underwriting office, and who acts as an agent for that insurer. The term does not include: (A) an employee of the insurer; (B) a manager of the United States branch of an alien insurer; (C) an underwriting manager who, under a contract, manages all of the reinsurance operations of an insurer, who is under common control with the insurer under Article 21.49-1 of this code, and whose compensation is not based on the volume of premiums written; or (D) the manager of a group, association, pool, or other organization of insurers who engages in joint underwriting or joint reinsurance and who is subject to examination by the insurance commissioner or other appropriate officer of the state in which the manager's principal business office is located. Person-An individual, corporation, partnership, association, or other private legal entity. Reinsurance intermediary -A broker or manager. Underwriting period -The period for which the policy is issued. sec.19.1403. Requirements for Bond or Errors and Omissions Policy. Any reinsurance intermediary must file and maintain a bond with the commissioner for the protection of all insurers represented or file and maintain an errors and omissions policy, meeting the following criteria. (1) The bond must be executed by the reinsurance intermediary as princlpal and by a surety company authorized to do business in this state, as surety, or surplus lines insurer eligible to do business in this state, in the principal sum of $100,000 for a broker and in the principal sum of $250,000 for a manager, payable to the Texas Department of Insurance for the use and benefit of all insurers represented. The bond must provide that a copy of any cancellation or nonrenewal notice, shall be mailed to the Deputy Commissioner for Licensing, Texas Department of Insurance, Mail Code 105-5A, 333 Guadalupe Street, P.O. Box 149104, Austin, Texas 78714-9104. The executed bond must be furnished to the Texas Department of Insurance. (2) The errors and omissions policy shall be in a form acceptable to the Texas Department of Insurance, and shall be filed with the deputy commissioner for licensing of the department at the address listed in paragraph (1) of this section. The policy must provide that the Texas Department of Insurance shall be a certificate holder and shall receive a copy of any cancellation or nonrenewal notice, which shall be mailed to the deputy commissioner for licensing at the address listed in paragraph (1) of this section. The errors and omissions policy shall cover all negligent acts or omissions of the reinsurance intermediary and any person acting on its behalf and shall provide coverage of at least $100,000 for each occurrence for brokers and shall provide coverage of at least $250,000 for each occurrence for managers. (3) The commissioner may determine that special circumstances require an additional amount of coverage for the bond or policy. sec.19.1404. Requirements for Interim Profit-Sharing by a Manager. If the contract between an insurer and its manager provides for a sharing of interim profits by the manager, interim profits may not be paid until five years after the end of each underwriting period for casualty business, one year after the end of each underwriting period for property business, and one year after the end of each underwriting period for accident and health insurance and all other lines of insurance. sec.19.1405. Requirements for Form of Audited Statements.
                                                                                                            The statements prepared by an independent certified public accountant of the financial condition of each manager of an insurer, required by the Reinsurance Intermediary Act, sec.8(b), shall comply with all generally accepted accounting procedures. sec.19.1406. Fees for Examinations. The expenses for the examinations required by the Reinsurance Intermediary Act (Act), sec.9 shall be determined to be just and reasonable if they are sufficient to meet all the expenses and disbursements necessary to comply with the provisions of the Act. sec.19.1407. Approval of Reinsurance Intermediary Manager's Contracts. (a) A written contract, which specifies the responsibilities of each party, shall be approved by the insurer's board of directors or attorney in fact and executed by a responsible officer of an insurer and a manager prior to entering into any transactions between the manager and the insurer. (b) A copy of the executed contract and the approval of the insurer's board of directors or attorney in fact shall be filed by the manager with the commissioner for approval at least 30 days before the insurer assumes or cedes any business through the manager. A contract shall not be deemed filed with the commissioner until the date all material required and sufficient to constitute a complete and executed contract, as determined by the agency, has been received by the commissioner. (c) The contract shall include the minimum requirements specified in the Texas Insurance Code, Article 21.07-7, sec.6. A contract which does not comply with the minimum requirements of the Texas Insurance Code or this section shall not be considered to have been filed with the commissioner for approval. (d) A failure to file complete and accurate information in all material respects is grounds for disapproval of the contract by the commissioner under the Texas Insurance Code, Article 21.07-7, sec.6. (e) Any disapproval by the commissioner of any contract filed under this section shall set forth the specific reasons for such disapproval. (f) If any material changes occur in the provisions set forth in the contract filed with the commissioner, an amended contract setting forth such changes shall be filed with the commissioner for approval as if it were a new contract. (g) Contracts subject to this section and the Insurance Code, Article 21.07-7, sec.6 shall be filed with the Reinsurance Activity Mail Code 303-2A, Texas Department Insurance, 333 Guadalupe, P.O. Box 149104, Austin, Texas 78714-9104, for the purpose of determining compliance with this section. Telephonic or fax transmissions shall not constitute proper filing under this section. (h) This section shall be cumulative of and in addition to the requirements of the Texas Insurance Code, Article 21.07-3, Article 21.07-7, and Article 21.49-l, and related regulations. Nothing contained in this section is intended to exempt an insurer or its reinsurance intermediary manager from other provisions of the Insurance Code. 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 December 4, 1991. TRD-9115199 Linda von Quintus-Dorn Chief Clerk Texas Department of Insurance Earliest possible of adoption: January 13, 1992 For further information, please call: (512) 463-6328 TITLE 34. PUBLIC FINANCE Part I. Comptroller of Public Accounts Chapter 3. Tax Administration Subchapter A. General Rules 34 TAC sec.3.8 The Comptroller of Public Accounts proposes an amendment to sec.3.8, concerning informant's recovery payment limitations. These changes are necessitated by Senate Bill 1108, adopted by the 72nd Legislature, 1991, and are effective September 1, 1991. This legislation allows the state to pay a maximum of 5.0% to an informant from the funds recovered under the contract by the state. The section is revised to eliminate the $10,000 limitation and states that any contract to pay an informant must be executed in advance of any investigation or audit. Tom Plaut, chief revenue estimator, has determined that for the first five-year period the section is in effect there will be no significant revenue impact on the state or local government as a result of enforcing or administering the section. This section is adopted under the Tax Code, Title 2, and does not require a statement of fiscal implications for small businesses. Dr. Plaut also has determined that for each year of the first five years the section is in effect the public benefit anticipated as a result of enforcing the section will be in providing new information regarding tax responsibilities. There is no anticipated economic cost to persons who are required to comply with the section as proposed. Comments on the proposal may be submitted to Lucy Glover, Manager, Tax Administration Division, P.O. Box 13528, Austin, Texas 78711. The amendment is proposed under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. sec.3.8. Informant's Recovery Payment Limitations. (a) No payment may be paid to an informant without the execution of a contract signed by both the informant and the comptroller. The contract must be executed in advance of any investigation or audit activity by the comptroller. (b)-(c) (No change.) (d) The amount of the payment is limited to 5.0% of the revenue recovered and applies only to amounts which are due to the state at the date the contract is executed
                                                                                                              [, or $10,000, whichever is smaller, unless the comptroller has negotiated with the claimant for an amount over $10,000 but in no event in an amount over 5.0% of the revenue covered]. This limitation applies to the payment to be paid from all claims and causes of action whatsoever as have arisen or may arise in connection with the information provided to the state by the informant. (e) (No change.) (f) Payment will not be made to any informant before the expiration of six months after the recovery of state money or property is complete and uncontested
                                                                                                                [Any informant payments in an amount less than $10,000 will be paid from the comptroller's appropriations if the information concerns tax revenue and the money is available. Contracts for payment for information on funds or property unrelated to tax revenue will be made subject to specific appropriation by the legislature. (g)-(h) (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 December 6, 1991. TRD-9115303 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Earliest possible date of adoption: January 13, 1992 For further information, please call: (512) 463-4028 Subchapter O. State Sales and Use Tax 34 TAC sec.3.300 The Comptroller of Public Accounts proposes an amendment to sec.3.300, concerning manufacturing; custom manufacturing; fabricating; processing. The amendment reflects the changes to the Tax Code, Chapter 151, made by the 72nd Legislature, 1991, First Called Session. The phased-in exemption on manufacturing machinery and equipment was delayed. Tom Plaut, chief revenue estimator, has determined that for the first five-year period the section is in effect there will be no significant revenue impact on the state or local government as a result of enforcing or administering the section. This section is adopted under the Tax Code, Title 2, and does not require a statement of fiscal implications for small businesses. Dr. Plaut also has determined that for each year of the first five years the section is in effect the public benefit anticipated as a result of enforcing the section will be in providing for more efficient tax administration. There is no anticipated economic cost to persons who are required to comply with the section as proposed. Comments on the proposal may be submitted to Lucy Glover, Manager, Tax Administration Division, P.O. Box 13528, Austin, Texas 78711. The amendment is proposed under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. sec.3.300. Manufacturing; Custom Manufacturing; Fabricating; Processing. (a) (No change.) (b) Manufacturer's responsibilities. (1) Collection of tax. Persons engaged in the business of fabricating, manufacturing, processing, or custom manufacturing must collect sales tax on the total sales price of the manufactured item or take an exemption certificate in lieu of the tax. The sales price includes, but is not limited to, the cost of materials, labor or service costs, and all expenses connected with production. Persons fabricating, custom manufacturing, or processing tangible personal property which is furnished either directly or indirectly by the customer must collect tax on such fabricating, custom manufacturing, or processing charge. Manufacturers shall pay or accrue sales or use tax on all items used in the manufacturing process which do not qualify for exemption from tax. A manufacturer who purchases tangible personal property tax free by means of an exemption certificate or resale certificate and subsequently uses the item for a nonexempt purpose must remit the tax to the comptroller based on the purchase price of the item. Reference should be made to sec.3.285 of this title (relating to Resale Certificate;
                                                                                                                  Sales for Resale[; Resale Certificate]), sec.3.287 of this title (relating to Exemption Certificates), and sec.3.346 of this title (relating to Use Tax). (2) Installed items. Generally, the charge for labor to install an item sold is taxable when the item sold is taxable. Persons who manufacture and install items which become improvements to residential realty or are incorporated into new real property structures are contractors and are subject to the provisions of sec.3.291 of this title (relating to Contractors). Example: cabinet makers or drapery makers who also affix the draperies or cabinets as a part of a new- construction contract. See also sec.3.347 of this title (relating to Improvements to Realty). Persons who manufacture and install items as a part of a repair contract are subject to the provisions of sec.3.292 of this title (relating to Repair, Remodeling, Maintenance, and Restoration of Tangible Personal Property
                                                                                                                    [Repairmen]). Example: fabricating a propeller shaft for a customer as a part of an outboard motor repair. Persons who manufacture and install items which do not become improvements to realty or which are not part of a repair must collect sales tax on the total charge. Example: a retailer who makes and installs draperies for a home owner. (3) (No change.) (4) Samples. Since the sole use of such samples is to demonstrate not the sample but the other items which it represents, the purchase of the raw materials used to make the sample is
                                                                                                                      [are] subject to the sales or use tax regardless of the fact that the sample itself may be ultimately sold. (c)-(e) (No change.) (f) Useful life of more than six months. (1) State tax paid on machinery, equipment, replacement parts, and accessories with a useful life exceeding six months may be partially refunded by the comptroller if the items are purchased and the tax is paid Page 12 of 15 after December 31, 1989. A reduced amount of tax may be paid at the time of purchase if the items are purchased on or
                                                                                                                        after October 1, 1993
                                                                                                                          [December 31, 1991]. The date that title or possession transfers from the retailer to the purchaser is the purchase date. Items purchased out of state will be considered purchased on the date they are brought into this state. (2) (No change.) (3) Qualifying items which are purchased in 1990 and from January 1, 1991, through September 30,
                                                                                                                            1991,
                                                                                                                              and on which tax is paid qualify for a refund of 25% of the state tax paid. (4) Manufacturing machinery and equipment purchased from October 1, 1991, through September 30, 1993, do not qualify for sales tax refunds or tax reductions
                                                                                                                                [To qualify for a reduction in the amount of tax paid, the qualifying items must be purchased after December 31, 1991]. [(A) Twenty-five percent of the sales price of qualifying items purchased during 1992 is exempted from the state sales and use tax.] (A)
                                                                                                                                  [(B) ] Fifty percent of the sales price of qualifying items purchased from October 1, 1993, through December 31, 1993,
                                                                                                                                    [during 1993] is exempted from the state sales and use tax. (B)
                                                                                                                                      [(C)] Seventy-five percent of the sales price of qualifying items purchased during 1994 is exempted from the state sales and use tax. (C)
                                                                                                                                        [(D)] Qualifying items purchased on or after January 1, 1995, are exempt. (g) (No change.) (h) Method of paying a reduced amount of tax. (1) The purchaser shall provide the retailer an exemption certificate for the appropriate percentage of the sales tax for qualifying items purchased on or after October 1, 1993
                                                                                                                                          [after December 31, 1991]. [(A) A retailer who receives an exemption certificate for purchases in 1992 for 25% of the state sales tax shall collect state sales tax on 75% of the sales price.] (A)
                                                                                                                                            [(B)] A retailer who receives an exemption certificate for purchases in 1993 for 50% of the sales tax shall collect state sales tax on 50% of the sales price. (B)
                                                                                                                                              [(C)] A retailer who receives an exemption certificate for purchases in 1994 for 75% of the sales price shall collect state sales tax on 25% of the sales price. (2) A purchaser who remits use tax on qualifying items purchased on or
                                                                                                                                                after October 1, 1993
                                                                                                                                                  [December 31, 1991], shall deduct from the amount reported as the purchase price the appropriate percentage allowed as a reduction in the state tax. (i) (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 December 6, 1991. TRD-9115302 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Earliest possible date of adoption: January 13, 1991 For further information, please call: (512) 463-4028 Subchapter BB. Battery Sales Fee 34 TAC sec.3.711 The Comptroller of Public Accounts proposes new sec.3.711, concerning collection and reporting requirements. House Bill 1986, adopted in the 72nd Legislature, 1991, requires the comptroller to administer and enforce the collection of the battery fee beginning September 1, 1991, imposed on the wholesale or retail sale of a lead-acid battery of six volts or more not sold for resale. The new section provides for the collection and reporting of the fee. Tom Plaut, chief revenue estimator, has determined that for the first five-year period the section is in effect there will be no significant revenue impact on the state or local government as a result of enforcing or administering the section. This section is adopted under the Tax Code, Title 2, and does not require a statement of fiscal implications for small businesses. Dr. Plaut also has determined that for each year of the first five years the section is in effect the public benefit anticipated as a result of enforcing the section will be in providing new information regarding tax responsibilities. There is no anticipated economic cost to persons who are required to comply with the proposed section. Comments on the proposal may be submitted to Lucy Glover, Manager, Tax Administration Division, P.O. Box 13528, Austin, Texas 78711. The new section is proposed under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. sec.3.711. Collection and Reporting Requirements. (a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1) Dealer-A wholesaler, retailer, or any other person who sells or offers to sell lead-acid batteries. (2) Lead-acid battery-Any battery, new or used, which contains lead and sulfuric acid, in liquid or gel form. (3) Sale for resale-A sale of a lead-acid battery to a purchaser for the purpose of reselling the battery in the normal course of business in the form or condition in which it is acquired (i.e., as a separate item). A sale of a battery that is attached to or becomes an integral part of a vehicle, boat, or other equipment that is being sold, rented, or leased is not a sale for resale. The battery sales fee is due on the sale prior to the battery becoming a part of this equipment. (b) Collection and remittance of the fee. (1) Every dealer must collect the fee on each sale of a lead- acid battery of six volts or more, except a sale for resale or a sale for disposal or reclamation. A fee shall not be charged, collected, or allowed as an offset on a battery taken as a trade-in. (2) The fee is not due on the sale of a vehicle, boat, or other equipment that has a battery as an integral part of it. (3) The amount of the fee due must be separately stated on the invoice, bill, or contract to the customer and shall be identified as the Texas battery sales fee. (4) A dealer may not advertise, make public, indicate, or imply that the dealer will absorb, assume, or refund any portion of the fee. (c) Report forms. The battery sales fee is to be reported on the Texas battery sales fee/waste tire recycling fee report form as prescribed by the comptroller. The fact that the dealer does not receive the form or does not receive the correct form from the comptroller for the filing of the return does not relieve the dealer of the responsibility of filing a return and paying the required fee. (d) Reporting period. (1) Monthly filing. The battery sales fee is due and payable on or before the 20th day of the month following the end of each calendar month. Every dealer also required to report the waste tire recycling fee must file at the same time the battery sales fee is filed. Returns must be filed on a monthly basis unless a dealer qualifies as a quarterly filer under paragraph (2) of this subsection. (2) Quarterly filing. A dealer who owes an average, as computed for the year, of less than $50 for a calendar month or less than $150 for a calendar quarter is required to file a return and pay the fee on or before the 20th day of the month following the end of the calendar quarter. The waste tire recycling fee liability is not included in determining the requirement for quarterly filing; however, a dealer required to file the waste tire recycling fee return on a monthly basis must file the battery fee return at the same time. (e) Payment of the fee. (1) On or before the 20th day of the month following each reporting period, every person subject to the fee shall file a consolidated return for all businesses operating under the same fee payer number and remit the total fee due. (2) Every dealer may retain $ .025 for each fee (i.e., battery) reported and paid on his return. (3) The returns must be signed by the person required to file the return or by the person's duly authorized agent, but need not be verified by oath. (f) Records required. (1) Invoices or other records must be kept for at least four years after the date on which the invoices or records are prepared. (2) The comptroller or an authorized representative has the right to examine any records or equipment of any person liable for the fee in order to verify the accuracy of any return made or to determine the fee liability in the event no return is filed. (g) Exemptions. (1) Sales for resale are not subject to the fee. (2) The sale of a battery that under the sales contract is shipped to a point outside Texas is not subject to the fee imposed by this section if the shipment is made by the seller by means of: (A) the facilities of the seller; (B) delivery by the seller to a carrier for shipment to a consignee at a point outside this state; or (C) delivery by the seller to a forwarding agent for shipment to a location in another state of the United States or its territories or possessions. (3) Exports beyond the territorial limits of the United States are not subject to the fee. Proof of export may be shown only by: (A) a copy of a bill of lading issued by a licensed and certificated carrier showing the seller as consignor, the buyer or purchaser as consignee, and a delivery point outside the territorial limits of the United States; (B) documentation provided by a licensed United States customs broker certifying that delivery was made to a point outside the territorial limits of the United States; (C) formal entry documents from the country of destination showing that the battery was imported into a country other than the United States. For the country of Mexico, the formal entry document would be the pedimento de importaciones document with a computerized, certified number issued by Mexican customs officials; or (D) a copy of the original airway, ocean, or railroad bill of lading issued by a licensed and certificated carrier which describes the items being exported and a copy of the freight forwarder's receipt if the freight forwarder takes possession of the property in Texas. (h) Replacements covered by a warranty or service contract. (1) The replacement of a battery under a manufacturer's warranty, without an additional charge to the purchaser, is not the sale of a battery to the purchaser. This replacement, therefore, is not subject to the fee. If there is a charge to the customer for the replacement (such as a pro rata warranty adjustment), then the customer must pay the battery sales fee. (2) The replacement of a battery under an extended warranty or a service contract depends on the terms of the contract. (A) If the replacement is free of charge to the customer, the dealer is responsible for paying the fee. (B) If there is a charge to the customer for the replacement, the customer must pay the fee. 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 December 6, 1991. TRD-9115304 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Earliest possible date of adoption: January 13, 1992 For further information, please call: (512) 463-4028 Subchapter DD. Oil Field Cleanup Regulatory Fee 34 TAC sec.3.731 The Comptroller of Public Accounts proposes new sec.3.731, concerning the imposition and collection of the oil field cleanup regulatory fee on oil. Senate Bill 1103, adopted in the 72nd Legislature, 1991, requires the comptroller to administer and enforce the collection of the oil fee. This new section provides guidance to persons required to report or pay or collect the fee. Tom Plaut, chief revenue estimator, has determined that for the first five-year period the section is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section. Dr. Plaut also has determined that for each year of the first five years the section is in effect the public benefit anticipated as a result of enforcing the section will be in providing new information regarding tax responsibilities. There is no anticipated economic cost to persons who are required to comply with the section as proposed. Comments on the proposal may be submitted to Lucy Glover, Manager, Tax Administration Division, P.O. Box 13528, Austin, Texas 78711. The new section is proposed under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement if the provisions of the Tax Code, Title 2. sec.3.731. Imposition and Collection of the Oil Fee. (a) Imposition. The oil field cleanup regulatory fee on oil is effective with reports for the production month of September 1991. (b) Reports. The fee is to be reported and paid in the same manner as the regulatory tax imposed by the Natural Resources Code, sec.81.111, and the occupation tax imposed by the Tax Code, Chapter 202. (c) Amount of fee. (1) Except as provided in paragraph (2) of this subsection, the rate of the fee shall be five-sixteenths of one cent ($0.003125) per taxable barrel of crude oil. (2) The fee shall not be collected or required to be paid for the production month that begins on the first day of the second month following the Texas Railroad Commission's certification to the comptroller that the fund balance has reached $10 million. The comptroller shall publish notification in the Texas Register
                                                                                                                                                    that the fee shall no longer be collected 15 days prior to the beginning of the production month for which the fee shall no longer be collected. (3) If the Railroad Commission certifies to the comptroller that the balance of the fund has fallen below $6 million, the fee shall again be due beginning the first day of the second month following the commission's certification to the comptroller. The comptroller shall publish notification in the Texas Register
                                                                                                                                                      that the fee shall be required to be collected 15 days prior to the beginning of the production month for which the fee shall be collected. 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 December 6, 1991. TRD-9115306 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Earliest possible date of adoption: January 13, 1992 For further information, please call: (512) 463-4028 34 TAC sec.3.732 The Comptroller of Public Accounts proposes new sec.3.732, concerning the reporting requirements of the gas fee. Senate Bill 1103, adopted in the 72nd Legislature, 1991, requires the comptroller to administer and enforce the collection of the oil field cleanup regulatory fee. This new section provides guidance to persons required to report or pay or collect the fee on gas. Tom Plaut, chief revenue estimator, has determined that for the first five-year period the section is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section. Dr. Plaut also has determined that for each year of the first five years the section is in effect the public benefit anticipated as a result of enforcing the section will be in providing new information regarding tax responsibilities. There is no anticipated economic cost to persons who are required to comply with the section as proposed. Comments on the proposal may be submitted to Lucy Glover, Manager, Tax Administration Division, P.O. Box 13528, Austin, Texas 78711. The new section is proposed under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. sec.3.732. Reporting Requirements for the Gas Fee. (a) Imposition. Except as provided by subsection (c)(2) of this section, the oil field cleanup regulatory fee on gas is due for the production month of September 1991 and all subsequent months. (b) Reports. The fee is to be reported and paid on the natural gas report in the same manner as the occupation tax is imposed by the Tax Code, Chapter 201. (c) Amount of fee. (1) Except as provided in subsection (c)(2) of this section, the rate of the fee shall be one-thirtieth of one cent ($0.000333) per 1,000 cubic feet (MCF) of gas. (2) The fee shall not be collected, or required to be paid for the production month that begins on the first day of the second month following the Texas Railroad Commission's certification to the comptroller that the oil field cleanup fund balance equals or exceeds $10 million. The comptroller shall publish notification in the Texas Register
                                                                                                                                                        that the fee shall no longer be collected 15 days prior to the beginning of the production month for which the fee shall no longer be collected. (3) If the Railroad Commission certifies to the comptroller that the balance of the fund has fallen below $6 million, the fee shall again be due beginning the first day of the second month following the commission's certification to the comptroller. The comptroller shall publish notification in the Texas Register
                                                                                                                                                          that the fee shall be required to be collected 15 days prior to the beginning of the production month for which the fee shall be collected. (d) Volume subject to fee. The volume of gas subject to the fee is the same volume of gas produced and taxed under the provisions of the Tax Code, Chapter 201. 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 December 6, 1991. TRD-9115305 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Earliest possible date of adoption: January 13, 1992 For further information, please call: (512) 463-4028 TITLE 37. PUBLIC SAFETY AND CORRECTIONS Part VI. Texas Department of Criminal Justice Chapter 163. Standards Subchapter C. Programs and Services 37 TAC sec.163.43 (Editor's Note: The Texas Department of Criminal Justice proposes for permanent adoption the new section it adopts on an emergency basis in this issue. The text of the new section is in the Emergency Rules section of this issue.) The Texas Department of Criminal Justice (TDCJ) proposes s163.43, concerning court reports and documentation, as part of Chapter 163, concerning standards, Subchapter C, Programs and Services. The rule as proposed for final adoption is necessary to accommodate changes in the Texas Code of Criminal Procedures, Article 42.12, sec.9, as codified in House Bill 93, Chapter 10, sec.sec.16.01 et seq, pages 213 and 214, 72nd Legislature, Second Called Session. Under the law as amended, local probation offices must prepare presentence investigations prior to the imposition of sentence for any felony offense, effective December 1, 1991, in conformity with new statutory requirements which are hereby incorporated into the Standards of the Community Justice Assistance Division of the TDCJ. The new rule, which is published as an emergency rule in this issue of the Texas Register, will be considered for final adoption by the TDCJ at their January 1992 meeting. Bob Young, director of the Austin budget office, finance and administration, Texas Department of Criminal Justice, has determined that for the first five- year period the section is in effect there will be fiscal implications as a result of enforcing or administering the section. The Texas Legislature has appropriated funds to reimburse community supervision and corrections departments for their required efforts, and the TDCJ has established a rate of reimbursement for such departments which is projected to cover their costs from the appropriated funds. Mr. Young also has determined that for each year of the first five years the section is in effect the public benefit anticipated as a result of enforcing the section will be improved documentation of criminal histories, and better informed sentencing practices. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the section as proposed. Comments on the proposal may be submitted to Dick Lewis, Director, Community Information and Assistance, Community Justice Assistance Division, Suite 600, Building B, 8100 Cameron Road, Austin, Texas 78753. The new section is proposed under the Texas Code of Criminal Procedures, Article 42.13, sec.2(a), which authorizes the Texas Board of Criminal Justice to adopt reasonable rules concerning the operations of community supervision and corrections departments. 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 December 3, 1991. TRD-9115174 Jackee Cox General Counsel Texas Department of Criminal Justice Proposed date of adoption: January 10, 1992 For further information, please call: (512) 463-9988 Chapter 195. Parole Terms and Conditions of Parole 37 TAC sec.195.61 The Board of the Texas Department of Criminal Justice proposes an amendment to 37 TAC sec.195.61, concerning terms and conditions of parole. The proposed amendments will make final rules of the emergency rules published by the board on September 24, 1991 (16 TexReg 5251). The amendments will be adopted to comply with the mandates of Senate Bill 259 (to be codified as Texas Civil Statutes, Article 6252-13c), which requires that all persons adjudicated guilty of specified offenses after September 1, 1991, shall register with appropriate law enforcement officials upon release on parole or mandatory supervision. Bill McCray, Financial Director for the Texas Department of Criminal Justice, has determined that the fiscal effects of enforcing or administering the section are within the agency's appropriations. The public benefits anticipated as a result of enforcing the section will be increased public safety. There will be no effect on small businesses. The anticipated economic cost to persons who are required to comply with the section will be minimal. Comments on the proposal may be submitted to Jackee Cox, General Counsel, Texas Department of Criminal Justice, P.O. Box 13084, Austin, Texas 78711, (512) 463- 9988. The proposed amendment will be considered for final adoption at the January 1992 meeting of the Texas Board of Criminal Justice. The amendment is proposed under Texas Code of Criminal Procedure, Article 42. 18, sec.8(g) which authorizes the Texas Board of Criminal Justice to adopt reasonable rules with respect to the terms and conditions of parole. sec.195.61. Terms and Conditions of Parole. The following terms and conditions of parole must be agreed to and accepted by the inmates as a prerequisite to parole. Continuation on parole is conditioned upon continuing compliance with the standard terms and conditions of parole and upon compliance with any special conditions imposed by a parole panel or the board or its authorized designate. (1)-(7) (No change.) (8) Special conditions. I shall abide by any special condition(s) imposed by the board; any such special conditions imposed upon release will be indicated on the face of this certificate by the letter(s) corresponding to the conditions as listed in subparagraphs (A)-(L) of this paragraph: (A)-(L) (No change.) (M) Sex Offender Registration Program under Texas Civil Statutes, Article 6252-13c. Within seven days of arrival in any municipality or county, and within seven days of any change of address, register with appropriate local law enforcement officials. (Special condition M.) (9) (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 December 5, 1991. TRD-9115411 Jackee Cox General Counsel Texas Department of Criminal Justice Earliest possible date of adoption: January 13, 1992 For further information, please call: (512) 463-9988 Chapter 197. Mandatory Supervision Rules and Conditions of Mandatory Supervision 37 TAC sec.197.21 The Board of the Texas Department of Criminal Justice proposes an amendment to 37 TAC sec.197.21, concerning rules and conditions of mandatory supervision. The proposed amendments will make final rules of the emergency rules published by the board on September 24, 1991 (16 TexReg 5251). The amendments will be adopted to comply with the mandates of Senate Bill 259 (to be codified as Texas Civil Statutes, Article 6252-13c), which requires that all persons adjudicated guilty of specified offenses after September 1, 1991, shall register with appropriate law enforcement officials upon release on parole or mandatory supervision. Bill McCray, Financial Director for the Texas Department of Criminal Justice, has determined that the fiscal effects of enforcing or administering the section are within the agency's appropriations. Mr. McCray also has determined that the public benefit anticipated as a result of enforcing the section will be increased public safety. There will be no effect on small businesses. The anticipated economic cost to persons who are required to comply with the section will be minimal. Comments on the proposal may be submitted to Jackee Cox, General Counsel, Texas Department of Criminal Justice, P.O. Box 13084, Austin, Texas 78711, (512) 463- 9988. The proposed amendment will be considered for final adoption at the January 1992 meeting of the Texas Board of Criminal Justice. The amendment is proposed under Texas Code of Criminal Procedure, Article 42. 18, sec.8(g), which authorizes the Texas Board of Criminal Justice to adopt reasonable rules with respect to the terms and conditions of mandatory supervision. sec.197.21. Rules and Conditions of Mandatory Supervision.
                                                                                                                                                            The following rules and conditions of mandatory Supervision. The following rules and conditions of mandatory supervision must be acknowledged by the inmate being released to mandatory supervision, and the releasee must recognize that his or her release is conditional and that he or she is deemed as if on parole. Continuation on mandatory supervision is conditional upon continuing compliance with the standard terms and conditions of mandatory supervision and upon compliance with any special conditions imposed by the parole of the board of staff as authorized by the board. (1)-(7) (No change.) (8) Special conditions. Abide by any special condition(s) imposed by the board; any special condition(s) imposed upon release will be indicated on the face of this certificate by the letter(s) corresponding to the conditions as listed in subparagraphs (A)-(L) of this paragraph: (A)-(L) (No change.) (M) Sex Offender Registration Program under Texas Civil Statutes, Article 6252-13c. Within seven days of arrival in any municipality or county, and within seven days of any change of address, register with appropriate local law enforcement officials. (Special Condition M.) (9) (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 December 5, 1991. TRD-9115410 Jackee Cox General Counsel Texas Department of Criminal Justice Earliest possible date of adoption: January 13, 1992 For further information, please call: (512) 463-9988 Chapter 321. Court Reports and Documentation 37 TAC sec.321.3 (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 Department of Criminal Justice or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.) The Texas Department of Criminal Justice (TDCJ) proposes the repeal of sec.321.3, concerning court reports and documentation. The TDCJ simultaneously proposes adoption of new sec.163.43, concerning court reports and documentation, as part of Chapter 163, Standards, Subchapter C, Programs and Services. The repeal of prior sec.321.3 and the proposed adoption of new sec.163.43 are necessary to accommodate changes in the Texas Code of Criminal Procedures, Article 42.12, sec.9, as codified in House Bill 93, Chapter 10, sec.sec.16.01 et. seq, pages 213 and 214, 72nd Legislature, Second Called Session. Under the law as amended, local probation offices must prepare presentence investigations prior to the imposition of sentence for any felony offense, effective December 1, 1991, in conformity with new statutory requirements which are hereby incorporated into the Standards of the Community Justice Assistance Division of TDCJ. This proposed repeal will complete action published as an emergency repeal of old sec.321.3, notice of which is published in this issue of the Texas Register . The adoption will be considered by TBCJ at their January 1992 meeting. Bob Young, director of the Austin budget office, finance and administration, Texas Department of Criminal Justice, has determined that for the first five- year period the repeal is in effect there will be fiscal implications as a result of enforcing or administering the repeal. The Texas Legislature has appropriated funds to reimburse community supervision and corrections departments for their required efforts, and TDCJ has established a rate of reimbursement for such departments which is projected to cover their costs from the appropriated funds. Mr. Young 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 enforcing the repeal will be improved documentation of criminal histories, and better informed sentencing practices. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the section as proposed. Comments on the proposed repeal may be submitted to Dick Lewis, Director, Community Information and Assistance, Community Justice Assistance Division, Suite 600, Building B, 8100 Cameron Road, Austin, Texas 78753. The repeal is proposed under the Code of Criminal Procedures, Article 42.13, sec.2(a), which authorizes the Texas Board of Criminal Justice to adopt reasonable rules concerning the operations of community supervision and corrections departments. 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 December 3, 1991. TRD-9115171 Jackee Cox General Counsel Texas Department of Criminal Justice Proposed date of adoption: January 10, 1992 For further information, please call: (512) 463-9988 TITLE 40. SOCIAL SERVICES AND ASSISTANCE Part I. Texas Department of Human Services Chapter 10. Family Self-Support Services Child Care Management Services Statewide Implementation 40 TAC sec.sec.10.3412-10.3414, 10.3462-10.3464 The Texas Department of Human Services (DHS) proposes amendments to sec.sec.10.3412, 10.3413, 10.3414, 10.3462, 10.3463, and 10.3464, concerning child care management services statewide implementation, in its family self- support services chapter. The purpose of the amendments to sec.10.3412 is to clarify the age limit for children who are mentally or physically handicapped to receive child care services. The child must be under 18 years old; or he may be 18, regularly attending high school or high school-level training full time, and expected to graduate before or during the month of his 19th birthday. The purpose of the amendments to sec.sec.10.3413, 10.3463, and 10.3464 is to extend child care services to families for one year after the family income exceeds 150% of the federal poverty income limit (FPIL), provided the family income remains below 185% of the FPIL. The purpose of the amendments to sec.10.3462 is to change the eligibility categories to include AFDC clients in self-initiated education and training and former Child Protective Services clients and to remove the refugee program as a funding source for child care services. The purpose of the amendments to sec.10.3414 is to clarify the procedure for Child Care Management Services (CCMS) contractors to apply for waivers from DHS to allow eligible families to receive child care funded through the Child Care and Development Block Grant (CCDBG). Burton F. Raiford, interim commissioner, has determined that for the first five- year period the sections are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the sections. Mr. Raiford also has determined that for each year of the first five years the sections are in effect the public benefit anticipated as a result of enforcing the sections will be that more families will be eligible for child care services. In addition, procedures for receiving CCDBG-funded child care will be clearer. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the proposed sections. Questions about the content of this proposal may be directed to Mary Beth O'Hanlon at (512) 450-4169 in DHS's Client Self-Support Program Policy Section. Comments on the proposal may be submitted to Nancy Murphy, Policy and Document Support-340, Texas Department of Human Services E-503, P.O. Box 149030, Austin, Texas 78714-9030, within 30 days of publication in the Texas Register. The amendments are proposed under the Human Resources Code, Title 2, Chapters 22 and 44, which authorizes the department to administer public assistance and day care programs. sec.10.3412. Availability of Purchased Child Care Services. (a) (No change.) (b) DHS purchases child care for children who are under age 13. Child care may be purchased for older children who are mentally or physically incapable of caring for themselves[.] if the child: (1) is under age 18; or (2) is age 18, regularly attends high school or high school-level training full time, and is expected to graduate before or during the month of his 19th birthday. (c) (No change.) sec.10.3413. Eligibility for Title IV-A Funded Child Care Services. (a) (No change.) (b) To be eligible for at-risk Title IV-A funded child care, a family must meet the following eligibility requirements: (1)-(2) (No change.) (3) the family's total gross income must be equal to or less than 150% of the applicable, current federal poverty income guidelines (FPIL). These families will continue to receive child care for one year after the family income exceeds 150% of the FPIL, provided the family income remains below 185% of the FPIL. sec.10.3414. Exceptions to Eligibility. (a) The Child Care Management Services (CCMS) contractor grants eligibility exceptions to allow individual families to access services funded by Title XX Social Services Block Grant (SSBG), General Revenue (GR), and Child Care and Development Block Grant (CCDBG)
                                                                                                                                                              funds when funds are available and in the following situations: (1)-(3) (No change.) (b) The CCMS contractor must apply for a waiver from DHS to allow families described in subsection (a)(1) and (2) of this section to receive child care paid from Title XX and CCDBG
                                                                                                                                                                funds. sec.10.3462. Priority for Intake Services. The Child Care Management Services (CCMS) contractor provides intake services to clients in the following eligibility categories according to the order of priorities indicated
                                                                                                                                                                  [listed in order of priority]: (1) Child Protective Services (CPS)-General CPS (Priority 1)
                                                                                                                                                                    ; (2) CPS-Aid to Families with Dependent Children (AFDC) foster care (Priority 2)
                                                                                                                                                                      ; (3) CPS-State-paid Foster Care (Priority 3)
                                                                                                                                                                        ; (4) Job Opportunities and Basic Skills Training (JOBS) participant (Priority 4)
                                                                                                                                                                          [-Title IV-A]; (5) Transitional Child Care (Priority 5)
                                                                                                                                                                            [-Title IV-A]; (6) AFDC recipient-non-JOBS (Priority 6)
                                                                                                                                                                              ; (7) Supplemental Security Income recipient (Priority 7)
                                                                                                                                                                                ; (8) AFDC Recipient-Approved Self-Initiated Education or Training in non-JOBS counties (Priority 8);
                                                                                                                                                                                  [Refugee Cash Assistance recipient,]; (9) Food Stamp Employment and Training participant (Priority 9)
                                                                                                                                                                                    ; (10) Food Stamp Recipient-Working(Priority 10)
                                                                                                                                                                                      ; (11) Income Eligible-Working-Not Before/After School (Priority 12); (12)
                                                                                                                                                                                        [(11)] Food Stamp recipient-Training (Priority 11)
                                                                                                                                                                                          ; [(12) Income Eligible-Working,]; (13) Income Eligible-Training-Not Before/After School (Priority 13)
                                                                                                                                                                                            ; (14) Category Reserved for Future Use
                                                                                                                                                                                              [Income Eligible-Refugee]; (15) Income Eligible Developmentally Delayed-Not Before/After School (Priority 15);
                                                                                                                                                                                                [Teen Parents, and] (16) Income Eligible Developmentally Delayed-Before/After School (Priority 15);
                                                                                                                                                                                                  [.] (17) Former CPS-Not Before/After School (Priority 16); (18) Former CPS-Before/After School (Priority 16); (19) Income Eligible Teen Parents-Not Before/After School (Priority 14); (20) Income Eligible Teen Parents-Before/After School (Priority 14); (21) Income Eligible-Working-Before/After School (Priority 12); and (22) Income Eligible-Training-Before/After School (Priority 13). sec.10.3463. Eligibility for Title XX Funded Child Care. (a)-(b) (No change.) (c) Clients in eligibility categories
                                                                                                                                                                                                    [priority groups] identified in sec.10.3462 (4), (5), (8), (9), (10), (12),
                                                                                                                                                                                                      [(11), (14),] (15), and (16) of this title (relating to Priority for Intake Services) receive Title XX funding only after the following funding sources for which they are eligible are depleted: (1) Title IV-A (Job Opportunities and Basic Skills Training, Transitional Child Care, and at-risk Child Care); (2) Title IV-A Approved Self-Initiated Education or Training in non-JOBS counties
                                                                                                                                                                                                        [Refugee Social Services]; (3)-(4) (No change.) (d) Income eligible families served with Title XX funding will continue to receive child care for one year after the family income exceeds 150% of the federal poverty income level (FPIL), provided the family income remains below 185% of the FPIL. sec.10.3464. Eligibility for Child Care and Development Block Grant (CCDBG) Funded Child Care. The Texas Department of Human Services (DHS) uses Child Care and Development Block Grant (CCDBG) funds to purchase child care for clients who meet the requirements stated for the following client groups: (1) children in families whose family income is below 150% of the federal poverty income level (FPIL)
                                                                                                                                                                                                          and whose parents are either working or are in training or school. These children will continue to receive child care for one year after the family income exceeds 150% of the FPIL
                                                                                                                                                                                                            [federal poverty income level], provided the family income remains below 185% of the FPIL
                                                                                                                                                                                                              [federal poverty income level]; (2) children of teen parents whose family income is below 150% of the FPIL
                                                                                                                                                                                                                [federal poverty income level] and who need child care in order to complete high school or the equivalent, as specified in sec.10.3414 of this title (relating to Exceptions to Eligibility). These children will continue to receive child care for one year after the family income exceeds 150% of the FPIL, provided the family income remains below 185% of the FPIL; (3) developmentally delayed children in families whose income is below 150% of the FPIL
                                                                                                                                                                                                                  [federal poverty income level] and whose parents are working or are in training or school. DHS will reserve 10% of the CCDBG funds available for child care to purchase care for these children. The cost of children's [unpaid initial and] ongoing medical expenses [not covered by insurance] must be deducted from the family's income before determining the family's income eligibility status. These children will continue to receive child care for one year after the family income exceeds 150% of the FPIL, provided the family income remains below 185% of the FPIL; (4) children receiving DHS-purchased child care as specified in sec.10.3416 of this title (relating to Child Care for Abused and Neglected Children). This group may receive CCDBG funded child care [without regard to income] for up to six months after they are no longer eligible to receive Title XX funded protective services child care. In order to receive CCDBG funded child care, the family income must be within 75% of the state median income.
                                                                                                                                                                                                                    DHS child protective services (CPS) caseworkers or CPS in-home case management contractors must authorize child care for these clients. They must use the forms and procedures required by the DHS child care program. 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 December 9, 1991. TRD-9115396 Nancy Murphy Agency liaison, Policy and Document Support Texas Department of Human Services Proposed date of adoption: February 17, 1992 For further information, please call: (512) 450-3765 40 TAC sec.sec.10.3419, 10.3423, 10.3465 (Editor's Note: The Texas Department of Human Services proposes for permanent adoption the sections it adopts on an emergency basis in this issue. The text of the sections are in the Emergency Rules section of this issue.) The Texas Department of Human Services (DHS) proposes amendments to sec.sec.10.3419, 10.3423, and 10.3465, concerning child care management services statewide implementation, in its Family Self-Support Services chapter. The purpose of the amendments is to extend JOBS child care services to AFDC recipients, in non-JOBS counties, who are participating in approved self- initiated education and training activities. The department is simultaneously adopting these amendments on an emergency basis, effective December 16, 1991, for 120 days. Burton F. Raiford, chief financial officer, has determined that for the first five-year period the sections are in effect there will be fiscal implications for state government as a result of enforcing or administering the sections. The effect on state government for the first five-year period the sections are in effect will be an estimated additional cost of $106,557 in fiscal year (FY) 1992; $187,797 in FY 1993; $225,534 in FY 1994; $266,414 in FY 1995; and $315,201 in FY 1996. Mr. Raiford also has determined that for each year of the first five years the sections are in effect the public benefit anticipated as a result of enforcing the sections will be an extension of JOBS child care services to AFDC recipients in non-JOBS counties. There will be no effect on small businesses as a result of enforcing or administering the sections. There is no anticipated economic cost to persons who are required to comply with the proposed sections. Questions about the content of this proposal may be directed to Charlotte Brantley at (512) 450-4179 in DHS's Client Self-Support Program Policy Section. Comments on the proposal may be submitted to Nancy Murphy, Policy and Document Support-339, Texas Department of Human Services E-503, P.O. Box 149030, Austin, Texas 78714-9030, within 30 days of publication in the Texas Register. The amendments are proposed under the Human Resources Code, Title 2, Chapters 22 and 44, which authorizes the department to administer public assistance and day care programs. 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 December 5, 1991. TRD-9115268 Nancy Murphy Agency liaison, Policy and Document Support Texas Department of Human Services Proposed date of adoption: March 1, 1992 For further information, please call: (512) 450-3765