ADOPTED RULES An agency may take final action on a section 30 days after a proposal has been published in the Texas Register. The section becomes effective 20 days after the agency files the correct document with the Texas Register, unless a later date is specified or unless a federal statute or regulation requires implementation of the action on shorter notice. If an agency adopts the section without any changes to the proposed text, only the preamble of the notice and statement of legal authority will be published. If an agency adopts the section with changes to the proposed text, the proposal will be republished with the changes. TITLE 4. AGRICULTURE Part I. Texas Department of Agriculture Chapter 30. Young Farmer Loan Guarantee Program Subchapter A. General Procedures 4 TAC sec.30.8 The Board of Directors of the Texas Agricultural Finance Authority (TAFA), a public authority within the Texas Department of Agriculture, adopts an amendment to sec.30.8, concerning the origination fee for loans made under the Texas Young Farmer Loan Guarantee Program, without changes to the proposed text as published in the December 27, 1994, issue of the Texas Register (19 TexReg 10291). The amendment is adopted in order to provide conformance of the young farmer loan guarantee program with the operation of the TAFA loan guaranty program, providing greater consistency among the TAFA programs. The amendment will function by basing the origination fee upon the loan guarantee amount, not the total loan amount. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Agriculture Code (the Code), sec.253.007(e), which provides the Board of Directors of the Texas Agricultural Finance Authority with the same authority in administering the Young Farmer Loan Guarantee Program as it has in administering programs established by the board under the Code, Chapter 58; Texas Agriculture Code, sec.58.022, which provides the board with the authority to adopt rules and procedures for administration of its programs; Texas Agriculture Code, sec.58.023, which provides the TAFA Board with the authority to adopt rules to establish criteria for eligibility of applicants and lenders under the TAFA Loan Guaranty Program; and, Texas Government Code, sec.2001.004, which requires that the department adopt rules of practice stating the nature and requirements of all available formal and informal procedures. Subchapter A: General Procedures. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 15, 1995. TRD-9503260 Dolores Alvarado Hibbs Chief Administrative Law Judge Texas Department of Agriculture Effective date: April 5, 1995 Proposal publication date: December 27, 1994 For further information, please call: (512) 463-7583 TITLE 19. EDUCATION Part II. Texas Education Agency Chapter 33. Investment Program of the Permanent School Fund 19 TAC sec.sec.33.1, 33.10, 33.15, 33.20, 33.25, 33.30, 33.35, 33.40, 33.45, 33.50, 33.60, 33.65, 33.70, 33.75, 33.85, 33.90, 33.95, 33.100, 33.105 The Texas Education Agency (TEA) adopts the repeal of sec. sec.33.1, 33.10, 33.15, 33.20, 33.25, 33.30, 33.35, 33.40, 33.45, 33.50, 33.60, 33.65, 33.70, 33.75, 33.85, 33.90, 33.95, 33.100, and 33.105, concerning the Texas Permanent School Fund (PSF), without changes to the proposed text as published in the January 31, 1995 issue of the Texas Register (20 TexReg 533). The sections establish investment objectives, policies, and guidelines for the PSF. The repeals are necessary to allow the State Board of Education (SBOE) to adopt new sections that will implement the strategic asset allocation plan the SBOE approved in October 1994. The new rules will cause the income of the PSF to flow to school districts and reduce the tax burden to the public and the state. The TEA is adopting new Chapter 33 in a separate submission. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Constitution, Article VII, sec.5(d), which authorizes the SBOE to manage the PSF assets. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 20, 1995. TRD-9503406 Criss Cloudt Executive Associate Commissioner, Policy Planning and Information Management Texas Education Agency Effective date: April 10, 1995 Proposal publication date: January 31, 1995 For further information, please call: (512) 463-9701 Chapter 33. Statement of Investment Objectives, Policies, and Guidelines 19 TAC sec.sec.33.1, 33.5, 33.10, 33.15, 33.20, 33.25, 33.30, 33.35, 33.40, 33.45, 33.50, 33.55, 33.60, 33.65 The Texas Education Agency (TEA) adopts new sec.sec.33.1, 33.5, 33.10, 33. 15, 33.20, 33.25, 33.30, 33.35, 33.40, 33.45, 33.50, 33.55, 33.60, and 33.65, concerning the Texas Permanent School Fund (PSF). Sections 33.15, 33.20, 33.25, and 33.45 are adopted with changes to the proposed text as published in the January 31, 1995, issue of the Texas Register (20 TexReg 533). Sections 33.1, 33.5, 33.10, 33.30, 33.35, 33.40, 33.50, 33.55, 33.60, and 33.65 are adopted without changes and will not be republished. The sections establish investment objectives, policies, and guidelines for the PSF and are necessary to implement the strategic asset allocation plan the State Board of Education (SBOE) approved in October 1994. The new rules will cause the income of the PSF flow to school districts and reduce the tax burden to the public and the state. The TEA is adopting the repeal of current Chapter 33 in a separate submission. The change to sec.33.15(a) adds language emphasizing the requirements of the Texas Constitution with regard to the contribution of the PSF to the purchase of textbooks. The change to sec.33.20(c)(10) adds language clarifying the desire of SBOE to meet the minimum income expectations of the PSF. In sec.33.25, information concerning currency hedging strategies was deleted from subsection (a)(2) and added as new subsection (a)(5) to clarify the text. The change to sec.33.25(c)(2)(C)(ii) adds language clarifying that errors and omissions insurance coverage should be specific to the assets of the PSF. Provisions of the proxy voting policy in sec.33.45(4), were changed to increase the frequency with which the PSF executive administrator must report to SBOE instances in which the executive administrator voted against management. No comments were received regarding adoption of the new rules. The new rules are adopted under the Texas Constitution, Article VII, sec.5(d) , which authorizes the SBOE to manage the PSF assets. sec.33.1. Constitutional Authority and Constitutional Restrictions. The Texas Permanent School Fund (PSF) shall be invested according to the Texas Constitution, Article VII, sec.5(d), under the direction of the State Board of Education (SBOE). sec.33.15. Responsible Parties and Their Duties. (a) The Texas Constitution, Article VII, sec.sec.1-8, establishes the Available School Fund, the Texas Permanent School Fund (PSF), and the State Board of Education (SBOE), and specifies the standard of care SBOE members must exercise in managing PSF assets. In addition, the constitution directs the legislature to establish suitable provisions for supporting and maintaining an efficient public free school system, defines the composition of the PSF and the Available School Fund, and requires the SBOE to set aside sufficient funds to provide free textbooks for the use of children attending the public free schools of this state. The Texas Education Code, Chapter 15, regulates the use of state funds to support public schools, and the provisions of this chapter govern the investment objectives, policies, and guidelines of the PSF. (b) The SBOE shall be responsible for overseeing all aspects of the PSF and may employ any of the following parties, whose duties and responsibilities are as follows. (1) An investment manager is a person, firm, corporation, bank, or insurance company the SBOE retains to manage a portion of the PSF assets under specified guidelines. (2) A custodian is an organization, normally a bank, the SBOE retains to safekeep, and provide accurate and timely reports of, PSF assets. (3) A consultant is a person or firm the SBOE retains to advise the PSF based on professional expertise. (4) Investment counsel is a person or firm retained under criteria specified in the PSF Investment Procedures Manual to advise PSF investment staff and the SBOE Committee on the Permanent School Fund within the policy framework established by the SBOE. Counsel may advise PSF internal managers regarding various issues, including: selecting companies in different industries; specific stock or corporate bond issues or other investment instruments; and timing of purchases and sales. Counsel advises on the economic and market environment and asset allocation and provides PSF investment staff direction on diversifying investments between asset classes and among respective industries. (5) A performance measurement consultant is a person or firm retained to provide the SBOE Committee on the Permanent School Fund an analysis of the PSF portfolio performance. The outside portfolio performance measurement service firm shall perform the analysis on a quarterly or as-needed basis. Quarterly reports shall be distributed to each member of the SBOE Committee on the Permanent School Fund, and a representative of the firm shall be available as necessary to brief the committee. (6) The Internal Audit Division of the Texas Education Agency (TEA) reviews the internal control procedures of the PSF Investment Office annually at the direction of the SBOE. The division conducts the audit according to standards advocated by the Institute of Internal Auditors, Inc., and reports all findings to the commissioner of education. The purpose of the internal audit shall be to evaluate the controls over assets and test compliance with TEA rules and procedures. (7) The State Auditor's Office is an independent state agency that performs an annual financial audit of the TEA at the direction of the Texas Legislature. The financial audit, conducted according to generally accepted auditing standards, is designed to test compliance with generally accepted accounting principles. The state auditor performs tests of the transactions of the PSF Investment Office as part of this annual audit, including compliance with governing statutes and SBOE policies and directives. (8) The SBOE may retain independent external auditors to review the PSF accounts annually or on an as-needed basis. (c) The SBOE shall meet on a regular or as-needed basis to conduct the affairs of the PSF. (d) In case of emergency or urgent public necessity, the SBOE Committee on the Permanent School Fund or the SBOE, as appropriate, may hold an emergency meeting under the Texas Government Code, sec.551.045. (e) The SBOE shall have the following exclusive duties: (1) determining the strategic asset allocation mix between asset classes based on the attending economic conditions and the PSF goals and objectives; (2) ratifying the investment transactions pertaining to the purchase, sale, or reinvestment of fixed income, equity, or cash securities by all internal and external managers for the current reporting period; (3) appointing members to the SBOE Investment Advisory Committee; (4) approving all contracts with external professional investment managers, financial advisors, financial consultants, or other external professionals employed to help the SBOE invest the PSF; (5) approving the performance measurement contract with a well recognized and reputable firm employed to evaluate and analyze PSF investment results. The service shall compare investment results to the written investment objectives of the SBOE and also compare the investment of the PSF with the investment of other public and private funds against market indices and by managerial style; (6) setting policies, objectives, and guidelines for investing PSF assets; and (7) representing the PSF to the state. (f) The SBOE may establish committees to administer the affairs of the PSF. The duties and responsibilities of any committee established shall be specified in the PSF Investment Procedures Manual. (g) The PSF shall have an executive administrator, with a staff to be adjusted as necessary, who functions directly with the SBOE through the SBOE Committee on the Permanent School Fund concerning investment matters, and who functions as part of the internal operation under the commissioner of education. At all times, the PSF executive administrator and staff shall invest PSF assets as directed by the SBOE according to the Texas Constitution and all other applicable Texas statutes, as amended, and SBOE rules governing the operation of the PSF. The PSF staff shall: (1) administer the PSF according to SBOE goals and objectives; (2) execute all directives, policies, and procedures from the SBOE and the SBOE Committee on the Permanent School Fund; (3) keep records and provide a continuous and accurate accounting of all PSF transactions, revenues, and expenses and provide reports on the status of the PSF portfolio; (4) advise any officials, investment firms, or other interested parties about the powers, limitations, and prohibitions regarding PSF investments that have been placed on the SBOE or PSF investment staff by statutes, attorney general opinions and court decisions, or by SBOE policies and operating procedures; (5) continuously research all internally managed securities held by the PSF and report to the SBOE Committee on the Permanent School Fund or the SBOE any information requested, including reports and statistics on the PSF, for the purpose of administering the PSF; (6) establish and maintain a procedures manual that implements this section to be approved by the SBOE; (7) make recommendations regarding investment and policy matters to the SBOE Committee on the Permanent School Fund and the SBOE; (8) establish and maintain accounting policies and internal control procedures concerning all receipts, disbursements and investments of the PSF, according to the procedures adopted by the SBOE. sec.33.20. Objectives. (a) Investment objectives. (1) Investment objectives have been formulated based on the following considerations: (A) the anticipated financial needs of the Texas public free school system in light of expected future contributions to the Texas Permanent School Fund (PSF); (B) the need to preserve capital; (C) the risk tolerance set by the State Board of Education (SBOE) and the need for diversity; (D) observations about historical rates of return on various asset classes; (E) assumptions about current and projected capital market and general economic conditions and expected levels of inflation; (F) the need to invest according to the prudent person rule; and (G) the need to document investment objectives, guidelines, and performance standards. (2) Investment objectives represent desired results and are long-term in nature, covering typical market cycles of three to five years. Any shortfall should be explainable in terms of general economic and capital market conditions. (3) The investment objectives are consistent with generally accepted standards of fiduciary responsibility. (4) Under the provisions of this chapter, investment managers shall have discretion and authority to implement security selection and timing. (b) Goal and objectives for the PSF. (1) Goal. The goal of the SBOE for the PSF shall be to obtain the greatest amount of income and capital appreciation consistent with the safety of principal, in light of the strategic asset allocation plan adopted. To achieve this goal, PSF investment shall be carefully administered at all times. (2) Objectives. (A) The preservation and safety of principal shall be a primary consideration in PSF investment. (B) Fixed income securities shall be purchased at the highest yield consistent with the preservation and safety of principal, emphasizing current rather than deferred income. (C) To the extent possible, the PSF administrators shall hedge against inflation by purchasing equities that emphasize stability and growth of future earnings and dividends rather than current return. (D) Securities, except investments for cash management purposes as specified in sec.33.25 of this title (relating to Permissible and Restricted Investments and General Guidelines for Investment Managers), shall be selected for investment on the basis of long-term investment merits rather than short-term gains. (c) Investment rate of return and risk objectives. (1) Because the education needs of the future generations of Texas school children are long-term in nature and directly related to income growth and income potential, the return objective of the PSF shall also be long-term and focused on maintaining asset growth while preserving real capital value. Maintaining value under an income and capital appreciation concept encompasses a policy that over the long term will provide the PSF a positive return when adjusted for inflation and spending. (2) Investment rates of return shall be based on a time- weighted calculation, compounded and annualized over a rolling period of three to five years, and shall take into account all cash income plus realized and unrealized capital gains and losses, and calculated gross and net of fees and expenses. (3) The overall risk level of PSF assets in terms of potential for price fluctuation shall not be extreme. The primary means of achieving such a risk profile are: (A) a broad diversification among asset classes that, as nearly as possible, react independently through varying economic and market circumstances; (B) careful control of risk level within each asset class by avoiding over- concentration and not taking extreme positions against the market averages; and (C) a degree of emphasis on stable growth. (4) Over time, the volatility of returns (or risk) for the total fund, as measured by standard deviation of investment returns, should be less than the risk from comparable investments in market indices in the proportion in which the PSF invests. (5) The objective of the domestic equity fund shall be to earn, over time, an average annual total rate of return that exceeds that of a representative benchmark index, combining dividends and capital appreciation, while maintaining a lower risk level than that of the representative benchmark index. (6) The objective of the international equity fund shall be to earn, over time, an average annual total rate of return that exceeds that of a representative international benchmark index in U.S. dollars, combining dividends and capital appreciation, while maintaining a lower risk level than that of the representative benchmark index. (7) The objective of the domestic fixed income fund shall be to earn, over time, an average annual total rate of return that exceeds that of a representative benchmark index, combining interest income and capital appreciation, while maintaining a lower risk level than that of the representative benchmark index. (8) The objective of the international fixed income fund shall be to earn, over time, an average annual total rate of return that exceeds the return of a representative Non- U.S. world benchmark index in U.S. dollars, combining interest income and capital appreciation, while maintaining a lower risk level than that of the representative benchmark index. (9) The objective of the short-term cash fund shall be to provide liquidity for the timely payment of security transactions, while earning a competitive return. The expected return, over time, shall exceed that of the representative benchmark index, while maintaining a lower risk level than that of the representative benchmark index. (10) Notwithstanding the risk parameters specified in paragraphs (4) -(9) of this subsection, consideration shall be given to marginal risk variances exceeding the representative benchmark indices if returns are commensurate with the risk levels of the respective portfolios. Additional consideration shall be given to meeting the projected income expectations of the PSF in each respective biennium as a guideline in allocating assets to the respective PSF investment managers, if this guideline is consistent with the prudent person mandate of the Texas Constitution, Article VII, sec.5(d), and the SBOE asset allocation strategy. (d) Asset allocation policy. (1) The SBOE shall adopt and implement a strategic asset allocation plan based on a well diversified, balanced investment approach that uses a broad range of asset classes indicated by the following characteristics of the PSF: (A) the long-term nature of the PSF; (B) the spending policy of the PSF; (C) the relatively low liquidity requirements of the PSF; (D) the investment preferences and risk tolerance of the SBOE; (E) the rate of return objectives; and (F) the diversification objectives of the PSF, specified in the Texas Constitution, Article VII, sec.5(d), the Texas Education Code, Chapter 15, and the provisions of this chapter. (2) The strategic asset allocation plan shall contain guideline percentages, at market value of the total fund's assets, to be invested in various asset classes. The target mix may not be attainable at a specific point in time since actual asset allocation will be dictated by current and anticipated market conditions, as well as the overall directions of the SBOE. (3) The SBOE Committee on the Permanent School Fund, with the advice of the PSF investment staff, shall review the provisions of this section at least annually and, as needed, rebalance the assets of the portfolio according to the asset allocation rebalancing procedure specified in the PSF Investment Procedures Manual. The SBOE Committee on the Permanent School Fund shall consider the industry diversification and the percentage allocation between fixed income and equity securities within the following asset classes: (A) domestic equities; (B) international equities; (C) domestic fixed income; (D) international fixed income; and (E) cash. (4) Investments shall not exceed the strategic ranges the SBOE establishes for each asset class. (5) Periodically, the SBOE shall allocate segments of the total fund to each investment manager and specify guidelines, investment objectives, and standards of performance that apply to those assets. sec.33.25. Permissible and Restricted Investments and General Guidelines for Investment Managers. (a) Permissible investments. (1) Equities are considered to be common or preferred corporate stocks; corporate bonds, debentures, or preferreds that may be converted into corporate stock; and investment trusts. Stocks listed on well recognized or principal U.S. or foreign exchanges are permitted. (2) Fixed income securities are considered to be U.S. or foreign treasury or government agency obligations, U.S. or foreign corporate bonds, asset- or mortgage-backed securities, taxable municipal obligations, Canadian bonds, Yankee bonds, supranational bonds (denominated in U.S. dollars), and 144A securities. (3) Cash equivalents are securities with maturities of less than or equal to one year that are considered to include interest bearing or discount instruments of the U.S. government or its agencies, money market funds, corporate discounted instruments, corporate-issued commercial paper, time deposits of U.S. or foreign banks, bankers acceptances, and fully collateralized repurchase agreements. Both U.S. and foreign offerings are permitted. All residual cash in the Texas Permanent School Fund (PSF) portfolio must be swept and invested on a daily basis. (4) Any new form of investment or new nonpublicly traded investment may be considered by the State Board of Education (SBOE) based on risk and return characteristics, provided the investment is consistent with PSF goals and objectives. (5) The State Board of Education (SBOE) may approve currency hedging strategies for the international portfolios and delineate the related procedures in the "Standards of Performance" section of the PSF Investment Procedures Manual. (b) Prohibited transactions and restrictions. Unless the SBOE gives its written approval, the following prohibited transactions and restrictions apply for all PSF managers: (1) short sales of any kind; (2) purchasing letter or restricted stock; (3) buying or selling on margin; (4) engaging in purchasing or writing options or similar transactions; (5) purchasing or selling futures on commodities contracts; (6) borrowing money, or pledging or otherwise encumbering PSF assets; (7) purchasing the equity or debt securities of the portfolio manager's organization or an affiliated organization; (8) engaging in any purchasing transaction, after which the cumulative market value of common stock in a single corporation exceeds 2. 5% of the PSF total market value or 5.0% of the manager's total portfolio market value; (9) engaging in any purchasing transaction, after which the cumulative number of shares of common stock in a single corporation held by the PSF exceeds 5.0% of the outstanding voting stock of that issuer; (10) engaging in any purchasing transaction, after which the cumulative market value of fixed income securities or cash equivalent securities in a single corporation (excluding the U.S. government or its agencies) exceeds 2.5% of the PSF total market value or 5.0% of the manager's total portfolio market value; (11) purchasing tax exempt bonds; (12) purchasing guaranteed investment contracts (GICs) from an insurance company or bank investment contracts (BICs) from a bank not rated at least AAA by Standard & Poor's or Moody's; (13) purchasing any fixed income security not rated at least BBB- by Standard & Poor's or Baa3 by Moody's, subject to the provisions in the PSF Investment Procedures Manual related to the fixed income portfolio mandates regarding quality and duration; (14) purchasing short-term money market instruments rated below A-1 or P-1 by Standard and Poor's and Moody's, respectively; (15) engaging in any transaction that results in unrelated business taxable income (excluding current holdings); (16) engaging in any transaction considered a "prohibited transaction" under the Internal Revenue Code or the Employee Retirement Income Security Act (ERISA); (17) purchasing precious metals or other commodities; (18) engaging in any transaction that would leverage a manager's position; (19) lending securities owned by the PSF, but held in custody by another party, such as a bank custodian, to any other party for any purpose, unless lending securities according to a separate written agreement the SBOE approved; and (20) purchasing fixed income securities without a stated par value amount due at maturity. (c) General guidelines for investment managers. (1) Each investment manager retained to manage a portion of PSF assets shall be aware of, and operate within, the provisions of this chapter and all applicable Texas statutes. (2) As fiduciaries of the PSF, investment managers shall discharge their duties solely in the interests of the PSF according to the prudent expert rule, engaging in activities that include the following. (A) Diversification. The investment policy shall be to diversify each manager's common stock portfolio by participating in industries and companies with above average prospects or sound fundamentals. (B) Securities trading. (i) Each manager shall send copies of each transaction record to the PSF investment staff and custodians. (ii) Each manager shall be required to reconcile the accounts under management on a monthly basis with the PSF investment staff and custodians. (iii) Each manager shall be responsible for complying fully with PSF policies for trading securities and selecting brokerage firms, as specified in sec.33.40 of this title (relating to Trading and Brokerage Policy). In particular, the emphasis of security trading shall be on best execution; that is, the highest proceeds to the PSF and the lowest costs, net of all transaction expenses. Placing orders shall be based on the financial viability of the brokerage firm and the assurance of prompt and efficient execution. (iv) The SBOE shall require each external manager to indemnify the PSF for all failed trades not due to the negligence of the PSF or its custodian. (C) Acknowledgments in writing. (i) Each external investment manager retained by the PSF must be a person, firm, or corporation registered as an investment adviser under the Investment Adviser Act of 1940, a bank as defined in the Act, or an insurance company qualified to do business in more than one state, and must acknowledge its fiduciary responsibility in writing. A firm registered with the Securities and Exchange Commission (SEC) must annually provide a copy of its Form ADV, Section II. (ii) The SBOE may require each external manager to obtain coverage for errors and omissions in an amount set by the SBOE, but the coverage shall be at least the greater of $500,000 or 1.0% of the assets managed, not exceeding $10 million. The coverage should be specific as to the assets of the PSF. The manager shall annually provide evidence in writing of the existence of the coverage. (iii) Each external manager may be required by the SBOE to obtain fidelity bonds, fiduciary liability insurance, or both. (iv) Each manager shall acknowledge in writing receiving a copy of, and agreeing to comply with, the provisions of this chapter. (D) Subject to the provisions of this chapter, any investment manager of marketable securities or other investments, retained by the PSF, shall have full discretionary investment authority over the assets for which the manager is responsible. (d) Reporting procedures for investment managers. The investment manager shall: (1) prepare a monthly report for delivery to the SBOE, the SBOE Committee on the Permanent School Fund, and the PSF investment staff that shall include, in the appropriate format, items requested by the SBOE. The reports shall cover any change in the firm's structure, professional team, or product offerings; the firm's economic review; a review of recent and anticipated investment activity; an analysis of major changes that have occurred in the investment markets and in the portfolio, particularly since the last report; a detail of the portfolio holdings and each transaction that has been completed or is in process since the last report; and a summary of the key characteristics of the PSF portfolio. Periodically, the PSF investment staff shall provide the investment manager a detailed description of, and format for, these reports; (2) when requested by the SBOE Committee on the Permanent School Fund, make a presentation describing the professionals retained for the PSF, the investment process used for the PSF portfolio under the manager's responsibility, and any related issues; (3) when requested by the PSF investment staff, meet to discuss the management of the portfolio, new developments, and any related matters; and (4) implement a specific investment process for the PSF. The manager shall describe the process and its underlying philosophy in an attachment to its investment management agreement with the PSF and manage according to this process until the PSF and manager agree in writing to any change. sec.33.45. Proxy Voting Policy. The State Board of Education (SBOE) recognizes its fiduciary obligations with respect to the voting of proxies of companies with securities that are owned by the Texas Permanent School Fund (PSF). Because the issues related to proxy voting are complex and directly impact investment values, the SBOE believes the PSF is best suited to vote the proxies of shares held in the PSF portfolio. Therefore, as part of the PSF investment policy, the SBOE instructs the PSF executive administrator and investment staff to vote all of the PSF proxies of companies according to the following guidelines. (1) Routine matters. Routine proxy proposals shall be voted in support of company proposals unless there is a clear reason not to do so. Routine matters include: (A) electing directors; (B) determining the size of a board; (C) changing a corporate name; (D) appointing an auditor; (E) splitting stock; (F) amending articles of incorporation that are required to comply with federal or state regulation; and (G) changing the date, time, or location of an annual meeting. (2) Business matters. Business proposals that do not eliminate the rights of shareholders, especially minority shareholders, or the status of securities held, including ownership status, shall not be treated as routine; rather, they shall be carefully analyzed. These issues may be voted with management. However, business proposals that are nonroutine or would impair the economic interests of shareholders shall be voted against management. Examples of such proposals include: (A) requests to alter bylaws to require a super majority to approve mergers; (B) anti-takeover proposals that could restrict tender offers or deny majority owners from exercising judgment; (C) proposals to dilute existing shares by issuing substantially more stock without adequate explanation by management; and (D) proposals that would enrich management excessively or substantially increase compensation awards or employment contracts to senior management that become effective when ownership of the company changes (also known as "golden parachute" awards). (3) Other matters. On all other matters, the PSF executive administrator and investment staff shall vote proxies judged to be in the best interests of the PSF. (4) At each regularly scheduled SBOE meeting, the PSF executive administrator shall advise the SBOE of all instances in which the PSF executive administrator voted against management. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 20, 1995. TRD-9503407 Criss Cloudt Executive Associate Commissioner, Policy Planning and Information Management Texas Education Agency Effective date: April 10, 1995 Proposal publication date: January 31, 1995 For further information, please call: (512) 463-9701 Chapter 75. Curriculum Subchapter F. Graduation Requirements 19 TAC sec.75.152, sec.75.153 The Texas Education Agency (TEA) adopts amendments to sec.75.152 and sec.75. 153, concerning graduation requirements. Section 75.152 is adopted with changes to the proposed text as published in the November 22, 1994, issue of the Texas Register (19 TexReg 9262). Section 75.153 is adopted without changes and will not be republished. The amendments are necessary to establish a new advanced high school program that will focus on the quality, rather than quantity, of student work. The components being considered as advanced measures provide a broad mix of options for students and encourage the development of strong community/school district relations through the use of mentorships and panels that require professional expertise. The amendments abolish the current advanced high school program and the advanced high school program with honors, and eliminate approval of honors courses by agency staff. The new advanced high school program focuses on outstanding student performance as determined by measures approved by the State Board of Education (SBOE). Provisions in the rules permit the board to review additional advanced measures and to modify the list as needed in the future. This should lead to a statewide advanced program that is more uniform, while still providing districts the flexibility to use those advanced measures that meet the needs of their students. The new program will replace the other advanced programs in school year 1999-2000 and operate concurrently with the other programs until that date. The amendments also delete the current set of graduation seals and the academic achievement record form. The changes to sec.75.152(a) and (h) add language to indicate that, beginning with the 1999-2000 school year, the new advanced high school program will be called the distinguished achievement program. The new name will help differentiate the new program from the current program. The changes to sec.75.152(c)(1)(A) and (h)(1)(A)(ii) clarify that English as a Second Language (ESL) I and II may be substituted for English I and II; however, ESL III may not be substituted for English III. The change to sec.75.152(c)(1)(B) removes ESL IV from the list of courses that may be taken to satisfy the fourth credit of the English language arts requirement for the new advanced high school program. The change to sec.75.152(d)(2) adds language to ensure that students who have taken courses that are being deleted from the current advanced high school program do not lose credit when the new program takes effect. In sec.75.152(f), the date by which a school district must submit honors courses for state approval was changed from March 31, 1995, to April 30, 1995 to correct an editorial error. The change to sec.75.152(h)(3) adds language specifying the circumstances under which a principal may waive suspension from extracurricular activities for a student who receives a grade below 70 for a six-week period in a class leading to an advanced measure. New sec.75.152(h)(4) allows, with appropriate approval, substitutions to be made for the courses required as part of the advanced high school program. The following comments were received regarding adoption of the amendments. The Texas Association for the Gifted and Talented (TAGT) and four members of the public approved of the proposed advanced high school program. One member of the public recommended maintaining a system of honors courses for the advanced high school program. The SBOE discussed this possibility, but did not add the measure. The rules state that local districts are encouraged to establish local honors courses based on the needs of their students. One member of the public expressed concern that students who had taken courses that were being deleted from the rule would be penalized. The SBOE added sec.75.152(d)(2) to ensure that a student who has already received credit in a course is not penalized. Numerous members of the public expressed concern about the fact that, for five years, there would be two advanced high school programs. The SBOE added language to sec.75.152(a) and (h) to indicate that, beginning with the 1999-2000 school year, the new advanced high school program will be called the distinguished achievement program. The new name will help differentiate the new program from the current program. The amendments are adopted under the Texas Education Code, sec.21.257, which authorizes SBOE to prescribe by rule standards for determining what constitutes an advanced high school program. The section also authorizes the board to adopt a transcript form for the advanced high school program which is designed to clearly distinguish it from a transcript used for the academic achievement record of a student who has not completed an advanced high school program. sec.75.152. Advanced High School Program. (a) Beginning with school year 1999-2000, the advanced high school program shall be known as the distinguished achievement program. Subsections (b)-(g) of this section shall expire at the end of school year 1998-1999. (b) A student who wishes to complete an advanced high school program and have the accomplishment recognized and distinguished on the academic achievement record (transcript) must complete requirements in addition to those prescribed in sec.75.151 of this title (relating to High School Graduation Requirements). Programs shall be of two types. (1) The advanced high school program shall consist of 22 credits selected from the provisions of subsection (c)(1)-(11) of this section. (2) The advanced high school honors program shall consist of 22 credits selected from the provisions of subsection (c)(1)-(11) of this section. Five of these credits must be designated by the board of trustees as honors courses under subsection (e) of this section. (c) The required credits shall include the following. (1) English language arts-four credits. (A) Three credits must consist of English I, II, and III. English as a Second Language (ESL) I and II may be substituted for English I and II. (B) The fourth credit of English may be satisfied by English IV, English IV Honors, English IV (Academic), English IV (Academic) Honors, or College Board advanced placement English literature and composition. (2) Languages-two credits. The credits must be earned for the same language. (3) Mathematics-three credits. The credits must consist of Algebra I, Algebra II, and Geometry. (4) Science-three credits. The credits must be selected from Physical Science or Science III, Biology I or Science IV, Biology II, Chemistry I, Chemistry II, Physics I, Physics II, Geology, Meteorology, Astronomy, Aquatic Science, Environmental Science,, or Anatomy and Physiology. (5) Social studies-two and one-half credits. The credits must consist of: (A) World History Studies or World Geography Studies -one credit; (B) United States History-one credit; and (C) United States Government-one-half credit. (6) Economics with emphasis on the free enterprise system and its benefits- one-half credit. (7) Physical education-one and one-half credits. (A) The school district board of trustees may allow a student to substitute certain physical activities for the one and one-half required credits of physical education. The substitutions shall be based on the physical activity involved in drill team, marching band, and cheerleading during the fall semester; Reserve Officer Training Corps (ROTC); athletics; Dance I-IV; and two- or three-hour block vocational gainful employment credits. (B) A student may not earn more than two credits in physical education toward state graduation requirements. (C) A school district may award state credit for physical education not exceeding two credits for appropriate private or commercially sponsored physical activity programs conducted either on or off campus. A district must apply to the commissioner of education for approval of such programs, which may be substituted for state graduation credit in physical education. (8) Health education-one-half credit. (9) Computing proficiency-one credit. The credit must be selected from a variety of computer-related courses listed in Subchapter D of this chapter (relating to Essential Elements -Grades 9-12), including: (A) Computer Mathematics; (B) Business Computer Applications I or II; (C) Business Computer Programming I or II; (D) Computer Science I or II; (E) Business Information Processing; and (F) Microcomputer Applications. (10) Fine arts or speech-one credit. The credit must be selected from the list of courses approved by the State Board of Education (SBOE) in Subchapter D of this chapter (relating to Essential Elements-Grades 9-12). (11) Electives-three credits. Each elective must be selected from the list of courses approved by SBOE in Subchapter D of this chapter (relating to Essential Elements-Grades 9-12). (d) When necessary and justified, the commissioner of education may authorize a substitution in the requirements for the advanced high school program under the following conditions. (1) A student must complete 22 credits from state-approved courses specified in this section. (2) A student must complete the number of credits in each subject area specified in this section from courses listed in these subject areas in Subchapter D of this chapter (relating to Essential Elements-Grades 9-12). A student who has already taken one or more of the following classes as part of the advanced high school program shall receive credit for each class taken: Precalculus, Trigonometry, Elementary Analysis, Analytic Geometry, Computer Mathematics I, Computer Mathematics II, Probability and Statistics, Calculus, Number Theory, Linear Algebra, Linear Programming, History of Mathematics, Survey of Mathematics, Laboratory Management, Physiology and Anatomy, or Computer Mathematics. (3) Any course substituted for another course must maintain the same level of academic excellence as the courses specified in this section. (4) A course described as introductory, remedial, or compensatory may not substitute for any course specified in this section. (5) The district must request in writing approval from the commissioner of education to substitute specific courses, citing justification for such requests. (e) A school district board of trustees that wishes to offer the advanced high school honors program must adopt policies that provide for special honors courses and programs. The policies must provide for modification of the courses of study in subsection (c) of this section by accelerating, providing greater depth, and expanding the courses and their essential elements described in this section and in Subchapter D of this chapter (relating to Essential Elements- Grades 9-12). In addition, the courses must be consistent with subsection (f) of this section. A school district must ensure that students participating in honors courses or programs are instructed in all essential elements and demonstrate an acceptable degree of mastery of those elements. (f) An honors course shall be defined as having: specific criteria for entry of highly motivated students; a definite scope and sequence that reflects the nature of the subject; a differentiated curriculum that includes a wider range and greater depth of subject matter than those of the regular course; an emphasis on higher level and critical thinking skills; provision for creative, productive thinking; a stress on cognitive concepts and processes; instructional strategies that accommodate the learning styles of the students involved; and independent as well as guided research. A school district wishing to offer honors courses or programs under subsection (e) of this section must submit descriptions of the courses or programs to the commissioner of education, who shall review and may approve the descriptions. The commissioner of education shall inform SBOE of the actions. A district that wishes to develop new honors courses or programs must submit descriptions for consideration for approval no later than April 30, 1995. After that date, the Texas Education Agency (TEA) shall not approve additional honors courses, although school districts are encouraged to develop such courses based on the needs of students in the district. (g) All College Board advanced placement and International Baccalaureate courses are designed as honors courses. A district is not required to submit these courses for approval. (h) Beginning in the 1999-2000 school year, a student who wishes to complete an advanced high school program (called the distinguished achievement program) and have the accomplishment recognized and distinguished on the academic achievement record (transcript) must complete the following requirements. (1) Academic core components. College Board advanced placement and International Baccalaureate courses may be substituted for requirements in appropriate proficiency areas. The student must demonstrate proficiency in the following. (A) English-four credits. The credits must consist of: (i) English I, English II, English III, English IV; or (ii) a passing score on an appropriate end-of-course assessment. English as a Second Language I and II may be substituted for English I and II for recent immigrants. (B) Mathematics-three credits. The credits must consist of: (i) Algebra I, Geometry, Algebra II; or (ii) a passing score on an appropriate end-of-course assessment. (C) Science-three credits. The credits must consist of: (i) three credits selected from Physical Science, Biology I and II, Chemistry I and II, Physics I and II, or Science III and IV. A student may not take more than two credits from any combination of Physical Science, Science III and IV, and Biology I; or (ii) a passing score on an appropriate end-of-course assessment. (D) Social studies-four credits. The credits must consist of: (i) U. S. History (one credit), World History Studies (one credit), World Geography (one credit), U. S. Government (one-half credit), and Economics (one- half) credit; or (ii) a passing score on an appropriate end-of-course assessment. (E) Second language-three credits. The credits must consist of: (i) three credits in the same language; or (ii) a passing score on a second-language proficiency assessment. (F) Health-one-half credit or a passing score on an appropriate end-of-course assessment. (G) Fine arts-one credit or a passing score on an appropriate end-of-course assessment. (H) Physical education-one and one-half credits or a passing score on an appropriate end-of-course assessment. (I) Computing-one credit. The credit must consist of: (i) one credit in computer science; or (ii) a passing score on an appropriate computing proficiency assessment. (2) Additional components. College Board advanced placement and International Baccalaureate courses may be submitted for requirements in appropriate proficiency areas. The student must choose one of the following options for additional components. (A) Option I: math, science, elective. The student must demonstrate proficiency in the following. (i) Math-one credit. The credit must consist of: (I) Precalculus (one credit); or (II) Trigonometry (one-half credit) and either Elementary Analysis (one-half credit) or Analytic Geometry (one-half credit). (ii) Science-one credit. The credit must be selected from Biology I or II, Chemistry I or II, Physics I or II, or Science III or IV. A student may not take more than two credits from any combination of Physical Science, Science III and IV, and Biology I. (iii) Elective-one credit. (B) Option II: career and technology. The student must demonstrate proficiency equivalent to three credits in a state-approved, coherent sequence of courses for career and technology preparation. To be included in the recommended high school program, a technology preparation program approved by TEA must meet recommended high school program criteria in English language arts, mathematics, science, social studies, foreign language, health, fine arts, and computing proficiency. (C) Option III: specialization. The student must demonstrate proficiency equivalent to three credits in a specialization consisting of state-approved, college-preparatory courses from language arts (including speech and journalism), science, social studies, mathematics, foreign language, fine arts, or computer science. (3) Advanced measures. A student also must receive any combination of four of the advanced measures approved by SBOE. The measures must be reviewed at least once each biennium and meet the standards specified in subparagraphs (A) and (B) of this paragraph. If a student who is not subject to suspension under sec.75.411(e) of this title (relating to Student Absences for Extracurricular or Other Activities) receives a six-week grade average lower than 70 in any course that is taken to meet the requirements of an advanced measure, a principal may remove the student's suspension from participation in any extracurricular activity. (A) The measures must focus on demonstrated student performance at the college or professional level. (B) Student performance on advanced measures must be assessed through an external review process. (4) Any program or course substitution to the courses included in subsection (h)(1) and (2) of this section must be approved by the commissioner of education or SBOE, respectively. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 20, 1995. TRD-9503408 Criss Cloudt Executive Associate Commissioner, Policy Planning and Information Management Texas Education Agency Effective date: April 10, 1995 Proposal publication date: November 22, 1994 For further information, please call: (512) 463-9701 TITLE 22. EXAMINING BOARDS Part IX. Texas State Board of Medical Examiners Chapter 161. General Provisions 22 TAC sec.161.1 The Texas State Board of Medical Examiners adopts an amendment to sec.161. 1, without changes, to the proposed text as published in the December 6, 1994, issue of the Texas Register (19 TexReg 9584). The section as adopted will further define the responsibilities of the Reciprocity and Examination Committees and allow overlapping between the two committees. The section as adopted will function by allowing either committee to act on licensure cases which will streamline the process. No comments were received regarding adoption of the amendment. The amendment is adopted under the Medical Practice Act, Texas Civil Statutes, Article 4495b, sec.2.09(a), which provides the Texas State Board of Medical Examiners with the authority to make rules, regulations and bylaws not inconsistent with this act as may be necessary for the governing of its own proceedings, the performance of its duties, the regulation of the practice of medicine in this state, and the enforcement of this Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 14, 1995. TRD-9503346 Bruce A. Levy, M.D., J.D. Executive Director Texas State Board of Medical Examiners Effective date: April 7, 1995 Proposal publication date: December 6, 1994 For further information, please call: (512) 834-7728 Chapter 170. Authority of Physician to Prescribe for the Treatment of Pain 22 TAC sec.sec.170.1-170.3 The Texas State Board of Medical Examiners adopts new sec.170.1-170.3, with changes, to the proposed text as published in the February 7, 1995, issue of the Texas Register (20 TexReg 874). The sections as adopted will provide guidelines and definitions for the proper treatment of pain and related recordkeeping. The sections as adopted will function by clarifying guidelines for physicians when treating for pain, and thereby improve the quality of medical care provided to the public. Several comments were received in support of the proposed new sections. These comments were received from individual physicians and patients, as well as the Texas Medical Association and the Texas Osteopathic Medical Association. The new sections are adopted under the Medical Practice Act, Texas Civil Statutes, Article 4495b, sec.2.09(a), which provides the Texas State Board of Medical Examiners with the authority to make rules, regulations and bylaws not inconsistent with this Act as may be necessary for the governing of its own proceedings, the performance of its duties, the regulation of the practice of medicine in this state, and the enforcement of this Act. sec.170.1. Purpose. The purpose of this chapter is to recognize that some dangerous drugs and controlled substances listed in Chapter 481 and 483 of the Texas Health and Safety Code are indispensable for the treatment of pain, and are useful for relieving and controlling many other related symptoms that patients may suffer. It is the position of the board that these drugs may be prescribed for the treatment of pain and other related symptoms after a reasonably based medical diagnosis has been made, in adequate doses, and for appropriate lengths of time, which in some cases may be as long as the pain or related symptoms persist. The board recognizes that pain, including intractable pain, and many other related symptoms are subjective complaints and that the appropriateness and the adequacy of drug and dose will vary from individual to individual. The practitioner is expected to exercise sound medical judgment in treating pain and related symptoms with dangerous drugs and controlled substances. sec.170.2. Definitions. The following words and terms, as used in the Medical Practice Act, Article 4495b, sec.3.08, shall have the following meanings in the context of providing medications for pain and related symptoms. Abuser of narcotic drugs, controlled substances and dangerous drugs-A person who takes a drug or drugs for other than legitimate medical purposes. Intractable pain -A pain state in which the cause of the pain cannot be removed or otherwise treated and which in the generally accepted course of medical practice no relief or cure of the cause of the pain is possible or none has been found after reasonable efforts. Non-therapeutic in nature or manner-A medical use or purpose that is not legitimate. Prescribing pharmaceuticals or practicing consistent with the public health and welfare-Prescribing pharmaceuticals and practicing medicine for a legitimate medical purpose in the usual course of professional practice. sec.170.3. Guidelines. The Texas State Board of Medical Examiners will use the following guidelines to determine whether a physician's conduct violates the Medical Practice Act, sec.sec.3.08(4)(E), 3.08(4)(F), and 3. 08(18) in regard to the prescribing, administering, ordering, or dispensing of pain medications and other drugs necessary to address their side effects. (1) The treatment of pain, including intractable pain, with dangerous drugs and controlled substances is a legitimate medical purpose when done in the usual course of professional practice. (2) A physician or surgeon duly authorized to practice medicine in Texas and to prescribe controlled substances and dangerous drugs in this state shall not be subject to disciplinary action by the board for prescribing, ordering, administering, or dispensing dangerous drugs or controlled substances for the treatment and relief of pain, including intractable pain, in the usual course of professional practice for a legitimate medical purpose in compliance with applicable state and federal law. (3) Prescribing, ordering, administering, or dispensing dangerous drugs or controlled substances for pain will be considered to be for a legitimate medical purpose if based upon accepted scientific knowledge of the treatment of pain, including intractable pain, not in contravention of applicable state or federal law, and if prescribed, ordered, administered, or dispensed in compliance with the following guidelines where appropriate and as is necessary to meet the individual needs of the patient: (A) After a documented medical history, which may be provided orally or in writing by the patient, and physical examination by the physician providing the medication including an assessment and consideration of the pain, physical and psychological function, any history and potential for substance abuse, coexisting diseases and conditions, and the presence of a recognized medical indication for the use of a dangerous drug or controlled substance; (B) Pursuant to a written treatment plan tailored for the individual needs of the patient by which treatment progress and success can be evaluated with stated objectives such as pain relief and/or improved physical and psychosocial function. Such a written treatment plan shall consider pertinent medical history and physical examination as well as the need for further testing, consultations, referrals, or use of other treatment modalities; (C) The physician should discuss the risks and benefits of the use of controlled substances with the patient or guardian; (D) Subject to documented periodic review of the care by the physician at reasonable intervals in view of the individual circumstances of the patient in regard to progress toward reaching treatment objectives which takes into consideration the course of medications prescribed, ordered, administered, or dispensed as well as any new information about the etiology of the pain; (E) Complete and accurate records of the care provided as set forth in subparagraphs (A)-(D) of this paragraph should be kept. When controlled substances are prescribed, names, quantities prescribed, dosages, and number of authorized refills of the drugs should be recorded, keeping in mind that pain patients with a history of substance abuse or who live in an environment posing a risk for medication misuse or diversion require special consideration. Management of these patients may require closer monitoring by the physician managing the pain and consultation with appropriate health care professionals. (4) A decision by a physician not to strictly adhere to the provisions of paragraph (3) of this section will, for good cause shown, be grounds for the board to take no disciplinary action in regard to the physician. Each case of prescribing for pain will be evaluated on an individual basis. The physician's conduct will be evaluated to a great extent by the treatment outcome, taking into account whether the drug used is medically and/or pharmacologically recognized to be appropriate for the diagnosis, the patient's individual needs including any improvement in functioning, and recognizing that some types of pain cannot be completely relieved. (5) If the provisions as set out in paragraphs (1)-(4) of this section are met, and if all drug treatment is properly documented, the board will consider such practices as prescribing in a therapeutic manner, and prescribing and practicing medicine in a manner consistent with public health and welfare. (6) Quantity of pharmaceutical and chronicity of prescribing will be evaluated on the basis of the documented appropriate diagnosis and treatment of the recognized medical indication, documented persistence of the recognized medical indication, and properly documented follow-up evaluation with appropriate continuing care as set out in this chapter. (7) A physician may use any number of treatment modalities for the treatment of pain, including intractable pain, which are consistent with legitimate medical purposes. (8) These rules shall not be construed so as to apply to the treatment of acute pain with dangerous drugs or controlled substances for purposes of short- term care. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 14, 1995. TRD-9503352 Bruce A. Levy, M.D., J.D. Executive Director Texas State Board of Medical Examiners Effective date: April 7, 1995 Proposal publication date: February 7, 1995 For further information, please call: (512) 834-7728 Chapter 173. Applications 22 TAC sec.173.1 The Texas State Board of Medical Examiners adopts an amendment to sec.173. 1, without changes, to the proposed text as published in the December 6, 1994, issue of the Texas Register (19 TexReg 9585). The section as adopted will delete titles of applications no longer being used by the board and add new titles to update the existing rules. The section as adopted will function as a clarification of the applications used by the board. No comments were received regarding adoption of the amendment. The amendment is adopted under the Medical practice Act, Texas Civil Statutes, Article 4495b, sec.2.09(a), which provides the Texas State Board of Medical Examiners with the authority to make rules, regulations and bylaws not inconsistent with this Act as may be necessary for the governing of its own proceedings, the performance of its duties, the regulation of the practice of medicine in this state, and the enforcement of this Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 14, 1995. TRD-9503347 Bruce A. Levy, M.D., J.D. Executive Director Texas State Board of Medical Examiners Effective date: April 7, 1995 Proposal publication date: December 6, 1994 For further information, please call: (512) 834-7728 Chapter 175. Schedule of Fees and Penalties 22 TAC sec.175.1, sec.175.2 The Texas State Board of Medical Examiners adopts amendments to sec.175.1 and sec.175.2, without changes to the proposed text as published in the December 6, 1994, issue of the Texas Register (19 TexReg 9585). The sections as adopted will update the board's fees for processing applications for various permits and licenses, and penalties for late annual registration for acupuncturists and physician assistants. The sections as adopted will function as a clarification of the fees charged by the board. No comments were received regarding adoption of the amendments. The amendments are adopted under the Medical Practice Act, Texas Civil Statutes, Article 4495b, sec.2.09(a), which provides the Texas State Board of Medical Examiners with the authority to make rules, regulations and bylaws not inconsistent with this Act as may be necessary for the governing of its own proceedings, the performance of its duties, the regulation of the practice of medicine in this state, and the enforcement of this Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 14, 1995. TRD-9503348 Bruce A. Levy, M.D., J.D. Executive Director Texas State Board of Medical Examiners Effective date: April 7, 1995 Proposal publication date: December 6, 1994 For further information, please call: (512) 834-7728 Chapter 183. Acupuncturists 22 TAC sec.183.4, sec.183.19 The Texas State Board of Medical Examiners adopts an amendment to sec.183. 4 and new sec.183.19, without changes to the proposed text as published in the December 6, 1994, issue of the Texas Register (19 TexReg 9586). The amendment as adopted will clarify that an acupuncture school approved by the National Accreditation Council on Schools and Colleges of Acupuncture and Oriental Medicine (NACSCAOM) may refer to itself as a college as long as it maintains NACSCAOM accreditation. The section as adopted will also change the requirement of at least 48 semester hours of preacupuncture training to 60 semester hours of preacupuncture training. The new sec.183.19 as adopted will clarify the professional titles a licensed acupuncturist may use. The sections as adopted will function as a clarification of existing rules and to raise the evaluation standard for licensure as an acupuncturist. No comments were received regarding adoption of the amendment and new section. The amendment and new section are adopted under the Medical Practice Act, Texas Civil Statutes, Article 4495b, sec.2.09(a), which provides the Texas State Board of Medical Examiners with the authority to make rules, regulations and bylaws not inconsistent with this Act as may be necessary for the governing of its own proceedings, the performance of its duties, the regulation of the practice of medicine in this state, and the enforcement of this Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 14, 1995. TRD-9503349 Bruce A. Levy, M.D., J.D. Executive Director Texas State Board of Medical Examiners Effective date: April 7, 1995 Proposal publication date: December 6, 1994 For further information, please call: (512) 834-7728 Chapter 185. Physician Assistants 22 TAC sec.185.7 The Texas State Board of Medical Examiners adopts an amendment to sec.185. 7, without changes to the proposed text published in the January 27, 1995, issue of the Texas Register (20 TexReg 420). The section will protect the public by providing a mechanism by which a temporary license may be issued to physician assistants in order to allow them to begin work, especially in underserved areas, sooner than otherwise would be possible. The section will function by providing the executive director of the board with the ability to issue a limited temporary license to a physician assistant whose file is substantially complete. The comments received from individuals related to a fee for temporary licenses which did not pertain to this particular rule change. The amendment is adopted under the Physician Assistant Licensing Act, Texas Civil Statutes, Article 4495b-1, sec.22, which provides the Texas State Board of Medical Examiners with the authority to make rules, regulations and bylaws not inconsistent with this Act as may be necessary for the governing of its own proceedings, the performance of its duties, the regulation of the practice of medicine in this state, and the enforcement of this Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 14, 1995. TRD-9503351 Bruce A. Levy, M.D., J.D. Executive Director Texas State Board of Medical Examiners Effective date: April 7, 1995 Proposal publication date: January 27, 1995 For further information, please call: (512) 834-7728 22 TAC sec.sec.185.16, 185.18, 185.19, 185.23 The Texas State Board of Medical Examiners adopts amendments to sec.sec.185. 16, 185.18, 185.19, and 185.23, without changes to the proposed text published in the December 6, 1994, issue of the Texas Register (19 TexReg 9587). The sections as adopted will protect the public by: requiring a supervising physician of a physician assistant to have an active and unrestricted license; notifying a complainant, at least quarterly, of the status of the complaint; and disciplining physician assistants for professional failure to practice as a physician assistant in an acceptable manner consistent with public health and welfare. The sections as adopted will function by clarifying the discretion of the Physician Assistant Advisory Council and streamlining the administrative process. No comments were received regarding adoption of the amendments. The amendments are adopted under the Physician Assistant Licensing Act, Texas Civil Statutes, Article 4495b-1, sec.22, which provides the Texas State Board of Medical Examiners with the authority to make rules, regulations, and bylaws not inconsistent with this Act as may be necessary for the governing of its own proceedings, the performance of its duties, the regulation of the practice of medicine in this state, and the enforcement of this Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 14, 1995. TRD-9503350 Bruce A. Levy, M.D., J.D. Executive Director Texas State Board of Medical Examiners Effective date: April 7, 1995 Proposal publication date: December 6, 1994 For further information, please call: (512) 834-7728 TITLE 22. EXAMINING BOARDS Part XII. Board of Vocational Nurse Examiners Chapter 235. Licensing Application for Licensure 22 TAC sec.235.17 The Board of Vocational Nurse Examiners adopts an amendment to sec.235.17, relative to temporary permits, without changes to the proposed text as published in the December 20, 1994, issue of the Texas Register (19 TexReg 10066). The amendment allows for explanation of what happens on temporary permits for those individuals who do not appear for the examination or fail to schedule for examination. The amendment will allow for a clearer understanding expiration dates of temporary permits. No comments were received regarding adoption of the amendment. The amendment is adopted under Texas Civil Statutes, Article 4528c, sec.5(g), which provide the Board of Vocational Nurse Examiners with the authority to make such rules and regulations as may be necessary to carry in effect the purposes of the law. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 14, 1995. TRD-9503282 Marjorie A. Bronk Executive Director Board of Vocational Nurse Examiners Effective date: April 6, 1995 Proposal publication date: December 20, 1994 For further information, please call: (512) 835-2071 Part XXIV. Texas Board of Veterinary Medical Examiners Chapter 571. Licensing Examinations 22 TAC sec.571.4 The Texas Board of Veterinary Medical Examiners adopts an amendment to sec.571.4, concerning Special Licenses, with changes to the proposed text published in the November 25, 1994, issue of the Texas Register (19 TexReg 9335). The change expands board-approved programs to include programs at institutions in the process of becoming accredited. The previous language only allowed for institutions already recognized and accredited. The amendment will define "board-approved veterinary programs" as cited in the Veterinary Licensing Act sec.10, Article 8890, as programs recognized and accredited by the appropriate authority of the American Veterinary Medical Association. No comments were received regarding adoption of the amendment. The amendment is adopted under Texas Civil Statutes, Article 8890, sec.7(a), which provide the Texas Board of Veterinary Medical Examiners with the authority to make, alter, or amend such rules and regulations as may be necessary or desirable to carry into effect the provisions of this Act." The amendment affects sec.10A, of the Veterinary Licensing Act, Article 8890, which provides the Board with the authority to issue special licenses to individuals employed in a Board-approved veterinary program at an institution of higher education. sec.571.4. Special Licenses. (a) Section 10A provisions. Under the provisions of the Veterinary Licensing Act, sec.10A, the State Board of Veterinary Medical Examiners shall offer the State Board Jurisprudence Examination to applicants for Special Licensure at least annually under the following conditions: (1) Candidates for Special Licensure must be identified to the Board, in writing, from the employing or controlling authority as meeting the provisions of sec.10A. The letter will state the candidates name, mailing address, and specific official duties that require a Special License. A board-approved program at an institution of higher education shall mean any program which is recognized and accredited, or in the accreditation process, by an appropriate body of the American Veterinary Medical Association. (2) The applicant must submit a completed application for examination to the Board Offices no later than 45 days prior to the examination date. The completed application includes payment of examination fees and certification from the employing official attesting to the applicant's employment position. (3) Upon completion of the State Board Jurisprudence Examination, each applicant shall receive a letter of notification from the Board notifying the applicant of the pass/fail results. A grade of 75% has been established as the minimum passing grade. For successful candidates, the letter shall constitute authority for limited practice in the State of Texas in accordance with each applicants's certified employment position. (4) A Special License will be issued for the calendar year in which the requirements for licensure have been met. Annually thereafter, a special license will be issued upon receipt of a registration renewal form which has been recertified by the employing official and also upon payment of the annual registration fee. (5) Renewals will follow the provision set forth in the Veterinary Licensing Act, Article 8890, sec.12(l)-(6). (6) Applicants who fail the State Board Jurisprudence Examination, and wish to be reexamined, will be required to resubmit an application and fees for the next scheduled, or later, Special Licensing Examination. (b) Applicant Criteria. Applicants for a Special License applying under the Veterinary Practice Act, sec.10A(4) (un/underrepresented) of shall meet the following criteria: (1) be a graduate of an AVMA accredited college of veterinary medicine or possess an ECFVG Certificate issued by the AVMA; (2) be licensed in another U. S. jurisdiction; (3) not be holding a special license under any other paragraph of Veterinary Practice Act, sec.10A; (4) shall have an employing sponsor approved by the Board who will certify that the need for a Special License exists; and (5) be deemed competent in the field for which the Special License is requested. (c) Need Criteria. In making a determination if a field is un/underrepresented, the Board shall consider empirical and statistical evidence that: (1) there is a need or demand for that veterinary discipline, and (2) that there is a shortage of DVM's practicing that veterinary discipline. (d) Competency Criteria. In determining competency, the Board shall consider one or more of the following: (1) that the applicant has taken and passed the required licensing examinations in another state or jurisdiction; (2) that the applicant holds a certificate of special competency issued by a specialty board as recognized by the AVMA (3) that the applicant take and pass the Texas Jurisprudence examination. (e) General. A change in status from one special license category to another must be approved by the Board. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 14, 1995. TRD-9503304 Ron Allen Executive Director Texas Board of Veterinary Medical Examiners Effective date: April 6, 1995 Proposal publication date: November 25, 1994 For further information, please call: (512) 447-1183 Chapter 573. Rules of Professional Conduct Responsibilities to Clients 22 TAC sec.573.27 The Texas Board of Veterinary Medical Examiners adopts an amendment to sec.573.27, concerning Observance of Confidentiality, with changes to the proposed text published in the October 21, 1994, issue of the Texas Register (19 TexReg 8346). The change expands the practitioner's authority to release records to include those records which are subpoenaed. This section was adopted on October 21, 1994, on an emergency basis so that client names and addresses might be released in order that rabies vaccination records can be provided to health care and public health professionals in cases of animal bites. Ellis Gilleland commented that the rule is not necessary since there is extensive language in the Veterinary Licenisng Act. Mr. Gilleland also felt that practitioners should also be authorized to release records which are subpoenaed. BOARD RESPONSE: The Board feels that the rule is needed to clarify the wording in the Veterinry Licensing Act. It was agreed that veterinarians should be authorized to release records which are requested through subpoena duces tecum, and added that authority to the rule. The amendment is adopted under Texas Civil Statutes, Article 8890, sec.7(a), which provide the Texas Board of Veterinary Medical Examiners with the authority to make, alter, or amend such rules and regulations as may be necessary or desirable to carry into effect the provisions of this Act. sec.573.27. Observance of Confidentiality. In accordance with sec.18E of the Veterinary Licensing Act, a licensed veterinarian shall not violate the confidential relationship between the veterinarian and a client and may not be required to disclose any information concerning the veterinarian's care for an animal except on written authorization or another form of waiver executed by the client or on receipt by the veterinarian of an appropriate court order, or subpoena duces tecum. Another form of waiver includes verbal authorization by the client. Confidentiality extends to care and treatment of the animal, but does not preclude the veterinarian from divulging the name and address of the animal owner to any health authority, veterinarian, or physician who requests the identity of the client for purposes of obtaining the information to verify rabies vaccinations or other treatment involving life threatening situations. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 14, 1995. TRD-9503305 Ron Allen Executive Director Texas Board of Veterinary Medical Examiners Effective date: April 6, 1995 Proposal publication date: October 21, 1994 For further information, please call: (512) 447-1183 Prescribing and/or Dispensing Medications 22 TAC sec.573.44 The Texas Board of Veterinary Medical Examiners adopts new sec.573.44, concerning Compounding Drugs, with changes to the proposed text published in the November 25, 1994, issue of the Texas Register (19 TexReg 9336). This new section provides veterinarians with guidelines for compounding drugs, which are based on the Federal Drug Administration's Compliance Policy Guide (CPG) concerning drug compounding and the illegal manufacture of drugs. The changes made since the rule was proposed are grammatical in nature and do not effect the intent of the rule. Following are comments received concerning the new rule, with the Board's response following each comment: Dr. Gordon Brumbaugh, Member, Texas Veterinary Medical Association's Pharmacy and Therapeutic Committee supports the rule and makes a number editorial changes which improves and clarifies the rule, but does not impact rule content. He points out that "valid prescription" as stated in subsection (f)(3)(A) should be defined. Dr. Brumbaugh contends that subsection (f)(3) contradicts the requirements for compounding, in that if a marketed, approved animal drug dosage form is available, compounding is not necessary. Paragraph (2) states that it is preferable to use approved labeled drugs in an extra-label manner over compounding products. He also asserts that a lengthy preamble is not needed in a rule of this nature. BOARD RESPONSE: The editorial suggestions were incorporated. The definition of a valid prescription is contained in the Act and Board rules and need not be recited in this rule. The contradictory language was clarified though editorial changes. The comment regarding the length of the preamble was not addressed. Mr. A. Wes Siegner, Jr., Attorney At Law, Hyman Phelps, & McNamara, Washington, D.C. addressed the rule on behalf of licensed veterinarians in Texas. He supports adoption of the rule and offers several suggestions. Mr. Siegner suggests that the first sentence of subsection (a) be amended to read "The Board acknowledges the historic medical need for compounding. . . " He also suggests the 4th sentence in subsection (a) be amended to read: "Consequently, in order to comply with the requirements of Texas law and the Veterinarian's Oath, veterinarians are required to . . ." The cautionary statement, the capitalized last portion of subsection (a), should be amended to read as: "THIS RULE IS AADOPTED BY THE BOARD TO CLARIFY THE CIRCUMSTANCES IN WHICH PRACTITIONERS ARE LEGALLY ENTITLED TO COMPOUND DRUGS. FEDERAL AND STATE LAWS OR REGULATIONS MAY PLACE ADDITIONAL CONDITIONS ON SUCH COMPOUNDING." He feels "unapproved new animal drugs" should be replaced with "compounded medicament" throughout subsection (e) since the Animal Drug Clarification Act removes drugs used off- label from the category of animal drugs requiring FDA approval. He interprets subsection (e)(3) as prohibiting the naming of compounded formulations, as well as any addition of color or additive. He points out that since a large percentage of West Texas and Panhandle feed lot employees speak very little or no English and few DVMs speak fluent Spanish, labels for medications are often color coded and simple prescription numbers and names are used to avoid improper medication and assure proper withdrawal times. He suggests prohibiting fanciful names which are meant to sell the products, but serve no apparent treatment function. Names such as "bloat treatment", "wound lotion", "pinkeye ointment" should be acceptable; however, "pink lady", "silver bullet", etc. which are clearly intended to sell the product, should be banned. The use of coloring is often useful in formulations requiring extended withdrawal times as a means of assuring elimination of unwanted residues. He asserts that prohibiting "other additives" in subsection (e)(3) is overly broad and undefined. He points out that some additives are useful. Some examples are preservatives, stabilizers, anti-oxidants, substances that tie up or neutralize antitoxins, chemicals to adjust pH, and substances such as lidocaine which are added to prevent pain at the injection site. Mr. Siegner suggests the following replacement wording for subsection (e)(3): "Preparation for sale of compounded medicaments which employ fanciful names, colorings or other additives that in any way imply that the compounds have some unique effectiveness (other than names, colorings or ingredients intended to serve as valid treatment function). "Mr. Siegner states "veterinarians can develop and use historical or comparative data to establish the increased efficacy of compounded preparations, particularly when working with large groups of animals. An example of this would be records establishing decreased death loss from the use of drugs with proven synergisms and/or additive beneficial effects, compared to the use of approved drug products with a single active ingredient." Therefore, he suggests that subsection (f)(2) be rewritten in the following manner: "Historical or comparative data establishing the increased efficacy of compounded formulations compared to FDA-approved human or animal drugs would normally be sufficient to support a decision to compound, assuming adequate withdrawal times are established." BOARD RESPONSE: A majority of Mr. Seigner's comments are editorial in nature and have been addressed. The remaining comments do not reflect substantial changes to the rule and can be addressed at a later date through amendments should the need arise. Mr. Gilleland commented that compounding drugs is a violation of federal statute until the Food and Drug Administration develops regulations. Further, he contends that the Board members are not trained clinical pharmacologists, and therefore not qualified to determine dosage of compounded drugs. He feels the words "at wholesale" should be removed from subsection (e)(5). Lastly, Mr. Gilleland alleges that regulations have not been written on compounding drugs and thus it is illegal for the Board to adopt a rule when no regulations exist. BOARD RESPONSE: Since there are no federal regulations dealing with compounding drugs, the Board put in the cautionary statement that veterinarians should keep abreast of changing federal and state laws and this rule enables the Board to take disciplinary action against those practitioners compounding drugs in violation of federal and state laws. The wording "at wholesale" was removed from subsection (e)(5). It is not necessary for regulations to be issued prior to the Board adopting a rule dealing with compounding drugs. Further, determining dosage of compounded drugs is not restricted to clinical pharmacologists. Dr. Nixon Varner commented on subsection (f)(1) which addresses the first step in determining whether compounding is necessary. The section states compounding should only be considered if the animal is threatened or suffering as a result of withholding a compounded treatment. Dr. Varner feels that synchronizing mares might be an example of a need to compound drugs, but the animals are not threatened or suffering by withholding treatment. BOARD RESPONSE: Disciplinary action would only be taken if a complaint was filed. It is not likely administering drugs to synchronize mares would generate a complaint. In order to address Dr. Varner's concern the rule would be withdrawn and reposted. If Dr. Varner's concern becomes an issue, the Board will amend the rule in the future. The new section is adopted under Texas Civil Statutes, Article 8890, sec.7(a) , which provide the Texas Board of Veterinary Medical Examiners with the authority to make, alter, or amend such rules and regulations as may be necessary or desirable to carry into effect the provisions of this Act. sec.573.44. Compounding Drugs. (a) Policy Preamble. The Board acknowledges the medical need for compounding, within certain aspects of veterinary practice, to enable the profession to use drugs in a responsible manner. The current state of veterinary medicine requires products to treat hundreds of conditions in more than 100 species, some of which are known to have unique physiological characteristics. While efforts have and are being made to expand the number of drug approvals for all applications of new animal drugs, only a fraction of the products explicitly labeled for each of these indications have U.S. Food and Drug Administration (FDA) approval. Consequently, veterinarians are required to relieve pain and suffering, treat diseases or conditions, and save animal lives in clinical situations in which no FDA approved product is properly formulated and labeled to address the specific medical need. However, there is a potential for harm to the public and health of animals when drug products are compounded, distributed and used on a large scale in the absence of adequate safeguards and practices. Therefore, the Board will implement and enforce the following guidelines regarding veterinarians who find the need to compound. These guidelines are based on the FDA's Compliance Policy Guide (CPG) concerning compounding and illegal manufacturing of drugs. CAUTION: VETERINARIANS SHOULD BE AWARE THAT FEDERAL AND STATE DRUG LAWS CAN CHANGE. THIS RULE IS AADOPTED BY THE BOARD TO ENABLE PRACTITIONERS TO COMPOUND DRUGS WHEN DOING SO IS NOT IN CONFLICT WITH FEDERAL AND STATE DRUG LAWS OR REGULATIONS. (b) Definition of "drug". When used in this rule, the definition of drug shall be as defined in the Texas Food, Drug, and Cosmetic Act, sec.431.002 (14). Section 431.002(14) currently reads: "Drug" means articles recognized in the official United States Pharmacopoeia National Formulary, or any supplement to it, articles designed or intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in man or other animals, articles, other than food, intended to affect the structure of any function of the body of man or other animals, and articles intended for use as a component of any article specified in this subdivision. The term does not include devices or their components, parts, or accessories. A food for which a claim is made in accordance with sec.403(r) of the federal Act, and for which the claim is approved by the secretary, is not a drug solely because the label or labeling contains such a claim. (c) Definition of Compounding. Any manipulation to produce a dosage form drug, (formulation of a drug for administration), except for that manipulation which is provided for in directions for use on the labeling of an approved drug product, e.g., reconstitution of a sterile powder with water for injection. (d) Definition of Illegal Manufacturing. Any such manipulation that occurs outside the confines of a legitimate practice, e.g., where a veterinarian- client-patient relationship does not exist. (e) Illegal Manufacturing or Unacceptable Compounding Prohibited. The following situations would likely be considered illegal manufacturing, or, if within the confines of a legitimate practice, unacceptable compounding. These situations will be considered of high regulatory priority by the Board, likely to result in an enforcement action against the person or persons responsible for such violative behavior, and reported to the FDA: (1) Preparation for sale of large quantities of unapproved new animal drugs on an ongoing basis and where no valid medical need or veterinary/client/patient relationship exists; (2) Promotion and/or distribution of compounded medicaments that are essentially similar to FDA-approved products; (3) Preparation for sale of unapproved new animal drugs which employ fanciful or trade names, colorings or other additives, or that in any way imply that the compounds have some unique effectiveness or composition; (4) Advertising, promotion, display, resale, or other means of marketing prepared unapproved new animal drugs; and (5) Offering compounded medicaments to other state licensed veterinarians, pharmacists or other commercial entities for resale. (f) Acceptable Compounding. Limited compounding by or on the order of a licensed veterinarian (or pharmacist on a veterinarian's prescription) is acceptable within the following guidelines. The practitioner would utilize the following decision process to determine whether or not compounding is necessary and justifiable. This process is designed to ensure that compounding is initiated only in those situations where the needs of the patient are great and the risks to the patient and consumer are small. (1) The first question or step of the process is a determination as to whether the health of the animal would be threatened or whether suffering would result from withholding treatment. If the answer to this question is in the affirmative, then the second consideration of the practitioner should be whether there is a need to create an appropriate dosage form drug for the species, age, anatomy, size, medical conditions, or safety of the patient or practitioner, or whether compounding is necessary because of a desire to increase effectiveness, decrease side effects or minimize the need for restraint of dangerous animals. (2) If the answer to this question of the need to create a drug is also in the affirmative, the practitioner should consider whether there is a marketed approved animal drug dosage form which, when used as labeled, or used in an extra-label manner, might acceptably treat the condition. The practitioner should also consider whether there is a human-labeled drug available that can be used in accordance with CPG 7125.35 to acceptably treat the condition. The use of approved animal drugs in an extra-label manner or the use of human-labeled drugs would both be preferred over the use of compounded products due to the concern that compounded products may pose purity, potency and stability problems. (3) All of the alternatives to treatment in listed in paragraph (2) of this subsection must be ruled out before a decision is made by the practitioner to compound. A positive response to any would negate the need to compound. When a decision is made to compound, all the following criteria and precautions must be met by the practitioner. (A) Compounding can only be performed by the veterinarian or by a pharmacist on the receipt of a valid prescription from a veterinarian. Compounding can only be performed within the confines of a legitimate veterinarian-client-patient relationship. (B) Veterinarians must exercise professional judgement to determine when compounding requires the services of a pharmacist. Professional assistance is necessary when the complexity of compounding exceeds the veterinarian's knowledge, skill, facilities, or available equipment. (C) The safety and efficacy of the compounded drug product is consistent with current standards of pharmaceutical and pharmacological practices, that is, known incompatibilities and inappropriate combinations are avoided and minimum current good compounding practices for the preparation of drug products by State-licensed pharmacies is met. (D) The veterinarian is responsible for ensuring, when a compounded drug product is used in a food-producing animal, that no violative tissue residues occur from such use. (E) Procedures are instituted to assure that appropriate patient records for the treated animals are maintained. (F) All drugs dispensed to the animal owner by the veterinarian or pharmacist must bear labeling information and an expiration date which is adequate to properly use the product. A complete label should bear the following information: (i) name and address of the attending veterinarian. (ii) date dispensed and expiration date. The expiration date should not exceed the length of the prescribed treatment. (iii) medically active ingredients. (iv) identity of treated animals. (v) directions for use. (vi) cautionary statements if needed. (vii) withdrawal/withholding times if needed. (viii) condition or disease to be treated. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 14, 1995. TRD-9503307 Ron Allen Executive Director Texas Board of Veterinary Medical Examiners Effective date: April 6, 1995 Proposal publication date: November 25, 1994 For further information, please call: (512) 447-1183 Responsibilities to Clients 22 TAC sec.573.69 The Texas Board of Veterinary Medical Examiners adopts an amendment to sec.573.69, concerning Reporting Criminal Activity, without changes to the text published in the October 21, 1994, issue of the Texas Register (19 TexReg 8347). This amendment will require the Board to report all non-drug related cases to proper authorities. Previously the Board was required to report all non-narcotic related cases to proper authorities. Mr. Gilleland expressed concern that there is no distinction between "non-drug related" and "drug-related" activity in the rule. It was suggested that in addition to reporting criminal activity to the Department of Public Safety and the Drug Enforcement Administration officials, criminal activity should be reported to county/district attorneys . BOARD RESPONSE: A representative from the Drug Enforcement Administration (DEA) present at the meeting pointed out that DEA has its own procedures that do not involve the district or county attorneys, and normally attorneys will refer to the DPS and/or DEA for investigation. With this information the Board felt it would be redundant to require that criminal activity be reported to county and district attorneys. The amendment is adopted under Texas Civil Statutes, Article 8890, sec.7(a), which provide the Texas Board of Veterinary Medical Examiners with the authority to make, alter, or amend such rules and regulations as may be necessary or desirable to carry into effect the provisions of this Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 14, 1995. TRD-9503306 Ron Allen Executive Director Texas Board of Veterinary Medical Examiners Effective date: April 6, 1995 Proposal publication date: October 21, 1994 For further information, please call: (512) 447-1183 Chapter 577. General Administrative Duties Staff and Miscellaneous 22 TAC sec.577.15 The Texas Board of Veterinary Medical Examiners adopts an amendment to sec.577.15, concerning Fee Schedule, without changes to the proposed text published in the November 4, 1994, issue of the Texas Register (19 TexReg 8747). This amendment is necessitated by a reduction in the license renewal fee. This section was adopted on an emergency basis on November 4, 1995, since the Board does not meet prior to commencement of the 1995 renewal period. The rule will set out the fees charged by the Board for examinations, license renewals, open records and mailing lists and labels. It will reduce the license renewal fee by $16. No comments were received regarding adoption of the amendment. The amendment is adopted under Texas Civil Statutes, Article 8890, sec.7(a), which provide the Texas Board of Veterinary Medical Examiners with the authority to make, alter, or amend such rules and regulations as may be necessary or desirable to carry into effect the provisions of this Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 14, 1995. TRD-9503303 Ron Allen Executive Director Texas Board of Veterinary Medical Examiners Effective date: April 6, 1995 Proposal publication date: November 4, 1994 For further information, please call: (512) 447-1183 TITLE 37. PUBLIC SAFETY AND CORRECTIONS Part III. Texas Youth Commission Chapter 88. Special Management Programs 37 TAC sec.88.1, sec.88.3 The Texas Youth Commission (TYC) adopts new sec.88.1 and sec.88.3, concerning special management and treatment program for assaultive youth, and intensive resocialization program, without changes to the proposed text as published in the February 10, 1995, issue of the Texas Register (20 TexReg 935). The justification for the new sections are that youth who engage in activities which incite and cause major disruption and endangerment of staff and youth will be better served by placement in highly structured treatment programs. New sec.88.1 will allow youth who pose a serious threat to life, property, self, staff, or other youth, to be moved to a special management and treatment program for aggressive and assaultive behaviors in a TYC institution. New sec.88.3 replaces the existing sec.91.73 which was simultaneously proposed for repeal. The rule has been moved to a more appropriate chapter and renumbered. No comments were received regarding adoption of the new rules. The new rules are adopted under the Human Resources Code, sec.61.075, which provides the Texas Youth Commission with the authority to order confinement under conditions it believes best designed for the child's welfare and the interests of the public. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 17, 1995. TRD-9503385 Steve Robinson Executive Director Texas Youth Commission Effective date: April 7, 1995 Proposal publication date: February 10, 1995 For further information, please call: (512) 483-5244 Chapter 91. Discipline and Control Control 37 TAC sec.91.73 The Texas Youth Commission (TYC) adopts the repeal of sec.91.73, concerning resocialization program, without changes to the proposed text as published in the February 10, 1995, issue of the Texas Register (20 TexReg 937). The repeal is justified in order to move the rule to a more appropriate chapter. The repeal will allow the rule to be moved to a new chapter and be renumbered. No comments were received regarding adoption of the repeal. The repeal is adopted under the Human Resources Code, sec.61.034, which provides the Texas Youth Commission with the authority to make rules appropriate to the proper accomplishment of its functions. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 17, 1995. TRD-9503384 Steve Robinson Executive Director Texas Youth Commission Effective date: April 7, 1995 Proposal publication date: February 10, 1995 For further information, please call: (512) 483-5244 TITLE 40. SOCIAL SERVICES AND ASSISTANCE Part I. Texas Department of Human Services Chapter 15. Medicaid Eligibility Subchapter B. Medicare and Third-Party Resources 40 TAC sec.15.201 The Texas Department of Human Services (DHS) adopts an amendment to sec.15. 201, concerning qualified Medicare beneficiaries. The purpose of the amendment is to update the rulebase to reflect policy and federal requirements in the Omnibus Budget Reconciliation Act of 1990, effective January 1, 1991. The income eligibility limit for the Qualified Medicare Beneficiary Program (QMB) program is raised to 100% of federal poverty levels, and the social security cost-of-living adjustment during January, February, and March of each year is excluded. The amendment will function by ensuring more people are eligible for the QMB program. The amendment is adopted under the Human Resources Code, Title 2, Chapters 22 and 32, which provides the department with the authority to administer public and medical assistance programs; and under Texas Civil Statutes, Article 4413 (502), sec.16, which provide the Health and Human Services Commission with the authority to administer federal medical assistance funds. The amendment is adopted in compliance with federal requirements effective January 1, 1991. The amendment implements the Human Resources Code 22.001-22.024 and 32. 001- 32.042. sec.15.201. Qualified Medicare Beneficiaries (QMB) (Type Program 24). (a) Public Law 100-360, the Medicare Catastrophic Coverage Act of 1988, requires the Texas Department of Human Services (DHS) to pay Medicare premiums, deductibles, and coinsurance for certain clients. Effective January 1, 1989, DHS pays Medicare premiums, deductibles, and coinsurance premiums for clients who (1) are enrolled in Medicare Part A, (2) have income that is equal to or less than (A) 85% of the federal poverty level in calendar year 1989, (B) 90% of the federal poverty level in calendar year 1990, and (C) 100% of the federal poverty level in calendar year 1991 and thereafter. (3) have resources no more than twice the limits for the SSI program. (b)-(g) (No change.) (h) For QMB eligibility, the cost-of-living adjustment (COLA) in Social Security benefits is excluded for the months of January, February, and March of each year, beginning in 1991. To determine eligibility for applications and recertifications, DHS uses the pre-COLA benefit amount during those months. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 16, 1995. TRD-9503317 Nancy Murphy Section Manager, Media and Policy Services Texas Department of Human Services Effective date: January 1, 1991 Proposal publication date: N/A For further information, please call: (512) 450-3765