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 16. ECONOMIC REGULATION PART IX. Texas Lottery Commission CHAPTER 401. Administration of the State Lottery Act The Texas Lottery Commission adopts amendments to 16 TAC sec.sec.401.152 (relating to Application for Licenses), 401.153 (relating to Qualification for License), 401.156 (relating to Renewal for License), 401.157 (relating to Temporary Licensee), 401.159 (relating to Summary Suspension of License), 401.301 (relating to General Definitions), 401.302 (relating to Instant Game Rules), 401.303 (relating to Grand Prize Drawing Rule), 401.304 (relating to On- Line Game Rules (General)), 401.352 (relating to Settlement Procedures), 401.355 (relating to Restricted Sales), 401.356 (relating to Sales Price of Tickets), 401.361 (relating to Required Purchases of Lottery Tickets), 401.362 (relating to Security Procedures), 401.363 (relating to Retailer Record), 401.364 (relating to Training), and 401.366 (relating to Compliance with All Applicable Laws), without changes to the proposed test published in the December 8, 1995, issue of the Texas Register (20 TexReg 10335). Many of the amendments are made to clarify language that became inconsistent when the Texas Lottery Commission, the agency, was created by House Bill 54, 72nd Legislature, First Called Session as amended by House Bill 1587, 73rd Legislature, Regular Session. Additionally, there are several instances in which the language is amended to reflect correct statutory references. Phrases within several of the rules are amended to correspond with the practices of the Texas Lottery Commission. The language in sec.401.153 is amended to incorporate legislation promulgated by House Bill 3031, 74th Legislature, Regular Session, regarding the locations lottery tickets may be sold. The changes to the existing rules make it clear (1) who, within the agency, is making determinations regarding particular matters and (2) what current agency practice is in light of legislative changes. No comments were received regarding adoption of the amendments. SUBCHAPTER B. Licensing of Sales Agents 16 TAC sec.sec.401.152, 401.153, 401.156, 401.157, 401.159 The amendments are adopted under the Texas Government Code, sec.466.015, which provides the Texas Lottery Commission with the authority to adopt all rules governing the establishment and operation of the lottery. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on February 22, 1996. TRD-9602542 Kimberly L. Kiplin General Counsel Texas Lottery Commission Effective date: March 14, 1996 Proposed publication date: December 8, 1995 For further information, please call: (512) 323-3791 SUBCHAPTER D. Lottery Game Rules 16 TAC sec.sec.401.301-401.304 The amendments are adopted under the Texas Government Code, sec.466.015, which provides the Texas Lottery Commission with the authority to adopt all rules governing the establishment and operation of the lottery. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on February 22, 1996. TRD-9602541 Kimberly L. Kiplin General Counsel Texas Lottery Commission Effective date: March 14, 1996 Proposed publication date: December 8, 1995 For further information, please call: (512) 323-3791 SUBCHAPTER E. Retailer Rules 16 TAC sec.sec.401.352, 401.355, 401.356, 401.361-401.364, 401.366 The amendments are adopted under the Texas Government Code, sec.466.015, which provides the Texas Lottery Commission with the authority to adopt all rules governing the establishment and operation of the lottery. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on February 22, 1996. TRD-9602540 Kimberly L. Kiplin General Counsel Texas Lottery Commission Effective date: March 14, 1996 Proposed publication date: December 8, 1995 For further information, please call: (512) 323-3791 TITLE 19. EDUCATION PART I. Texas Higher Education Coordinating Board CHAPTER 1. Agency Administration SUBCHAPTER A. General Provisions 19 TAC sec.1.9 The Texas Higher Education Coordinating Board adopts an amendment to sec.1.9, concerning General Provisions (Training for Members of Governing Boards and Board Trustees), without changes to the proposed text as published in the December 12, 1995, issue of the Texas Register (20 TexReg 10461). The 74th Legislature modified this training program. House Bill 1250 permits the Coordinating Board to provide for alternative methods by which regents can obtain the required training. It also eliminates the requirement for a two-day training session and allows more latitude by the Coordinating Board in the selection of topics. House Bill 1689 makes the regents training optional for elected members community college boards of trustees. The proposed modifications to the board rules includes changing the statute reference from sec.61.083 to sec.61.084. This was changed in House Bill 1250 to correct a duplication of a previously used section number. The second change is to add a section allowing for an alternative method for delivering the training program. Governing board members are required to attend a one-day seminar addressing topics such as budgeting, policy development, and governance. Previously, board members were required to attend a two-day seminar. Board members are still required to attend one seminar during their first two years of service on the Board. There were no comments received regarding adoption of the amendment. The amendment is adopted under Texas Education Code, sec.61.084, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules concerning General Provisions (Training for Members of Governing Boards and Board of Trustees). 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 authority. Issued in Austin, Texas, on February 20, 1996. TRD-9602526 James McWhorter Assistant Commissioner for Administration Texas Higher Education Coordinating Board Effective date: March 14, 1996 Proposal publication date: December 12, 1995 For further information, please call: (512) 483-6160 CHAPTER 5. Program Development SUBCHAPTER H. Approval of Off-Campus and Out-of-district Instruction for Public Colleges and Universities 19 TAC sec.sec.5.151-5.155, 5.157, 5.158 The Texas Higher Education Coordinating Board adopts the repeal of Subchapter H, sec.sec.5.151-5.155, 5.157, and 5.158, concerning Approval of Off-Campus and Out-of-district Instruction for Public Colleges and Universities, without changes to the proposed text as published in the November 24, 1995, issue of the Texas Register (20 TexReg 9791). The repeals will: ease constraints on universities and health science centers offering courses on other campuses; enhance the freedom of each community college to use any mode of instruction within the boundaries of its taxing authority; eliminate the "one-third rule" for the delivery of distance instruction (a rule which required one-third of any degree to be taken by a student on campus); omit the limit of three years on approval of off-campus master's programs; and do away with current requirements for initial Institutional Plans for live off-campus instruction and annual financial reports for Instructional Telecommunications. There were no comments received regarding adoption of the repeals. The repeals are adopted under Texas Education Code, sec.61.051 and sec.130.086, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules concerning Approval of Distance Learning for Public Colleges and Universities. 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 authority. Issued in Austin, Texas, on February 20, 1996. TRD-9602529 James McWhorter Assistant Commissioner for Administration Texas Higher Education Coordinating Board Effective date: March 14, 1996 Proposal publication date: November 24, 1995 For further information, please call: (512) 483-6160 19 TAC sec.sec.5.151-5.159 The Texas Higher Education Coordinating Board adopts new Subchapter H, sec.sec.5.151-5.159, concerning Approval of Distance Learning for Public Colleges and Universities, with changes to the proposed text as published in the November 24, 1995, issue of the Texas Register (20 TexReg 9791). The new sections will: ease constraints on universities and health science centers offering courses on other campuses; enhance the freedom of each community college to use any mode of instruction within the boundaries of its taxing authority; eliminate the "one-third rule" for the delivery of distance instruction (a rule which required one-third of any degree to be taken by a student on campus); omit the limit of three years on approval of off-campus master's programs; and do away with current requirements for initial Institutional Plans for live off-campus instruction and annual financial reports for Instructional Telecommunications. There were no comments received regarding adoption of the new sections. The new sections are under Texas Education Code, sec.61.051 and sec.130.086, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules concerning Approval of Distance Learning for Public Colleges and Universities. sec.sec.5.151. Terminology. (a) "Distance Learning" refers to instruction delivered by any means to any single or multiple location(s): (1) other than the "main campus" of a senior institution (or "on campus"), where the primary office of the chief executive officer of the campus is located; (2) outside the boundaries of the taxing authority of a community/junior college district; or (3) via instructional telecommunications to any other distance location. For the purposes of this subchapter, health science centers and health-related institutions shall be regarded as senior institutions. (b) The term "Instructional Telecommunications" (IT) refers to distance learning instruction delivered primarily by telecommunications technology. Delivery systems may include but are not limited to one or more of the following: interactive video, open-channel television, cable television, closed-circuit television, low-power television, communication and/or direct broadcast satellite, satellite master antenna system, microwave, video tape, video disc, computer software, computer networks, and telephone lines. (c) A "Reception Site" is any location that receives instruction via instructional telecommunications. This may include campuses, health agencies, business and industrial sites, public schools, homes, or any other locations where students may receive instruction. (d) The term "Program" refers to any certificate or degree program. A program is understood to be "offered via distance learning" if a student may complete the program without taking any courses on the main campus of the senior institution or without physically attending classes within the boundaries of the taxing authority of the community/junior college district. (e) An "Auxiliary Location" is a site or facility owned by an institution or recognized by the Coordinating Board as qualifying for special treatment under the provisions of this subchapter (see sec.5.155(b) and (c) of this title (relating to Annual Plan for Distance Learning)). (f) A "Regional Council" is a cooperative arrangement among representatives of all public and independent higher education institutions within a State Uniform Service Region (See sec.5.156 of this title (relating to Procedures for Review)). (g) An "Annual Plan" is a listing by location of distance learning courses and programs planned to be taught during an academic year by an institution. (See sec.5.155) sec.5.152. General Provisions. (a) The provisions of this subchapter are in accordance with Texas Education Code, sec.61.051 and sec.130.086, and apply to all distance learning instruction provided live or via telecommunication technology for academic credit by a public community/junior college outside of the boundaries of its taxing authority, or by a technical college, university, or health-related institution at a site other than the main campus. The subchapter also applies to instruction offered at out-of-state or foreign locations. (b) A class offered both on-campus and through distance learning instruction is subject to the reporting provisions of this subchapter if any student receives more than one-half of the instruction via distance learning delivery systems. (c) Each course offered under the provisions of this subchapter must be reported annually in accordance with the Board's uniform reporting system. State-funded distance learning instruction which is not reported by location will be disallowed for funding. (d) No degree or certificate program may be offered via distance learning instruction without prior approval of the Board. In addition, institutions may not offer through distance learning instruction at any site an array of courses that would constitute a degree or certificate program without prior approval by the Board to offer a full program at that site. Courses offered in violation of this provision will be disallowed for formula funding. (e) No master's degree program may be offered via distance learning instruction without express prior notification to the Southern Association of Colleges and Schools. No distance learning doctoral degree programs will be authorized except through the approval of joint or cooperative degree programs. (f) As directed by statute, the Board retains final authority for the offering of classes, courses, programs, and degrees, and may take whatever action it deems appropriate to comply with the Texas Education Code. sec.5.153. Standards and Criteria for Distance Learning. (a) Distance learning instruction offered by any live or telecommunications delivery system must be comparable to on-campus instruction. It must meet all of the quality standards which an institution requires of similar instruction offered on-campus to regularly enrolled students. (b) A distance learning course which offers either regular college credit or Continuing Education Units must do so in accordance with the standards of the Commission on Colleges of the Southern Association of Colleges and Schools. (c) Students enrolled in distance learning must satisfy the same requirements for admission to the institution, to the program of which the course is a part, and to the class/section itself, as are required of on-campus students. (d) Faculty providing distance learning instruction must be selected and evaluated by the same standards, review, and approval procedures used by the institution to select and evaluate faculty responsible for on-campus instruction. Institutions must provide training and support to enhance the added skills required of faculty teaching classes via instructional telecommunications. (e) The instructor of record must participate in the delivery of instruction and evaluation of student progress. (f) Providers of graduate-level distance learning instruction must be approved by the graduate faculty of the institution. (g) All distance learning instruction must be administered under the authority of the same office or person administering the corresponding on-campus instruction. The supervision, monitoring, and evaluation processes for instructors must be comparable to those for on-campus instruction. (h) Students must be provided academic support services -- including academic advising, counseling, library and other learning resources, tutoring services, and financial aid -- that are comparable to those available for on-campus students. (i) Facilities for distance learning instruction (other than homes as instructional telecommunications reception sites) must be adequate for the purpose of delivering instruction which is comparable in quality to on-campus instruction. sec.5.154. Institutional Plan for Instructional Telecommunications. (a) Each institution seeking first-time authority to offer distance learning instruction via telecommunications technology must submit an "Institutional Plan for Instructional Telecommunications" for review by the Coordinating Board's Advisory Committee on Instructional Telecommunications and approval by the Board before offering such instruction, except as noted in sec.5.154(c) of this section. The plan must include the following: (1) Institutional policies reflecting a commitment to maintain quality in accordance with the provisions of this subchapter. (2) A description of institutional arrangements for the operation of instruc- tional telecommunications, including identification of courses to be offered and the location(s) of proposed distance learning instruction. (b) After an initial Institutional Plan for Instructional Telecommunications has been approved by the Board, an institution must receive additional Board approval to expand beyond the approved plan. (c) The Commissioner may authorize under experimental authority a one-time offering of a limited number of classes via instructional telecommunications prior to Board approval of an Institutional Plan for Instructional Telecommunications. sec.5.155. Annual Plan for Distance Learning. (a) Unless specifically exempted by the Board, all state-funded distance learning instruction must be submitted for annual review by appropriate Regional Councils or peer institutions as provided in this subchapter. The procedure will utilize an Annual Plan for Distance Learning ("Annual Plan") for each requesting institution (See sec.5.156 of this title (relating to Procedures for Review). (b) The Board may exempt from annual review courses offered by one public institution on the campus of another public institution, courses taught on military bases or in correctional institutions, student teaching, internships, clinical instruction, practica, cooperative education work stations, field courses (when limited to campus-based students), and other specialized types of distance instruction. Exemption may also be given for distance learning instruction at a designated Auxiliary Location. Instruction offered under all such exemptions, however, must still be reported in accordance with the Board's uniform reporting system and will be subject to monitoring for quality. (c) If distance learning instruction is provided regularly in an approved cooperative degree program, in a correctional institution, on a military base, or at other sites where an institution needs to utilize resources not normally available on its main campus, the site where the instruction is received may be recognized as an Auxiliary Location by the Board. Auxiliary locations are recognized as having a specific, defined academic mission; expansion beyond the authorized mission requires prior approval of the Board. (d) In approving Annual Plans, the Commissioner may give preference for the delivery of distance learning courses or degree programs which rely principally upon faculty travel off-campus or out-of-district to the nearest institution willing and able to deliver the instruction. (e) The Commissioner may approve, as amendments to an institution's Annual Plan, courses submitted not later than two weeks after the beginning of any semester or summer session. The Commissioner shall not approve additional courses in excess of 20% of the number of courses previously approved as part of the Annual Plan for the requesting institution, or ten courses, whichever is greater. Such courses must first be submitted for consideration by public and independent institutions in the appropriate Regional Council(s). sec.5.156. Procedures for Review and Approval of Lower-Division Distance Learning. (a) Each institution must submit for review by all affected Regional Councils an Annual Plan which lists by location all proposed lower-division distance learning instruction. Requests for new locations and/or substantially different classes or programs at previously approved locations must be submitted on application forms provided by the Commissioner for that purpose. (b) Proposed lower-division distance learning instruction must be reviewed by the Regional Council of the Uniform Service Region containing each proposed site for the receiving of instruction in accordance with the provisions of this subchapter. (c) The Coordinating Board recognizes Regional Councils in each of the ten state Uniform Service Regions. The presidents -- or designated representatives -- of each public and independent institution of higher education with its main campus in the Region comprise the Council membership. A Council Chair shall be elected by the members, with term of service to be determined by the respective Council. (d) Each Regional Council has the following responsibilities: (1) Develop and file with the Universities and Community and Technical College Divisions of the Coordinating Board its procedures and guidelines for reviewing Annual Plans for proposed lower-division distance learning classes, programs, and locations in the Region. (2) Facilitate inter-institutional cooperation in the conduct of distance learning instruction, assure that each institution in the Region has notification in advance of all lower-division classes, programs, and locations proposed to be offered in the Region by any other institution, and provide each institution in the Region full opportunity to review and comment on the plans of other institutions. (3) Make recommendations to the Commissioner regarding Annual Plans for Distance Learning proposed to be offered within its Uniform Service Region in accordance with the consensus views of Council members. (4) Advise the Commissioner on appropriate policies and procedures for effective state-level administration of lower-division distance learning. (5) Encourage excellence in the conduct of lower-division distance learning instruction. (6) Study cooperatively the various methods of providing lower-division distance learning instruction, and promote the use of those methods which support quality and promise the most effective and efficient use of state resources. (e) Procedures for submitting applications to the Board for authorization to offer lower-division distance learning classes are as follows: (1) Each Regional Council must meet at least annually in the spring semester to receive and review each institution's Annual Plan for lower-division distance learning instruction proposed within the Region for the following academic year. Distance learning instruction proposed at any other time of the year may be reviewed by Council members by other means. (2) Distance learning instruction proposed by an institution must be reviewed by the Regional Council and forwarded to the Coordinating Board by a deadline set by the Commissioner, together with the Council's recommendations for approval or disapproval. (3) If proposed classes could affect an institution which is a member of another Regional Council, the Annual Plan must also be sent to that institution and to the Council to which it belongs. The full membership of that Council must review the proposal and return a recommendation to the originating Council. This recommendation and that of the originating Council must both be sent to the Commissioner. (4) Distance learning instruction proposed to be offered on a statewide basis must be separately identified. (5) Recommendations of the Regional Councils must be submitted in a time frame determined by the Commissioner to permit annual consideration by the Board at its April meeting. (6) The Commissioner will consider the recommendations of Regional Councils as well as any dissenting report filed by an institution. Subject to the following section, the Commissioner has the authority to approve or disapprove courses and Annual Plans, and to resolve disputes between or among institutions which cannot be resolved by the Councils. The Commissioner will report to all affected institutions on approvals and disapprovals of classes proposed under each Annual Plan at least two weeks before the scheduled April Board meeting, at which time the Board may hear appeals to approvals and disapprovals made by the Commissioner. (f) During the passage of the year it may be necessary for an institution to request approval of lower-division distance learning activities not submitted as part of its Annual Plan. Such proposed amendments to an Annual Plan must be submitted to affected Regional Councils prior to the teaching of any additional classes. Each Council Chair will forward recommendations to the Commissioner regarding the appropriateness of such instruction. Amendments shall be considered by the Commissioner in accordance with sec.5.155(e) of this title (relating Annual Plan for Distance Learning). sec.5.157. Procedures for Review and Approval of Upper-Level and Graduate Distance Learning. (a) Each January the Commissioner will initiate an exchange of information among all public and independent senior institutions, whether they propose to offer distance learning instruction for the following academic year or not. The exchange will be used to develop long-range plans for meeting state and regional needs, achieving institutional cooperation, and eliminating unnecessary duplication of offerings. Institutions must notify all other potentially affected institutions of their Annual Plans for the next academic year within the time frame prescribed by the Commissioner, and must seek to eliminate any conflicts or duplication. (b) Institutions must submit their official requests for approval by the Commissioner of distance instruction classes on forms provided by the Commissioner. (c) The Commissioner has the authority to resolve disputes between or among institutions, and has the authority to approve or disapprove courses and Annual Plans subject to the following section. (d) The Commissioner will report to all affected institutions on approvals and disapprovals of distance learning activities proposed under each Annual Plan at least two weeks before the scheduled July Board meeting, at which time the Board may hear appeals to approvals and disapprovals made by the Commissioner. (e) During the passage of the year it may be necessary for an institution to request approval of courses not submitted as part of its annual plan. The Commissioner shall consider such requests in accordance with sec.5.155(e) of this title (relating to Annual Plan for Distance Learning) if they are accompanied by documentation of discussions with other public and independent institutions in the affected Uniform Service Region concerning the proposed classes. sec.5.158. Approval of State-Funded Out-of-State and Foreign Courses. (a) State-funded out-of-state and foreign courses offered by Texas public institutions of higher education or by an approved consortium composed of Texas public institutions must have prior approval by the Commissioner in order for the semester credit hours or contact hours to be used for formula reimbursement. The following procedures shall apply: (1) An institution or consortium must submit to the Commissioner an application for state funding which demonstrates that the course meets the criteria set forth in subsection (b) of this section. (2) The Commissioner or designee will review applications in accordance with the standards and criteria outlined in this subchapter, and will notify the requesting institution of approval or denial of course applications, including a written explanation for any denials. (3) A course that has been previously approved to be offered at an out-of-state or foreign location may be re-approved on the basis of institutional certification that the course is the same as that previously approved. (b) State-funded out-of-state and foreign courses are subject to the following standards and criteria: (1) All students enrolled must meet all institutional standards for admission and must be actually admitted to the institution or one of the participating institutions in an approved consortium. All students enrolled must pay the appropriate tuition and fees for their residency category for the total number of credit hours earned. Financial aid must be available to students registering in foreign classes on the same basis as it would be for such students seeking financial aid for on-campus instruction. Additional financial aid may be furnished by the institution as appropriate. (2) Instruction must be provided by faculty of the institution or one of the consortium institutions and be supervised and evaluated according to appropriate institutional policies. Exceptions may be made by the Commissioner to take advantage of uniquely qualified instructors at an out-of-state or foreign location if the institution provides for individual justification and approval by the appropriate faculty or institutional officials. (3) Individual courses must meet the following standards and criteria: (A) Each course must be on the approved course inventory of the main campus of the institution or a consortium institution, must be a part of an approved degree or certificate program, and must be justified in terms of academic, cultural, or other resources available at the specific location(s). (B) Instruction must conform to all relevant academic policies of the institution. All classes must conform to the institution's workload and enrollment requirements, contact hour/credit ratio, and similar matters. (C) Courses may not offer credit for activities undertaken primarily for travel, recreation, or pleasure. (D) Minimum class enrollments must conform to the same standards applicable were the class to be offered on-campus. (4) Multi-course offerings must meet the following standards and criteria: (A) A group of courses taught by an individual faculty member and offered in the same time period and in the same out-of-state or foreign location may be considered as an aggregate for approval purposes. (B) Some courses may be approved within an aggregate request without satisfying paragraph (3)(A) of this subsection; however, the Commissioner may approve a multi-course aggregate only if at least one-half of the classes (making up at least one-half of the combined credit hours) comply with paragraph (3)(A) of this subsection. All other criteria in this subsection must be fully met by all courses that make up a multi-course aggregate. (5) Advertising or marketing for out-of-state and foreign classes should emphasize the instructional nature of the classes, and may not emphasize or create the impression that the classes are primarily credit-for-travel experiences. (6) Faculty and staff may not realize unusual perquisites or unusual financial gain for teaching out-of-state or foreign classes. (7) Except for funds specifically appropriated for international activities (e.g. state incentive programs, scholarships, etc.), state funds may not be used for faculty or student travel, meals and lodging, or other incidental expenses associated with out-of-state or foreign instruction. (8) Any free tickets for travel, accommodations, or other expenses provided by travel agents, carriers, or hotels must be used in direct support of the instructional program and may not be made as gifts to faculty or staff members or their families. (9) No state funding will be provided for courses or credits delivered by Instructional Telecommunications (see sec.5.15 (b) of this title relating to Terminology) to reception sites outside state boundaries. sec.5.159. Non-State-Funded Out-of-State and Foreign Classes. (a) Out-of-state and foreign courses offered by public universities and health related institutions, for which no state funds are expended, may be taught without prior approval of the Board. However, prior Board approval is required for full degree programs offered under these circumstances. Institutions are expected to ensure that all such instruction meets the quality standards expected of Texas higher education institutions. (b) Community and technical colleges proposing to offer out-of-state or foreign courses for which no state funds are expended are subject to the provisions of Chapter 9, Subchapter L of these rules and regulations. 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 authority. Issued in Austin, Texas, on February 20, 1996. TRD-9602528 James McWhorter Assistant Commissioner for Administration Texas Higher Education Coordinating Board Effective date: March 14, 1996 Proposal publication date: November 24, 1995 For further information, please call: (512) 483-6160 SUBCHAPTER J. Instructional Telecommunications 19 TAC sec.sec.5.191-5.195 The Texas Higher Education Coordinating Board adopts the repeal of Subchapter J, sec.sec.5.191-5.195, concerning Instructional Telecommunications, without changes to the proposed text as published in the November 24, 1995, issue of the Texas Register (20 TexReg 9794). The repeals will: ease constraints on universities and health science centers offering courses on other campuses; enhance the freedom of each community college to use any mode of instruction within the boundaries of its taxing authority; eliminate the "one-third rule" for the delivery of distance instruction (a rule which required one-third of any degree to be taken by a student on campus); omit the limit of three years on approval of off-campus master's programs; and do away with current requirements for initial Institutional Plans for live off-campus instruction and annual financial reports for Instructional Telecommunications. There were no comments received regarding adoption of the repeals. The repeals are adopted under Texas Education Code, sec.61.051 and sec.130.086, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules concerning Instructional Telecommunications. 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 authority. Issued in Austin, Texas, on February 20, 1996. TRD-9602530 James McWhorter Assistant Commissioner for Administration Texas Higher Education Coordinating Board Effective date: March 14, 1996 Proposal publication date: November 24, 1995 For further information, please call: (512) 483-6160 SUBCHAPTER P. Testing and Remediation 19 TAC sec.sec.5.311-5.318 The Texas Higher Education Coordinating Board adopts the repeal of Subchapter P sec.sec.5.311-5.318, concerning Testing and Remediation, without changes to the proposed text as published in the December 12, 1995, issue of the Texas Register (20 TexReg 10462). The rules are being repealed due to new legislation and updates were needed. There were no comments received regarding adoption of the repeals. The repeals are adopted under Texas Education Code, sec.sec.51.306, 51.3061, and 130.090, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules concerning Testing and Remediation. 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 authority. Issued in Austin, Texas, on February 20, 1996. TRD-9602532 James McWhorter Assistant Commissioner for Administration Texas Higher Education Coordinating Board Effective date: March 14, 1996 Proposal publication date: December 12, 1995 For further information, please call: (512) 483-6160 The Texas Higher Education Coordinating Board adopts new Subchapter P sec.sec.5.311-5.318, concerning Testing and Remediation, without changes to the proposed text as published in the December 12, 1995, issue of the Texas Register (20 TexReg 10462). The rules are being changed due to new legislation and updates were needed. The new sections will clarify the current rules and will institute new regulations due to legislation. There were no comments received regarding adoption of the new sections. The new sections are adopted under Texas Education Code, sec.sec.51.306, 51.3061, and 130.090, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules concerning Testing and Remediation. 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 authority. Issued in Austin, Texas, on February 20, 1996. TRD-9602531 James McWhorter Assistant Commissioner for Administration Texas Higher Education Coordinating Board Effective date: March 14, 1996 Proposal publication date: December 12, 1995 For further information, please call: (512) 483-6160 CHAPTER 17. Campus Planning SUBCHAPTER A. Criteria for Approval of New Construction and Major Repair and Rehabilitation 19 TAC sec.sec.17.24, 17.31, 17.33 The Texas Higher Education Coordinating Board adopts amendments to Subchapter A sec.sec.17.24, 17.31, and 17.33, concerning Criteria for Approval of New Construction and Major Repair and Rehabilitation, without changes to the proposed text as published in the December 12, 1995, issue of the Texas Register (20 TexReg 10465). The rules are being changed to bring the rules in line with changes in state law (Senate Bill 726 passed by the 74th Legislature provided for energy conservation performance projects at higher education institutions). Other proposed changes are to correct obsolete language and improve internal consistency of the rules. The proposed changes provide for the Board and/or Committee approval of energy conservation performance projects; allow institutions eighteen months instead of one year to award a contract on projects approved or evaluated by the Coordinating Board; remove obsolete deadlines; and, correct agency names that have changed. Comments were received regarding the proposed amendments stating that they consurred with the rule changes. One comment said they had no suggested changes. No further changes were made to the rules. Comments were received from: State Energy Conservation Office; General Services Commission; Honeywell, Inc.; Texas A & M University at Galveston; University of Texas Health Science Center-San Antonio; and University of Texas-Pan American. The amendments are adopted under Texas Education Code, sec.61.0572 and sec.61.058, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules concerning Criteria for Approval of New Construction and Major Repair and Rehabilitation. 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 authority. Issued in Austin, Texas, on February 20, 1996. TRD-9602537 James McWhorter Assistant Commissioner for Administration Texas Higher Education Coordinating Board Effective date: March 14, 1996 Proposal publication date: December 12, 1995 For further information, please call: (512) 483-6160 SUBCHAPTER B. Application for Approval of New Construction and Major Repair and Rehabilitation 19 TAC sec.sec.17.44-17.46 The Texas Higher Education Coordinating Board adopts amendments to Subchapter B sec.sec.17.44-17.46, concerning Application for Approval of New Construction and Major Repair and Rehabilitation, with changes to the proposed text published in the December 12, 1995, issue of the Texas Register (20 TexReg 10466). The rules are being changed to bring the rules in line with changes in state law (Senate Bill 726 passed by the 74th Legislature provided for energy conservation performance projects at higher education institutions). Other proposed changes are to correct obsolete language and improve internal consistency of the rules. The proposed changes provide for the Board and/or Committee approval of energy conservation performance projects; allow institutions eighteen months instead of one year to award a contract on projects approved or evaluated by the Coordinating Board; remove obsolete deadlines; and, correct agency names that have changed. Comments were received regarding the proposed amendments stating that they concurred with the rule changes. One comment said they had no suggested changes. Two comments suggested changes in the language of sec.17.45 to make it concur with legislative language regarding energy conservation projects. Additional changes were made to sec.17.45 as a result of these comments. Comments were received from: State Energy Conservation Office; General Services Commission; Honeywell, Inc.; Texas A & M University at Galveston; University of Texas Health Science Center-San Antonio; and University of Texas-Pan American. The amendments are adopted under Texas Education Code, sec.61.0572 and sec.61.058, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules concerning Application of New Construction and Major Repair and Rehabilitation. sec.17.44. Application Form. Application forms and guidelines for requesting Coordinating Board approval will be provided by the Coordinating Board and shall call for the following information: (1) (No change.) (2) Letter of assurance that the project has been designed to improve utilization of energy using the Energy Management Center standards; (3)-(6) (No change.) sec.17.45. Energy Conservation Projects. For the purpose of encouraging repair and rehabilitation projects that improve energy conservation in higher education facilities, the following procedure may be used to review, for Board approval, energy conservation projects reviewed by the State Energy Conservation Office's Energy Management Center for funding through a performance contract; or energy conservation contracts approved for funding by SECO/EMC through the Texas LoanSTAR Program. (1) The Energy Management Center periodically will submit to the Coordinating Board lists of the projects it has reviewed for funding through performance contracting or approved for funding through the Texas LoanSTAR Program at public institutions of higher education, except community or junior colleges. (2) The Coordinating Board staff reviews the projects to verify that none would result in a net addition of educational and general space or would be in conflict with Board standards for repair and rehabilitation projects. However, in the case of performance funding projects, additional space may be added. (3) (No change.) (4) If the committee approves the list of projects the staff will notify the Energy Management Center and the institutions whose projects have been approved. (5) The committee may refer to the full Board any projects it does not wish to approve that cost more than $600,000. If a Loanstar project would have the effect of increasing space, it must be referred to the full Board. (6) The Coordinating Board or Campus Planning Committee must approve energy conservation performance contracts. However, the Board or Campus Planning Committee will consider the review and comment report from the Energy Management Center prior to approval. sec.17.46. Special Approval Procedure. (a) Under this procedure the Coordinating Board delegates to the Campus Planning Committee the review and approval of the following types of projects: (1) (No change.) (2) Major repair and rehabilitation of existing education and general buildings that will not add educational and general space and whose total project cost is no more than $3 million. However, in the case of energy conservation performance projects, additional space may be added. (3) (No change.) (b) (No change.) 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 authority. Issued in Austin, Texas, on February 20, 1996. TRD-9602538 James McWhorter Assistant Commissioner for Administration Texas Higher Education Coordinating Board Effective date: March 14, 1996 Proposal publication date: December 12, 1995 For further information, please call: (512) 483-6160 CHAPTER 21. Student Services SUBCHAPTER B. Determining Residence Status 19 TAC sec.21.31 The Texas Higher Education Coordinating Board adopts an amendment to Subchapter B sec.21.31, concerning Competitive Scholarship Recipients, without changes to the proposed text as published in the December 19, 1995, issue of the Texas Register (20 TexReg 10875). The rules are being changed to implement changes required by passage of House Bill 1792. The rule provides guidance on implementing the expansion of the competitive scholarship program to include nonacademic scholarships. There were no comments received regarding the proposed amendment. The amendment is adopted under Texas Education Code, sec.54.064, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules concerning Competitive Scholarship Recipients. 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 authority. Issued in Austin, Texas, on February 20, 1996. TRD-9602533 James McWhorter Assistant Commissioner for Administration Texas Higher Education Coordinating Board Effective date: March 14, 1996 Proposal publication date: December 19, 1995 For further information, please call: (512) 483-6160 SUBCHAPTER P. Professional Nurses' Student Loan Repayment Program 19 TAC sec.21.508 The Texas Higher Education Coordinating Board adopts an amendment to Subchapter P sec.21.508, concerning Professional Nurses' Student Loan Repayment Program (Qualifications for Student Loan Repayment), without changes to the proposed text as published in the December 12, 1995, issue of the Texas Register (20 TexReg 10467). The rules are being changed to clarify which fields of nursing qualify for repayment of loans. The change clarifies which fields of nursing will qualify for possible repayment of loans. There were no comments received regarding the proposed amendment. The amendment is adopted under Texas Education Code, sec.61.656, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules concerning Professional Nurses' Student Loan Repayment Program (Qualifications for Student Loan Repayment). 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 authority. Issued in Austin, Texas, on February 20, 1996. TRD-9602534 James McWhorter Assistant Commissioner for Administration Texas Higher Education Coordinating Board Effective date: March 14, 1996 Proposal publication date: December 12, 1995 For further information, please call: (512) 483-6160 SUBCHAPTER DD. Minority Doctoral Incentive Program 19 TAC sec.sec.21.970-21.981 The Texas Higher Education Coordinating Board adopts new Subchapter DD sec.sec.21.970-21.981, concerning Minority Doctoral Incentive Program, without changes to the proposed text published in the December 12, 1995, issue of the Texas Register (20 TexReg 10468). The rules for the administration of this program are being changed to improve their clarity. Funds were appropriated for this program in the 74th Legislative Session. The rules will be used to guide decisions regarding selection of candidates for the program and the guarantee the state will make for repayment of loans. There were no comments received regarding the proposed new sections. The new sections are adopted under Texas Education Code, sec.56.162, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules concerning Minority Doctoral Incentive Program. 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 authority. Issued in Austin, Texas, on February 20, 1996. TRD-9602535 James McWhorter Assistant Commissioner for Administration Texas Higher Education Coordinating Board Effective date: March 14, 1996 Proposal publication date: December 12, 1995 For further information, please call: (512) 483-6160 19 TAC sec.sec.21.970-21.983 The Texas Higher Education Coordinating Board adopts the repeal of Subchapter DD sec.sec.21.970-21.983, concerning Minority Doctoral Incentive Program, without changes to the proposed text published in the December 12, 1995, issue of the Texas Register (20 TexReg 10467). The repeal to the subchapter will give more clarity to the rules. Funds were appropriated for this program in the 74th Legislative Session. The rules will be used to guide decisions regarding selection of candidates for the program and the guarantee the state will make for repayment of loans. There were no comments received regarding the proposed repeals. The repeals are adopted under Texas Education Code, sec.56.162, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules concerning Minority Doctoral Incentive Program. 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 authority. Issued in Austin, Texas, on February 20, 1996. TRD-9602536 James McWhorter Assistant Commissioner for Administration Texas Higher Education Coordinating Board Effective date: March 14, 1996 Proposal publication date: December 12, 1995 For further information, please call: (512) 483-6160 TITLE 25. HEALTH SERVICES PART II. Texas Department of Mental Health and Mental Retardation CHAPTER 406. ICF/MR Programs SUBCHAPTER D. Reimbursement Methodology 25 TAC sec.406.157 The Texas Department of Mental Health and Mental Retardation (TDMHMR) and adopts an amendment to sec.406.157, concerning ICF/MR program reimbursement methodology, without changes to the proposed text as published in the December 12, 1995, issue of the Texas Register (20 TexReg 10500). The proposed amendment deletes language inadvertently added in the last action on this rule; deletes four facilities from the list of children's facilities considered eligible for alternative reimbursement rates; and allows for the provisions of a settlement agreement between the Private Provider Association of Texas, the Texas Health and Human Services Commission, the Texas Department of Mental Health and Mental Retardation, and the Texas Department of Human Services which would allow the state to facilitate creation of a new reimbursement methodology for the Intermediate Care Facilities/Mental Retardation (ICF/MR) program. There was no written public comment received during the public comment period. The amendment is adopted under the Texas Health and Safety Code, sec.532.015, which provides the Texas Mental Health and Mental Retardation Board with broad rulemaking authority, and under the provisions of Texas Civil Statutes, Article 4413(502), sec.16, which provides the Texas Health and Human Services Commission with the authority to administer federal medical assistance funds. 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 February 21, 1996. TRD-9602606 Ann Utley Chairman, Texas Mental Health and Mental Retardation Board Texas Department of Mental Health and Mental Retardation Effective date: March 12, 1996 Proposal publication date: December 12, 1996 For further information, please call: (512) 206-4516 TITLE 28. INSURANCE PART I. Texas Department of Insurance CHAPTER 33. Continuing Care Retirement Facilities SUBCHAPTER A. General Provisions 19 TAC sec.sec.33.1-33.10 The Commissioner of Insurance adopts amendments to sec.sec.33.1-33.10, concerning the general provisions for Chapter 33 of this title (relating to Continuing Care Retirement Communities), without changes to the proposed text of sec.sec.33.1-33.7, and sec.sec.33.9-33.10 as published in the September 1, 1995, issue of the Texas Register (20 TexReg 6791). Amended sec.33.8 is adopted with changes to the proposed text of Form Number 6 which was incorporated by reference in this section, as published in the September 1, 1995, issue of the Texas Register (20 TexReg 6791). The amendments are necessary to provide technical corrections, to clarify the sections, and to make changes mandated by amendments to Health and Safety Code, Chapter 246, enacted by the passage of House Bill 2389, 73rd Legislature, 1993. Section 33.1 states the purpose of this chapter. Section 33.2 revises several of the definitions contained in this section. Section 33.3 clarifies the persons to which this chapter apply. Section 33.4 provides that if a court of competent jurisdiction determines portions of this chapter are invalid, then the remaining portions will remain in effect. Section 33.5 provides that violators of this chapter or any orders entered under this chapter may be subject to penalties under the Insurance Code, Article 1.10, sec.7. Section 33.6 provides the filing fee for a certificate of authority. Section 33.7 defines fiscal year. Section 33.8 adopts and incorporates by reference forms to be used by continuing care retirement facilities. Copies of these forms have been filed with the Secretary of State's Office, Texas Register Division. Persons desiring copies of these forms can obtain them from the Texas Department of Insurance, MC 305-2C, P.O. Box 149104, Austin, Texas 78714-9104. Section 33.9 changes the address for all filings made under this chapter. Section 33.10 clarifies that unregistered facilities are required to respond to commissioner inquiries and that the commissioner may take action against unregistered facilities. A comment suggested adding to Form Number 6 - Form for Disclosure Statement, the words "consumer protection and refund provisions" so that the form section regarding required contract language reads "Consumer Protection and Refund Provisions - Required Standard Contract Language". The department agrees and makes such a change to Form Number 6, incorporated by reference in sec.33.8. A comment suggested adding the Texas Department of Insurance's toll free number to Form Number 6 - Form for Disclosure Statement, so that interested parties could contact the department for a copy of the brochure on continuing care retirement communities. The department agrees and makes such a change to Form Number 6, incorporated by reference in sec.33.8. For with changes: Office of Public Insurance Counsel, individual commenters. The amendments are adopted pursuant to the Health and Safety Code, Chapter 246, including the rule making authority conferred by sec.246.003 of that chapter; the Insurance Code, Articles 1.03A and 1.10; House Bill 1461, sec.1.23, 73rd Legislature, 1993; and the Government Code, sec.2001.04, et seq. Health and Safety Code, Chapter 246 sets out the statutory requirements for continuing care retirement facilities and sec.246.003 authorizes the board to regulate those facilities and to adopt rules as necessary to administer and enforce that chapter. Insurance Code, Article 1.03A provides the commissioner with the authorization to adopt rules and regulations for the conduct and execution of the duties and functions of the department. Insurance Code, Article 1.10 authorizes sanctions for violations by licensees of the department. House Bill 1461, sec.1.23 authorizes the transition of duties between the State Board of Insurance and Commissioner of Insurance. The Government Code, sec.2001.004, et seq. authorizes and requires each state agency to adopt rules of practice setting forth the nature and requirements of available procedures and prescribes the manner for adoption of rules by a state administrative agency. sec.sec.33.8. Forms. The forms listed in this section are published by the department and filed with the Office of the Secretary of State, Texas Register Division. Copies of the forms may be obtained from the Texas Department of Insurance, CCRC Section, Insurer Services, Mail Code 305-2C, P.O. Box 149104, Austin, Texas, 78714-9104. The department adopts and incorporates by reference the forms listed in paragraphs (1) - (16), and their use is required, where applicable, for compliance with the provisions of this chapter. (1) CCRC Form Number 1 - Application for Certificate of Authority to do Business in the State of Texas under the Act, sec.246.022; (2) CCRC Form Number 2 - Application for Approval by the Commissioner for Release of Loan Reserve Fund Escrow Account Amounts in Excess of that Allowed Under the Act, sec.246.078(a); (3) CCRC Form Number 3 - Officers and Directors Page; (4) CCRC Form Number 4 - Biographical Data Form; (5) CCRC Form Number 4a - Biographical Data Form for Not-for-Profit CCRC Board Members; (6) CCRC Form Number 5 - Acknowledgment of Delivery of Disclosure Statement; (7) CCRC Form Number 6 - Form for Disclosure Statement; (8) CCRC Form Number 6a - Instructions for Preparation of CCRC Disclosure Statement for Filing with the Texas Department of Insurance; (9) CCRC Form Number 7 - Application for Change of Control of CCRC; (10) CCRC Form Number 8 - Certification of Changes to Disclosure Statement; (11) CCRC Form Number 9 - Notice of Request to Release Entrance Fee Escrow Account Funds; (12) CCRC Form Number 10 - Notice of Request to Release Funds from the Reserve Fund Escrow Account; (13) CCRC Form Number 11 - Notice by Provider of Repayment of Previously Released Funds to the Reserve Fund Escrow Account; (14) CCRC Form Number 12 - Affidavit of Repayment of Previously Released Funds to the Reserve Fund Escrow Account; (15) CCRC Form Number 13 - Notice of Lien; and (16) CCRC Form Number 14 - Calculations Concerning Conditions for Release of Entrance Fees to Provider. 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 authority. Issued in Austin, Texas, on February 22, 1996. TRD-9602556 Alicia M. Fechtel General Counsel and Chief Clerk Texas Department of Insurance Effective date: March 14, 1996 Proposal publication date: September 1, 1995 For further information, please call: (512) 463-6327 SUBCHAPTER B. Facilities Qualifying for a Certificate of Authority Under the Texas Continuing Care Facility and Disclosure and Rehabilitation 19 TAC sec.sec.33.101-33.108 The Texas Commissioner of Insurance adopts the repeal of sec.sec.33.101-33.108, without changes to the proposed text as published in the September 1, 1995, issue of the Texas Register (20 TexReg 6793). The adopted repeals are necessary because the rules contained in Subchapter B relate to Health and Safety Code, sec.246.023, a grandfather provision that allowed certain providers to obtain mandatory certificates of authority if a facility was occupied by one or more residents on September 1, 1987; was under construction on September 1, 1987; or incurred substantial financial obligations before September 1, 1987 related to the development of the facility. All providers who would have been issued a mandatory certificate of authority under Health and Safety Code, sec.246.023 have already been issued a certificate of authority. These rules are no longer necessary or relevant because the provisions in Health and Safety Code, sec.246.023 regarding the mandatory issuance of a certificate of authority have already been executed. No comments were received regarding adoption of the repeals. The repeals are adopted pursuant to the Health and Safety Code, Chapter 246, including the rule making authority conferred by sec.246.003; the Insurance Code, Article 1.03A; House Bill 1461, sec.1.23, 73rd Legislature, 1993; and the Government Code, sec.2001.004, et seq. Health and Safety Code, Chapter 246 sets out the statutory requirements for continuing care retirement facilities and sec.246.003 authorizes the board to regulate those facilities and to adopt rules and take other action as necessary to administer and enforce that chapter. Insurance Code, Article 1.03A provides the commissioner with the authorization to adopt rules and regulations for the conduct and execution of the duties and functions of the department. House Bill 1461, sec.1.23 authorizes the transition of duties between the State Board of Insurance and the Commissioner of Insurance. The Government Code, sec.2001.004, et seq. authorizes and requires each state agency to adopt rules of practice setting forth the nature and requirements of available procedures and prescribes the manner for adoption of rules by a state administrative agency. 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 authority. Issued in Austin, Texas, on February 22, 1996. TRD-9602558 Alicia M. Fechtel General Counsel and Chief Clerk Texas Department of Insurance Effective date: March 14, 1996 Proposal publication date: September 1, 1995 For further information, please call: (512) 463-6327 SUBCHAPTER C. Application by Continuing Care Provider for Certificate of Authority 19 TAC sec.sec.33.201-33.206 The Commissioner of Insurance adopts amendments to sec.sec.33.201-33.206, without changes to the proposed text as published in the September 1, 1995, issue of the Texas Register (20 TexReg 6794). Amended sections 33.201-33.206 concern the application by a continuing care provider for a certificate of authority. The amendments are necessary to provide technical corrections, to clarify the sections and to make changes mandated by amendments to Health and Safety Code, Chapter 246, enacted by the passage of House Bill 2389, 73rd Legislature, 1993. Section 33.201 establishes the scope of this subchapter. Section 33.202 provides that only incorporated entities shall be issued a certificate of authority. Section 33.203 clarifies the requirements for filing an application for certificate of authority. Section 33.204 clarifies the items which should be included with an application for certificate of authority. Section 33.205 clarifies the actions which may be taken for a deficient application for certificate of authority. Section 33.206 addresses the hearing to be held on an application for certificate of authority. No comments were received regarding the adoption of amendments to these sections. The amendments are adopted pursuant to the Health and Safety Code, Chapter 246, including the rule making authority conferred by sec.246.003 of that chapter; the Insurance Code, Article 1.03A; House Bill 1461, sec.1.23, 73rd Legislature, 1993; and the Government Code, sec.2001.004, et seq. Health and Safety Code, Chapter 246 sets out the statutory requirements for continuing care retirement facilities and sec.246.003 of that chapter authorizes the board to regulate those facilities and to adopt rules and take other action as necessary to administer and enforce that chapter. Insurance Code, Article 1.03A. provides the commissioner with the authorization to adopt rules and regulations for the conduct and execution of the duties and functions of the department. House Bill 1461, sec.1.23 authorizes the transition of duties between the State Board of Insurance and the Commissioner of Insurance. The Government Code, sec.2001.004, et seq. authorizes and requires each state agency to adopt rules of practice setting forth the nature and requirements of available procedures and prescribes the manner for adoption of rules by a state administrative agency. 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 authority. Issued in Austin, Texas, on February 22, 1996. TRD-9602564 Alicia M. Fechtel General Counsel and Chief Clerk Texas Department of Insurance Effective date: March 14, 1996 Proposal publication date: September 1, 1995 For further information, please call: (512) 463-6327 SUBCHAPTER D. Disclosure Statement 19 TAC sec.sec.33.301-33.308 The Commissioner of Insurance adopts amendments to sec.sec.33.301-33.308, concerning the contents, preparation, delivery and filing requirements for disclosure statements, financial statements, studies and forecasts, without changes to the proposed text as published in the September 26, 1995, issue of the Texas Register (20 TexReg 7792). The amendments are necessary to provide technical corrections, to clarify the sections, and to make changes mandated by amendments to Health and Safety Code, Chapter 246, enacted by the passage of House Bill 2389, 73rd Legislature, 1993. Section 33.301 clarifies the requirements for filing and preparation of the disclosure statement. Section 33.302 clarifies the requirements for filing the annual disclosure statement revision, and provides for the applicable fees. Section 33.303 clarifies the provisions for other revisions of the disclosure statement. Section 33.304 provides that disclosure statements shall follow the format and instructions contained in CCRC Form Number 6 and Form Number 6a. Section 33.305 clarifies the requirements for the date on the cover page of a disclosure statement. Section 33.306 provides that financial statements shall specifically address escrow accounts, trusts, and reserve funds, and provides reporting requirements if the provider operates more than one facility or has other business interests. Section 33.307 clarifies the requirements for the delivery of the disclosure statement. Section 33.308 provides for actions the commissioner may take when a provider fails to submit a disclosure statement. No comments were received regarding adoption of these amended sections. The amendments are adopted pursuant to the Health and Safety Code, Chapter 246, including the rule making authority conferred by sec.246.003; the Insurance Code, Article 1.03A; and House Bill 1461, sec.1.23, 73rd Legislature, 1993; and the Government Code, sec.2001.004, et seq. Health and Safety Code, Chapter 246 sets out the statutory requirements for continuing care retirement facilities and sec.246.003 authorizes the board to regulate those facilities and to adopt rules and take other action as necessary to administer and enforce that chapter. Insurance Code, Article 1.03A provides the commissioner with the authorization to adopt rules and regulations for the conduct and execution of the duties and functions of the department. Insurance Code, Article 1.10 authorizes sanctions for violations by licensees of the department. House Bill 1461, sec.1.23 authorizes the transition of duties between the State Board of Insurance and the Commissioner of Insurance. The Government Code, sec.2001.004, et seq. authorizes and requires each state agency to adopt rules of practice setting forth the nature and requirements of available procedures and prescribes the manner for adoption of rules by a state administrative agency. 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 authority. Issued in Austin, Texas, on February 22, 1996. TRD-9602563 Alicia M. Fechtel General Counsel and Chief Clerk Texas Department of Insurance Effective date: March 14, 1996 Proposal publication date: September 26, 1995 For further information, please call: (512) 463-6327 19 TAC sec.33.304 The Texas Commissioner of Insurance adopts the repeal of sec.33.304, concerning requirements for disclosure statement preparation and filing, without changes to the proposed text as published in the September 1, 1995, issue of the Texas Register (20 TexReg 6796). The repeal of sec.33.304 is necessary to enable the commissioner to simultaneously amend sec.33.301(c) of this title. This repeal and amendment of sec.33.301(c) is necessary for the more effective regulation of continuing care retirement communities. The repeal of sec.33.304 allows the commissioner to address disclosure statement preparation and filing in amended sec.33.301(c) of this title. No comments were received regarding adoption of the repeal. The repeals are adopted pursuant to the Health and Safety Code, Chapter 246, including the rule making authority conferred by sec.246.003; the Insurance Code, Article 1.03A; House Bill 1461, sec.1.23, 73rd Legislature, 1993; and the Government Code, sec.2001.004, et seq. Health and Safety Code, Chapter 246 sets out the statutory requirements for continuing care retirement facilities and sec.246.003 authorizes the board to regulate those facilities and to adopt rules and take other action as necessary to administer and enforce that chapter. Insurance Code, Article 1.03A provides the commissioner with the authorization to adopt rules and regulations for the conduct and execution of the duties and functions of the department. House Bill 1461, sec.1.23 authorizes the transition of duties between the State Board of Insurance and the Commissioner of Insurance. The Government Code, sec.2001.004, et seq. authorizes and requires each state agency to adopt rules of practice setting forth the nature and requirements of available procedures and prescribes the manner for adoption of rules by a state administrative agency. 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 authority. Issued in Austin, Texas, on February 22, 1996. TRD-9602562 Alicia M. Fechtel General Counsel and Chief Clerk Texas Department of Insurance Effective date: March 14, 1996 Proposal publication date: September 1, 1995 For further information, please call: (512) 463-6327 SUBCHAPTER E. Escrow Accounts 19 TAC sec.33.401 The Commissioner of Insurance adopts an amendment to sec.33.401, concerning the requirements for the maintenance and use of escrow accounts by continuing care retirement facility providers, with changes to the proposed text as published in the September 1, 1995, issue of the Texas Register (20 TexReg 6796). The amendment is necessary to provide technical corrections, to clarify the section, and to make changes mandated by amendments to Health and Safety Code, Chapter 246, enacted by the passage of House Bill 2389, 73rd Legislature, 1993. The amendment to sec.33.401 describes the requirements for entrance fee escrow accounts, provides for the ownership of the interest accrued in the accounts, provides the requirements for depositing funds into the accounts and issuing status statements, and provides that certain non refundable portions of deposits are not required to be held in the entrance fee escrow account. A comment suggested a provision should be added to sec.33.401(b) which states "the written receipt given to the resident or prospective resident for the funds shall include the information that the provider must deposit the funds in the escrow account within 72 hours of receipt, in addition to the name and address of the escrow agent." The department agrees and the adoption makes such a change to the paragraph. A comment suggested a provision should be added to sec.33.401(c) which states: the written receipt given to the resident shall also include the following statement: "at your request, the escrow agent must provide a statement indicating the status of your balance in the entrance fee escrow account." The department agrees and the adoption makes such a change to the paragraph. For with changes: Office of Public Insurance Counsel, individual commenters. The amendment is adopted pursuant to the Health and Safety Code, Chapter 246, including the rule making authority conferred by sec.246.003; the Insurance Code, Articles 1.03A and 1.10; House Bill 1461, sec.1.23, 73rd Legislature, 1993; and the Government Code, sec.2001.004, et seq. The Health and Safety Code, Chapter 246 sets out the statutory requirements for continuing care retirement facilities and sec.246.003 authorizes the department to regulate those facilities, to adopt rules, and to take other action as necessary to administer and enforce that chapter. The Insurance Code, Article 1.03A provides the commissioner with the authorization to adopt rules and regulations for the conduct and execution of the duties and functions of the department. Article 1.10 provides that the commissioner, after notice and opportunity for a hearing, may take action against the holder of a continuing care retirement facility license. House Bill 1461, sec.1.23 authorizes the transition of duties between the State Board and Commissioner of Insurance. The Government Code, sec.2001.004, et seq. authorizes and requires each state agency to adopt rules or practice setting forth the nature and requirements of available procedures, and prescribes the manner for adoption of rules by a state administrative agency. sec.sec.33.401. Entrance Fee Escrow Account. (a) The provider of a facility which was unoccupied on September 1, 1987, and for which continuing care contracts have been or will be entered into on or after September 1, 1987, shall establish an entrance fee escrow account with a bank or trust company located in this state, as escrow agent. The provider subject to this section shall establish the entrance fee escrow account before entering into a reservation agreement or a continuing care contract, and accepting an entrance fee or a reservation agreement deposit. The entrance fee escrow account shall be maintained in an account separate from the provider's business account and must be fully covered by federal deposit insurance or secured by the United States Government. (b) When the provider receives a refundable reservation agreement deposit, an entrance fee, or a portion of an entrance fee from a resident or prospective resident, the funds shall be deposited in the entrance fee escrow account. The provider shall give the resident or prospective resident a written receipt for the funds. The provider shall then deliver a copy of the receipt together with the funds to the escrow agent for deposit within 72 hours of the provider's receipt. The written receipt given to the resident or prospective resident for the funds shall include the information that the provider must deposit the funds in the escrow account within 72 hours of receipt, in addition to the name and address of the escrow agent. (c) At any time upon the request of the resident or prospective resident, the provider, or the commissioner, the escrow agent shall issue a statement indicating the status of a resident or prospective resident's balance in the entrance fee escrow account. The written receipt given to the resident shall also include the following statement: "At your request, the escrow agent must provide a statement indicating the status of your balance in the entrance fee escrow account." (d) Accrued interest on the entrance fee escrow account shall be the property of the provider unless otherwise provided in the continuing care contract. (e) This section does not apply to any non refundable portion of an entrance fee or reservation agreement deposit that does not exceed two percent of the amount required as the entrance fee and that is clearly designated as non refundable in the relevant continuing care contract or reservation agreement. 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 authority. Issued in Austin, Texas, on February 22, 1996. TRD-9602557 Alicia M. Fechtel General Counsel and Chief Clerk Texas Department of Insurance Effective date: March 14, 1996 Proposal publication date: September 1, 1995 For further information, please call: (512) 463-6327 19 TAC sec.sec.33.402-33.406 The Commissioner of Insurance adopts new sec.sec.33.402- 33.406, concerning the requirements for the maintenance and use of escrow accounts by continuing care retirement facility providers, without changes to the proposed text as published in the September 1, 1995, issue of the Texas Register (20 TexReg 6798). These sections will replace the existing sections which are adopted for repeal in another section of this issue of the Texas Register. The new rules are designed to clarify the sections and to make changes mandated by amendments to Health and Safety Code, Chapter 246, enacted by the passage of House Bill 2389, 73rd Legislature, 1993. New sec.33.402 details provisions for refund of entrance fees and return of reservation agreement deposits, and details certain provisions the reservation agreement must contain. New sec.33.403 provides the escrow agent shall notify the department of a request for release of funds, contains the conditions for release of the entrance fee escrow account funds to the provider, and gives a limit on the amount of funds that may be released. New sec.33.404 details requirements for the loan reserve fund escrow account. New sec.33.405 contains the conditions and procedures for release of the loan reserve fund escrow account. New sec.33.406 provides for the repayment of funds released from the reserve fund escrow account. No comments were received regarding the adoption of the new sections. The new sections are adopted pursuant to the Health and Safety Code, Chapter 246, including the rule making authority conferred by sec.246.003, the Insurance Code, Articles 1.03A and 1.10; House Bill 1461, sec.1.23, 73rd Legislature, 1993; and the Government Code, sec.2001.004, et seq. The Health and Safety Code, Chapter 246 sets out the statutory requirements for continuing care retirement facilities and sec.246.003 authorizes the department to regulate those facilities, to adopt rules, and to take other action as necessary to administer and enforce that chapter. The Insurance Code, Article 1.03A provides the commissioner with the authorization to adopt rules and regulations for the conduct and execution of the duties and functions of the department. Article 1.10 provides that the commissioner after notice and opportunity for a hearing, may take action against the holder of a continuing care retirement facility license. House Bill 1461, sec.1.23 authorizes the transition of duties between the State Board of Insurance and Commissioner of Insurance. The Government Code, sec.2001.004, et seq. authorizes and requires each state agency to adopt rules or practice setting forth the nature and requirements of available procedures, and prescribes the manner for adoption of rules by a state administrative agency. 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 authority. Issued in Austin, Texas, on February 22, 1996. TRD-9602559 Alicia M. Fechtel General Counsel and Chief Clerk Texas Department of Insurance Effective date: March 14, 1996 Proposal publication date: September 1, 1995 For further information, please call: (512) 463-6327 19 TAC sec.sec.33.402-33.407 The Commissioner of Insurance adopts the repeal of sec.sec.33.402-33.407, concerning the requirements for the maintenance and use of escrow accounts by continuing care retirement facility providers, without changes as published in the September 1, 1995, issue of the Texas Register (20 TexReg 6797). The repeals are necessary to eliminate unnecessary provisions, to make changes mandated by amendments to the Health and Safety Code, Chapter 246, enacted by the passage of House Bill 2389, 73rd Legislature, 1993 and to enable the Texas Department of Insurance to adopt new sec.sec.33.402 - 33.406. Simultaneously to the adoption of this appeal, adoption of new sec.sec. 33.402-33.406 is published elsewhere in this issue of the Texas Register. New sec.33.402 states the conditions under which entrance fees in escrow must be returned to the persons who paid them to providers. New sec.33.403 sets forth a procedure for determining when entrance fees in escrow may be released to providers. The calculations in repealed sec.33.403(b) are now contained in the new CCRC Form #14 - Calculations Concerning Conditions for Release of Entrance Fees to Provider under Health and Safety Code, sec.246.073. New sec.33.404 provides for the calculation of the total amount of entrance fees in escrow for a particular facility that may be released to the provider before the facility is complete. New sec.33.405 provides for the establishment of reserve fund escrow accounts with respect to continuing care retirement facilities. New sec.33.406 places a limit on the amount of funds which may be released to a provider from the reserve fund escrow. New sec.33.407 requires that escrow agreements for entrance fee and reserve fund escrow accounts contain provisions obligating the escrow agent to notify the board when a provider requests a release of funds. No comments were received regarding the adoption of the repeal. The repeals are adopted pursuant to Health and Safety Code, Chapter 246, including the rule making authority conferred by sec.246.003; the Insurance Code, Article 1.03A; House Bill 1461, sec.1.23, 73rd Legislature, 1993; and the Government Code, sec.2001.004, et seq. Health and Safety Code, Chapter 246 sets out the statutory requirements for continuing care retirement facilities and sec.246.003 authorizes the board to regulate those facilities and to adopt rules and take other action as necessary to administer and enforce that chapter. Insurance Code, Article 1.03A provides the commissioner with the authorization to adopt rules and regulations for the conduct and execution of the duties and functions of the department. House Bill 1461, sec.1.23 authorizes the transition of duties between the State Board of Insurance and the Commissioner of Insurance. The Government Code, sec.2001.004, et seq. authorizes and requires each state agency to adopt rules of practice setting forth the nature and requirements of available procedures and prescribes the manner for adoption of rules by a state administrative agency. 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 authority. Issued in Austin, Texas, on February 22, 1996. TRD-9602560 Alicia M. Fechtel General Counsel and Chief Clerk Texas Department of Insurance Effective date: March 14, 1996 Proposal publication date: September 1, 1995 For further information, please call: (512) 463-6327 SUBCHAPTER F. Ongoing Regulatory Requirements 19 TAC sec.sec. 33.501-33.511 The Commissioner of Insurance adopts amendments to sec.sec.33.501-33.504, and sec.sec.33.506-33.511, concerning the ongoing regulatory requirements for continuing care retirement facilities without changes to the proposed text as published in the September 26, 1995, issue of the Texas Register (20 TexReg 7794). Amended sec.33.505 is adopted with changes to the proposed text as published in the September 26, 1995, issue of the Texas Register. A public hearing on the sections as published was requested on October 24, 1995, by the Texas Association of Homes and Services for the Aging, but was subsequently withdrawn. The amendments are necessary to provide technical corrections, to clarify the sections, and to make changes mandated by amendments to the Health and Safety Code, Chapter 246, enacted by the passage of House Bill 2389, 73rd Legislature, 1993. Section 33.505 was expanded to include additional criteria when evaluating whether a facility is financially unsound. Section 33.501 states how books and records of providers shall be kept. Section 33.502 provides that the commissioner may make inquires to determine compliance with the Act. Section 33.503 provides that the commissioner may conduct investigations and examinations to determine compliance with the Act. Section 33.504 provides the requirements for advertising. Section 33.505 provides a purpose statement for the rule, gives a list of factors the department may consider to determine whether a provider is financially unsound, and includes additional financial information the department may consider to determine a facility is financially unsound. Section 33.506 provides the actuarial review requirements. Section 33.507 provides the commissioner's authority under the Act relating to supervision, rehabilitation, or liquidation. Section 33.508 provides the procedures for the transfer of a certificate of authority. Section 33.509 requires the provider to file with the department any management contract with a third party 30 days before the contract is entered into. Section 33.510 provides for advance notice to the department for a change in fiscal year. Section 33.511 provides for notification to the department of any changes of persons responsible for the management or direction of a facility. Comments suggested that the language in sec.33.305(b)(1)(A) which as originally published stated, one of the factors to be considered in evaluating the financial condition of a facility is an adequate fund balance, "as evidenced by a positive fund balance of the actuarial balance sheet" should be changed to delete the reference to "positive". In response to this suggestion, the department changed the language so that the criteria to consider whether an adequate fund balance is maintained is "evidenced by a fund balance on the actuarial balance sheet which is acceptable to the commissioner or by an actuarial funded status ratio acceptable to the commissioner." A comment suggested the language in sec.33.305(b)(1)(B)(i) as originally published which states: facilities which are not required to obtain actuarial balance sheets may show an adequate fund balance by "maintaining a positive fund balance on its audited financial statements prepared under generally accepted accounting principles" should be changed and the reference to "positive" deleted. The department agrees and has deleted the reference to positive and changed the language so that facilities which are not required to obtain an actuarial balance sheet may show an adequate fund balance by "maintaining a fund balance on audited financial statements prepared under generally accepted accounting principles which is acceptable to the commissioner." One comment suggested that the reference to positive fund balance in sec.33.505(b)(1)(B)(ii) should be deleted. The department agrees and has changed the language of sec.33.505(b)(1)(B)(ii) so that a facility which is not required to obtain actuarial balance sheets under sec.33.506 may show an adequate fund balance by "voluntarily obtaining an actuarial report to show a satisfactory actuarial balance as described in sec.33.506(c)." Comments suggested that the reference to positive fund balance in sec.33.505(e)(1)(B) as originally proposed should be changed to "if the facility does not maintain a satisfactory actuarial balance." The department agrees and has changed the language to "[i]f the facility does not maintain a satisfactory actuarial balance as described in Section 33.506(c), the commissioner may require the facility to disclose these items in notes accompanying the financial statements, even if an accounting entry is not required to be made." Comments suggested that sec.33.505(d) as originally proposed should be changed so that if any unaudited generally accepted accounting principles balance sheet filed with the disclosure statement shows a net fund deficit and reflects an unfunded future service obligation, the commissioner may require the facility to submit an actuarial report demonstrating the facility is in actuarial balance. In response to this suggestion, the department changed this paragraph, but added the provision that the actuarial report must demonstrate the facility is in satisfactory actuarial balance in order to make the language consistent with sec.33.506(c). Comments were received on sec.33.505(e)(C) as originally proposed that recommended changing the language from "non-refundable entrance fees shall be treated as deferred revenue to be amortized over each group of residents' estimated lives" to "non-refundable entrance fees shall be reported in accordance with the American Institute of Certified Public Accountants Statement of Position 90-8." The department disagrees because the language as originally proposed is more specific and follows the standard for reporting contained in the American Institute of Certified Public Accountants Statement of Position 90- 8. Comments were received on sec.33.505(e)(D) which stated there was a mistake in the language as originally proposed that was contrary to the standards for reporting contained in the American Institute of Certified Public Accountants Statement of Position 90-8, requiring the refundable portion of entrance fee to be amortized. The department agrees and deleted the provision regarding amortization. A comment was received on sec.33.506(c)(1) which suggested the language as originally proposed on whether a satisfactory actuarial balance is maintained should be changed from "if resources that are available for the facility's current residents are greater than or equal to the actuarial present value of the expected costs of performing all remaining obligations to such residents under their contracts" to "a satisfactory actuarial balance is maintained if resources that are available for the facility's current residents are at levels acceptable to the commissioner and within industry guidelines." The department disagrees. The language in sec.33.506(c)(1) regarding whether a satisfactory actuarial balance is maintained is taken verbatim from Actuarial Standard of Practice Number 3, Practices Relating to Continuing Care Retirement Communities. For the changes: The Texas Association of Homes and Services for the Aging, individual commenters and Davis & Wilkerson. The amendments are adopted pursuant to the Health and Safety Code, Chapter 246, including the rule making authority conferred by sec.246.003; the Insurance Code, Article 1.03A; House Bill 1461, sec.1.23, 73rd Legislature, 1993; and the Government Code, sec.2001.004, et seq. Health and Safety Code, Chapter 246 provides the statutory requirements for continuing care retirement facilities and sec.246.003 authorizes the department to regulate those facilities, to adopt rules, and to take other action as necessary to administer and enforce that chapter. Insurance Code, Article 1.03A sets forth the requirements for rules of general application to be adopted by the Ccommissioner of Insurance. Section 1.23 of House Bill 1461 authorizes the transition of duties between the State Board of Insurance and Commissioner of Insurance. The Government Code, sec.2001.004, et seq. authorizes and requires each state agency to adopt rules of practice setting forth the nature and requirements of available procedures and prescribes the manner for adoption of rules by a state administrative agency. sec.sec.33.505. Financial Condition (a) The purpose of this rule is to enumerate conditions which the commissioner may consider to determine whether a provider or facility is financially unsound and which may be a basis for the commissioner to initiate an action against a facility or provider under the Health and Safety Code, sec.246.091. In evaluating any of these factors, all circumstances concerning the provider's or facility's operations must be evaluated in making an ultimate conclusion that a facility or provider is financially unsound. (b) In order to determine whether a facility or provider is financially unsound, the commissioner may consider the following factors: (1) Adequate fund balance. (A) An adequate fund balance is maintained if resources that are available for the facility's current residents (including the actuarial present value of periodic fees expected to be paid in the future by current residents) are reasonably equivalent to or greater than the actuarial present value of the expected costs of performing all remaining obligations to such residents under their contracts, as evidenced by a fund balance on the actuarial balance sheet which is acceptable to the commissioner or by an actuarial funded status ratio acceptable to the commissioner. (B) Facilities which are not required to obtain actuarial balance sheets under sec.33.506 may show an adequate fund balance by: (i) maintaining a fund balance on audited financial statements prepared under generally accepted accounting principles which is acceptable to the commissioner; or (ii) voluntarily obtaining an actuarial report to show a satisfactory actuarial balance as described in sec.33.506(c); or (iii) providing evidence of adequate funding by showing guarantees of liabilities and obligations to residents by a parent or other supporting organization, and providing audited financial statements of such parent or supporting organization showing its capacity to provide such guarantees. (2) Ability to meet current financial obligations. The facility's or provider's ability to meet its current financial obligations, as shown on its most recently audited financial statements can be measured by comparing current assets, including current portions of restricted funds, to current liabilities. (3) Ability to meet projections. The facility's or provider's ability to meet its projected occupancy goals or cash projections can be measured by comparing the projections filed with the department as part of the annual disclosure statement, CCRC Form Number 6 to actual results. The comparison of projections to actual results, including occupancy figures, shall be included with the disclosure statement and the financial statements, together with an explanation of variances greater than plus or minus 10% in a line item, and an explanation of variances which are greater in dollar amount than the net cash flow, positive or negative. (4) Cash Flow. The facility's or provider's ability to maintain a level of cash flow acceptable to the commissioner can be measured by analyzing the cash flow statement included in the audited financial statements. (5) Operating ratio. The facility's or provider's ability to maintain an operating ratio acceptable to the commissioner and within industry guidelines can be measured by taking cash operating revenues and dividing it by cash operating expenses. In determining if an operating ratio is acceptable, the commissioner may consider guarantees of operating support by a parent or other supporting organization, and audited financial statements of such parent or organization showing its capacity to provide such guarantees. (6) Debt service ratio. The facility's or provider's ability to maintain a debt service ratio acceptable to the commissioner and within industry guidelines can be measured by using the following calculation: Total Excess (Deficit) of Revenues and Gains in excess of Expenses and Losses plus Interest Expense plus Depreciation Expense plus Amortization Expense minus Amortization of Deferred Revenues from Entry Fees plus Net Proceeds from Entry Fees, divided by Annual Debt Service (annual principal and interest payment or maximum annual debt service). (7) Occupancy ratio. The facility's or provider's ability to maintain an occupancy ratio acceptable to the commissioner and within industry guidelines can be measured by taking the total number of occupied units in a facility and dividing it by the total number of units in that facility. Occupancy may be tracked by each level of care, including independent living units, nursing beds, or other levels of care available. (c) Additional financial information. (1) The commissioner may require information or reports in addition to those contained in the disclosure statement to monitor the financial condition of the facility and administer and enforce the Act. The reports may include, but are not limited to, quarterly financial statements, statements prepared for reporting to bond issuers or underwriters, and audited financial statements of the facility's parent or other supporting organization. (2) The commissioner may consider the trends in a facility's operation and on its financial statements, and may consider the effect that any unusual, extraordinary, or non-recurring occurrence may have on the outcomes of any calculations made to determine trends or to financial condition of the facility as contemplated in subsection (b). (3) If a facility is a start-up facility, the commissioner may consider that such a facility may meet standards which differ from those required of an established facility for at least the first thirty-six months of operation, beginning with occupancy by the first resident. (4) Before making a final determination that a facility is financially unsound, the commissioner will provide the facility with the opportunity to submit additional financial information to demonstrate its ability to meet its financial obligations and obligations to its residents. (d) Balance sheet with net fund deficit. If any audited generally accepted accounting principles (GAAP) balance sheet filed with the disclosure statement shows a net fund deficit and reflects an unfunded future service obligation, the commissioner may require the provider or management of the facility to submit an actuarial balance sheet demonstrating that the facility is in satisfactory actuarial balance, or to submit a plan delineating action to be taken to remove such deficit. The plan shall include, but not be limited to, the items listed in paragraphs (1) through (3) of this subsection: (1) The reasons or causes of the deficit balance; (2) Conditions or circumstances that exist which may require unusual accounting treatment, but are not regularly recurring conditions that will cause increasing deficits in subsequent periods; (3) Projections of the following: (A) cash flow from operations of the facility for the next 18 months or for whatever other period of time the department deems appropriate; (B) overall financial conditions, as projected in pro forma calendar quarterly balance sheets and income statements, for the next 18 months or for whatever period of time the department deems appropriate; (C) debt service for the next 18 months; and (D) specific actions to be taken by management during the next 18 months to minimize any operating factors that are contributing to the deficit balance, or to reduce the deficit balance. (e) Requirements for basic financial statements. A provider or facility shall file the basic financial statements with the disclosure statement which satisfy the requirements in paragraphs (1) - (3) of this subsection. (1) The balance sheet on a comparative basis shall reflect at least the liabilities listed in subparagraphs (A) - (D) of this paragraph. (A) A continuing care provider which is financed through a financing authority by the issuance of bonds or other long-term obligations shall establish those obligations which are issued for its benefit as liabilities. The provider is responsible for repayment of the obligations. The notes accompanying the financial statements shall disclose the debt service ratio, and shall disclose any guarantees of bond obligations made by parent or other supporting organizations. (B) Liability to provide future services is the excess of the present value of the facility's obligations to provide future services to current residents over and above the present value of related future revenue. No accounting entry is required if the present value of future related revenues exceeds the present value of the obligations for future services. If the present value of related future revenue is less than the present value of the obligation, no accounting entry is required unless the liability is greater than the unamortized entrance fees, in which case a liability is recognized and an expense recorded. If the facility does not maintain a satisfactory actuarial balance as described in Section 33.506(c), the commissioner may require the facility to disclose these items in notes accompanying the financial statements, even if an accounting entry is not required to be made. (C) The non-refundable entrance fees paid by a resident upon entering into a continuing care contract shall be treated as deferred revenue to be amortized over each group of residents' estimated remaining lives using a method that properly matches revenues with expenses. (D) The refundable portion of the entrance fee shall be recorded as a liability. (2) The basic audited financial statements filed with the disclosure statement shall include at least the items listed in subparagraphs (A) - (D) of this subsection: (A) a statement of activity (a statement of support, revenue, expense); (B) a statement of changes in fund balances; (C) a statement of changes in financial position prepared on a cash flow basis; and (D) notes to accompany the financial statements considered necessary to full disclosure or adequate understanding of the financial statements, financial condition, and operation. (3) Accompanying the basic financial statements described in paragraphs (1) and (2) of this subsection shall be a reconciliation of the cash flow statement to the statement of revenue and expenses, and a comparison of pro-forma projections for the period to actual results, including an explanation of variances greater than plus or minus 10% in a line item, and an explanation of variances which are greater in dollar amount than total net income or loss. The comparison shall also include actual beginning and ending occupancy rates for living units, and actual number of occupied bed-days for nursing care units. The reconciliation and comparisons required by this paragraph are not required to be included within the audit of the financial statements, and may be prepared by the management of the facility or by the preparers of the audited financial statements. (f) Continuing Care Contract Liens. To secure the obligations of the provider under any continuing care contract, a lien attaches on the date a resident first occupies a facility. The lien covers the real and personal property of the provider located at the facility. The provider shall submit to the department a written notice sworn to by an officer of the provider for each county where the provider has a facility on CCRC Form Number 13 (Notice of Lien). The provider shall file the notice of the lien with the department before the date of the execution of the first continuing care contract related to the facility. 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 authority. Issued in Austin, Texas, on February 22, 1996. TRD-9602561 Alicia M. Fechtel General Counsel and Chief Clerk Texas Department of Insurance Effective date: March 14, 1996 Proposal publication date: September 26, 1995 For further information, please call: (512) 463-6327 TITLE 34. PUBLIC FINANCE PART IV. Employees Retirement System CHAPTER 73. Benefits 34 TAC sec.73.31 The Employees Retirement System of Texas adopts an amendment to sec.73.31, concerning adjustment to annuities without changes to the proposed text as published in the September 15, 1995, issue of the Texas Register (20 TexReg 7263). The amendment provides adjustments to annuities as a result of Senate Bill 1231, 74th Legislature, which made some plan design changes which may now be considered for potential adjustments to current annuities. The amendment will permit certified peace officers (CPOs) and custodial officers (COs) who retired before August 31, 1995 to receive credit for partial years of service and to have their annuity calculated using the new formula rather than the CPO table that was repealed under Senate Bill 1231. This amendment will provide equity for all CPOs/COs regardless of their actual retirement date. The various adjustments to the annuities would be applied to the March annuities and would be payable March 31, 1996. The amendment is adopted under the Government Code, sec.814.602 which provides the Employees Retirement System of Texas with the authority to adopt rules that adjust or modify annuities to the extent necessary to be consistent with changes in plan design. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on February 23, 1996. TRD-9602629 Charles D. Travis Executive Director Employees Retirement System Effective date: March 15, 1996 Proposed publication date: September 15, 1995 For further information, please call: (512) 867-3336 TITLE 40. SOCIAL SERVICES AND ASSISTANCE PART VI. Texas Commission for the Deaf and Hard of Hearing CHAPTER 183. Board for Evaluation of Interpreters and Interpreter Certification SUBCHAPTER D. Denial, Suspension, or Revocation of a Certificate 40 TAC sec.183.501 The Texas Commission for the Deaf and Hard of Hearing adopts an amendment to sec.183.501, concerning Grounds for Denial, Suspension, or Revocation of an Interpreter Certificate or Interpreter Certification Application, with changes to the proposed text as published in the December 22, 1995, issue of the Texas Register (20 Tex Reg 10988). This amendment will update current grievance procedures to comply with those of the Office of Administrative Hearings. A comment was received regarding terminology/grammatical changes which has been incorporated. The amendment is adopted under the Human Resources Code, sec.81.006(b)(3), which provides the Texas Commission for the Deaf and Hard of Hearing the authority to adopt rules for administration and programs. The adopted amendment affects Texas Administrative Code. sec.sec.183.501. Grounds for Denial, Suspension, or Revocation of an Interpreter Certificate or Interpreter Certification Application. The Texas Commission for the Deaf and Hard of Hearing may deny application; suspend or revoke certification; or otherwise discipline, reprimand, or place on probation an interpreter for any of the following causes: (1) conviction of a felony or any offense involving moral turpitude. In determining if the criminal conviction has a direct bearing on whether the interpreter or applicant should be entrusted to serve the public, the commission considers the particular facts and circumstances of each case to include evidence of those matters required by Texas Government Code sec.2001.001 et seq. The crimes having such a direct bearing include criminal conduct of homicide, rape, sexual abuse, indecency with a child, injury to a child, aggravated assault, robbery, burglary, theft, forgery, bribery, perjury, and those relating to controlled substances; (2) use of drugs or intoxicating liquors to an extent that affects his or her professional competence. This includes: the use of drugs or intoxicating liquors, whether or not controlled, to an extent that is dangerous to the interpreter or applicant, or any other members of the public; the use of drugs or intoxicating liquors to the extent that such use impairs the interpreter's or applicant's ability to perform the work of interpreting in a safe and responsible manner; (3) impersonating another person who holds an interpreter certification from TCDHH/BEI; (4) allowing another person to use his or her interpreter certification; (5) representing that the interpreter has a level of certification different from the actual level of certification awarded by the commission; (6) using fraud, deception or misrepresentation in an application for certification; (7) willfully violating or aiding in the violation of any of the standards of ethical behavior; (8) being grossly incompetent or grossly negligent in his or her duties as an interpreter; or having demonstrated repeated and/or continuous negligence or irresponsibility in the performance of his or her duties; (9) being adjudicated mentally incompetent by a court of competent jurisdiction; (10) intentionally harassing, abusing, or intimidating a board member, candidate, or any supportive staff either physically or verbally; (11) intentionally divulging any aspect of confidential information relating to the certification evaluation including content, topic, vocabulary, identity of individuals involved in the tests, skills, written tests, and any other testing materials; (12) failure to meet requirements for certification maintenance; or (13) engaging in the practice of interpreting while certification is suspended. 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 February 21, 1996. TRD-9602478 David W. Myers Executive Director Texas Commission for the Deaf and Hard of Hearing Effective date: March 13, 1996 Proposal publication date: December 22, 1995 For further information, please call: (512) 451-8494 40 TAC sec.183.505 The Texas Commission for the Deaf and Hard of Hearing adopts an amendment to sec.183.505, concerning Certificate Holders' Rights to Information Regarding Revocation and Suspension, without changes to the proposed text as published in the December 22, 1995, issue of the Texas Register (20 TexReg 10989). This amendment will update current grievance procedures to comply with those of the Office of Administrative Hearings. No comments were received regarding adoption of this amendment. The amendment is adopted under the Human Resources Code, sec.81.006(b)(3), which provides the Texas Commission for the Deaf and Hard of Hearing the authority to adopt rules for administration and programs. The adopted amendment affects Texas Administrative Code. 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 February 21, 1996. TRD-9602479 David W. Myers Executive Director Texas Commission for the Deaf and Hard of Hearing Effective date: March 13, 1996 Proposal publication date: December 22, 1995 For further information, please call: (512) 451-8494