TITLE 19. EDUCATION

PART 2. TEXAS EDUCATION AGENCY

CHAPTER 33. STATEMENT OF INVESTMENT OBJECTIVES, POLICIES, AND GUIDELINES OF THE TEXAS PERMANENT SCHOOL FUND

SUBCHAPTER AA. COMMISSIONER'S RULES

19 TAC §33.1001

The Texas Education Agency proposes an amendment to §33.1001, concerning payments for remittance to the Charter District Bond Guarantee Reserve Fund. The proposed amendment would change the timing and amount of payment by charter holders to the Charter District Bond Guarantee Reserve Fund established under the Texas Education Code (TEC), §45.0571, as amended by Senate Bill (SB) 1480, 85th Texas Legislature, Regular Session, 2017.

TEC, §45.0571, authorizes the commissioner to establish rules related to the Charter District Bond Guarantee Reserve Fund. The statute, as amended by SB 1480, 85th Texas Legislature, Regular Session, 2017, provides that a charter district that has a bond guaranteed as provided by TEC, Chapter 45, Subchapter C, must remit to the commissioner, for deposit in the Charter District Bond Guarantee Reserve Fund, an amount equal to 20% of the savings to the charter district resulting from the lower interest rate on the bond due to the guarantee by the permanent school fund.

The proposed amendment would add new subsection (c) applicable to charter district bonds guaranteed under 19 TAC §33.67, Bond Guarantee Program for Charter Schools, that receive final approval from the commissioner of education in the form of the permanent school fund certificate on or after September 1, 2017. The new subsection would require a payment from the charter district that is equal to 20% of the savings on the bond due to the guarantee by the permanent school fund.

The payment would be due within 30 days of bond closing and be calculated in a manner similar to the existing rule, with the differences being that all amounts will be paid in one upfront payment and the amounts for the savings in future years will be discounted to their present value and included as part of the upfront payment. The discount factor will be the yield to worst of the Bloomberg Barclays US Aggregate 3-5 Year Bond Index on the last business day of the previous month.

The proposed amendment would also provide for the commissioner to choose a replacement data source if the two indices referenced in the rule become discontinued. The commissioner would be allowed to choose another data source for a reasonable period of time until the rule could be amended with another acceptable data source.

The proposed amendment would have no procedural or reporting implications. The proposed amendment would have no locally maintained paperwork requirements.

FISCAL NOTE. Leo Lopez, associate commissioner for school finance / chief school finance officer, has determined that for the first five-year period the amendment is in effect, there will be fiscal implications for the state and open-enrollment charter schools, but not beyond what is provided for by the authorizing statute. The TEC, §45.0571, as amended by SB 1480, 85th Texas Legislature, Regular Session, 2017, requires an open-enrollment charter holder that is designated a charter district and whose bonds are approved for the guarantee to remit to the commissioner, for deposit in the Charter District Bond Guarantee Reserve Fund, the amount equal to 20% of the savings resulting from the lower interest rate on the bonds that is due to the guarantee. The TEC, §45.0571, also requires the commissioner to adopt rules for determining the amount due under this section. It is estimated that the payments by charter districts into the Charter District Bond Guarantee Reserve Fund will increase by approximately $12 million per year for fiscal year 2018 through fiscal year 2022 as more charter district bonds are guaranteed by the Permanent School Fund.

There is no effect on local economy for the first five years that the proposed amendment is in effect; therefore, no local employment impact statement is required under Texas Government Code, §2001.022.

PUBLIC BENEFIT/COST NOTE. Mr. Lopez has determined that for each year of the first five years the amendment is in effect the public benefit anticipated as a result of enforcing the amendment will be implementing the changes to statute by SB 1480, 85th Texas Legislature, Regular Session, 2017. There is no anticipated economic cost to persons who are required to comply with the proposed amendment.

ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS FOR SMALL BUSINESSES AND MICROBUSINESSES. There is no direct adverse economic impact for small businesses and microbusinesses; therefore, no regulatory flexibility analysis, specified in Texas Government Code, §2006.002, is required.

REQUEST FOR PUBLIC COMMENT. The public comment period on the proposal begins August 25, 2017, and ends September 25, 2017. Comments on the proposal may be submitted to Cristina De La Fuente-Valadez, Rulemaking, Texas Education Agency, 1701 North Congress Avenue, Austin, Texas 78701. Comments may also be submitted electronically to rules@tea.texas.gov. A request for a public hearing on the proposal submitted under the Administrative Procedure Act must be received by the commissioner of education not more than 14 calendar days after notice of the proposal has been published in the Texas Register on August 25, 2017.

STATUTORY AUTHORITY. The amendment is proposed under the Texas Education Code, §45.0571, as amended by Senate Bill 1480, 85th Texas Legislature, Regular Session, 2017, which authorizes the commissioner of education to adopt rules to determine the amount of the statutorily required 20% savings set aside for the Charter District Bond Guarantee Reserve Fund.

CROSS REFERENCE TO STATUTE. The amendment implements the Texas Education Code, §45.0571, as amended by Senate Bill 1480, 85th Texas Legislature, Regular Session, 2017.

§33.1001.Payments for Remittance to Charter District Bond Guarantee Reserve Fund.

(a) In this section, "charter district," "combination issue," and "refunding issue," have the meanings assigned to those terms by §33.67 of this title (relating to Bond Guarantee Program for Charter Schools).

(b) The following provisions apply to charter district bonds guaranteed under §33.67 of this title that receive final approval from the commissioner of education in the form of the permanent school fund certificate before September 1, 2017.

(1) [(b)] A charter district that has bonds guaranteed under §33.67 of this title must annually remit to the commissioner [of education] a payment for deposit in the Charter District Bond Guarantee Reserve Fund established under the Texas Education Code (TEC), §45.0571, as described in paragraphs (4) and (5) [subsections (e) and (f)] of this subsection [section].

(2) [(c)] To calculate the total payments required under paragraphs (4) and (5) [subsections (e) and (f)] of this subsection [section] for charter district bonds guaranteed under §33.67 of this title with a closing date before March 1, 2017, the first annual amount due under this section is the amount equal to 0.1% of the principal amount that is outstanding on the date the bonds were issued, which is the closing date for the bonds. The amount due annually for each subsequent payment due under this section is the amount equal to 0.1% of the principal amount that is outstanding on the anniversary of the closing date.

(3) [(d)] To calculate the total payments required under paragraphs (4) and (5) [subsections (e) and (f)] of this subsection [section] for charter district bonds guaranteed under §33.67 of this title with a closing date on or after March 1, 2017, the commissioner will calculate an amount equal to 10% of the savings to the charter district resulting from the lower interest rate on the bond due to the guarantee by the permanent school fund.

(A) [(1)] The annual amount due to the Charter District Bond Guarantee Reserve Fund will be computed as R = P x S x 0.1, where:

(i) [(A)] "R" is the amount to be contributed to Charter District Bond Guarantee Reserve Fund;

(ii) [(B)] "P" is the outstanding principal amount on the closing date of the bond for payments made under paragraph (4) [subsection (e)] of this subsection [section] or the outstanding principal amount on the anniversary of the closing date of the bond for payments made under paragraph (5) [subsection (f)] of this subsection [section]; and

(iii) [(C)] "S" is the savings to the charter district as a result of the bond guarantee under §33.67 of this title, which is computed as the difference between the preceding 36-month moving average of the Thomson Reuters Municipal Market Data index yield for the Baa twenty-year maturity and the preceding 36-month moving average of the Thomson Reuters Municipal Market Data index yield for the AAA twenty-year maturity. If the Thomson Reuters Municipal Market Data index is discontinued, the commissioner shall choose another data source for a reasonable period of time until this section can be amended with another acceptable data source.

(I) [(i)] The savings "S" shall remain constant for the life of the newly guaranteed bond.

(II) [(ii)] If Thomson Reuters Municipal Market Data index is decomposed to reflect each ratings step within the Baa universe, the savings calculation shall be based on the charter district's actual rating to the comparable rating in the decomposed index.

(B) [(2)] The commissioner will semi-annually compute "S," which is the value to be used to compute "R" for charter district bonds, and post it on the agency's website during the first week of September and March [of the applicable state fiscal year].

(4) [(e)] The first payment due under this section is due within 30 days of the closing date. The commissioner will direct the comptroller to withhold the amount of this first payment from the state funds otherwise payable to the charter district, on a date that falls within 30 days of the closing date. If, on that date, the state funds remaining to be paid to the charter district for the year are less than the amount due to the reserve fund for that year, the commissioner will recover the difference as authorized under the TEC, §42.258.

(5) [(f)] Each subsequent annual payment is due on the anniversary of the closing date. The commissioner will direct the comptroller to annually, during the month of the anniversary date, withhold the amount due to the reserve fund for that year from the state funds otherwise payable to the charter district. If, on the anniversary date, the state funds remaining to be paid to the charter district for the year are less than the amount due to the reserve fund for that year, the commissioner will recover the difference as authorized under the TEC, §42.258.

(6) [(g)] The commissioner will provide a charter district with a statement of the total and annual amounts due under this section within 60 days of the date that the bonds approved for the guarantee under §33.67 of this title are sold. The commissioner will calculate savings for refunding issues, and the refunding portion of combination issues, using the principal amount that is being refunded.

(7) [(h)] No payment is due on an anniversary date on which no principal amount is outstanding. The total amount due under this section is the sum of all annual payments due.

(c) The following provisions apply to charter district bonds guaranteed under §33.67 of this title that receive final approval from the commissioner in the form of the permanent school fund certificate on or after September 1, 2017.

(1) A charter district that has bonds guaranteed under §33.67 of this title must remit to the commissioner a payment for deposit in the Charter District Bond Guarantee Reserve Fund established under the TEC, §45.0571, as described in paragraph (3) of this subsection.

(2) To calculate the payment required under paragraph (3) of this subsection, the commissioner will calculate an amount equal to 20% of the savings over the life of the bond to the charter district resulting from the lower interest rate on the bond due to the guarantee by the permanent school fund. The calculation will be based on subsection (b)(3) of this section, but the formula in subsection (b)(3)(A) of this section will read R = (P x S x 0.2) ÷ (1 + PV) T.

(A) "PV" is the present value discount factor, which is the yield to worst of the Bloomberg Barclays US Aggregate 3-5 Year Bond Index on the last business day of the previous month. If the Bloomberg Barclays US Aggregate 3-5 Year Bond Index is discontinued, the commissioner shall choose another data source for a reasonable period of time until this section can be amended with another acceptable data source.

(B) "T" is the number of years from the anniversary of the closing date of the bond.

(C) The payment is equal to the sum of the amount required under subsection (b)(4) of this section and the present value of the amounts required for each year of the bond under subsection (b)(5) of this section.

(3) The payment due under this section is due within 30 days of the closing date.

(4) The commissioner will provide a charter district with a statement of the amount due under this section after the bonds approved for the guarantee under §33.67 of this title are sold but before they close. The commissioner will calculate savings for refunding issues, and the refunding portion of combination issues, using the principal amount that is being refunded.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 14, 2017.

TRD-201703129

Cristina De La Fuente-Valadez

Director, Rulemaking

Texas Education Agency

Earliest possible date of adoption: September 24, 2017

For further information, please call: (512) 475-1497


CHAPTER 62. COMMISSIONER'S RULES CONCERNING THE EQUALIZED WEALTH LEVEL

19 TAC §62.1071

(Editor's note: In accordance with Texas Government Code, §2002.014, which permits the omission of material which is "cumbersome, expensive, or otherwise inexpedient," the figure in 19 TAC §62.1071 is not included in the print version of the Texas Register. The figure is available in the on-line version of the August 25, 2017, issue of the Texas Register.)

The Texas Education Agency (TEA) amends §62.1071, concerning the equalized wealth level. The amendment adopts as a part of the Texas Administrative Code (TAC) the Manual for Districts Subject to Wealth Equalization 2016-2017 School Year, Revised April 2017. The manual contains the processes and procedures that the TEA uses in the administration of the provisions of the Texas Education Code (TEC), Chapter 41, and the fiscal, procedural, and administrative requirements that school districts subject to the TEC, Chapter 41, must meet.

The TEA has adopted the procedures contained in each yearly manual for districts subject to wealth equalization as part of the TAC since 2011. The earlier version of 19 TAC §62.1071, Administration of Wealth Equalization, adopted effective June 11, 1998, and subsequently amended several times, was repealed effective May 9, 2011, and replaced with the wealth equalization manual to remove outdated and obsolete provisions from rule.

The amendment to 19 TAC §62.1071, Manual for Districts Subject to Wealth Equalization, adopts in rule the official TEA publication Manual for Districts Subject to Wealth Equalization 2016-2017 School Year, Revised April 2017 as Figure: 19 TAC §62.1071(a). The manual replaces an earlier version published as proposed in the April 21, 2017 issue of the Texas Register. The withdrawal of the earlier version of the manual is published in the withdrawn rules section of this issue.

Each school year's manual for districts subject to wealth equalization explains how districts subject to wealth equalization are identified; the fiscal, procedural, and administrative requirements those districts must meet; and the consequences for not meeting requirements. The manual also provides information on using the online Foundation School Program (FSP) System to fulfill certain requirements.

This rule is being adopted under the authority of the TEC, §41.013. Pursuant to the TEC, §41.013(c), Texas Government Code, Chapter 2001, does not apply to a decision of the commissioner under the TEC, Chapter 41. The Secretary of State is required to publish any rules adopted under the TEC, Chapter 41, in the Texas Register and the Texas Administrative Code upon the request of the commissioner, pursuant to the TEC, §41.013(d). Use of forms and procedures commonly utilized under the Administrative Procedure Act provides a convenience to the general public and administrative agencies. Their use does not constitute a waiver of the TEC, §41.013(c), or an election to apply the requirements in Texas Government Code, Chapter 2001, to this rule adoption.

Two changes to the Manual for Districts Subject to Wealth Equalization 2016-2017 School Year, Revised April 2017 from the Manual for Districts Subject to Wealth Equalization 2016-2017 School Year are as follows.

Administrative Procedures

TEC, §41.001, requires a district's designation under this chapter to be determined based on the taxable value of property, as determined under Texas Government Code, Chapter 403, Subchapter M. The language incorrectly referring to property values used for state funding purposes under the TEC, Chapter 42, is repealed.

Taxation

The subsection titled, "What if our district offers an optional homestead exemption?" is repealed because the TEC, §42.2522(a), only applies to the TEC, Chapter 42.

The amendment places the specific procedures contained in the Manual for Districts Subject to Wealth Equalization 2016-2017 School Year, Revised April 2017 in the TAC. The TEA administers the wealth equalization provisions of the TEC, Chapter 41, according to the procedures specified in each yearly manual for districts subject to wealth equalization. Data reporting requirements are addressed primarily through the online FSP System.

The amendment has no locally maintained paperwork requirements.

FISCAL NOTE. Leo Lopez, associate commissioner for school finance/chief school finance officer, has determined that for the first five-year period the amendment is in effect, there will be no fiscal implications to state or local government beyond what statute requires. This amendment repeals language in the Manual for Districts Subject to Wealth Equalization 2016-2017 School Year that previously applied the TEC, §42.2522, to districts subject to the TEC, Chapter 41. TEC, §42.2522, prohibits the commissioner from providing funds under the TEC, Chapter 42, to school districts based on property values computed in accordance with Texas Government Code, §403.302(d)(2), which excludes one-half of the local option homestead exemption (LOHE). TEC, Chapter 41, however, contains no such prohibition. Therefore, because the TEC, §42.2522, is explicitly limited to districts receiving funds under the TEC, Chapter 42, its application to districts paying recapture under TEC, Chapter 41, is being removed.

The repeal of the previous application of the TEC, §42.2522, to school districts subject to the TEC, Chapter 41, will allow the TEA to apply the plain language of the TEC, §41.001(2). This provision requires the TEA to calculate "wealth per student" for all districts subject to the TEC, Chapter 41, using the taxable value of property as determined under Texas Government Code, Chapter 403, Subchapter M. This calculation of taxable value excludes one-half of the total dollar amount of LOHE. See Texas Government Code, §403.302(d)(2).

The previous application of the TEC, §42.2522, to districts subject to the TEC, Chapter 41, had the effect of increasing recapture payments for school districts that are subject to the TEC, Chapter 41, that also have a LOHE. The application of the statute as written will lower the amount of recapture collected by the state by $88,112,532 in fiscal year 2017; $92,044,986 in fiscal year 2018; $95,984,871 in 2019; $99,797,144 in 2020; $122,549,135 in 2021; and $125,549,135 in 2022.

This resulting decline in recapture revenue is not the result of a discretionary decision in the wealth equalization manual, but rather the result of applying the clear and unambiguous language in the statute. Therefore, the decline in recapture revenue is not a result of enforcing or administering a rule, but a result of the action of the legislature to exclude one-half of the amount of the LOHE from the calculation of recapture.

Because the provision in the TEC, §41.001(2), only reduces recapture for one-half of the amount of the LOHE, any district adopting a LOHE will still have to bear the cost of the other half of the LOHE. Because the adoption of a LOHE bears significant costs to districts adopting the LOHE, the repeal of this provision in the wealth equalization manual is unlikely to cause other districts to adopt a LOHE. Because it is unlikely that application of this statute on its own will cause additional districts to adopt a LOHE, it is not possible to speculate on the future actions of locally governed school districts with respect to their optional tax exemptions nor is it possible to speculate on the potential fiscal impacts from those actions.

There is no effect on local economy for the first five years that the amendment is in effect; therefore, no local employment impact statement is required under Texas Government Code, §2001.022.

PUBLIC BENEFIT/COST NOTE. Mr. Lopez has determined that for each year of the first five years the amendment is in effect the public benefit anticipated as a result of enforcing the amendment will be to continue to inform the public of the existence of an annual publication specifying requirements for school districts subject to wealth equalization. There is no anticipated economic cost to persons who are required to comply with the amendment.

ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS FOR SMALL BUSINESSES AND MICROBUSINESSES. There is no direct adverse economic impact for small businesses and microbusinesses; therefore, no regulatory flexibility analysis, specified in Texas Government Code, §2006.002, is required.

REQUEST FOR PUBLIC COMMENT. The public comment period begins August 25, 2017, and ends September 25, 2017. Comments may be submitted to Cristina De La Fuente-Valadez, Rulemaking, Texas Education Agency, 1701 North Congress Avenue, Austin, Texas 78701. Comments may also be submitted electronically to rules@tea.texas.gov.

A public hearing on the amendment will be held from 1:30 p.m. until the conclusion of testimony or not later than 2:30 p.m. on August 31, 2017, in Room 1-100, William B. Travis Building, 1701 North Congress Avenue, Austin, Texas 78701. Questions about the hearing should be directed to the Division of State Funding at (512) 463-9238.

STATUTORY AUTHORITY. The amendment is authorized under the Texas Education Code (TEC), §41.006, which authorizes the commissioner of education to adopt rules necessary for the implementation of the TEC, Chapter 41, Equalized Wealth Level; TEC, §41.013(c), which provides that Texas Government Code, Chapter 2001, is inapplicable to decisions of the commissioner under TEC, Chapter 41; and TEC, §41.013(d), which authorizes the commissioner to request the Secretary of State to publish rules adopted under TEC, Chapter 41.

CROSS REFERENCE TO STATUTE. The amendment implements the Texas Education Code, §41.006 and §41.013(c) and (d).

§62.1071.Manual for Districts Subject to Wealth Equalization.

(a) The processes and procedures that the Texas Education Agency (TEA) uses in the administration of the provisions of the Texas Education Code (TEC), Chapter 41, and the fiscal, procedural, and administrative requirements that school districts subject to the TEC, Chapter 41, must meet are described in the official TEA publication Manual for Districts Subject to Wealth Equalization 2016-2017 School Year, Revised April 2017, provided in this subsection.

Figure: 19 TAC §62.1071(a) (.pdf)

[Figure: 19 TAC §62.1071(a)]

(b) The specific processes, procedures, and requirements used in the manual for districts subject to wealth equalization are established annually by the commissioner of education and communicated to all school districts.

(c) School district actions and inactions in previous school years and data from those school years will continue to be subject to the annual manual for districts subject to wealth equalization with respect to those years.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 14, 2017.

TRD-201703128

Cristina De La Fuente-Valadez

Director, Rulemaking

Texas Education Agency

Earliest possible date of adoption: September 24, 2017

For further information, please call: (512) 475-1497


CHAPTER 129. STUDENT ATTENDANCE

SUBCHAPTER AA. COMMISSIONER'S RULES

19 TAC §129.1025

The Texas Education Agency (TEA) proposes an amendment to §129.1025, concerning student attendance accounting. The proposed amendment would adopt by reference the 2017-2018 Student Attendance Accounting Handbook.

The TEA has adopted its student attendance accounting handbook in rule since 2000. Attendance accounting evolves from year to year, so the intention is to annually update 19 TAC §129.1025 to refer to the most recently published student attendance accounting handbook.

Each annual student attendance accounting handbook provides school districts and charter schools with the Foundation School Program (FSP) eligibility requirements of all students, prescribes the minimum requirements of all student attendance accounting systems, lists the documentation requirements for attendance audit purposes, and details the responsibilities of all district personnel involved in student attendance accounting. The TEA distributes FSP resources under the procedures specified in each current student attendance accounting handbook. The final version of the student attendance accounting handbook is published on the TEA website. A supplement, if necessary, is also published on the TEA website.

The proposed amendment to 19 TAC §129.1025 would adopt by reference the student attendance accounting handbook for the 2017-2018 school year. Some of the changes included in the proposed handbook would incorporate legislation resulting from the 85th Texas Legislature, Regular Session, 2017. However, some legislative changes would not be included in the proposed handbook because they are not effective until the 2018-2019 school year. Those changes will be included in the 2018-2019 Student Attendance Accounting Handbook.

Significant changes to the 2017-2018 Student Attendance Accounting Handbook from the 2016-2017 Student Attendance Accounting Handbook include the following.

Section 3, General Attendance Requirements

Texas Education Code (TEC), §25.081, and Chapter 42, specifically §42.005, establish the general parameters for attendance and school operation in §42.004. The following changes would implement reporting requirements for attendance and funding.

Language would be added stating that to be eligible for funding for work-based learning opportunities, a student must participate in the work-based learning opportunity for at least two hours (half-day attendance) or at least four hours (full-day attendance). Work-based learning opportunities include internships, externships, apprenticeships, mentorships, etc. (This is not an exhaustive list of work-based learning opportunities.)

A chart would be added to specify that the following activities are eligible for funding under the 2-through-4 hour rule: instruction, in-class breakfast, recess, work-based learner, and study program for state assessments (if the student has met all graduation requirements). The list of ineligible activities would include study hall, sign ins, and repeated courses (if a student has already received credit for that course).

A requirement would be added that districts can code students who meet all of the criteria listed in Section 3.3.1 of the handbook as immigrants and that once a student has been in U.S. schools for more than three full academic years, the immigrant indicator code should be removed.

A note would be added in the section on compulsory attendance that a child engages in truant conduct if the child is required to attend school under the TEC, §25.085, and fails to attend school on 10 or more days or parts of days within a six-month period in the same school year.

Language would be added specifying that attendance must not be taken by students or classroom aides and clerks who do not meet the requirements of a highly qualified paraprofessional.

Language would be added to allow a student to be considered present for FSP funding if the student is participating in an off-campus work-based learning opportunity and is not scheduled to be on campus during any part of the school day. The language would also state that a student who is participating in an off-campus work-based learning opportunity and is scheduled to be on campus during any part of the school day should have his or her attendance recorded while on campus.

Language would be added to specify that paraprofessionals who take attendance must meet the requirements of a highly qualified paraprofessional.

Language would be added to state that the school nurse will not count for FSP funding as a health care professional appointment.

Language would be added to state that a student who is 17 years of age or older may be considered present for FSP funding if the student is absent to pursue enlistment in a branch of the armed services of the United States or the National Guard. Language would state that the district (1) must not excuse for this purpose more than 4 days of school during the period the student is enrolled in high school; and (2) must adopt a policy stating when an absence will be excused for this purpose and a policy that verifies the student's activities related to pursuing enlistment in a branch of the armed services or the Texas National Guard.

Clarification would be added that days of instruction are the number of days that satisfy the instructional time requirements established under the student attendance accounting handbook that are required by a district or charter school to accumulate 75,600 minutes of operation in a school year.

Language would be added stating that a school district may not provide student instruction on Memorial Day.

Language stating that a student who is served through the general education homebound (GEH) program retains the same average daily attendance (ADA) eligibility code he or she had before receiving GEH services, regardless of how many hours the student will be served through the GEH program, would be deleted.

Section 4, Special Education

TEC, Chapter 42, specifically §42.151, authorizes funding for special education in certain circumstances. TEC, §42.004, authorizes the commissioner to adopt reports that may be necessary to implement and administer the FSP. The following changes would implement reporting for special education to account for attendance and funding.

Language would be added stating that upon completion of a full individual and initial evaluation of a student, an Admission, Review, and Dismissal (ARD) committee meets and develops the student's individualized education program (IEP) that includes the appropriate educational placement for implementing the student's IEP.

Language would be added to state that the ARD committee determines the date that services will begin (the effective date) and the duration of the services and records this information in the IEP.

Language would be added to specify that when a student moves from one district to another within the state in the same school year and either the parents verify that the student was receiving special education services in the previous district or the previous district verifies in writing or by telephone that the student was receiving special education services, a district must meet the requirements of 34 Code of Federal Regulations (CFR) §300.323(a) and (e) regarding the provision of special education services.

Language stating that a student aged 6 years or older who is served in the special education homebound instructional setting retains the same ADA eligibility code he or she had before receiving homebound services, regardless of how many hours the student will be served in the homebound instructional setting, would be deleted.

Additional language would be added in the chart for preschool programs for children with disabilities and homebound services.

Language would be added specifying that, to claim special education contact hours, a student must be employed (paid or unpaid full- or part-time), receiving special education services as required in the IEP, and coded a Vocational Adjustment Class (VAC) (08).

Language would be added to state that for students currently residing in a hospital, residential facility, or state supported living center, the instructional arrangement coding for an adult student who resides in a residential facility can be interchanged with the word "parent."

Language relating to teachers providing instruction in mainstream settings would be added to state that if certified special education personnel are only monitoring student progress, mainstream special education funding must not be generated. The proposed new language would specify that in order to report this instructional arrangement, the district should document the details of the specially designed instruction that is being provided in the student's IEP.

Language stating that sheltered workshops should be included in the residential care and treatment facility community class and off home campus community class would be deleted.

Language for indicator code 1 - speech therapy would be revised.

An example would be added to Code 8 - VAC and Codes 91-98 - Off Home Campus.

Section 5, Career and Technical Education (CTE)

TEC, Chapter 42, including §42.154, authorizes funding for career and technical education (CTE) in certain circumstances. TEC, Chapter 29, Subchapter F, establishes general parameters for CTE programs. TEC, §42.004, authorizes the commissioner to adopt reports that may be necessary to implement and administer the FSP. The following changes would implement reporting for CTE to account for attendance and funding.

Additional language would be added to state that teachers with less than a bachelor's degree are not eligible to teach CTE courses that meet graduation requirements for English language arts and reading, science, mathematics, or fine arts. The language would also note that certain teacher assignments may require an industry license that is regulated outside of the TEA.

Language would be added stating that with the approval of the local board of trustees, school districts and charter schools may offer any state-approved innovative course for state elective credit. The language would specify that no application is required for a district or charter school to offer an approved innovative course but if a district wishes to submit a new innovative course, the district must follow the process for applying to the TEA for approval to offer the new innovative course.

Language would be revised to include Project-Based Research, Principles of Applied Engineering, Principles of Transportation Systems, and Health Science Theory/Health Science Clinical as CTE courses.

Language would be added to state that an 8th grade student who is not enrolled in a Career and Technical Education for the Disabled (CTED) course but who is enrolled in a Principles of Law, Public Safety, Corrections, and Security course is not eligible to generate contact hour funding. The language would specify that only students in Grades 9-12 are eligible for CTE contact hours, except for students in Grades 7 and 8 who are eligible for and enrolled in CTED courses.

Section 6, Bilingual/English as a SecondLanguage (ESL)

TEC, §42.153, authorizes funding for bilingual or special language programs in certain circumstances. TEC, Chapter 29, Subchapter B, establishes general parameters for bilingual and special language programs. TEC, §42.004, authorizes the commissioner to adopt reports that may be necessary to implement and administer the FSP. The following change would implement reporting for bilingual and special language programs to account for attendance and funding.

The chart for the exit criteria for the English language learner would be updated.

Section 7, Prekindergarten (PK)

TEC, Chapter 29, Subchapter E, establishes special general parameters for pre-kindergarten (PK) programs. TEC, Chapter 42, including §42.005, establishes average daily attendance (ADA) requirements and authorizes funding for certain circumstances. TEC, §42.004, authorizes the commissioner to adopt reports that may be necessary to implement and administer the FSP. The following changes would implement reporting for PK to account for attendance and funding.

Additional language would be added stating that a district must verify a student's eligibility for PK in order to receive funding in the PK program. Districts would be required to have the verification document on file for their records.

Language would be revised to state that if a student qualifies for PK on the basis of being limited English proficient (LEP) but is not receiving required services through the bilingual/ESL program because of a parental denial, the student remains eligible for PK if the student enrolls in a new district provided that the documentation described in Section 7.2.2.1 of the handbook is made available to the new district.

Section 9, Pregnancy-Related Services (PRS)

TEC, Chapter 42, including §42.152, authorizes funding for students who are pregnant under certain circumstances. TEC, §42.004, authorizes the commissioner to adopt reports that may be necessary to implement and administer the FSP. The following changes would implement reporting for pregnancy-related services (PRS) to account for attendance and funding.

Language would be revised to state that a district receives 2.41 PRS weighted funding while PRS, consisting of support services and compensatory education home instruction (CEHI), are being provided to the student.

Language would be added specifying that remote instruction for the PRS program means that CEHI is provided to a student through a technology that allows for real-time, two-way interaction between a student and teacher who are in different physical locations.

Language would be updated to state that The Life Skills Program for Student Parents (previously called the Pregnancy Education and Parenting (PEP) Program) will not be funded for the 2017-2018 school year.

Language would be added to allow a district to apply for a waiver to provide CEHI on campus in a small group of four or less students when a student in postpartum recovery is transitioning back to school in accordance with the terms of the approved waiver.

Language stating that a student who is provided CEHI services retains the same ADA eligibility code she had before receiving CEHI services, regardless of how many hours she will receive CEHI, would be deleted.

Language stating that a student who is provided special education services and PRS during confinement retains the same ADA eligibility code she had before receiving the services, regardless of how many hours the student will be provided the services, would be deleted.

Language would be added to specify that when a student is enrolled in the PRS program, districts should inform the student of the services that are offered and the options that are available, such as the CEHI break in service option, in order to support quality district and student service planning.

Section 12, Virtual, Remote, and Electronic Instruction

TEC, Chapter 30A, establishes the general parameters for the Texas Virtual School Network (TxVSN). TEC, §30A.153, authorizes funding for the TxVSN for the FSP under certain circumstances. TEC, §42.004, authorizes the commissioner to adopt reports that may be necessary to implement and administer the FSP. The following change would implement reporting for the TxVSN to account for attendance and funding.

Language would be added stating that each TxVSN course is considered to be 55 minutes of daily classroom instruction for purposes of the 2-through-4-hour rule.

Section 14, Glossary

Definitions would be updated to reflect changes made throughout the handbook.

The definition of career cluster would be revised to include a new hyperlink to the TEA website.

A definition for work-based learner would be added.

A definition for days of instruction would be added.

The proposed amendment would place the specific procedures contained in the 2017-2018 Student Attendance Accounting Handbook in the Texas Administrative Code. The TEA distributes FSP funds according to the procedures specified in each annual student attendance accounting handbook. Data reporting requirements are addressed through the Texas Student Data System Public Education Information Management System (TSDS PEIMS).

The handbook has long stated that school districts and open-enrollment charter schools must keep all student attendance documentation for five years from the end of the school year. Any new student attendance documentation required to be kept would correspond with the student attendance accounting requirement changes described previously.

FISCAL NOTE. Leo Lopez, associate commissioner for school finance / chief school finance officer, has determined that for the first five-year period the amendment is in effect, there will be no fiscal implications for state or local government as a result of enforcing or administering the amendment. There is no effect on local economy for the first five years that the proposed amendment is in effect; therefore, no local employment impact statement is required under Texas Government Code, §2001.022.

PUBLIC BENEFIT/COST NOTE. Mr. Lopez has determined that for each year of the first five years the amendment is in effect the public benefit anticipated as a result of enforcing the amendment will be continuing to inform the public of the existence of annual publications specifying attendance accounting procedures for school districts and charter schools. There is no anticipated economic cost to persons who are required to comply with the proposed amendment.

ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS FOR SMALL BUSINESSES AND MICROBUSINESSES. There is no direct adverse economic impact for small businesses and microbusinesses; therefore, no regulatory flexibility analysis, specified in Texas Government Code, §2006.002, is required.

REQUEST FOR PUBLIC COMMENT. The public comment period on the proposal begins August 25, 2017, and ends September 25, 2017. Comments on the proposal may be submitted to Cristina De La Fuente-Valadez, Rulemaking, Texas Education Agency, 1701 North Congress Avenue, Austin, Texas 78701. Comments may also be submitted electronically to rules@tea.texas.gov. A request for a public hearing on the proposal submitted under the Administrative Procedure Act must be received by the commissioner of education not more than 14 calendar days after notice of the proposal has been published in the Texas Register on August 25, 2017.

STATUTORY AUTHORITY. The amendment is proposed under the Texas Education Code (TEC), §7.055(b)(35), which states that the commissioner shall perform duties in connection with the Foundation School Program (FSP) as prescribed by the TEC, Chapter 42; TEC, §25.081, as amended by House Bill (HB) 441 and HB 2442, 85th Texas Legislature, Regular Session, 2017, which states that for each school year, each school district must operate so that the district provides for at least 75,600 minutes, including time allocated for instruction, intermissions, and recesses, for students. TEC, §25.081(d), authorizes the commissioner to adopt rules to implement the section. TEC, §25.081(f), states that a school district may not provide student instruction on Memorial Day but that if a school district would be required to provide student instruction on Memorial Day to compensate for minutes of instruction lost because of school closures caused by disaster, flood, extreme weather conditions, fuel curtailment, or another calamity, the commissioner shall approve the instruction of students for fewer than the number of minutes required under TEC, §25.081(a); TEC, §25.0812, which states that school districts and charter schools may not schedule the last day of school for students before May 15; TEC, §25.087, as amended by Senate Bill (SB) 1152, 85th Texas Legislature, Regular Session, 2017, which requires that a school district excuse a student who is 17 years of age or older from attending school to pursue enlistment in a branch of the armed services of the United States or the Texas National Guard, provided that (1) the district may not excuse for this purpose more than four days of school during the period the student is enrolled in high school; and (2) the district verifies the student's activities related to pursuing enlistment in a branch of the armed services or the Texas National Guard. The statute requires each school district to adopt procedures to verify a student's activities as described by TEC, §25.087(b-5); TEC, §30A.153, which states that, subject to the limitation imposed under the TEC, §30A.153(a-1), a school district or open-enrollment charter school in which a student is enrolled is entitled to funding under the TEC, Chapter 42, or in accordance with the terms of a charter granted under the TEC, §12.101, for the student's enrollment in an electronic course offered through the state virtual school network in the same manner that the district or school is entitled to funding for the student's enrollment in courses provided in a traditional classroom setting, provided that the student successfully completes the electronic course; TEC, §42.004, which states that the commissioner, in accordance with the rules of the State Board of Education, shall take such action and require such reports consistent with the TEC, Chapter 42, as may be necessary to implement and administer the FSP; TEC, §42.005, as amended by SB 2084 and HB 2442, 85th Texas Legislature, Regular Session, 2017, which states that average daily attendance is the quotient of the sum of attendance for each day of the minimum number of days of instruction as described under the TEC, §25.081(a), divided by the minimum number of days of instruction; TEC, §42.151, which states that for each student in average daily attendance in a special education program under the TEC, Chapter 29, Subchapter A, in a mainstream instructional arrangement, a school district is entitled to an annual allotment equal to the adjusted basic allotment multiplied by 1.1. For each full-time equivalent student in average daily attendance in a special education program under the TEC, Chapter 29, Subchapter A, in an instructional arrangement other than a mainstream instructional arrangement, a district is entitled to an annual allotment equal to the adjusted basic allotment multiplied by a weight determined according to its instructional arrangement; TEC, §42.152, which states that for each student who is educationally disadvantaged or who is a student who does not have a disability and resides in a residential placement facility in a district in which the student's parent or legal guardian does not reside, a district is entitled to an annual allotment equal to the adjusted basic allotment multiplied by 0.2, and by 2.41 for each full-time equivalent student who is in a remedial and support program under the TEC, §29.081, because the student is pregnant; TEC, §42.153, which states that for each student in average daily attendance in a bilingual education or special language program under the TEC, Chapter 29, Subchapter B, a district is entitled to an annual allotment equal to the adjusted basic allotment multiplied by 0.1; and TEC, §42.154, as amended by SB 22 and HB 3593, 85th Texas Legislature, Regular Session, 2017, which states that for each full-time equivalent student in average daily attendance in an approved career and technology education program in Grades 9-12 or in career and technology education programs for students with disabilities in Grades 7-12, a district is entitled to weighted funding.

CROSS REFERENCE TO STATUTE. The amendment implements the Texas Education Code (TEC), §§7.055(b)(35); 25.081, as amended by House Bill (HB) 441 and HB 2442, 85th Texas Legislature, Regular Session, 2017; 25.0812; 25.087, as amended by Senate Bill (SB) 1152, 85th Texas Legislature, Regular Session, 2017; 30A.153; 42.004; 42.005, as amended by Senate Bill (SB) 2084 and HB 2442, 85th Texas Legislature, Regular Session, 2017; 42.151-42.153; and 42.154, as amended by SB 22 and HB 3593, 85th Texas Legislature, Regular Session, 2017.

§129.1025.Adoption by Reference: Student Attendance Accounting Handbook.

(a) The student attendance accounting guidelines and procedures established by the commissioner of education under §129.21 of this title (relating to Requirements for Student Attendance Accounting for State Funding Purposes) and the Texas Education Code, §42.004, to be used by school districts and charter schools to maintain records and make reports on student attendance and student participation in special programs will be published annually.

(b) The standard procedures that school districts and charter schools must use to maintain records and make reports on student attendance and student participation in special programs for school year 2017-2018 [2016-2017] are described in the official Texas Education Agency (TEA) publication 2017-2018 [2016-2017] Student Attendance Accounting Handbook, dated September 2017 [November 2016], which is adopted by this reference as the agency's official rule. A copy of the 2017-2018 [2016-2017] Student Attendance Accounting Handbook, dated September 2017 [November 2016], is available for examination during regular office hours, 8:00 a.m. to 5:00 p.m., except holidays, Saturdays, and Sundays, at the Texas Education Agency, 1701 North Congress Avenue, Austin, Texas 78701. In addition, the publication can be accessed from the TEA official website. The commissioner will amend the 2017-2018 [2016-2017] Student Attendance Accounting Handbook, dated September 2017 [November 2016], and this subsection adopting it by reference, as needed.

(c) Data from previous school years will continue to be subject to the student attendance accounting handbook as the handbook existed in those years.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 14, 2017.

TRD-201703130

Cristina De La Fuente-Valadez

Director, Rulemaking

Texas Education Agency

Earliest possible date of adoption: September 24, 2017

For further information, please call: (512) 475-1497