H.B. No. 1

AN ACT

relating to public school finance, property tax relief, public
school accountability and programs, and related matters; making an
appropriation.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

ARTICLE 1. PUBLIC SCHOOL FINANCE AND PROPERTY TAX RELIEF

SECTION 1.01. Section 41.002, Education Code, is amended by
amending Subsection (a) and adding Subsections (a-1) and (a-2) to
read as follows:
(a) A school district may not have a wealth per student that
exceeds:
(1) the wealth per student that generates the amount
of maintenance and operations tax revenue per weighted student
available to a district at the 88th percentile in wealth per
student, for the district’s maintenance and operations tax effort
equal to or less than the rate equal to the product of the state
compression percentage, as determined under Section 42.2516,
multiplied by the maintenance and operations tax rate adopted by
the district for the 2005 tax year;
(2) the wealth per student that generates the amount
of maintenance and operations tax revenue per weighted student
available to the Austin Independent School District, as determined
by the commissioner in cooperation with the Legislative Budget
Board, for the first six cents by which the district’s maintenance
and operations tax rate exceeds the rate equal to the product of the
state compression percentage, as determined under Section 42.2516,
multiplied by the maintenance and operations tax rate adopted by
the district for the 2005 tax year, subject to Section 41.093(b-1);
or
(3) $319,500, for the district’s maintenance and
operations tax effort that exceeds the first six cents by which the
district’s maintenance and operations tax effort exceeds the rate
equal to the product of the state compression percentage, as
determined under Section 42.2516, multiplied by the maintenance and
operations tax rate adopted by the district for the 2005 tax year
[$305,000].
(a-1) Subsection (a) applies beginning with the 2008-2009
school year. For the 2006-2007 and 2007-2008 school years, a school
district may not have a wealth per student that exceeds the wealth
per student specified by Subsection (a), except that:
(1) Subsection (a)(2) applies only to the first four
cents by which the district’s maintenance and operations tax rate
exceeds the rate equal to the product of the state compression
percentage, as determined under Section 42.2516, multiplied by the
maintenance and operations tax rate adopted by the district for the
2005 tax year, subject to Section 41.093(b-1); and
(2) Subsection (a)(3) applies to the district’s
maintenance and operations tax effort that exceeds the first four
cents by which the district’s maintenance and operations tax effort
exceeds the rate described by Subdivision (1).
(a-2) Subsection (a-1) and this subsection expire September
1, 2008.
SECTION 1.02. Section 41.093, Education Code, is amended by
amending Subsection (a) and adding Subsections (b-1) and (b-2) to
read as follows:
(a) Subject to Subsection (b-1), the [The] cost of each
credit is an amount equal to the greater of:
(1) the amount of the district’s maintenance and
operations tax revenue per student in weighted average daily
attendance for the school year for which the contract is executed;
or
(2) the amount of the statewide district average of
maintenance and operations tax revenue per student in weighted
average daily attendance for the school year preceding the school
year for which the contract is executed.
(b-1) If the guaranteed level of state and local funds per
weighted student per cent of tax effort under Section
42.302(a-1)(2) for which state funds are appropriated for a school
year is an amount at least equal to the amount of revenue per
weighted student per cent of tax effort available to the Austin
Independent School District, as determined by the commissioner in
cooperation with the Legislative Budget Board, the commissioner, in
computing the amounts described by Subsections (a)(1) and (2) and
determining the cost of an attendance credit, shall exclude
maintenance and operations tax revenue resulting from the first six
cents by which a district’s maintenance and operations tax rate
exceeds the rate equal to the product of the state compression
percentage, as determined under Section 42.2516, multiplied by the
maintenance and operations tax rate adopted by the district for the
2005 tax year.
(b-2) Subsection (b-1) applies beginning with the 2008-2009
school year. For the 2006-2007 and 2007-2008 school years, the
commissioner shall compute the amounts described by Subsections
(a)(1) and (2) and determine the cost of an attendance credit as
specified by Subsection (b-1), except the commissioner shall
exclude maintenance and operations tax revenue resulting from the
first four cents by which a district’s maintenance and operations
tax rate exceeds the rate equal to the product of the state
compression percentage, as determined under Section 42.2516,
multiplied by the maintenance and operations tax rate adopted by
the district for the 2005 tax year. This subsection expires
September 1, 2008.
SECTION 1.03. Section 42.101, Education Code, is amended to
read as follows:
Sec. 42.101. BASIC ALLOTMENT. For each student in average
daily attendance, not including the time students spend each day in
special education programs in an instructional arrangement other
than mainstream or career and technology education programs, for
which an additional allotment is made under Subchapter C, a
district is entitled to an allotment in an amount equal to the
product of the amount per student per cent of tax effort available
to a district at the percentile in wealth per student specified by
Section 42.302(a-1)(1), multiplied by 86 [of $2,537]. A greater
amount for any school year may be provided by appropriation.
SECTION 1.04. Subchapter E, Chapter 42, Education Code, is
amended by adding Section 42.2516 to read as follows:
Sec. 42.2516. ADDITIONAL STATE AID FOR TAX REDUCTION. (a)
In this section, “state compression percentage” means the
percentage, as determined by the commissioner, of a school
district’s adopted maintenance and operations tax rate for the 2005
tax year that serves as the basis for state funding for tax rate
reduction under this section. The commissioner shall determine the
state compression percentage for each school year based on the
percentage by which a district is able to reduce the district’s
maintenance and operations tax rate for that year, as compared to
the district’s adopted maintenance and operations tax rate for the
2005 tax year, as a result of state funds appropriated for
distribution under this section for that year from the property tax
relief fund established under Section 403.109, Government Code, or
from another funding source available for school district property
tax relief.
(a-1) Subsection (a) applies beginning with the state
fiscal year ending August 31, 2009. For the state fiscal year
ending August 31, 2007, the state compression percentage is 88.67
percent. For the state fiscal year ending August 31, 2008, the
state compression percentage is 66.67 percent. This subsection
expires September 1, 2009.
(b) Subject to Subsections (g) and (h), but notwithstanding
any other provision of this title, a school district is entitled to
state revenue necessary to provide the district with the sum of:
(1) the amount of state revenue necessary to maintain
state and local revenue per student in weighted average daily
attendance in the amount equal to the greater of:
(A) the amount of state and local revenue per
student in weighted average daily attendance for the maintenance
and operations of the district available to the district for the
2005-2006 school year;
(B) the amount of state and local revenue per
student in weighted average daily attendance for the maintenance
and operations of the district to which the district would have been
entitled for the 2006-2007 school year under this chapter, as it
existed on January 1, 2006, or, if the district would have been
subject to Chapter 41, as that chapter existed on January 1, 2006,
the amount to which the district would have been entitled under that
chapter, based on the funding elements in effect for the 2005-2006
school year, if the district imposed a maintenance and operations
tax at the rate adopted by the district for the 2005 tax year; or
(C) the amount of state and local revenue per
student in weighted average daily attendance for the maintenance
and operations of the district to which the district would have been
entitled for the 2006-2007 school year under this chapter, as it
existed on January 1, 2006, or, if the district would have been
subject to Chapter 41, as that chapter existed on January 1, 2006,
the amount to which the district would have been entitled under that
chapter, based on the funding elements in effect for the 2005-2006
school year, if the district imposed a maintenance and operations
tax at the rate equal to the rate described by Section 26.08(i) or
(k)(1), Tax Code, as applicable, for the 2006 tax year;
(2) an amount equal to the product of $2,500
multiplied by the number of classroom teachers, full-time
librarians, full-time counselors certified under Subchapter B,
Chapter 21, and full-time school nurses employed by the district
and entitled to a minimum salary under Section 21.402; and
(3) an amount equal to the product of $275 multiplied
by the number of students in average daily attendance in grades nine
through 12 in the district.
(c) In determining the amount to which a district is
entitled under Subsection (b)(1), the commissioner shall include:
(1) any amounts described by Rider 69, page III-19,
Chapter 1369, Acts of the 79th Legislature, Regular Session, 2005
(the General Appropriations Act);
(2) for a school district that received additional
revenue for the 2005-2006 school year as a result of an agreement
under Subchapter E, Chapter 41:
(A) if the amount of state revenue to which the
district is entitled under Subsection (b) is computed based on the
amount described by Subsection (b)(1)(A), the amount of that
additional revenue retained by the district for the 2005-2006
school year, which is the amount by which the total maintenance and
operations revenue available to the district for that school year
exceeded the total maintenance and operations revenue that would
have been available to the district for that school year if the
district had not entered into the agreement, less any amount the
district paid to another entity under the agreement; or
(B) if the amount of state revenue to which the
district is entitled under Subsection (b) is computed based on the
amount described by Subsection (b)(1)(B) or (C), the amount of the
additional revenue that would have been retained by the district
for the 2006-2007 school year if the district had entered into the
agreement on the same terms as under the agreement for the 2005-2006
school year, which is the amount by which the total maintenance and
operations revenue that would have been available to the district
for the 2006-2007 school year if the district had entered into the
agreement exceeds the total maintenance and operations revenue that
would have been available to the district for that school year if
the district had not entered into the agreement and had imposed a
maintenance and operations tax at the rate of $1.50 on the $100
valuation of taxable property, less any amount the district would
have paid to another entity under the agreement;
(3) any amount necessary to reflect an adjustment made
by the commissioner under Section 42.005;
(4) any amount necessary to reflect an adjustment made
by the commissioner under Section 42.2521; and
(5) any amount necessary to reflect an adjustment made
by the commissioner under Section 42.2531.
(d) If, for the 2006-2007 or a subsequent school year, a
school district enters into an agreement under Subchapter E,
Chapter 41, the commissioner shall reduce the amount of state
revenue to which the district is entitled under Subsection (b) for
that school year by an amount equal to any additional revenue for
that school year that the district receives and retains as a result
of that agreement, which is the amount by which the total
maintenance and operations revenue available to the district
exceeds the total maintenance and operations revenue that would
have been available to the district if the district had not entered
into the agreement and had imposed a maintenance and operations tax
at the maximum rate permitted under Section 45.003(d), less any
amount the district pays to another entity under the agreement.
(e) The amount of revenue to which a school district is
entitled because of the technology allotment under Section 32.005
is not included in making a determination under Subsection (b)(1).
(f) For purposes of determining the amount of revenue to
which a school district is entitled under this section, the
commissioner shall use the average tax collection rate for the
district for the 2003, 2004, and 2005 tax years.
(g) If a school district adopts a maintenance and operations
tax rate that is below the rate equal to the product of the state
compression percentage multiplied by the maintenance and
operations tax rate adopted by the district for the 2005 tax year,
the commissioner shall reduce the district’s entitlement under this
section in proportion to the amount by which the adopted rate is
less than the rate equal to the product of the state compression
percentage multiplied by the rate adopted by the district for the
2005 tax year.
(h) Notwithstanding any other provision of this title, if
the amount of state and local revenue per student in weighted
average daily attendance for the maintenance and operations of the
district available to the district in a school year as a result of
increases to the equalized wealth level under Section 41.002, the
basic allotment under Section 42.101, and the guaranteed level
under Section 42.302 made by H.B. No. 1, Acts of the 79th
Legislature, 3rd Called Session, 2006, exceeds the amount to which
a district is entitled under Subsection (b) for that school year,
the commissioner must:
(1) reduce the amount of state aid provided to the
district for that school year by an amount equal to the excess
revenue, as determined by the commissioner; or
(2) for a district with a wealth per student greater
than the applicable amount described by Section 41.002(a), require
the district to purchase a number of attendance credits for that
school year at a cost equal to the amount of excess revenue, as
determined by the commissioner.
(i) A school district that is required to take action under
Chapter 41 to reduce its wealth per student to the equalized wealth
level and that is entitled to state revenue under this section may
receive that revenue through an adjustment against the total amount
of attendance credits required to be purchased under Subchapter D,
Chapter 41, or the total number of nonresident students required to
be educated under Subchapter E, Chapter 41, as determined by the
commissioner.
(j) If a school district reduces its maintenance and
operations tax rate by an amount less than the rate equal to the
product of the difference between the state compression percentage
for the preceding year and the state compression percentage for the
year of the reduction, multiplied by the maintenance and operations
tax rate adopted by the district for the 2005 tax year, the
commissioner may not reduce the amount to which the district is
entitled under this section on the basis of the additional revenue
collected by the district.
(k) The commissioner may adopt rules necessary to
administer this section.
(l) A determination by the commissioner under this section
is final and may not be appealed.
SECTION 1.05. Sections 42.253(g) and (h), Education Code,
are amended to read as follows:
(g) If a school district demonstrates to the satisfaction of
the commissioner that the estimate of the district’s tax rate,
student enrollment, or taxable value of property used in
determining the amount of state funds to which the district is
entitled are so inaccurate as to result in undue financial hardship
to the district, the commissioner may adjust funding to that
district in that school year to the extent that funds are available
for that year[, including funds in the reserve account. Funds in
the reserve account may not be used under this subsection until any
reserve funds have been used for purposes of Subsection (f)].
(h) If the amount appropriated for the Foundation School
Program for the second year of a state fiscal biennium is less than
the amount to which school districts are entitled for that year, the
commissioner shall certify the amount of the difference to the
Legislative Budget Board not later than January 1 of the second year
of the state fiscal biennium. The Legislative Budget Board shall
propose to the legislature that the certified amount be transferred
to the foundation school fund from the economic stabilization fund
and appropriated for the purpose of increases in allocations under
this subsection. If the legislature fails during the regular
session to enact the proposed transfer and appropriation [proposed
under Subsection (f)] and there are not funds available under
Subsection (j), the commissioner shall reduce the total amount of
state funds allocated to each district by an amount determined by a
method under which the application of the same number of cents of
increase in tax rate in all districts applied to the taxable value
of property of each district, as determined under Subchapter M,
Chapter 403, Government Code, results in a total levy equal to the
total reduction. The following fiscal year, a district’s
entitlement under this section is increased by an amount equal to
the reduction made under this subsection.
SECTION 1.06. Effective August 1, 2009, Sections 42.259(c),
(d), and (f), Education Code, are amended to read as follows:
(c) Payments from the foundation school fund to each
category 2 school district shall be made as follows:
(1) 22 percent of the yearly entitlement of the
district shall be paid in an installment to be made on or before the
25th day of September of a fiscal year;
(2) 18 percent of the yearly entitlement of the
district shall be paid in an installment to be made on or before the
25th day of October;
(3) 9.5 percent of the yearly entitlement of the
district shall be paid in an installment to be made on or before the
25th day of November;
(4) 7.5 percent of the yearly entitlement of the
district shall be paid in an installment to be made on or before the
25th day of April;
(5) five percent of the yearly entitlement of the
district shall be paid in an installment to be made on or before the
25th day of May;
(6) 10 percent of the yearly entitlement of the
district shall be paid in an installment to be made on or before the
25th day of June;
(7) 13 percent of the yearly entitlement of the
district shall be paid in an installment to be made on or before the
25th day of July; and
(8) 15 percent of the yearly entitlement of the
district shall be paid in an installment to be made on or before the
25th day of August [after the fifth day of September and not later
than the 10th day of September of the calendar year following the
calendar year of the payment made under Subdivision (1)].
(d) Payments from the foundation school fund to each
category 3 school district shall be made as follows:
(1) 45 percent of the yearly entitlement of the
district shall be paid in an installment to be made on or before the
25th day of September of a fiscal year;
(2) 35 percent of the yearly entitlement of the
district shall be paid in an installment to be made on or before the
25th day of October; and
(3) 20 percent of the yearly entitlement of the
district shall be paid in an installment to be made on or before the
25th day of August [after the fifth day of September and not later
than the 10th day of September of the calendar year following the
calendar year of the payment made under Subdivision (1)].
(f) Any [Except as provided by Subsection (c)(8) or (d)(3),
any] previously unpaid additional funds from prior years owed to a
district shall be paid to the district together with the September
payment of the current year entitlement.
SECTION 1.07. Subchapter E, Chapter 42, Education Code, is
amended by adding Section 42.261 to read as follows:
Sec. 42.261. CERTAIN FUNDS APPROPRIATED FOR PURPOSE OF TAX
REDUCTION. (a) Funds appropriated by the legislature for a tax
year for the purpose of reducing a school district’s maintenance
and operations tax rate and providing state aid under Section
42.2516:
(1) are not excess funds for purposes of Section
42.2517;
(2) are not available for purposes of Section 42.2521
or 42.2522;
(3) may not be used for purposes of Chapter 46; and
(4) may not be provided by the commissioner to a school
district for a purpose other than reduction of the district’s
maintenance and operations tax rate.
(b) The commissioner may adopt rules necessary to
administer this section.
SECTION 1.08. Section 42.302, Education Code, is amended by
amending Subsection (a) and adding Subsections (a-1), (a-2), (a-3),
(a-4), and (f) to read as follows:
(a) Each school district is guaranteed a specified amount
per weighted student in state and local funds for each cent of tax
effort over that required for the district’s local fund assignment
up to the maximum level specified in this subchapter. The amount of
state support, subject only to the maximum amount under Section
42.303, is determined by the formula:

GYA = (GL X WADA X DTR X 100) – LR

where:
“GYA” is the guaranteed yield amount of state funds to be
allocated to the district;
“GL” is the dollar amount guaranteed level of state and local
funds per weighted student per cent of tax effort, which is an
amount described by Subsection (a-1) [$27.14] or a greater amount
for any year provided by appropriation;
“WADA” is the number of students in weighted average daily
attendance, which is calculated by dividing the sum of the school
district’s allotments under Subchapters B and C, less any allotment
to the district for transportation, any allotment under Section
42.158, and 50 percent of the adjustment under Section 42.102, by
the basic allotment for the applicable year;
“DTR” is the district enrichment tax rate of the school
district, which is determined by subtracting the amounts specified
by Subsection (b) from the total amount of maintenance and
operations taxes collected by the school district for the
applicable school year and dividing the difference by the quotient
of the district’s taxable value of property as determined under
Subchapter M, Chapter 403, Government Code, or, if applicable,
under Section 42.2521, divided by 100; and
“LR” is the local revenue, which is determined by multiplying
“DTR” by the quotient of the district’s taxable value of property as
determined under Subchapter M, Chapter 403, Government Code, or, if
applicable, under Section 42.2521, divided by 100.
(a-1) In this section, “wealth per student” has the meaning
assigned by Section 41.001. For purposes of Subsection (a), the
dollar amount guaranteed level of state and local funds per
weighted student per cent of tax effort (“GL”) for a school district
is:
(1) the amount of district tax revenue per weighted
student per cent of tax effort available to a district at the 88th
percentile in wealth per student, as determined by the commissioner
in cooperation with the Legislative Budget Board, for the
district’s maintenance and operations tax effort equal to or less
than the rate equal to the product of the state compression
percentage, as determined under Section 42.2516, multiplied by the
maintenance and operations tax rate adopted by the district for the
2005 tax year;
(2) the amount of district tax revenue per weighted
student per cent of tax effort available to the Austin Independent
School District, as determined by the commissioner in cooperation
with the Legislative Budget Board, for the first six cents by which
the district’s maintenance and operations tax rate exceeds the rate
equal to the product of the state compression percentage, as
determined under Section 42.2516 and notwithstanding the
limitation on district enrichment tax rate (“DTR”) under Section
42.303, multiplied by the maintenance and operations tax rate
adopted by the district for the 2005 tax year; and
(3) $31.95, for the district’s maintenance and
operations tax effort that exceeds the amount of tax effort
described by Subdivision (2).
(a-2) The limitation on district enrichment tax rate
(“DTR”) under Section 42.303 does not apply to the district’s
maintenance and operations tax effort described by Subsection
(a-1)(2).
(a-3) Subsection (a-1) applies beginning with the 2008-2009
school year. For the 2006-2007 and 2007-2008 school years, the
dollar amount guaranteed level of state and local funds per
weighted student per cent of tax effort (“GL”) for a school district
is the level specified by Subsection (a-1), except that:
(1) Subsection (a-1)(2) applies only to the first four
cents by which the district’s maintenance and operations tax rate
exceeds the rate equal to the product of the state compression
percentage, as determined under Section 42.2516, multiplied by the
maintenance and operations tax rate adopted by the district for the
2005 tax year;
(2) Subsection (a-1)(3) applies to the district’s
maintenance and operations tax effort that exceeds the rate
described by Subdivision (1); and
(3) the limitation on district enrichment tax rate
(“DTR”) under Section 42.303 does not apply to the district’s
maintenance and operations tax effort described by Subdivision (1).
(a-4) Subsection (a-3) and this subsection expire September
1, 2009.
(f) If a school district imposes a maintenance and
operations tax at a rate greater than the rate equal to the product
of the state compression percentage, as determined under Section
42.2516, multiplied by the maintenance and operations tax rate
adopted by the district for the 2005 tax year, the district is
entitled to receive an allotment under this section on the basis of
that greater tax effort.
SECTION 1.09. Section 42.303, Education Code, is amended to
read as follows:
Sec. 42.303. LIMITATION ON ENRICHMENT TAX RATE. The
district enrichment tax rate (“DTR”) under Section 42.302 may not
exceed the amount [$0.64] per $100 of valuation by which the maximum
rate permitted under Section 45.003 exceeds the rate of $0.86, or a
greater amount for any year provided by appropriation.
SECTION 1.10. Section 30.003, Education Code, is amended by
adding Subsection (f-1) to read as follows:
(f-1) The commissioner shall determine the total amount
that the Texas School for the Blind and Visually Impaired and the
Texas School for the Deaf would have received from school districts
in accordance with this section if H.B. No. 1, Acts of the 79th
Legislature, 3rd Called Session, 2006, had not reduced the
districts’ share of the cost of providing education services. That
amount, minus any amount the schools do receive from school
districts, shall be set aside as a separate account in the
foundation school fund and appropriated to those schools for
educational purposes.
SECTION 1.11. Section 44.004, Education Code, is amended by
adding Subsection (c-1) to read as follows:
(c-1) The notice described by Subsection (c) must state in a
distinct row or on a separate or individual line for each of the
following taxes:
(1) the proposed rate of the school district’s
maintenance tax described by Section 45.003, under the heading
“Maintenance Tax”; and
(2) if the school district has issued ad valorem tax
bonds under Section 45.001, the proposed rate of the tax to pay for
the bonds, under the heading “School Debt Service Tax Approved by
Local Voters.”
SECTION 1.12. Section 45.003, Education Code, is amended by
amending Subsection (d) and adding Subsections (e) and (f) to read
as follows:
(d) A proposition submitted to authorize the levy of
maintenance taxes must include the question of whether the
governing board or commissioners court may levy, assess, and
collect annual ad valorem taxes for the further maintenance of
public schools, at a rate not to exceed the rate[, which may be not
more than $1.50 on the $100 valuation of taxable property in the
district,] stated in the proposition. For any year, the
maintenance tax rate per $100 of taxable value adopted by the
district may not exceed the rate equal to the sum of $0.17 and the
product of the state compression percentage, as determined under
Section 42.2516, multiplied by $1.50.
(e) A rate that exceeds the maximum rate specified by
Subsection (d) for the year in which the tax is to be imposed is
void. A school district with a tax rate that is void under this
subsection may, subject to requirements imposed by other law, adopt
a rate for that year that does not exceed the maximum rate specified
by Subsection (d) for that year.
(f) Notwithstanding any other law, a district that levied a
maintenance tax for the 2005 tax year at a rate greater than $1.50
per $100 of taxable value in the district as permitted by special
law may not levy a maintenance tax at a rate that exceeds the rate
per $100 of taxable value that is equal to the sum of $0.17 and the
product of the state compression percentage, as determined under
Section 42.2516, multiplied by the rate of the maintenance tax
levied by the district for the 2005 tax year.
SECTION 1.13. Section 56.208(a), Education Code, is amended
to read as follows:
(a) The Early High School Graduation Scholarship program is
financed under the Foundation School Program. Funding for the
state tuition credits is not subject to the provisions of Sections
42.253(h) [42.253(e)] through (k).
SECTION 1.14. Section 26.08, Tax Code, is amended by
amending Subsections (i) and (k) and adding Subsections (i-1), (n),
(o), and (p) to read as follows:
(i) For purposes of this section, the effective maintenance
and operations [rollback] tax rate of a school district is [the sum
of:
[(1)] the tax rate that, applied to the current total
value for the district, would impose taxes in an amount that, when
added to state funds that would be distributed to the district under
Chapter 42, Education Code, for the school year beginning in the
current tax year using that tax rate, including state funds that
will be distributed to the district in that school year under
Section 42.2516, Education Code, would provide the same amount of
state funds distributed under Chapter 42, Education Code, including
state funds distributed under Section 42.2516, Education Code, and
maintenance and operations taxes of the district per student in
weighted average daily attendance for that school year that would
have been available to the district in the preceding year if the
funding elements for Chapters 41 and 42, Education Code, for the
current year had been in effect for the preceding year[;
[(2) the rate of $0.06 per $100 of taxable value; and
[(3) the district’s current debt rate].
(i-1) For purposes of Subsections (i) and (k), any change
from the preceding school year to the current school year in the
amount of state funds distributed to a school district under
Section 42.2516, Education Code, is not considered to be a change in
a funding element for Chapter 42, Education Code. The amount of
state funds distributed under Chapter 42, Education Code, and
maintenance and operations taxes of the district per student in
weighted average daily attendance for that school year that would
have been available to the district in the preceding year if the
funding elements for Chapters 41 and 42, Education Code, for the
current year had been in effect for the preceding year is computed
on the basis of the amount actually distributed to the district
under Section 42.2516, Education Code, in the preceding school
year.
(k) For purposes of this section, for the [2003, 2004,
2005,] 2006, 2007, or 2008 tax year, for a school district that is
entitled to state funds under Sections 1581.1015(d), (e), and (f)
[Section 4(a-1), (a-2), (a-3), (a-4), (a-5), or (a-6), Article
3.50-9], Insurance Code, the effective maintenance and operations
[rollback] tax rate of the district is the sum of:
(1) the tax rate that, applied to the current total
value for the district, would impose taxes in an amount that, when
added to state funds that would be distributed to the district under
Chapter 42, Education Code, for the school year beginning in the
current tax year using that tax rate, including state funds that
will be distributed to the district in that school year under
Section 42.2516, Education Code, would provide the same amount of
state funds distributed under Chapter 42, Education Code, including
state funds distributed under Section 42.2516, Education Code, and
maintenance and operations taxes of the district per student in
weighted average daily attendance for that school year that would
have been available to the district in the preceding year if the
funding elements for Chapters 41 and 42, Education Code, for the
current year had been in effect for the preceding year; and
(2) the tax rate that, applied to the current total
value for the district, would impose taxes in the amount that, when
added to state funds that would be distributed to the district under
Chapter 42, Education Code, for the school year beginning in the
current tax year using that tax rate, including state funds that
will be distributed to the district in that school year under
Section 42.2516, Education Code, permits the district to comply
with Section 1581.052 [3, Article 3.50-9], Insurance Code[;
[(3) the rate of $0.06 per $100 of taxable value; and
[(4) the district’s current debt rate].
(n) For purposes of this section, the rollback tax rate of a
school district whose maintenance and operations tax rate for the
2005 tax year was $1.50 or less per $100 of taxable value is:
(1) for the 2006 tax year, the sum of the rate that is
equal to 88.67 percent of the maintenance and operations tax rate
adopted by the district for the 2005 tax year, the rate of $0.04 per
$100 of taxable value, and the district’s current debt rate; and
(2) for the 2007 and subsequent tax years, the lesser
of the following:
(A) the sum of the following:
(i) the rate per $100 of taxable value that
is equal to the product of the state compression percentage, as
determined under Section 42.2516, Education Code, for the current
year and $1.50;
(ii) the rate of $0.04 per $100 of taxable
value;
(iii) the rate that is equal to the sum of
the differences for the 2006 and each subsequent tax year between
the adopted tax rate of the district for that year if the rate was
approved at an election under this section and the rollback tax rate
of the district for that year; and
(iv) the district’s current debt rate; or
(B) the sum of the following:
(i) the effective maintenance and
operations tax rate of the district as computed under Subsection
(i) or (k), as applicable;
(ii) the rate per $100 of taxable value that
is equal to the product of the state compression percentage, as
determined under Section 42.2516, Education Code, for the current
year and $0.06; and
(iii) the district’s current debt rate.
(o) For purposes of this section, the rollback tax rate of a
school district whose maintenance and operations tax rate for the
2005 tax year was greater than $1.50 per $100 of taxable value is
computed in the manner provided by Subsection (n) except that the
maintenance and operations tax rate per $100 of taxable value
adopted by the district for the 2005 tax year is substituted for
$1.50 in a computation under that subsection.
(p) Notwithstanding Subsection (b) of this section, Section
41.001, Election Code, or any other law, an election held under this
section to approve the adopted tax rate for the 2006 tax year must
be ordered not later than August 31, 2006, and must be held on
September 30, 2006. If the election is not held on that date, the
governing body of the school district may not adopt a tax rate for
the 2006 tax year that exceeds the school district’s rollback tax
rate. The secretary of state shall prescribe the procedures
necessary to implement this subsection and to ensure the proper and
orderly conduct of the elections. The secretary of state shall
adopt rules under this subsection in the manner provided by law for
emergency rules. Any action taken by a person before the date this
subsection takes effect in preparation for the implementation of
the changes in law made by this subsection that the person
determines is necessary or appropriate and that the person would
have been authorized to take had this subsection been in effect at
the time of the action is validated as of the effective date of this
subsection. This subsection expires January 1, 2007.
SECTION 1.15. (a) Section 31.01(c), Tax Code, as amended by
Chapters 1255 and 1368, Acts of the 79th Legislature, Regular
Session, 2005, is reenacted and amended to read as follows:
(c) The tax bill or a separate statement accompanying the
tax bill shall:
(1) identify the property subject to the tax;
(2) state the appraised value, assessed value, and
taxable value of the property;
(3) if the property is land appraised as provided by
Subchapter C, D, E, or H, Chapter 23, state the market value and the
taxable value for purposes of deferred or additional taxation as
provided by Section 23.46, 23.55, 23.76, or 23.9807, as applicable;
(4) state the assessment ratio for the unit;
(5) state the type and amount of any partial exemption
applicable to the property, indicating whether it applies to
appraised or assessed value;
(6) state the total tax rate for the unit;
(7) state the amount of tax due, the due date, and the
delinquency date;
(8) explain the payment option and discounts provided
by Sections 31.03 and 31.05, if available to the unit’s taxpayers,
and state the date on which each of the discount periods provided by
Section 31.05 concludes, if the discounts are available;
(9) state the rates of penalty and interest imposed
for delinquent payment of the tax;
(10) include the name and telephone number of the
assessor for the unit and, if different, of the collector for the
unit;
(11) for real property, state for the current tax year
and each of the preceding five tax years:
(A) the appraised value and taxable value of the
property;
(B) the total tax rate for the unit;
(C) the amount of taxes imposed on the property
by the unit; and
(D) the difference, expressed as a percent
increase or decrease, as applicable, in the amount of taxes imposed
on the property by the unit compared to the amount imposed for the
preceding tax year;
[(11) for real property, state the differences,
expressed as a percent increase or decrease, as applicable, in the
following for the current tax year as compared to the fifth tax year
before that tax year:
[(A) the appraised value of the property; and
[(B) the amount of taxes imposed on the property
by the unit;] and
(12) for real property, state the differences,
expressed as a percent increase or decrease, as applicable, in the
following for the current tax year as compared to the fifth tax year
before that tax year:
(A) the appraised value and taxable value of the
property;
(B) the total tax rate for the unit; and
(C) the amount of taxes imposed on the property
by the unit[; and
[(13) include any other information required by the
comptroller].
(b) Section 31.01, Tax Code, is amended by adding Subsection
(d-1) to read as follows:
(d-1) This subsection applies only to a school district. In
addition to stating the total tax rate for the school district, the
tax bill or the separate statement shall separately state:
(1) the maintenance and operations rate of the school
district;
(2) if the school district has outstanding debt, as
defined by Section 26.012, the debt rate of the district;
(3) the maintenance and operations rate of the school
district for the preceding tax year;
(4) if for the current tax year the school district
imposed taxes for debt, as defined by Section 26.012, the debt rate
of the district for the current tax year;
(5) if for the preceding tax year the school district
imposed taxes for debt, as defined by Section 26.012, the debt rate
of the district for that year; and
(6) the total tax rate of the district for the
preceding tax year.
(c) Section 31.01(c-1), Tax Code, as added by Chapter 1255,
Acts of the 79th Legislature, Regular Session, 2005, is repealed.
(d) The change in law made by this section applies only to an
ad valorem tax bill that is mailed on or after the effective date of
this Act.
(e) If this Act is passed by the legislature without
receiving a vote of two-thirds of all the members elected to each
house and is approved by the governor, any action taken before the
effective date of this Act in preparation for the implementation of
the amendment made by this Act to Section 31.01, Tax Code, by an
officer or employee of a taxing unit that the officer or employee
determines is necessary or appropriate and that the officer or
employee would have been authorized to take had this section been in
effect at the time of the action is validated as of the effective
date of this Act. A tax bill or separate statement accompanying the
tax bill mailed before the effective date of this section that is in
compliance with Section 31.01, Tax Code, as amended by this Act, is
validated as of the effective date of this Act.
SECTION 1.16. Section 311.013, Tax Code, is amended by
adding Subsection (n) to read as follows:
(n) This subsection applies only to a school district whose
taxable value computed under Section 403.302(d), Government Code,
is reduced in accordance with Subdivision (5) of that subsection.
In addition to the amount otherwise required to be paid into the tax
increment fund, the district shall pay into the fund an amount equal
to the amount by which the amount of taxes the district would have
been required to pay into the fund in the current year if the
district levied taxes at the rate the district levied in 2005
exceeds the amount the district is otherwise required to pay into
the fund in the year of the reduction, not to exceed the amount the
school district realizes from the reduction in the school
district’s taxable value under Section 403.302(d)(5), Government
Code.
SECTION 1.17. Section 403.302, Government Code, is amended
by amending Subsections (d) and (i) and adding Subsections (c-1)
and (d-1) to read as follows:
(c-1) This subsection applies only to a school district
whose central administrative office is located in a county with a
population of 9,000 or less and a total area of more than 6,000
square miles. If after conducting the annual study for a tax year
the comptroller determines that the local value for a school
district is not valid, the comptroller shall adjust the taxable
value determined under Subsections (a) and (b) as follows:
(1) for each category of property sampled and tested
by the comptroller in the school district, the comptroller shall
use the weighted mean appraisal ratio determined by the study,
unless the ratio is more than four percentage points lower than the
weighted mean appraisal ratio determined by the comptroller for
that category of property in the immediately preceding study, in
which case the comptroller shall use the weighted mean appraisal
ratio determined in the immediately preceding study minus four
percentage points;
(2) the comptroller shall use the category weighted
mean appraisal ratios as adjusted under Subdivision (1) to
establish a value estimate for each category of property sampled
and tested by the comptroller in the school district; and
(3) the value estimates established under Subdivision
(2), together with the local tax roll value for any categories not
sampled and tested by the comptroller, less total deductions
determined by the comptroller, determine the taxable value for the
school district.
(d) For the purposes of this section, “taxable value” means
the market value of all taxable property less:
(1) the total dollar amount of any residence homestead
exemptions lawfully granted under Section 11.13(b) or (c), Tax
Code, in the year that is the subject of the study for each school
district;
(2) one-half of the total dollar amount of any
residence homestead exemptions granted under Section 11.13(n), Tax
Code, in the year that is the subject of the study for each school
district;
(3) the total dollar amount of any exemptions granted
before May 31, 1993, within a reinvestment zone under agreements
authorized by Chapter 312, Tax Code;
(4) subject to Subsection (e), the total dollar amount
of any captured appraised value of property that:
(A) is within a reinvestment zone created on or
before May 31, 1999, or is proposed to be included within the
boundaries of a reinvestment zone as the boundaries of the zone and
the proposed portion of tax increment paid into the tax increment
fund by a school district are described in a written notification
provided by the municipality or the board of directors of the zone
to the governing bodies of the other taxing units in the manner
provided by Section 311.003(e), Tax Code, before May 31, 1999, and
within the boundaries of the zone as those boundaries existed on
September 1, 1999, including subsequent improvements to the
property regardless of when made;
(B) generates taxes paid into a tax increment
fund created under Chapter 311, Tax Code, under a reinvestment zone
financing plan approved under Section 311.011(d), Tax Code, on or
before September 1, 1999; and
(C) is eligible for tax increment financing under
Chapter 311, Tax Code;
(5) for a school district for which a deduction from
taxable value is made under Subdivision (4), an amount equal to the
taxable value required to generate revenue when taxed at the school
district’s current tax rate in an amount that, when added to the
taxes of the district paid into a tax increment fund as described by
Subdivision (4)(B), is equal to the total amount of taxes the
district would have paid into the tax increment fund if the district
levied taxes at the rate the district levied in 2005;
(6) the total dollar amount of any exemptions granted
under Section 11.251, Tax Code;
(7) [(6)] the difference between the comptroller’s
estimate of the market value and the productivity value of land that
qualifies for appraisal on the basis of its productive capacity,
except that the productivity value estimated by the comptroller may
not exceed the fair market value of the land;
(8) [(7)] the portion of the appraised value of
residence homesteads of individuals who receive a tax limitation
under Section 11.26, Tax Code, on which school district taxes are
not imposed in the year that is the subject of the study, calculated
as if the residence homesteads were appraised at the full value
required by law;
(9) [(8)] a portion of the market value of property
not otherwise fully taxable by the district at market value because
of:
(A) action required by statute or the
constitution of this state that, if the tax rate adopted by the
district is applied to it, produces an amount equal to the
difference between the tax that the district would have imposed on
the property if the property were fully taxable at market value and
the tax that the district is actually authorized to impose on the
property, if this subsection does not otherwise require that
portion to be deducted; or
(B) action taken by the district under Subchapter
B or C, Chapter 313, Tax Code;
(10) [(9)] the market value of all tangible personal
property, other than manufactured homes, owned by a family or
individual and not held or used for the production of income;
(11) [(10)] the appraised value of property the
collection of delinquent taxes on which is deferred under Section
33.06, Tax Code;
(12) [(11)] the portion of the appraised value of
property the collection of delinquent taxes on which is deferred
under Section 33.065, Tax Code; and
(13) [(12)] the amount by which the market value of a
residence homestead to which Section 23.23, Tax Code, applies
exceeds the appraised value of that property as calculated under
that section.
(d-1) For a school district for which in the 2005 tax year a
deduction from taxable value is made under Subsection (d)(4), the
comptroller shall certify to the commissioner of education a final
taxable value for the 2005 tax year, calculated as if the reduction
in the school district’s ad valorem tax rate and the method of
calculating the amount of the deduction from taxable value under
Subsection (d)(5) required by H.B. No. 1, Acts of the 79th
Legislature, 3rd Called Session, 2006, took effect September 1,
2005. This subsection expires September 1, 2007.
(i) If the comptroller determines in the annual study that
the market value of property in a school district as determined by
the appraisal district that appraises property for the school
district, less the total of the amounts and values listed in
Subsection (d) as determined by that appraisal district, is valid,
the comptroller, in determining the taxable value of property in
the school district under Subsection (d), shall for purposes of
Subsection (d)(13) [(d)(12)] subtract from the market value as
determined by the appraisal district of residence homesteads to
which Section 23.23, Tax Code, applies the amount by which that
amount exceeds the appraised value of those properties as
calculated by the appraisal district under Section 23.23, Tax Code.
If the comptroller determines in the annual study that the market
value of property in a school district as determined by the
appraisal district that appraises property for the school district,
less the total of the amounts and values listed in Subsection (d) as
determined by that appraisal district, is not valid, the
comptroller, in determining the taxable value of property in the
school district under Subsection (d), shall for purposes of
Subsection (d)(13) [(d)(12)] subtract from the market value as
estimated by the comptroller of residence homesteads to which
Section 23.23, Tax Code, applies the amount by which that amount
exceeds the appraised value of those properties as calculated by
the appraisal district under Section 23.23, Tax Code.
SECTION 1.18. (a) Section 11.26, Tax Code, is amended by
adding Subsections (a-1) and (a-2) to read as follows:
(a-1) Notwithstanding the other provisions of this section
and except as provided by Subsection (a-2), if in the current tax
year an individual qualifies for a limitation on tax increases
provided by this section on the individual’s residence homestead
and the individual or the individual’s spouse qualified for an
exemption under Section 11.13(c) for the same homestead in the
preceding tax year, the amount of the limitation provided by this
section on the homestead in the current tax year is equal to the
lesser of:
(1) the amount computed by:
(A) multiplying the amount of tax the school
district imposed on the homestead in the preceding tax year by the
lesser of one or a fraction the numerator of which is the tax rate of
the district for the current tax year and the denominator of which
is the tax rate of the district for the preceding tax year; and
(B) adding to the amount computed under Paragraph
(A) any tax in the current tax year attributable to improvements
made in the preceding tax year, as provided by Subsection (b); or
(2) the amount of the limitation on tax increases on
the homestead as otherwise provided by this section.
(a-2) Notwithstanding the other provisions of this section,
if in the 2007 tax year an individual qualifies for a limitation on
tax increases provided by this section on the individual’s
residence homestead and the first tax year the individual or the
individual’s spouse qualified for an exemption under Section
11.13(c) for the same homestead was a tax year before the 2006 tax
year, the amount of the limitation provided by this section on the
homestead in the 2007 tax year is equal to the amount computed by:
(1) multiplying the amount of tax the school district
imposed on the homestead in the 2005 tax year by the lesser of one or
a fraction the numerator of which is the tax rate of the district
for the 2006 tax year and the denominator of which is the tax rate of
the district for the 2005 tax year;
(2) adding to the amount computed under Subdivision
(1) any tax in the 2006 tax year attributable to improvements made
in the 2005 tax year, as provided by Subsection (b);
(3) multiplying the amount computed under Subdivision
(2) by the lesser of one or a fraction the numerator of which is the
tax rate of the district for the 2007 tax year and the denominator
of which is the tax rate of the district for the 2006 tax year; and
(4) adding to the amount computed under Subdivision
(3) any tax in the 2007 tax year attributable to improvements made
in the 2006 tax year, as provided by Subsection (b).
(b) Section 42.2511(a), Education Code, is amended to read
as follows:
(a) Notwithstanding any other provision of this chapter, a
school district is entitled to additional state aid to the extent
that state aid under this chapter based on the determination of the
school district’s taxable value of property as provided under
Subchapter M, Chapter 403, Government Code, does not fully
compensate the district for ad valorem tax revenue lost due to:
(1) the increase in the homestead exemption under
Section 1-b(c), Article VIII, Texas Constitution, as proposed by
H.J.R. No. 4, 75th Legislature, Regular Session, 1997, and the
additional limitation on tax increases under Section 1-b(d),
Article VIII, Texas Constitution, as proposed by H.J.R. No. 4, 75th
Legislature, Regular Session, 1997; and
(2) the reduction of the limitation on tax increases
to reflect any reduction in the school district tax rate as provided
by Section 11.26(a-1) or (a-2), Tax Code, as applicable.
(c) Section 403.302, Government Code, is amended by
amending Subsection (j) and adding Subsection (j-1) to read as
follows:
(j) For purposes of Section 42.2511, Education Code, the
comptroller shall certify to the commissioner of education:
(1) a final value for each school district computed on
a residence homestead exemption under Section 1-b(c), Article VIII,
Texas Constitution, of $5,000; [and]
(2) a final value for each school district computed
on:
(A) a residence homestead exemption under
Section 1-b(c), Article VIII, Texas Constitution, of $15,000; and
(B) the effect of the additional limitation on
tax increases under Section 1-b(d), Article VIII, Texas
Constitution, as proposed by H.J.R. No. 4, 75th Legislature,
Regular Session, 1997; and
(3) a final value for each school district computed on
the effect of the reduction of the limitation on tax increases to
reflect any reduction in the school district tax rate as provided by
Section 11.26(a-1) or (a-2), Tax Code, as applicable.
(j-1) For purposes of applying Subsection (j)(3) in the
2007-2008 school year, the comptroller shall compute the final
value under that subsection as if the reduction of the limitation on
tax increases to reflect any reduction in the school district tax
rate as provided by Section 11.26(a-1) or (a-2), Tax Code, as
applicable, had taken effect in the 2006 tax year. This subsection
expires September 1, 2008.
(d) This section applies only to an ad valorem tax year that
begins on or after January 1, 2007.
(e) This section takes effect January 1, 2007, but only if
the constitutional amendment proposed by the 79th Legislature, 3rd
Called Session, 2006, authorizing the legislature to provide for a
reduction of the limitation on the total amount of ad valorem taxes
that may be imposed for public school purposes on the residence
homesteads of the elderly or disabled to reflect any reduction in
the rate of those taxes is approved by the voters. If that
amendment is not approved by the voters, this section has no effect.
SECTION 1.19. Chapter 12, Agriculture Code, is amended by
adding Section 12.041 to read as follows:
Sec. 12.041. SCHOOL BREAKFAST AND LUNCH PROGRAM. (a) The
department, the Texas Education Agency, and the Health and Human
Services Commission shall ensure that applicable information
maintained by each entity is used on at least a quarterly basis to
identify children who are categorically eligible for free meals
under the national free or reduced-price breakfast and lunch
program. In complying with this subsection, the department,
agency, and commission shall use information that corresponds to
the months of the year in which enrollment in the food stamp program
is customarily higher than average.
(b) The department shall determine the feasibility of
establishing a process under which school districts verify student
eligibility for the national free or reduced-price breakfast and
lunch program through a direct verification process that uses
information maintained under the food stamp and Medicaid programs,
as authorized by 42 U.S.C. Section 1758(b)(3), as amended by
Section 105(a) of the Child Nutrition and WIC Reauthorization Act
of 2004 (Pub. L. No. 108-265), and 7 C.F.R. Sections 245.6a(a)(1)
and (3) and 245.6a(b)(3). If the department determines the process
described by this subsection is feasible, the department may
implement the process.
SECTION 1.20. Sections 42.253(e), (e-1), (f), and (l),
Education Code, are repealed.
SECTION 1.21. (a) This section applies only to one of the
following entities that, for the 2005-2006 school year, received
funding as a result of an agreement between school districts under
Subchapter E, Chapter 41, Education Code:
(1) a juvenile justice alternative education program;
or
(2) a group of school districts formed to provide
technology services to member districts, with or without regional
education service center assistance.
(b) To be entitled to state aid under this section, a
juvenile justice alternative education program or a group of school
districts described by Subsection (a)(2) of this section that
received funds under an agreement under Subchapter E, Chapter 41,
Education Code, for the 2005-2006 school year must attempt to enter
into a similar agreement for the 2006-2007 school year with each
school district that participated in an agreement for the 2005-2006
school year with the program or group.
(c) For the 2006-2007 school year, a juvenile justice
alternative education program or a group of school districts
described by Subsection (a)(2) of this section is entitled to state
aid under this section in an amount equal to the difference between:
(1) the funding the program or group received as a
result of all agreements between school districts under Subchapter
E, Chapter 41, Education Code, for the 2005-2006 school year; and
(2) the funding the program or group receives as a
result of all agreements between school districts under Subchapter
E, Chapter 41, Education Code, for the 2006-2007 school year.
(d) The commissioner of education shall:
(1) determine the amount of state aid to which a
juvenile justice alternative education program or a group of school
districts described by Subsection (a)(2) of this section is
entitled under this section; and
(2) distribute the aid in 10 equal monthly
installments beginning with September 2006 and ending with June
2007.
(e) The commissioner of education shall adopt rules to
implement this section.
(f) A determination of the commissioner of education under
this section is final and may not be appealed.
SECTION 1.22. To the extent necessary to implement this
Act, the commissioner of education may treat a reference to a tax
rate of $1.50 in Chapter 41 or 42, Education Code, or in a rule
implementing those chapters, as those chapters or rules existed on
May 1, 2006, as a different tax rate consistent with the effect of
reducing school district tax rates to the state compression
percentage rate.

ARTICLE 2. FISCAL ACCOUNTABILITY

SECTION 2.01. Chapter 1, Education Code, is amended by
adding Section 1.005 to read as follows:
Sec. 1.005. EDUCATION RESEARCH CENTERS; SHARING STUDENT
INFORMATION. (a) In this section:
(1) “Center” means a center for education research
authorized by this section.
(2) “Coordinating board” means the Texas Higher
Education Coordinating Board.
(b) The commissioner of education and the coordinating
board may establish not more than three centers for education
research for conducting research described by Subsections (e) and
(f).
(c) A center may be established as part of:
(1) the Texas Education Agency;
(2) the coordinating board; or
(3) a public junior college, public senior college or
university, or public state college, as those terms are defined by
Section 61.003.
(d) A center may be operated under a memorandum of
understanding between the commissioner of education, the
coordinating board, and the governing board of an educational
institution described by Subsection (c)(3). The memorandum of
understanding must require the commissioner of education, or a
person designated by the commissioner, and the coordinating board,
or a person designated by the coordinating board, to provide
direct, joint supervision of the center under this section.
(e) A center shall conduct research for the benefit of
education in this state, including research relating to the impact
of state and federal education programs, the performance of
educator preparation programs, public school finance, and the best
practices of school districts with regard to classroom instruction,
bilingual education programs, special language programs, and
business practices.
(f) The commissioner of education and the coordinating
board:
(1) under the memorandum of understanding described by
Subsection (d), may require a center to conduct certain research
projects considered of particular importance to the state, as
determined by the commissioner and the coordinating board;
(2) not later than the 45th day before the date a
research project required to be conducted under this subsection is
scheduled to begin, shall notify the governor, the Legislative
Budget Board, and the governing body of the educational institution
in which the center is established that the research project is
required; and
(3) shall provide sufficient funds to finance the
project.
(g) In conducting research under this section, a center:
(1) may use data on student performance, including
data that is confidential under the Family Educational Rights and
Privacy Act of 1974 (20 U.S.C. Section 1232g), the center has
collected from the Texas Education Agency, the coordinating board,
any public or private institution of higher education, and any
school district; and
(2) shall comply with rules adopted by the
commissioner of education and the coordinating board to protect the
confidentiality of student information, including rules
establishing procedures to ensure that confidential student
information is not duplicated or removed from a center in an
unauthorized manner.
(h) The commissioner of education and the coordinating
board may:
(1) accept gifts and grants to be used in operating one
or more centers; and
(2) by rule impose reasonable fees, as appropriate,
for the use of a center’s research, resources, or facilities.
(i) This section does not authorize the disclosure of
student information that may not be disclosed under the Family
Educational Rights and Privacy Act of 1974 (20 U.S.C. Section
1232g).
(j) The commissioner of education and the coordinating
board shall adopt rules as necessary to implement this section.
(k) In implementing this section, the commissioner of
education may use funds appropriated to the agency and available
for the purpose of establishing the centers. After a center is
established, the center must be funded by gifts and grants accepted
under Subsection (h)(1) and fees imposed under Subsection (h)(2).
Fees adopted under Subsection (h)(2) must be set in an amount
sufficient to provide for the continued operation of the center.
SECTION 2.02. Subchapter A, Chapter 7, Education Code, is
amended by adding Sections 7.008 and 7.009 to read as follows:
Sec. 7.008. PUBLIC ACCESS TO PEIMS DATA. (a) The
commissioner with the assistance of an advisory panel described by
Subsection (b) shall develop a request for proposal for a qualified
third-party contractor to develop and implement procedures to make
available, through the agency Internet website, all financial and
academic performance data submitted through the Public Education
Information Management System (PEIMS) for school districts and
campuses.
(b) The commissioner shall appoint an advisory panel to
assist the commissioner in developing requirements for a system
that is easily accessible by the general public and contains
information of primary relevance to the public. The advisory panel
shall consist of:
(1) educators;
(2) interested stakeholders;
(3) business leaders; and
(4) other interested members of the public.
(c) The procedures developed under this section must
provide:
(1) a summarized format easily understood by the
public for reporting financial and academic performance
information on the agency Internet website; and
(2) the ability for those who access the Internet
website to view and download state, district, and campus level
information.
(d) This section does not authorize the disclosure of
student information that may not be disclosed under the Family
Educational Rights and Privacy Act of 1974 (20 U.S.C. Section
1232g). The commissioner shall adopt rules to protect the
confidentiality of student information.
(e) The procedures to make available, through the agency
Internet website, all financial and academic performance
information for school districts and campuses as described by this
section shall be implemented not later than August 1, 2007. This
subsection expires August 1, 2009.
Sec. 7.009. BEST PRACTICES; CLEARINGHOUSE. (a) In
coordination with the Legislative Budget Board, the agency shall
establish an online clearinghouse of information relating to best
practices of campuses and school districts regarding instruction,
public school finance, resource allocation, and business
practices. To the extent practicable, the agency shall ensure that
information provided through the online clearinghouse is specific,
actionable information relating to the best practices of
high-performing and highly efficient campuses and school districts
rather than general guidelines relating to campus and school
district operation. The information must be accessible by campuses,
school districts, and interested members of the public.
(b) The agency shall solicit and collect from the
Legislative Budget Board, centers for education research
established under Section 1.005, and exemplary or recognized school
districts, campuses, and open-enrollment charter schools, as rated
under Section 39.072, examples of best practices relating to
instruction, public school finance, resource allocation, and
business practices, including best practices relating to
curriculum, scope and sequence, compensation and incentive
systems, bilingual education and special language programs,
compensatory education programs, and the effective use of
instructional technology, including online courses.
(c) The agency shall contract for the services of one or
more third-party contractors to develop, implement, and maintain a
system of collecting and evaluating the best practices of campuses
and school districts as provided by this section. In addition to
any other considerations required by law, the agency must consider
an applicant’s demonstrated competence and qualifications in
analyzing campus and school district practices in awarding a
contract under this subsection.
(d) The commissioner may purchase from available funds
curriculum and other instructional tools identified under this
section to provide for use by school districts.
SECTION 2.03. Subchapter A, Chapter 11, Education Code, is
amended by adding Section 11.003 to read as follows:
Sec. 11.003. ADMINISTRATIVE EFFICIENCY. (a) Not later
than December 1, 2006, the commissioner shall evaluate the
feasibility of including a uniform indicator under Section
39.202(b) that measures effective administrative management
through the use of cooperative shared services arrangements. If
the commissioner determines that the adoption of a uniform
indicator described by this subsection is feasible, the
commissioner by rule shall include the indicator in the financial
accountability rating system under Subchapter I, Chapter 39, for
school districts beginning with the 2007-2008 school year. This
subsection expires September 1, 2009.
(b) Each regional education service center shall:
(1) notify each school district served by the center
regarding the opportunities available through the center for
cooperative shared services arrangements within the center’s
service area; and
(2) evaluate the need for cooperative shared services
arrangements within the center’s service area and consider
expanding center-sponsored cooperative shared services
arrangements.
(c) Each regional education service center shall assist a
school district board of trustees in entering into an agreement
with another district or political subdivision, a regional
education service center, or an institution of higher education as
defined by Section 61.003, for a cooperative shared services
arrangement regarding administrative services, including
transportation, food service, purchasing, and payroll functions.
(d) The commissioner may require a district to enter into a
cooperative shared services arrangement for administrative
services if the commissioner determines:
(1) that the district has failed to satisfy a
financial accountability standard as determined by commissioner
rule under Subchapter I, Chapter 39; and
(2) that entering into a cooperative shared services
arrangement would:
(A) enable the district to enhance its
performance on the financial accountability standard identified
under Subdivision (1); and
(B) promote the efficient operation of the
district.
(e) The commissioner may require an open-enrollment charter
school to enter into a cooperative shared services arrangement for
administrative services if the commissioner determines, after an
audit conducted under Section 12.1163, that such a cooperative
shared services arrangement would promote the efficient operation
of the school.
SECTION 2.04. Subchapter D, Chapter 11, Education Code, is
amended by adding Section 11.170 to read as follows:
Sec. 11.170. INTERNAL AUDITOR. If a school district
employs an internal auditor:
(1) the board of trustees shall select the internal
auditor; and
(2) the internal auditor shall report directly to the
board.
SECTION 2.05. Section 39.202(a), Education Code, is amended
to read as follows:
(a) The commissioner shall, in consultation with the
comptroller, develop and implement a financial accountability
rating system for school districts in this state that:
(1) distinguishes among school districts based on
levels of financial performance; and
(2) includes procedures to:
(A) provide additional transparency to public
education finance; and
(B) enable the commissioner and school district
administrators to provide meaningful financial oversight and
improvement.
SECTION 2.06. Subchapter A, Chapter 44, Education Code, is
amended by adding Section 44.0041 to read as follows:
Sec. 44.0041. PUBLICATION OF SUMMARY OF PROPOSED BUDGET.
(a) Concurrently with the publication of notice of the budget under
Section 44.004, a school district shall post a summary of the
proposed budget:
(1) on the school district’s Internet website; or
(2) if the district has no Internet website, in the
district’s central administrative office.
(b) The budget summary must include:
(1) information relating to per student and aggregate
spending on:
(A) instruction;
(B) instructional support;
(C) central administration;
(D) district operations;
(E) debt service; and
(F) any other category designated by the
commissioner; and
(2) a comparison to the previous year’s actual
spending.
SECTION 2.07. Subchapter A, Chapter 44, Education Code, is
amended by adding Section 44.0061 to read as follows:
Sec. 44.0061. REVIEW OF ACCOUNTING SYSTEM. (a) The
commissioner shall contract with a qualified third-party
contractor to conduct a comprehensive review of the accounting
systems used by school districts under Section 44.007.
(b) The third-party contractor conducting the review under
this section shall:
(1) provide any recommendations relating to the
accounting systems to:
(A) improve the transparency of district
spending behavior;
(B) provide more thorough information relating
to campus spending; and
(C) facilitate program evaluations, including
evaluations of compensatory education programs; and
(2) evaluate the accounting systems to determine
whether any reporting requirements should be adjusted based on
district size.
(c) Before January 1, 2007, the commissioner shall submit a
report to the legislature describing the results of the review
conducted under this section.
(d) This section expires January 2, 2007.
SECTION 2.08. Section 44.007, Education Code, is amended by
amending Subsection (b) and adding Subsections (e) and (f) to read
as follows:
(b) The accounting system must meet at least the minimum
requirements prescribed by the commissioner [State Board of
Education], subject to review and comment by the state auditor.
(e) Not later than January 1, 2007, the commissioner shall
submit a report to the legislature evaluating the benefits of
providing school districts with standardized accounting software
that complies with the requirements of this section and any other
appropriate statutes. The report:
(1) shall consider:
(A) any savings and costs accrued to school
districts resulting from the use of the software provided,
including any savings accrued from eliminating the payment of
programming costs in response to changes in statute or
administrative rules;
(B) any accountability benefits achieved by
providing the information collected by the software regularly to
the agency and the public; and
(C) any personnel and other resources required
for the agency to continuously review the information collected in
order to alert members of school district boards of trustees and
superintendents regarding areas of potential waste or fraud; and
(2) may consider software accessed by alternative
methods, including web-based methods or network-based methods,
that the commissioner considers most economical for districts of
different sizes.
(f) This subsection and Subsection (e) expire September 1,
2007.
SECTION 2.09. Subchapter A, Chapter 44, Education Code, is
amended by adding Section 44.011 to read as follows:
Sec. 44.011. SPENDING TARGETS FOR DISTRICT EXPENDITURES.
(a) The commissioner shall annually establish and publish the
proposed expenditures for each school district as determined by the
commissioner based on an evaluation of information relating to the
best practices of campuses and districts as described by Section
7.009. The commissioner shall consider unique characteristics of
the district, including the district’s size.
(b) The proposed expenditures to be determined as required
by Subsection (a) must include amounts for:
(1) instructional expenditures;
(2) central administrative expenditures;
(3) district operations; and
(4) any other category designated by the commissioner.
(c) If the board of trustees of a school district intends to
exceed the proposed expenditures established by the commissioner
under this section, the board must adopt and publish a resolution
that includes an explanation justifying the board’s actions.
SECTION 2.10. The Texas Education Agency shall study the
level of use of shared services arrangements by school districts in
this state. Before January 1, 2007, the agency shall submit a
report to the legislature describing the current status of shared
services arrangements and identify any legal impediments
restricting school districts from participating in those
arrangements.

ARTICLE 3. ACADEMIC ACCOUNTABILITY

SECTION 3.01. Subchapter A, Chapter 7, Education Code, is
amended by adding Section 7.010 to read as follows:
Sec. 7.010. ELECTRONIC STUDENT RECORDS SYSTEM. (a) In this
section, “institution of higher education” has the meaning assigned
by Section 61.003.
(b) Each school district, open-enrollment charter school,
and institution of higher education shall participate in an
electronic student records system that satisfies standards
approved by the commissioner of education and the commissioner of
higher education.
(c) The electronic student records system must permit an
authorized state or district official or an authorized
representative of an institution of higher education to
electronically transfer to and from an educational institution in
which the student is enrolled and retrieve student transcripts,
including information concerning a student’s:
(1) course or grade completion;
(2) teachers of record;
(3) assessment instrument results;
(4) receipt of special education services, including
placement in a special education program and the individualized
education program developed; and
(5) personal graduation plan as described by Section
28.0212.
(d) The commissioner of education or the commissioner of
higher education may solicit and accept grant funds to maintain the
electronic student records system and to make the system available
to school districts, open-enrollment charter schools, and
institutions of higher education.
(e) A private or independent institution of higher
education, as defined by Section 61.003, may participate in the
electronic student records system under this section. If a private
or independent institution of higher education elects to
participate, the institution must provide the funding to
participate in the system.
(f) Any person involved in the transfer and retrieval of
student information under this section is subject to any state or
federal law governing the release of or providing access to any
confidential information to the same extent as the educational
institution from which the data is collected. A person may not
release or distribute the data to any other person in a form that
contains confidential information.
(g) The electronic student records system shall be
implemented not later than the 2007-2008 school year. This
subsection expires September 1, 2008.
SECTION 3.02. Section 8.051(b), Education Code, is amended
to read as follows:
(b) Each regional education service center shall annually
develop and submit to the commissioner for approval a plan for
improvement. Each plan must include the purposes and description
of the services the center will provide to:
(1) campuses identified as academically unacceptable
[low-performing] based on the indicators adopted under Section
39.051;
(2) the lowest-performing campuses in the region; and
(3) other campuses.
SECTION 3.03. Section 12.013(b), Education Code, is amended
to read as follows:
(b) A home-rule school district is subject to:
(1) a provision of this title establishing a criminal
offense;
(2) a provision of this title relating to limitations
on liability; and
(3) a prohibition, restriction, or requirement, as
applicable, imposed by this title or a rule adopted under this
title, relating to:
(A) the Public Education Information Management
System (PEIMS) to the extent necessary to monitor compliance with
this subchapter as determined by the commissioner;
(B) educator certification under Chapter 21 and
educator rights under Sections 21.407, 21.408, and 22.001;
(C) criminal history records under Subchapter C,
Chapter 22;
(D) student admissions under Section 25.001;
(E) school attendance under Sections 25.085,
25.086, and 25.087;
(F) inter-district or inter-county transfers of
students under Subchapter B, Chapter 25;
(G) elementary class size limits under Section
25.112, in the case of any campus in the district that is considered
academically unacceptable [low-performing] under Section 39.132;
(H) high school graduation under Section 28.025;
(I) special education programs under Subchapter
A, Chapter 29;
(J) bilingual education under Subchapter B,
Chapter 29;
(K) prekindergarten programs under Subchapter E,
Chapter 29;
(L) safety provisions relating to the
transportation of students under Sections 34.002, 34.003, 34.004,
and 34.008;
(M) computation and distribution of state aid
under Chapters 31, 42, and 43;
(N) extracurricular activities under Section
33.081;
(O) health and safety under Chapter 38;
(P) public school accountability under
Subchapters B, C, D, and G, Chapter 39;
(Q) equalized wealth under Chapter 41;
(R) a bond or other obligation or tax rate under
Chapters 42, 43, and 45; and
(S) purchasing under Chapter 44.
SECTION 3.04. Section 21.453(b), Education Code, is amended
to read as follows:
(b) The commissioner may allocate funds from the account to
regional education service centers to provide staff development
resources to school districts that:
(1) are rated academically unacceptable;
(2) have one or more campuses rated as academically
unacceptable [low-performing]; or
(3) are otherwise in need of assistance as indicated
by the academic performance of students, as determined by the
commissioner.
SECTION 3.05. Section 28.006(j), Education Code, is amended
to read as follows:
(j) No more than 15 percent of the funds certified by the
commissioner under Subsection (i) may be spent on indirect costs.
The commissioner shall evaluate the programs that fail to meet the
standard of performance under Section 39.051(b)(8) [39.051(b)(7)]
and may implement sanctions under Subchapter G, Chapter 39. The
commissioner may audit the expenditures of funds appropriated for
purposes of this section. The use of the funds appropriated for
purposes of this section shall be verified as part of the district
audit under Section 44.008.
SECTION 3.06. Section 29.056(g), Education Code, is amended
to read as follows:
(g) A district may transfer a student of limited English
proficiency out of a bilingual education or special language
program for the first time or a subsequent time if the student is
able to participate equally in a regular all-English instructional
program as determined by:
(1) agency-approved tests administered at the end of
each school year to determine the extent to which the student has
developed oral and written language proficiency and specific
language skills in [both the student’s primary language and]
English;
(2) satisfactory performance on the reading
assessment instrument under Section 39.023(a) or an English
language arts assessment instrument under Section 39.023(c), as
applicable, with the assessment instrument administered in
English, or, if the student is enrolled in the first or second
grade, an achievement score at or above the 40th percentile in the
reading and language arts sections of an English standardized test
approved by the agency; and
(3) agency-approved [other indications of a student’s
overall progress, including] criterion-referenced tests and the
results of a [test scores,] subjective teacher evaluation[, and
parental evaluation].
SECTION 3.07. Subchapter B, Chapter 29, Education Code, is
amended by adding Section 29.0561 to read as follows:
Sec. 29.0561. EVALUATION OF TRANSFERRED STUDENTS;
REENROLLMENT. (a) The language proficiency assessment committee
shall reevaluate a student who is transferred out of a bilingual
education or special language program under Section 29.056(g) if
the student earns a failing grade in a subject in the foundation
curriculum under Section 28.002(a)(1) during any grading period in
the first two school years after the student is transferred to
determine whether the student should be reenrolled in a bilingual
education or special language program.
(b) During the first two school years after a student is
transferred out of a bilingual education or special language
program under Section 29.056(g), the language proficiency
assessment committee shall review the student’s performance and
consider:
(1) the total amount of time the student was enrolled
in a bilingual education or special language program;
(2) the student’s grades each grading period in each
subject in the foundation curriculum under Section 28.002(a)(1);
(3) the student’s performance on each assessment
instrument administered under Section 39.023(a) or (c);
(4) the number of credits the student has earned
toward high school graduation, if applicable; and
(5) any disciplinary actions taken against the student
under Subchapter A, Chapter 37.
(c) After an evaluation under this section, the language
proficiency assessment committee may require intensive instruction
for the student or reenroll the student in a bilingual education or
special language program.
SECTION 3.08. Section 29.202(a), Education Code, is amended
to read as follows:
(a) A student is eligible to receive a public education
grant or to attend another public school in the district in which
the student resides under this subchapter if the student is
assigned to attend a public school campus:
(1) at which 50 percent or more of the students did not
perform satisfactorily on an assessment instrument administered
under Section 39.023(a) or (c) in any two of the preceding three
years; or
(2) that was, at any time in the preceding three years,
considered academically unacceptable [low-performing] under
Section 39.132.
SECTION 3.09. Subchapter B, Chapter 39, Education Code, is
amended by adding Section 39.034 to read as follows:
Sec. 39.034. MEASURE OF ANNUAL IMPROVEMENT IN STUDENT
ACHIEVEMENT. (a) The commissioner shall determine a method by
which the agency may measure annual improvement in student
achievement from one school year to the next on an assessment
instrument required under this subchapter.
(b) For students of limited English proficiency, as defined
by Section 29.052, the agency shall use a student’s performance
data on reading proficiency assessment instruments in English and
one other language to calculate the student’s progress toward dual
language proficiency.
(c) The agency shall use a student’s previous years’
performance data on an assessment instrument required under this
subchapter to determine the student’s expected annual improvement.
The agency shall report that expected level of annual improvement
and the actual level of annual improvement achieved to the
district. The report must state whether the student fell below,
met, or exceeded the agency’s expectation for improvement.
(d) The agency shall determine the necessary annual
improvement required each year for a student to be prepared to pass
the exit-level assessment instrument required under this
subchapter for graduation. The agency shall report the necessary
annual improvement required to the district. Each year, the report
must state whether the student fell below, met, or exceeded the
necessary target for improvement.
(e) The agency shall report to each school district the
comparisons made under this section. Each school district shall
provide the comparisons to each teacher for all students who were:
(1) assessed on an assessment instrument; and
(2) taught by that teacher in the subject for which the
assessment instrument was administered.
(f) The school a student attends shall provide a record of
the comparisons made under this section and provided to the school
under Subsection (e) in a written notice to the student’s parents.
(g) To the extent practicable, the agency shall combine the
report of the comparisons required under this section with the
report of the student’s performance on assessment instruments
administered under Section 39.023.
(h) The commissioner shall implement this section beginning
with the 2007-2008 school year. This subsection expires September
1, 2008.
SECTION 3.10. Section 39.051(b), Education Code, as amended
by Chapters 433 and 805, Acts of the 78th Legislature, Regular
Session, 2003, is reenacted and amended to read as follows:
(b) Performance on the indicators adopted under this
section shall be compared to state-established standards. The
degree of change from one school year to the next in performance on
each indicator adopted under this section shall also be considered.
The indicators must be based on information that is disaggregated
by race, ethnicity, gender, and socioeconomic status and must
include:
(1) the results of assessment instruments required
under Sections 39.023(a), (c), and (l), aggregated by grade level
and subject area;
(2) dropout rates, including dropout rates and
district completion rates for grade levels 9 through 12, computed
in accordance with standards and definitions adopted by the
National Center for Education Statistics of the United States
Department of Education;
(3) high school graduation rates, computed in
accordance with standards and definitions adopted in compliance
with the [federal] No Child Left Behind Act of 2001 (Pub. L. No.
107-110);
(4) student attendance rates;
(5) the percentage of graduating students who attain
scores on the secondary exit-level assessment instruments required
under Subchapter B that are equivalent to a passing score on the
assessment [test] instrument required under Section 51.3062
[51.306];
(6) the percentage of graduating students who meet the
course requirements established for the recommended high school
program by State Board of Education rule;
(7) the results of the Scholastic Assessment Test
(SAT), the American College Test (ACT), articulated postsecondary
degree programs described by Section 61.852, and certified
workforce training programs described by Chapter 311, Labor Code;
(8) the percentage of students, aggregated by grade
level, provided accelerated instruction under Section 28.0211(c),
the results of assessments administered under that section, the
percentage of students promoted through the grade placement
committee process under Section 28.0211, the subject of the
assessment instrument on which each student failed to perform
satisfactorily, and the performance of those students in the school
year following that promotion on the assessment instruments
required under Section 39.023;
(9) for students who have failed to perform
satisfactorily on an assessment instrument required under Section
39.023(a) or (c), the numerical progress of those students grouped
by percentage on subsequent assessment instruments required under
those sections, aggregated by grade level and subject area;
(10) the percentage of students exempted, by exemption
category, from the assessment program generally applicable under
this chapter; [and]
(11) the percentage of students of limited English
proficiency exempted from the administration of an assessment
instrument under Sections 39.027(a)(3) and (4);
(12) the percentage of students in a special education
program under Subchapter A, Chapter 29, assessed through assessment
instruments developed or adopted under Section 39.023(b);
(13) the measure of progress toward preparation for
postsecondary success; and
(14) the measure of progress toward dual language
proficiency under Section 39.034(b), for students of limited
English proficiency, as defined by Section 29.052.
SECTION 3.11. Section 39.051(d), Education Code, is amended
to read as follows:
(d) Annually, the commissioner shall define exemplary,
recognized, and unacceptable performance for each academic
excellence indicator included under Subsections (b)(1) through (7)
[(6)] and shall project the standards for each of those levels of
performance for succeeding years. For the indicator under
Subsection (b)(8) [(b)(7)], the commissioner shall define
exemplary, recognized, and unacceptable performance based on
student performance for the period covering both the current and
preceding academic years. In defining exemplary, recognized, and
unacceptable performance for the indicators under Subsections
(b)(2) and (4) [(3)], the commissioner may not consider as a dropout
or as a student who has failed to attend school a student whose
failure to attend school results from:
(1) the student’s expulsion under Section 37.007; and
(2) as applicable:
(A) adjudication as having engaged in delinquent
conduct or conduct indicating a need for supervision, as defined by
Section 51.03, Family Code; or
(B) conviction of and sentencing for an offense
under the Penal Code.
SECTION 3.12. Section 39.052(b), Education Code, is amended
to read as follows:
(b) The report card shall include the following
information:
(1) where applicable, the academic excellence
indicators adopted under Sections 39.051(b)(1) through (10) [(9)];
(2) average class size by grade level and subject;
(3) the administrative and instructional costs per
student, computed in a manner consistent with Section 44.0071; and
(4) the district’s instructional expenditures ratio
and instructional employees ratio computed under Section 44.0071,
and the statewide average of those ratios, as determined by the
commissioner.
SECTION 3.13. Section 39.071, Education Code, is amended to
read as follows:
Sec. 39.071. ACCREDITATION. (a) Accreditation of a school
district is determined in accordance with this section
[subchapter]. The commissioner by rule shall define the following
accreditation statuses:
(1) accredited;
(2) accredited-warned; and
(3) accredited-probation.
(b) Each year, the commissioner shall determine the
accreditation status of each school district. In determining
accreditation status, the commissioner:
(1) shall evaluate and consider the performance of the
district under:
(A) the academic accountability system under
Section 39.072; and
(B) the financial accountability rating system
under Subchapter I; and
(2) may consider:
(A) the district’s compliance with statutory
requirements and requirements imposed by rule of the commissioner
or State Board of Education under specific statutory authority that
relate to:
(i) reporting data through the Public
Education Information Management System (PEIMS) or other reports
required by state or federal law or court order;
(ii) the high school graduation
requirements under Section 28.025; or
(iii) an item listed under Sections
7.056(e)(3)(C)-(I) that applies to the district;
(B) the effectiveness of the district’s programs
for special populations; and
(C) the effectiveness of the district’s career
and technology program.
(c) Based on a school district’s performance under
Subsection (b), the commissioner shall:
(1) assign a district an accreditation status; or
(2) revoke the accreditation of the district and order
closure of the district under this subchapter.
(d) The commissioner shall notify a school district that
receives an accreditation status of accredited-warned or
accredited-probation that the performance of the district is below
a standard required under this section. The commissioner shall
require the district to notify the parents of students enrolled in
the district and property owners in the district of the district’s
accreditation status and the implications of that accreditation
status.
(e) A school district that is not accredited may not
receive funds from the agency or hold itself out as operating a
public school of this state.
(f) This chapter may not be construed to invalidate a
diploma awarded, course credit earned, or grade promotion granted
by a school district before the commissioner revoked the district’s
accreditation.
SECTION 3.14. Sections 39.072(b) and (c), Education Code,
are amended to read as follows:
(b) The academic excellence indicators adopted under
Sections 39.051(b)(1) through (8) [(7)] and the district’s current
special education compliance status with the agency shall be the
main considerations of the agency in the rating of the district
under this section. Additional criteria in the rules may include
consideration of:
(1) compliance with statutory requirements and
requirements imposed by rule of the State Board of Education under
specific statutory authority that relate to:
(A) reporting data through the Public Education
Information Management System (PEIMS);
(B) the high school graduation requirements
under Section 28.025; or
(C) an item listed in Sections
7.056(e)(3)(C)-(I) that applies to the district;
(2) the effectiveness of the district’s programs for
special populations; and
(3) the effectiveness of the district’s career and
technology programs.
(c) The agency shall evaluate against state standards and
shall, not later than August 1 of each year, report the performance
of each campus in a district and each open-enrollment charter
school on the basis of the campus’s performance on the indicators
adopted under Sections 39.051(b)(1) through (8) [(7)].
Consideration of the effectiveness of district programs under
Subsection (b)(2) or (3) must be based on data collected through the
Public Education Information Management System for purposes of
accountability under this chapter and include the results of
assessments required under Section 39.023.
SECTION 3.15. Sections 39.073(a) and (b), Education Code,
are amended to read as follows:
(a) The agency shall annually review the performance of each
district and campus on the indicators adopted under Sections
39.051(b)(1) through (8) [(7)] and determine if a change in the
accreditation status of the district is warranted. The
commissioner may determine how all indicators adopted under Section
39.051(b) may be used to determine accountability ratings and to
select districts and campuses for acknowledgment.
(b) Each annual review shall include an analysis of the
indicators under Sections 39.051(b)(1) through (8) [(6)] to
determine district and campus performance in relation to:
(1) standards established for each indicator;
(2) required improvement as defined under Section
39.051(c); and
(3) comparable improvement as defined by Section
39.051(c).
SECTION 3.16. Section 39.074(e), Education Code, is amended
to read as follows:
(e) If an annual review indicates low performance on one or
more of the indicators under Sections 39.051(b)(1) through (8)
[(7)] of one or more campuses in a district, the agency may conduct
an on-site evaluation of those campuses only.
SECTION 3.17. Section 39.131, Education Code, is amended to
read as follows:
Sec. 39.131. SANCTIONS FOR DISTRICTS. (a) If a school
district does not satisfy the accreditation criteria under Section
39.071, the academic performance standards under Section 39.072, or
any financial accountability standard as determined by
commissioner rule, the commissioner shall take any of the following
actions[, listed in order of severity,] to the extent the
commissioner determines necessary:
(1) issue public notice of the deficiency to the board
of trustees;
(2) order a hearing conducted by the board of trustees
of the district for the purpose of notifying the public of the
unacceptable performance, the improvements in performance expected
by the agency, and the sanctions that may be imposed under this
section if the performance does not improve;
(3) order the preparation of a student achievement
improvement plan that addresses each academic excellence indicator
for which the district’s performance is unacceptable, the
submission of the plan to the commissioner for approval, and
implementation of the plan;
(4) order a hearing to be held before the commissioner
or the commissioner’s designee at which the president of the board
of trustees of the district and the superintendent shall appear and
explain the district’s low performance, lack of improvement, and
plans for improvement;
(5) arrange an on-site investigation of the district;
(6) appoint an agency monitor to participate in and
report to the agency on the activities of the board of trustees or
the superintendent;
(7) appoint a conservator to oversee the operations of
the district;
(8) appoint a management team to direct the operations
of the district in areas of unacceptable performance or require the
district to obtain certain services under a contract with another
person;
(9) if a district has a current accreditation status
of accredited-warned or accredited-probation, is [been] rated [as]
academically unacceptable, or fails to satisfy financial
accountability standards as determined by commissioner rule [for a
period of one year or more], appoint a board of managers to exercise
the powers and duties of the board of trustees;
(10) if for two consecutive school years, including
the current school year, a district has received an accreditation
status of accredited-warned or accredited-probation, has been
rated academically unacceptable, or has failed to satisfy financial
accountability standards as determined by commissioner rule,
revoke the district’s accreditation and [been rated as academically
unacceptable for a period of two years or more]:
(A) order closure of the district and annex the
district to one or more adjoining districts under Section 13.054;
or
(B) in the case of a home-rule school district or
open-enrollment charter school, order closure of all programs
operated under the district’s or school’s charter; or
(11) if a district has been rated [as] academically
unacceptable for [a period of] two consecutive school years,
including the current school year, [or more] due to the district’s
dropout rates, impose sanctions designed to improve high school
completion rates, including:
(A) ordering the development of a dropout
prevention plan for approval by the commissioner;
(B) restructuring the district or appropriate
school campuses to improve identification of and service to
students who are at risk of dropping out of school, as defined by
Section 29.081;
(C) ordering lower student-to-counselor ratios
on school campuses with high dropout rates; and
(D) ordering the use of any other intervention
strategy effective in reducing dropout rates, including mentor
programs and flexible class scheduling.
(b) This subsection applies regardless of whether a
district has satisfied the accreditation criteria. If for two
consecutive school years, including the current school year, [a
period of one year or more] a district has had a conservator or
management team assigned, the commissioner may appoint a board of
managers, a majority of whom must be residents of the district, to
exercise the powers and duties of the board of trustees.
SECTION 3.18. Section 39.132, Education Code, is amended to
read as follows:
Sec. 39.132. SANCTIONS FOR ACADEMICALLY UNACCEPTABLE AND
CERTAIN OTHER CAMPUSES. [(a)] If a campus performance is below any
standard under Section 39.073(b), the campus is considered an
academically unacceptable [a low-performing] campus. The
commissioner may permit the campus to participate in an innovative
redesign of the campus to improve campus performance or shall [may]
take any of the other following actions[, listed in order of
severity], to the extent the commissioner determines necessary:
(1) issue public notice of the deficiency to the board
of trustees;
(2) order a hearing conducted by the board of trustees
at the campus for the purpose of:
(A) notifying the public of the unacceptable
performance, the improvements in performance expected by the
agency, and the sanctions that may be imposed under this section if
the performance does not improve within a designated period of
time; and
(B) soliciting public comment on the initial
steps being taken to improve performance;
(3) order the preparation of a report regarding the
parental involvement program at the campus and a plan describing
strategies for improving parental involvement at the campus;
(4) order the preparation of a report regarding the
effectiveness of the district- and campus-level planning and
decision-making committees established under Subchapter F, Chapter
11, and a plan describing strategies for improving the
effectiveness of those committees;
(5) order the preparation of a student [achievement]
improvement plan that addresses each academic excellence indicator
for which the campus’s performance is unacceptable, the submission
of the plan to the commissioner for approval, and implementation of
the plan;
(6) order a hearing to be held before the commissioner
or the commissioner’s designee at which the president of the board
of trustees, the superintendent, and the campus principal shall
appear and explain the campus’s low performance, lack of
improvement, and plans for improvement; or
(7) appoint a campus intervention team under Section
39.1322.
[(7) appoint a special campus intervention team to:
[(A) conduct a comprehensive on-site evaluation
of the campus to determine the cause for the campus’s low
performance and lack of progress;
[(B) recommend actions, including reallocation
of resources and technical assistance, changes in school procedures
or operations, staff development for instructional and
administrative staff, intervention for individual administrators
or teachers, waivers from state statute or rule, or other actions
the team considers appropriate;
[(C) assist in the development of a campus plan
for student achievement; and
[(D) assist the commissioner in monitoring the
progress of the campus in implementing the campus plan for
improvement of student achievement; or
[(8) if a campus has been a low-performing campus for a
period of one year or more, appoint a board of managers composed of
residents of the district to exercise the powers and duties of the
board of trustees of the district in relation to the campus.
[(b) If a campus has been a low-performing campus for a
period of two consecutive years or more, the commissioner shall
order the closure of the district or charter program on the campus
or reconstitute the campus. In reconstituting the campus, a
special campus intervention team shall be assembled for the purpose
of deciding which educators may be retained at that campus. If an
educator is not retained, the educator may be assigned to another
position in the district.]
SECTION 3.19. Subchapter G, Chapter 39, Education Code, is
amended by adding Sections 39.1321, 39.1322, 39.1323, 39.1324,
39.1326, and 39.1327 to read as follows:
Sec. 39.1321. SANCTIONS FOR CHARTER SCHOOLS. (a)
Sanctions authorized under this chapter for a school district or
campus apply in the same manner to an open-enrollment charter
school.
(b) The commissioner shall adopt rules to implement
procedures to impose any sanction provision under this chapter as
those provisions relate to open-enrollment charter schools.
(c) In adopting rules under this section, the commissioner
shall require that the charter of an open-enrollment charter
school:
(1) be automatically revoked if the charter school is
ordered closed under this chapter; and
(2) be automatically modified to remove authorization
for an individual campus if the campus is ordered closed under this
chapter.
(d) If sanctions are imposed on an open-enrollment charter
school under the procedures provided by this chapter, a charter
school is not entitled to an additional hearing relating to the
modification, placement on probation, revocation, or denial of
renewal of a charter as provided by Subchapter D, Chapter 12.
Sec. 39.1322. TECHNICAL ASSISTANCE AND CAMPUS INTERVENTION
TEAMS. (a) If a campus is rated academically acceptable for the
current school year but would be rated as academically unacceptable
if performance standards to be used for the following school year
were applied to the current school year, the commissioner shall
select and assign a technical assistance team to assist the campus
in executing a school improvement plan and any other school
improvement strategies the commissioner determines appropriate.
The commissioner may waive the requirement to assign a technical
assistance team under this subsection if the improvement in
performance standards among all student groups, including special
populations, over the preceding three years indicates that the
campus is likely to be rated academically acceptable in the
following school year.
(b) If a campus has been identified as academically
unacceptable under Section 39.132, the commissioner shall appoint a
campus intervention team.
(c) To the extent practicable, the commissioner shall
select and assign the technical assistance team under Subsection
(a) or the campus intervention team under Subsection (b) before the
first day of instruction for the school year.
(d) The commissioner may determine when the services of a
technical assistance team or campus intervention team are no longer
needed at a campus under this section.
Sec. 39.1323. CAMPUS INTERVENTION TEAM PROCEDURES. (a) A
campus intervention team shall:
(1) conduct a comprehensive on-site evaluation of the
campus to determine the cause for the campus’s low performance and
lack of progress;
(2) recommend actions, including reallocation of
resources and technical assistance, changes in school procedures or
operations, staff development for instructional and administrative
staff, intervention for individual administrators or teachers,
waivers from state statute or rule, or other actions the team
considers appropriate;
(3) assist in the development of a school improvement
plan for student achievement; and
(4) assist the commissioner in monitoring the progress
of the campus in implementing the school improvement plan for
improvement of student achievement.
(b) A campus intervention team assigned under Section
39.1322 to a campus shall conduct a comprehensive on-site needs
assessment of the campus to determine the causal factors resulting
in the campus’s low performance and lack of progress. The team
shall use the following guidelines and procedures in conducting the
comprehensive needs assessment of the campus:
(1) an assessment of the staff to determine the
percentage of certified teachers who are teaching in their field,
the number of teachers with less than three years of experience, and
teacher turnover rates;
(2) compliance with the appropriate class-size rules
and number of class-size waivers received;
(3) an assessment of the quality, quantity, and
appropriateness of instructional materials, including the
availability of technology-based instructional materials;
(4) a report on the parental involvement strategies
and the effectiveness of the strategies;
(5) an assessment of the extent and quality of the
mentoring program provided for new teachers on the campus;
(6) an assessment of the type and quality of the
professional development provided to the staff;
(7) a demographic analysis of the student population,
including student demographics, at-risk populations, and special
education percentages;
(8) a report of disciplinary incidents and school
safety information;
(9) financial and accounting practices;
(10) an assessment of the appropriateness of the
curriculum and teaching strategies; and
(11) any other research-based data or information
obtained from a data collection process that would assist the
campus intervention team in:
(A) recommending an action under Subsection (c);
and
(B) executing a school improvement plan under
Subsection (d).
(c) On completing the evaluation under this section, the
campus intervention team shall recommend actions, including:
(1) reallocation of resources;
(2) technical assistance;
(3) changes in school procedures or operations;
(4) staff development for instructional and
administrative staff;
(5) intervention for individual administrators or
teachers;
(6) waivers from state statutes or rules; or
(7) other actions the campus intervention team
considers appropriate.
(d) In executing a school improvement plan developed under
Subsection (a)(3), the campus intervention team shall:
(1) assist the campus in implementing research-based
practices for curriculum development and classroom instruction,
including bilingual education and special education programs, if
appropriate, and financial management;
(2) provide research-based technical assistance,
including data analysis, academic deficiency identification,
intervention implementation, and budget analysis, to strengthen
and improve the instructional programs at the campus; and
(3) submit the school improvement plan to the
commissioner for approval.
(e) A campus intervention team appointed under Section
39.1322(b):
(1) shall continue to work with a campus until:
(A) the campus is rated academically acceptable
for a two-year period; or
(B) the campus is rated academically acceptable
for a one-year period and the commissioner determines that the
campus is operating and will continue to operate in a manner that
improves student achievement; and
(2) may continually update the school improvement
plan, with approval from the commissioner, to meet the needs of the
campus.
(f) Notwithstanding any other provision of this subchapter,
if the commissioner determines that a campus for which an
intervention is ordered under Section 39.1322(b) is not fully
implementing the campus intervention team’s recommendations or
school improvement plan, the commissioner may order the
reconstitution of the campus.
Sec. 39.1324. MANDATORY SANCTIONS. (a) If a campus has
been identified as academically unacceptable for two consecutive
school years, including the current school year, the commissioner
shall order the reconstitution of the campus and assign a campus
intervention team. In reconstituting the campus, a campus
intervention team shall assist the campus in:
(1) developing a school improvement plan;
(2) obtaining approval of the plan from the
commissioner; and
(3) executing the plan on approval by the
commissioner.
(b) The campus intervention team shall decide which
educators may be retained at that campus. A principal who has been
employed by the campus in that capacity during the full two-year
period described by Subsection (a) may not be retained at that
campus. A teacher of a subject assessed by an assessment instrument
under Section 39.023 may be retained only if the campus
intervention team determines that a pattern exists of significant
academic improvement by students taught by the teacher. If an
educator is not retained, the educator may be assigned to another
position in the district.
(c) A campus subject to Subsection (a) shall implement the
school improvement plan as approved by the commissioner. The
commissioner may appoint a monitor, conservator, management team,
or a board of managers to the district to ensure and oversee the
implementation of the school improvement plan.
(d) Notwithstanding any other provision of this subchapter,
if the commissioner determines that a campus subject to Subsection
(a) is not fully implementing the school improvement plan, the
commissioner may pursue alternative management of the campus under
Section 39.1327 or may order closure of the campus.
(e) If a campus is considered an academically unacceptable
campus for the subsequent school year after the campus is
reconstituted under this section, the commissioner shall review the
progress of the campus and may order closure of the campus or pursue
alternative management under Section 39.1327.
(f) If a campus is considered academically unacceptable for
two consecutive school years after the campus is reconstituted
under Subsection (a), the commissioner shall order closure of the
campus or pursue alternative management under Section 39.1327.
Sec. 39.1326. TRANSITIONAL SANCTIONS PROVISIONS. For the
2006-2007 school year, the commissioner shall assign a campus
intervention team or a technical assistance team to a campus under
Section 39.1322 on the basis of academic performance ratings for
the 2005-2006 school year. The commissioner may impose a sanction
on a campus under Section 39.1323(f) or 39.1324(a) on the basis of
academic performance ratings for the 2005-2006 school year and the
2006-2007 school year. A sanction ordered by the commissioner
before July 1, 2006, shall remain in effect for the 2006-2007 school
year. The commissioner may allow a principal subject to Section
39.1324(b) to remain at a campus for the 2006-2007 school year.
This section expires September 1, 2008.
Sec. 39.1327. MANAGEMENT OF CERTAIN ACADEMICALLY
UNACCEPTABLE CAMPUSES. (a) A campus may be subject to this section
if the campus has been identified as academically unacceptable
under Section 39.132 and the commissioner orders alternative
management under Section 39.1324(d), (e), or (f).
(b) The commissioner shall solicit proposals from qualified
nonprofit entities to assume management of a campus subject to this
section or may appoint to assume management of a campus subject to
this section a school district other than the district in which the
campus is located that is located in the boundaries of the same
regional education service center as the campus is located. A
district appointed under this section shall assume management of a
campus subject to this section in the same manner provided by this
section for a qualified nonprofit entity or in accordance with
commissioner rule.
(c) If the commissioner determines that the basis for
identifying a campus as academically unacceptable is limited to a
specific condition that may be remedied with targeted technical
assistance, the commissioner may:
(1) provide the campus a one-year waiver under this
section; and
(2) require the district to contract for the
appropriate technical assistance.
(d) The commissioner may annually solicit proposals under
this section for the management of a campus subject to this section.
The commissioner shall notify a qualified nonprofit entity that has
been approved as a provider under this section. The district must
execute a contract with an approved provider and relinquish control
of the campus before January 1 of the school year.
(e) To qualify for consideration as a managing entity under
this section, the entity must submit a proposal that provides
information relating to the entity’s management and leadership team
that will participate in management of the campus under
consideration, including information relating to individuals that
have:
(1) documented success in whole school interventions
that increased the educational and performance levels of students
in academically unacceptable campuses;
(2) a proven record of effectiveness with programs
assisting low-performing students;
(3) a proven ability to apply research-based school
intervention strategies;
(4) a proven record of financial ability to perform
under the management contract; and
(5) any other experience or qualifications the
commissioner determines necessary.
(f) In selecting a managing entity under this section, the
commissioner shall give preference to a nonprofit entity that:
(1) meets any qualifications under this section; and
(2) has documented success in educating students from
similar demographic groups and with similar educational needs as
the students who attend the campus that is to be operated by a
managing entity under this section.
(g) The school district may negotiate the term of a
management contract for not more than five years with an option to
renew the contract. The management contract must include a
provision describing the district’s responsibilities in supporting
the operation of the campus. The commissioner shall approve the
contract before the contract is executed and, as appropriate, may
require the district, as a term of the contract, to support the
campus in the same manner as the district was required to support
the campus before the execution of the management contract.
(h) A management contract under this section shall include
provisions approved by the commissioner that require the managing
entity to demonstrate improvement in campus performance, including
negotiated performance measures. The performance measures must be
consistent with the priorities of this chapter. The commissioner
shall evaluate a managing entity’s performance on the first and
second anniversaries of the date of the management contract. If the
evaluation fails to demonstrate improvement as negotiated under the
contract by the first anniversary of the date of the management
contract, the district may terminate the management contract, with
the commissioner’s consent, for nonperformance or breach of
contract and select another provider from an approved list provided
by the commissioner. If the evaluation fails to demonstrate
significant improvement, as determined by the commissioner, by the
second anniversary of the date of the management contract, the
district shall terminate the management contract and select another
provider from an approved list provided by the commissioner or
resume operation of the campus if approved by the commissioner. If
the commissioner approves the district’s operation of the campus,
the commissioner shall assign a technical assistance team to assist
the campus.
(i) Notwithstanding any other provision of this code, the
funding for a campus operated by a managing entity must be not less
than the funding of the other campuses in the district on a per
student basis so that the managing entity receives at least the same
funding the campus would otherwise have received.
(j) Each campus operated by a managing entity under this
section is subject to this chapter in the same manner as any other
campus in the district.
(k) The commissioner may adopt rules necessary to implement
this section.
(l) With respect to the management of a campus under this
section:
(1) a managing entity is considered to be a
governmental body for purposes of Chapters 551 and 552, Government
Code; and
(2) any requirement in Chapter 551 or 552, Government
Code, that applies to a school district or the board of trustees of
a school district applies to a managing entity.
SECTION 3.20. Subchapter G, Chapter 39, Education Code, is
amended by adding Section 39.1331 to read as follows:
Sec. 39.1331. ACQUISITION OF PROFESSIONAL SERVICES. In
addition to other sanctions authorized under Sections 39.131 and
39.132, the commissioner may order a school district or campus to
acquire professional services at the expense of the district or
campus to address the applicable financial, assessment, data
quality, program, or governance deficiency. The commissioner’s
order may require the district or campus to:
(1) select an external auditor, data quality expert,
professional authorized to monitor district assessment instrument
administration, or curriculum or program expert; or
(2) provide for the appropriate training of district
staff or board of trustees members in the case of a district, or
campus staff, in the case of a campus.
SECTION 3.21. Section 39.134, Education Code, is amended to
read as follows:
Sec. 39.134. COSTS PAID BY DISTRICT. The costs of providing
a monitor, conservator, management team, [or special] campus
intervention team, technical assistance team, managing entity
under Section 39.1327, or service provider under Section 39.1331
shall be paid by the district. If the district fails or refuses to
pay the costs in a timely manner, the commissioner may:
(1) pay the costs using amounts withheld from any
funds to which the district is otherwise entitled; or
(2) recover the amount of the costs in the manner
provided for recovery of an overallocation of state funds under
Section 42.258.
SECTION 3.22. Chapter 39, Education Code, is amended by
adding Subchapter K to read as follows:

SUBCHAPTER K. PROCEDURES FOR CHALLENGE OF ACCOUNTABILITY

RATING OR SANCTION

Sec. 39.301. REVIEW BY COMMISSIONER: ACCOUNTABILITY
RATINGS. (a) The commissioner by rule shall provide a process for
a school district or open-enrollment charter school to challenge an
agency decision made under this chapter relating to an academic or
financial accountability rating that affects the district or
school.
(b) The rules under Subsection (a) must provide for the
commissioner to appoint a committee to make recommendations to the
commissioner on a challenge made to an agency decision relating to
an academic or financial accountability rating. The commissioner
may not appoint an agency employee as a member of the committee.
(c) The commissioner may limit a challenge under this
section to a written submission of any issue identified by the
school district or open-enrollment charter school challenging the
agency decision.
(d) The commissioner shall make a final decision under this
section after considering the recommendation of the committee
described by Subsection (b). The commissioner’s decision may not
be appealed under Section 7.057 or other law.
(e) A school district or open-enrollment charter school may
not challenge an agency decision relating to an academic or
financial accountability rating under this chapter in another
proceeding if the district or school has had an opportunity to
challenge the decision under this section.
Sec. 39.302. REVIEW BY STATE OFFICE OF ADMINISTRATIVE
HEARINGS: SANCTIONS. (a) A school district or open-enrollment
charter school that intends to challenge a decision by the
commissioner under this chapter to close the district or a district
campus or the charter school or to pursue alternative management of
a district campus or the charter school must appeal the decision
under the procedures provided for a contested case under Chapter
2001, Government Code.
(b) A challenge to a decision under this section is under
the substantial evidence rule as provided by Subchapter G, Chapter
2001, Government Code.
(c) Notwithstanding other law:
(1) the State Office of Administrative Hearings shall
provide an expedited review of a challenge under this section;
(2) the administrative law judge shall issue a final
order not later than the 30th day after the date on which the
hearing is finally closed; and
(3) the decision of the administrative law judge is
final and may not be appealed.
SECTION 3.23. (a) Not later than the 2007-2008 school year,
the Texas Education Agency shall collect information concerning:
(1) the measure of progress toward preparation for
postsecondary success for purposes of Section 39.051(b)(13),
Education Code, as added by this Act; and
(2) the measure of progress toward dual language
proficiency for purposes of Section 39.051(b)(14), Education Code,
as added by this Act.
(b) Not later than the 2008-2009 school year, the Texas
Education Agency shall include, in evaluating the performance of
school districts, campuses, and open-enrollment charter schools
under Subchapter D, Chapter 39, Education Code:
(1) the measure of progress toward preparation for
postsecondary success under Section 39.051(b)(13), Education Code,
as added by this Act; and
(2) the measure of progress toward dual language
proficiency under Section 39.051(b)(14), Education Code, as added
by this Act.
(c) The Texas Education Agency may implement Subsection
(b)(2) of this section only if, during the most recent school year,
school districts are entitled to an allotment for each student in
average daily attendance in a bilingual education or special
language program under Subchapter B, Chapter 29, Education Code,
that exceeds the amount of that allotment for the 2005-2006 school
year.
SECTION 3.24. (a) The lieutenant governor and the speaker
of the house of representatives shall create a joint interim
committee to examine the impact of public school assessment
instruments on the quality of instruction, teacher morale, and
students’ motivation to learn.
(b) The committee shall investigate in the interim study:
(1) the usefulness of the various tests in elementary
and secondary schools, including the assessment instruments
administered under Section 39.023, Education Code, as predictors or
indicators of student success;
(2) the impact of testing on the amount of
instructional time and on the content of instruction offered at the
elementary and secondary school levels;
(3) the amount of classroom time required to prepare
for and administer multiple tests in public schools;
(4) whether teachers would benefit from a reduction in
the paperwork requirements associated with mandatory testing in
public schools;
(5) whether there is a need to adjust the timing of the
tests’ administration in the public schools to optimize student
success; and
(6) the extent to which teachers and students might
benefit from a reduction or consolidation of the current number of
mandatory tests administered at the elementary and secondary school
levels.
(c) The general rules and policies for joint interim
committees adopted by the 79th Legislature shall govern the
proceedings and operations of the committee.
(d) The committee shall submit a full report, including
findings and recommendations, to the Texas Legislature not later
than September 1, 2007.
(e) This section expires October 1, 2007.
SECTION 3.25. Nothing in this Act shall be construed to
require development of additional state assessments, nor to require
a student in a dual language program to be assessed in more than one
language on any individual assessment. The commissioner of
education may adopt rules, consistent with Subchapter B, Chapter
29, Education Code, for determining the appropriate assessment of
dual language students.

ARTICLE 4. EDUCATION EMPLOYEES

SECTION 4.01. Subchapter E, Chapter 11, Education Code, is
amended by adding Section 11.203 to read as follows:
Sec. 11.203. SCHOOL LEADERSHIP PILOT PROGRAM FOR
PRINCIPALS. (a) The agency shall develop and implement a school
leadership pilot program for principals in cooperation with a
nonprofit corporation that has substantial experience in
developing best practices to improve leadership skills, student
achievement, student graduation rates, and teacher retention.
(b) The agency shall consult business schools, departments,
or programs at institutions of higher education to develop program
course work that focuses on management and business training.
(c) A principal or a person interested in becoming a
principal may apply for participation in the program, in a form and
manner determined by the commissioner.
(d) A principal of a campus rated academically
unacceptable, as well as any person employed to replace that
principal, shall participate in the program and complete the
program requirements not later than a date determined by the
commissioner.
(e) To pay the costs of administering the program, the
commissioner may use funds appropriated to the agency and available
for that purpose.
(e-1) For the state fiscal biennium beginning September 1,
2005, the amount the commissioner may use to finance activities
under this section may not exceed $3.6 million. This subsection
expires August 31, 2007.
(f) To implement and administer the program, the
commissioner may accept grants, gifts, and donations from public
and private entities.
(g) The commissioner may adopt rules necessary to
administer this section.
(h) During the first semester of the 2008-2009 school year,
the agency shall evaluate the effectiveness of the program in
developing and enhancing the ability of principals participating in
the program to provide school leadership and improve student
achievement and graduation rates and teacher retention. Not later
than January 1, 2009, the agency shall submit a report explaining
the results of the study to the governor, lieutenant governor,
speaker of the house of representatives, and the presiding officers
of the standing committees of each house of the legislature with
primary jurisdiction over public education.
(i) This section expires September 1, 2010.
SECTION 4.02. Subchapter D, Chapter 12, Education Code, is
amended by adding Section 12.133 to read as follows:
Sec. 12.133. WAGE INCREASE FOR CERTAIN PROFESSIONAL STAFF.
(a) This section applies to a charter holder that on January 1,
2006, operated an open-enrollment charter school.
(b) Each school year, using state funds received by the
charter holder for that purpose under Subsection (d), a charter
holder that participated in the program under Chapter 1579,
Insurance Code, for the 2005-2006 school year shall provide
employees of the charter holder, other than administrators,
compensation in the form of annual salaries, incentives, or other
compensation determined appropriate by the charter holder that
results in an average compensation increase for classroom teachers,
full-time librarians, full-time counselors, and full-time school
nurses who are employed by the charter holder and who would be
entitled to a minimum salary under Section 21.402 if employed by a
school district, in an amount at least equal to $2,500.
(b-1) Using state funds received by the charter holder for
that purpose under Subsection (d-1), a charter holder that
participated in the program under Chapter 1579, Insurance Code, for
the 2005-2006 school year shall provide employees of the charter
holder, other than administrators, compensation in the form of
annual salaries, incentives, or other compensation determined
appropriate by the charter holder that results in average
compensation increases as follows:
(1) for full-time employees other than employees who
would be entitled to a minimum salary under Section 21.402 if
employed by a school district, an average increase at least equal to
$500; and
(2) for part-time employees, an average increase at
least equal to $250.
(c) Each school year, using state funds received by the
charter holder for that purpose under Subsection (e), a charter
holder that did not participate in the program under Chapter 1579,
Insurance Code, for the 2005-2006 school year shall provide
employees of the charter holder, other than administrators,
compensation in the form of annual salaries, incentives, or other
compensation determined appropriate by the charter holder that
results in an average compensation increase for classroom teachers,
full-time librarians, full-time counselors, and full-time school
nurses who are employed by the charter holder and who would be
entitled to a minimum salary under Section 21.402 if employed by a
school district, in an amount at least equal to $2,000.
(d) Each school year, in addition to any amounts to which a
charter holder is entitled under this chapter, a charter holder
that participated in the program under Chapter 1579, Insurance
Code, for the 2005-2006 school year is entitled to state aid in an
amount, as determined by the commissioner, equal to the product of
$2,500 multiplied by the number of classroom teachers, full-time
librarians, full-time counselors, and full-time school nurses
employed by the charter holder at an open-enrollment charter
school.
(d-1) In addition to any amounts to which a charter holder
is entitled under this chapter, a charter holder that participated
in the program under Chapter 1579, Insurance Code, for the
2005-2006 school year is entitled to state aid in an amount, as
determined by the commissioner, equal to the sum of:
(1) the product of $500 multiplied by the number of
full-time employees other than employees who would be entitled to a
minimum salary under Section 21.402 if employed by a school
district; and
(2) the product of $250 multiplied by the number of
part-time employees.
(e) Each school year, in addition to any amounts to which a
charter holder is entitled under this chapter, a charter holder
that did not participate in the program under Chapter 1579,
Insurance Code, for the 2005-2006 school year is entitled to state
aid in an amount, as determined by the commissioner, equal to the
product of $2,000 multiplied by the number of classroom teachers,
full-time librarians, full-time counselors, and full-time school
nurses employed by the charter holder at an open-enrollment charter
school.
(f) A payment under this section is in addition to wages the
charter holder would otherwise pay the employee during the school
year.
SECTION 4.03. Section 19.007, Education Code, is amended by
adding Subsection (f) to read as follows:
(f) In addition to other amounts received by the district
under this section, the district is entitled to state aid in an
amount equal to the product of $2,000 multiplied by the number of
classroom teachers, full-time librarians, full-time counselors
certified under Subchapter B, Chapter 21, and full-time school
nurses who are employed by the district and who would be entitled to
a minimum salary under Section 21.402 if employed by a school
district operating under Chapter 11.
SECTION 4.04. Section 19.009, Education Code, is amended by
adding Subsection (d-1) to read as follows:
(d-1) Each school year, the district shall pay an amount at
least equal to $2,000 to each classroom teacher, full-time
librarian, full-time counselor certified under Subchapter B,
Chapter 21, and full-time school nurse who is employed by the
district and who would be entitled to a minimum salary under Section
21.402 if employed by a school district operating under Chapter 11.
A payment under this section is in addition to wages the district
would otherwise pay the employee during the school year.
SECTION 4.05. Section 21.402, Education Code, is amended by
amending Subsections (a), (c), and (d) and adding Subsections (c-1)
and (c-2) to read as follows:
(a) Except as provided by Subsection (d), (e), or (f), a
school district must pay each classroom teacher, full-time
librarian, full-time counselor certified under Subchapter B, or
full-time school nurse not less than the minimum monthly salary,
based on the employee’s level of experience in addition to other
factors, as determined by commissioner rule, determined by the
following formula:

MS = SF x FS

where:
“MS” is the minimum monthly salary;
“SF” is the applicable salary factor specified by Subsection
(c); and
“FS” is the amount, as determined by the commissioner under
Subsection (b), of state and local funds per weighted student,
including funds provided under Section 42.2516(b)(1)(B), but not
funds provided under Section 42.2516(b)(1)(A), (b)(1)(C), (b)(2),
or (b)(3), available to a district eligible to receive state
assistance under Section 42.302 with a maintenance and operations
[an enrichment] tax rate per $100 of taxable value equal to the
product of the state compression percentage, as determined under
Section 42.2516, multiplied by $1.50 [, as defined by Section
42.302, equal to the maximum rate authorized under Section
42.303], except that the amount of state and local funds per
weighted student does not include the amount attributable to the
increase in the guaranteed level made by Chapter 1187 [H.B. No.
3343], Acts of the 77th Legislature, Regular Session, 2001.
(c) The salary factors per step are as follows:

YearsExperience 0 1 2 3 4
SalaryFactor .6226 [.5656] .6360 [.5790] .6492 [.5924] .6627 [.6058] .6909 [.6340]

YearsExperience 5 6 7 8 9
SalaryFactor .7192 [.6623] .7474 [.6906] .7737 [.7168] .7985 [.7416] .8220 [.7651]

YearsExperience 10 11 12 13 14
SalaryFactor .8441 [.7872] .8650 [.8082] .8851 [.8281] .9035 [.8467] .9213 [.8645]

YearsExperience 15 16 17 18 19
SalaryFactor .9380 [.8811] .9539 [.8970] .9687 [.9119] .9828 [.9260] .9963 [.9394]

YearsExperience 20 andover
SalaryFactor 1.009 [.9520]

(c-1) Notwithstanding Subsection (a), for the 2006-2007
school year, a classroom teacher, full-time librarian, full-time
counselor certified under Subchapter B, or full-time school nurse
is entitled to a monthly salary that is at least equal to the sum of:
(1) the monthly salary the employee would have
received for the 2006-2007 school year under the district’s salary
schedule for the 2005-2006 school year, if that schedule had been in
effect for the 2006-2007 school year, including any local
supplement and any money representing a career ladder supplement
the employee would have received in the 2006-2007 school year; and
(2) $250.
(c-2) Subsection (c-1) and this subsection expire September
1, 2007.
(d) A classroom teacher, full-time librarian, full-time
counselor certified under Subchapter B, or full-time school nurse
employed by a school district in the 2006-2007 [2000-2001] school
year is, as long as the employee is employed by the same district,
entitled to a salary that is at least equal to the salary the
employee received for the 2006-2007 [2000-2001] school year.
SECTION 4.06. Subchapter I, Chapter 21, Education Code, is
amended by adding Section 21.415 to read as follows:
Sec. 21.415. EMPLOYMENT CONTRACTS. (a) A school district
shall provide in employment contracts that qualifying employees may
receive an incentive payment under an awards program established
under Subchapter N or O if the district participates in the program.
(b) The district shall indicate that any incentive payment
distributed is considered a payment for performance and not an
entitlement as part of an employee’s salary.
SECTION 4.07. Subchapter J, Chapter 21, Education Code, is
amended by adding Section 21.458 to read as follows:
Sec. 21.458. MENTORS. (a) Each school district may assign
a mentor teacher to each classroom teacher who has less than two
years of teaching experience. A teacher assigned as a mentor must:
(1) teach in the same school;
(2) to the extent practicable, teach the same subject
or grade level, as applicable; and
(3) meet the qualifications prescribed by
commissioner rules adopted under Subsection (b).
(b) The commissioner shall adopt rules necessary to
administer this section, including rules concerning the duties and
qualifications of a teacher who serves as a mentor. The rules
concerning qualifications must require that to serve as a mentor a
teacher must:
(1) complete a research-based mentor and induction
training program approved by the commissioner;
(2) complete a mentor training program provided by the
district; and
(3) have at least three complete years of teaching
experience with a superior record of assisting students, as a
whole, in achieving improvement in student performance.
(c) From the funds appropriated to the agency for purposes
of this section, the commissioner shall adopt rules and provide
funding to school districts that assign mentor teachers under this
section. Funding provided to districts under this section may be
used only for providing:
(1) mentor teacher stipends;
(2) scheduled time for mentor teachers to provide
mentoring to assigned classroom teachers; and
(3) mentoring support through providers of mentor
training.
(d) In adopting rules under Subsection (c), the
commissioner shall rely on research-based mentoring programs that,
through external evaluation, have demonstrated success.
SECTION 4.08. Chapter 21, Education Code, is amended by
adding Subchapters N and O to read as follows:

SUBCHAPTER N. AWARDS FOR STUDENT ACHIEVEMENT PROGRAM

Sec. 21.651. DEFINITION. In this subchapter, “program”
means the awards for student achievement program.
Sec. 21.652. ESTABLISHMENT OF PROGRAM. (a) The
commissioner by rule shall:
(1) establish an awards for student achievement
program under which an eligible campus may receive a grant from the
agency in the manner provided by this subchapter; and
(2) adopt program guidelines in accordance with this
subchapter for a campus to follow in developing a campus incentive
plan under Section 21.654.
(b) In adopting rules under this section, the commissioner
shall include rules governing eligibility for and participation by
an open-enrollment charter school in the program.
Sec. 21.653. CAMPUS ELIGIBILITY. (a) Except as provided by
Subsection (b), a campus is eligible to apply for and may receive a
program grant if the campus:
(1) is ranked by the agency in the top half of this
state’s elementary school campuses, middle or junior high school
campuses, high school campuses, or campuses for students of all
grade levels, as applicable, in the percentage of educationally
disadvantaged students enrolled at the campus; and
(2) is rated exemplary or recognized under Section
39.072 or ranked in the top quartile of campuses in comparable
improvement, as defined by Section 39.051(c), in mathematics or
reading.
(b) This subsection applies only to a registered
alternative education campus that has a student enrollment of at
least 30 students and is rated under alternative education
accountability procedures. A campus to which this subsection
applies is eligible to apply for and may receive a program grant if
the campus is ranked by the agency in the top third of elementary
school campuses, middle or junior high school campuses, high school
campuses, or campuses for students of all grade levels, as
applicable, in the percentage of educationally disadvantaged
students enrolled at the campus who perform successfully, as
determined under Section 39.024, on assessment instruments
administered under Section 39.023.
Sec. 21.654. CAMPUS INCENTIVE PLAN. (a) A campus-level
decision-making body, such as the campus-level planning and
decision-making committee established under Subchapter F, Chapter
11, for each eligible campus that intends to participate in the
program shall develop a campus incentive plan for the campus that:
(1) is designed to reward teachers who have a positive
impact on improving student achievement;
(2) meets all program guidelines adopted by the
commissioner under Section 21.652; and
(3) describes how grant funds will be distributed.
(b) A district-level committee, such as the district-level
planning and decision-making committee established under
Subchapter F, Chapter 11:
(1) must approve the campus incentive plan developed
under Subsection (a) before the plan is submitted to the agency; and
(2) shall approve the plan if the district-level
committee determines that the plan meets program guidelines adopted
by the commissioner under Section 21.652.
(c) A school district shall, on behalf of an eligible
campus, submit a campus incentive plan to the agency for approval.
The plan must be submitted together with:
(1) evidence of significant classroom teacher
involvement in the development of the plan presented through the
campus-level decision-making body’s meeting attendance records or
minutes or other appropriate means;
(2) letters from at least three classroom teachers
assigned to the eligible campus describing the teachers’ support
for and involvement in developing the plan; and
(3) evidence that the plan:
(A) has been made available for public viewing;
and
(B) has been presented to the public at a
regularly scheduled board of trustees meeting or will be presented
at a regularly scheduled board meeting on a date specified, as
applicable.
(d) The agency may approve only a campus incentive plan that
meets program guidelines adopted by the commissioner under Section
21.652 and satisfies this section. The agency may negotiate with a
school district to ensure that activities proposed in the campus
incentive plan the district submits meet program guidelines.
Sec. 21.655. AMOUNT OF PROGRAM GRANT AWARD. (a) Each
eligible campus whose campus incentive plan is approved by the
agency under Section 21.654 is entitled to a grant award in an
amount determined by the commissioner.
(b) Grants from funds appropriated for the program shall be
awarded beginning with the 2006-2007 school year and may not exceed
$100 million in the 2006-2007 school year except as expressly
authorized by the General Appropriations Act or other law. This
subsection expires September 1, 2007.
Sec. 21.656. INCENTIVE PAYMENTS TO CLASSROOM TEACHERS. (a)
An eligible campus must use 75 percent of a grant award received
under Section 21.655 to provide incentive payments to classroom
teachers assigned to the campus. To the extent practicable, the
campus shall pay a classroom teacher an incentive payment in an
amount of not less than $3,000 or more than $10,000.
(b) In distributing incentive payments to classroom
teachers under this section, an eligible campus:
(1) may distribute an incentive payment only to a
classroom teacher who:
(A) demonstrates success in improving student
achievement using objective, quantifiable measures, such as local
benchmarking systems, portfolio assessments, end-of-course
assessments, and value-added assessments; and
(B) successfully collaborates with other faculty
and with staff in a manner that contributes to improving overall
student achievement at the campus; and
(2) may consider a classroom teacher’s:
(A) assignment to teach a subject that:
(i) has been designated by the commissioner
as a subject historically experiencing a critical shortage of
teachers or a high teacher turnover rate; or
(ii) is a subject for which the district in
which the campus is located has a shortage of teachers; or
(B) demonstration of ongoing initiative,
commitment, professionalism, and involvement in an activity that
directly results in improved student achievement, including
working with students outside of assigned class hours, creating a
program that involves parents, and personalizing the learning
environment for each student.
Sec. 21.657. DISTRIBUTION OF OTHER PROGRAM FUNDS. (a) An
eligible campus must use 25 percent of a grant award received under
Section 21.655 to provide for:
(1) incentive payments to campus employees other than
classroom teachers, such as principals, assistant principals,
teachers who are not eligible for an incentive payment under
Section 21.656, counselors, speech therapists, instructional
coaches, teacher’s aides, nurses, librarians, members of the
custodial staff, or other campus employees who have contributed to
improved student achievement;
(2) professional development for classroom teachers
who:
(A) do not receive an incentive payment under
Section 21.656; and
(B) would benefit from professional development
to develop or enhance skills and behaviors described under Section
21.656(b);
(3) reimbursement or funding for a professional
development activity that directly contributes to improved
classroom instruction and student achievement;
(4) signing bonuses for classroom teachers new to the
campus who are teaching subjects that have been designated by the
commissioner as historically experiencing a critical shortage of
teachers;
(5) a teacher mentoring program that meets the
requirements of Section 21.458;
(6) an activity that supports new teacher induction
programs, including:
(A) common planning time and collaboration;
(B) a professional development activity; and
(C) standards-based evaluations;
(7) an activity that supports common planning time and
curriculum development;
(8) a program that has been proven to recruit and
retain highly effective teachers;
(9) an activity that creates or furthers the goals of
an incentive system designed to improve student achievement;
(10) stipends for teachers who participate in an
after-school or Saturday program that directly contributes to
improved classroom instruction and student achievement;
(11) stipends for teachers who are certified under
Subchapter B in the main subject area in which they teach;
(12) stipends for teachers who hold a postgraduate
degree;
(13) additional funding for feeder campuses that,
because they are not assigned performance ratings under Chapter 39,
do not qualify to participate in the program, such as campuses that
serve kindergarten through grade two, to implement an activity
described by this section; and
(14) any other program that directly contributes to
improved student achievement.
(b) A campus may not use any of a grant award received under
Section 21.655 to provide for an incentive payment to an employee
whose primary responsibility, as determined in accordance with
commissioner rule, is supervision of an athletic activity.
Sec. 21.658. RULES. The commissioner shall adopt rules
necessary to administer this subchapter.

SUBCHAPTER O. EDUCATOR EXCELLENCE AWARDS PROGRAM

Sec. 21.701. DEFINITION. In this subchapter, “program”
means the educator excellence awards program.
Sec. 21.702. EDUCATOR EXCELLENCE AWARDS PROGRAM. (a) The
commissioner by rule shall establish an educator excellence awards
program under which school districts, in accordance with local
awards plans approved by the commissioner, receive program grants
from the agency for the purpose of providing awards to district
employees in the manner provided by Section 21.705.
(b) In establishing the program, the commissioner shall
adopt program guidelines in accordance with this subchapter for a
school district to follow in developing a local awards plan under
Section 21.704.
(c) In adopting rules under this section, the commissioner
shall include rules governing eligibility for and participation by
an open-enrollment charter school in the program.
Sec. 21.703. EDUCATOR EXCELLENCE FUND; AMOUNT OF GRANT
AWARD. (a) Each state fiscal year, the commissioner shall deposit
the sum of $1,000 multiplied by the number of classroom teachers in
this state to the credit of the educator excellence fund in the
general revenue fund. Each state fiscal year, the agency shall use:
(1) not more than $100 million of the funds in the
educator excellence fund to provide grant awards under the awards
for student achievement program established under Subchapter N; and
(2) any remaining funds in the educator excellence
fund to provide a qualifying school district a grant in an amount
determined by:
(A) dividing the amount of remaining money
available for distribution in the educator excellence fund by the
total number of students in average daily attendance in qualifying
districts for that fiscal year; and
(B) multiplying the amount determined under
Paragraph (A) by the number of students in average daily attendance
in the district.
(b) Subsection (a) applies beginning with the state fiscal
year beginning September 1, 2008. In the state fiscal year
beginning September 1, 2007, the commissioner shall deposit $840
multiplied by the number of classroom teachers in this state to the
credit of the educator excellence fund in the general revenue fund.
The agency shall use:
(1) not more than $100 million of the funds in the
educator excellence fund to provide grant awards under the awards
for student achievement program established under Subchapter N; and
(2) any remaining funds in the educator excellence
fund to provide a qualifying school district a grant in an amount
determined by:
(A) dividing the amount of remaining money
available for distribution in the educator excellence fund by the
total number of students in average daily attendance in qualifying
districts for that fiscal year; and
(B) multiplying the amount determined under
Paragraph (A) by the number of students in average daily attendance
in the district.
(c) Subsection (b) and this subsection expire September 1,
2008.
(d) Notwithstanding Subsection (a) or (b), the agency may
use funds in the educator excellence fund as necessary to conduct or
contract with another entity to conduct the evaluation required
under Section 21.706. This subsection expires June 1, 2011.
Sec. 21.704. LOCAL AWARDS PLANS. (a) A district-level
committee for a school district that intends to participate in the
program, such as the district-level planning and decision-making
committee established under Subchapter F, Chapter 11, shall develop
a local awards plan for the district. The local awards plan may
provide for all campuses in the district to participate in the
program or only certain campuses selected by the district-level
committee. A majority of classroom teachers assigned to a campus
that is selected by the district-level committee to participate in
the program must approve participation to be included in the local
awards plan.
(b) If appropriate, the district-level committee may use a
campus incentive plan developed for a campus in the district under
Subchapter N in whole or in part as part of the local awards plan
submitted under this section. Notwithstanding Section 21.705, the
commissioner by rule shall allow a campus that receives funding
under Subchapter N and that is included in a district’s local awards
plan under this section to use grant funds received under this
subchapter as additional money to be spent in the manner provided by
Subchapter N.
(c) A school district shall submit a local awards plan to
the agency for approval. The plan must be submitted together with
evidence of significant teacher involvement in the development of
the plan.
(d) The agency may approve only a local awards plan that
meets program guidelines adopted by the commissioner under Section
21.702 and that satisfies this section and Section 21.705.
(e) The agency shall make model local awards plans available
to school districts that wish to participate in the program.
(f) A school district whose local awards plan is approved by
the agency to receive a program grant under this subchapter may
renew the plan for three consecutive school years without
resubmitting the plan to the agency for approval. A school district
may amend a local awards plan for approval by the agency for each
school year the district receives a program grant.
Sec. 21.705. AWARD PAYMENTS. A school district must use at
least 60 percent of grant funds awarded to the district under this
subchapter to directly award classroom teachers who effectively
improve student achievement as determined by meaningful, objective
measures. The remaining funds must be used only to:
(1) provide stipends to effective mentors or teacher
coaches;
(2) provide stipends to classroom teachers who are
certified in a subject that is designated by the commissioner as
commonly experiencing a critical shortage of teachers;
(3) provide stipends to classroom teachers who are
certified under Subchapter B in the main subject area in which they
teach;
(4) provide stipends to classroom teachers with proven
records of success for improving student performance who are
assigned to campuses at which the district has experienced
difficulty assigning or retaining teachers;
(5) provide stipends to classroom teachers who hold
postgraduate degrees;
(6) provide awards to principals who effectively
increase student performance as determined by objective measures;
(7) provide awards to other campus employees who
demonstrate excellence; or
(8) implement the components of a Teacher Advancement
Program (TAP), including:
(A) an instructionally focused accountability
system; and
(B) the adjustment of teaching schedules to
permit ongoing applied professional growth.
Sec. 21.706. EVALUATION OF AWARDS FOR STUDENT ACHIEVEMENT
AND EDUCATION EXCELLENCE AWARDS PROGRAMS. (a) Using funds from the
educator excellence fund created under Section 21.703, the agency
shall conduct or contract with another entity to conduct a
comprehensive evaluation of the awards for student achievement
program established under Subchapter N and the educator excellence
awards program established under this subchapter. The evaluation
must include:
(1) a descriptive analysis of the design and
implementation of the awards for student achievement program and
the educator excellence awards program at participating campuses or
school districts, including detailed descriptions of the models and
approaches used by the campuses or districts in distributing
incentive awards to classroom teachers;
(2) detailed information regarding the distribution
of incentive awards to classroom teachers under the awards for
student achievement program and the educator excellence awards
program, including the measurements used by the campuses or
districts in determining the amounts of incentive awards to
distribute to classroom teachers;
(3) a comprehensive, quantitative analysis of the
impact of the awards for student achievement program and the
educator excellence awards program at participating campuses or
districts, including the impact of the various incentive award
distribution models used by the campuses or districts on key
outcomes in the programs; and
(4) a summary of the approaches used by participating
campuses or districts in distributing grant funds that are not
specifically designated for distribution as incentive awards for
classroom teachers and an assessment of whether those funds are
used effectively by the participating campuses or districts.
(b) Not later than December 1, 2008, the agency shall
prepare and deliver to each member of the legislature a report
describing the interim results of the evaluation conducted in
accordance with this section. Not later than December 1, 2010, the
agency shall prepare and deliver to each member of the legislature a
report describing the final results of the evaluation.
(c) This section expires June 1, 2011.
Sec. 21.707. RULES. The commissioner shall adopt rules
necessary to administer this subchapter.
SECTION 4.09. Subchapter D, Chapter 22, Education Code, as
added by Chapters 899 and 1359, Acts of the 79th Legislature,
Regular Session, 2005, is reenacted and amended to read as follows:

SUBCHAPTER D. HEALTH CARE [COMPENSATION] SUPPLEMENTATION

Sec. 22.101. DEFINITIONS. In this subchapter:
(1) “Cafeteria plan” means a plan as defined and
authorized by Section 125, Internal Revenue Code of 1986.
(2) “Employee” means an active, contributing member of
the Teacher Retirement System of Texas who:
(A) is employed by a district, other educational
district whose employees are members of the Teacher Retirement
System of Texas, participating charter school, or regional
education service center;
(B) is not a retiree eligible for coverage under
the program established under Chapter 1575, Insurance Code;
(C) is not eligible for coverage by a group
insurance program under Chapter 1551 or 1601, Insurance Code; and
(D) is not an individual performing personal
services for a district, other educational district that is a
member of the Teacher Retirement System of Texas, participating
charter school, or regional education service center as an
independent contractor.
(3) “Participating charter school” means an
open-enrollment charter school established under Subchapter D,
Chapter 12, that participates in the program established under
Chapter 1579, Insurance Code.
(4) “Regional education service center” means a
regional education service center established under Chapter 8.
Sec. 22.102. AUTHORITY TO ADOPT RULES; OTHER AUTHORITY.
(a) The agency may adopt rules to implement this subchapter.
(b) The agency may enter into interagency contracts with any
other agency of this state for the purpose of assistance in
implementing this subchapter.
Sec. 22.103. DESIGNATION OF COMPENSATION AS HEALTH CARE
SUPPLEMENTATION. (a) An employee of a school [ELIGIBILITY;
WAITING PERIOD. A person is not eligible for a monthly distribution
under this subchapter before the 91st day after the first day the
person becomes an employee.
[Sec. 22.104. DISTRIBUTION BY AGENCY. Subject to the
availability of funds, each month the agency shall deliver to each]
district, [including a district that is ineligible for state aid
under Chapter 42, each] other educational district that is a member
of the Teacher Retirement System of Texas, [each] participating
charter school, or [and each] regional education service center may
elect to designate a portion of the employee’s compensation to be
used as health care supplementation under this subchapter.
(b) The amount designated under this section may not exceed
the amount permitted under applicable federal law.
(c) This section does not apply to an employee who is not
covered by a cafeteria plan or who is not eligible to pay health
care premiums through a premium conversion plan [state funds in an
amount, as determined by the agency, equal to the product of the
number of eligible employees employed by the district, school, or
service center multiplied by the amount specified in the General
Appropriations Act for purposes of this subchapter and divided by
12. The agency shall distribute funding to only one entity for
employees who are employed by more than one entity listed in this
section].
Sec. 22.104 [22.105]. FUNDS HELD IN TRUST. All funds
received by a district, other educational district, participating
charter school, or regional education service center under this
subchapter are held in trust for the benefit of the employees on
whose behalf the district, school, or service center received the
funds.
Sec. 22.105. WRITTEN ELECTION REQUIRED. Each school year,
an active employee must elect in writing whether to designate a
portion of the employee’s compensation to be used as health care
supplementation under this subchapter. An election under this
section must be made at the same time at which the employee elects
to participate in a cafeteria plan, if applicable.
Sec. 22.106. [RECOVERY OF DISTRIBUTIONS. The agency is
entitled to recover from a district, other educational district,
participating charter school, or regional education service center
any amount distributed under this subchapter to which the district,
school, or service center was not entitled.
[Sec. 22.107. DETERMINATION BY AGENCY FINAL. A
determination by the agency under this subchapter is final and may
not be appealed.
[Sec. 22.108. DISTRIBUTION BY SCHOOL. Each month, each
district, other educational district that is a member of the
Teacher Retirement System of Texas, participating charter school,
and regional education service center must distribute to its
eligible employees the funding received under this subchapter. To
receive the monthly distribution, an individual must meet the
definition of an employee under Section 22.101 for that month.
[Sec. 22.109.] USE OF DESIGNATED [SUPPLEMENTAL]
COMPENSATION. An employee may use compensation designated for
health care supplementation [a monthly distribution received]
under this subchapter for any employee benefit, including
depositing the designated amount [of the distribution] into a
cafeteria plan in which[, if] the employee is enrolled [in a
cafeteria plan,] or using the designated amount [of the
distribution] for health care premiums through a premium conversion
plan. [The employee may take the amount of the distribution as
supplemental compensation.
[Sec. 22.110. SUPPLEMENTAL COMPENSATION. An amount
distributed to an employee under this subchapter must be in
addition to the rate of compensation that:
[(1) the district, other educational district,
participating charter school, or regional education service center
paid the employee in the preceding school year; or
[(2) the district, school, or service center would
have paid the employee in the preceding school year if the employee
had been employed by the district, school, or service center in the
same capacity in the preceding school year.]
Sec. 22.107. WAGE INCREASE FOR SUPPORT STAFF. (a) A school
district shall pay each full-time district employee, other than an
administrator or an employee subject to the minimum salary schedule
under Section 21.402, an amount at least equal to $500.
(b) A school district shall pay each part-time district
employee, other than an administrator, an amount at least equal to
$250.
(c) A school district employee entitled to a wage increase
under this section may elect to receive a portion of the person’s
annual wages as health care supplementation as provided by this
subchapter.
(d) A payment under this section is in addition to wages the
district would otherwise pay the employee during the school year.
SECTION 4.10. Subchapter E, Chapter 42, Education Code, is
amended by adding Section 42.2513 to read as follows:
Sec. 42.2513. ADDITIONAL STATE AID FOR STAFF SALARY
INCREASES. (a) A school district, including a school district that
is otherwise ineligible for state aid under this chapter, is
entitled to state aid in an amount equal to the sum of:
(1) the product of $500 multiplied by the number of
full-time district employees, other than administrators or
employees subject to the minimum salary schedule under Section
21.402; and
(2) the product of $250 multiplied by the number of
part-time district employees, other than administrators.
(b) A determination by the commissioner under this section
is final and may not be appealed.
(c) The commissioner may adopt rules to implement this
section.
SECTION 4.11. Sections 822.201(b) and (c), Government Code,
are amended to read as follows:
(b) “Salary and wages” as used in Subsection (a) means:
(1) normal periodic payments of money for service the
right to which accrues on a regular basis in proportion to the
service performed;
(2) amounts by which the member’s salary is reduced
under a salary reduction agreement authorized by Chapter 610;
(3) amounts that would otherwise qualify as salary and
wages under Subdivision (1) but are not received directly by the
member pursuant to a good faith, voluntary written salary reduction
agreement in order to finance payments to a deferred compensation
or tax sheltered annuity program specifically authorized by state
law or to finance benefit options under a cafeteria plan qualifying
under Section 125 of the Internal Revenue Code of 1986, if:
(A) the program or benefit options are made
available to all employees of the employer; and
(B) the benefit options in the cafeteria plan are
limited to one or more options that provide deferred compensation,
group health and disability insurance, group term life insurance,
dependent care assistance programs, or group legal services plans;
(4) performance pay awarded to an employee by a school
district as part of a total compensation plan approved by the board
of trustees of the district and meeting the requirements of
Subsection (e);
(5) the benefit replacement pay a person earns under
Subchapter H, Chapter 659, except as provided by Subsection (c);
(6) stipends paid to teachers in accordance with
Section 21.410, 21.411, 21.412, or 21.413, Education Code;
(7) amounts by which the member’s salary is reduced or
that are deducted from the member’s salary as authorized by
Subchapter J, Chapter 659; [and]
(8) a merit salary increase made under Section 51.962,
Education Code; and
(9) amounts received under the awards for student
achievement program under Subchapter N, Chapter 21, Education Code,
the educator excellence awards program under Subchapter O, Chapter
21, Education Code, or a mentoring program under Section 21.458,
Education Code.
(c) Excluded from salary and wages are:
(1) expense payments;
(2) allowances;
(3) payments for unused vacation or sick leave;
(4) maintenance or other nonmonetary compensation;
(5) fringe benefits;
(6) deferred compensation other than as provided by
Subsection (b)(3);
(7) compensation that is not made pursuant to a valid
employment agreement;
(8) payments received by an employee in a school year
that exceed $5,000 for teaching a driver education and traffic
safety course that is conducted outside regular classroom hours;
(9) the benefit replacement pay a person earns as a
result of a payment made under Subchapter B or C, Chapter 661;
(10) any compensation designated as health care
supplementation [amount received] by an employee under Subchapter
D, Chapter 22, Education Code, subject to an annual limit of $1,000;
(11) any amount received by an employee under:
(A) [,] former Article 3.50-8, Insurance Code;
(B) [,] former Chapter 1580, Insurance Code;
(C) Subchapter D, Chapter 22, Education Code, as
that subchapter existed January 1, 2006;[,] or
(D) Rider 9, Page III-39, Chapter 1330, Acts of
the 78th Legislature, Regular Session, 2003 (the General
Appropriations Act); and
(12) [(11)] any compensation not described in
Subsection (b).
SECTION 4.12. As soon as practicable after the effective
date of this Act, the commissioner of education shall adopt rules
for establishing and administering the awards for student
achievement program under Subchapter N, Chapter 21, Education Code,
as added by this Act, and the educator excellence awards program
under Subchapter O, Chapter 21, Education Code, as added by this
Act. The commissioner shall make the awards for student
achievement program available for campus participation not later
than the 2006-2007 school year. The commissioner shall make the
educator excellence awards program available for school district
participation beginning with the 2007-2008 school year.

ARTICLE 5. HIGH SCHOOL SUCCESS AND COLLEGE READINESS

SECTION 5.01. Subchapter A, Chapter 28, Education Code, is
amended by adding Sections 28.008 and 28.009 to read as follows:
Sec. 28.008. ADVANCEMENT OF COLLEGE READINESS IN
CURRICULUM. (a) To ensure that students are able to perform
college-level course work at institutions of higher education, the
commissioner of education and the commissioner of higher education
shall establish vertical teams composed of public school educators
and institution of higher education faculty.
(b) The vertical teams shall:
(1) recommend for approval by the commissioner of
education and the Texas Higher Education Coordinating Board college
readiness standards and expectations that address what students
must know and be able to do to succeed in entry-level courses
offered at institutions of higher education;
(2) evaluate whether the high school curriculum
requirements under Section 28.002 and other instructional
requirements serve to prepare students to successfully perform
college-level course work;
(3) recommend how the public school curriculum
requirements can be aligned with college readiness standards and
expectations;
(4) develop instructional strategies for teaching
courses to prepare students to successfully perform college-level
course work; and
(5) develop or establish minimum standards for
curricula, professional development materials, and online support
materials in English language arts, mathematics, science, and
social studies, designed for students who need additional
assistance in preparing to successfully perform college-level
course work.
(c) The commissioner of education and the Texas Higher
Education Coordinating Board by rule shall establish the
composition and duties of the vertical teams established under this
section.
(d) The State Board of Education shall incorporate college
readiness standards and expectations approved by the commissioner
of education and the Texas Higher Education Coordinating Board
under Subsection (b) into the essential knowledge and skills
identified by the board under Section 28.002(c).
(e) Notwithstanding any other provision of this section,
the State Board of Education retains its authority under Section
28.002 concerning the required curriculum.
(f) Not later than September 1, 2011, the vertical teams
shall complete the development of or establish minimum standards
for the curricula and related materials under Subsection (b)(5).
The vertical teams shall develop or establish minimum standards for
the English language arts curricula and materials first, followed
by mathematics, science, and social studies, respectively. The
vertical teams shall complete the development of or establish
minimum standards for the English language arts curricula and
materials for approval by the State Board of Education not later
than June 1, 2009. The English language arts curricula and online
materials must be made available to high school students beginning
with the 2009 fall semester, with the mathematics, science, and
social studies curricula and online materials respectively
becoming available each subsequent fall semester. This subsection
expires December 1, 2012.
(g) The agency shall coordinate with the Texas Higher
Education Coordinating Board as necessary in administering this
section.
Sec. 28.009. COLLEGE CREDIT PROGRAM. (a) Each school
district shall implement a program under which students may earn
the equivalent of at least 12 semester credit hours of college
credit in high school. On request, a public institution of higher
education in this state shall assist a school district in
developing and implementing the program.
(a-1) Not later than the fall 2008 semester, each school
district shall implement a program that meets the requirements
prescribed by Subsection (a). This subsection expires June 1,
2009.
(b) The agency shall coordinate with the Texas Higher
Education Coordinating Board as necessary in administering this
section.
SECTION 5.02. Section 28.025, Education Code, is amended by
adding Subsection (b-1) to read as follows:
(b-1) The State Board of Education by rule shall require
that:
(1) the curriculum requirements for the recommended
and advanced high school programs under Subsection (a) include a
requirement that students successfully complete four courses in
each subject of the foundation curriculum under Section
28.002(a)(1); and
(2) one or more courses offered in the required
curriculum for the recommended and advanced high school programs
include a research writing component.
SECTION 5.03. Subchapter C, Chapter 29, Education Code, is
amended by adding Section 29.0822 to read as follows:
Sec. 29.0822. OPTIONAL FLEXIBLE SCHOOL DAY PROGRAM. (a)
Notwithstanding Section 25.081 or 25.082, a school district may
apply to the commissioner to provide a flexible school day program
for students in grades nine through 12 who:
(1) have dropped out of school or are at risk of
dropping out of school as defined by Section 29.081; or
(2) attend a campus that is implementing an innovative
redesign of the campus or an early college high school under a plan
approved by the commissioner.
(b) To enable a school district to provide a program under
this section that meets the needs of students described by
Subsection (a), a school district that meets application
requirements may:
(1) provide flexibility in the number of hours each
day a student attends;
(2) provide flexibility in the number of days each
week a student attends; or
(3) allow a student to enroll in less than or more than
a full course load.
(c) A course offered in a program under this section must
provide for at least the same number of instructional hours as
required for a course offered in a program that meets the required
minimum number of instructional days under Section 25.081 and the
required length of school day under Section 25.082.
(d) The commissioner may adopt rules for the administration
of this section, including rules establishing application
requirements. The commissioner shall calculate average daily
attendance for students served under this section. The
commissioner shall allow accumulations of hours of instruction for
students whose schedule would not otherwise allow full state
funding. Funding under this subsection shall be determined based
on the number of instructional days in the school district calendar
and a seven-hour school day, but attendance may be cumulated over a
school year, including any summer or vacation session. The
attendance of students who accumulate less than the number of
attendance hours required under this subsection shall be
proportionately reduced for funding purposes. The commissioner may
set maximum funding amounts for an individual course under this
section.
SECTION 5.04. Subchapter D, Chapter 29, Education Code, is
amended by adding Section 29.124 to read as follows:
Sec. 29.124. TEXAS GOVERNOR’S SCHOOLS. (a) In this
section, “public senior college or university” has the meaning
assigned by Section 61.003.
(b) A Texas governor’s school is a summer residential
program for high-achieving high school students. A governor’s
school program may include any or all of the following educational
curricula:
(1) mathematics and science;
(2) humanities; or
(3) leadership and public policy.
(c) A public senior college or university may apply to the
commissioner to administer a Texas governor’s school program under
this section. The commissioner shall give preference to a public
senior college or university that applies in cooperation with a
nonprofit association. The commissioner shall give additional
preference if the nonprofit association receives private
foundation funds that may be used to finance the program.
(d) The commissioner may approve an application under this
section only if the applicant:
(1) applies within the period and in the manner
required by rule adopted by the commissioner;
(2) submits a program proposal that includes:
(A) a curriculum consistent with Subsection (b);
(B) criteria for selecting students to
participate in the program;
(C) a statement of the length of the program,
which must be at least three weeks; and
(D) a statement of the location of the program;
(3) agrees to use a grant under this section only for
the purpose of administering a program; and
(4) satisfies any other requirements established by
rule adopted by the commissioner.
(e) From funds appropriated to the agency, the commissioner
may make a grant in an amount not to exceed $750,000 each year to
public senior colleges or universities whose applications are
approved under this section to pay the costs of administering a
Texas governor’s school program.
(f) The commissioner may adopt other rules necessary to
implement this section.
SECTION 5.05. Subchapter B, Chapter 39, Education Code, is
amended by adding Section 39.0232 to read as follows:
Sec. 39.0232. USE OF END-OF-COURSE ASSESSMENT INSTRUMENT AS
PLACEMENT INSTRUMENT. To the extent practicable, the agency shall
ensure that any high school end-of-course assessment instrument
developed by the agency is developed in such a manner that the
assessment instrument may be used to determine the appropriate
placement of a student in a course of the same subject matter at an
institution of higher education.
SECTION 5.06. Subchapter F, Chapter 39, Education Code, is
amended by adding Sections 39.113 and 39.114 to read as follows:
Sec. 39.113. RECOGNITION OF HIGH SCHOOL COMPLETION AND
SUCCESS AND COLLEGE READINESS PROGRAMS. (a) The agency shall:
(1) develop standards for evaluating the success and
cost-effectiveness of high school completion and success and
college readiness programs implemented under Section 39.114;
(2) provide guidance for school districts and campuses
in establishing and improving high school completion and success
and college readiness programs implemented under Section 39.114;
and
(3) develop standards for selecting and methods for
recognizing school districts and campuses that offer exceptional
high school completion and success and college readiness programs
under Section 39.114.
(b) The commissioner may adopt rules for the administration
of this section.
Sec. 39.114. HIGH SCHOOL ALLOTMENT. (a) Except as provided
by Subsection (b), a school district or campus must use funds
allocated under Section 42.2516(b)(3) to:
(1) implement or administer a college readiness
program that provides academic support and instruction to prepare
underachieving students for entrance into an institution of higher
education;
(2) implement or administer a program that encourages
students to pursue advanced academic opportunities, including
early college high school programs and dual credit, advanced
placement, and international baccalaureate courses;
(3) implement or administer a program that provides
opportunities for students to take academically rigorous course
work, including four years of mathematics and four years of science
at the high school level;
(4) implement or administer a program, including
online course support and professional development, that aligns the
curriculum for grades six through 12 with postsecondary curriculum
and expectations; or
(5) implement or administer other high school
completion and success initiatives in grades six through 12
approved by the commissioner.
(b) A school district may use funds allocated under Section
42.2516(b)(3) on any instructional program in grades six through 12
other than an athletic program if:
(1) the district is recognized as exceptional by the
commissioner under the academic accountability indicator adopted
under Section 39.051(b)(13); and
(2) the district’s completion rates for grades nine
through 12 meet or exceed completion rate standards required by the
commissioner to achieve a rating of exemplary under Section 39.072.
(b-1) Subsection (b) applies beginning with the 2008–2009
school year. This subsection expires September 1, 2009.
(c) An open-enrollment charter school is entitled to an
allotment under this section in the same manner as a school
district.
(d) The commissioner shall adopt rules to administer this
section, including rules related to the permissible use of funds
allocated under this section to an open-enrollment charter school.
SECTION 5.07. Section 42.005(a), Education Code, is amended
to read as follows:
(a) In this chapter, average daily attendance is:
(1) the quotient of the sum of attendance for each day
of the minimum number of days of instruction as described under
Section 25.081(a) divided by the minimum number of days of
instruction; [or]
(2) for a district that operates under a flexible year
program under Section 29.0821, the quotient of the sum of
attendance for each actual day of instruction as permitted by
Section 29.0821(b)(1) divided by the number of actual days of
instruction as permitted by Section 29.0821(b)(1); or
(3) for a district that operates under a flexible
school day program under Section 29.0822, the average daily
attendance as calculated by the commissioner in accordance with
Section 29.0822(d).
SECTION 5.08. Subchapter C, Chapter 61, Education Code, is
amended by adding Sections 61.0761, 61.0762, and 61.0763 to read as
follows:
Sec. 61.0761. P-16 COLLEGE READINESS AND SUCCESS STRATEGIC
ACTION PLAN. (a) The P-16 Council established under Section 61.076
shall recommend to the commissioner of education and the board a
college readiness and success strategic action plan to increase
student success and decrease the number of students enrolling in
developmental course work in institutions of higher education. The
plan must include:
(1) definitions, as determined by the P-16 Council in
coordination with the State Board of Education, of the standards
and expectations for college readiness that address the knowledge
and skills expected of students to perform successfully in
entry-level courses offered at institutions of higher education;
(2) a description of the components of a P-16
individualized graduation plan sufficient to prepare students for
college success;
(3) the manner in which the Texas Education Agency
should provide model curricula for use as a reference tool by school
district employees;
(4) recommendations to the Texas Education Agency, the
State Board of Education, and the board regarding strategies for
decreasing the number of students enrolling in developmental course
work at institutions of higher education;
(5) recommendations to the State Board for Educator
Certification regarding changes to educator certification and
professional development requirements that contribute to the
ability of public school teachers to prepare students for higher
education; and
(6) any other elements that the commissioner of
education and the board suggest for inclusion in the plan.
(b) The commissioner of education and the board shall adopt
the college readiness and success strategic action plan recommended
by the P-16 Council if the commissioner of education and the board
determine that the plan meets the requirements of this section.
(c) Notwithstanding any other provision of this section,
the State Board of Education retains the board’s authority over the
required curriculum adopted under Section 28.002.
(d) Not later than December 1 of each even-numbered year,
the commissioner of education and the board shall submit a report to
the governor, the lieutenant governor, the speaker of the house of
representatives, each member of the Legislative Budget Board, and
the members of the standing committees of the senate and house of
representatives with primary jurisdiction over the public school
system and higher education system describing progress in
implementing the college readiness and success strategic action
plan.
(e) The commissioner of education and the board shall adopt
rules necessary to implement this section.
Sec. 61.0762. PROGRAMS TO ENHANCE STUDENT SUCCESS. To
implement the college readiness and success strategic action plan
adopted under Section 61.0761 and to enhance the success of
students at institutions of higher education, the board by rule
shall develop:
(1) summer higher education bridge programs in the
subject areas of mathematics, science, and English language arts;
(2) incentive programs for institutions of higher
education that implement research-based, innovative developmental
education initiatives;
(3) financial assistance programs for educationally
disadvantaged students, as defined by Section 5.001, who take
college entrance and college readiness assessment instruments;
(4) professional development programs for faculty of
institutions of higher education on college readiness standards and
the implications of such standards on instruction; and
(5) other programs as determined by the board that
support the participation and success goals in “Closing the Gaps,”
the state’s master plan for higher education.
Sec. 61.0763. COURSE REDESIGN PROJECT. (a) To improve
student learning and reduce the cost of course delivery, the board,
with the assistance of advisory committees and nonprofit
organizations with expertise in methodologies for developing and
delivering college-level courses in a cost-effective manner, shall
implement a project under which institutions of higher education
selected by the board will review and revise entry-level lower
division academic courses. In selecting institutions of higher
education to participate in the project, the board shall determine
the criteria for participation and must encourage collaboration
among institutions, including institutions of different types.
Participating institutions of higher education shall:
(1) review and revise one or more courses from among
not more than 25 entry-level lower division academic courses
identified by the board;
(2) draw on established best practices regarding
effective course redesign techniques;
(3) use information technology to enhance the
effectiveness of revised courses; and
(4) determine whether any cost savings and increased
student success result from the review and revision of courses
under this section.
(b) Not later than September 1, 2006, the board shall
initiate the development of the project and recruit institutions of
higher education to participate in the project. Not later than
September 1, 2007, each participating institution of higher
education shall begin offering courses reviewed and revised by the
institution under this section. Not later than September 1, 2009,
each participating institution of higher education shall submit a
report to the board describing the results of the project at the
institution. Not later than January 1, 2011, the board shall submit
a summary report describing the results of the project at
participating institutions of higher education to the clerks of the
standing committees of the senate and house of representatives with
primary jurisdiction over the higher education system.
(c) This section expires May 1, 2011.
SECTION 5.09. Not later than January 1, 2007, the State
Board of Education shall adopt rules as required by Section
28.025(b-1), Education Code, as added by this Act. The rules shall
require that the curriculum requirements for the recommended and
advanced high school programs under that subsection apply to
students entering the ninth grade beginning with the 2007-2008
school year.

ARTICLE 6. PREKINDERGARTEN PROGRAMS

SECTION 6.01. Section 29.153, Education Code, is amended by
amending Subsection (b) and adding Subsection (f) to read as
follows:
(b) A child is eligible for enrollment in a prekindergarten
class under this section if the child is at least three years of age
and is:
(1) unable to speak and comprehend the English
language;
(2) educationally disadvantaged; [or]
(3) homeless, as defined by 42 U.S.C. Section 11302,
regardless of the residence of the child, of either parent of the
child, or of the child’s guardian or other person having lawful
control of the child;
(4) the child of an active duty member of the armed
forces of the United States, including the state military forces or
a reserve component of the armed forces, who is ordered to active
duty by proper authority; or
(5) the child of a member of the armed forces of the
United States, including the state military forces or a reserve
component of the armed forces, who was injured or killed while
serving on active duty.
(f) A child who is eligible for enrollment in a
prekindergarten class under Subsection (b)(4) or (5) remains
eligible for enrollment if the child’s parent leaves the armed
forces, or is no longer on active duty, after the child begins a
prekindergarten class.

ARTICLE 7. TEXAS SCHOOL FOR THE DEAF

SECTION 7.01. Section 30.051, Education Code, is amended by
amending Subsection (a) and adding Subsection (e) to read as
follows:
(a) The Texas School for the Deaf is a state agency
established to provide educational services to persons who are 21
years of age or younger on September 1 of any school year and who are
deaf or hard of hearing and who may have one or more other
disabilities. The school shall provide[:
[(1)] comprehensive educational services, on a day or
residential basis, and [;
[(2)] short-term services to allow a student to better
achieve educational results from services available in the
community. The school is not intended to serve:
(1) students whose needs are appropriately addressed
in a home or hospital setting or a residential treatment facility;
or
(2) students whose primary, ongoing needs are related
to a severe or profound emotional, behavioral, or cognitive
deficit[; and
[(3) services for any student who is deaf or hard of
hearing and also has an additional disability and who requires a
specialized support program but does not require a residential
treatment facility].
(e) If a school district or another educational entity
requests an assessment of a student’s educational or related needs
related to hearing impairment, the school may conduct an assessment
and charge a reasonable fee for the assessment.
SECTION 7.02. Section 30.053(d), Education Code, is amended
to read as follows:
(d) The board shall annually establish the superintendent’s
salary. The annual salary [must be based on not more than 230 days
of service and] may not exceed 120 percent of the annual salary of
the highest paid instructional administrator at the school.
SECTION 7.03. Section 30.055, Education Code, is amended by
amending Subsection (b) and adding Subsection (g) to read as
follows:
(b) The governing board of the school may enter into an
employment contract with any employee who provides, or supervises
any employee who provides, direct and regular educational services
to students or who provides other professional, educational
services. An employee employed under this subsection is not
subject to Section 2252.901, Government Code. Each teacher shall
be employed under a term contract as provided by Subchapter E,
Chapter 21, or under a probationary contract as provided by
Subchapter C, Chapter 21. An employee employed under a contract
under this subsection:
(1) shall be paid in accordance with a salary
structure adopted by the superintendent with the concurrence of the
board that provides salaries, including assignment stipends,
equal, on a daily-rate basis, to salaries, including assignment
stipends, paid to employees employed in comparable positions by the
Austin Independent School District;
(2) is not eligible for longevity pay under Subchapter
D, Chapter 659, Government Code, and is not entitled to a paid day
off from work on any national or state holiday;
(3) is eligible for sick leave accrual under the
General Appropriations Act in each month in which at least one day
of the month is included in the term of the employment contract and
in any other month in which work is performed or paid leave is
taken;
(4) may be permitted by the board to use a maximum of
four days per contract term of accrued sick leave for personal
reasons as designated by the board but the number of sick leave days
not used for personal reasons during a contract term may not be
carried forward to a subsequent contract term for use as personal
leave;
(5) shall be paid the salary designated in the
employment contract in 12 [equal] monthly installments if the
employee chooses to be paid in that manner; [and]
(6) shall work the hours established by the
superintendent; and
(7) in addition to the contract salary received during
the employee’s first year of employment with the school and for the
purpose of reducing a vacancy in a position that is difficult to
fill because of the specialized nature and the limited number of
qualified applicants, may be paid a salary supplement, not to
exceed any salary supplement paid by the Austin Independent School
District to an employee employed in a comparable position [board].
(g) The school may pay to a teacher or employee who provides
services or supervises an employee who provides services as
described by Subsection (b) and who is employed to provide
short-term services under Section 30.051(a) a salary that, on a
daily-rate basis, does not exceed the salary paid by the Austin
Independent School District to an employee employed in a comparable
position during the regular school year.

ARTICLE 8. TEXAS EDUCATION AGENCY SUNSET PROVISION

SECTION 8.01. Section 7.004, Education Code, is amended to
read as follows:
Sec. 7.004. SUNSET PROVISION. The Texas Education Agency
is subject to Chapter 325, Government Code (Texas Sunset Act).
Unless continued in existence as provided by that chapter, the
agency is abolished September 1, 2012 [2007]. In the review of the
agency by the Sunset Advisory Commission, as required by this
section, the sunset commission shall limit its review to the
appropriateness of recommendations made by the sunset commission to
the 79th Legislature. In the Sunset Advisory Commission’s report
to the 80th Legislature, the sunset commission may include any
recommendations it considers appropriate.

ARTICLE 9. SCHOOL START DATE

SECTION 9.01. Section 7.056(e), Education Code, is amended
to read as follows:
(e) Except as provided by Subsection (f), a school campus or
district may not receive an exemption or waiver under this section
from:
(1) a prohibition on conduct that constitutes a
criminal offense;
(2) a requirement imposed by federal law or rule,
including a requirement for special education or bilingual
education programs; or
(3) a requirement, restriction, or prohibition
relating to:
(A) essential knowledge or skills under Section
28.002 or minimum graduation requirements under Section 28.025;
(B) public school accountability as provided by
Subchapters B, C, D, and G, Chapter 39;
(C) extracurricular activities under Section
33.081 or participation in a University Interscholastic League
area, regional, or state competition under Section 33.0812;
(D) health and safety under Chapter 38;
(E) purchasing under Subchapter B, Chapter 44;
(F) elementary school class size limits, except
as provided by Section 25.112;
(G) removal of a disruptive student from the
classroom under Subchapter A, Chapter 37;
(H) at-risk programs under Subchapter C, Chapter
29;
(I) prekindergarten programs under Subchapter E,
Chapter 29;
(J) educator rights and benefits under
Subchapters A, C, D, E, F, G, and I, Chapter 21, or under Subchapter
A, Chapter 22;
(K) special education programs under Subchapter
A, Chapter 29; [or]
(L) bilingual education programs under
Subchapter B, Chapter 29; or
(M) the requirements for the first day of
instruction under Section 25.0811.
SECTION 9.02. Section 25.0811(a), Education Code, is
amended to read as follows:
(a) A school district may not begin instruction for students
for a school year before the fourth Monday [week] in [which] August
unless the district operates a year-round system under Section
25.084 [21 falls. For purposes of this subsection, Sunday is
considered the first day of the week].
SECTION 9.03. Sections 25.0811(b) and (c), Education Code,
are repealed.
SECTION 9.04. (a) Section 25.0811, Education Code, as
amended by this Act, applies beginning with the 2007–2008 school
year. The first day of instruction for the 2006–2007 school year is
governed by Section 25.0811, Education Code, as it existed before
amendment by this Act, and the former law is continued in effect for
that purpose.
(b) A waiver under Section 7.056(e), Education Code, from
the requirements for the first day of instruction under Section
25.0811, Education Code, for the 2007-2008 or a subsequent school
year that is granted before the effective date of this Act is void.

ARTICLE 10. HEALTH AND SAFETY

SECTION 10.01. The heading to Section 38.015, Education
Code, is amended to read as follows:
Sec. 38.015. SELF-ADMINISTRATION OF PRESCRIPTION ASTHMA OR
ANAPHYLAXIS MEDICINE BY STUDENTS.
SECTION 10.02. Sections 38.015(a) and (b), Education Code,
are amended to read as follows:
(a) In this section:
(1) “Parent” includes a person standing in parental
relation.
(2) “Self-administration of prescription asthma or
anaphylaxis medicine” means a student’s discretionary use of
prescription asthma or anaphylaxis medicine.
(b) A student with asthma or anaphylaxis is entitled to
possess and self-administer prescription asthma or anaphylaxis
medicine while on school property or at a school-related event or
activity if:
(1) the prescription [asthma] medicine has been
prescribed for that student as indicated by the prescription label
on the medicine;
(2) the student has demonstrated to the student’s
physician or other licensed health care provider and the school
nurse, if available, the skill level necessary to self-administer
the prescription medication, including the use of any device
required to administer the medication;
(3) the self-administration is done in compliance with
the prescription or written instructions from the student’s
physician or other licensed health care provider; and
(4) [(3)] a parent of the student provides to the
school:
(A) a written authorization, signed by the
parent, for the student to self-administer the prescription
[asthma] medicine while on school property or at a school-related
event or activity; and
(B) a written statement from the student’s
physician or other licensed health care provider, signed by the
physician or provider, that states:
(i) that the student has asthma or
anaphylaxis and is capable of self-administering the prescription
[asthma] medicine;
(ii) the name and purpose of the medicine;
(iii) the prescribed dosage for the
medicine;
(iv) the times at which or circumstances
under which the medicine may be administered; and
(v) the period for which the medicine is
prescribed.

ARTICLE 11. ELECTION PROVISIONS

SECTION 11.01. Subchapter C, Chapter 11, Education Code, is
amended by adding Section 11.0581 to read as follows:
Sec. 11.0581. JOINT ELECTIONS REQUIRED. (a) An election
for trustees of an independent school district shall be held on the
same date as:
(1) the election for the members of the governing body
of a municipality located in the school district; or
(2) the general election for state and county
officers.
(b) Elections held on the same date as provided by
Subsection (a) shall be held as a joint election under Chapter 271,
Election Code.
(c) The voters of a joint election under this section shall
be served by common polling places consistent with Section
271.003(b), Election Code.
(d) The board of trustees of an independent school district
changing an election date to comply with this section shall adjust
the terms of office of its members to conform to the new election
date.
SECTION 11.02. Section 61.012, Election Code, is amended by
adding Subsection (c) to read as follows:
(c) The requirement imposed by Subsection (a) does not apply
to an election of trustees of an independent school district, other
than an election of an independent school district that is held
jointly with another election in which a federal office appears on
the ballot, held before January 1, 2008. This subsection expires
January 1, 2008.

ARTICLE 12. PERMISSIVE TRANSFER OF CERTAIN STUDENTS

SECTION 12.01. Subchapter B, Chapter 25, Education Code, is
amended by adding Section 25.0343 to read as follows:
Sec. 25.0343. TRANSFER OF STUDENTS RESIDING IN HOUSEHOLD OF
STUDENT RECEIVING SPECIAL EDUCATION SERVICES. (a) If, for the
purpose of receiving special education services under Subchapter A,
Chapter 29, a school district assigns a student to a district campus
other than the campus the student would attend based on the
student’s residence, the district shall permit the student’s
parent, guardian, or other person standing in parental relation to
the student to obtain a transfer to the assigned campus for any
other student residing in the household of the student receiving
special education services, provided that:
(1) the other student is entitled under Section 25.001
to attend school in the district; and
(2) the appropriate grade level for the other student
is offered at the campus.
(b) A school district is not required to provide
transportation to a student who transfers to another campus under
this section. This subsection does not affect any transportation
services provided by the district in accordance with other law for
the student receiving special education services.
(c) Section 25.034 does not apply to a transfer under this
section.
(d) This section does not apply if the student receiving
special education services resides in a residential facility.

ARTICLE 13. APPROPRIATION; PUBLIC EDUCATION FUNDING FOR CERTAIN
PURPOSES

SECTION 13.01. (a) There is appropriated to the Texas
Education Agency for distribution to the school districts of this
state in accordance with Chapters 41 and 42, Education Code, as
amended by this Act, an amount not to exceed $3,825,000,000 in
fiscal year 2007 from any funds in the State Treasury not otherwise
appropriated.
(b) The Texas Education Agency:
(1) shall develop a plan to expend the appropriation
made under Subsection (a) of this section in accordance with this
Act that includes making adjustments to strategies, methods of
finance, performance measures, and riders in Chapter 1369, Acts of
the 79th Legislature, Regular Session, 2005 (the General
Appropriations Act), as amended by Chapter 2, Acts of the 79th
Legislature, 1st Called Session, 2005, as necessary to implement
this Act; and
(2) in accordance with Section 69, Article XVI, Texas
Constitution, may not expend the appropriation made under
Subsection (a) of this section without the prior approval of the
governor and the Legislative Budget Board.
SECTION 13.02. For the fiscal biennium ending August 31,
2007, the commissioner of education, to the extent not specifically
prohibited by state or federal law, shall use federal funds,
including consolidated administrative or innovative program funds,
for the purposes described by Sections 1.005, 7.008, 39.034,
44.0061, and 44.007(e), Education Code, as added by this Act. To
the extent federal funds are not sufficient, state funds
appropriated for those purposes may be used to fund the remaining
balance. If the amount of the state funds appropriated exceeds the
amount needed for purposes of this section, the excess shall be
returned to the general revenue fund.
SECTION 13.03. Subsection (a) of Rider 97 following the
appropriations to the Texas Education Agency in Chapter 1369, Acts
of the 79th Legislature, Regular Session, 2005 (the General
Appropriations Act), as amended by Chapter 2, Acts of the 79th
Legislature, 1st Called Session, 2005, is repealed.
SECTION 13.04. The legislature will implement reforms to
the system by which the state and school districts procure and
purchase textbooks. The State Board of Education should forgo the
issuance of proclamations on and after the effective date of this
Act. Reforms to the existing system may include changes in the
manner in which funding for instructional materials is provided and
such changes may affect materials called for in Proclamation 2005.

ARTICLE 14. COMPUTERS AND COMPUTER-RELATED EQUIPMENT

SECTION 14.01. Section 32.153(a), Education Code, as added
by Chapter 834, Acts of the 78th Legislature, Regular Session,
2003, is amended to read as follows:
(a) To implement the pilot project, the agency may use any
gift, grant, or donation given for the pilot project. The agency
may solicit and accept a gift, grant, or donation of any kind from
any source, including from a foundation, private entity,
governmental entity, and institution of higher education, for the
implementation of the pilot project. The agency may [not] use only
undedicated and unobligated money from the general revenue fund for
purposes of the pilot project.
SECTION 14.02. Section 32.157, Education Code, as added by
Chapter 834, Acts of the 78th Legislature, Regular Session, 2003,
is amended to read as follows:
Sec. 32.157. PILOT PROJECT EVALUATION; EXPIRATION. (a)
After the expiration of the [three-year] pilot project, the agency
may review the pilot project based on the annual reports the agency
receives from the board of trustees of participating school
districts. The agency may include the review of the pilot project
in the comprehensive annual report required under Section 39.182
that covers the 2010-2011 [2006-2007] school year.
(b) This subchapter expires August 31, 2011 [2007].
SECTION 14.03. Section 32.153(d), Education Code, as added
by Chapter 834, Acts of the 78th Legislature, Regular Session,
2003, is repealed.

ARTICLE 15. APPLICABILITY; EFFECTIVE DATE

SECTION 15.01. Except as otherwise provided by this Act,
this Act applies beginning with the 2006-2007 school year.
SECTION 15.02. Except as otherwise provided by this Act,
this Act takes effect immediately if it receives a vote of
two-thirds of all the members elected to each house, as provided by
Section 39, Article III, Texas Constitution. If this Act does not
receive the vote necessary for immediate effect, this Act takes
effect on the 91st day after the last day of the legislative
session, except as otherwise provided by this Act.

______________________________             ______________________________

                                     President of the Senate                                                          Speaker of the House

I certify that H.B. No. 1 was passed by the House on April 24,
2006, by the following vote: Yeas 146, Nays 2, 1 present, not
voting; and that the House concurred in Senate amendments to H.B.
No. 1 on May 12, 2006, by the following vote: Yeas 136, Nays 8; and
that the House adopted H.C.R. No. 48 authorizing certain
corrections in H.B. No. 1 on May 12, 2006, by a non-record vote;
passed subject to the provisions of Article III, Section 49a, of the
Constitution of the State of Texas.

______________________________
Chief Clerk of the House

I certify that H.B. No. 1 was passed by the Senate, with
amendments, on May 10, 2006, by the following vote: Yeas 31, Nays
0; and that the Senate adopted H.C.R. No. 48 authorizing certain
corrections in H.B. No. 1 on May 12, 2006, by a viva-voce vote;
passed subject to the provisions of Article III, Section 49a, of the
Constitution of the State of Texas.

______________________________
Secretary of the Senate

I certify that the amounts appropriated in the herein H.B.
No. 1, 3rd Called Session of the 79th Legislature, are within
amounts estimated to be available in the affected fund.

Certified_____________________

______________________________
Comptroller of Public Accounts

APPROVED: __________________

Date

__________________

Governor