Summary of Public Comments and Agency Responses Related to New 19 TAC Chapter 109, Budgeting, Accounting, and Auditing, Subchapter AA, Commissioner's Rules Concerning Financial Accountability, Division 2, Financial Solvency, §109.1101, Financial Solvency Review
Comment: The Texas Charter Schools Association (TCSA) commented that the agency should consider, in its statutorily required review of the first-quarter financial data specified in subsection (c)(2)(A), that these data may be skewed because of start-up costs associated with the start of the school year. The TCSA further commented that the agency should give significant weight to the Public Education Information Management System (PEIMS) financial actual data for the past two school years specified in subsection (c)(1)(B).
Agency Response: The agency agrees that significant weight should be given to the PEIMS financial actual data for the past two school years and has maintained language as published as proposed.
Comment: The TCSA commented that it supported the language in subsection (c)(2)(B), which provides for school districts and charter schools to submit comments regarding the financial information to be reviewed by the agency.
Agency Response: The agency agrees with the comment and has maintained language as published as proposed.
Comment: The Arlington Independent School District executive director of finance asked how the agency will treat fund balance in determining a district's financial solvency and, specifically, which fund balance category or categories will be considered in the financial solvency review.
Agency Response: The agency provides the following clarification. Only the unreserved undesignated general fund balance will be used in determining financial solvency, as specified in subsection (d)(3)(C) and in the figure included in subsection (d)(1) of the rule, which describes the methodology to be used in the financial solvency review. Subsection (d)(3)(C) and the figure included in subsection (d)(1) have been modified at adoption to clarify that, effective beginning with fiscal year 2010-2011 data, the term "unreserved" will be replaced by the term "assigned and unassigned" in the financial accountability system.
Comment: The TCSA commented that it had concerns about the analysis of projected revenues and expenditures for the current school year and next two school years described in subsection (d)(2)(B), stating that charter schools may not be able to project with specificity revenues and expenditures for upcoming school years. The TCSA further commented that it encouraged the agency to avoid adopting a reporting template that would require specificity or would hold charter schools accountable for meeting the schools' projections.
Agency Response: The agency disagrees that subsection (d)(2)(B) is problematic and has maintained language as published as proposed. The projections described in subsection (d)(2)(B) are projections that will be developed by the agency and not by charter schools themselves. The projections will be used only as one of several data items to develop a preliminary list, for internal agency use, of school districts or charter schools that warrant further review to determine whether they face potential financial insolvency. School districts and charter schools will not be held accountable for meeting the agency-developed projections described in subsection (d)(2)(B).
Comment: The TCSA commented that subsection (f)(4) should be modified to provide for notification of the affected school district or charter school before assignment of an Accredited-Warned status and to provide for the opportunity for the district or charter school to revise its financial plan.
Agency Response: The agency disagrees with the comment and has maintained language as published as proposed. Subsection (e)(4) already provides for notification of the affected school district or charter school and for the opportunity to modify a financial plan.
Comment: The TCSA commented that subsection (g) conflicts with the Texas Education Code (TEC), §39.151, and should be modified to allow for appeals under 19 TAC §109.1002.
Agency Response: The agency agrees with the comment in part and has modified subsection (g) to remove the prohibition on appealing accreditation status decisions.
The agency disagrees that the subsection (g) provision prohibiting the appeal of financial plan approval decisions conflicts with the TEC, §39.151, and has maintained that provision as published as proposed.
The agency clarifies that the appeal process specified in §109.1002 of this title (relating to Financial Accountability Ratings) would not apply to agency decisions provided for in §109.1101 (relating to Financial Solvency Review), as §109.1002 provides only for appeals of preliminary financial accountability ratings. Nothing in §109.1101 prevents a school district or charter school from appealing its preliminary financial accountability rating under §109.1002.
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