Discussion of Proposed Amendment to 19 TAC Chapter 105, Foundation School Program, Subchapter B, Use of State Funds, §105.11, Maximum Allowable Indirect Cost
July 20, 2011
COMMITTEE ON SCHOOL FINANCE/PERMANENT SCHOOL FUND: DISCUSSION
STATE BOARD OF EDUCATION: NO ACTION
SUMMARY: This item presents proposed amendment to 19 TAC Chapter 105, Foundation School Program, Subchapter B, Use of State Funds, §105.11, Maximum Allowable Indirect Cost, for discussion. The proposed amendment would update the rule to reflect a change to the use of special program allotments for indirect or administrative expenses, in accordance with Senate Bill (SB) 1, 82nd Texas Legislature, First Called Session, 2011. The recommended indirect cost rate will be provided to the board prior to the July meeting.
STATUTORY AUTHORITY: Texas Education Code (TEC), §§42.1541, 42.152(c), 42.151(h), 42.153(b), 42.154(a-1) and (c), and 42.156(b).
BOARD RESPONSE: This item is presented for review and comment.
PREVIOUS BOARD ACTION: The State Board of Education (SBOE) adopted 19 TAC §105.11 to be effective September 1, 1996. The rule was amended to be effective December 5, 2004, and December 31, 2009.
FUTURE ACTION EXPECTED: The proposed amendment to 19 TAC §105.11 would be presented to the SBOE for first reading and filing authorization at the September 2011 meeting. Second reading and final adoption would then be presented at the November 2011 meeting with a proposed effective date of 20 days after filing as adopted, if approved by a vote of two-thirds of the members of the SBOE.
BACKGROUND INFORMATION AND SIGNIFICANT ISSUES: In accordance with 19 TAC §105.11, no more than 45% of each school district's Foundation School Program (FSP) special allotments under the TEC, Chapter 42, Subchapter C, may be expended for indirect costs related to compensatory education, gifted and talented education, bilingual education and special language programs, and special education and no more than 40% may be expended for indirect costs related to career and technical education. The rule also specifies the expenditure function codes to which the indirect costs may be attributed, as defined in the Texas Education Agency (TEA) bulletin Financial Accountability System Resource Guide.
SB 1, 82nd Texas Legislature, First Called Session, 2011, added the TEC, §42.1541, directing the SBOE by rule to increase the indirect cost allotments established for special education, compensatory education, bilingual education or special language programs, career and technical education programs. SB 1 directs the SBOE to take action not later than the date that permits the increased indirect cost allotments to apply beginning with the 2011-2012 school year.
The proposed amendment to 19 TAC §105.11 would change the 45% and 40% FSP special allotments for indirect costs under the TEC, Chapter 42, Subchapter C, to a percent still to be determined in accordance with the TEC, §42.152(c), and §42.1541, as authorized by SB 1. The proposed amendment to §105.11 that would recommend the new indirect cost rate will be provided to the board prior to the July meeting.
FISCAL IMPACT: The proposed amendment would allow schools to reallocate their special revenue funds with a different indirect cost rate. The change would not increase or decrease the amount of funds available to the schools.
PUBLIC AND STUDENT BENEFIT: The proposed amendment would implement the statutory change related to the use of state funds for special program allotments.
PROCEDURAL AND REPORTING IMPLICATIONS: None.
LOCALLY MAINTAINED PAPERWORK REQUIREMENTS: None.
PUBLIC COMMENTS: None.
OTHER COMMENTS AND RELATED ISSUES: None.
Commissioner of Education
Staff Members Responsible:
Laura Taylor, Associate Commissioner
Rita Chase, Director
Division of Financial Audits
I. Statutory Citations
II. Text of Proposed Amendment to 19 TAC Chapter 105, Foundation School Program, Subchapter B, Use of State Funds, §105.11, Maximum Allowable Indirect Cost
(to be provided prior to the July 2011 meeting)