Commissioner's Rules
Adopted New 19 TAC Chapter 109, Budgeting, Accounting, and Auditing, Subchapter BB, Commissioner's Rules Concerning Financial Exigency, §109.2001, Financial Exigency
Attachments:
I. Statutory Citation (PDF)
II. Text of Adopted New 19 TAC Chapter 109, Budgeting, Accounting, and Auditing, Subchapter BB, Commissioner's Rules Concerning Financial Exigency, §109.2001, Financial Exigency (PDF)
III. Summary of Public Comments and Agency Responses
SUMMARY:
The rule action presented in this item was filed as adopted with the Texas Register under the commissioner's rulemaking authority. This item adopts new 19 TAC Chapter 109, Budgeting, Accounting, and Auditing, Subchapter BB, Commissioner's Rules Concerning Financial Exigency, §109.2001, Financial Exigency. The adopted new rule implements the requirements of the Texas Education Code (TEC), §44.011, as added by Senate Bill (SB) 8, 82nd Texas Legislature, First Called Session, 2011. The TEC, §44.011, requires that the commissioner of education adopt minimum standards concerning school district financial conditions that must exist for declaration of financial exigency by the board of trustees of the school district.
STATUTORY AUTHORITY:
TEC, §44.011, as added by SB 8, 82nd Texas Legislature, First Called Session, 2011.
EFFECTIVE DATE:
May 17, 2012.
BACKGROUND INFORMATION AND SIGNIFICANT ISSUES:
Previously there were no rules or regulations as to when a school district may declare financial exigency for the school district. New TEC, §44.011, allows the board of trustees of a school district to adopt a resolution declaring financial exigency for the school district. Each time the board adopts a resolution under this section, the board must notify the commissioner of education.
Adopted new 19 TAC Chapter 109, Subchapter BB, §109.2001, defines financial exigency and establishes in rule procedures for consistent implementation of the statutorily required written notification. In accordance with the TEC, §44.011, adopted new 19 TAC §109.2001 sets minimum standards concerning school district financial conditions that must exist for declaration of financial exigency by the board of trustees of the school district. Also in accordance with statute, the adopted new rule prescribes the time and manner in which notice must be given to the commissioner of education.
In conjunction with the addition of minimum standards concerning the declaration of financial exigency, School Financial Integrity Rating System of Texas (FIRST) rules in 19 TAC Chapter 109, Subchapter AA, will be amended in 2012 for the fiscal year 2011-2012 data for financial accountability ratings to be published in summer 2013. A school district declaring financial exigency will not be able to obtain the highest School FIRST rating of Superior Achievement.
In response to public comments, the following changes were made to 19 TAC §109.2001 since the rule was published as proposed.
In subsection (a), the phrase "existing academic programs" was changed to "the district's instructional programs" to clarify that a school district may also take into consideration new programs when determining the district's financial resources.
In subsection (b)(3), the phrase "over one year" was added to define the time period involved.
The criterion described in subsection (b)(4) was broadened to include events other than unforeseen natural disasters.
Subsection (b)(5) was modified to allow for a combination of the conditions listed in the subsection in order to provide flexibility.
Subsection (d) was modified to clarify that an extension of a declaration of financial exigency is subject to the same criteria specified in subsection (b).
In addition, the following technical changes were made at adoption.
Subsection (b)(5) was modified to better phrase the original intent, clarifying that the 15% benchmark applies to all conditions listed in subsection (b)(5).
Subsection (d) was modified to require that the specified notice be signed by both the board president and the school district superintendent for shared responsibility and accountability. The subsection was also modified to remove reference to a specific agency division, as the division responsible for handling notices of exigency declarations may change.
FISCAL IMPACT:
The Texas Education Agency has determined that there are no additional costs to persons or entities required to comply with the rule action. In addition, there is no direct adverse economic impact for small businesses and microbusinesses; therefore, no regulatory flexibility analysis, specified in Texas Government Code, §2006.002, is required.
PUBLIC AND STUDENT BENEFIT:
The new rule establishes procedures for consistent implementation of the statutory requirements related to the declaration of financial exigency.
PROCEDURAL AND REPORTING IMPLICATIONS:
The new rule requires a school district to provide notice to the commissioner of education when the school district declares financial exigency. The notice must be provided within 20 calendar days of adoption by a school district's board of trustees.
LOCALLY MAINTAINED PAPERWORK REQUIREMENTS:
School districts are required to maintain documentation supporting the declaration of financial exigency.
PUBLIC COMMENTS:
The public comment period on the proposal began December 9, 2011, and ended January 9, 2012. Attachment III reflects a summary of public comments received and corresponding agency responses regarding proposed new 19 TAC Chapter 109, Budgeting, Accounting, and Auditing, Subchapter BB, Commissioner's Rules Concerning Financial Exigency, §109.2001, Financial Exigency.
ALTERNATIVES:
None.
OTHER COMMENTS AND RELATED ISSUES:
None.
Staff Members Responsible:
Nora Ibáñez Hancock, Associate Commissioner, Grants and Fiscal Compliance
Sonya Etheridge, Director, Financial Audits
For more information, email rules@tea.state.tx.us.