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 14, 2009
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 House Bill (HB) 3646, 81st Texas Legislature, 2009.
STATUTORY AUTHORITY: Texas Education Code (TEC), §§42.151(h), 42.152(c), 42.153(b), 42.154(c), 42.156(b), and 42.1541.
BOARD RESPONSE: This item is presented for review and comment.
PREVIOUS BOARD ACTION: Section 105.11 was adopted to be effective September 1, 1996, and amended to be effective December 5, 2004.
FUTURE ACTION EXPECTED: The proposed amendment to 19 TAC §105.11 would be presented to the State Board of Education (SBOE) for first reading and filing authorization at the September 2009 meeting. Second reading and final adoption would then be presented at the November 2009 meeting, requesting an effective date of 20 days after filing as adopted with the Texas Register.
BACKGROUND INFORMATION AND SIGNIFICANT ISSUES: Through 19 TAC §105.11, the SBOE establishes the maximum percentage of Foundation School Program (FSP) special allotments under the TEC, Chapter 42, Subchapter C, that school districts may expend for indirect costs for specific programs. Currently, no more than 15% of FSP special allotments can be expended on indirect costs related to the following programs: compensatory education, gifted and talented education, bilingual education and special language programs, and special education. The rule also limits the maximum indirect cost for career and technical education to no more than 10%, as authorized by the General Appropriations Act, Rider 74, 78th Texas Legislature, 2003. In addition, the rule specifies the expenditure function codes to which the indirect costs may be attributed, as defined in the Texas Education Agency publication, Financial Accountability System Resource Guide.
HB 3646, 81st Texas Legislature, 2009, amended the TEC, §42.152(c), to provide that 45%, rather than 15%, may be expended from FSP special allotments for indirect costs. HB 3646 also added the TEC, §42.1541, directing the SBOE to by rule increase the indirect cost allotments established for special education, compensatory education, bilingual education, and career and technical education programs. HB 3646 directs the SBOE to take action not later than the date that permits the increased indirect cost allotments to apply beginning with the 2009-2010 school year.
The proposed amendment to 19 TAC §105.11 would increase the percent allowances for indirect costs for the Foundation School Program special allotments under the TEC, Chapter 42, Subchapter C, to 45% in accordance with the TEC, §42.152(c), and §42.1541, as directed by the 81st Texas Legislature.
FISCAL IMPACT: The TEA has determined that there are no additional costs to persons or entities required to comply with the proposed 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 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.
ALTERNATIVES: None.
OTHER COMMENTS AND RELATED ISSUES: None.
Respectfully submitted,
Robert Scott
Commissioner of Education
Staff Members Responsible:
Laura Taylor, Associate Commissioner
Accreditation
Rita Chase, Director
Financial Audits
Attachments:
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