1-1                                   AN ACT
 1-2     relating to the operation and funding of certain group coverage
 1-3     programs for certain school and educational employees and their
 1-4     dependents.
 1-5           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-6                  ARTICLE 1.  GROUP HEALTH COVERAGE PROGRAM
 1-7           SECTION 1.01.  Subchapter E, Chapter 3, Insurance Code, is
 1-8     amended by adding Article 3.50-7 to read as follows:
 1-9           Art. 3.50-7.  TEXAS SCHOOL EMPLOYEES UNIFORM GROUP HEALTH
1-10     COVERAGE ACT
1-11           Sec. 1.  SHORT TITLE. This article may be cited as the Texas
1-12     School Employees Uniform Group Health Coverage Act.
1-13           Sec. 2.  DEFINITIONS. In this article:
1-14                 (1)  "Administering firm" means any entity designated
1-15     by the trustee to administer any coverages, services, benefits, or
1-16     requirements under this article and the trustee's rules adopted
1-17     under this article.
1-18                 (2)  "Charter school"  means an open-enrollment charter
1-19     school established under Subchapter D, Chapter 12, Education Code.
1-20                 (3)  "Dependent" means:
1-21                       (A)  a spouse of a full-time employee or
1-22     part-time employee;
1-23                       (B)  a full-time or part-time employee's
1-24     unmarried child who is younger than 25 years of age, including:
 2-1                             (i)  an adopted child;
 2-2                             (ii)  a foster child, stepchild, or other
 2-3     child who is in a regular parent-child relationship; and
 2-4                             (iii)  a recognized natural child;
 2-5                       (C)  a full-time or part-time employee's
 2-6     recognized natural child, adopted child, foster child, stepchild,
 2-7     or other child who is in a regular parent-child relationship and
 2-8     who lives with or whose care is provided by the employee or the
 2-9     surviving spouse on a regular basis, regardless of the child's age,
2-10     if the child is mentally retarded or physically incapacitated to
2-11     such an extent as to be dependent on the employee or surviving
2-12     spouse for care or support, as determined by the trustee; and
2-13                       (D)  notwithstanding any other provision of this
2-14     code, any other dependent of a full-time or part-time employee
2-15     specified by rules adopted by the trustee.
2-16                 (4)  "Employee" means a participating member of the
2-17     Teacher Retirement System of Texas who is employed by a
2-18     participating entity and who  is not receiving coverage from a
2-19     uniform group insurance program under the Texas Employees Uniform
2-20     Group Insurance Benefits Act (Article 3.50-2, Vernon's Texas
2-21     Insurance Code) or the Texas State College and University Employees
2-22     Uniform Insurance Benefits Act (Article 3.50-3, Vernon's Texas
2-23     Insurance Code) or from the Texas Public School Retired Employees
2-24     Group Insurance Program established under Article 3.50-4 of this
2-25     code. The term does not include an individual performing personal
2-26     services as an independent contractor.
2-27                 (5)  "Health coverage plan" means any group policy or
 3-1     contract, hospital service agreement, health maintenance
 3-2     organization agreement, preferred provider arrangement, or any
 3-3     similar group arrangement or any combination of those policies,
 3-4     contracts, agreements, or arrangements that provides for, pays for,
 3-5     or reimburses expenses for health care services.
 3-6                 (6)  "Participating entity" means an entity
 3-7     participating in the uniform group coverage program established
 3-8     under this article.  The term includes:
 3-9                       (A)  a school district;
3-10                       (B)  another educational district whose employees
3-11     are members of the Teacher Retirement System of Texas;
3-12                       (C)  a regional education service center; and
3-13                       (D)  a charter school that meets the requirements
3-14     of Section 6 of this article.
3-15                 (7)  "Program" means the uniform group coverage program
3-16     established under this article.
3-17                 (8)  "Regional education service center" means a
3-18     regional education service center established under Chapter 8,
3-19     Education Code.
3-20                 (9)  "Trustee" means the Teacher Retirement System of
3-21     Texas.
3-22           Sec. 3.  ADMINISTRATION; POWERS AND DUTIES OF TRUSTEE. (a)
3-23     The Teacher Retirement System of Texas, as trustee, shall implement
3-24     and administer the uniform group coverage program described by this
3-25     article.
3-26           (b)  The trustee may hire and compensate employees as
3-27     necessary to implement the program.  The trustee may contract with
 4-1     an independent and experienced group insurance consultant or
 4-2     actuary for advice and counsel in implementing and administering
 4-3     the program.
 4-4           (c)  The trustee may adopt rules relating to the program as
 4-5     considered necessary by the trustee.
 4-6           (d)  In contracting for group health coverage under this
 4-7     article, competitive bidding shall be required under rules adopted
 4-8     by the trustee.  The trustee is not required to select the lowest
 4-9     bid but may consider also ability to service contracts, past
4-10     experiences, financial stability, and other relevant criteria.  If
4-11     the trustee awards a contract to an entity whose bid deviates from
4-12     that advertised, the deviation shall be recorded and the reasons
4-13     for the deviation shall be fully justified in the minutes of the
4-14     next meeting of the trustee.
4-15           (e)  The trustee may enter into interagency contracts with
4-16     any agency of the state, including the Employees Retirement System
4-17     of Texas and the Texas Department of Insurance, for the purpose of
4-18     assistance in implementing the program.
4-19           (f)  The trustee may adopt rules to administer the program,
4-20     including rules relating to adjudication of claims and expelling
4-21     participants from the program for cause.
4-22           Sec. 4.  GROUP COVERAGES. (a)  The trustee by rule shall
4-23     establish plans of group coverages for employees participating in
4-24     the program and their dependents.  The plans must include at least
4-25     two tiers of group coverage, with coverage at different levels in
4-26     each tier, ranging from the catastrophic care coverage plan to the
4-27     primary care coverage plan.  Each tier must contain a health
 5-1     coverage plan.
 5-2           (b)  The trustee by rule shall define the requirements of
 5-3     each coverage plan and tier of coverage.  The coverage provided
 5-4     under the catastrophic care coverage plan shall be prescribed by
 5-5     the trustee by rule and must provide coverage at least as extensive
 5-6     as the coverage provided under the TRS-Care 2 plan operated under
 5-7     Article 3.50-4 of this code.  The coverage provided under the
 5-8     primary care coverage plan must be comparable in scope and, to the
 5-9     greatest extent possible, in cost to the coverage provided under
5-10     the Texas Employees Uniform Group Insurance Benefits Act (Article
5-11     3.50-2, Vernon's Texas Insurance Code).
5-12           (c)  Comparable coverage plans of each tier of coverage
5-13     established must be offered to employees of all participating
5-14     entities.
5-15           (d)  During the initial period of eligibility, coverage
5-16     provided under the program may not be made subject to a preexisting
5-17     condition limitation.
5-18           (e)  The trustee may offer optional coverages to employees
5-19     participating in the program.  The trustee by rule may define the
5-20     types of optional coverages offered under this subsection.
5-21           Sec. 5.  PARTICIPATION IN PROGRAM BY SCHOOL DISTRICTS, OTHER
5-22     EDUCATIONAL DISTRICTS, AND REGIONAL EDUCATION SERVICE CENTERS. (a)
5-23     Effective September 1, 2002, each school district with 500 or fewer
5-24     employees and each regional education service center is required to
5-25     participate in the program.
5-26           (a-1)  Effective September 1, 2002, a school district that,
5-27     on January 1, 2001, had more than 500 employees but not more than
 6-1     1,000 employees may elect to participate in the program.  A school
 6-2     district that elects to participate in the program under this
 6-3     subsection must notify the trustee of the election, in the manner
 6-4     prescribed by the trustee, not later than September 30, 2001.  This
 6-5     subsection expires January 1, 2002.
 6-6           (b)  Effective September 1, 2005, a school district with more
 6-7     than 500 employees may elect to participate in the program.  A
 6-8     school district that elects to participate under this subsection
 6-9     shall apply for participation in the manner prescribed by the
6-10     trustee by rule.
6-11           (b-1)  Notwithstanding Subsection (b) of this section, a
6-12     school district with more than 500 employees may elect to
6-13     participate in the program before September 1, 2005, if the trustee
6-14     determines that participation by districts in that category would
6-15     be administratively feasible and cost-effective.  This subsection
6-16     expires September 1, 2005.
6-17           (c)  In determining the number of employees of a school
6-18     district for purposes of Subsections (a) and (b) of this section,
6-19     school districts that, on January 1, 2001, were members of a risk
6-20     pool established under the authority of Chapter 172, Local
6-21     Government Code, as provided by Section 22.004, Education Code, may
6-22     elect to be treated as a single unit.  A school district shall
6-23     elect whether to be considered as a member of  a risk pool under
6-24     this section by notifying the trustee not later than September 1,
6-25     2001.
6-26           (d)  A risk pool in existence on January 1, 2001, that, as of
6-27     that date, provided group health coverage to 500 or fewer school
 7-1     district employees may elect to participate in the program.
 7-2           (e)  A school district with 500 or fewer employees that is a
 7-3     member of a risk pool described by Subsection (c) of this section
 7-4     that provides  group health coverage to more than 500 school
 7-5     district employees must elect, not later than September 1, 2001,
 7-6     whether to be treated as a school district with 500 or fewer
 7-7     employees or as part of a unit with more than 500 employees.  The
 7-8     school district must notify the trustee of the election, in the
 7-9     manner prescribed by the trustee, not later than September 1, 2001.
7-10           (f)  For purposes of this section, participation in the
7-11     program by school districts covered by a risk pool is limited to
7-12     school districts covered by the risk pool as of January 1, 2001.
7-13           (g)  Notwithstanding Subsection (a) of this section, a school
7-14     district otherwise subject to Subsection (a) of this section that,
7-15     on January 1, 2001, was individually self-funded for the provision
7-16     of health coverage to its employees may elect to not participate in
7-17     the program.
7-18           (h)  Notwithstanding Subsection (a) of this section, a school
7-19     district otherwise subject to Subsection (a) of this section that
7-20     is a party to a contract for the provision of insurance coverage to
7-21     the employees of the district that is in effect on September 1,
7-22     2002, is not required to participate in the program until the
7-23     expiration of the contract period.  A school district subject to
7-24     this subsection shall notify the trustee in the manner prescribed
7-25     by the trustee.  This subsection expires March 1, 2004.
7-26           (i)  An educational district described by Section 2(6)(B) of
7-27     this article that, on January 1, 2001, has 500 or fewer employees
 8-1     may elect not to participate in the program.
 8-2           Sec. 6.  PARTICIPATION BY CHARTER SCHOOLS; ELIGIBILITY. (a)
 8-3     A charter school is eligible to participate in the program if the
 8-4     school agrees:
 8-5                 (1)  that all records of the school relating to
 8-6     participation in the program are open to inspection by the trustee,
 8-7     the administering firm, the commissioner of education, or a
 8-8     designee of any of those entities; and
 8-9                 (2)  to have its accounts relating to participation in
8-10     the program annually audited by a certified public accountant at
8-11     the school's expense.
8-12           (b)  A charter school must notify the trustee of the school's
8-13     intent to participate in the program in the manner and within the
8-14     time required by trustee rule.
8-15           Sec. 7.  PARTICIPATION BY EMPLOYEE. (a)  In this section,
8-16     "full-time employee" and "part-time employee" have the meanings
8-17     assigned by trustee rules.
8-18           (b)  Except as provided by Subsection (d) of this section,
8-19     participation in the program is limited to  employees of
8-20     participating entities who are full-time employees and to part-time
8-21     employees who are participating members in the Teacher Retirement
8-22     System of Texas.  Such an employee who applies for coverage during
8-23     an open enrollment period prescribed by the trustee is
8-24     automatically covered by the catastrophic care coverage plan
8-25     unless the employee:
8-26                 (1)  specifically waives coverage under this article;
8-27                 (2)  selects a higher tier coverage plan; or
 9-1                 (3)  is expelled from the program.
 9-2           (c)  A participating employee may select coverage in any
 9-3     coverage plan offered by the trustee.  The employee is not required
 9-4     to continue participation in the coverage plan initially selected
 9-5     and may select a higher or lower tier coverage plan than the plan
 9-6     initially selected by the employee in the manner provided by
 9-7     trustee rule.  If the combined contributions received from the
 9-8     state and the employing participating entity under Section 9 of
 9-9     this article exceed the cost of a coverage plan selected by the
9-10     employee, the employee may use the excess amount of contributions
9-11     to obtain coverage under a higher tier coverage plan, or to pay all
9-12     or part of the cost of coverage for the employee's dependents.  A
9-13     married couple, both of whom are eligible for coverage under the
9-14     program, may pool the amount of contributions to which the couple
9-15     are entitled under the program to obtain coverage for themselves
9-16     and dependent coverage.
9-17           (d)  A part-time employee of a participating entity who is
9-18     not a participating member in the Teacher Retirement System of
9-19     Texas is eligible to participate in the program only if the
9-20     employee pays all of the premiums and other costs associated with
9-21     the health coverage plan selected by the employee.
9-22           (e)  Notwithstanding Subsection (d) of this section, a
9-23     participating entity may pay any portion of what otherwise would be
9-24     the employee share of premiums and other costs associated with the
9-25     coverage selected by the employee.
9-26           Sec. 8.  FUND. (a)  The Texas school employees uniform group
9-27     coverage trust fund is established as a trust fund with the
 10-1    comptroller.
 10-2          (b)  The fund is composed of:
 10-3                (1)  all contributions made to the fund under this
 10-4    article from employees, participating entities, and the state;
 10-5                (2)  contributions made by employees or participating
 10-6    entities for optional coverages;
 10-7                (3)  investment income;
 10-8                (4)  any additional amounts appropriated by the
 10-9    legislature for contingency reserves, administrative expenses, or
10-10    other expenses; and
10-11                (5)  any other money required or authorized to be paid
10-12    into the fund.
10-13          (c)  The trustee may use amounts in the fund only to provide
10-14    group coverages under this article and to pay the expenses of
10-15    administering the program.
10-16          (d)  The trustee may invest assets of the fund in the manner
10-17    provided by Section 67(a)(3), Article XVI, Texas Constitution.
10-18          Sec. 9.  PAYMENT OF CONTRIBUTIONS FOR PROGRAM. (a)  The state
10-19    shall assist employees of participating school districts and
10-20    charter schools in the purchase of group health coverage under this
10-21    article by providing for each covered employee the amount of $900
10-22    each state fiscal year or a greater amount as provided by the
10-23    General Appropriations Act.  The state contribution shall be
10-24    distributed through the school finance formulas under Chapters 41
10-25    and 42, Education Code, and used by school districts and charter
10-26    schools as provided by Sections 42.2514 and 42.260, Education Code.
10-27          (b)  The state shall assist employees of participating
 11-1    regional education service centers and educational districts
 11-2    described by Section 2(6)(B) of this article in the purchase of
 11-3    group health coverage under this article by providing to the
 11-4    employing service center or educational district, for each covered
 11-5    employee, the amount of $900 each state fiscal year or a greater
 11-6    amount as provided by the General Appropriations Act.
 11-7          (c)  A participating entity shall make contributions for the
 11-8    program as provided by Article 3.50-9 of this code.
 11-9          (d)  An employee covered by the program shall pay that
11-10    portion of the cost of coverage selected by the employee that
11-11    exceeds the amount of the state contribution under Subsection (a)
11-12    or (b) of this section and the participating entity contribution
11-13    under Subsection (c) of this section.  The employee may pay the
11-14    employee's contribution under this subsection from the amount
11-15    distributed to the employee under Article 3.50-8 of this code.
11-16          (e)  Notwithstanding Subsection (d) of this section, a
11-17    participating entity may pay any portion of what otherwise would be
11-18    the employee share of premiums and other costs associated with the
11-19    coverage selected by the employee.
11-20          SECTION 1.02.  Effective September 1, 2002, Subchapter E,
11-21    Chapter 3, Insurance Code, is amended by adding Article 3.50-8 to
11-22    read as follows:
11-23          Art. 3.50-8.  ACTIVE EMPLOYEE HEALTH COVERAGE OR COMPENSATION
11-24    SUPPLEMENTATION
11-25          Sec. 1.  DEFINITIONS. In this article:
11-26                (1)  "Cafeteria plan" means a plan as defined and
11-27    authorized by Section 125, Internal Revenue Code of 1986, and its
 12-1    subsequent amendments.
 12-2                (2)  "Employee" means a participating member of the
 12-3    Teacher Retirement System of Texas who:
 12-4                      (A)  is employed by a school district, other
 12-5    educational district whose employees are members of the Teacher
 12-6    Retirement System of Texas, participating charter school, or
 12-7    regional education service center; and
 12-8                      (B)  is not a retiree covered under the Texas
 12-9    Public School Retired Employees Group Insurance Program established
12-10    under Article 3.50-4 of this code.
12-11                (3)  "Participating charter school" means an
12-12    open-enrollment charter school established under Subchapter D,
12-13    Chapter 12, Education Code, that participates in the uniform group
12-14    coverage program established under Article 3.50-7 of this code.
12-15                (4)  "Regional education service center" means a
12-16    regional education service center established under Chapter 8,
12-17    Education Code.
12-18                (5)  "Trustee" means the Teacher Retirement System of
12-19    Texas.
12-20          Sec. 2.  ACTIVE EMPLOYEE HEALTH COVERAGE OR COMPENSATION
12-21    SUPPLEMENTATION. (a)  Each year, the trustee shall deliver to each
12-22    school district, including a school district that is ineligible for
12-23    state aid under Chapter 42, Education Code, each other educational
12-24    district that is a member of the Teacher Retirement System of
12-25    Texas, each participating charter school, and each regional
12-26    education service center state funds in an amount, as determined by
12-27    the trustee, equal to the product of the number of active employees
 13-1    employed by the district, school, or service center multiplied by
 13-2    $1,000 or a greater amount as provided by the General
 13-3    Appropriations Act for purposes of this article.
 13-4          (b)  All funds received by a school district, other
 13-5    educational district, participating charter school, or regional
 13-6    education service center under this article are held in trust for
 13-7    the benefit of the active employees on whose behalf the district,
 13-8    school, or service center received the funds.
 13-9          (c)  The trustee shall distribute funds under this article in
13-10    equal monthly installments.  The trustee is entitled to recover
13-11    from a school district, other educational district, participating
13-12    charter school, or regional education service center any amount
13-13    distributed under this article to which the district, school, or
13-14    service center was not entitled.
13-15          (d)  A determination by the trustee under this section is
13-16    final and may not be appealed.
13-17          Sec. 3.  EMPLOYEE ELECTION. (a)  If an active employee is
13-18    covered by a cafeteria plan of a school district, other educational
13-19    district, participating charter school, or regional education
13-20    service center, the state contribution under this article shall be
13-21    deposited in the cafeteria plan, and the employee may elect among
13-22    the options provided by the cafeteria plan.  A cafeteria plan
13-23    receiving state contributions under this article may include a
13-24    medical savings account option and must include, at a minimum, the
13-25    following options:
13-26                (1)  a health care reimbursement account;
13-27                (2)  a benefit or coverage other than that provided
 14-1    under Article 3.50-7 of this code, or any employee coverage or
 14-2    dependent coverage available under Article 3.50-7 of this code but
 14-3    not otherwise fully funded by the state or the employer
 14-4    contributions, any of which must be a "qualified benefit" under
 14-5    Section 125, Internal Revenue Code of 1986, and its subsequent
 14-6    amendments;
 14-7                (3)  an option for the employee to receive the state
 14-8    contribution as supplemental compensation; or
 14-9                (4)  an option to divide the state contribution among
14-10    two or more of the other options provided under this subsection.
14-11          (b)  If an active employee is not covered by a cafeteria plan
14-12    of a school district, other educational district, participating
14-13    charter school, or regional education service center, the state
14-14    contribution under this article shall be paid to the active
14-15    employee as supplemental compensation.
14-16          (c)  Supplemental compensation under this section must be in
14-17    addition to the rate of compensation that:
14-18                (1)  the school district, other educational district,
14-19    participating charter school, or regional education service center
14-20    paid the employee in the preceding school year; or
14-21                (2)  the district, school, or service center would have
14-22    paid the employee in the preceding school year if the employee had
14-23    been employed by the district, school, or service center in the
14-24    same capacity in the preceding school year.
14-25          (d)  For each state fiscal year, an election under this
14-26    section must be made before the later of:
14-27                (1)  August 1 of the preceding state fiscal year; or
 15-1                (2)  the 31st day after the date the employee is hired.
 15-2          (e)  The trustee shall prescribe and distribute to each
 15-3    school district, other educational district, participating charter
 15-4    school, and regional education service center:
 15-5                (1)  a model explanation written in English and Spanish
 15-6    of the options active employees may elect under this section and
 15-7    the effect of electing each option; and
 15-8                (2)  an election form to be completed by active
 15-9    employees.
15-10          (f)  Each state fiscal year, a school district, other
15-11    educational district, participating charter school, or regional
15-12    education service center shall prepare and distribute to each
15-13    active employee a written explanation in English and Spanish, as
15-14    appropriate, of the options the employee may elect under this
15-15    section.  The explanation must be based on the model explanation
15-16    prepared by the trustee under Subsection (e) of this section and
15-17    must reflect all available health coverage options available to the
15-18    employee.  The explanation must be distributed to an employee
15-19    before the later of:
15-20                (1)  July 1 of the preceding state fiscal year; or
15-21                (2)  the fifth day after the date the employee is
15-22    hired.
15-23          (g)  The written explanation under Subsection (f) of this
15-24    section must be accompanied by a copy of the election form
15-25    prescribed under Subsection (e)(2) of this section.
15-26          (h)  Any unencumbered funds that are returned to the school
15-27    district from accounts established under Subsection (a) of this
 16-1    section may be used only to provide employee compensation,
 16-2    benefits, or both.
 16-3          Sec. 4.  RULES; CONTRACT AUTHORITY. (a)  The trustee may
 16-4    adopt rules to implement this article.
 16-5          (b)  The trustee may enter into interagency contracts with
 16-6    any agency of this state for the purpose of assistance in
 16-7    implementing this article.
 16-8          Sec. 5.  MEDICAL SAVINGS ACCOUNT. (a)  In this section,
 16-9    "qualified health care expense" means an expense paid by an
16-10    employee for medical care, as defined by Section 213(d), Internal
16-11    Revenue Code of 1986, and its subsequent amendments, for the
16-12    employee or the employee's dependents, as defined by Section 152,
16-13    Internal Revenue Code of 1986, and its subsequent amendments.
16-14          (b)  The trustee, by rule, shall specify the requirements for
16-15    a medical savings account established under this article.
16-16          (c)  The trustee shall request in writing a ruling or opinion
16-17    from the Internal Revenue Service as to whether the medical savings
16-18    accounts established under this article and the state rules
16-19    governing those accounts qualify the accounts for appropriate
16-20    federal tax exemptions.  Based on the response of the Internal
16-21    Revenue Service, the trustee shall:
16-22                (1)  modify the rules, plans, and procedures adopted
16-23    under this section as necessary to ensure the qualification of
16-24    those accounts for appropriate federal tax exemptions; and
16-25                (2)  certify the information regarding federal tax
16-26    qualifications to the comptroller.
16-27          (d)  An employee who elects under Section 3(a) of this
 17-1    article to have state funds distributed under this article placed
 17-2    in a medical savings account may use the money in that account only
 17-3    for a qualified health care expense.
 17-4          SECTION 1.03. Subchapter E, Chapter 3, Insurance Code, is
 17-5    amended by adding Article 3.50-9 to read as follows:
 17-6          Art. 3.50-9.  EMPLOYER EXPENDITURES FOR SCHOOL EMPLOYEE
 17-7    HEALTH COVERAGE PLANS
 17-8          Sec. 1.  DEFINITIONS.  In this article:
 17-9                (1)  "Participating employee" means an employee of a
17-10    school district, other educational district whose employees are
17-11    members of the Teacher Retirement System of Texas, participating
17-12    charter school, or regional education service center who
17-13    participates in a group health coverage plan provided by or through
17-14    the district, school, or service center.
17-15                (2)  "Participating charter school" means an
17-16    open-enrollment charter school established under Subchapter D,
17-17    Chapter 12, Education Code, that participates in the uniform group
17-18    coverage program established under Article 3.50-7 of this code.
17-19                (3)  "Regional education service center" means a
17-20    regional education service center established under Chapter 8,
17-21    Education Code.
17-22          Sec. 2.  MAINTENANCE OF EFFORT FOR 2000-2001 SCHOOL YEAR.
17-23    (a)  Subject to Section 3 of this article, and except as provided
17-24    by Section 5 of this article, a school district, other educational
17-25    district whose employees are members of the Teacher Retirement
17-26    System of Texas, participating charter school, or regional
17-27    education service center that, for the 2000-2001 school year, paid
 18-1    amounts to share with employees the cost of coverage under a group
 18-2    health coverage plan shall, for each fiscal year, use to provide
 18-3    health coverage an amount for each participating employee at least
 18-4    equal to the amount computed as provided by this section.
 18-5          (b)  The school district, other educational district,
 18-6    participating charter school, or regional education service center
 18-7    shall divide the amount that the district, school, or service
 18-8    center paid during the 2000-2001 school year for the prior group
 18-9    health coverage plan by the total number of full-time employees of
18-10    the district, school, or service center in the 2000-2001 school
18-11    year and multiply the result by the number of full-time employees
18-12    of the district, school, or service center in the fiscal year for
18-13    which the computation is made.  If, for the 2000-2001 school year,
18-14    a school district, other educational district, participating
18-15    charter school, or regional education service center provided group
18-16    health coverage to its employees through a self-funded insurance
18-17    plan, the amount the district, school, or service center paid
18-18    during that school year for the plan includes only the amount of
18-19    regular contributions made by the district, school, or service
18-20    center to the plan.
18-21          (c)  Amounts used as required by this section shall be
18-22    deposited, as applicable, in:
18-23                (1)  the Texas school employees uniform group coverage
18-24    trust fund established under Section 8, Article 3.50-7, of this
18-25    code; or
18-26                (2)  another fund established for the payment of
18-27    employee health coverage that meets requirements for those funds
 19-1    prescribed by the Texas Education Agency.
 19-2          Sec. 3.  MINIMUM EFFORT. (a)  A school district, other
 19-3    educational district, participating charter school, or regional
 19-4    education service center shall, for each fiscal year, use to
 19-5    provide health coverage an amount equal to the number of
 19-6    participating employees of the district, school, or service center
 19-7    multiplied by $1,800.  Amounts used as required by this section
 19-8    shall be deposited in a fund described by Section 2(c) of this
 19-9    article.
19-10          (b)  To comply with this section, a school district or
19-11    participating charter school may use state funds received under
19-12    Chapter 42, Education Code, other than funds that may be used under
19-13    that chapter only for a specific purpose, except that amounts a
19-14    district or school is required to use to pay contributions under a
19-15    group health coverage plan for district or school employees under
19-16    Section 42.2514 or 42.260, Education Code, other than amounts
19-17    described by Section 42.260(c)(2)(B), are not used in computing
19-18    whether the district or school complies with this section.
19-19          Sec. 4.  STATE ASSISTANCE FOR MEETING MINIMUM EFFORT.
19-20    (a)  For any state fiscal year beginning with the fiscal year
19-21    ending August 31, 2003, except as provided by Subsection (b) of
19-22    this section, a school district that imposes maintenance and
19-23    operations taxes at the maximum rate permitted under Section
19-24    45.003(d), Education Code, is entitled to state funds in an amount
19-25    equal to the difference, if any, between:
19-26                (1)  an amount equal to the number of participating
19-27    employees of the district multiplied by $1,800; and
 20-1                (2)  if the following amount is less than the amount
 20-2    specified by Subdivision (1) of this subsection, the sum of:
 20-3                      (A)  the amount the district is required to use
 20-4    to provide health coverage under Section 2 of this article for that
 20-5    fiscal year; and
 20-6                      (B)  the difference, if any, between:
 20-7                            (i)  the amount determined under Section
 20-8    42.2514(b)(2), Education Code; and
 20-9                            (ii)  the amount determined under Section
20-10    42.2514(b)(1), Education Code, if that amount is less than the
20-11    amount specified by Subparagraph (i) of this paragraph.
20-12          (a-1)  For the state fiscal year beginning September 1, 2002,
20-13    a school district or participating charter school is entitled to
20-14    state funds in an amount equal to the difference, if any, between:
20-15                (1)  an amount equal to the number of participating
20-16    employees of the district or school multiplied by $1,800; and
20-17                (2)  if the following amount is less than the amount
20-18    specified by Subdivision (1) of this subsection, the sum of:
20-19                      (A)  the amount the district or school is
20-20    required to use to provide health coverage under Section 2 of this
20-21    article for that fiscal year; and
20-22                      (B)  the difference, if any, between:
20-23                            (i)  the amount determined under Section
20-24    42.2514(b)(2), Education Code; and
20-25                            (ii)  the amount determined under Section
20-26    42.2514(b)(1), Education Code, if that amount is less than the
20-27    amount specified by Subparagraph (i) of this paragraph.
 21-1          (a-2)  For the state fiscal year beginning September 1, 2003,
 21-2    a school district or participating charter school is entitled to
 21-3    state funds in an amount equal to the difference, if any, between:
 21-4                (1)  an amount equal to the number of participating
 21-5    employees of the district or school multiplied by $1,500; and
 21-6                (2)  if the following amount is less than the amount
 21-7    specified by Subdivision (1) of this subsection, the sum of:
 21-8                      (A)  the amount the district or school is
 21-9    required to use to provide health coverage under Section 2 of this
21-10    article for that fiscal year; and
21-11                      (B)  the difference, if any, between:
21-12                            (i)  the amount determined under Section
21-13    42.2514(b)(2), Education Code; and
21-14                            (ii)  the amount determined under Section
21-15    42.2514(b)(1), Education Code, if that amount is less than the
21-16    amount specified by Subparagraph (i) of this paragraph.
21-17          (a-3)  For the state fiscal year beginning September 1, 2004,
21-18    a school district or participating charter school is entitled to
21-19    state funds in an amount equal to the difference, if any, between:
21-20                (1)  an amount equal to the number of participating
21-21    employees of the district or school multiplied by $1,200; and
21-22                (2)  if the following amount is less than the amount
21-23    specified by Subdivision (1) of this subsection, the sum of:
21-24                      (A)  the amount the district or school is
21-25    required to use to provide health coverage under Section 2 of this
21-26    article for that fiscal year; and
21-27                      (B)  the difference, if any, between:
 22-1                            (i)  the amount determined under Section
 22-2    42.2514(b)(2), Education Code; and
 22-3                            (ii)  the amount determined under Section
 22-4    42.2514(b)(1), Education Code, if that amount is less than the
 22-5    amount specified by Subparagraph (i) of this paragraph.
 22-6          (a-4)  For the state fiscal year beginning September 1, 2005,
 22-7    a school district or participating charter school is entitled to
 22-8    state funds in an amount equal to the difference, if any, between:
 22-9                (1)  an amount equal to the number of participating
22-10    employees of the district or school multiplied by $900; and
22-11                (2)  if the following amount is less than the amount
22-12    specified by Subdivision (1) of this subsection, the sum of:
22-13                      (A)  the amount the district or school is
22-14    required to use to provide health coverage under Section 2 of this
22-15    article for that fiscal year; and
22-16                      (B)  the difference, if any, between:
22-17                            (i)  the amount determined under Section
22-18    42.2514(b)(2), Education Code; and
22-19                            (ii)  the amount determined under Section
22-20    42.2514(b)(1), Education Code, if that amount is less than the
22-21    amount specified by Subparagraph (i) of this paragraph.
22-22          (a-5)  For the state fiscal year beginning September 1, 2006,
22-23    a school district or participating charter school is entitled to
22-24    state funds in an amount equal to the difference, if any, between:
22-25                (1)  an amount equal to the number of participating
22-26    employees of the district or school multiplied by $600; and
22-27                (2)  if the following amount is less than the amount
 23-1    specified by Subdivision (1) of this subsection, the sum of:
 23-2                      (A)  the amount the district or school is
 23-3    required to use to provide health coverage under Section 2 of this
 23-4    article for that fiscal year; and
 23-5                      (B)  the difference, if any, between:
 23-6                            (i)  the amount determined under Section
 23-7    42.2514(b)(2), Education Code; and
 23-8                            (ii)  the amount determined under Section
 23-9    42.2514(b)(1), Education Code, if that amount is less than the
23-10    amount specified by Subparagraph (i) of this paragraph.
23-11          (a-6)  For the state fiscal year beginning September 1, 2007,
23-12    a school district or participating charter school is entitled to
23-13    state funds in an amount equal to the difference, if any, between:
23-14                (1)  an amount equal to the number of participating
23-15    employees of the district or school multiplied by $300; and
23-16                (2)  if the following amount is less than the amount
23-17    specified by Subdivision (1) of this subsection, the sum of:
23-18                      (A)  the amount the district or school is
23-19    required to use to provide health coverage under Section 2 of this
23-20    article for that fiscal year; and
23-21                      (B)  the difference, if any, between:
23-22                            (i)  the amount determined under Section
23-23    42.2514(b)(2), Education Code; and
23-24                            (ii)  the amount determined under Section
23-25    42.2514(b)(1), Education Code, if that amount is less than the
23-26    amount specified by Subparagraph (i) of this paragraph.
23-27          (a-7)  A school district that receives state funds under
 24-1    Subsection (a) of this section for a state fiscal year is not
 24-2    entitled to state funds under Subsection (a-1), (a-2), (a-3),
 24-3    (a-4), (a-5), or (a-6) of this section.
 24-4          (a-8)  Subsections (a-1)-(a-7) of this section and this
 24-5    subsection expire September 1, 2008.
 24-6          (b)  For any state fiscal year, the amount of state funds a
 24-7    school district receives under Subsection (a) of this section may
 24-8    not exceed the amount of state funds the district received under
 24-9    this section for the year preceding the year in which the district
24-10    first receives funds under Subsection (a) of this section.
24-11          (c)  The Teacher Retirement System of Texas shall distribute
24-12    state funds to school districts and participating charter schools
24-13    under this section in equal monthly installments.  State funds
24-14    received under this section shall be deposited in a fund described
24-15    by Section 2(c) of this article.  The Texas Education Agency shall
24-16    provide to the retirement system information necessary for the
24-17    retirement system to determine a district's or school's eligibility
24-18    for state funds under this section.  The trustee may enter into
24-19    interagency contracts with any agency of this state for the purpose
24-20    of assistance in distributing funds under this article.
24-21          (d)  The Teacher Retirement System of Texas is entitled to
24-22    recover from a school district or participating charter school any
24-23    amount distributed under this section to which the district or
24-24    school was not entitled.  A determination by the retirement system
24-25    under this section is final and may not be appealed.
24-26          Sec. 5.  USE OF EXCESS MAINTENANCE OF EFFORT. If the amount a
24-27    school district, other educational district, or participating
 25-1    charter school is required to use to provide health coverage under
 25-2    Section 2 of this article for a fiscal year exceeds the amount
 25-3    necessary for the district or school to comply with Section 3 of
 25-4    this article for that year, the district or school may use the
 25-5    excess only to provide employee compensation at a rate greater than
 25-6    the rate of compensation that the district or school paid an
 25-7    employee in the 2000-2001 school year, benefits, or both.
 25-8          Sec. 6.  ADDITIONAL SUPPORT FOR CERTAIN SCHOOL DISTRICTS. (a)
 25-9    This section applies only to a school district that:
25-10                (1)  pays taxes under Section 3111(a), Internal Revenue
25-11    Code of 1986, and its subsequent amendments, for employees covered
25-12    by the social security retirement program; and
25-13                (2)  covered all employees under that program before
25-14    January 1, 2001.
25-15          (b)  The state shall provide additional support for a school
25-16    district to which this section applies in an amount computed by
25-17    multiplying the total amount of supplemental compensation received
25-18    by district employees under Article 3.50-8 of this code by 0.062.
25-19          (c)  The trustee may adopt rules as necessary to implement
25-20    this section.
25-21          (d)  This section expires September 1, 2008.
25-22          SECTION 1.04. Subchapter C, Chapter 62, Health and Safety
25-23    Code, is amended by adding Section 62.1015 to read as follows:
25-24          Sec. 62.1015.  ELIGIBILITY OF CERTAIN CHILDREN; DISALLOWANCE
25-25    OF MATCHING FUNDS. (a)  In this section, "charter school,"
25-26    "employee," and "regional education service center" have the
25-27    meanings assigned by Section 2, Article 3.50-7, Insurance Code.
 26-1          (b)  A child of an employee of a charter school, school
 26-2    district, other educational district whose employees are members of
 26-3    the Teacher Retirement System of Texas, or regional education
 26-4    service center may be enrolled in health benefits coverage under
 26-5    the child health plan. A child enrolled in the child health plan
 26-6    under this section participates in the same manner as any other
 26-7    child enrolled in the child health plan.
 26-8          (c)  The cost of health benefits coverage for children
 26-9    enrolled in the child health plan under this section shall be paid
26-10    as provided in the General Appropriations Act. Expenditures made to
26-11    provide health benefits coverage under this section may not be
26-12    included for the purpose of determining the state children's health
26-13    insurance expenditures, as that term is defined by 42 U.S.C.
26-14    Section 1397ee(d)(2)(B), as amended, unless the Health and Human
26-15    Services Commission, after consultation with the appropriate
26-16    federal agencies, determines that the expenditures may be included
26-17    without adversely affecting federal matching funding for the child
26-18    health plan provided under this chapter.
26-19                        ARTICLE 2.  SCHOOL FINANCE
26-20          SECTION 2.01.  Section 21.402(a), Education Code, is amended
26-21    to read as follows:
26-22          (a)  Except as provided by Subsection (d), (e), or (f), a
26-23    school district must pay each classroom teacher, full-time
26-24    librarian, full-time counselor certified under Subchapter B, or
26-25    full-time school nurse not less than the minimum monthly salary,
26-26    based on the employee's level of experience, determined by the
26-27    following formula:
 27-1                               MS = SF X FS
 27-2    where:
 27-3          "MS" is the minimum monthly salary;
 27-4          "SF" is the applicable salary factor specified by Subsection
 27-5    (c); and
 27-6          "FS" is the amount, as determined by the commissioner under
 27-7    Subsection (b), of state and local funds per weighted student
 27-8    available to a district eligible to receive state assistance under
 27-9    Section 42.302 with an enrichment tax rate, as defined by Section
27-10    42.302, equal to the maximum rate authorized under Section 42.303,
27-11    except that the amount of state and local funds per weighted
27-12    student does not include the amount attributable to the increase in
27-13    the guaranteed level made by H.B. No. 3343, Acts of the 77th
27-14    Legislature, Regular Session, 2001.
27-15          SECTION 2.02.  Effective September 1, 2001, Section
27-16    41.002(a), Education Code, is amended to read as follows:
27-17          (a)  A school district may not have a wealth per student that
27-18    exceeds $300,000 [$295,000].
27-19          SECTION 2.03.  Effective September 1, 2002, Section
27-20    41.002(a), Education Code, is amended to read as follows:
27-21          (a)  A school district may not have a wealth per student that
27-22    exceeds $305,000 [$295,000].
27-23          SECTION 2.04.  Effective September 1, 2001, Subchapter E,
27-24    Chapter 42, Education Code, is amended by adding Section 42.2513 to
27-25    read as follows:
27-26          Sec. 42.2513.  ADDITIONAL STATE AID FOR CERTAIN SCHOOL
27-27    DISTRICTS. (a)  A school district, other than a district that is
 28-1    required to take action under Chapter 41 to reduce its wealth per
 28-2    student to the equalized wealth level, is entitled to state aid in
 28-3    an amount, as determined by the commissioner, according to the
 28-4    formula:
 28-5                   ASA = (IGL X WADA X DTR X 100) - AIFE
 28-6    where:
 28-7          "ASA" is the amount of additional state aid to which the
 28-8    district is entitled;
 28-9          "IGL" is the increase made by H.B. No. 3343, Acts of the 77th
28-10    Legislature, Regular Session, 2001, to the guaranteed level of
28-11    state and local funds per weighted student per cent of tax effort
28-12    under Section 42.302;
28-13          "WADA" is the number of students in weighted average daily
28-14    attendance, as determined under Section 42.302;
28-15          "DTR" is the district enrichment tax rate of the school
28-16    district, as determined under Sections 42.253 and 42.302; and
28-17          "AIFE" is the amount of:
28-18                (1)  additional state aid allocated to the district
28-19    because of increases in funding elements under this chapter made by
28-20    H.B. No. 3343, Acts of the 77th Legislature, Regular Session, 2001;
28-21    or
28-22                (2)  reductions in payments required under Chapter 41
28-23    because of the increase made by H.B. No. 3343, Acts of the 77th
28-24    Legislature, Regular Session, 2001, to the equalized wealth level.
28-25          (b)  For purposes of Subsection (a), for the 2002-2003 school
28-26    year, the increase to the guaranteed level of state and local funds
28-27    per weighted student per cent of tax effort ("IGL") is reduced for
 29-1    each school district eligible for additional state assistance under
 29-2    this section by the amount determined by the following formula:
 29-3              RGL = (DPV2/WADA2/10,000) - (DPV1/WADA1/10,000)
 29-4    where:
 29-5          "RGL" is the reduction in the guaranteed level of state and
 29-6    local funds per weighted student per cent of tax effort;
 29-7          "DPV2" is the taxable value of property in the school
 29-8    district determined under Subchapter M, Chapter 403, Government
 29-9    Code, for the 2002-2003 school year;
29-10          "WADA2" is the number of students in weighted average daily
29-11    attendance as determined under Section 42.302 for the 2002-2003
29-12    school year;
29-13          "DPV1" is the taxable value of property in the school
29-14    district for the 2001-2002 school year; and
29-15          "WADA1" is the number of students in weighted average daily
29-16    attendance for the 2001-2002 school year.
29-17          (c)  Subsection (b) does not apply if the application of the
29-18    formula provided by that subsection would result in an increase in
29-19    the increase to the guaranteed level of state and local funds per
29-20    weighted student per cent of tax effort ("IGL").
29-21          (d)  For purposes of Subsection (a), additional state aid
29-22    allocated to a school district because of increases in funding
29-23    elements ("AIFE") does not include additional state aid allocated
29-24    to the district under Section 42.2514.
29-25          (e)  Of the amount appropriated to the agency for purposes of
29-26    the Foundation School Program for the state fiscal biennium ending
29-27    August 31, 2003, the commissioner may not use more than $37 million
 30-1    to provide additional state assistance under this section.  If the
 30-2    amount to which school districts are entitled for a fiscal year
 30-3    exceeds the amount available under this subsection, the
 30-4    commissioner shall reduce the amount of additional state assistance
 30-5    to each district in the manner provided by Section 42.253(h).
 30-6          (f)  The commissioner may adopt rules to implement this
 30-7    section.  A determination by the commissioner under this section is
 30-8    final and may not be appealed.
 30-9          (g)  This section expires September 1, 2003.
30-10          SECTION 2.05.  Effective September 1, 2002, Subchapter E,
30-11    Chapter 42, Education Code, is amended by adding Section 42.2514 to
30-12    read as follows:
30-13          Sec. 42.2514.  ADDITIONAL STATE AID FOR SCHOOL EMPLOYEE
30-14    BENEFITS. (a)  In this section, "participating charter school"
30-15    means an open-enrollment charter school that participates in the
30-16    uniform group coverage program established under Article 3.50-7,
30-17    Insurance Code.
30-18          (b)  For each school year, a school district, including a
30-19    school district that is otherwise ineligible for state aid under
30-20    this chapter, or a participating charter school is entitled to
30-21    state aid in an amount, as determined by the commissioner, equal to
30-22    the difference, if any, between:
30-23                (1)  the amount determined by multiplying the amount of
30-24    $900 or the amount specified in the General Appropriations Act for
30-25    that year for purposes of the state contribution under Section 9,
30-26    Article 3.50-7, Insurance Code, by the number of district or school
30-27    employees who participate in a group health coverage plan provided
 31-1    by or through the district or school; and
 31-2                (2)  an amount equal to 75 percent of the amount of:
 31-3                      (A)  additional funds to which the district or
 31-4    school is entitled due to the increase made by H.B. No. 3343, Acts
 31-5    of the 77th Legislature, Regular Session, 2001, to:
 31-6                            (i)  the equalized wealth level under
 31-7    Section 41.002; and
 31-8                            (ii)  the guaranteed level of state and
 31-9    local funds per weighted student per cent of tax effort under
31-10    Section 42.302; or
31-11                      (B)  additional state aid to which the district
31-12    is entitled under Section 42.2513.
31-13          (c)  A school district or participating charter school may
31-14    use state aid received under this section only to pay contributions
31-15    under a group health coverage plan for district or school
31-16    employees.
31-17          (d)  A determination by the commissioner under this section
31-18    is final and may not be appealed.
31-19          (e)  The commissioner may adopt rules to implement this
31-20    section.
31-21          SECTION 2.06. Section 42.253, Education Code, is amended by
31-22    adding Subsection (e-1) to read as follows:
31-23          (e-1)  For the 2003-2004, 2004-2005, 2005-2006, 2006-2007,
31-24    2007-2008, or 2008-2009 school year, the limit authorized under
31-25    Subsection (e) is increased by an amount equal to the portion of a
31-26    school district's maintenance and operations tax for that year
31-27    necessary for the district, when added to state funds received
 32-1    under this chapter for that portion of the tax, to comply with
 32-2    Section 3, Article 3.50-9, Insurance Code.  For the 2005-2006 and
 32-3    2007-2008 school years, the limit authorized under Subsection (e)
 32-4    does not include any portion of a school district's maintenance and
 32-5    operations tax rate for which the limit under Subsection (e)
 32-6    applicable to the district was increased under this subsection. The
 32-7    commissioner may adopt rules necessary to administer this
 32-8    subsection.  A determination of the commissioner under this
 32-9    subsection is final and may not be appealed.  This subsection
32-10    expires September 1, 2009.
32-11          SECTION 2.07.  Subchapter E, Chapter 42, Education Code, is
32-12    amended by adding Section 42.2591 to read as follows:
32-13          Sec. 42.2591.  USE OF CERTAIN FUNDS. (a)  For the 2001-2002
32-14    school year, the commissioner shall certify to each school district
32-15    the amount of:
32-16                (1)  additional funds to which the district is entitled
32-17    due to the increase made by H.B. No. 3343, Acts of the 77th
32-18    Legislature, Regular Session, 2001, to:
32-19                      (A)  the equalized wealth level under Section
32-20    41.002; or
32-21                      (B)  the guaranteed level of state and local
32-22    funds per weighted student per cent of tax effort under Section
32-23    42.302; or
32-24                (2)  additional state aid to which the district is
32-25    entitled under Section 42.2513.
32-26          (b)  Notwithstanding any other provision of this code, a
32-27    school district may use the amount of funds certified for the
 33-1    district under Subsection (a) for any lawful purpose, including:
 33-2                (1)  a nonrecurring expense, including a capital
 33-3    outlay; or
 33-4                (2)  debt service.
 33-5          (c)  A determination by the commissioner under this section
 33-6    is final and may not be appealed.
 33-7          (d)  The commissioner may adopt rules to implement this
 33-8    section.
 33-9          (e)  This section expires September 1, 2002.
33-10          SECTION 2.08. Effective September 1, 2002, Subchapter E,
33-11    Chapter 42, Education Code, is amended by adding Section 42.260 to
33-12    read as follows:
33-13          Sec. 42.260.  USE OF CERTAIN FUNDS. (a)  In this section,
33-14    "participating charter school" has the meaning assigned by Section
33-15    42.2514.
33-16          (b)  For each year, the commissioner shall certify to each
33-17    school district or participating charter school the amount of:
33-18                (1)  additional funds to which the district or school
33-19    is entitled due to the increase made by H.B. No. 3343, Acts of the
33-20    77th Legislature, Regular Session, 2001, to:
33-21                      (A)  the equalized wealth level under Section
33-22    41.002; or
33-23                      (B)  the guaranteed level of state and local
33-24    funds per weighted student per cent of tax effort under Section
33-25    42.302; or
33-26                (2)  additional state aid to which the district or
33-27    school is entitled under Section 42.2513.
 34-1          (c)  Notwithstanding any other provision of this code, a
 34-2    school district or participating charter school may use the
 34-3    following amount of funds only to pay contributions under a group
 34-4    health coverage plan for district or school employees:
 34-5                (1)  an amount equal to 75 percent of the amount
 34-6    certified for the district or school under Subsection (b); or
 34-7                (2)  if the following amount is less than the amount
 34-8    specified by Subdivision (1), the sum of:
 34-9                      (A)  the amount determined by multiplying the
34-10    amount of $900 or the amount specified in the General
34-11    Appropriations Act for that year for purposes of the state
34-12    contribution under Section 9, Article 3.50-7, Insurance Code, by
34-13    the number of district or school employees who participate in a
34-14    group health coverage plan provided by or through the district or
34-15    school; and
34-16                      (B)  the difference between the amount necessary
34-17    for the district or school to comply with Section 3, Article
34-18    3.50-9, Insurance Code, for the school year and the amount the
34-19    district or school is required to use to provide health coverage
34-20    under Section 2 of that article for that year.
34-21          (d)  A determination by the commissioner under this section
34-22    is final and may not be appealed.
34-23          (e)  The commissioner may adopt rules to implement this
34-24    section.
34-25          SECTION 2.09. Effective September 1, 2001, Section 42.302(a),
34-26    Education Code, is amended to read as follows:
34-27          (a)  Each school district is guaranteed a specified amount
 35-1    per weighted student in state and local funds for each cent of tax
 35-2    effort over that required for the district's local fund assignment
 35-3    up to the maximum level specified in this subchapter.  The amount
 35-4    of state support, subject only to the maximum amount under Section
 35-5    42.303, is determined by the formula:
 35-6                    GYA = (GL X WADA X DTR X 100) - LR
 35-7    where:
 35-8          "GYA" is the guaranteed yield amount of state funds to be
 35-9    allocated to the district;
35-10          "GL" is the dollar amount guaranteed level of state and local
35-11    funds per weighted student per cent of tax effort, which is $25.81
35-12    [$24.99] or a greater amount for any year provided by
35-13    appropriation;
35-14          "WADA" is the number of students in weighted average daily
35-15    attendance, which is calculated by dividing the sum of the school
35-16    district's allotments under Subchapters B and C, less any allotment
35-17    to the district for transportation, any allotment under Section
35-18    42.158, and 50 percent of the adjustment under Section 42.102, by
35-19    the basic allotment for the applicable year;
35-20          "DTR" is the district enrichment tax rate of the school
35-21    district, which is determined by subtracting the amounts specified
35-22    by Subsection (b) from the total amount of maintenance and
35-23    operations taxes collected by the school district for the
35-24    applicable school year and dividing the difference by the quotient
35-25    of the district's taxable value of property as determined under
35-26    Subchapter M, Chapter 403, Government Code, or, if applicable,
35-27    under Section 42.2521, divided by 100; and
 36-1          "LR" is the local revenue, which is determined by multiplying
 36-2    "DTR" by the quotient of the district's taxable value of property
 36-3    as determined under Subchapter M, Chapter 403, Government Code, or,
 36-4    if applicable, under Section 42.2521, divided by 100.
 36-5          SECTION 2.10. Effective September 1, 2002, Section 42.302(a),
 36-6    Education Code, is amended to read as follows:
 36-7          (a)  Each school district is guaranteed a specified amount
 36-8    per weighted student in state and local funds for each cent of tax
 36-9    effort over that required for the district's local fund assignment
36-10    up to the maximum level specified in this subchapter.  The amount
36-11    of state support, subject only to the maximum amount under Section
36-12    42.303, is determined by the formula:
36-13                    GYA = (GL X WADA X DTR X 100) - LR
36-14    where:
36-15          "GYA" is the guaranteed yield amount of state funds to be
36-16    allocated to the district;
36-17          "GL" is the dollar amount guaranteed level of state and local
36-18    funds per weighted student per cent of tax effort, which is $27.14
36-19    [$24.99] or a greater amount for any year provided by
36-20    appropriation;
36-21          "WADA" is the number of students in weighted average daily
36-22    attendance, which is calculated by dividing the sum of the school
36-23    district's allotments under Subchapters B and C, less any allotment
36-24    to the district for transportation, any allotment under Section
36-25    42.158, and 50 percent of the adjustment under Section 42.102, by
36-26    the basic allotment for the applicable year;
36-27          "DTR" is the district enrichment tax rate of the school
 37-1    district, which is determined by subtracting the amounts specified
 37-2    by Subsection (b) from the total amount of maintenance and
 37-3    operations taxes collected by the school district for the
 37-4    applicable school year and dividing the difference by the quotient
 37-5    of the district's taxable value of property as determined under
 37-6    Subchapter M, Chapter 403, Government Code, or, if applicable,
 37-7    under Section 42.2521, divided by 100; and
 37-8          "LR" is the local revenue, which is determined by multiplying
 37-9    "DTR" by the quotient of the district's taxable value of property
37-10    as determined under Subchapter M, Chapter 403, Government Code, or,
37-11    if applicable, under Section 42.2521, divided by 100.
37-12          SECTION 2.11. Section 26.08, Tax Code, is amended by adding
37-13    Subsections (k)-(m) to read as follows:
37-14          (k)  For purposes of this section, for the 2003, 2004, 2005,
37-15    2006, 2007, or 2008 tax year, for a school district that is
37-16    entitled to state funds under Section 4(a-1), (a-2), (a-3), (a-4),
37-17    (a-5), or (a-6), Article 3.50-9, Insurance Code, the rollback tax
37-18    rate of the district is the sum of:
37-19                (1)  the tax rate that, applied to the current total
37-20    value for the district, would impose taxes in an amount that, when
37-21    added to state funds that would be distributed to the district
37-22    under Chapter 42, Education Code, for the school year beginning in
37-23    the current tax year using that tax rate, would provide the same
37-24    amount of state funds distributed under Chapter 42 and maintenance
37-25    and operations taxes of the district per student in weighted
37-26    average daily attendance for that school year that would have been
37-27    available to the district in the preceding year if the funding
 38-1    elements for Chapters 41 and 42, Education Code, for the current
 38-2    year had been in effect for the preceding year;
 38-3                (2)  the tax rate that, applied to the current total
 38-4    value for the district, would impose taxes in the amount that, when
 38-5    added to state funds that would be distributed to the district
 38-6    under Chapter 42, Education Code, for the school year beginning in
 38-7    the current tax year using that tax rate, permits the district to
 38-8    comply with Section 3, Article 3.50-9, Insurance Code;
 38-9                (3)  the rate of $0.06 per $100 of taxable value; and
38-10                (4)  the district's current debt rate.
38-11          (l)  For purposes of Subsection (k), the amount of state
38-12    funds that would have been available to a school district in the
38-13    preceding year is computed using the maximum tax rate for the
38-14    current year under Section 42.253(e), Education Code.
38-15          (m)  Subsections (k) and (l) and this subsection expire
38-16    January 1, 2009.
38-17                     ARTICLE 3.  CONFORMING AMENDMENTS
38-18          SECTION 3.01. Article 3.50-4, Insurance Code, is amended by
38-19    adding Section 3A to read as follows:
38-20          Sec. 3A.  TRANSFER OF RECORDS. The trustee shall transfer
38-21    from the program established under this article all records
38-22    relating to active employees participating in the uniform group
38-23    coverage program established under Article 3.50-7 of this code not
38-24    later than the date on which the program of coverages provided
38-25    under Article 3.50-7 of this code is implemented.
38-26          SECTION 3.02. Section 1, Article 3.50-4, Insurance Code, is
38-27    amended to read as follows:
 39-1          Sec. 1.  SHORT TITLE.  This article may be cited as the Texas
 39-2    Public School Retired Employees Group Insurance Act.
 39-3          SECTION 3.03.  Sections 2(3) and (4), Article 3.50-4,
 39-4    Insurance Code, are amended to read as follows:
 39-5                (3)  "Dependent" means:
 39-6                      (A)  a spouse of a retiree [or active member];
 39-7                      (B)  a retiree's[, an active member's,] or a
 39-8    deceased active member's unmarried child who is younger than 25
 39-9    years of age including:
39-10                            (i)  an adopted child;
39-11                            (ii)  a foster child, a stepchild, or other
39-12    child who is in a regular parent-child relationship; and
39-13                            (iii)  a recognized natural child; and
39-14                      (C)  a retiree's [or active member's] recognized
39-15    natural child, adopted child, foster child, stepchild, or other
39-16    child who is in a regular parent-child relationship and who lives
39-17    with or whose care is provided by the retiree[, active member,] or
39-18    surviving spouse on a regular basis, regardless of the child's age,
39-19    if the child is mentally retarded or physically incapacitated to
39-20    such an extent as to be dependent on the retiree[, active member,]
39-21    or surviving spouse for care or support, as determined by the
39-22    trustee, or in the case of a deceased active member, a recognized
39-23    natural child, adopted child, foster child, stepchild, or other
39-24    child who was in a regular parent-child relationship and who lived
39-25    with or whose care was provided by the deceased active member on a
39-26    regular basis, regardless of the child's age, if the child is
39-27    mentally retarded or physically incapacitated to such an extent as
 40-1    to have been dependent on the deceased active member or surviving
 40-2    spouse for care or support, as determined by the trustee.
 40-3                (4)  "Fund" means the retired [Texas public] school
 40-4    employees group insurance fund.
 40-5          SECTION 3.04.  Section 3(a), Article 3.50-4, Insurance Code,
 40-6    is amended to read as follows:
 40-7          (a)  The Texas Public School Retired Employees Group
 40-8    Insurance Program is established to provide for an insurance plan
 40-9    or plans under this article.
40-10          SECTION 3.05.  Section 5(a), Article 3.50-4, Insurance Code,
40-11    is amended to read as follows:
40-12          (a)  The trustee may adopt rules, plans, procedures, and
40-13    orders reasonably necessary to implement this article, including:
40-14                (1)  establishment of minimum benefit and financing
40-15    standards for group insurance coverage to be provided to all
40-16    retirees, [active employees,] dependents, surviving spouses, and
40-17    surviving dependent children;
40-18                (2)  establishment of basic and optional group coverage
40-19    to be provided to retirees, [active employees,] dependents,
40-20    surviving spouses, and surviving dependent children;
40-21                (3)  establishment of the procedures for contributions
40-22    and deductions;
40-23                (4)  establishment of periods for enrollment and
40-24    selection of optional coverage and procedures for enrolling and
40-25    exercising options under the plan;
40-26                (5)  determination of methods and procedures for claims
40-27    administration;
 41-1                (6)  study of the operation of all insurance coverage
 41-2    provided under this article;
 41-3                (7)  administration of the fund;
 41-4                (8)  adoption of a timetable for the development of
 41-5    minimum benefit and financial standards for group insurance
 41-6    coverage, establishment of group insurance plans, and the taking of
 41-7    bids for and awarding of contracts for insurance plans; and
 41-8                (9)  contracting with an independent and experienced
 41-9    group insurance consultant or actuary[, who does not receive
41-10    insurance commissions from any insurance company,] for advice and
41-11    counsel in implementing and administering this program.
41-12          SECTION 3.06. Sections 8(e) and (i), Article 3.50-4,
41-13    Insurance Code, are amended to read as follows:
41-14          (e)  The trustee may contract for and make available to all
41-15    retirees, dependents, surviving spouses, and surviving dependent
41-16    children optional group health benefit plans in addition to the
41-17    basic plans.  The optional coverage may include a smaller
41-18    deductible, lower coinsurance, or additional categories of benefits
41-19    permitted under Subsection (b) of this section to provide
41-20    additional levels of coverages and benefits.  The trustee may
41-21    utilize a portion of the funds received for the Texas Public School
41-22    Retired Employees Group Insurance Program to offset some portion of
41-23    costs paid by the retiree for optional coverage if such utilization
41-24    does not reduce the period the program is projected to remain
41-25    financially solvent by more than one year in a biennium.  Any
41-26    additional contributions for these optional plans shall be paid for
41-27    by the retiree, surviving spouse, or surviving dependent children.
 42-1          (i)  In contracting for any benefits under this article,
 42-2    competitive bidding shall be required under rules adopted by the
 42-3    trustee.  [The rules must require that prospective bidders provide
 42-4    information, for each area consisting of a county and all adjacent
 42-5    counties, on the number and types of qualified providers willing to
 42-6    participate in the coverage or plan for which the bid is made.  The
 42-7    rules may provide criteria to determine qualified providers.  The
 42-8    trustee shall consider the information before awarding a contract
 42-9    but may not require a bidder to demonstrate a minimum standard of
42-10    provider participation.]  The trustee is not required to select the
42-11    lowest bid but may consider also ability to service contracts, past
42-12    experiences, financial stability, and other relevant criteria.  If
42-13    the trustee awards a contract to an entity whose bid deviates from
42-14    that advertised, the deviation shall be recorded and the reasons
42-15    for the deviation shall be fully justified in the minutes of the
42-16    next meeting of the trustee.
42-17          SECTION 3.07.  Section 9, Article 3.50-4, Insurance Code, is
42-18    amended to read as follows:
42-19          Sec. 9.  BENEFIT CERTIFICATES.  At such times, or upon such
42-20    events, as designated by the trustee, each insurance carrier shall
42-21    issue to each retiree, [active employee,] surviving spouse, or
42-22    surviving dependent child insured under this article a certificate
42-23    of insurance that:
42-24                (1)  states the benefits to which the person is
42-25    entitled;
42-26                (2)  states to whom the benefits are payable;
42-27                (3)  states to whom the claims must be submitted; and
 43-1                (4)  summarizes the provisions of the policy
 43-2    principally affecting the person.
 43-3          SECTION 3.08.  Section 10(a), Article 3.50-4, Insurance Code,
 43-4    is amended to read as follows:
 43-5          (a)  Not later than the 180th day after the end of each state
 43-6    fiscal year, the trustee shall make a written report to the Texas
 43-7    Department [State Board] of Insurance concerning the insurance
 43-8    coverages provided and the benefits and services being received by
 43-9    persons insured under this article.
43-10          SECTION 3.09.  Section 12, Article 3.50-4, Insurance Code, is
43-11    amended to read as follows:
43-12          Sec. 12.  DEATH CLAIMS:  BENEFICIARIES.  The amount of group
43-13    life insurance and group accidental death and dismemberment
43-14    insurance covering a retiree, [active employee,] surviving spouse,
43-15    dependent, or surviving dependent child at the date of death shall
43-16    be paid, on the establishment of a valid claim, only:
43-17                (1)  to the beneficiary or beneficiaries designated by
43-18    the person in a signed and witnessed written document received
43-19    before death in the trustee's office; or
43-20                (2)  if no beneficiary is properly designated or in
43-21    existence, to persons in accordance with the trustee's death
43-22    benefit provisions in Subsection (b), Section 824.103, Government
43-23    Code.
43-24          SECTION 3.10.  Section 13, Article 3.50-4, Insurance Code, is
43-25    amended to read as follows:
43-26          Sec. 13.  AUTOMATIC COVERAGE. A retiree [or active employee]
43-27    who applies during an enrollment period may not be denied any of
 44-1    the group insurance basic coverage provided under this article
 44-2    unless the person has been found under Section 18A of this article
 44-3    to have defrauded or attempted to defraud the Texas Public School
 44-4    Retired Employees Group Insurance Program.
 44-5          SECTION 3.11.  Section 15, Article 3.50-4, Insurance Code, is
 44-6    amended to read as follows:
 44-7          Sec. 15.  RETIRED SCHOOL EMPLOYEES GROUP INSURANCE FUND.
 44-8    (a)  The retired school employees group insurance fund is created.
 44-9    The comptroller is the custodian of the fund, and the trustee shall
44-10    administer the fund.  All contributions from active employees,
44-11    retirees, and the state, contributions for optional coverages,
44-12    investment income, appropriations for implementation of this
44-13    program, and other money required or authorized to be paid into the
44-14    fund shall be paid into the fund.  From the fund shall be paid,
44-15    without state fiscal year limitation, the appropriate premiums to
44-16    the carrier or carriers providing group coverage under the plan or
44-17    plans under this article, claims for benefits under the group
44-18    coverage, and the amounts expended by the trustee for
44-19    administration of the program.  The appropriate portion of the
44-20    contributions to the fund to provide for incurred but unreported
44-21    claim reserves and contingency reserves, as determined by the
44-22    trustee, shall be retained in the fund.
44-23          (b)  The trustee shall transfer the amounts deducted from
44-24    annuities for contributions into the fund.
44-25          (c)  Expenses for the development and administration of the
44-26    program shall be spent as provided by a budget adopted by the
44-27    trustee.
 45-1          (d)  The trustee may invest and reinvest the money in the
 45-2    fund as provided by Subchapter D, Chapter 825, Government Code, for
 45-3    assets of the Teacher Retirement System of Texas.
 45-4          SECTION 3.12.  Section 18A, Article 3.50-4, Insurance Code,
 45-5    is amended to read as follows:
 45-6          Sec. 18A.  EXPULSION FROM PROGRAM FOR FRAUD.  (a)  After
 45-7    notice and hearing as provided by this section, the trustee may
 45-8    expel from participation in the Texas Public School Retired
 45-9    Employees Group Insurance Program any retiree, [active employee,]
45-10    surviving spouse, dependent, or surviving dependent child who
45-11    submits a fraudulent claim under, or has defrauded or attempted to
45-12    defraud, any health benefits plan offered under the program.
45-13          (b)  On its motion or on the receipt of a complaint, the
45-14    trustee may call and hold a hearing to determine whether a person
45-15    has submitted a fraudulent claim under, or has defrauded or
45-16    attempted to defraud, any health benefits plan offered under the
45-17    Texas Public School Retired Employees Group Insurance Program.
45-18          (c)  A proceeding under this section is a contested case
45-19    under Chapter 2001, Government Code [the Administrative Procedure
45-20    and Texas Register Act (Article 6252-13a, Vernon's Texas Civil
45-21    Statutes)].
45-22          (d)  If the trustee, at the conclusion of the hearing, issues
45-23    a decision that finds that the accused submitted a fraudulent claim
45-24    or has defrauded or attempted to defraud any health benefits plan
45-25    offered under the Texas Public School Retired Employees Group
45-26    Insurance Program, the trustee shall expel the person from
45-27    participation in the program.
 46-1          (e)  The substantial evidence rule shall be used on any
 46-2    appeal of a decision of the trustee under this section.
 46-3          (f)  A person expelled from the Texas Public School Retired
 46-4    Employees Group Insurance Program may not be insured by any health
 46-5    insurance plan offered by the program for a period, to be
 46-6    determined by the trustee, of up to five years from the date the
 46-7    expulsion takes effect.
 46-8          SECTION 3.13.  Section 18B(a), Article 3.50-4, Insurance
 46-9    Code, is amended to read as follows:
46-10          (a)  Section 825.507, Government Code, concerning the
46-11    confidentiality and disclosure of records, applies to [of
46-12    information in] records that are in the custody of the Teacher
46-13    Retirement System of Texas or[, applies to information in records
46-14    that are] in the custody of an administrator, carrier, agent,
46-15    attorney, consultant, or governmental body acting in cooperation
46-16    with or on behalf of the retirement system regarding retirees,
46-17    active employees, annuitants, or beneficiaries under the Texas
46-18    Public School Retired Employees Group Insurance Program.
46-19          SECTION 3.14.  Sections 18C(c), (d), and (i), Article 3.50-4,
46-20    Insurance Code, are amended to read as follows:
46-21          (c)  The trustee, the Texas public school retired employees
46-22    group insurance program, the retired school employees group
46-23    insurance fund, and the board of trustees, officers, advisory
46-24    committee members, and employees of the trustee are not liable for
46-25    damages arising from the acts or omissions of health care providers
46-26    who are participating health care providers in the coordinated care
46-27    network established by the trustee.  Those health care providers
 47-1    are independent contractors and are responsible for their own acts
 47-2    and omissions.
 47-3          (d)  The trustee, the Texas public school retired employees
 47-4    group insurance program, the retired school employees group
 47-5    insurance fund, or a member of a credentialing committee, or the
 47-6    board of trustees, officers, advisory committee members, or
 47-7    employees of the trustee are not liable for damages arising from
 47-8    any act, statement, determination, recommendation made, or act
 47-9    reported, without malice, in the course of the evaluation of the
47-10    qualifications of health care providers or of the patient care
47-11    rendered by those providers.
47-12          (i)  A credentialing committee, a person participating in a
47-13    credentialing review, a health care provider, the trustee, the
47-14    Texas public school retired employees group insurance program, or
47-15    the board of trustees, officers, advisory committee members, or
47-16    employees of the trustee that are named as defendants in any civil
47-17    action filed as a result of participation in the credentialing
47-18    process may use otherwise confidential information obtained for
47-19    legitimate internal business and professional purposes, including
47-20    use in their own defense.  Use of information under this subsection
47-21    does not constitute a waiver of the confidential and privileged
47-22    nature of the information.
47-23          SECTION 3.15.  Section 19, Article 3.50-4, Insurance Code, is
47-24    amended to read as follows:
47-25          Sec. 19.  ASSISTANCE.  In implementing and administering this
47-26    article, the Texas Department [State Board] of Insurance, as
47-27    requested by the trustee, shall assist the trustee in carrying out
 48-1    this article.
 48-2          SECTION 3.16. Article 3.51, Insurance Code, is amended by
 48-3    adding Section 3 to read as follows:
 48-4          Sec. 3. (a)  Notwithstanding any other provision of this
 48-5    article, a common or independent school district or any other
 48-6    agency or subdivision of the public school system of this state
 48-7    that is participating in the uniform group coverage program
 48-8    established under Article 3.50-7 of this code may not procure
 48-9    contracts under this article for health insurance coverage and may
48-10    not renew a health insurance contract procured under this article
48-11    after the date on which the program of coverages provided under
48-12    Article 3.50-7 of this code is implemented.
48-13          (b)  This section does not preclude an entity described by
48-14    Subsection (a) of this section from procuring contracts under this
48-15    article for the provision of optional insurance coverages for the
48-16    employees of the entity.
48-17          SECTION 3.17. Article 26.036, Insurance Code, is amended by
48-18    adding Subsection (c) to read as follows:
48-19          (c)  An independent school district that is participating in
48-20    the uniform group coverage program established under Article 3.50-7
48-21    of this code may not participate in the small employer market under
48-22    this article for health insurance coverage and may not renew a
48-23    health insurance contract obtained in accordance with this article
48-24    after the date on which the program of coverages provided under
48-25    Article 3.50-7 of this code is implemented.  This subsection does
48-26    not affect a contract for the provision of optional coverages not
48-27    included in a health benefits plan under this chapter.
 49-1          SECTION 3.18. Section 22.004, Education Code, is amended to
 49-2    read as follows:
 49-3          Sec. 22.004.  GROUP HEALTH BENEFITS FOR SCHOOL EMPLOYEES. (a)
 49-4    A [Each] district shall participate in the uniform group coverage
 49-5    program established under Article 3.50-7, Insurance Code, as
 49-6    provided by Section 5 of that article.
 49-7          (b)  A district that does not participate in the program
 49-8    described by Subsection (a) shall make available to its employees
 49-9    group health coverage provided by a risk pool established by one or
49-10    more school districts under Chapter 172, Local Government Code, or
49-11    under a policy of insurance or group contract issued by an insurer,
49-12    a company subject to Chapter 20, Insurance Code, or a health
49-13    maintenance organization under the Texas Health Maintenance
49-14    Organization Act (Chapter 20A, Vernon's Texas Insurance Code).  The
49-15    coverage must meet the substantive coverage requirements of Article
49-16    3.51-6, Insurance Code, and any other law applicable to group
49-17    health insurance policies or contracts issued in this state.  The
49-18    coverage must include major medical treatment but may exclude
49-19    experimental procedures.  In this subsection, "major medical
49-20    treatment" means a medical, surgical, or diagnostic procedure for
49-21    illness or injury.  The coverage may include managed care or
49-22    preventive care and must be comparable to the basic health coverage
49-23    provided under the Texas Employees Uniform Group Insurance Benefits
49-24    Act (Article 3.50-2, Vernon's Texas Insurance Code).  The board of
49-25    trustees of the Teacher Retirement System of Texas shall adopt
49-26    rules to determine whether a school district's group health
49-27    coverage is comparable to the basic health coverage specified by
 50-1    this subsection.  The rules must provide for consideration of the
 50-2    following factors concerning the district's coverage in determining
 50-3    whether the district's coverage is comparable to the basic health
 50-4    coverage specified by this subsection:
 50-5                (1)  the deductible amount for service provided inside
 50-6    and outside of the network;
 50-7                (2)  the coinsurance percentages for service provided
 50-8    inside and outside of the network;
 50-9                (3)  the maximum amount of coinsurance payments a
50-10    covered person is required to pay;
50-11                (4)  the amount of the copayment for an office visit;
50-12                (5)  the schedule of benefits and the scope of
50-13    coverage;
50-14                (6)  the lifetime maximum benefit amount; and
50-15                (7)  verification that the coverage is issued by a
50-16    provider licensed to do business in this state by the Texas
50-17    Department of Insurance or is provided by a risk pool authorized
50-18    under Chapter 172, Local Government Code, or that a district is
50-19    capable of covering the assumed liabilities in the case of coverage
50-20    provided through district self-insurance.
50-21          (c) [(b)]  The cost of the coverage provided under the
50-22    program described by Subsection (a) shall be paid by the state, the
50-23    district, and the employees in the manner provided by Article
50-24    3.50-7, Insurance Code.  The cost of coverage provided under a plan
50-25    adopted under Subsection (b) shall [may] be shared by the employees
50-26    and the district using the contributions by the state described by
50-27    Section 9, Article 3.50-7, Insurance Code, or by Article 3.50-8,
 51-1    Insurance Code.
 51-2          (d) [(c)]  Each district shall report the district's
 51-3    compliance with this section [subsection] to the executive director
 51-4    of the Teacher Retirement System of Texas not later than March 1 of
 51-5    each even-numbered year in the manner required by the board of
 51-6    trustees of the Teacher Retirement System of Texas.  For a district
 51-7    that does not participate in the program described by Subsection
 51-8    (a), the [The] report must be based on the district group health
 51-9    coverage plan in effect during the current plan year and must
51-10    include:
51-11                (1)  appropriate documentation of:
51-12                      (A)  the district's contract for group health
51-13    coverage with a provider licensed to do business in this state by
51-14    the Texas Department of Insurance or a risk pool authorized under
51-15    Chapter 172, Local Government Code; or
51-16                      (B)  a resolution of the board of trustees of the
51-17    district authorizing a self-insurance plan for district employees
51-18    and of the district's review of district ability to cover the
51-19    liability assumed;
51-20                (2)  the schedule of benefits;
51-21                (3)  the premium rate sheet, including the amount paid
51-22    by the district and employee;
51-23                (4)  the number of employees covered by the [each]
51-24    health coverage plan offered by the district; and
51-25                (5)  any other information considered appropriate by
51-26    the executive director of the Teacher Retirement System of Texas.
51-27          (e) [(d)]  Based on the criteria prescribed by Subsection (b)
 52-1    [(a)], the executive director of the Teacher Retirement System of
 52-2    Texas shall, for each district that does not participate in the
 52-3    program described by Subsection (a), certify whether a district's
 52-4    coverage is comparable to the basic health coverage provided under
 52-5    the Texas Employees Uniform Group Insurance Benefits Act (Article
 52-6    3.50-2, Vernon's Texas Insurance Code).  If the executive director
 52-7    of the Teacher Retirement System of Texas determines that the group
 52-8    health coverage offered by a district is not comparable, the
 52-9    executive director shall report that information to the district
52-10    and to the Legislative Budget Board.  The executive director shall
52-11    submit a report to the legislature not later than September 1 of
52-12    each even-numbered year describing the status of each district's
52-13    group health coverage program based on the information contained in
52-14    the report required by Subsection (d) [(c)] and the certification
52-15    required by this subsection.
52-16          (f) [(e)]  A school district that does not participate in the
52-17    program described by Subsection (a) may not contract with an
52-18    insurer, a company subject to Chapter 20, Insurance Code, or a
52-19    health maintenance organization to issue a policy or contract under
52-20    this section, or with any person to assist the school district in
52-21    obtaining or managing the policy or contract unless, before the
52-22    contract is entered into, the insurer, company, organization, or
52-23    person provides the district with an audited financial statement
52-24    showing the financial condition of the insurer, company,
52-25    organization, or person.
52-26          (g) [(f)]  An insurer, a company subject to Chapter 20,
52-27    Insurance Code, or a health maintenance organization that issues a
 53-1    policy or contract under this section and any person that assists
 53-2    the school district in obtaining or managing the policy or contract
 53-3    for compensation shall provide an annual audited financial
 53-4    statement to the school district showing the financial condition of
 53-5    the insurer, company, organization, or person.
 53-6          (h) [(g)]  An audited financial statement provided under this
 53-7    section must be made in accordance with rules adopted by the
 53-8    commissioner of insurance or state auditor, as applicable.
 53-9          (i)  Notwithstanding any other provision of this section, a
53-10    district participating in the uniform group coverage program
53-11    established under Article 3.50-7, Insurance Code, may not make
53-12    group health coverage  available to its employees under this
53-13    section after the date on which the program of coverages provided
53-14    under Article 3.50-7, Insurance Code, is implemented.
53-15          (j)  This section does not preclude a district that is
53-16    participating in the uniform group coverage program established
53-17    under Article 3.50-7, Insurance Code, from entering into contracts
53-18    to provide optional insurance coverages for the employees of the
53-19    district.
53-20          SECTION 3.19. Section 822.201(c), Government Code, is amended
53-21    to read as follows:
53-22          (c)  Excluded from salary and wages are:
53-23                (1)  expense payments;
53-24                (2)  [,] allowances;
53-25                (3)  [,] payments for unused vacation or sick leave;
53-26                (4)  [,] maintenance or other nonmonetary compensation;
53-27                (5)  [,] fringe benefits;
 54-1                (6)  [,] deferred compensation other than as provided
 54-2    by Subsection (b)(3);
 54-3                (7)  [,] compensation that is not made pursuant to a
 54-4    valid employment agreement;
 54-5                (8)  [,] payments received by an employee in a school
 54-6    year that exceed $5,000 for teaching a driver education and traffic
 54-7    safety course that is conducted outside regular classroom hours;
 54-8                (9)  [,] the benefit replacement pay a person earns as
 54-9    a result of a payment made under Subchapter B or C, Chapter 661;
54-10                (10)  supplemental compensation received by an employee
54-11    under Article 3.50-8, Insurance Code;[,] and
54-12                (11)  any compensation not described in Subsection (b).
54-13          SECTION 3.20. Sections 7A, 20, and 21, Article 3.50-4,
54-14    Insurance Code, are repealed.
54-15          SECTION 3.21. Sections 3.02-3.14, 3.19, and 3.20 of this Act
54-16    take effect September 1, 2002.
54-17                    ARTICLE 4.  APPROPRIATION TRANSFERS
54-18          SECTION 4.01. On September 1, 2002, the comptroller shall
54-19    transfer the amount of $42 million from the retired school
54-20    employees group insurance fund created under Section 15, Article
54-21    3.50-4, Insurance Code, as amended by this Act, to the Texas school
54-22    employees uniform group coverage trust fund created under Section
54-23    8, Article 3.50-7, Insurance Code, as added by this Act.  The
54-24    Teacher Retirement System of Texas shall use the amount transferred
54-25    under this section to establish and implement the uniform group
54-26    coverage program for school employees established under Article
54-27    3.50-7, Insurance Code, as added by this Act.
 55-1          SECTION 4.02. A portion of the amounts appropriated in
 55-2    Article III, S.B. No. 1, Acts of the 77th Legislature, Regular
 55-3    Session, 2001, to the Texas Education Agency is allocated as
 55-4    provided by this section:
 55-5                (1)  for the fiscal year ending August 31, 2002, the
 55-6    amount appropriated under Strategy A.2.1.:  FSP-Equalized
 55-7    Operations is reduced by []the sum of $3 million and the amount
 55-8    appropriated to the Teacher Retirement System of Texas is increased
 55-9    by that amount for the establishment and implementation of the
55-10    uniform group coverage program for school employees established
55-11    under Article 3.50-7, Insurance Code, as added by this Act;
55-12                (2)  for the fiscal year ending August 31, 2003, the
55-13    amount appropriated under Strategy A.2.1.:  FSP-Equalized
55-14    Operations is reduced by the sum of $691,100,000 and the amount
55-15    appropriated to the Teacher Retirement System of Texas is increased
55-16    by that amount for payment of:
55-17                      (A)  school employee health coverage or
55-18    compensation supplementation under Article 3.50-8, Insurance Code,
55-19    as added by this Act; and
55-20                      (B)  state assistance in meeting the minimum
55-21    effort regarding school employee health coverage under Article
55-22    3.50-9, Insurance Code, as added by this Act;
55-23                (3)  for the fiscal year ending August 31, 2003, the
55-24    amount appropriated under Strategy A.2.1.:  FSP-Equalized
55-25    Operations is reduced by the sum of $1,361,000 and the amount
55-26    appropriated to the Teacher Retirement System of Texas is increased
55-27    by that amount for assistance to school districts in paying social
 56-1    security taxes on amounts of supplemental compensation received by
 56-2    district employees under Article 3.50-8, Insurance Code, as added
 56-3    by this Act, as provided by Section 6, Article 3.50-9, Insurance
 56-4    Code, as added by this Act; and
 56-5                (4)  for the fiscal year ending August 31, 2003, the
 56-6    amount appropriated under Strategy A.2.1.:  FSP-Equalized
 56-7    Operations is reduced by the sum of $4.2 million and the amount
 56-8    appropriated to the Health and Human Services Commission is
 56-9    increased by that amount for payment of the costs of health
56-10    benefits coverage for children enrolled in the child health plan
56-11    under Section 62.1015, Health and Safety Code, as added by this
56-12    Act.
56-13          SECTION 4.03. The Legislative Budget Board shall increase the
56-14    number of full-time-equivalent positions authorized for the Teacher
56-15    Retirement System of Texas by S.B. No. 1, Acts of the 77th
56-16    Legislature, Regular Session, 2001, by 25 for each fiscal year of
56-17    the biennium ending August 31, 2003.
56-18          SECTION 4.04. The Legislative Budget Board shall increase the
56-19    number of full-time-equivalent positions authorized for the Texas
56-20    Education Agency by S.B. No. 1, Acts of the 77th Legislature,
56-21    Regular Session, 2001, by three for each fiscal year of the
56-22    biennium ending August 31, 2003.
56-23                  ARTICLE 5.  TRANSITION; EFFECTIVE DATE
56-24          SECTION 5.01. The Teacher Retirement System of Texas shall
56-25    develop the coverage plans to be implemented in the uniform group
56-26    coverage program established under Article 3.50-7, Insurance Code,
56-27    as added by this Act, beginning September 1, 2001, and shall
 57-1    develop the enrollment requirements for the program during the
 57-2    2001-2002 school year, with coverage beginning September 1, 2002.
 57-3          SECTION 5.02. The Teacher Retirement System of Texas shall
 57-4    transfer to the fund established under Section 8, Article 3.50-7,
 57-5    Insurance Code, as added by this Act, any outstanding balance held
 57-6    by the Teacher Retirement System of Texas as of December 31, 2001,
 57-7    in the school employees group insurance fund established under
 57-8    Section 15, Article 3.50-4, Insurance Code, that was designated for
 57-9    use in programs relating to active school district employees.
57-10          SECTION 5.03. Not later than July 31, 2001, the Teacher
57-11    Retirement System of Texas shall provide written information to
57-12    school districts subject to Section 5(a-1), Article 3.50-7,
57-13    Insurance Code, as added by this Act, that provides a general
57-14    description of the uniform group coverage program established under
57-15    Article 3.50-7, Insurance Code, as added by this Act.
57-16          SECTION 5.04. A school district that becomes eligible to
57-17    participate in the uniform group coverage program established under
57-18    Article 3.50-7, Insurance Code, as added by this Act, as provided
57-19    by Section 5(b) of that article and that elects to participate in
57-20    the program beginning September 1, 2005, must notify the Teacher
57-21    Retirement System of Texas of the election not later than January
57-22    1, 2005.
57-23          SECTION 5.05. During the initial implementation of Article
57-24    3.50-7, Insurance Code, as added by this Act, and notwithstanding
57-25    any bidding requirements or other requirements set forth in Article
57-26    3.50-4, Insurance Code, or Article 3.50-7, Insurance Code, as added
57-27    by this Act, the Teacher Retirement System of Texas may amend any
 58-1    agreement in effect on September 1, 2001, that it has entered into
 58-2    under Article 3.50-4, Insurance Code, for benefits or
 58-3    administration to extend application of that agreement to include
 58-4    participants and programs under Article 3.50-7, Insurance Code, as
 58-5    added by this Act, and may, as necessary, extend the periods of
 58-6    contracts for benefits or administration in effect on September 1,
 58-7    2001, under Article 3.50-4, Insurance Code.
 58-8          SECTION 5.06. As soon as practicable after September 1, 2001,
 58-9    the Health and Human Services Commission shall consult with the
58-10    appropriate federal agencies and make the determination required by
58-11    Section 62.1015, Health and Safety Code, as added by this Act.
58-12          SECTION 5.07. Notwithstanding any applicable state law
58-13    relating to competitive bidding requirements for school districts,
58-14    a school district that is required as of September 1, 2002, to
58-15    participate in the uniform group coverage program established under
58-16    Article 3.50-7, Insurance Code, as added by this Act, is exempt
58-17    from any requirement that the district request bids for health
58-18    insurance coverage before the renewal date of the district's
58-19    contract for health insurance coverage for the 2001-2002 school
58-20    year.
58-21          SECTION 5.08. (a)  Except as otherwise provided by this Act,
58-22    this Act takes effect September 1, 2001.
58-23          (b)  Sections 5.03 and 5.07 of this Act take effect
58-24    immediately if this Act receives a vote of two-thirds of all the
58-25    members elected to each house, as provided by Section 39, Article
58-26    III, Texas Constitution.  If this Act does not receive the vote
58-27    necessary for immediate effect, Sections 5.03 and 5.07 of this Act
 59-1    take effect September 1, 2001.
         _______________________________     _______________________________
             President of the Senate              Speaker of the House
               I certify that H.B. No. 3343 was passed by the House on
         May 1, 2001, by a non-record vote; that the House refused to concur
         in Senate amendments to H.B. No. 3343 on May 10, 2001, and
         requested the appointment of a conference committee to consider the
         differences between the two houses; and that the House adopted the
         conference committee report on H.B. No. 3343 on May 27, 2001, by a
         non-record vote; and that the House adopted H.C.R. No. 328
         authorizing certain corrections in H.B. No. 3343 on May 28, 2001,
         by a non-record vote.
                                             _______________________________
                                                 Chief Clerk of the House
               I certify that H.B. No. 3343 was passed by the Senate, with
         amendments, on May 7, 2001, by a viva-voce vote; at the request of
         the House, the Senate appointed a conference committee to consider
         the differences between the two houses; and that the Senate adopted
         the conference committee report on H.B. No. 3343 on May 27, 2001,
         by the following vote:  Yeas 31, Nays 0; and that the Senate
         adopted H.C.R. No. 328 authorizing certain corrections in H.B. No.
         3343 on May 28, 2001, by a viva-voce vote.
                                             _______________________________
                                                 Secretary of the Senate
         APPROVED:  __________________________
                              Date
                    __________________________
                            Governor