By: Hochberg, et al. (Senate Sponsor - Shapiro)	H.B. No. 3646
	(In the Senate - Received from the House May 13, 2009;
	May 14, 2009, read first time and referred to Committee on
	Education; May 23, 2009, reported adversely, with favorable
	Committee Substitute by the following vote:  Yeas 8, Nays 0;
	May 23, 2009, sent to printer.)
	COMMITTEE SUBSTITUTE FOR H.B. No. 3646	By:  Shapiro

	A BILL TO BE ENTITLED
	AN ACT
	relating to public school finance.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	ARTICLE 1. PUBLIC SCHOOL FINANCE
	SECTION 1.01.  Subchapter D, Chapter 12, Education Code, is
	amended by adding Section 12.1331 to read as follows:
	Sec. 12.1331.  SALARY INCREASE FOR CERTAIN PROFESSIONAL
	STAFF. (a) This section applies to a charter holder that on
	January 1, 2009, operated an open-enrollment charter school.
	(b)  Beginning with the 2009-2010 school year, each charter
	holder shall use at least the amount specified in Subsection (c) to
	increase the salaries of classroom teachers, full-time librarians,
	full-time counselors, and full-time school nurses employed by the
	charter holder who would be entitled to the minimum salary under
	Section 21.402 if employed by a school district.
	(c)  The amount required to be used in accordance with
	Subsection (b) is the greater of:
	(1)  the product of $65 multiplied by the number of
	students in weighted average daily attendance in the school during
	the 2009-2010 school year; or
	(2)  the product of $800 multiplied by the number of
	classroom teachers, full-time librarians, full-time counselors,
	and full-time school nurses employed by the charter holder during
	the 2009-2010 school year who would be entitled to the minimum
	salary under Section 21.402 if employed by a school district.
	(d)  A payment under Subsection (b) is in addition to salary
	the charter holder would otherwise pay the employees during the
	school year.
	SECTION 1.02.  Section 19.007, Education Code, is amended by
	adding Subsection (g) to read as follows:
	(g)  In addition to other amounts received by the district
	under this section, the district is entitled to state aid in an
	amount equal to the greater of:
	(1)  the product of $65 multiplied by the number of
	students in weighted average daily attendance in the district
	during the 2009-2010 school year; or
	(2)  the product of $800 multiplied by the number of
	classroom teachers, full-time librarians, full-time counselors
	certified under Subchapter B, Chapter 21, and full-time school
	nurses who are employed by the district during the 2009-2010 school
	year and who would be entitled to a minimum salary under Section
	21.402 if employed by a school district operating under Chapter 11.
	SECTION 1.03.  Section 19.009, Education Code, is amended by
	adding Subsection (d-2) to read as follows:
	(d-2)  Beginning with the 2009-2010 school year, the
	district shall use the amount received by the district under
	Section 19.007(g) to increase the salaries of classroom teachers,
	full-time librarians, full-time counselors certified under
	Subchapter B, Chapter 21, and full-time school nurses who are
	employed by the district and who would be entitled to a minimum
	salary under Section 21.402 if employed by a school district
	operating under Chapter 11. A payment under this subsection is in
	addition to salary the district would otherwise pay the employees
	during the school year.
	SECTION 1.04.  Section 21.402, Education Code, is amended by
	amending Subsections (a) and (d) and adding Subsections (c-1),
	(c-2), (c-3), and (c-4) to read as follows:
	(a)  Except as provided by Subsection (d), (e), or (f), a
	school district must pay each classroom teacher, full-time
	librarian, full-time counselor certified under Subchapter B, or
	full-time school nurse not less than the minimum monthly salary,
	based on the employee's level of experience in addition to other
	factors, as determined by commissioner rule, determined by the
	following formula:
	MS = SF x FS
	where:
	"MS" is the minimum monthly salary;
	"SF" is the applicable salary factor specified by Subsection
	(c); and
	"FS" is the amount, as determined by the commissioner under
	Subsection (b), of state and local funds per weighted student,
	including funds provided under Section 42.2516 [42.2516(b)(1)(B),
	but not funds provided under Section 42.2516(b)(1)(A), (b)(1)(C),
	(b)(2), or (b)(3)], available to a district eligible to receive
	state assistance under Section 42.302 with a maintenance and
	operations tax rate per $100 of taxable value equal to the product
	of the state compression percentage, as determined under Section
	42.2516, multiplied by $1.50, except that the amount of state and
	local funds per weighted student does not include the amount
	attributable to the increase in the guaranteed level made by
	Chapter 1187, Acts of the 77th Legislature, Regular Session, 2001.
	(c-1)  Beginning with the 2009-2010 school year, each school
	district shall use at least the amount specified in Subsection
	(c-2) to increase the salaries of classroom teachers, full-time
	librarians, full-time counselors certified under Subchapter B, and
	full-time school nurses employed by the district.
	(c-2)  The amount required to be used in accordance with
	Subsection (c-1) is the greater of:
	(1)  the product of $65 multiplied by the number of
	students in weighted average daily attendance in the district
	during the 2009-2010 school year; or
	(2)  the product of $800 multiplied by the number of
	classroom teachers, full-time librarians, full-time counselors
	certified under Subchapter B, and full-time school nurses employed
	by the district during the 2009-2010 school year.
	(c-3)  An increase in salary under Subsection (c-1) does not
	include:
	(1)  any amount an employee would have received for the
	2009-2010 school year under the district's salary schedule for the
	2008-2009 school year, if that schedule had been in effect for the
	2009-2010 school year, including any local supplement the employee
	would have received in the 2009-2010 school year; or
	(2)  any part of the salary to which an employee is
	entitled under Subsection (a).
	(c-4)  Subsections (c-1), (c-2), and (c-3) and this
	subsection expire September 1, 2010.
	(d)  A classroom teacher, full-time librarian, full-time
	counselor certified under Subchapter B, or full-time school nurse
	employed by a school district in the 2009-2010 [2006-2007] school
	year is, as long as the employee is employed by the same district,
	entitled to a salary that is at least equal to the salary the
	employee received for the 2009-2010 [2006-2007] school year.
	SECTION 1.05.  Section 21.415(a), Education Code, is amended
	to read as follows:
	(a)  A school district shall provide in employment contracts
	that qualifying employees may receive an incentive payment under an
	awards program established under Subchapter [N or] O if the
	district participates in the program.
	SECTION 1.06.  Section 21.703(a), Education Code, is amended
	to read as follows:
	(a)  Each state fiscal year, the commissioner shall deposit
	the sum of $1,000 multiplied by the number of classroom teachers in
	this state to the credit of the educator excellence fund in the
	general revenue fund. Each state fiscal year, the agency shall use
	the[:
	[(1)     not more than $100 million of the funds in the
	educator excellence fund to provide grant awards under the awards
	for student achievement program established under Subchapter N; and
	[(2)  any remaining] funds in the educator excellence
	fund to provide a qualifying school district a grant in an amount
	determined by:
	(1) [(A)]  dividing the amount of [remaining] money
	available for distribution in the educator excellence fund by the
	total number of students in average daily attendance in qualifying
	districts for that fiscal year; and
	(2) [(B)]  multiplying the amount determined under
	Subdivision (1) [Paragraph (A)] by the number of students in
	average daily attendance in the district.
	SECTION 1.07.  Section 21.706(a), Education Code, is amended
	to read as follows:
	(a)  Using funds from the educator excellence fund created
	under Section 21.703, the agency shall conduct or contract with
	another entity to conduct a comprehensive evaluation of the [awards
	for student achievement program established under Subchapter N and
	the educator excellence awards] program [established under this
	subchapter]. The evaluation must include:
	(1)  a descriptive analysis of the design and
	implementation of the [awards for student achievement program and
	the educator excellence awards] program at participating campuses
	or school districts, including detailed descriptions of the models
	and approaches used by the campuses or districts in distributing
	incentive awards to classroom teachers;
	(2)  detailed information regarding the distribution
	of incentive awards to classroom teachers under the [awards for
	student achievement program and the educator excellence awards]
	program, including the measurements used by the campuses or
	districts in determining the amounts of incentive awards to
	distribute to classroom teachers;
	(3)  a comprehensive, quantitative analysis of the
	impact of the [awards for student achievement program and the
	educator excellence awards] program at participating campuses or
	districts, including the impact of the various incentive award
	distribution models used by the campuses or districts on key
	outcomes in the program [programs]; and
	(4)  a summary of the approaches used by participating
	campuses or districts in distributing grant funds that are not
	specifically designated for distribution as incentive awards for
	classroom teachers and an assessment of whether those funds are
	used effectively by the participating campuses or districts.
	SECTION 1.08.  The heading to Section 39.114, Education
	Code, is amended to read as follows:
	Sec. 39.114.  USE OF HIGH SCHOOL ALLOTMENT.
	SECTION 1.09.  Sections 39.114(a), (b), and (d), Education
	Code, are amended to read as follows:
	(a)  Except as provided by Subsection (b), a school district
	or campus must use funds allocated under Section 42.160
	[42.2516(b)(3)] to:
	(1)  implement or administer a college readiness
	program that provides academic support and instruction to prepare
	underachieving students for entrance into an institution of higher
	education;
	(2)  implement or administer a program that encourages
	students to pursue advanced academic opportunities, including
	early college high school programs and dual credit, advanced
	placement, and international baccalaureate courses;
	(3)  implement or administer a program that provides
	opportunities for students to take academically rigorous course
	work, including four years of mathematics and four years of science
	at the high school level;
	(4)  implement or administer a program, including
	online course support and professional development, that aligns the
	curriculum for grades six through 12 with postsecondary curriculum
	and expectations; or
	(5)  implement or administer other high school
	completion and success initiatives in grades six through 12
	approved by the commissioner.
	(b)  A school district may use funds allocated under Section
	42.160 [42.2516(b)(3)] on any instructional program in grades six
	through 12 other than an athletic program if:
	(1)  the district is recognized as exceptional by the
	commissioner under the academic accountability indicator adopted
	under Section 39.051(b)(13); and
	(2)  the district's completion rates for grades nine
	through 12 meet or exceed completion rate standards required by the
	commissioner to achieve a rating of exemplary under Section 39.072.
	(d)  The commissioner shall adopt rules to administer this
	section[, including rules related to the permissible use of funds
	allocated under this section to an open-enrollment charter school].
	SECTION 1.10.  Section 41.002(a), Education Code, is amended
	to read as follows:
	(a)  A school district may not have a wealth per student that
	exceeds:
	(1)  $470,000 [the wealth per student that generates
	the amount of maintenance and operations tax revenue per weighted
	student available to a district at the 88th percentile in wealth per
	student], for the district's maintenance and operations tax effort
	equal to or less than the rate equal to the product of the state
	compression percentage, as determined under Section 42.2516,
	multiplied by the maintenance and operations tax rate adopted by
	the district for the 2005 tax year;
	(2)  the wealth per student that generates the amount
	of maintenance and operations tax revenue per weighted student
	available to the Austin Independent School District, as determined
	by the commissioner in cooperation with the Legislative Budget
	Board, for the first six cents by which the district's maintenance
	and operations tax rate exceeds the rate equal to the product of the
	state compression percentage, as determined under Section 42.2516,
	multiplied by the maintenance and operations tax rate adopted by
	the district for the 2005 tax year, subject to Section 41.093(b-1);
	or
	(3)  $319,500, for the district's maintenance and
	operations tax effort that exceeds the first six cents by which the
	district's maintenance and operations tax effort exceeds the rate
	equal to the product of the state compression percentage, as
	determined under Section 42.2516, multiplied by the maintenance and
	operations tax rate adopted by the district for the 2005 tax year.
	SECTION 1.11.  Section 41.093(b-1), Education Code, is
	amended to read as follows:
	(b-1)  If the guaranteed level of state and local funds per
	weighted student per cent of tax effort under Section
	42.302(a-1)(1) [42.302(a-1)(2)] for which state funds are
	appropriated for a school year is an amount at least equal to the
	amount of revenue per weighted student per cent of tax effort
	available to the Austin Independent School District, as determined
	by the commissioner in cooperation with the Legislative Budget
	Board, the commissioner, in computing the amounts described by
	Subsections (a)(1) and (2) and determining the cost of an
	attendance credit, shall exclude maintenance and operations tax
	revenue resulting from the first six cents by which a district's
	maintenance and operations tax rate exceeds the rate equal to the
	product of the state compression percentage, as determined under
	Section 42.2516, multiplied by the maintenance and operations tax
	rate adopted by the district for the 2005 tax year.
	SECTION 1.12.  Subchapter A, Chapter 42, Education Code, is
	amended by adding Section 42.008 to read as follows:
	Sec. 42.008.  LIMITATION ON REVENUE INCREASES. (a)
	Notwithstanding any other provision of this title, a school
	district is not entitled in any school year to receive an amount of
	state and local maintenance and operations revenue per student in
	weighted average daily attendance that exceeds by more than six
	percent the amount of state and local maintenance and operations
	revenue per student in weighted average daily attendance received
	by the district during the preceding school year.
	(a-1)  Subsection (a) applies beginning with the 2010-2011
	school year. For the 2009-2010 school year, a school district is
	not entitled to receive an amount of state and local maintenance and
	operations revenue per student in weighted average daily attendance
	that exceeds by more than six percent the amount of state and local
	maintenance and operations revenue per student in weighted average
	daily attendance that the district would have received during that
	year under Chapter 41 and this chapter, as those chapters existed on
	January 1, 2009, at a maintenance and operations tax rate equal to
	the product of the state compression percentage for that year, as
	determined under Section 42.2516, multiplied by the maintenance and
	operations tax rate adopted by the district for the 2005 tax year.
	This subsection expires September 1, 2010.
	(b)  Enrichment revenue to which a school district is
	entitled under Section 42.302 is not included for purposes of
	determining the limitation imposed by this section.
	(c)  The commissioner shall make adjustments to amounts due
	to a school district under this chapter or amounts required for a
	district to comply with Chapter 41 as necessary to comply with the
	limitation imposed by this section.
	(d)  A determination by the commissioner under this section
	is final and may not be appealed.
	SECTION 1.13.  Section 42.101, Education Code, is amended to
	read as follows:
	Sec. 42.101.  BASIC ALLOTMENT. (a) For each student in
	average daily attendance, not including the time students spend
	each day in special education programs in an instructional
	arrangement other than mainstream or career and technology
	education programs, for which an additional allotment is made under
	Subchapter C, a district is entitled to an allotment [in an amount]
	equal to the lesser of $4,700 or the amount that results from the
	following formula:
	A = $4,700 X (DCR/MCR)
	where:
	"A" is the allotment to which a district is entitled;
	"DCR" is the district's compressed tax rate, which is the
	product of the state compression percentage, as determined under
	Section 42.2516, multiplied by the maintenance and operations tax
	rate adopted by the district for the 2005 tax year; and
	"MCR" is the state maximum compressed tax rate, which is the
	product of the state compression percentage, as determined under
	Section 42.2516, multiplied by $1.50 [product of the amount per
	student per cent of tax effort available to a district at the
	percentile in wealth per student specified by Section
	42.302(a-1)(1), multiplied by 86].
	(b)  A greater amount for any school year may be provided by
	appropriation.
	SECTION 1.14.  Section 42.106, Education Code, is amended to
	read as follows:
	Sec. 42.106.  TUITION ALLOTMENT [ADJUSTED PROPERTY VALUE]
	FOR DISTRICTS NOT OFFERING ALL GRADE LEVELS. A [For purposes of
	this chapter, the taxable value of property of a] school district
	that contracts for students residing in the district to be educated
	in another district under Section 25.039(a) is entitled to receive
	an allotment equal to [adjusted by applying the formula:
	[ADPV = DPV - (TN/.015)
	[where:
	["ADPV" is the district's adjusted taxable value of property;
	["DPV" is the taxable value of property in the district for
	the preceding tax year determined under Subchapter M, Chapter 403,
	Government Code; and
	["TN" is] the total amount of tuition required to be paid by
	the district under Section 25.039 [for the school year for which the
	adjustment is made], not to exceed the amount specified by
	commissioner rule under Section 25.039(b).
	SECTION 1.15.  Section 42.152(c), Education Code, is amended
	to read as follows:
	(c)  Funds allocated under this section shall be used to fund
	supplemental programs and services designed to eliminate any
	disparity in performance on assessment instruments administered
	under Subchapter B, Chapter 39, or disparity in the rates of high
	school completion between students at risk of dropping out of
	school, as defined by Section 29.081, and all other students.
	Specifically, the funds, other than an indirect cost allotment
	established under State Board of Education rule, which may not
	exceed 45 [15] percent, may be used to meet the costs of providing a
	compensatory, intensive, or accelerated instruction program under
	Section 29.081 or an alternative education program established
	under Section 37.008 or to support a program eligible under Title I
	of the Elementary and Secondary Education Act of 1965, as provided
	by Pub. L. No. 103-382 and its subsequent amendments, and by federal
	regulations implementing that Act, at a campus at which at least 40
	percent of the students are educationally disadvantaged. In
	meeting the costs of providing a compensatory, intensive, or
	accelerated instruction program under Section 29.081, a district's
	compensatory education allotment shall be used for costs
	supplementary to the regular education program, such as costs for
	program and student evaluation, instructional materials and
	equipment and other supplies required for quality instruction,
	supplemental staff expenses, salary for teachers of at-risk
	students, smaller class size, and individualized instruction. A
	home-rule school district or an open-enrollment charter school must
	use funds allocated under Subsection (a) for a purpose authorized
	in this subsection but is not otherwise subject to Subchapter C,
	Chapter 29. Notwithstanding any other provisions of this section:
	(1)  to ensure that a sufficient amount of the funds
	allotted under this section are available to supplement
	instructional programs and services, no more than 18 percent of the
	funds allotted under this section may be used to fund disciplinary
	alternative education programs established under Section 37.008;
	(2)  the commissioner may waive the limitations of
	Subdivision (1) upon an annual petition, by a district's board and a
	district's site-based decision making committee, presenting the
	reason for the need to spend supplemental compensatory education
	funds on disciplinary alternative education programs under Section
	37.008, provided that:
	(A)  the district in its petition reports the
	number of students in each grade level, by demographic subgroup,
	not making satisfactory progress under the state's assessment
	system; and
	(B)  the commissioner makes the waiver request
	information available annually to the public on the agency's
	website; and
	(3)  for purposes of this subsection, a program
	specifically designed to serve students at risk of dropping out of
	school, as defined by Section 29.081, is considered to be a program
	supplemental to the regular education program, and a district may
	use its compensatory education allotment for such a program.
	SECTION 1.16.  Section 42.154(a), Education Code, is amended
	to read as follows:
	(a)  For each full-time equivalent student in average daily
	attendance in an approved career and technology education program
	in grades nine through 12 or in career and technology education
	programs for students with disabilities in grades seven through 12,
	a district is entitled to:
	(1)  an annual allotment equal to the adjusted basic
	allotment multiplied by a weight of 1.35; and
	(2)  $50, if the student is enrolled in:
	(A)  two or more advanced career and technology
	education classes for a total of three or more credits; or
	(B)  an advanced course as part of a tech-prep
	program under Subchapter T, Chapter 61.
	SECTION 1.17.  Subchapter C, Chapter 42, Education Code, is
	amended by adding Section 42.1541 to read as follows:
	Sec. 42.1541.  INDIRECT COST ALLOTMENTS. (a) The State
	Board of Education shall by rule increase the indirect cost
	allotments established under Sections 42.151(h), 42.152(c),
	42.153(b), and 42.154(a-1) and (c) and in effect for the 2008-2009
	school year as necessary to reflect the increased percentage of
	total maintenance and operations funding represented by the basic
	allotment under Section 42.101 as a result of amendment of that
	section by H.B. No. 3646, Acts of the 81st Legislature, Regular
	Session, 2009.
	(b)  The board shall take the action required by Subsection
	(a) not later than the date that permits the increased indirect cost
	allotments to apply beginning with the 2009-2010 school year.
	(c)  This section expires September 1, 2010.
	SECTION 1.18.  Subchapter C, Chapter 42, Education Code, is
	amended by adding Section 42.160 to read as follows:
	Sec. 42.160.  HIGH SCHOOL ALLOTMENT. (a) A school district
	is entitled to an annual allotment of $275 for each student in
	average daily attendance in grades 9 through 12 in the district.
	(b)  A school district that is required to take action under
	Chapter 41 to reduce its wealth per student to the equalized wealth
	level is entitled to a credit, in the amount of the allotments to
	which the district is entitled under this section, against the
	total amount required under Section 41.093 for the district to
	purchase attendance credits. A school district that is otherwise
	ineligible for state aid under this chapter is entitled to receive
	allotments under this section.
	(c)  An open-enrollment charter school is entitled to an
	allotment under this section in the same manner as a school
	district.
	(d)  The commissioner shall adopt rules to administer this
	section, including rules related to the permissible use of funds
	allocated under this section to an open-enrollment charter school.
	SECTION 1.19.  Section 42.2516, Education Code, is amended
	to read as follows:
	Sec. 42.2516.  ADDITIONAL STATE AID FOR TAX REDUCTION. (a)
	In this section, "state compression percentage" means the
	percentage, as determined by the commissioner, of a school
	district's adopted maintenance and operations tax rate for the 2005
	tax year that serves as the basis for state funding for tax rate
	reduction under this section. The commissioner shall determine the
	state compression percentage for each school year based on the
	percentage by which a district is able to reduce the district's
	maintenance and operations tax rate for that year, as compared to
	the district's adopted maintenance and operations tax rate for the
	2005 tax year, as a result of state funds appropriated for
	distribution under this section for that year from the property tax
	relief fund established under Section 403.109, Government Code, or
	from another funding source available for school district property
	tax relief.
	(b)  Notwithstanding any other provision of this title, a
	school district that imposes a maintenance and operations tax at a
	rate at least equal to the product of the state compression
	percentage multiplied by the maintenance and operations tax rate
	adopted by the district for the 2005 tax year is entitled to at
	least the amount of state revenue necessary to provide the district
	with the sum of:
	(1)  as calculated under Subsection (e), the amount of
	state and local revenue per student in weighted average daily
	attendance for maintenance and operations that the district would
	have received during the 2009-2010 school year under Chapter 41 and
	this chapter, as those chapters existed on January 1, 2009, at a
	maintenance and operations tax rate equal to the product of the
	state compression percentage for that year multiplied by the
	maintenance and operations tax rate adopted by the district for the
	2005 tax year;
	(2)  an amount equal to the product of $135 multiplied
	by the number of students in weighted average daily attendance in
	the district;
	(3)  an amount equal to the amount the district is
	required to pay into the tax increment fund for a reinvestment zone
	under Section 311.013(n), Tax Code, in the current tax year; and
	(4)  any amount to which the district is entitled under
	Section 42.106.
	(c)  Enrichment revenue to which a school district is
	entitled under Section 42.302 is not included for purposes of
	determining the amount to which a district is entitled under this
	section.
	(d)  In determining the amount to which a district is
	entitled under Subsection (b)(1), the commissioner shall:
	(1)  include any amounts received by the district
	during the 2008-2009 school year under Rider 86, page III-23,
	Chapter 1428 (H.B. 1), Acts of the 80th Legislature, Regular
	Session, 2007 (the General Appropriations Act); and
	(2)  for a school district that paid tuition under
	Section 25.039 during the 2008-2009 school year, reduce the amount
	to which the district is entitled by the amount of tuition paid
	during that school year.
	(e)  For purposes of determining the total amount of state
	and local revenue to which a district is entitled under Subsection
	(b)(1), the commissioner shall determine the amount of state and
	local revenue per student in weighted average daily attendance to
	which the district would have been entitled during the 2009-2010
	school year under Chapter 41 and this chapter, as they existed on
	January 1, 2009, and multiply that amount by the number of students
	in weighted average daily attendance as determined in accordance
	with the changes to Chapter 41 and this chapter, including the
	repeal of former Section 42.103(e), made by H.B. No. 3646, Acts of
	the 81st Legislature, Regular Session, 2009.
	(f)  A school district that is required to take action under
	Chapter 41 to reduce its wealth per student to the equalized wealth
	level and that is entitled to state revenue under this section may
	receive that revenue through an adjustment against the total amount
	of attendance credits required to be purchased under Subchapter D,
	Chapter 41, or the total number of nonresident students required to
	be educated under Subchapter E, Chapter 41, as determined by the
	commissioner.
	(g)  The commissioner may adopt rules necessary to implement
	this section.
	(h)  A determination by the commissioner under this section
	is final and may not be appealed.
	[(a-1)     Subsection (a) applies beginning with the state
	fiscal year ending August 31, 2009. For the state fiscal year
	ending August 31, 2007, the state compression percentage is 88.67
	percent. For the state fiscal year ending August 31, 2008, the
	state compression percentage is 66.67 percent. This subsection
	expires September 1, 2009.
	[(b)     Subject to Subsections (b-1), (b-2), (f-1), (g), and
	(h), but notwithstanding any other provision of this title, a
	school district is entitled to state revenue necessary to provide
	the district with the sum of:
	[(1)     the amount of state revenue necessary to maintain
	state and local revenue per student in weighted average daily
	attendance in the amount equal to the greater of:
	[(A)     the amount of state and local revenue per
	student in weighted average daily attendance for the maintenance
	and operations of the district available to the district for the
	2005-2006 school year;
	[(B)     the amount of state and local revenue per
	student in weighted average daily attendance for the maintenance
	and operations of the district to which the district would have been
	entitled for the 2006-2007 school year under this chapter, as it
	existed on January 1, 2006, or, if the district would have been
	subject to Chapter 41, as that chapter existed on January 1, 2006,
	the amount to which the district would have been entitled under that
	chapter, based on the funding elements in effect for the 2005-2006
	school year, if the district imposed a maintenance and operations
	tax at the rate adopted by the district for the 2005 tax year; or
	[(C)     the amount of state and local revenue per
	student in weighted average daily attendance for the maintenance
	and operations of the district to which the district would have been
	entitled for the 2006-2007 school year under this chapter, as it
	existed on January 1, 2006, or, if the district would have been
	subject to Chapter 41, as that chapter existed on January 1, 2006,
	the amount to which the district would have been entitled under that
	chapter, based on the funding elements in effect for the 2005-2006
	school year, if the district imposed a maintenance and operations
	tax at the rate equal to the rate described by Section 26.08(i) or
	(k)(1), Tax Code, as applicable, for the 2006 tax year;
	[(2)     an amount equal to the product of $2,500
	multiplied by the number of classroom teachers, full-time
	librarians, full-time counselors certified under Subchapter B,
	Chapter 21, and full-time school nurses employed by the district
	and entitled to a minimum salary under Section 21.402; and
	[(3)     an amount equal to the product of $275 multiplied
	by the number of students in average daily attendance in grades nine
	through 12 in the district.
	[(b-1)     The amount determined for a school district under
	Subsection (b) is increased or reduced as follows:
	[(1)     if for any school year the district is entitled to
	a greater allotment under Section 42.158 than the allotment to
	which the district was entitled under that section for the school
	year on which the district's entitlement under Subsection (b) is
	based, the district's entitlement under Subsection (b) is increased
	by an amount equal to the difference between the amount to which the
	district is entitled under Section 42.158 for that school year and
	the amount to which the district was entitled under that section
	for:
	[(A)     the 2005-2006 school year, if the amount
	determined for the district under Subsection (b) is determined
	under Subsection (b)(1)(A); or
	[(B)     the 2006-2007 school year, if the amount
	determined for the district under Subsection (b) is determined
	under Subsection (b)(1)(B) or (C); and
	[(2)     if for any school year the district is not
	entitled to an allotment under Section 42.158 or is entitled to a
	lesser allotment under that section than the allotment to which the
	district was entitled under that section for the school year on
	which the district's entitlement under Subsection (b) is based, the
	district's entitlement under Subsection (b) is reduced by an amount
	equal to the difference between the amount to which the district was
	entitled under Section 42.158 for the 2005-2006 or 2006-2007 school
	year, as appropriate based on whether the district's entitlement
	under Subsection (b) is determined under Subsection (b)(1)(A), (B),
	or (C), and the amount to which the district is entitled under
	Section 42.158 for the current school year.
	[(b-2)     The amount determined for a school district under
	Subsection (b) is increased or reduced as follows:
	[(1)     if for any school year the district is entitled to
	a greater allotment under Section 42.155 or greater additional
	state aid under Section 42.2515 than the allotment or additional
	state aid to which the district was entitled under Section 42.155 or
	42.2515, as applicable, for the school year on which the district's
	entitlement under Subsection (b) is based, the district's
	entitlement under Subsection (b) is increased by an amount equal to
	the difference between the amount to which the district is entitled
	under Section 42.155 or 42.2515, as applicable, for that school
	year and the amount to which the district was entitled under the
	applicable section, as applicable for:
	[(A)     the 2005-2006 school year, if the amount
	determined for the district under Subsection (b) is determined
	under Subsection (b)(1)(A); or
	[(B)     the 2006-2007 school year, if the amount
	determined for the district under Subsection (b) is determined
	under Subsection (b)(1)(B) or (C); and
	[(2)     if for any school year the district is not
	entitled to an allotment under Section 42.155 or additional state
	aid under Section 42.2515 or is entitled to a lesser allotment or
	less additional state aid under the applicable section than the
	allotment or additional state aid to which the district was
	entitled under the applicable section for the school year on which
	the district's entitlement under Subsection (b) is based, the
	district's entitlement under Subsection (b) is reduced by an amount
	equal to the difference between the amount to which the district was
	entitled under Section 42.155 or 42.2515, as applicable, for the
	2005-2006 or 2006-2007 school year, as appropriate based on whether
	the district's entitlement under Subsection (b) is determined under
	Subsection (b)(1)(A), (B), or (C), and the amount to which the
	district is entitled under the applicable section for the current
	school year.
	[(c)     In determining the amount to which a district is
	entitled under Subsection (b)(1), the commissioner shall include:
	[(1)     any amounts described by Rider 69, page III-19,
	Chapter 1369, Acts of the 79th Legislature, Regular Session, 2005
	(the General Appropriations Act);
	[(2)     for a school district that received additional
	revenue for the 2005-2006 school year as a result of an agreement
	under Subchapter E, Chapter 41:
	[(A)     if the amount of state revenue to which the
	district is entitled under Subsection (b) is computed based on the
	amount described by Subsection (b)(1)(A), the amount of that
	additional revenue retained by the district for the 2005-2006
	school year, which is the amount by which the total maintenance and
	operations revenue available to the district for that school year
	exceeded the total maintenance and operations revenue that would
	have been available to the district for that school year if the
	district had not entered into the agreement, less any amount the
	district paid to another entity under the agreement; or
	[(B)     if the amount of state revenue to which the
	district is entitled under Subsection (b) is computed based on the
	amount described by Subsection (b)(1)(B) or (C), the amount of the
	additional revenue that would have been retained by the district
	for the 2006-2007 school year if the district had entered into the
	agreement on the same terms as under the agreement for the 2005-2006
	school year, which is the amount by which the total maintenance and
	operations revenue that would have been available to the district
	for the 2006-2007 school year if the district had entered into the
	agreement exceeds the total maintenance and operations revenue that
	would have been available to the district for that school year if
	the district had not entered into the agreement and had imposed a
	maintenance and operations tax at the rate of $1.50 on the $100
	valuation of taxable property, less any amount the district would
	have paid to another entity under the agreement;
	[(3)     any amount necessary to reflect an adjustment
	made by the commissioner under Section 42.005;
	[(4)     any amount necessary to reflect an adjustment
	made by the commissioner under Section 42.2521; and
	[(5)     any amount necessary to reflect an adjustment
	made by the commissioner under Section 42.2531.
	[(d)     If, for the 2006-2007 or a subsequent school year, a
	school district enters into an agreement under Subchapter E,
	Chapter 41, the commissioner shall reduce the amount of state
	revenue to which the district is entitled under Subsection (b) for
	that school year by an amount equal to any additional revenue for
	that school year that the district receives and retains as a result
	of that agreement, which is the amount by which the total
	maintenance and operations revenue available to the district
	exceeds the total maintenance and operations revenue that would
	have been available to the district if the district had not entered
	into the agreement and had imposed a maintenance and operations tax
	at the maximum rate permitted under Section 45.003(d), less any
	amount the district pays to another entity under the agreement.
	[(e)     The amount of revenue to which a school district is
	entitled because of the technology allotment under Section 32.005
	is not included in making a determination under Subsection (b)(1).
	[(f)     For purposes of determining the amount of revenue to
	which a school district is entitled under this section, the
	commissioner shall use the average tax collection rate for the
	district for the 2003, 2004, and 2005 tax years.
	[(f-1)     The commissioner shall, in accordance with rules
	adopted by the commissioner, adjust the amount of a school
	district's local revenue derived from maintenance and operations
	tax collections, as calculated for purposes of determining the
	amount of state revenue to which the district is entitled under this
	section, if the district, for the 2007 tax year or a subsequent tax
	year:
	[(1)     adopts an exemption under Section 11.13(n), Tax
	Code, that was not in effect for the 2005 or 2006 tax year, or
	eliminates an exemption under Section 11.13(n), Tax Code, that was
	in effect for the 2005 or 2006 tax year;
	[(2)     adopts an exemption under Section 11.13(n), Tax
	Code, at a greater or lesser percentage than the percentage in
	effect for the district for the 2005 or 2006 tax year;
	[(3)     grants an exemption under an agreement authorized
	by Chapter 312, Tax Code, that was not in effect for the 2005 or 2006
	tax year, or ceases to grant an exemption authorized by that chapter
	that was in effect for the 2005 or 2006 tax year; or
	[(4)     agrees to deposit taxes into a tax increment fund
	created under Chapter 311, Tax Code, under a reinvestment zone
	financing plan that was not in effect for the 2005 or 2006 tax year,
	or ceases depositing taxes into a tax increment fund created under
	that chapter under a reinvestment zone financing plan that was in
	effect for the 2005 or 2006 tax year.
	[(f-2)     The rules adopted by the commissioner under
	Subsection (f-1) must:
	[(1)     require the commissioner to determine, as if this
	section did not exist, the effect under Chapter 41 and this chapter
	of a school district's action described by Subsection (f-1)(1),
	(2), (3), or (4) on the total state revenue to which the district
	would be entitled or the cost to the district of purchasing
	sufficient attendance credits to reduce the district's wealth per
	student to the equalized wealth level; and
	[(2)     require an increase or reduction in the amount of
	state revenue to which a school district is entitled under
	Subsection (b) that is substantially equivalent to any change in
	total state revenue or the cost of purchasing attendance credits
	that would apply to the district if this section did not exist.
	[(f-3)     An adjustment made by the commissioner under the
	rules adopted under Subsection (f-1) is final and may not be
	appealed.
	[(g)     If a school district adopts a maintenance and
	operations tax rate that is below the rate equal to the product of
	the state compression percentage multiplied by the maintenance and
	operations tax rate adopted by the district for the 2005 tax year,
	the commissioner shall reduce the district's entitlement under this
	section in proportion to the amount by which the adopted rate is
	less than the rate equal to the product of the state compression
	percentage multiplied by the rate adopted by the district for the
	2005 tax year.
	[(h)     Notwithstanding any other provision of this title, if
	the amount of state and local revenue per student in weighted
	average daily attendance for the maintenance and operations of the
	district available to the district in a school year as a result of
	increases to the equalized wealth level under Section 41.002, the
	basic allotment under Section 42.101, and the guaranteed level
	under Section 42.302 made by H.B. No. 1, Acts of the 79th
	Legislature, 3rd Called Session, 2006, exceeds the amount to which
	a district is entitled under Subsection (b) for that school year,
	the commissioner must:
	[(1)     reduce the amount of state aid provided to the
	district for that school year by an amount equal to the excess
	revenue, as determined by the commissioner; or
	[(2)     for a district with a wealth per student greater
	than the applicable amount described by Section 41.002(a), require
	the district to purchase a number of attendance credits for that
	school year at a cost equal to the amount of excess revenue, as
	determined by the commissioner.
	[(i)     A school district that is required to take action under
	Chapter 41 to reduce its wealth per student to the equalized wealth
	level and that is entitled to state revenue under this section may
	receive that revenue through an adjustment against the total amount
	of attendance credits required to be purchased under Subchapter D,
	Chapter 41, or the total number of nonresident students required to
	be educated under Subchapter E, Chapter 41, as determined by the
	commissioner.
	[(j)     If a school district reduces its maintenance and
	operations tax rate by an amount less than the rate equal to the
	product of the difference between the state compression percentage
	for the preceding year and the state compression percentage for the
	year of the reduction, multiplied by the maintenance and operations
	tax rate adopted by the district for the 2005 tax year, the
	commissioner may not reduce the amount to which the district is
	entitled under this section on the basis of the additional revenue
	collected by the district.
	[(k)     The commissioner may adopt rules necessary to
	administer this section.
	[(l)     A determination by the commissioner under this section
	is final and may not be appealed.]
	SECTION 1.20.  Section 42.252(a), Education Code, is amended
	to read as follows:
	(a)  Each school district's share of the Foundation School
	Program is determined by the following formula:
	LFA = TR X DPV
	where:
	"LFA" is the school district's local share;
	"TR" is a tax rate which for each hundred dollars of valuation
	is an effective tax rate of the amount equal to the product of the
	state compression percentage, as determined under Section 42.2516,
	multiplied by the lesser of:
	(1)  $1.50; or
	(2)  the maintenance and operations tax rate adopted by
	the district for the 2005 tax year [$0.86]; and
	"DPV" is the taxable value of property in the school district
	for the preceding tax year determined under Subchapter M, Chapter
	403, Government Code.
	SECTION 1.21.  Section 42.253, Education Code, is amended by
	adding Subsection (c-1) to read as follows:
	(c-1)  The amounts to be paid under Section 42.2516(b)(3)
	shall be paid at the same time as other state revenue is paid to the
	district. Payments shall be based on amounts paid under Section
	42.2516(b)(3) for the preceding year. Any deficiency shall be paid
	to the district at the same time the final amount to be paid to the
	district is determined, and any overpayment shall be deducted from
	the payments the district would otherwise receive in the following
	year.
	SECTION 1.22.  Section 42.260(a), Education Code, is amended
	to read as follows:
	(a)  In this section, "participating charter school" means
	an open-enrollment charter school that participates in the uniform
	group coverage program established under Chapter 1579, Insurance
	Code [has the meaning assigned by Section 42.2514].
	SECTION 1.23.  Sections 42.302(a), (a-1), and (a-2),
	Education Code, are amended to read as follows:
	(a)  Each school district is guaranteed a specified amount
	per weighted student in state and local funds for each cent of tax
	effort over that required for the district's local fund assignment
	up to the maximum level specified in this subchapter. The amount of
	state support, subject only to the maximum amount under Section
	42.303, is determined by the formula:
	GYA = (GL X WADA X DTR X 100) - LR
	where:
	"GYA" is the guaranteed yield amount of state funds to be
	allocated to the district;
	"GL" is the dollar amount guaranteed level of state and local
	funds per weighted student per cent of tax effort, which is an
	amount described by Subsection (a-1) or a greater amount for any
	year provided by appropriation;
	"WADA" is the number of students in weighted average daily
	attendance, which is calculated by dividing the sum of the school
	district's allotments under Subchapters B and C, less any allotment
	to the district for transportation, any allotment under Section
	42.158 or 42.160, and 50 percent of the adjustment under Section
	42.102, by the basic allotment for the applicable year;
	"DTR" is the district enrichment tax rate of the school
	district, which is determined by subtracting the amounts specified
	by Subsection (b) from the total amount of maintenance and
	operations taxes collected by the school district for the
	applicable school year and dividing the difference by the quotient
	of the district's taxable value of property as determined under
	Subchapter M, Chapter 403, Government Code, or, if applicable,
	under Section 42.2521, divided by 100; and
	"LR" is the local revenue, which is determined by multiplying
	"DTR" by the quotient of the district's taxable value of property as
	determined under Subchapter M, Chapter 403, Government Code, or, if
	applicable, under Section 42.2521, divided by 100.
	(a-1)  In this section, "wealth per student" has the meaning
	assigned by Section 41.001. For purposes of Subsection (a), the
	dollar amount guaranteed level of state and local funds per
	weighted student per cent of tax effort ("GL") for a school district
	is:
	(1)  the greater of [the amount of district tax revenue
	per weighted student per cent of tax effort available to a district
	at the 88th percentile in wealth per student, as determined by the
	commissioner in cooperation with the Legislative Budget Board, for
	the district's maintenance and operations tax effort equal to or
	less than the rate equal to the product of the state compression
	percentage, as determined under Section 42.2516, multiplied by the
	maintenance and operations tax rate adopted by the district for the
	2005 tax year;
	[(2)]  the amount of district tax revenue per weighted
	student per cent of tax effort that would be available to the Austin
	Independent School District, as determined by the commissioner in
	cooperation with the Legislative Budget Board, if the reduction of
	the limitation on tax increases as provided by Section 11.26(a-1),
	(a-2), or (a-3), Tax Code, did not apply, or the amount of district
	tax revenue per weighted student per cent of tax effort used for
	purposes of this subdivision in the preceding school year, for the
	first six cents by which the district's maintenance and operations
	tax rate exceeds the rate equal to the product of the state
	compression percentage, as determined under Section 42.2516 [and
	notwithstanding the limitation on district enrichment tax rate
	("DTR") under Section 42.303], multiplied by the maintenance and
	operations tax rate adopted by the district for the 2005 tax year;
	and
	(2) [(3)]  $31.95, for the district's maintenance and
	operations tax effort that exceeds the amount of tax effort
	described by Subdivision (1) [(2)].
	(a-2)  The limitation on district enrichment tax rate
	("DTR") under Section 42.303 does not apply to the district's
	maintenance and operations tax effort described by Subsection
	(a-1)(1) [(a-1)(2)].
	SECTION 1.24.  Section 42.303, Education Code, is amended to
	read as follows:
	Sec. 42.303.  LIMITATION ON ENRICHMENT TAX RATE. The
	district enrichment tax rate ("DTR") under Section 42.302 may not
	exceed the amount per $100 of valuation by which the maximum rate
	permitted under Section 45.003 exceeds the rate used to determine
	the district's local share under Section 42.252 [of $0.86], or a
	greater amount for any year provided by appropriation.
	SECTION 1.25.  Chapter 42, Education Code, is amended by
	adding Subchapter I to read as follows:
	SUBCHAPTER I. COMPREHENSIVE REVIEW OF PUBLIC SCHOOL FINANCE
	WEIGHTS AND ADJUSTMENTS
	Sec. 42.451.  SELECT COMMITTEE ON PUBLIC SCHOOL FINANCE
	WEIGHTS AND ADJUSTMENTS. (a) The Select Committee on Public School
	Finance Weights and Adjustments is established to conduct a
	comprehensive review of weights and adjustments under the public
	school finance system.
	(b)  The committee is composed of 15 members appointed as
	follows:
	(1)  two members of the senate, appointed by the
	lieutenant governor;
	(2)  two members of the house of representatives,
	appointed by the speaker of the house of representatives;
	(3)  the commissioner of education;
	(4)  one public school teacher, one public school
	principal, and one public school district superintendent, each
	currently employed in this state and each appointed jointly by the
	lieutenant governor and the speaker of the house of
	representatives;
	(5)  two persons, each of whom is currently employed as
	an educator in a public school in this state and each appointed
	jointly by the lieutenant governor and the speaker of the house of
	representatives;
	(6)  one representative from the business community or
	the public, appointed by the lieutenant governor;
	(7)  one representative from the business community or
	the public, appointed by the speaker of the house of
	representatives; and
	(8)  three representatives from the business community
	or the public, at least one of whom has one or more children who
	currently attend public school in this state, appointed by the
	governor.
	(c)  The governor, lieutenant governor, and speaker of the
	house of representatives shall make the appointments required by
	Subsection (b) in a timely fashion to permit the committee to comply
	with Section 42.452(a).
	Sec. 42.452.  COMMITTEE MEETINGS. (a) Not later than
	October 1, 2009, the committee shall hold an organizational
	meeting.
	(b)  The lieutenant governor and speaker of the house of
	representatives shall each appoint a committee member to serve as
	co-chair.
	(c)  Committee meetings shall be held at the call of the
	co-chairs.
	Sec. 42.453.  COMPENSATION AND REIMBURSEMENT. (a) A member
	of the committee is entitled to reimbursement for actual and
	necessary expenses incurred in performing committee duties.
	(b)  A legislative member of the committee is entitled to
	reimbursement from the appropriate fund of the house of the
	legislature in which the member serves.
	(c)  A member other than a legislative member is entitled to
	reimbursement from funds appropriated to the committee.
	Sec. 42.454.  COMMITTEE STAFF. (a) The co-chairs of the
	committee may appoint a committee director and staff to support the
	work of the committee.
	(b)  The director and staff members are employees of the
	Texas Legislative Council and shall be paid from funds appropriated
	to the council for the committee's operations.
	(c)  The committee may contract with one or more consultants
	if necessary to enable the committee to perform its duties under
	this subchapter.
	Sec. 42.455.  CONDUCT OF REVIEW. (a) The committee shall
	conduct public hearings throughout the state and solicit testimony
	about the weights and adjustments under the finance system from
	parents of public school children and other interested persons. At
	least one public hearing must be held at a public school during a
	time that public school students are able to attend the hearing.
	(b)  The commissioner shall ensure that the committee has
	access to any documentation and agency personnel the committee
	requests.
	(c)  The Legislative Budget Board, the comptroller, the
	state auditor, and any other state agency, official, or personnel
	shall cooperate with the committee in carrying out its duties under
	this subchapter.
	(d)  The committee may coordinate the review under this
	subchapter with any other legislative study, as appropriate.
	Sec. 42.456.  REPORT. (a) Not later than December 1, 2010,
	the committee shall provide a report that:
	(1)  states the findings of the review conducted under
	this subchapter; and
	(2)  includes any recommendations for statutory
	changes.
	(b)  The report must be approved by a majority of the
	committee members. A member who disagrees with any part of the
	report may attach a dissenting statement to the report.
	Sec. 42.457.  EXPIRATION. This subchapter expires January
	11, 2011.
	SECTION 1.26.  Section 46.033, Education Code, is amended to
	read as follows:
	Sec. 46.033.  ELIGIBLE BONDS.  Bonds, including bonds
	issued under Section 45.006, are eligible to be paid with state and
	local funds under this subchapter if:
	(1)  the district made payments on the bonds during the
	final [2006-2007] school year of the preceding state fiscal
	biennium or taxes levied to pay the principal of and interest on the
	bonds were included in the district's audited debt service
	collections for that school year; and
	(2)  the district does not receive state assistance
	under Subchapter A for payment of the principal and interest on the
	bonds.
	SECTION 1.27.  Section 46.034(c), Education Code, is amended
	to read as follows:
	(c)  If the amount required to pay the principal of and
	interest on eligible bonds in a school year is less than the amount
	of payments made by the district on the bonds during the final
	[2006-2007] school year of the preceding state fiscal biennium or
	the district's audited debt service collections for that school
	year, the district may not receive aid in excess of the amount that,
	when added to the district's local revenue for the school year,
	equals the amount required to pay the principal of and interest on
	the bonds.
	SECTION 1.28.  Sections 403.302(d), (i), and (j), Government
	Code, are amended to read as follows:
	(d)  For the purposes of this section, "taxable value" means
	the market value of all taxable property less:
	(1)  the total dollar amount of any residence homestead
	exemptions lawfully granted under Section 11.13(b) or (c), Tax
	Code, in the year that is the subject of the study for each school
	district;
	(2)  one-half of the total dollar amount of any
	residence homestead exemptions granted under Section 11.13(n), Tax
	Code, in the year that is the subject of the study for each school
	district;
	(3)  the total dollar amount of any exemptions granted
	before May 31, 1993, within a reinvestment zone under agreements
	authorized by Chapter 312, Tax Code;
	(4)  subject to Subsection (e), the total dollar amount
	of any captured appraised value of property that:
	(A)  is within a reinvestment zone created on or
	before May 31, 1999, or is proposed to be included within the
	boundaries of a reinvestment zone as the boundaries of the zone and
	the proposed portion of tax increment paid into the tax increment
	fund by a school district are described in a written notification
	provided by the municipality or the board of directors of the zone
	to the governing bodies of the other taxing units in the manner
	provided by Section 311.003(e), Tax Code, before May 31, 1999, and
	within the boundaries of the zone as those boundaries existed on
	September 1, 1999, including subsequent improvements to the
	property regardless of when made;
	(B)  generates taxes paid into a tax increment
	fund created under Chapter 311, Tax Code, under a reinvestment zone
	financing plan approved under Section 311.011(d), Tax Code, on or
	before September 1, 1999; and
	(C)  is eligible for tax increment financing under
	Chapter 311, Tax Code;
	(5)  [for a school district for which a deduction from
	taxable value is made under Subdivision (4), an amount equal to the
	taxable value required to generate revenue when taxed at the school
	district's current tax rate in an amount that, when added to the
	taxes of the district paid into a tax increment fund as described by
	Subdivision (4)(B), is equal to the total amount of taxes the
	district would have paid into the tax increment fund if the district
	levied taxes at the rate the district levied in 2005;
	[(6)]  the total dollar amount of any captured
	appraised value of property that:
	(A)  is within a reinvestment zone:
	(i)  created on or before December 31, 2008,
	by a municipality with a population of less than 18,000; and
	(ii)  the project plan for which includes
	the alteration, remodeling, repair, or reconstruction of a
	structure that is included on the National Register of Historic
	Places and requires that a portion of the tax increment of the zone
	be used for the improvement or construction of related facilities
	or for affordable housing;
	(B)  generates school district taxes that are paid
	into a tax increment fund created under Chapter 311, Tax Code; and
	(C)  is eligible for tax increment financing under
	Chapter 311, Tax Code;
	(6) [(7)]  the total dollar amount of any exemptions
	granted under Section 11.251 or 11.253, Tax Code;
	(7) [(8)]  the difference between the comptroller's
	estimate of the market value and the productivity value of land that
	qualifies for appraisal on the basis of its productive capacity,
	except that the productivity value estimated by the comptroller may
	not exceed the fair market value of the land;
	(8) [(9)]  the portion of the appraised value of
	residence homesteads of individuals who receive a tax limitation
	under Section 11.26, Tax Code, on which school district taxes are
	not imposed in the year that is the subject of the study, calculated
	as if the residence homesteads were appraised at the full value
	required by law;
	(9) [(10)]  a portion of the market value of property
	not otherwise fully taxable by the district at market value because
	of:
	(A)  action required by statute or the
	constitution of this state that, if the tax rate adopted by the
	district is applied to it, produces an amount equal to the
	difference between the tax that the district would have imposed on
	the property if the property were fully taxable at market value and
	the tax that the district is actually authorized to impose on the
	property, if this subsection does not otherwise require that
	portion to be deducted; or
	(B)  action taken by the district under Subchapter
	B or C, Chapter 313, Tax Code;
	(10) [(11)]  the market value of all tangible personal
	property, other than manufactured homes, owned by a family or
	individual and not held or used for the production of income;
	(11) [(12)]  the appraised value of property the
	collection of delinquent taxes on which is deferred under Section
	33.06, Tax Code;
	(12) [(13)]  the portion of the appraised value of
	property the collection of delinquent taxes on which is deferred
	under Section 33.065, Tax Code; and
	(13) [(14)]  the amount by which the market value of a
	residence homestead to which Section 23.23, Tax Code, applies
	exceeds the appraised value of that property as calculated under
	that section.
	(i)  If the comptroller determines in the annual study that
	the market value of property in a school district as determined by
	the appraisal district that appraises property for the school
	district, less the total of the amounts and values listed in
	Subsection (d) as determined by that appraisal district, is valid,
	the comptroller, in determining the taxable value of property in
	the school district under Subsection (d), shall for purposes of
	Subsection (d)(13) [(d)(14)] subtract from the market value as
	determined by the appraisal district of residence homesteads to
	which Section 23.23, Tax Code, applies the amount by which that
	amount exceeds the appraised value of those properties as
	calculated by the appraisal district under Section 23.23, Tax Code.
	If the comptroller determines in the annual study that the market
	value of property in a school district as determined by the
	appraisal district that appraises property for the school district,
	less the total of the amounts and values listed in Subsection (d) as
	determined by that appraisal district, is not valid, the
	comptroller, in determining the taxable value of property in the
	school district under Subsection (d), shall for purposes of
	Subsection (d)(13) [(d)(14)] subtract from the market value as
	estimated by the comptroller of residence homesteads to which
	Section 23.23, Tax Code, applies the amount by which that amount
	exceeds the appraised value of those properties as calculated by
	the appraisal district under Section 23.23, Tax Code.
	(j)  For purposes of Chapter 42 [Section 42.2511], Education
	Code, the comptroller shall certify to the commissioner of
	education:
	(1)  a final value for each school district computed on
	a residence homestead exemption under Section 1-b(c), Article VIII,
	Texas Constitution, of $5,000;
	(2)  a final value for each school district computed
	on:
	(A)  a residence homestead exemption under
	Section 1-b(c), Article VIII, Texas Constitution, of $15,000; and
	(B)  the effect of the additional limitation on
	tax increases under Section 1-b(d), Article VIII, Texas
	Constitution, as proposed by H.J.R. No. 4, 75th Legislature,
	Regular Session, 1997; and
	(3)  a final value for each school district computed on
	the effect of the reduction of the limitation on tax increases to
	reflect any reduction in the school district tax rate as provided by
	Section 11.26(a-1), (a-2), or (a-3), Tax Code, as applicable.
	SECTION 1.29.  Section 311.013(n), Tax Code, is amended to
	read as follows:
	(n)  This subsection applies only to a school district whose
	taxable value computed under Section 403.302(d), Government Code,
	is reduced in accordance with Subdivision (4) [(5)] of that
	subsection. In addition to the amount otherwise required to be paid
	into the tax increment fund, the district shall pay into the fund an
	amount equal to the amount by which the amount of taxes the district
	would have been required to pay into the fund in the current year if
	the district levied taxes at the rate the district levied in 2005
	exceeds the amount the district is otherwise required to pay into
	the fund in the year of the reduction[, not to exceed the amount the
	school district realizes from the reduction in the school
	district's taxable value under Section 403.302(d)(5), Government
	Code].
	ARTICLE 2. CONFORMING AMENDMENTS
	SECTION 2.01.  Section 29.097(g), Education Code, is amended
	to read as follows:
	(g)  For purposes of Subsection (f)(2), a school district is
	encouraged to use funds allocated under Section 42.160
	[42.2516(b)(3)].
	SECTION 2.02.  Section 29.098(h), Education Code, is amended
	to read as follows:
	(h)  For purposes of Subsection (g)(2), a school district is
	encouraged to use funds allocated under Section 42.160
	[42.2516(b)(3)].
	SECTION 2.03.  Section 29.918(a), Education Code, is amended
	to read as follows:
	(a)  Notwithstanding Section 39.114 or 42.152, a school
	district or open-enrollment charter school with a high dropout
	rate, as determined by the commissioner, must submit a plan to the
	commissioner describing the manner in which the district or charter
	school intends to use the compensatory education allotment under
	Section 42.152 and the high school allotment under Section 42.160
	[42.2516(b)(3)] for developing and implementing research-based
	strategies for dropout prevention. The district or charter school
	shall submit the plan not later than December 1 of each school year
	preceding the school year in which the district or charter school
	will receive the compensatory education allotment or high school
	allotment to which the plan applies.
	SECTION 2.04.  Section 29.919(e), Education Code, is amended
	to read as follows:
	(e)  As a condition of receiving a state grant, a campus must
	contribute additional funding for activities provided at the campus
	through the program, in an amount equal to at least $100 each school
	year for each student in an eligible grade level served through the
	program. The additional funding required by this subsection may
	consist of local funds, private funds, or state funds other than
	grant funds provided under this section. For program activities
	provided at the high school level, the high school allotment
	provided under Section 42.160 [42.2516(b)(3)] may be used to meet
	the additional funding requirement prescribed by this subsection.
	SECTION 2.05.  Section 822.201(b), Government Code, is
	amended to read as follows:
	(b)  "Salary and wages" as used in Subsection (a) means:
	(1)  normal periodic payments of money for service the
	right to which accrues on a regular basis in proportion to the
	service performed;
	(2)  amounts by which the member's salary is reduced
	under a salary reduction agreement authorized by Chapter 610;
	(3)  amounts that would otherwise qualify as salary and
	wages under Subdivision (1) but are not received directly by the
	member pursuant to a good faith, voluntary written salary reduction
	agreement in order to finance payments to a deferred compensation
	or tax sheltered annuity program specifically authorized by state
	law or to finance benefit options under a cafeteria plan qualifying
	under Section 125 of the Internal Revenue Code of 1986, if:
	(A)  the program or benefit options are made
	available to all employees of the employer; and
	(B)  the benefit options in the cafeteria plan are
	limited to one or more options that provide deferred compensation,
	group health and disability insurance, group term life insurance,
	dependent care assistance programs, or group legal services plans;
	(4)  performance pay awarded to an employee by a school
	district as part of a total compensation plan approved by the board
	of trustees of the district and meeting the requirements of
	Subsection (e);
	(5)  the benefit replacement pay a person earns under
	Subchapter H, Chapter 659, except as provided by Subsection (c);
	(6)  stipends paid to teachers in accordance with
	Section 21.410, 21.411, 21.412, or 21.413, Education Code;
	(7)  amounts by which the member's salary is reduced or
	that are deducted from the member's salary as authorized by
	Subchapter J, Chapter 659;
	(8)  a merit salary increase made under Section 51.962,
	Education Code;
	(9)  amounts received under the relevant parts of the
	[awards for student achievement program under Subchapter N, Chapter
	21, Education Code, the] educator excellence awards program under
	Subchapter O, Chapter 21, Education Code, or a mentoring program
	under Section 21.458, Education Code, that authorize [authorized]
	compensation for service; and
	(10)  salary amounts designated as health care
	supplementation by an employee under Subchapter D, Chapter 22,
	Education Code.
	SECTION 2.06.  Section 1579.251(a), Insurance Code, is
	amended to read as follows:
	(a)  The state shall assist employees of participating
	school districts and charter schools in the purchase of group
	health coverage under this chapter by providing for each covered
	employee the amount of $900 each state fiscal year or a greater
	amount as provided by the General Appropriations Act. The state
	contribution shall be distributed through the school finance
	formulas under Chapters 41 and 42, Education Code, and used by
	school districts and charter schools as provided by Section
	[Sections 42.2514 and] 42.260, Education Code.
	SECTION 2.07.  Section 1581.053(b), Insurance Code, is
	amended to read as follows:
	(b)  Notwithstanding Subsection (a), amounts a district or
	school is required to use to pay contributions under a group health
	coverage plan for district or school employees under Section
	[42.2514 or] 42.260, Education Code, other than amounts described
	by Section 42.260(c)(2)(B), are not used in computing whether the
	district or school complies with Section 1581.052.
	ARTICLE 3. REPEALER; MISCELLANEOUS; EFFECTIVE DATE
	SECTION 3.01.  (a) The following provisions of the
	Education Code are repealed:
	(1)  Subchapter N, Chapter 21;
	(2)  Section 21.704(b);
	(3)  Section 39.114(c); and
	(4)  Sections 42.103(e), 42.2511, 42.2512, and
	42.2514.
	(b)  Subchapter C, Chapter 1581, Insurance Code, is
	repealed.
	(c)  Section 2, Chapter 1191 (H.B. 828), Acts of the 80th
	Legislature, Regular Session, 2007, is repealed.
	SECTION 3.02.  To the extent of any conflict, this Act
	prevails over S.B. No. 1969, Acts of the 81st Legislature, Regular
	Session, 2009.
	SECTION 3.03.  (a) Notwithstanding any other provision of
	this Act, Sections 12.1331, 19.007(g), 19.009(d-2), and
	21.402(c-1), Education Code, as added by this Act, are expressly
	contingent on a determination by the commissioner of education that
	payment of salary increases required by or associated with those
	sections are allowable uses of federal funds received by school
	districts and open-enrollment charter schools under the American
	Recovery and Reinvestment Act of 2009 (Pub. L. No. 111-5) and
	appropriated as part of the Foundation School Program. The
	commissioner may not make a determination under this subsection
	until the state's application to spend funds under the American
	Recovery and Reinvestment Act of 2009 has been approved by the
	United States government. The commissioner shall promptly notify
	school districts and open-enrollment charter schools of that
	determination. A determination by the commissioner under this
	subsection is final and may not be appealed.
	(b)  A school district or open-enrollment charter school may
	enter into an employment contract or agreement that is contingent
	on a determination of the commissioner of education under
	Subsection (a) of this section.
	SECTION 3.04.  Section 42.2516(b)(3), Education Code, as
	amended by this Act, applies as if that subdivision were in effect
	in the state fiscal year beginning September 1, 2006, and any
	amounts due a school district under that subdivision for the state
	fiscal years beginning September 1, 2006, September 1, 2007, and
	September 1, 2008, shall be paid to the district in the state fiscal
	year beginning September 1, 2009, at the time payments are made to
	the district under Section 42.259(f), Education Code.
	SECTION 3.05.  This Act takes effect September 1, 2009,
	except that Section 1.14 of this Act takes effect immediately if
	this Act receives a vote of two-thirds of all the members elected to
	each house, as provided by Section 39, Article III, Texas
	Constitution. If this Act does not receive the vote necessary for
	immediate effect, Section 1.14 takes effect September 1, 2009.
	* * * * *