84R668 GCB-D
 
  By: Aycock H.B. No. 654
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to public school finance and the formation of school
  finance districts.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subtitle I, Title 2, Education Code, is amended
  by adding Chapter 42A to read as follows:
  CHAPTER 42A.  PUBLIC SCHOOL FINANCE SYSTEM
  SUBCHAPTER A.  GENERAL PROVISIONS
         Sec. 42A.001.  STATE POLICY. (a)  It is the policy of this
  state that the provision of public education is a state
  responsibility and that a thorough and efficient system be provided
  and substantially financed through state revenue sources so that
  each student enrolled in the public school system shall have access
  to programs and services that are appropriate to the student's
  educational needs and that are substantially equal to those
  available to any similar student, notwithstanding varying local
  economic factors.
         (b)  The public school finance system of this state shall
  adhere to a standard of neutrality that provides for substantially
  equal access to similar revenue per student at similar tax effort,
  considering all state and local tax revenues of districts after
  acknowledging all legitimate student and district cost
  differences.
         Sec. 42A.002.  PUBLIC SCHOOL FINANCE SYSTEM. (a)  The public
  school finance system consists of state funding as provided by
  Subchapter C and local funding as provided by Subchapter D, with
  each source of funding distributed on the basis of weighted average
  daily attendance, as determined under Section 42A.102.
         (b)  Additional amounts of funding are made available
  through the public school finance system for specified purposes as
  provided by law.
         Sec. 42A.003.  STUDENT ELIGIBILITY. (a)  A student is
  entitled to the benefits of the public school finance system if, on
  September 1 of the school year, the student:
               (1)  is 5 years of age or older and under 21 years of age
  and has not graduated from high school, or is at least 21 years of
  age and under 26 years of age and has been admitted by a school
  district to complete the requirements for a high school diploma; or
               (2)  is at least 19 years of age and under 26 years of
  age and is enrolled in an adult high school diploma and industry
  certification charter school pilot program under Section 29.259.
         (b)  A student to whom Subsection (a) does not apply is
  entitled to the benefits of the public school finance system if the
  student is enrolled in a prekindergarten class under Section
  29.153.
         (c)  A child may be enrolled in the first grade if the child
  is at least six years of age at the beginning of the school year of
  the district or has been enrolled in the first grade or has
  completed kindergarten in the public schools in another state
  before transferring to a public school in this state.
         (d)  Notwithstanding Subsection (a), a student younger than
  five years of age is entitled to the benefits of the public school
  finance system if:
               (1)  the student performs satisfactorily on the
  assessment instrument administered under Section 39.023(a) to
  students in the third grade; and
               (2)  the district has adopted a policy for admitting
  students younger than five years of age.
         Sec. 42A.004.  AVERAGE DAILY ATTENDANCE. (a) In this
  chapter, average daily attendance is:
               (1)  the quotient of the sum of attendance for each day
  of the minimum number of days of instruction as described under
  Section 25.081(a) divided by the minimum number of days of
  instruction;
               (2)  for a district that operates under a flexible year
  program under Section 29.0821, the quotient of the sum of
  attendance for each actual day of instruction as permitted by
  Section 29.0821(b)(1) divided by the number of actual days of
  instruction as permitted by Section 29.0821(b)(1); or
               (3)  for a district that operates under a flexible
  school day program under Section 29.0822, the average daily
  attendance as calculated by the commissioner in accordance with
  Section 29.0822(d).
         (b)  For purposes of this chapter, the average daily
  attendance of a school district that experiences a decline of two
  percent or more in average daily attendance is considered to be:
               (1)  the actual average daily attendance of the
  preceding school year, if the decline is the result of the closing
  or reduction in personnel of a military base; or
               (2)  subject to Subsection (e), an average daily
  attendance not to exceed 98 percent of the actual average daily
  attendance of the preceding school year, if the decline is not the
  result of the closing or reduction in personnel of a military base.
         (c)  The commissioner shall adjust the average daily
  attendance of a school district that has a significant percentage
  of students who are migratory children as defined by 20 U.S.C.
  Section 6399.
         (d)  The commissioner may adjust the average daily
  attendance of a school district in which a disaster, flood, extreme
  weather condition, fuel curtailment, or other calamity has a
  significant effect on the district's attendance.
         (e)  For each school year, the commissioner shall adjust the
  average daily attendance of school districts that are considered to
  have an adjusted average daily attendance under Subsection (b)(2)
  so that:
               (1)  all districts are considered to have the same
  percentage of the preceding year's actual average daily attendance;
  and
               (2)  the total cost to the state does not exceed the
  amount specifically appropriated for that year for purposes of
  Subsection (b)(2).
         (f)  An open-enrollment charter school is not entitled to an
  adjustment under Subsection (b)(2).
         (g)  If a student may receive course credit toward the
  student's high school academic requirements and toward the
  student's higher education academic requirements for a single
  course, including a course provided under Section 28.009 by a
  public institution of higher education, the time during which the
  student attends the course shall be counted as part of the minimum
  number of instructional hours required for a student to be
  considered a full-time student in average daily attendance for
  purposes of this section.
         Sec. 42A.005.  AVERAGE DAILY ATTENDANCE FOR DISTRICTS IN
  DISASTER AREA. (a) From funds specifically appropriated for the
  purpose or other funds available to the commissioner for that
  purpose, the commissioner shall adjust the average daily attendance
  of a school district all or part of which is located in an area
  declared a disaster area by the governor under Chapter 418,
  Government Code, if the district experiences a decline in average
  daily attendance that is reasonably attributable to the impact of
  the disaster.
         (b)  The adjustment must be sufficient to ensure that the
  district receives funding comparable to the funding that the
  district would have received if the decline in average daily
  attendance reasonably attributable to the impact of the disaster
  had not occurred.
         (c)  The commissioner shall make the adjustment required by
  this section for the two-year period following the date of the
  governor's initial proclamation or executive order declaring the
  state of disaster.
         (d)  Section 42A.004(b)(2) does not apply to a district that
  receives an adjustment under this section.
         (e)  A district that receives an adjustment under this
  section may not receive any additional adjustment under Section
  42A.004(d) for the decline in average daily attendance on which the
  adjustment under this section is based.
         (f)  For purposes of this title, a district's adjusted
  average daily attendance under this section is considered to be the
  district's average daily attendance as determined under Section
  42A.004.
         Sec. 42A.006.  REFERENCES TO FOUNDATION SCHOOL PROGRAM.  A
  reference in law to the Foundation School Program means the public
  school finance system under this chapter.
  SUBCHAPTER B.  PERMISSIBLE WEALTH LEVEL AND SCHOOL FINANCE
  DISTRICTS
         Sec. 42A.051.  DEFINITIONS. In this subchapter:
               (1)  "Wealth per weighted student" means the taxable
  value of property, as determined under Subchapter M, Chapter 403,
  Government Code, divided by the number of students in weighted
  average daily attendance.
               (2)  "Weighted average daily attendance" means the
  number of students in total weighted average daily attendance in a
  school district as determined under Section 42A.102 and as adjusted
  under Subchapter C, if applicable.
         Sec. 42A.052.  PERMISSIBLE RANGE OF WEALTH. (a) Using the
  most current information available, the commissioner shall
  determine the statewide average total property tax rate imposed by
  school districts in this state, the statewide average wealth per
  weighted student of school districts in this state, and the tax
  revenue per weighted student that would result from imposing the
  average tax rate against the average wealth per weighted student.
         (b)  A school district's wealth per weighted student is
  required to be:
               (1)  at least the wealth that, at the average tax rate
  determined under Subsection (a), would result in revenue per
  weighted student that is $300 less than the amount of revenue per
  weighted student determined by the commissioner under Subsection
  (a); and
               (2)  not more than the wealth that, at the average tax
  rate determined under Subsection (a), would result in revenue per
  weighted student that is $300 more than the amount of revenue per
  weighted student determined by the commissioner under Subsection
  (a).
         (c)  The commissioner shall notify each school district
  determined to have a wealth per weighted student that is not within
  the permissible range of wealth under this section. The
  commissioner shall also publish the permissible range of wealth on
  the agency's Internet website.
         (d)  The commissioner shall revise the determination of
  permissible wealth level and provide the notification required by
  this section every 10 years.
         Sec. 42A.053.  CREATION OF SCHOOL FINANCE DISTRICT. (a) If
  the wealth per weighted student of a school district is not within
  the permissible range under Section 42A.052, the district must form
  a school finance district with one or more other school districts in
  accordance with this subchapter or be subject to consolidation by
  the commissioner under Section 42A.062.
         (b)  The board of trustees of each school district proposing
  to form a school finance district must execute an agreement to
  conduct an election on the creation of the district for the purpose
  of consolidating the tax bases of the component school districts.
         (c)  The boards of trustees may not proceed with the election
  unless the proposed agreement is approved by the commissioner as
  provided by Section 42A.054.
         (d)  The agreement must provide that:
               (1)  each component school district will receive from
  the maintenance tax revenue of the school finance district an equal
  amount of money per student in weighted average daily attendance;
  and
               (2)  the school finance district will assume all the
  indebtedness of the component school districts.
         Sec. 42A.054.  APPROVAL BY COMMISSIONER. The commissioner
  shall approve a proposed school finance district agreement if:
               (1)  the board of trustees of each component school
  district has approved the proposed school finance district; and
               (2)  the proposed school finance district's wealth per
  weighted student will be within the permissible range under Section
  42A.052.
         Sec. 42A.055.  ELECTION REQUIRED.  (a)  An agreement under
  this subchapter must provide for the ordering of an election to be
  held on the same date in each component school district.  The
  election must be held on a Tuesday or Saturday, and Section 41.001,
  Election Code, does not apply to the election.
         (b)  The ballot shall be printed to permit voting for or
  against the proposition: "Creation of a school finance district
  composed of the consolidated territory for taxing purposes of
  _________________________ school districts, and authorizing the
  levy, assessment, and collection of annual ad valorem taxes for the
  maintenance of the public free schools within that territory at a
  rate not to exceed $_________ on the $100 valuation of taxable
  property; and further to create a consolidated tax base for the
  repayment of all bonded indebtedness issued by the joint board of
  the school finance district or previously issued by the component
  school districts and to authorize the joint board of the school
  finance district to levy, pledge, and collect ad valorem taxes at a
  rate sufficient to pay the principal of and interest on those
  bonds."
         (c)  The rate of the tax for maintenance of the public free
  schools to be included in the proposition shall be provided by the
  agreement among the component school districts.
         (d)  The proposition is approved only if the proposition
  receives a favorable vote of the majority of the votes cast within
  each component school district.
         Sec. 42A.056.  STATUS OF SCHOOL FINANCE DISTRICT. (a)  A
  school finance district is a school district established for the
  limited purpose of exercising the taxing power authorized by
  Section 3, Article VII, Texas Constitution, and distributing the
  revenue to its component school districts as provided by this
  chapter.
         (b)  A school finance district may issue bonds as provided by
  Chapter 45.
         (c)  A school finance district is subject to any provision of
  law applicable to a school district that relates to imposition of
  taxes, issuance of bonds, collection and distribution of tax
  revenue, or the determination of a school district's entitlement to
  funding under this chapter.
         Sec. 42A.057.  GOVERNANCE. (a) A school finance district is
  governed by the boards of trustees of the component school
  districts acting jointly.
         (b)  Any action taken by the joint board must receive a
  favorable vote of a majority of each component school district's
  board of trustees.
         Sec. 42A.058.  MAINTENANCE AND BOND TAXES. (a) The joint
  board shall levy a maintenance tax for the benefit of the component
  school districts not later than September 1 of each year or as soon
  thereafter as practicable.
         (b)  The joint board shall levy a bond tax if necessary to pay
  principal and interest on bonds issued by the joint board or to pay
  indebtedness of component school districts assumed by the school
  finance district.
         (c)  Each component school district shall bear a share of the
  costs of assessing and collecting taxes in proportion to the
  component school district's share of weighted average daily
  attendance in the school finance district.
         (d)  A component school district may not levy maintenance or
  bond taxes.
         (e)  A school finance district is entitled to assistance with
  payment of existing debt under Subchapter B, Chapter 46.
         Sec. 42A.059.  DISSOLUTION OF SCHOOL FINANCE DISTRICT.  (a)  
  A school finance district formed under this subchapter exists for
  10 years after the date the district was created. On the expiration
  of the 10-year period, a school finance district is dissolved.
         (b)  Each component school district that remains, after the
  commissioner's revision of the permissible range of wealth, subject
  to the requirement to form a school finance district under Section
  42A.053(a) shall form a new school finance district or seek
  continuation of the former school finance district, as provided by
  Section 42A.060.
         Sec. 42A.060.  CONTINUED MEMBERSHIP IN SCHOOL FINANCE
  DISTRICT. (a)  A school district shall form a new school finance
  district in the manner provided by this subchapter or continue an
  existing school finance district if the school district continues
  to have a wealth per weighted student that is not within the most
  recently determined permissible range of wealth.
         (b)  The board of trustees of each component school district
  that seeks to continue an existing school finance district shall
  seek the commissioner's approval to continue the school finance
  district for another 10-year period.
         (c)  The commissioner shall approve the continuation of a
  school finance district for a succeeding 10-year period if:
               (1)  the board of trustees of each component school
  district petitions the commissioner for the continuation of the
  school finance district; and
               (2)  the school finance district's wealth per weighted
  student is within the most recently determined permissible range of
  wealth.
         (d)  An existing school finance district that obtains the
  commissioner's approval for a succeeding 10-year period is not
  required to obtain renewed voter approval.
         Sec. 42A.061.  OPTIONAL FORMATION OR CONTINUATION OF SCHOOL
  FINANCE DISTRICT.  The board of trustees of a school district not
  required to form or continue a school finance district under this
  subchapter may elect to do so by satisfying the requirements for
  formation or continuation provided by this subchapter.
         Sec. 42A.062.  CONSOLIDATION BY COMMISSIONER. (a)  A school
  district required to form a school finance district under Section
  42A.053 is subject to consolidation under this section if the
  district has not, before the date specified by the commissioner:
               (1)  agreed to be a member of a school finance district;
               (2)  obtained approval of the commissioner as required
  by Section 42A.053; and
               (3)  received the approval of the voters in each
  component school district regarding the formation of the school
  finance district and the imposition of taxes.
         (b)  The commissioner shall order the consolidation of a
  school district described by Subsection (a) with one or more other
  school districts. The commissioner shall consolidate school
  districts so that the projected wealth per weighted student of the
  consolidated school district is within the permissible range of
  wealth.
         Sec. 42A.063.  GOVERNANCE OF CONSOLIDATED DISTRICT. (a)
  Until the initial trustees elected as provided by Subsection (b)
  have qualified and taken office, a district consolidated under
  Section 42A.062 is governed by a transitional board of trustees
  consisting of the board of trustees of the district having the
  greatest student membership on the last day of the school year
  preceding the consolidation plus one member of the board of
  trustees of each other consolidating district selected by that
  board.
         (b)  The transitional board of trustees shall divide the
  consolidated district into nine single-member trustee districts in
  accordance with the procedures provided by Section 11.052.  The
  transitional board shall order an election for the initial board of
  trustees to be held on the first May uniform election date after the
  effective date of a consolidation order.
         (c)  Members of the board of trustees of a consolidated
  district serve staggered terms of office for four years.
         (d)  Section 13.156 applies to districts consolidated under
  this subchapter.
         Sec. 42A.064.  FUND BALANCES OF CONSOLIDATED DISTRICT. Fund
  balances of a school district consolidated under Section 42A.062
  may be used only for the benefit of the schools within the district
  that generated the funds.
         Sec. 42A.065.  EMPLOYMENT CONTRACTS OF CONSOLIDATED
  DISTRICT. A consolidated district created under Section 42A.062
  shall honor an employment contract entered into by a consolidating
  district.
         Sec. 42A.066.  COMMISSIONER TO APPROVE SUBSEQUENT BOUNDARY
  CHANGES. A school district that is involved in an action under this
  chapter that results in boundary changes to the district or in the
  consolidation of tax bases into a school finance district is
  subject to consolidation, detachment, or annexation under Chapter
  13 only if the commissioner certifies that the change under Chapter
  13 will not result in a district with a wealth per weighted student
  that is not within the permissible range of wealth.
         Sec. 42A.067.  HOMESTEAD EXEMPTIONS. (a) The governing
  board of a school district that results from consolidation under
  this chapter, including consolidation of tax bases into a school
  finance district, for the tax year in which the consolidation
  occurs may determine whether to adopt a homestead exemption
  provided by Section 11.13, Tax Code, and may set the amount of the
  exemption, if adopted, at any time before the governing board
  adopts a tax rate for that tax year. This section applies only to an
  exemption that the governing board of a school district is
  authorized to adopt or change in amount under Section 11.13, Tax
  Code.
         (b)  This section prevails over any inconsistent provision
  of Section 11.13, Tax Code, or other law.
         Sec. 42A.068.  TAX ABATEMENTS. (a) A tax abatement
  agreement executed by a school district that is involved in
  consolidation under this chapter is not affected and applies to the
  taxation of the property covered by the agreement as if executed by
  the district within which the property is included.
         (b)  The commissioner shall determine the wealth per
  weighted student of a school district under this chapter as if any
  tax abatement agreement executed by a school district on or after
  May 31, 1993, had not been executed.
         Sec. 42A.069.  TAX INCREMENT OBLIGATIONS. The payment of
  tax increments under Chapter 311, Tax Code, is not affected by the
  consolidation of territory or tax bases under this chapter. In each
  tax year a school district paying a tax increment from taxes on
  property over which the district has assumed taxing power is
  entitled to retain the same percentage of the tax increment from
  that property that the district in which the property was located
  before the consolidation could have retained for the respective tax
  year.
         Sec. 42A.070.  REQUIRED NUMBER OF SCHOOL FINANCE DISTRICTS.  
  In approving the formation or continuation of school finance
  districts under this subchapter, the commissioner shall ensure the
  formation of not fewer than 30 school finance districts in the
  state.
  SUBCHAPTER C.  STATE FUNDING
         Sec. 42A.101.  STATE FUNDS. (a)  Each biennium, the
  legislature shall set by appropriation the amount of state funds to
  be distributed each school year for public education in accordance
  with this chapter.
         (b)  The amount appropriated shall be distributed to school
  districts on the basis of each district's total weighted average
  daily attendance, as computed under this subchapter, with each
  district entitled to receive the same amount of state funds per
  student in weighted average daily attendance.
         (c)  Distributions shall be made in accordance with the
  payment schedule adopted under Section 42A.204.
         Sec. 42A.102.  DETERMINATION OF WEIGHTED AVERAGE DAILY
  ATTENDANCE. (a) The total weighted average daily attendance of a
  school district is the sum of the weighted average daily attendance
  for each educational program for which a student multiplier is
  provided under Subsection (b), as determined by the formula:
  EPWADA = S X SM X CEI
  where:
         "EPWADA" is the weighted average daily attendance for the
  educational program;
         "S" is the number of students in average daily attendance,
  number of full-time equivalent students, or number of students
  enrolled, as appropriate, in the educational program for which the
  computation is made;
         "SM" is the student multiplier for the educational program,
  as provided by Subsection (b); and
         "CEI" is 50 percent of the cost of education index adjustment
  for the school district adopted by the foundation school fund
  budget committee to reflect the geographic variation in known
  resource costs and costs of education due to factors beyond the
  control of the school district contained in Chapter 203, Title 19,
  Texas Administrative Code, as that chapter existed on January 1,
  1997.
         (b)  The student multipliers are:
               (1)  1.0 for a student in average daily attendance, not
  including time the student spends each day in a special education
  program in an instructional arrangement other than mainstream or in
  a career and technology education program;
               (2)  1.1 for a student in a special education program in
  a mainstream instructional arrangement;
               (3)  5.0 for a full-time equivalent student in a
  special education program in a homebound instructional
  arrangement;
               (4)  3.0 for a full-time equivalent student in a
  special education program in a hospital class instructional
  arrangement;
               (5)  5.0 for a full-time equivalent student in a
  special education program in a speech therapy instructional
  arrangement;
               (6)  3.0 for a full-time equivalent student in a
  special education program in a resource room instructional
  arrangement;
               (7)  3.0 for a full-time equivalent student in a
  special education program in a self-contained, mild and moderate,
  regular campus instructional arrangement;
               (8)  3.0 for a full-time equivalent student in a
  special education program in a self-contained, severe, regular
  campus instructional arrangement;
               (9)  2.7 for a full-time equivalent student in a
  special education program in an off-home campus instructional
  arrangement;
               (10)  1.7 for a full-time equivalent student in a
  special education program in a nonpublic day school;
               (11)  2.3 for a full-time equivalent student in a
  special education program vocational adjustment class;
               (12)  4.0 for a student in a special education program
  who resides in a care and treatment facility, other than a state
  supported living center, whose parent or guardian does not reside
  in the district, and who receives educational services from the
  district campus;
               (13)  2.8 for a student in a special education program
  who resides in a state supported living center;
               (14)  0.2 for a student who is educationally
  disadvantaged or who is a student who does not have a disability and
  resides in a residential placement facility in a district in which
  the student's parent or guardian does not reside;
               (15)  2.41 for a full-time equivalent student who is in
  a remedial and support program under Section 29.081 because the
  student is pregnant;
               (16)  0.1 for a student who is in a bilingual education
  or special language program under Subchapter B, Chapter 29;
               (17)  1.35 for a full-time equivalent student in an
  approved career and technology education program in grades nine
  through 12 or in a career and technology education program for
  students with disabilities in grades seven through 12;
               (18)  0.12 for a student in a program for gifted and
  talented students that the district certifies to the commissioner
  as complying with Subchapter D, Chapter 29; and
               (19)  except as provided by Section 42A.256, 0.1 for a
  student in average daily attendance who is using a public education
  grant under Subchapter G, Chapter 29, to attend school in a district
  other than the district in which the student resides.
         (c)  In this section:
               (1)  "Career and technology education program" means a
  program under Subchapter F, Chapter 29.
               (2)  "Full-time equivalent student" means 30 hours of
  contact a week between a student and program personnel.
               (3)  "Special education program" means a program under
  Subchapter A, Chapter 29.
         Sec. 42A.103.  SMALL AND MID-SIZED DISTRICT ADJUSTMENT.  (a)  
  The adjusted weighted average daily attendance of certain small and
  mid-sized districts is computed in accordance with this section.  
  In this section:
               (1)  "AWADA" is the adjusted weighted average daily
  attendance;
               (2)  "ADA" is the number of students in average daily
  attendance in the district; and
               (3)  "WADA" is the total number of students in weighted
  average daily attendance determined under Section 42A.102.
         (b)  The adjusted weighted average daily attendance of a
  school district that contains at least 300 square miles and has not
  more than 1,600 students in average daily attendance is determined
  by the formula:
  AWADA = (1 + ((1,600 - ADA) X .0004)) X WADA
         (c)  The adjusted weighted average daily attendance of a
  school district that contains less than 300 square miles and has not
  more than 1,600 students in average daily attendance is determined
  by the formula:
  AWADA = (1 + ((1,600 - ADA) X .00025)) X WADA
         (d)  The adjusted weighted average daily attendance of a
  school district that offers a kindergarten through grade 12 program
  and has less than 5,000 students in average daily attendance is
  determined by the formula, of the following formulas, that results
  in the greatest weighted average daily attendance:
               (1)  the formula in Subsection (b) or (c) for which the
  district is eligible; or
               (2)  AWADA = (1 + ((5,000 - ADA) X .000025)) X WADA
         (e)  A school district's adjusted weighted average daily
  attendance computed under this section is used in determining the
  amount of funding to which the district is entitled under this
  chapter on the basis of weighted average daily attendance.
         Sec. 42A.104.  SPARSITY ADJUSTMENT. Notwithstanding
  Sections 42A.102 and 42A.103, the weighted average daily attendance
  of a school district that has fewer than 130 students in average
  daily attendance is 130 students in weighted average daily
  attendance if the district offers a kindergarten through grade 12
  program and has preceding or current year's average daily
  attendance of at least 90 students or is 30 miles or more by bus
  route from the nearest high school district.  The weighted average
  daily attendance of a district offering a kindergarten through
  grade 8 program whose preceding or current year's average daily
  attendance was at least 50 students or that is 30 miles or more by
  bus route from the nearest high school district is 75 students in
  weighted average daily attendance.  A weighted average daily
  attendance of 60 students shall be used if a district offers a
  kindergarten through grade 6 program and has preceding or current
  year's average daily attendance of at least 40 students or is 30
  miles or more by bus route from the nearest high school district.
  SUBCHAPTER D.  LOCAL FUNDING
         Sec. 42A.151.  DEPOSIT WITH COMPTROLLER; DISTRIBUTION OF
  SCHOOL FINANCE DISTRICT LOCAL FUNDS. (a) Each school finance
  district shall submit to the comptroller the local tax revenue
  collected by the school finance district. The comptroller shall
  hold the money for the school finance district in a numbered account
  outside the treasury for distribution to the component school
  districts as provided by this section.
         (b)  For each school year, the comptroller shall determine
  the total amount available for distribution from a school finance
  district's account to the component school districts.
         (c)  In accordance with the payment schedule adopted under
  Section 42A.204, the comptroller shall distribute the amount
  determined under Subsection (b) to the component school districts
  on the basis of the total weighted average daily attendance of each
  school district, with each school district in the school finance
  district receiving the same amount of local funding per student in
  total weighted average daily attendance.
         (d)  The commissioner shall certify the total weighted
  average daily attendance of each school district for purposes of
  this section.
         Sec. 42A.152.  SCHOOL DISTRICT LOCAL FUNDS. A school
  district that is not a member of a school finance district shall
  retain control and possession of all local tax revenue, subject to
  other law applicable to public education funds.
  SUBCHAPTER E. ADMINISTRATION
         Sec. 42A.201.  ADMINISTRATION BY COMMISSIONER. The
  commissioner, in accordance with the rules of the State Board of
  Education, shall take such action and require such reports
  consistent with this chapter as may be necessary to implement and
  administer the public school finance system.
         Sec. 42A.202.  PUBLIC EDUCATION INFORMATION MANAGEMENT
  SYSTEM (PEIMS). (a) Each school district shall participate in the
  Public Education Information Management System (PEIMS) and shall
  provide through that system information required for the
  administration of this chapter and of other appropriate provisions
  of this code.
         (b)  The commissioner by rule shall require each school
  district and open-enrollment charter school to report through the
  Public Education Information Management System information
  regarding the number of students enrolled in the district or school
  who are identified as having dyslexia.  The agency shall maintain
  the information provided in accordance with this subsection.
         (c)  Each school district shall use a uniform accounting
  system adopted by the commissioner for the data required to be
  reported for the Public Education Information Management System.
         (d)  Annually, the commissioner shall review the Public
  Education Information Management System and shall repeal or amend
  rules that require school districts to provide information through
  the Public Education Information Management System that is not
  necessary.  In reviewing and revising the Public Education
  Information Management System, the commissioner shall develop
  rules to ensure that the system:
               (1)  provides useful, accurate, and timely information
  on student demographics and academic performance, personnel, and
  school district finances;
               (2)  contains only the data necessary for the
  legislature and the agency to perform their legally authorized
  functions in overseeing the public education system; and
               (3)  does not contain any information related to
  instructional methods, except as provided by Section 29.066 or
  required by federal law.
         (e)  The commissioner's rules must ensure that the Public
  Education Information Management System links student performance
  data to other related information for purposes of efficient and
  effective allocation of scarce school resources, to the extent
  practicable using existing agency resources and appropriations.
         Sec. 42A.203.  ESTIMATE REQUIRED. (a) Not later than
  October 1 of each even-numbered year, the agency shall submit to the
  legislature an estimate of the student enrollment and a projection
  of the weighted average daily attendance of each school district
  for the following biennium.
         (b)  The agency shall update the information provided to the
  legislature under Subsection (a) not later than March 1 of each
  odd-numbered year.
         Sec. 42A.204.  PAYMENT SCHEDULE. In coordination with the
  comptroller and the Legislative Budget Board, the commissioner by
  rule shall determine a schedule for payment of funds under this
  chapter.
         Sec. 42A.205.  RECOVERY OF OVERALLOCATED FUNDS. (a)  If a
  school district has received an overallocation of funds, the agency
  shall, by withholding from subsequent allocations of funds for the
  current or subsequent school year or by requesting and obtaining a
  refund, recover from the district an amount equal to the
  overallocation.
         (b)  Notwithstanding Subsection (a), the agency may recover
  an overallocation of funds over a period not to exceed the
  subsequent five school years if the commissioner determines that
  the overallocation was the result of exceptional circumstances
  reasonably caused by statutory changes to this chapter or Chapter
  46 and related reporting requirements.
         (c)  If a district fails to comply with a request for a refund
  under Subsection (a), the agency shall certify to the comptroller
  that the amount constitutes a debt for purposes of Section 403.055,
  Government Code. The agency shall provide to the comptroller the
  amount of the overallocation and any other information required by
  the comptroller. The comptroller may certify the amount of the debt
  to the attorney general for collection.
         (d)  Any amounts recovered under this section shall be
  deposited to the credit of the available school fund.
         Sec. 42A.206.  FALSIFICATION OF RECORDS; REPORT. When, in
  the opinion of the agency's director of school audits, audits or
  reviews of accounting, enrollment, or other records of a school
  district reveal deliberate falsification of the records, or
  violation of the provisions of this chapter, through which the
  district's share of funds allocated under the authority of this
  chapter would be, or has been, illegally increased, the director
  shall promptly and fully report the fact to the State Board of
  Education, the state auditor, and the appropriate county attorney,
  district attorney, or criminal district attorney.
  SUBCHAPTER F. CONDITIONS APPLICABLE TO FUNDING BASED ON STUDENT
  MULTIPLIERS
         Sec. 42A.251.  SPECIAL EDUCATION PROGRAMS. (a) For funding
  purposes, the number of contact hours credited per day for each
  student in the off-home campus instructional arrangement may not
  exceed the contact hours credited per day for the multidistrict
  class instructional arrangement in the 1992-1993 school year.
         (b)  For funding purposes, the number of contact hours
  credited per day for each student in the resource room;
  self-contained, mild and moderate; and self-contained, severe,
  instructional arrangements may not exceed the average of the
  statewide total contact hours credited per day for those three
  instructional arrangements in the 1992-1993 school year.
         (c)  The State Board of Education by rule shall prescribe the
  qualifications an instructional arrangement must meet in order to
  be funded as a particular instructional arrangement under this
  chapter. In prescribing the qualifications that a mainstream
  instructional arrangement must meet, the board shall establish
  requirements that students with disabilities and their teachers
  receive the direct, indirect, and support services that are
  necessary to enrich the regular classroom and enable student
  success.
         (d)  Funds received by a school district as a result of the
  district's weighted average daily attendance of students described
  by Sections 42A.102(b)(2)-(13), other than an indirect cost
  allowance established under State Board of Education rule, must be
  used in the special education program under Subchapter A, Chapter
  29.
         (e)  The agency shall encourage the placement of students in
  special education programs, including students in residential
  instructional arrangements, in the least restrictive environment
  appropriate for their educational needs.
         (f)  The State Board of Education shall adopt rules and
  procedures governing contracts for residential placement of
  special education students. The legislature shall provide by
  appropriation for the state's share of the costs of those
  placements.
         (g)  A school district that provides an extended year program
  required by federal law for special education students who may
  regress is entitled to receive funds in an amount equal to 75
  percent, or a lesser percentage determined by the commissioner, of
  the amount of state funds provided per student in weighted average
  daily attendance under Section 42A.101(b) for each full-time
  equivalent student in average daily attendance, multiplied by the
  amount designated for the student's instructional arrangement
  under Section 42A.102(b) for each day the program is provided
  divided by the number of days in the minimum school year. The total
  amount of state funding for extended year services under this
  subsection may not exceed $10 million per year. A school district
  may use funds received under this subsection only in providing an
  extended year program.
         (h)  From the total amount of funds appropriated for weighted
  average daily attendance of students described by Sections
  42A.102(b)(2)-(13), the commissioner shall withhold an amount
  specified in the General Appropriations Act and distribute that
  amount to school districts for programs under Section 29.014. The
  program established under that section is required only in school
  districts in which the program is financed by funds distributed
  under this subsection and any other funds available for the
  program. After deducting the amount withheld under this subsection
  from the total amount appropriated for weighted average daily
  attendance of students described by Sections 42A.102(b)(2)-(13),
  the commissioner shall reduce each district's allocation
  proportionately.
         Sec. 42A.252.  COMPENSATORY EDUCATION PROGRAMS. (a) In
  this section, "compensatory education funds" means funds received
  by a school district as a result of the district's weighted average
  daily attendance of students described by Sections 42A.102(b)(14)
  and (15).
         (b) For purposes of Section 42A.102(b)(14), the number of
  educationally disadvantaged students is determined:
               (1)  by averaging the best six months' enrollment in the
  national school lunch program of free or reduced-price lunches for
  the preceding school year; or
               (2)  in the manner provided by commissioner rule, if no
  campus in the district participated in the national school lunch
  program of free or reduced-price lunches during the preceding
  school year.
         (c)  Compensatory education funds, other than an indirect
  cost allowance established under State Board of Education rule,
  which may not exceed 48 percent, 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 may be used to meet the costs of providing a compensatory,
  intensive, or accelerated instruction program under Section 29.081
  or a disciplinary alternative education program established under
  Section 37.008, to pay the costs associated with placing students
  in a juvenile justice alternative education program established
  under Section 37.011, 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, compensatory
  education funds 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 compensatory
  education funds for a purpose authorized in this subsection but is
  not otherwise subject to Subchapter C, Chapter 29. 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 compensatory education funds for
  such a program.
         (d)  Notwithstanding Subsection (c), compensatory education
  funds may be used to fund in proportion to the percentage of
  students served by the program that meet the criteria in Section
  29.081(d) or (g):
               (1)  an accelerated reading instruction program under
  Section 28.006(g); or
               (2)  a program for treatment of students who have
  dyslexia or a related disorder as required by Section 38.003.
         (e)  Notwithstanding Subsection (c), compensatory education
  funds may be used to fund a district's mentoring services program
  under Section 29.089.
         (f)  The agency shall evaluate the effectiveness of
  accelerated instruction and support programs provided under
  Section 29.081 for students at risk of dropping out of school.
         (g)  The State Board of Education, with the assistance of the
  comptroller, shall develop and implement by rule reporting and
  auditing systems for district and campus expenditures of
  compensatory education funds to ensure that compensatory education
  funds are spent only to supplement the regular education program as
  required by Subsection (c). The reporting requirements shall be
  managed electronically to minimize local administrative costs. A
  district shall submit the report required by this subsection not
  later than the 150th day after the last day permissible for
  resubmission of information required under Section 42A.202.
         (h)  The commissioner shall develop a system to identify
  school districts that are at high risk of having used compensatory
  education funds other than in compliance with Subsection (c) or of
  having inadequately reported compensatory education expenditures.
  If a review of the report submitted under Subsection (g), using the
  risk-based system, indicates that a district is not at high risk of
  having misused compensatory education funds or of having
  inadequately reported compensatory education expenditures, the
  district may not be required to perform a local audit of
  compensatory education expenditures and is not subject to on-site
  monitoring under this section.
         (i)  If a review of the report submitted under Subsection
  (g), using the risk-based system, indicates that a district is at
  high risk of having misused compensatory education funds, the
  commissioner shall notify the district of that determination. The
  district must respond to the commissioner not later than the 30th
  day after the date the commissioner notifies the district of the
  commissioner's determination. If the district's response does not
  change the commissioner's determination that the district is at
  high risk of having misused compensatory education funds or if the
  district does not respond in a timely manner, the commissioner
  shall:
               (1)  require the district to conduct a local audit of
  compensatory education expenditures for the current or preceding
  school year;
               (2)  order agency staff to conduct on-site monitoring
  of the district's compensatory education expenditures; or
               (3)  both require a local audit and order on-site
  monitoring.
         (j)  If a review of the report submitted under Subsection
  (g), using the risk-based system, indicates that a district is at
  high risk of having inadequately reported compensatory education
  expenditures, the commissioner may require agency staff to assist
  the district in following the proper reporting methods or amending
  a district or campus improvement plan under Subchapter F, Chapter
  11. If the district does not take appropriate corrective action
  before the 45th day after the date the agency staff notifies the
  district of the action the district is expected to take, the
  commissioner may:
               (1)  require the district to conduct a local audit of
  the district's compensatory education expenditures; or
               (2)  order agency staff to conduct on-site monitoring
  of the district's compensatory education expenditures.
         (k)  The commissioner, in the year following a local audit of
  compensatory education expenditures, shall withhold from a
  district's payment of funds under Section 42A.204 an amount equal
  to the amount of compensatory education funds the agency determines
  were not used in compliance with Subsection (c). The commissioner
  shall release to a district funds withheld under this subsection
  when the district provides to the commissioner a detailed plan to
  spend those funds in compliance with Subsection (c).
         (l)  The commissioner shall grant a one-year exemption from
  the requirements of Subsections (g)-(k) to a school district in
  which the group of students who have failed to perform
  satisfactorily in the preceding school year on an assessment
  instrument required under Section 39.023(a), (c), or (l)
  subsequently performs on those assessment instruments at a level
  that meets or exceeds a level prescribed by commissioner rule. Each
  year the commissioner, based on the most recent information
  available, shall determine if a school district is entitled to an
  exemption for the following school year and notify the district of
  that determination.
         Sec. 42A.253.  BILINGUAL EDUCATION OR SPECIAL LANGUAGE
  PROGRAMS. (a) Funds received by a school district as a result of
  the district's weighted average daily attendance of students
  described by Section 42A.102(b)(16), other than an indirect cost
  allowance established under State Board of Education rule, must be
  used in providing bilingual education or special language programs
  under Subchapter B, Chapter 29, and must be accounted for under
  existing agency reporting and auditing procedures.
         (b)  Funds described by Subsection (a) may be used only for
  program and student evaluation, instructional materials and
  equipment, staff development, supplemental staff expenses, salary
  supplements for teachers, and other supplies required for quality
  instruction and smaller class size.
         Sec. 42A.254.  CAREER AND TECHNOLOGY EDUCATION. (a) Funds
  received by a school district as a result of the district's weighted
  average daily attendance of students described by Section
  42A.102(b)(17), other than an indirect cost allowance established
  under State Board of Education rule, must be used in providing
  career and technology education programs in grades nine through 12
  or career and technology education programs for students with
  disabilities in grades seven through 12 under Sections 29.182,
  29.183, and 29.184.
         (b)  The commissioner shall conduct a cost-benefit
  comparison between career and technology education programs and
  mathematics and science programs.
         (c)  Out of the total amount of funds appropriated for
  weighted average daily attendance of students described by Section
  42A.102(b)(17), the commissioner shall set aside an amount
  specified in the General Appropriations Act, which may not exceed
  an amount equal to one percent of the total amount appropriated, to
  support regional career and technology education planning. After
  deducting the amount set aside under this subsection from the total
  amount appropriated, the commissioner shall reduce each district's
  allocation proportionately.
         Sec. 42A.255.  GIFTED AND TALENTED STUDENT PROGRAMS. (a)
  Funds received by a school district as a result of the district's
  weighted average daily attendance of students described by Section
  42A.102(b)(18), other than the amount that represents the program's
  share of general administrative costs, must be used in providing
  programs for gifted and talented students under Subchapter D,
  Chapter 29, including programs sanctioned by International
  Baccalaureate and Advanced Placement, or in developing programs for
  gifted and talented students. Each district must account for the
  expenditure of state funds as provided by rule of the State Board of
  Education. If by the end of the 12th month after receiving funds
  under this chapter for gifted and talented student programs for
  developing a program a district has failed to implement a program,
  the district must refund the funds received for gifted and talented
  student programs to the agency within 30 days.
         (b)  Not more than five percent of a district's students in
  average daily attendance are eligible for funding under this
  chapter for attendance in a gifted and talented student program.
         (c)  After each district has received allocated funds for
  this program, the State Board of Education may use up to $500,000 of
  the funds allocated under this chapter for programs such as
  MATHCOUNTS, Future Problem Solving, Odyssey of the Mind, and
  Academic Decathlon, as long as these funds are used to train
  personnel and provide program services. To be eligible for funding
  under this subsection, a program must be determined by the State
  Board of Education to provide services that are effective and
  consistent with the state plan for gifted and talented education.
         Sec. 42A.256.  PUBLIC EDUCATION GRANTS. The total number of
  students for whom a student multiplier is applied under Section
  42A.102(b)(19) for a district may not exceed the number by which the
  number of students using public education grants to attend school
  in the district exceeds the number of students who reside in the
  district and use public education grants to attend school in
  another district.
         Sec. 42A.257.  APPLICABILITY OF CONDITIONS TO SCHOOL
  DISTRICTS NOT INCLUDED IN SCHOOL FINANCE DISTRICT. The conditions
  prescribed by this subchapter apply to local tax revenue retained
  by a school district in the same manner that the conditions apply to
  state and local money distributed under this chapter.
         SECTION 2.  Section 12.106(a), Education Code, as effective
  September 1, 2017, is amended to read as follows:
         (a)  A charter holder is entitled to receive for the
  open-enrollment charter school funding under Chapter 42A [42] equal
  to the amount of state funding per student in weighted average daily
  attendance provided under that chapter to [, excluding enrichment
  funding under Section 42.302(a), to which the charter holder would
  be entitled for the school under Chapter 42 if the school were] a
  school district [without a tier one local share for purposes of
  Section 42.253].
         SECTION 3.  Section 45.003(d), Education Code, is amended to
  read as follows:
         (d)  A proposition submitted to authorize the levy of
  maintenance taxes must include the question of whether the
  governing board or commissioners court may levy, assess, and
  collect annual ad valorem taxes for the further maintenance of
  public schools, at a rate not to exceed the rate stated in the
  proposition. [For any year, the maintenance tax rate per $100 of
  taxable value adopted by the district may not exceed the rate equal
  to the sum of $0.17 and the product of the state compression
  percentage, as     determined     under Section 42.2516, multiplied by
  $1.50.]
         SECTION 4.  The following provisions of the Education Code
  are repealed:
               (1)  Sections 12.106(a-1) and (a-2);
               (2)  Chapter 41;
               (3)  Chapter 42; and
               (4)  Sections 45.003(e) and (f).
         SECTION 5.  (a) As soon as practicable and not later than
  October 1, 2015, the commissioner of education, as required by
  Section 42A.052, Education Code, as added by this Act, shall:
               (1)  make the initial determination of permissible
  range of wealth; and
               (2)  notify each school district with a wealth per
  weighted student that is not within the permissible range of
  wealth.
         (b)  Each school district proposing to form a school finance
  district must submit the proposed agreement to the commissioner of
  education for approval not later than April 1, 2016.
         (c)  The commissioner of education shall approve or
  disapprove each proposed agreement not later than May 1, 2016.
         (d)  An election for voter approval of each proposed
  agreement approved by the commissioner of education must occur not
  later than December 1, 2016.
         (e)  Not later than May 1, 2017, the commissioner of
  education, as required by Section 42A.062, Education Code, as added
  by this Act, shall order the consolidation of each school district
  with a wealth per weighted student not within the permissible range
  of wealth that failed to obtain voter approval of the formation of a
  school finance district.
         (f)  Notwithstanding any other provision of this section,
  the commissioner of education may modify the dates specified in
  this section or provide for additional deadlines as necessary to
  ensure that the system of public school funding provided by this Act
  is fully implemented beginning with the 2017 tax year and the
  2017-2018 school year.
         SECTION 6.  An obligation or entitlement of a school
  district in connection with state funding for the 2016-2017 or an
  earlier school year under Chapters 41 and 42, Education Code, as
  those chapters existed before repeal by this Act, is not affected by
  this Act, and the prior law is continued in effect for that purpose.
         SECTION 7.  (a) Subject to Subsection (b) of this section,
  this Act applies beginning with the 2017-2018 school year.
         (b)  Section 42A.058, Education Code, as added by this Act,
  applies beginning with the 2017 tax year.
         SECTION 8.  This Act takes effect immediately if it 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, this
  Act takes effect September 1, 2015.