January 2014 Committee on School Finance Permanent School Fund Item 2

Proposed Amendments to 19 TAC Chapter 109, Budgeting, Accounting, and Auditing, Subchapter D, Uniform Bank Bid or Request for Proposal and Depository Contract
(First Reading and Filing Authorization)

January 31, 2014

COMMITTEE ON SCHOOL FINANCE/PERMANENT SCHOOL FUND: ACTION
STATE BOARD OF EDUCATION: ACTION

SUMMARY:
This item presents for first reading and filing authorization proposed amendments to 19 TAC Chapter 109, Budgeting, Accounting, and Auditing, Subchapter D, Uniform Bank Bid or Request for Proposal and Depository Contract, §109.51, Uniform Depository Bank Bid or Proposal Form, and §109.52, Uniform Depository Bank Contract and Surety Bond Forms. The proposed amendment to §109.51 would remove the requirement for a school district to file its bid or proposal with the Texas Education Agency (TEA) and would add a requirement for the district to make the selected bid or proposal available to the TEA on request. The proposed amendment to §109.52 would require a school district to file a copy of its depository contract electronically with the TEA and would revise the depository contract form adopted as a figure in that section to remove the requirement that TEA staff members sign the form to indicate approval. The proposed amendment to §109.52 would also add a provision for the TEA to notify a district by email if its depository contract is incomplete and a provision stating that a district that has no depository contract in force and filed with the TEA will receive its warrants from the TEA by US mail.

STATUTORY AUTHORITY: Texas Education Code (TEC), §§7.102(c)(34), 45.206, and 45.208.

EFFECTIVE DATE: The proposed effective date of the proposed amendments to 19 TAC §109.51 and §109.52 would be 20 days after filing as adopted with the Texas Register in order to implement the latest policy in a timely manner. Under the TEC, §7.102(f), the State Board of Education (SBOE) must approve the rule action at second reading and final adoption by a vote of two-thirds of its members to specify an effective date earlier than the beginning of the 2014-2015 school year.

PREVIOUS BOARD ACTION: The SBOE adopted 19 TAC §109.51 and §109.52 effective September 1, 1997. The rules were last amended effective August 17, 2008. A discussion item regarding proposed amendments to 19 TAC §109.51 and §109.52 was presented to the Committee on School Finance/Permanent School Fund during its November 2013 meeting.

BACKGROUND INFORMATION AND SIGNIFICANT ISSUES: The rules in 19 TAC Chapter 109, Subchapter D, establish rules related to a school district's selection of and contract with a bank to serve as the district's depository for all funds.

Section 109.51 establishes the requirement that each school district, before the current depository contract expires, choose whether to select a depository bank through competitive bidding or through requests for proposals and then submit a blank uniform bid or proposal form to each bank in the district and, if desired, to other interested banks. Section 109.51 also establishes the requirement that a district file the selected form with the Texas Education Agency (TEA). The section includes the bid and proposal forms prescribed by the SBOE.

Section 109.52 establishes the requirement that each school district select at least one bank as a depository and enter into a depository contract with the bank, providing the completed contract to the TEA. Section 109.52 also establishes the requirement that a district provide a completed surety bond form to the TEA if the depository bank uses a surety bond to secure district deposits. The section includes the depository contract form and surety bond form with the content prescribed by the SBOE.

Agency staff recommend proposed amendments to 19 TAC §109.51 and §109.52 to reduce the paperwork a district must file with the agency and to streamline the process by which a school district selects a depository bank.

The proposed amendment to 19 TAC §109.51, Uniform Depository Bank Bid or Proposal Form, would remove the requirement in subsection (b) for the district to file its bid or proposal with the TEA and would add a requirement for the district to make the selected bid or proposal available to the TEA on request. The uniform bid blank form, adopted as Figure: 19 TAC §109.51(c), and the uniform proposal blank form, adopted as Figure 19 TAC §109.51(d), would be revised to update and clarify language.

The proposed amendment to 19 TAC §109.52, Uniform Depository Bank Contract and Surety Bond Forms, would clarify language and add a provision in subsection (a) to require a district to electronically file the contract with the TEA. The proposed amendment would also add a provision for the TEA to notify a district by email if its depository contract is incomplete and a provision stating that a district that has no depository contract in force and filed with the TEA will receive its warrants from the TEA by US mail.

The uniform depository bank contract form, adopted as Figure: 19 TAC §109.52(b), would be revised to remove the signature line for a TEA staff member to approve the contract because the TEA's approval is not considered necessary; to delete any requirement for the bid or proposal to be attached to the contract and to add a provision that the district must provide the bid or proposal upon the TEA's request; to remove language stating that the contract becomes binding only upon acceptance by the TEA; and to add a requirement for the district to file the contract or extension electronically with the TEA. The surety bond form, adopted as Figure: 19 TAC §109.52(d), would be revised to update and clarify language.

FISCAL IMPACT: The TEA has determined that there are no additional costs to persons or entities required to comply with the proposed amendments. Districts may save money because the proposed amendment to 19 TAC §109.51 would remove the requirement for districts to mail their selected bid or proposal form to the TEA. These savings are impossible to estimate because the size or page count of documents could vary and require differing amounts of staff processing time as well as packing and shipping costs. In addition, there is no direct adverse economic impact for small businesses and microbusinesses; therefore, no regulatory flexibility analysis, specified in Texas Government Code, §2006.002, is required.

PUBLIC AND STUDENT BENEFIT: The proposed amendments would update and streamline the process and reduce paperwork for a district to select and contract with a depository bank.

PROCEDURAL AND REPORTING IMPLICATIONS: The proposed amendments would update and streamline the filing process and reduce paperwork for a district to select and contract with a depository bank.

LOCALLY MAINTAINED PAPERWORK REQUIREMENTS: The proposed amendments would require the district to keep the selected bid or proposal in the district and make it available to the TEA upon request.

PUBLIC COMMENTS: The official public comment period will begin when the proposal is published in the Texas Register.

ALTERNATIVES: None.

OTHER COMMENTS AND RELATED ISSUES: A request for a public hearing on the proposal submitted under the Administrative Procedure Act must be received by the commissioner of education not more than 14 calendar days after notice of the proposal has been published in the Texas Register.

MOTION TO BE CONSIDERED: The State Board of Education:

Approve for first reading and filing authorization the proposed amendments to 19 TAC Chapter 109, Budgeting, Accounting, and Auditing, Subchapter D, Uniform Bank Bid or Request for Proposal and Depository Contract, §109.51, Uniform Depository Bank Bid or Proposal Form, and §109.52, Uniform Depository Bank Contract and Surety Bond Forms.

Staff Members Responsible:
Lisa Dawn-Fisher, Associate Commissioner
School Finance / Chief School Finance Officer

David Marx, Director
Financial Compliance

Attachments:
I. Statutory Citations (PDF, 19KB)
II. Text of Proposed Amendments to 19 TAC Chapter 109, Budgeting, Accounting, and Auditing, Subchapter D, Uniform Bank Bid or Request for Proposal and Depository Contract, §109.51, Uniform Depository Bank Bid or Proposal Form, and §109.52, Uniform Depository Bank Contract and Surety Bond Forms (PDF, 257KB)