This page provides a general overview of the definition for
severance payments, the requirements for reporting severance payments, and the procedures
for reducing Foundation School Program (FSP) funding.
Related Statutes and Rules
For more information,
see the following statues and rules:
Definition of Severance Payment
payment is any amount paid by the board of trustees of a school district to a
superintendent whose contract is terminated early. The payment includes but is not
limited to the following:
- The amount is paid as a compensation for, or a
condition of, the early contract termination.
- The payment is more than the amount the
superintendent earned under the contract as of the date of termination,
including any amount that exceeds the amount of earned standard salary and
- The payment is made to a former superintendent
who remains employed by a school district in another capacity or contracts with
a school district to provide the district services. This payment may be a severance
payment in whole or in part if the payment is compensation for the early
termination of a prior employment agreement.
- The payment is for actual or threatened
litigation related to the employment contract.
Requirements for Reporting Severance Payments
If a district makes a payment to a superintendent who is
departing early, the district must file a Superintendent Payment Disclosure
Form with the Texas Education Agency (TEA). However, the district does not have
to file the form for a payment already earned and payable under the terms of a
terminated employment contract, such as a payment for accrued vacation.
must be filed not later than the 60th day after the earlier of the following
- The district executes the agreement to make the
- The district makes any payment under such an
The interim superintendent, new superintendent, or school
board president is responsible for timely filing of the Superintendent Payment
Disclosure Form. The district must file the form regardless of whether the
district considers a payment to be a severance payment as that term is defined
in 19 TAC 105.1021(a).
The form is
found at the following link:
Superintendent Payment Disclosure Form (PDF, 320KB)
Procedure for Reducing FSP Funding
The commissioner will reduce a district’s FSP funding by the amount that a severance payment to a
superintendent exceeds one year’s salary and
benefits under the superintendent’s terminated contract.
commissioner will reduce the district’s FSP funding:
- in the school year following the school year in
which the first payment requiring an FSP funding reduction is made to the
- in the school year following each school year
that any additional payment requiring an FSP funding reduction is made to the
If a district’s liability to the state exceeds the total of
the district’s estimated payments of FSP funding for the remainder of the
school year, the district is subject to reductions in its FSP funding for
subsequent school years until the liability has been fully liquidated.
The reduction in FSP funding may be applied to any source of
FSP estimated earned revenue. A proportionate amount of the reduction in FSP
funding will be deducted from each FSP state aid payment for the school year or