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18_11 Adopted New 19 TAC §105.1011

Commissioner's Rules

Adopted New 19 TAC Chapter 105, Foundation School Program, Subchapter BB, Commissioner's Rules Concerning Charter School Funding, §105.1011, Additional State Aid for Open-Enrollment Charter School Facilities

Attachments:
I. Statutory Citation (PDF)
II. Text of Adopted New 19 TAC Chapter 105, Foundation School Program, Subchapter BB, Commissioner's Rules Concerning Charter School Funding, §105.1011, Additional State Aid for Open-Enrollment Charter School Facilities (PDF)
SUMMARY: The rule action presented in this item was filed as adopted with the Texas Register under the commissioner's rulemaking authority. This item adopts new 19 TAC Chapter 105, Foundation School Program, Subchapter BB, Commissioner's Rules Concerning Charter School Funding, §105.1011, Additional State Aid for Open-Enrollment Charter School Facilities. The adopted new rule implements changes made by House Bill (HB) 21, 85th Texas Legislature, First Called Session, 2017, by defining the most recent performance rating under Texas Education Code (TEC), Chapter 39, Subchapter C, for the purposes of determining open-enrollment charter school facilities funding eligibility.

STATUTORY AUTHORITY: TEC, §12.106, as amended by HB 21, 85th Texas Legislature, First Called Session, 2017.

TEC, §12.106(c), allows the commissioner to adopt rules for the administration of TEC, §12.106.

TEC, §12.106(d), as added by HB 21, 85th Texas Legislature, First Called Session, 2017, establishes the formula to be used to calculate open-enrollment charter school facilities funding.

TEC, §12.106(e), as added by HB 21, 85th Texas Legislature, First Called Session, 2017, sets forth eligibility to receive open-enrollment charter school facilities funding.

EFFECTIVE DATE: December 20, 2018.

BACKGROUND INFORMATION AND JUSTIFICATION: The TEC, §12.106, authorizes the commissioner of education to adopt rules for the administration of state funding for open-enrollment charter schools. HB 21, 85th Texas Legislature, First Called Session, 2017, created a new facilities allotment under TEC, §12.106(d), for open-enrollment charter schools. The allotment is based on the open-enrollment charter school's average daily attendance (ADA) multiplied by the state average interest and sinking (I&S) tax rate imposed by school districts for the current school year. An amount of $60 million was allocated in HB 21 to fund facilities payments to open-enrollment charter schools. If the statewide total exceeds $60 million, the state average I&S tax rate is prorated to result in a total amount to which open-enrollment charter schools are entitled to for the current year equal to $60 million. Pursuant to TEC, §12.106(e), a charter holder is entitled to receive funding for facilities if the most recent overall performance rating assigned to the open-enrollment charter school under TEC, Chapter 39, Subchapter C, reflects at least acceptable performance.

To implement HB 21, adopted new §105.1011 exercises the commissioner's authority under TEC, §12.106(c), to define the most recent rating year for the purposes of determining funding eligibility under TEC, Chapter 39, Subchapter C, as the most recent preliminary overall performance rating issued to the open-enrollment charter school preceding the school year for which funding under TEC, §12.106(d), would be provided.

The adopted new rule removes any ambiguity about which performance rating will be used in the allotment calculation. Since the distribution of the allotment occurs before the final accountability rating for the preceding year is determined, adopted new §105.1011(a) specifies that the preliminary rating will be used to determine funding under TEC, §12.106(d). Subsection (b) specifies that if an appeal to the preliminary rating results in a change to a rating of at least acceptable, then the full amount of the funds will be provided.

In response to public comment, new subsection (c) was added at adoption. The new subsection specifies that Texas Education Agency (TEA) will use the most recent final overall performance rating assigned to the open-enrollment charter school under TEC, Chapter 39, Subchapter C, to determine eligibility in cases where the open-enrollment charter school was not rated the preceding school year as a result of a special evaluation by the commissioner because the open-enrollment charter school was in a county declared a natural disaster.

FISCAL IMPACT: TEA has determined that there are no additional costs to persons or entities required to comply with the new rule. In addition, there is no direct adverse economic impact for small businesses, microbusinesses, or rural communities; therefore, no regulatory flexibility analysis, specified in Texas Government Code, §2006.002, is required. There is no effect on local economy; therefore, no local employment impact statement is required under Texas Government Code, §2001.022. The new rule does not impose a cost on regulated persons, another state agency, a special district, or a local government and, therefore, is not subject to Texas Government Code, §2001.0045.

GOVERNMENT GROWTH IMPACT: TEA staff prepared a Government Growth Impact Statement assessment for this rulemaking. During the first five years the rulemaking would be in effect, it would not create or eliminate a government program; would not require the creation of new employee positions or elimination of existing employee positions; would not require an increase or decrease in future legislative appropriations to the agency; would not require an increase or decrease in fees paid to the agency; would not create a new regulation; would not expand, limit, or repeal an existing regulation; would not increase or decrease the number of individuals subject to its applicability; and would not positively or adversely affect the state's economy.

PUBLIC AND STUDENT BENEFIT: The new rule implements new provisions in TEC, §12.106, that provide open-enrollment charter schools with additional funding for facilities. The adopted new rule clearly defines the overall performance rating to be used in the allotment calculation and helps open-enrollment charter schools estimate state aid and prepare their budgets.

PROCEDURAL AND REPORTING IMPLICATIONS: The new rule has no new procedural and reporting implications. Open-enrollment charter schools will continue to follow current reporting requirements.

LOCALLY MAINTAINED PAPERWORK REQUIREMENTS: The new rule requires no new locally maintained paperwork requirements. Open-enrollment charter schools will continue to maintain existing local records.

PUBLIC COMMENTS: The public comment period on the proposal began August 24, 2018, and ended September 24, 2018. Following is a summary of the public comments received and the responses.

Comment: The Texas Charter Schools Association (TCSA) requested that the proposed rule address whether charter districts that are not rated due to the regulations put in place for Hurricane Harvey accountability waivers are still eligible for the additional funding for facilities.

Agency Response: The agency agrees and has modified the rule at adoption. New subsection (c) has been added to address open-enrollment charter schools that are not rated as a result of a special evaluation by the commissioner because the open-enrollment charter school was in a county declared a natural disaster.

Comment: TCSA requested that the commissioner clarify that a single campus district with a rating of "met standard" will be considered to have acceptable performance because in 2018, single campus districts did not receive a district A-F rating.

Agency Response: The agency agrees with recommendation, but it will not result in a change to the proposed language. Per TEC, §39.054(a-4), effective January 1, 2019, single campus districts will receive the A-F rating assigned to the campus. Therefore, in determining eligibility for 2020 there will not need to be a distinction made for multi-campus district charters and single campus district charters. Additionally, single campus charter districts that had a 2018 rating of "met standard" were determined to be eligible for facilities funding for 2019.

Comment: TCSA stated that TEC, §12.106(f)(4), allows the additional facilities funding to be used "for any purpose related to the purchase, lease, sale, acquisition, or maintenance of an instructional facility" but that it is silent as to what qualifies as "maintenance." TCSA asked that the proposed rule define maintenance to include upgrades or improvements to any facilities owned or leased by the charter.

Agency Response: The agency disagrees with defining maintenance as part of the rule because it is outside of the scope of this rule. Allowable maintenance expenditures are set forth in the Financial Accountability System Resource Guide adopted by reference in 19 TAC §109.41, Financial Accountability System Resource Guide.

Comment: An individual opposed facilities funding to charter schools under TEC, §12.106(d).

Agency Response: This comment is outside of the scope of the proposed rulemaking.

Staff Members Responsible:
Leo Lopez, Associate Commissioner, School Finance / Chief School Finance Officer
Al McKenzie, Director, State Funding
Nora Rainey, Manager, State Funding 

 

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