January 2020 Committee on School Finance/Permanent School Fund Item 1

Proposed Repeal of 19 TAC Chapter 105, Foundation School Program, Subchapter B, Use of State Funds 
(First Reading and Filing Authorization)

January 31, 2020

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

SUMMARY: This item presents for first reading and filing authorization the proposed repeal of 19 Texas Administrative Code (TAC) Chapter 105, Foundation School Program, Subchapter B, Use of State Funds, §105.11, Maximum Allowable Indirect Cost, and §105.12, Basic Allotment. The proposed repeal would implement House Bill (HB) 3, 86th Texas Legislature, 2019, which removed the State Board of Education's (SBOE's) rulemaking authority related to maximum allowable indirect costs and the basic allotment for the Foundation School Program (FSP).

STATUTORY AUTHORITY: Texas Education Code (TEC), §48.004, as transferred, redesignated, and amended by HB 3, 86th Texas Legislature, 2019. 

TEC, §48.004, as transferred, redesignated, and amended by HB 3, 86th Texas Legislature, 2019, requires the commissioner to adopt rules, take actions, and require reports necessary to implement and administer the FSP.

The full text of statutory citations can be found in the statutory authority section of this agenda.

EFFECTIVE DATE: The proposed effective date of the proposed repeal is 20 days after filing as adopted with the Texas Register. Under TEC, §7.102(f), the 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 2020-2021 school year. The earlier effective date will implement legislation in a timely manner by removing provisions for which statutory authority no longer exists.

PREVIOUS BOARD ACTION: The SBOE adopted §105.11 effective September 1, 1996, and last amended the section effective December 26, 2011. The SBOE adopted §105.12 effective October 10, 1999. 

BACKGROUND INFORMATION AND JUSTIFICATION: Section 105.11 establishes the limits that may be expended from special allotments on indirect costs related to compensatory education, bilingual education, special language programs, and special education. 

Section 105.12 explains the authorized use of state aid for acquisitions, renovation, repairs, and maintenance of facilities. 

HB 3, 86th Texas Legislature, 2019, renumbered TEC, §42.004, to §48.004. The renumbered statute was amended to remove the SBOE's rulemaking authority related to maximum allowable indirect costs and the basic allotment for the FSP. The repeal of the rules is necessary since statutory authority no longer exists.

The proposed rule action was not presented as a discussion item. The SBOE, however, may wish to consider this item for first reading and filing authorization as authorized under its operating procedures. Therefore, this item is presented for first reading and filing authorization consideration at this meeting. It is recommended that the SBOE consider this item for first reading and filing authorization to ensure that provisions for which statutory authority no longer exists are removed from the TAC in a timely manner. 

FISCAL IMPACT: The Texas Education Agency (TEA) has determined that there are no additional costs to state or local government required to comply with the proposal. 

LOCAL EMPLOYMENT IMPACT: The proposal has no effect on local economy; therefore, no local employment impact statement is required under Texas Government Code, §2001.022.

SMALL BUSINESS, MICROBUSINESS, AND RURAL COMMUNITY IMPACT: The proposal has 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.

COST INCREASE TO REGULATED PERSONS: The proposal 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.

TAKINGS IMPACT ASSESSMENT: The proposal does not impose a burden on private real property and, therefore, does not constitute a taking under Texas Government Code, §2007.043.

GOVERNMENT GROWTH IMPACT: TEA staff prepared a Government Growth Impact Statement assessment for this proposed rulemaking. The proposed rulemaking would repeal an existing regulation. Section 105.11 and §105.12 would be repealed to implement HB 3, 86th Texas Legislature, 2019, which removed the SBOE's rulemaking authority related to maximum allowable indirect costs and the basic allotment for the FSP.

The proposed rulemaking 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 or limit 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 BENEFIT AND COST TO PERSONS: The proposal would implement legislation by removing rules for which statutory authority no longer exists. There is no anticipated economic cost to persons who are required to comply with the proposal.

DATA AND REPORTING IMPACT: The proposal would have no data and reporting impact.

PRINCIPAL AND CLASSROOM TEACHER PAPERWORK REQUIREMENTS: TEA has determined that the proposal would not require a written report or other paperwork to be completed by a principal or classroom teacher.

PUBLIC COMMENTS: The public comment period on the proposal begins March 6, 2020, and ends April 10, 2020. The SBOE will take registered oral and written comments on the proposal at the appropriate committee meeting in April 2020 in accordance with the SBOE board operating policies and procedures. 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 on March 6, 2020.

MOTION TO BE CONSIDERED: The State Board of Education:

Suspend the board operating procedures in accordance with §5.2(a) to allow consideration at first reading and filing authorization; and

Approve for first reading and filing authorization the proposed repeal of 19 TAC Chapter 105, Foundation School Program, Subchapter B, Use of State Funds.

Staff Members Responsible:
David Marx, Director, Financial Compliance
Sara Kohn, Assistant Director, Forecasting and Fiscal Analysis
Thomas Heil, Financial Analyst, Forecasting and Fiscal Analysis

Attachment:    Text of Proposed Repeal of 19 TAC Chapter 105, Foundation School Program, Subchapter B, Use of State Funds