Comment. ATPE recommended that a sunset provision be added to §100.1111(d) instead of leaving it in effect indefinitely, since it was included to address the possibility that standard accreditation ratings will not be issued to districts or charter schools for the first year the TAKS is administered. ACE supported the idea of a sunset provision.

Agency Response. The agency disagrees with the comment. If proposed §100.1111(d) is triggered at all for the 2003 school year, then it will be needed for at least two years beyond 2003. Without it, predicting agency decisions respecting the applicability of subsection (e) to some charter holders may be difficult.

Comment. An individual commented that the phrase, "comply with subsection (d)," in proposed §100.1111(b), (c), and (c)(3), appears to be incorrect, and suggested that the phrase be changed to read, "comply with subsection (e)."

Agency Response. The agency agrees with the comment. The phrase, "comply with subsection (d)," in proposed §100.1111(b), (c), and (c)(3), has been modified to read, "comply with subsection (e)."

Proposed §100.1113. Relationships By Consanguinity or By Affinity.

Comment. ACE and HCJJCS suggested that §100.1113 summarize Government Code, §§573.021-573.025, instead of merely referring to those sections. These provisions are among the most frequently consulted sections of the nepotism law. Charter holders may not have convenient access to the Government Code, and including the necessary information in the rules applicable to charter schools may enhance compliance with the nepotism law.

Agency Response. The agency agrees with the comment. Proposed §100.1113 has been modified to summarize Government Code, §§573.021-573.025, instead of merely referring to those sections.

Proposed §100.1114. Nepotism Prohibitions.

Comment. ATPE recommended that the rule include a prohibition related to influencing an employee of a management company who has contracted to provide services to that charter.

Agency Response. The agency disagrees with the comment. Government Code, §§573.041 (Prohibition Applicable to Public Official), 573.042 (Prohibition Applicable to Candidate), and 573.044 (Prohibition Applicable to Trading), provide for the exceptions listed in proposed §100.1114. TEC, §12.1055 (Applicability of Nepotism Laws), does not support a rule imposing a prohibition related to influencing an employee of a management company who has contracted to provide services to that charter.

Proposed §100.1115. Nepotism Exceptions.

Comment. ATPE suggested that §100.1115(a) should not exclude bus drivers and substitute teachers from the nepotism law. Bus drivers and substitute teachers are still employees of the charter school and should not be exempt from nepotism laws since they can still benefit from increased benefits, perks, and privileges as a result of their relationship with a person who makes employment decisions. There is no prohibition against long-term substitutes in charter schools, so this could provide a loophole for teachers to circumvent the nepotism laws. ATPE also expressed concern that §100.1115 (b) allows relatives of potential charter officials to gain employment at the charter school without violating nepotism provisions, if their employment begins a minimum number of days prior to the charter official accepting that position. This lends itself to abuse since a relative may be aware that they will be taking an official position with the charter school with plenty of time to influence the hiring of a relative prior to ascending to that official position. ATPE recommends deleting this section of the rule since there is no enforcement mechanism in place. A person who serves a charter school in an official capacity should not have a relative in their employment at any time during their tenure in that capacity. ATPE also recommended a provision to prohibit charter officials from discussing any aspect of a relative's employment with any person who makes employment decisions regarding the relative.

Agency Response. The agency disagrees with the comment. Government Code, §573.061 (General Exceptions), and §573.062 (Continuous Employment), provide for the exceptions listed in proposed §100.1115(a) and (b).

Proposed §100.1116. Enforcement of Nepotism Prohibitions.

Comment. ATPE recommended revising §100.1116(c)(2) to provide that a charter holder's failure to remove a person in violation of the nepotism laws constitutes a material violation of the charter that could result in adverse action being taken by the commissioner.

Agency Response. The agency disagrees with the comment. Proposed §100.1116(a) (relating to Removal by charter holder) addresses the removal of a person who violates nepotism prohibitions and exceptions. Section 100.1116 also establishes that failure to comply is a material charter violation.

Comment. ACE and HCJJCS stated that the proposed rules do not define the time frame within which a charter holder must comply with applicable nepotism provisions. A charter holder should not be required to institute required governance reforms until 180 days from the date of the event giving rise to the requirement for reform.

Agency Response. The agency agrees, in part, with the comment. See the agency's response to a similar comment on proposed §100.1111. In response to a comment on proposed §100.1116, §100.1111 has been modified to add a new subsection (g) dealing with the time frame within which a charter holder must comply with applicable nepotism provisions after ratings are assigned each year.

Comment. ACE requested that the proposed rules clarify any change in the governance regime of a charter school required by this subchapter is not effective until the deadline for appeal of the determination triggering the required change has expired.

Agency Response. The agency agrees, in part, with the comment. See the agency's response to a similar comment on proposed §100.1111. In response to a comment on proposed §100.1116, §100.1111 has been modified to add a new subsection (g) dealing with the time frame within which a charter holder must comply with applicable nepotism provisions after ratings are assigned each year.

Proposed §100.1131. Conflicts of Interest and Board Member Compensation; Exception.

Comment. ACE and HCJJCS commented that proposed §100.1131(b)(2) and (7) conflict with Local Government Code, Chapter 171. Under Chapter 171, a local public official is permitted to have a substantial interest in a business entity that sells goods or services to the local governmental entity. Chapter 171 is procedural only, and requires the local public official merely to file an affidavit and be recused from taking official action respecting such transactions. Proposed §100.1131(b)(2) and (7) prohibit the local public official from having a substantial interest in a business entity that sells goods or services to charter school or the charter holder. Such a conflict of interest should be subject to the procedural restrictions imposed by Chapter 171, but should not be prohibited by the rule.

Agency Response. The agency agrees with the comment. Proposed §100.1131(b)(2) and (7) has been deleted.

Comment. ACE and HCJJCS commented that the word "remuneration" in §100.1131(b) and (b)(8) is vague and ambiguous.

Agency Response. The agency disagrees with the comment. The word "remuneration" is modified by its context, which gives it sufficiently specific meaning without unduly restricting the intended scope of the proposed rule. First, the word is not used alone but appears only as part of the phrase, "compensation or remuneration." Second, the phrase "compensation or remuneration" appears in §100.1131(b)(8) as an inclusive closing provision in a list of seven specific examples of "compensation or remuneration." Under standard principles of construction (applicable both to statutes and rules), the phrase as it is used in §100.1131(b)(8) applies to circumstances that are similar in material respects to those set forth in §100.1131(b)(1)-(7), although not specifically listed among those subsections.

Comment. ACE and HCJJCS commented that proposed §100.1131(f)(1) is vague and ambiguous, and requested that it be clarified to permit an employee of the charter school to serve as a member of the governing body of the charter holder even if the person is employed both by the charter holder and by the charter school.

Agency Response. The agency agrees with the comment. In response to another comment, proposed §100.1011(3) has been modified to add a new subparagraph (A) clarifying that the phrase, "employee of a charter school" as used in this subchapter, means a person paid to work at a charter school under the direction and control of an officer of a charter school, regardless of whether the person is on the payroll of the charter holder, a charter school operated by the charter holder, a management company providing management services to the charter holder, or any other person. In response to the comment, proposed §100.1011(3) has been modified to add a new subparagraph (B) clarifying that the phrase, "employee of a charter holder," as used in this subchapter, means a charter holder employee who engages in no charter school activity for the charter holder and is not an officer of a charter school.

Comment. ACE and HCJJCS commented that the word "committee" in §100.1131(f)(3) is vague and ambiguous, and requested that it be clarified by adding the words "with final decision making authority."

Agency Response. The agency disagrees with the comment. TEC, §12.1055 (Applicability of Nepotism Laws), makes Government Code, Chapter 573, apply to charter holders. That section provides at subsection (b), "persons defined under Sections 573.021-573.025, Government Code, shall not constitute a quorum of the governing body or any committee of the governing body."

Comment. ACE and HCJJCS commented that proposed §100.1131 does not define the time frame within which a charter holder must comply with applicable conflict of interest provisions. A charter holder should not be required to institute required governance reforms until 180 days from the date of the event giving rise to the requirement for reform.

Agency Response. The agency agrees, in part, with the comment. See the agency's response to a similar comment on proposed §100.1111. Proposed §100.1131 has been modified to add a new subsection (h) dealing with the time frame within which a charter holder must comply with applicable conflict of interest provisions after ratings are assigned each year.

Comment. ACE requested that proposed §100.1131 be modified to clarify that any change in the governance regime of an open-enrollment charter school required by this subchapter is not effective until the deadline for appeal of the determination triggering the required change has expired.

Agency Response. The agency agrees, in part, with the comment. See the agency's response to a similar comment on proposed §100.1111. Modifications related to this comment have been made to §100.1131(h).

Comment. An individual commented that the phrase, "comply with subsection (d)," in proposed §100.1131(c) and (d), appears to be incorrect, and suggested that the phrase be changed to read, "comply with subsection (f)." In addition, in subsection (f), the phrase, "Notwithstanding subsection (c)" should be changed to read, "Notwithstanding subsection (b)."

Agency Response. The agency agrees with the comment. The phrase, "comply with subsection (e)," in proposed §100.1131(c) and (d), has been modified to read, "comply with subsection (f)." In addition, in subsection (f), the phrase, "Notwithstanding subsection (c)" has been changed to read, "Notwithstanding subsection (b)."

Proposed §100.1132. General Conflict of Interest Provisions.

Comment. ACE and HCJJCS commented that the term "local public official" in §100.1132(a)(1) is vague and ambiguous, and requested that it be clarified.

Agency Response. The agency agrees with the comment. Proposed §100.1132(a)(1) has been modified to delete the phrase, "who exercises responsibilities beyond those that are advisory in nature."

Proposed §100.1133. Conflicts Requiring Affidavit and Abstention From Voting.

Comment. ATPE suggested the conflict of interest provision in this section should be revised to prohibit a majority of the board members who share a conflict of interest from still participating in discussions and voting on the matter. This is inappropriate for charter governing board members, even though it is permitted for school district board of trustee members, because charter governing board members are appointed and not elected. Since charter board members are not elected and do not face approval from an outside, objective body of people, it is much easier and much more conceivable that a majority of the board could be comprised of individuals that share the same substantial interest in a business or property. This presents great potential for abuse.

Agency Response. The agency disagrees with the comment. TEC, §12.1054 (Applicability of Laws Relating to Conflict of Interest), makes Local Government Code, Chapter 171, apply to charter holders. That section provides at subsection (b) that: "a requirement in a law listed in this section that applies to. . . the board of trustees of a school district applies to. . . the governing body of a charter holder, or the governing body of an open-enrollment charter school." Local Government Code, §171.004 (Affidavit and Abstention From Voting Required), provides at subsection (c) for the exception provided by proposed §100.1133(c).

Proposed §100.1134. Conflict Requiring Separate Vote on Budget.

Comment. ATPE suggested the conflict of interest provision in this section should be revised to prohibit a majority of the board members who share a conflict of interest from still participating in discussions and voting on the matter. This is inappropriate for charter governing board members, even though it is permitted for school district board of trustee members, because charter governing board members are appointed and not elected. Since charter board members are not elected and do not face approval from an outside, objective body of people, it is much easier and much more conceivable that a majority of the board could be comprised of individuals that share the same substantial interest in a business or property. This presents great potential for abuse.

Agency Response. The agency disagrees with the comment. For further response, see response to a similar comment from ATPE concerning proposed §100.1133 (relating to Conflicts Requiring Affidavit and Abstention From Voting).

Proposed §100.1151. Criminal History; Restrictions on Serving.

Comment. The law firm of Donald W. Hicks, Sr., P.C., Attorneys and Counselors at Law, on behalf of its client, Texans Can!, on behalf of its open-enrollment charter schools, commented as follows. Proposed §100.1151 exceeds the language of TEC, §12.120(a), by enlarging the categories of individuals who are restricted from "serving." As proposed, an employee or officer of the governing body of a charter school, who has been convicted of a felony or a misdemeanor involving moral turpitude, is restricted from serving. The inclusion of the categories of an "employee" or an "officer" of the governing body of a charter school, is inconsistent with, and exceeds the language of the statute. TEC, §12.120(a), addresses an officer or employee of a charter school, not of the governing body of a charter school. The proposed rule is in violation of the law of the State of Texas. The law firm of Donald W. Hicks, Sr., P.C., requested that proposed §100.1151 be redrafted consistent with TEC, §12.120.

Agency Response. The agency agrees, in part, with the comment. See response to subsequent comment from Bracewell & Patterson, L.L.P.

Comment. Five representatives of Texans Can! suggested modifying the language of proposed subsections (a), (h), and (j)(2) of §100.1151 to more accurately reflect the language in TEC, §12.120(a). Texans Can! commented that subsections (a), (h), and (j)(2) of §100.1151 are confusing in that they seem to say that "a person may not serve as an employee ... of the governing body of a charter school ... if the person has been convicted of: . . .." TEC, §12.120(a), restricts the service of "a member of the governing body of a charter holder, ... a member of the governing body of an open-enrollment charter school, or ... an officer or employee of an open-enrollment charter school" without restriction on "an employee of the governing body of a charter school." These representatives of Texans Can! stated no objection to proposed subsections (a), (h), and (j)(2) of §100.1151 if the words "an employee" are eliminated to make the statement more consistent with the wording of TEC, §12.120(a).

Agency Response. The agency agrees, in part, with the comment. See response to subsequent comment from Bracewell & Patterson, L.L.P.

Comment. ACE commented that the rules should not add a new restriction on service. House Bill 6 specifically says certain persons should not be permitted to serve as an employee of a charter school, but leaves decisions pertaining to employees of a charter holder to the discretion of the governing board of the charter holder. The rule language extending statutory prohibitions to cover employees of the charter holder should be eliminated.

Agency Response. The agency agrees, in part, with the comment. See response to subsequent comment from Bracewell & Patterson, L.L.P.

Comment. The law firm of Bracewell & Patterson, L.L.P., Attorneys and Counselors at Law, on behalf of its client, Texans Can!, on behalf of its open-enrollment charter schools, commented as follows. In promulgating proposed §100.1151 to implement TEC, §12.120, the commissioner expanded the categories of individuals who are restricted from serving beyond those established by the Legislature, and expanded the categories of offenses targeted beyond those established by the Legislature. Bracewell & Patterson objected to the following phrases in proposed §100.1151: " as an employee, an officer, or a member of the governing body of a charter school" in subsection (a); "or any felony" in subsection (b); "charter holder" and "in any capacity" in subsection (b)(1); and "employee, an officer, or a member of the governing body of a charter school" in subsection (h).