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(a)The following words and terms, when used in this
section, have the following meanings, unless the context clearly indicates
otherwise.
(1)Annual Financial Report (AFR)--The audited annual
report required by the Texas Education Code (TEC), §44.008, that
is due to the Texas Education Agency (TEA) by no later than 150 days
after the close of a school district's or an open-enrollment charter
school's fiscal year.
(2)Electronic submission--The TEA electronic data
feed format required for use by school districts, open-enrollment
charter schools, and regional education service centers (ESCs).
(3)Financial Integrity Rating System of Texas (FIRST)--The
financial accountability rating system administered by the TEA in
accordance with the TEC, §39.082 and §39.085. The system
provides additional transparency to public education finance and meaningful
financial oversight and improvement for school districts (School FIRST)
and open-enrollment charter schools (Charter FIRST).
(4)Fiscal year--The fiscal year of a school district
or an open-enrollment charter school, which begins on July 1 or September
1 of each year, as determined by the board of trustees of the district
or the governing body of the charter holder in accordance with the
TEC, §44.0011.
(5)Foundation School Program (FSP)--The program established
under the TEC, Chapters 41, 42, and 46, or any successor program of
state-appropriated funding for school districts in this state.
(6)Public Education Information Management System
(PEIMS)--The system that school districts and open-enrollment charter
schools use to load, validate, and submit their data to the TEA.
(7)Summary of Finances (SOF) report--The document
of record for FSP allocations. An SOF report is produced for each
school district and open-enrollment charter school by the TEA division
responsible for state funding that describes the school district's
or open-enrollment charter school's funding elements and FSP state
aid.
(8)Warrant hold--The process by which state payments
issued to payees indebted to the state, or payees with a tax delinquency,
are held by the Texas Comptroller of Public Accounts until the debt
is satisfied in accordance with the Texas Government Code, §403.055.
(b)The TEA will assign a financial accountability
rating to each school district and open-enrollment charter school
as required by the TEC, §39.082.
(c)The commissioner of education will evaluate the
rating system every three years as required by the TEC, §39.082,
and may modify the system in order to improve the effectiveness of
the rating system. If the rating system has been modified, the TEA
will communicate changes to ratings criteria and their effective dates
to school districts and open-enrollment charter schools.
(d)The TEA will use the following sources of data
in calculating the financial accountability indicators for school
districts and open-enrollment charter schools:
(1)AFR. For each school district and open-enrollment
charter school, the TEA will use audited financial data in the district's
or charter's AFR. The AFR, submitted as an electronic submission through
the TEA website, must include data required in the Financial Accountability
System Resource Guide (FASRG) adopted under §109.41 of this title
(relating to Financial Accountability System Resource Guide);
(2)PEIMS. The TEA will use PEIMS data submitted by
the school district or open-enrollment charter school in the calculation
of the financial accountability indicators.
(3)Warrant holds. The TEA will use warrant holds as
reported by the Texas Comptroller of Public Accounts in the calculation
of the financial accountability indicators.
(4)FSP. The TEA will use the average daily attendance
(ADA) information used for FSP funding purposes for the school district
or open-enrollment charter school in the calculation of the financial
accountability indicators.
(e)The TEA will base the financial accountability
rating of a school district on its overall performance on the financial
measurements, ratios, and other indicators established by the commissioner,
as shown in the figures provided in this subsection. Financial accountability
ratings for a rating year are based on the data from the immediate
prior fiscal year.
(1)The financial accountability rating indicators
for rating year 2014-2015 are based on fiscal year 2014 financial
data and are provided in the figure in this paragraph entitled "School
FIRST - Rating Worksheet Dated April 2015 for rating year 2014-2015."
Attached Graphic
(2)The financial accountability rating indicators
for rating year 2015-2016 are based on fiscal year 2015 financial
data and are provided in the figure in this paragraph entitled "School
FIRST - Rating Worksheet Dated April 2015 for rating year 2015-2016."
Attached Graphic
(3)The financial accountability rating indicators
for rating year 2016-2017 are based on fiscal year 2016 financial
data and are provided in the figure in this paragraph entitled "School
FIRST - Rating Worksheet Dated April 2015 for rating year 2016-2017."
The financial accountability rating indicators for rating years after
2016-2017 will use the same calculation and scoring method provided
in the figure in this paragraph.
Attached Graphic
(4)The specific calculations and scoring methods used
in the financial accountability rating worksheets for school districts
for rating years prior to 2014-2015 remain in effect for all purposes
with respect to those rating years.
(f)The TEA will base the financial accountability
rating of an open-enrollment charter school on its overall performance
on the financial measurements, ratios, and other indicators established
by the commissioner, as shown in the figures provided in this subsection.
Financial accountability ratings for a rating year are based on the
data from the immediate prior fiscal year.
(1)The financial accountability rating indicators
for rating year 2014-2015 are based on fiscal year 2014 financial
data and are provided in the figure in this paragraph entitled "Charter
FIRST - Rating Worksheet Dated April 2015 for rating year 2014-2015."
Attached Graphic
(2)The financial accountability rating indicators
for rating year 2015-2016 are based on fiscal year 2015 financial
data and are provided in the figure in this paragraph entitled "Charter
FIRST - Rating Worksheet Dated April 2015 for rating year 2015-2016."
Attached Graphic
(3)The financial accountability rating indicators
for rating year 2016-2017 are based on fiscal year 2016 financial
data and are provided in the figure in this paragraph entitled "Charter
FIRST - Rating Worksheet Dated April 2015 for rating year 2016-2017."
The financial accountability rating indicators for rating years after
2016-2017 will use the same calculation and scoring method provided
in the figure in this paragraph.
Attached Graphic
(4)The specific calculations and scoring methods used
in the financial accountability rating worksheets for open-enrollment
charter schools for rating years prior to 2014-2015 remain in effect
for all purposes with respect to those rating years.
(g)The types of financial accountability ratings that
school districts or open-enrollment charter schools may receive for
the rating year 2014-2015 are as follows.
(1)P for pass. This rating applies only to the financial
accountability rating for rating year 2014-2015 based on fiscal year
2014 financial data. In accordance with the procedures established
in this section, a school district or an open-enrollment charter school
will receive a P rating if it scores within the applicable range established
by the commissioner for a P rating.
(2)F for substandard achievement. This rating applies
to the financial accountability rating for rating year 2014-2015 based
on fiscal year 2014 financial data. In accordance with the procedures
established in this section, a school district or an open-enrollment
charter school will receive an F rating if it scores within the applicable
range established by the commissioner for an F rating.
(h)The types of financial accountability ratings that
school districts or open-enrollment charter schools may receive for
the rating year 2015-2016 and all subsequent rating years are as follows.
(1)A for superior achievement. Beginning with the
financial accountability rating for rating year 2015-2016 and all
subsequent rating years, in accordance with the procedures established
in this section, a school district or an open-enrollment charter school
will receive an A rating if it scores within the applicable range
established by the commissioner for an A rating.
(2)B for above standard achievement. Beginning with
the financial accountability rating for rating year 2015-2016 and
all subsequent rating years, in accordance with the procedures established
in this section, a school district or an open-enrollment charter school
will receive a B rating if it scores within the applicable range established
by the commissioner for a B rating.
(3)C for standard achievement. Beginning with the
financial accountability rating for rating year 2015-2016 and all
subsequent rating years, in accordance with the procedures established
in this section, a school district or an open-enrollment charter school
will receive a C rating if it scores within the applicable range established
by the commissioner for a C rating.
(4)F for substandard achievement. Beginning with the
financial accountability rating for rating year 2015-2016 and all
subsequent rating years, in accordance with the procedures established
in this section, a school district or an open-enrollment charter school
will receive an F rating if it scores within the applicable range
established by the commissioner for an F rating.
(i)The commissioner may lower a financial accountability
rating based on the findings of an action conducted under the TEC,
Chapter 39.
(j)A financial accountability rating remains in effect
until replaced by a subsequent financial accountability rating.
(k)The TEA will issue a preliminary financial accountability
rating to a school district or an open-enrollment charter school on
or before August 8 of each year. The TEA will base the financial accountability
rating for a rating year on the data from the fiscal year preceding
the rating year.
(1)The TEA will not delay the issuance of the preliminary
or final rating if a school district or an open-enrollment charter
school fails to meet the statutory deadline under the TEC, §44.008,
for submitting the AFR. Instead, the school district or open-enrollment
charter school will receive an F rating.
(2)If the TEA receives an appeal of a preliminary
rating, described by subsection (l) of this section, the TEA will
issue a final rating to the school district or open-enrollment charter
school no later than 60 days after receiving the appeal.
(3)If the TEA does not receive an appeal of a preliminary
rating, described by subsection (l) of this section, the preliminary
rating automatically becomes a final rating 31 days after issuance
of the preliminary rating.
(l)A school district or an open-enrollment charter
school may appeal its preliminary financial accountability rating
through the following appeals process.
(1)The TEA division responsible for financial accountability
must receive a written appeal no later than 30 days after the TEA's
release of the preliminary rating. The appeal must include substantial
evidence that supports the school district's or open-enrollment charter
school's position. Appeals received 31 days or more after TEA issues
a preliminary rating will not be considered.
(2)A data error solely attributable to the TEA is
the only basis for an appeal. If a preliminary rating contains a data
error solely attributable to the TEA, a school district or an open-enrollment
charter school may submit a written appeal requesting a review of
the preliminary rating.
(3)Errors by a school district or an open-enrollment
charter school in recording data or submitting data through the TEA
data collection and reporting system are not a valid basis for appealing
a preliminary rating.
(4)The TEA will only consider appeals that would result
in a change of the preliminary rating.
(5)The TEA division responsible for financial accountability
will select an external review panel to independently oversee the
appeals process.
(6)The TEA division responsible for financial accountability
will submit the information provided by the school district or open-enrollment
charter school to the external review panel members for review.
(7)Each external review panel member will examine
the appeal and supporting documentation and will submit his or her
recommendation to the TEA division responsible for financial accountability.
(8)The TEA division responsible for financial accountability
will compile the recommendations and forward them to the commissioner.
(9)The commissioner will make a final ratings decision.
(m)A final rating issued by the TEA under this section
may not be appealed under the TEC, §7.057, or any other law or
rule.
(n)A financial accountability rating by a voluntary
association is a local option of the school district or open-enrollment
charter school, but it does not substitute for a financial accountability
rating by the TEA.
(o)Each school district and open-enrollment charter
school is required to report information and financial accountability
ratings to parents, taxpayers, and other stakeholders by implementing
the following reporting procedures.
(1)Each school district and open-enrollment charter
school must prepare and distribute an annual financial management
report in accordance with this subsection.
(2)Each school district and open-enrollment charter
school must provide the public with an opportunity to comment on the
report at a public hearing.
(3)The school district's or open-enrollment charter
school's annual financial management report must include:
(A)a description of its financial management performance
based on a comparison, provided by the TEA, of its performance on
the indicators established by the commissioner and reflected in this
section. The report will contain information that discloses:
(i)state-established standards; and
(ii)the school district's or open-enrollment charter
school's financial management performance under each indicator for
the current and previous year's financial accountability ratings;
(B)any descriptive information required by the commissioner,
including:
(i)a copy of the superintendent's current employment
contract or other written documentation of employment if no contract
exists. This must disclose all compensation and benefits paid to the
superintendent. The school district or open-enrollment charter school
may publish the superintendent's employment contract on its website
instead of publishing it in the annual financial management report;
(ii)a summary schedule for the fiscal year (12-month
period) of expenditures paid on behalf of the superintendent and each
board member and total reimbursements received by the superintendent
and each board member. This includes transactions on the school district's
or open-enrollment charter school's credit card(s), debit card(s),
stored-value card(s), and any other similar instrument(s) to cover
expenses incurred by the superintendent and each board member. The
summary schedule must separately report reimbursements for meals,
lodging, transportation, motor fuel, and other items. The summary
schedule of total reimbursements should not include reimbursements
for supplies and materials that were purchased for the operation
of the school district or open-enrollment charter school;
(iii)a summary schedule for the fiscal year of the
dollar amount of compensation and fees received by the superintendent
from an outside school district or open-enrollment charter school
or any other outside entity in exchange for professional consulting
or other personal services. The schedule must separately report the
amount received from each entity;
(iv)a summary schedule for the fiscal year of the
total dollar amount of gifts that had a total economic value of $250
or more received by the executive officers and board members. This
reporting requirement applies only to gifts received by the school
district's or open-enrollment charter school's (or charter holder's)
executive officers and board members (and their immediate family as
described by Government Code, Chapter 573, Subchapter B, Relationships
by Consanguinity or by Affinity) from an outside entity that received
payments from the school district or open-enrollment charter school
(or charter holder) in the prior fiscal year and to gifts from competing
vendors that were not awarded contracts in the prior fiscal year.
This reporting requirement does not apply to reimbursement by an outside
entity for travel-related expenses when the purpose of the travel
was to investigate matters directly related to an executive officer's
or board member's duties or to investigate matters related to attendance
at education-related conferences and seminars with the primary purpose
of providing continuing education (this exclusion does not apply to
trips for entertainment purposes or pleasure trips). This reporting
requirement excludes an individual gift or a series of gifts from
a single outside entity that had a total economic value of less than
$250 per executive officer or board member; and
(v)a summary schedule for the fiscal year of the dollar
amount received by board members for the total amount of business
transactions with the school district or open-enrollment charter school
(or charter holder). This reporting requirement is not to duplicate
the items disclosed in the summary schedule of reimbursements received
by board members; and
(C)any other information the board of trustees of
the school district or open-enrollment charter school determines to
be useful.
(4)The board of trustees of each school district or
open-enrollment charter school must hold a public hearing on the annual
financial management report within two months after receiving a final
financial accountability rating. The public hearing must be held at
a location in the district's or open-enrollment charter school's facilities.
The board must give notice of the hearing to owners of real estate
property in the geographic boundaries of the school district or open-enrollment
charter school and to parents of school district or open-enrollment
charter school students. In addition to other notice required by law,
the board must provide notice of the hearing:
(A)to a newspaper of general circulation in the geographic
boundaries of the school district or each campus of an open-enrollment
charter school once a week for two weeks prior to holding the public
meeting, providing the time and place of the hearing. The first notice
in the newspaper may not be more than 30 days prior to the public
meeting or less than 14 days prior to the public meeting. If no newspaper
is published in the county in which the district's central administration
office is located or within the geographic boundaries of an open-enrollment
charter school's campus, then the board must publish the notice in
the county nearest to the county seat of the county in which the district's
central administration office is located or in which the campus of
the open-enrollment charter school is located; and
(B)through electronic mail to the mass communication
media serving the school district or open-enrollment charter school,
including, but not limited to, radio and television.
(5)At the hearing, the school district or open-enrollment
charter school must provide the annual financial management report
to the attending parents and taxpayers.
(6)The school district or open-enrollment charter
school must retain the annual financial management report for at least
three years after the public hearing and make it available to parents
and taxpayers upon request.
(7)Each school district or open-enrollment charter
school that received an F rating must file a corrective action plan
with the TEA, prepared in accordance with instructions from the commissioner,
within one month after the school district's or open-enrollment charter
school's public hearing. The commissioner may require certain information
in the corrective action plan to address the factor(s) that may have
contributed to a school district's or an open-enrollment charter school's
F rating.
The agency certifies that legal counsel has
reviewed the proposal and found it to be within the state agency's
legal authority to adopt.
Filed
with the Office of the Secretary of State on May 8, 2015
TRD-201501628 Cristina De La Fuente-Valadez
Director, Rulemaking
Texas Education Agency
Earliest possible date of adoption: June 21, 2015
For further information, please call: (512) 475-1497
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