Response: The agency agrees that only state revenue should be included in the calculation for Indicator 10 for Charter FIRST. The agency will also exclude Indicator 10 from the 2021-2022 Charter FIRST ratings. The agency added Figure: 19 TAC §109.1001(f)(6) at adoption, which discloses indicators for the 2021-2022 rating year. The agency will not score Indicator 10 for the 2021-2022 Charter FIRST ratings and will include only state revenue object code series 58XX in the calculation of budgeted and actual revenues for Indicator 10 for subsequent years. A note was added to Indicator 10 that states, "This indicator will not be utilized for the 2021-2022 rating year." An edit was also made to the data source for Indicator 10 to delete object code 57XX as a source of revenue in the calculation.

The agency also agrees that adjustments should be made to the financial accountability rating system when unforeseen circumstances occur that adversely impact FIRST scores. These adjustments are allowed for under TEC, §39.087 and §39.082, which allows charter schools and school districts to submit additional information regarding FIRST indicators under subsection (g).

Charter FIRST Indicator 14

Comment: Concerning proposed Figure: 19 TAC §109.1001(f)(5), TPCSA urged the agency to consider a full waiver or other relief for Indicator 14. TPCSA stated that Indicator 14 is adversely impacted by (1) increasing or declining enrollment or attendance and virtual options, since it may not be possible to rapidly reduce administrative staff or costs at the same rate as instructional costs, and (2) administration staff requirements for all of the new funding, guidelines, applications, stakeholder input, and grant management. TPSCA added that some schools must administer ESSER, TEA's Texas COVID Learning Acceleration Supports (TCLAS), Prior Purchase Reimbursement Program (PPRP), FEMA grants, and other grants.

Response: The agency disagrees that Indicator 14 (Was the charter school's administrative cost ratio equal to or less than the threshold ratio?) should be waived. The agency understands that adjustments in ADA can impact a charter school; therefore, Indicator 14 is designed so that charter schools with a lower ADA can have a higher administrative cost ratio to receive the maximum points for this indicator as compared to charter schools with a higher ADA that may have a greater chance of benefitting from economies of scale. Additionally, 65% of charter schools received the maximum points allowed for this indicator while only 5% received zero points. The agency has maintained language as proposed concerning Indicator 14 in Figure: 19 TAC §109.1001(f)(5).

Charter FIRST Indicator 16

Comment: Concerning proposed Figure: 19 TAC §109.1001(f)(5), TPCSA urged the agency to consider a full waiver or other relief for Indicator 16 for Charter FIRST. TPCSA stated that Indicator 16 is adversely impacted by increasing or declining enrollment or attendance and virtual options throughout the year, changing health guidance and parental preference, and local health policies. TPCSA also commented that ADA estimates are made in August, which is before the impacts of the pandemic in a given year can be accurately predicted.

Schulman, Lopez, Hoffer and Adelstein, LLP also requested that the agency exclude Indicator 16 from Charter FIRST in Figure: 19 TAC §109.1001(f)(5) because the COVID-19 pandemic seriously inhibited charter schools' ability to accurately predict enrollment, ADA, and revenues for the 2020-2021 school year. The law firm further stated that this indicator adversely and punitively affects small and new charter schools for impacts of the pandemic outside their control. The law firm requested that the agency create an exception that would allow charter schools to submit documentary evidence of the impact of the pandemic on losses in enrollment and ADA and award points for this indicator or exclude the indicator when supported by documentation.

Response: The agency agrees that the uncertainty of ADA caused by the pandemic may adversely impact Indicator 16 (Was the charter school's actual average daily attendance (ADA) within 10 percent of the charter school's annual estimated ADA?). Therefore, the agency will exclude Indicator 16 from the 2021-2022 Charter FIRST ratings. The agency added Figure: 19 TAC §109.1001(f)(6) at adoption, which discloses indicators for the 2021-2022 rating year. A note was added to Indicator 16 that states, "This indicator will not be utilized for the 2021-2022 rating year."

The agency also agrees that adjustments should be made to the financial accountability rating system when unforeseen circumstances occur that adversely impact FIRST scores. These adjustments are allowed for under TEC, §39.087 and §39.082, which allows charter schools and school districts to submit additional information regarding FIRST indicators under subsection (g).

STATUTORY AUTHORITY. The amendment is adopted under Texas Education Code (TEC), §12.104, as amended by Senate Bill (SB) 1365, 87th Texas Legislature, Regular Session, 2021, subjects open-enrollment charter schools to the prohibitions, restrictions, or requirements relating to public school accountability and special investigations under TEC, Chapter 39, Subchapters A, B, C, D, F, G, and J, and TEC, Chapter 39A; TEC, §39.082, which requires the commissioner to develop and implement a financial accountability rating system for public schools and establishes certain minimum requirements for the system, including an appeals process; TEC, §39.083, which requires the commissioner to include in the financial accountability system procedures for public schools to report and receive public comment on an annual financial management report; TEC, §39.085, which requires the commissioner to adopt rules to implement TEC, Chapter 39, Subchapter D, which addresses financial accountability for public schools; TEC, §39.087, as added by House Bill 1525, 87th Texas Legislature, Regular Session, 2021, which requires the commissioner to adjust the financial accountability rating system under TEC, §39.082, to account for the impact of financial practices necessary as a response to the coronavirus disease (COVID-19) pandemic, including adjustments required to account for federal funding and funding adjustments under TEC, Chapter 48, Subchapter F; and TEC, §39.151, as amended by SB 1365, 87th Texas Legislature, Regular Session, 2021, which requires the commissioner to provide a process by which a district or charter school can challenge an agency decision related to academic or financial accountability under TEC, Chapter 39, including a determination of consecutive school years of unacceptable performance ratings. This process must include a committee to make recommendations to the commissioner. These provisions collectively authorize and require the commissioner to adopt the financial accountability system rules, which implement each requirement of statute applicable to districts and open-enrollment charter schools.

CROSS REFERENCE TO STATUTE. The amendment implements Texas Education Code, §§12.104, as amended by Senate Bill (SB) 1365, 87th Texas Legislature, Regular Session, 2021; 39.082; 39.083; 39.085; 39.087, as added by House Bill 1525, 87th Texas Legislature, Regular Session, 2021; and 39.151, as amended by SB 1365, 87th Texas Legislature, Regular Session, 2021.