The Texas Education Agency (TEA) proposes an amendment to §109.41, concerning the "Financial Accountability System Resource Guide." The section adopts by reference the "Financial Accountability System Resource Guide" as the TEA's official rule. The "Resource Guide" describes rules for financial accounting in modules for financial accountability and reporting, budgeting, purchasing, auditing, site-based decision making, accountability, data collection and reporting, management, state compensatory education, GASB 34, and dropout audits. The "Resource Guide" includes a special supplement module for nonprofit charter school chart of accounts. Public school districts use the "Resource Guide" to meet the accounting, auditing, budgeting, and reporting requirements as set forth in the Texas Education Code (TEC) and other state statutes relating to public school finance. Under §109.41(b), the commissioner of education shall amend the "Resource Guide," adopting it by reference, as needed. The "Resource Guide" is available at http://www.tea.state.tx.us/school.finance/ on the TEA website.

The proposed amendment to §109.41 changes the date from "November 2003" to "November 2004" to reflect the effective date of proposed amendments to the "Resource Guide." The amendments being proposed include changes to the state compensatory education module and other minor updates to accounting and auditing modules.

Thomas D. Canby, Jr., managing director for financial audits, has determined that for the first five-year period the amendment is in effect there will be fiscal implications for state or local government as a result of enforcing or administering the amendment. The changes to the state compensatory education module include raising the threshold amount of the allotment from $75,000 to $150,000 to determine school districts and charter schools that are subject to electronic reporting for state compensatory education. This change will result in a savings of $500 per year for fiscal years 2005-2009 for those districts and charter schools that receive less than $150,000 in state compensatory education allotment. While some districts will no longer be subject to electronic reporting requirements, districts that do not meet the threshold limits will continue to submit applicable reports to the TEA. It is estimated that approximately 300 schools will be affected by this change and result in a total gross savings to these schools in an estimated amount of $150,000 annually for fiscal years 2005-2009.

Mr. Canby has determined that for each year of the first five years the amendment is in effect the public benefit anticipated as a result of enforcing the amendment will be improving financial accountability for educational programs in the Texas school system and keeping financial management practices current with changes in state law and federal rules and regulations. There will not be an effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the amendment as proposed.

Comments on the proposal may be submitted to Cristina De La Fuente-Valadez, Policy Coordination Division, 1701 North Congress Avenue, Austin, Texas 78701, (512) 475-1497. Comments may also be submitted electronically to rules@tea.state.tx.us or faxed to (512) 463-0028. All requests for a public hearing on the proposed amendment submitted under the Administrative Procedure Act must be received by the commissioner of education not more than 15 calendar days after notice of a proposed change in the section has been published in the Texas Register.

The amendment is proposed under the Texas Education Code, §§7.055, 7.102(c)(32), 44.001, 44.007, and 44.008, which authorizes the commissioner of education to establish advisory guidelines relating to fiscal management of a school district and the State Board of Education to establish a standard school fiscal accounting system in conformity with generally accepted accounting principles.

The proposed amendment implements the Texas Education Code, §§7.055, 7.102(c)(32), 44.001, 44.007, and 44.008.