The Texas Education Agency (TEA) adopts an amendment to §109.41, concerning the "Financial Accountability System Resource Guide," with changes to the proposed text as published in the October 1, 2004, issue of the Texas Register (29 TexReg 9330). 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 such as financial reporting, budgeting, purchasing, auditing, site-based decision making, data collection and reporting, management, and state compensatory education. 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 web site.

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

The rule text of §109.41 was modified since filed as proposed to reflect December 2004 as the date of the "Resource Guide" since adoption of the amendment will take effect in December rather than November 2004. The document adopted by reference, the "Resource Guide," is adopted with the following changes.

In Module 1, the amendment as proposed would have eliminated the fund code 389--Master Mathematics Teacher and revised fund code 421 from Master Reading Teacher to Master Reading Teacher/Master Mathematics Teacher; however, subsequent to filing the proposal, it was noted that this elimination and revision would be in conflict with the Public Education Information Management System (PEIMS) Data Standards. The existing fund codes will be retained to maintain consistency between the "Resource Guide" and the PEIMS Data Standards.

Also in Module 1, in response to public comment, the definition for function 53 was amended and reference to health reimbursement accounts (HRAs) was removed from the definition for expenditure object code 6144.

In response to public comment, Module 3 was changed to add clarification to the job order contracts for facilities repair.

In Module 9, in response to public comment, Section 9.4 was amended to show a minimum allotment of $150,000 for application of the electronic auditing and reporting process.

The following comments were received regarding adoption of the amendment.

Comment. An individual commented that object code 6144 refers to HRAs which were not implemented by the Teacher Retirement System and reference to HRAs should be deleted.

Response. The agency agrees with this comment and modified Module 1, Financial Accounting and Reporting, to delete reference to HRAs from the object code.

Comment. An official from Whitehouse Independent School District commented that the exclude column for function 53 needed clarification.

Response. The agency agrees with this comment and modified Module 1, Financial Accounting and Reporting, to amend the definition.

Comment. An individual asked that new language be added to the Purchasing Module of the Resource Guide to add clarification to the job order contracts for facilities repair.

Response. The agency, in general, agrees with this comment and modified Module 3, Purchasing, to reflect the changes suggested.

Comment. An individual commented that the State Compensatory Education Module had a conflict in the amount of allotment necessary to qualify for an agreed upon procedures audit. The commenter stated that in one place it reports $150,000 and another place it states $74,999 is necessary before an audit is required.

Response. The agency agrees with this comment and modified Module 9, State Compensatory Education, to reflect the correct amount of $150,000.

The amendment is adopted under the Texas Education Code, §§7.055, 7.102(c)(32), 44.001, 44.007, and 44.008, which authorize 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 adopted amendment implements the Texas Education Code, §§7.055, 7.102(c)(32), 44.001, 44.007, and 44.008.