The Texas Education Agency (TEA) adopts amendments to §§100.1011, 100.1021, 100.1025, 100.1027, 100.1031, 100.1033, 100.1035, 100.1041, 100.1043, 100.1051, 100.1101-100.1104, 100.1111, 100.1131, 100.1151, 100.1201, 100.1207, 100.1209, and 100.1211 and new §100.1022, concerning open-enrollment charter schools. The amendments to §§100.1011, 100.1021, 100.1025, 100.1027, 100.1031, 100.1033, 100.1035, 100.1041, 100.1043, 100.1051, 100.1101, 100.1151, 100.1201, and 100.1209 are adopted without changes to the proposed text as published in the December 24, 2004, issue of the Texas Register (29 TexReg 11847) and will not be republished. New §100.1022 and the amendments to §§100.1102, 100.1103, 100.1104, 100.1111, 100.1131, 100.1207, and 100.1211 are adopted with changes to the proposed text. The sections address general provisions as well as provisions relating to commissioner action and intervention, funding and financial operations, governance, and operations. The adopted amendments update, revise, and clarify these provisions. Adopted new §100.1022 establishes standards and criteria for use in an administrative hearing on any adverse action taken by the commissioner against a charter holder.

House Bill 6, 77th Texas Legislature, 2001, directed the commissioner of education to adopt rules for a wide range of issues related to open-enrollment charter schools. Accordingly, rules in 19 TAC Chapter 100, Subchapter AA, were adopted to be effective in November 2001. Rules were also added and amended to be effective in April 2002 and June 2003. The rules in 19 TAC Chapter 100, Subchapter AA, are organized in divisions addressing related subject matter, as follows: Division 1. General Provisions; Division 2. Commissioner Action and Intervention; Division 3. Charter School Funding and Financial Operations; Division 4. Property of Open-Enrollment Charter Schools; Division 5. Charter School Governance; and Division 6, Charter School Operations. This action adopts amendments to rules in Divisions 1, 2, 3, 5, and 6, in addition to a new rule in Division 2.

Division 1. General Provisions.

The amendment to 19 TAC §100.1011, Definitions, provides definitions for charter school "campus" and charter school "site." This amendment also provides an additional exception to the definition of "management company." Technical edits to other definitions are also adopted. No changes were made to this section since published as proposed.

Division 2. Commissioner Action and Intervention.

The amendment to 19 TAC §100.1021, Adverse Action on an Open-Enrollment Charter, emphasizes that accountability ratings are grounds for adverse action against a charter holder. In addition, the amendment establishes that hearings on adverse action taken against a charter holder by the commissioner will be held by the State Office for Administrative Hearings. The amendment also revises and clarifies timelines for hearing requests, exceptions, and replies. No changes were made to this section since published as proposed.

The adopted new 19 TAC §100.1022, Standards for Adverse Action on an Open-Enrollment Charter, establishes the standards and criteria for use in an administrative hearing on any adverse action taken by the commissioner against a charter holder. The adopted rule includes provisions related to required minimum student, financial, compliance, health and safety, and charter performance, along with probation and modification provisions for mitigating and aggravating factors.

In response to public comment, §100.1022 was modified since published as proposed in order to address provisions related to required student and financial performance. Language was added to subsection (b) related to charters being revoked or non-renewed based on unsatisfactory student performance as measured by accountability ratings. Language was added to subsection (c) providing examples of serious unsatisfactory financial performance. In addition to the changes made in response to public comment, the language of subsections (b)(3), (c)(3), (d)(3), (e)(3), and (f)(3) has been modified to clarify procedures for appealing specified agency actions and to clarify Government Code procedures for requesting agency rulemaking or challenging agency rules.

The amendment to 19 TAC §100.1025, Intervention Based on Health, Safety, or Welfare of Students, revises the hearing process for cases in which the commissioner intervenes in charter school operations to protect the health, safety, and welfare of students. The amendment establishes that such hearings may no longer be conducted under 19 TAC Chapter 157, Subchapter AA, General Provisions for Hearings Before the Commissioner of Education. No changes were made to this section since published as proposed.

The amendment to 19 TAC §100.1027, Accreditation Sanctions, changes the rule title to Accountability Ratings and Sanctions and emphasizes that the commissioner may take any accountability action under TEC, Chapter 39, Subchapters B, C, D, or G, that may be taken against a school district or campus as authorized under those subchapters. No changes were made to this section since published as proposed.

The amendment to 19 TAC §100.1031, Charter Renewal, establishes that commissioner decisions about charter renewals are governed by new 19 TAC §100.1022. No changes were made to this section since published as proposed.

The amendment to 19 TAC §100.1033, Charter Amendment, revises the process for amending a charter. This amendment establishes specific types of amendments as "substantive" and clarifies the type of data considered as relevant information. In addition, the amendment establishes the submission date for expansion amendments, revises the length of time a charter school must have operated before expanding, and incorporates new requirements from TEC, §12.114, regarding amendment requests to increase maximum enrollment. No changes were made to this section since published as proposed.

The amendment to 19 TAC §100.1035, Compliance Records on Nepotism, Conflicts of Interest, and Restrictions on Serving, revises the timeline for running criminal history checks on members of the governing bodies of the charter holder and the charter school, officers of the charter school, and employees of the charter school and requires that the records be made available to the TEA upon request. No changes were made to this section since published as proposed.

Division 3. Charter School Funding and Financial Operations.

The amendment to 19 TAC §100.1041, State Funding, incorporates new requirements from TEC, §12.1061, regarding the recovery of over-allocated funds by the TEA for student attendance in a program affected by an expansion that was not approved by the commissioner. No changes were made to this section since published as proposed.

The amendment to 19 TAC §100.1043, Status and Use of State Funds; Depository Contract, revises the procedure for submitting bank depository contracts. No changes were made to this section since published as proposed.

The amendment to 19 TAC §100.1051, Audit by Commissioner; Records in the Possession of a Management Company, incorporates new requirements from TEC, §12.1163, limiting on-site audits of a charter school, charter holder, or management company by the TEA to one per year unless the commissioner has specific cause. No changes were made to this section since published as proposed.

Division 5. Charter School Governance.

The amendment to 19 TAC §100.1101, Delegation of Powers and Duties, requires prior notice to the TEA of any bankruptcy proceeding initiated by a charter holder. No changes were made to this section since published as proposed.

The amendment to 19 TAC §100.1102, Training for Members of Governing Bodies of Charter Holder and School, revises the language that deals with the 60-minute board training module related to assessments, reporting requirements, and accountability ratings and sanctions. The amendment also modifies the time requirement for the module related to the use of public funds, provides further specification related to the required 12-hour instruction, and modifies provisions related to training for members of organizations based on accountability ratings.

In response to public comments, §100.1102 was modified since published as proposed. Language was modified in subsection (d) to clarify the distribution of minutes for the total required hours of training. Language was modified in subsection (f) to allow an exception to the restriction of the use of self-instructional materials. Language was also added to subsection (f) to allow 25% of continuing training hours earned in excess of required hours to carry over to the next year. Language was modified and new language was added with new subsection (h) related to limited exemptions for members of the governing body of charters whose campuses are all rated "Acceptable" or higher for at least two out of three of the most recent ratings.

The amendment to 19 TAC §100.1103, Training for Chief Executive and Central Administrative Officers, provides further specification related to the required 30-hour instruction; modifies the time requirements for modules related to school finance and public records; revises the language that deals with the 240-minute module related to assessments, reporting requirements, and accountability ratings and sanctions; and also modifies provisions related to training for officers of organizations based on accountability ratings. The amendment also revises the requirements for chief executive and central administrative officer training to exempt those who have the lifetime equivalent of a Standard Superintendent Certificate issued by the State Board for Educator Certification (SBEC).

In response to public comments, §100.1103 was modified since published as proposed. Language was modified in subsection (d) to clarify the distribution of minutes for the total required hours of training. Language was modified in subsection (f) to allow an exception to the restriction of the use of self-instructional materials. Language was also added to subsection (f) to allow 25% of continuing training hours earned in excess of required hours to carry over to the next year. Language was modified and new language was added with new subsection (h) related to limited exemptions for chief executive and central administrative officers of charters whose campuses are all rated "Acceptable" or higher for at least two out of three of the most recent ratings.

The amendment to 19 TAC §100.1104, Training for Campus Administrative Officers, provides further specification related to the required 10-hour instruction; modifies the time requirements for modules related to school law, school finance, health and safety issues, use of public funds, accountability to the public, open meetings requirements, and public records; and modifies provisions related to continuing training for officers of organizations based on accountability ratings. The amendment also revises the requirements for campus administrative officer training to exempt those who have the lifetime equivalent of a Standard Principal Certificate issued by SBEC.

In response to public comment, §100.1104 was modified since published as proposed. Language was added to subsection (f) to allow 25% of continuing training hours earned in excess of required hours to carry over to the next year.

The amendment to 19 TAC §100.1111, Applicability of Nepotism Provisions; Exceptions for Acceptable Performance, revises definitions to conform to new 19 TAC §100.1022.

In response to public comment, §100.1111 was modified since published as proposed. Language was changed in subsection (g) to allow a charter holder 60 days, rather than 30, to come into compliance after it is assigned a rating that renders it ineligible for exemption to nepotism restrictions.

The amendment to 19 TAC §100.1131, Conflicts of Interest and Board Member Compensation; Exception, revises the exceptions to the conflict of interest provisions based on accountability ratings.

In response to public comment, §100.1131 was modified since published as proposed. Language was added to subsection (d) to clarify the applicability of sufficient substantive ratings, consistent with provisions in §100.1111(c)(3).

The amendment to 19 TAC §100.1151, Criminal History; Restrictions on Serving, revises the timeline for running criminal history checks on members of the governing bodies of the charter holder and the charter school, officers of the charter school, and employees of the charter school. No changes were made to this section since published as proposed.

Division 6. Charter School Operations.

The amendment to 19 TAC §100.1201, Voluntary Participation in State Programs, corrects a statutory reference. No changes were made to this section since published as proposed.

The amendment to 19 TAC §100.1207, Student Admission, establishes exceptions to the admissions lottery, specifies elements of the required non-discrimination policy for admissions.

In response to public comments, §100.1207 was modified since published as proposed. Proposed subsection (e) was modified to retain language addressing transfers that permits a charter school to admit students who reside outside of the designated geographic areas if the charter so provides. Proposed subsections (f) and (g) were deleted.

The amendment to 19 TAC §100.1209, Municipal Ordinances, revises language to conform to a new definition proposed in 19 TAC §100.1011. No changes were made to this section since published as proposed.

The amendment to 19 TAC §100.1211, Students, establishes that minimum teacher qualifications must comply with federal regulations. The amendment also clarifies the data reporting requirement.

In response to public comment, §100.1211 was modified since published as proposed in order to clarify that although a high school equivalency certificate is not the equivalent of a high school diploma for the purposes of TEC, §12.129, a person with a GED who obtains a college degree is qualified to teach at a charter school under the rule.

The adopted rule actions have the following procedural and reporting implications.

The amendments to 19 TAC §§100.1033, 100.1102, 100.1103, 100.1104, and 100.1211 replace specific reference to the Public Education Information Management System (PEIMS) with a more appropriate and general reference to all TEA data reporting requirements.

The amendment to 19 TAC §100.1033 requires that expansion amendments be received by the TEA by the first day of February preceding the school year in which the expansion is to be effective. There was no requirement that such requests be filed with the TEA by a specific date.

The amendments to 19 TAC §100.1035 and 19 TAC §100.1151 require that every three years a charter holder run criminal history checks on members of the governing bodies of the charter holder and the charter school, officers of the charter school, and employees of the charter school. Currently, such checks are required annually.

The amendment to 19 TAC §100.1043 requires that a charter holder submit a bank depository contract to the TEA only if there has been a change since the last filing, although the charter holder must file a statement to this effect in lieu of a copy of the depository contract. Currently, depository contracts must be filed annually.

The amendment to 19 TAC §100.1101 requires that a charter holder notify the TEA of any bankruptcy proceeding initiated by a charter holder.

Comments from stakeholders contributed to the development of the proposed amendments. A public hearing on the proposed amendments was held on January 10, 2005. In addition, the public was given the opportunity to submit written/electronic comments. Following is a summary of public comments received and corresponding agency responses regarding the proposed amendments to 19 TAC Chapter 100, Subchapter AA.

§100.1011. Definitions.

Comment. The Association of Charter Educators recommended eliminating §100.1011(15)(C) and (E), stating the sections create uncertainty and ambiguity about charter terms and responsibilities.

Agency Response. The agency disagrees with the comment and has maintained the language of §100.1011(15)(C) and (E), as proposed. The agency considers both its own request for application and all additional supplementary documents supplied by the charter holder to the agency to be relevant to defining the terms and conditions of open-enrollment charters.

§100.1021. Adverse Action on an Open-Enrollment Charter.

Comment. The director of special education/instructional supervisor of Austin Can Academy, Dallas Can Academy, Fort Worth Can Academy, Houston Can Academy, and San Antonio Can High School expressed concern that the requirements in proposed §100.1021 mean stricter requirements for charter schools than for traditional schools and requested standards required under TEC, §39.132.

Agency Response. The agency disagrees with the comment and has maintained the language of §100.1021, as proposed. Section 100.1021 will exist and function in concert with TEC, §39.132, and does not diminish or eliminate the agency's ability to use campus sanctions and remedies specified in TEC, §39.132. In addition, TEC, §39.132, makes no provision for charter school revocation or non-renewal, while §100.1021, under the authority of TEC, §12.115, does.

Comment. The Association of Charter Educators suggested changing the time allowed for requesting a hearing as proposed in §100.1021(d) from ten business days to at least 15 business days.

Agency Response. The agency disagrees with the comment and has maintained the language of §100.1021(d), as proposed. The standard set forth in this provision already alters the current rule's time requirement for requesting a hearing from ten days to ten business days, and adding an additional five days to the charter school's response time will likely only have the effect of delaying the adjudication of the case.

Comment. The Association of Charter Educators agreed with the change in proposed §100.1021(d) allowing the commissioner to review and, if warranted, act upon a charter holder's response to the notice issued pursuant to §100.1021(b).

Agency Response. No response required.

§100.1022. Standards for Adverse Action.

Comment. The Resource Center for Charter Schools, Westlake Academy, Dallas Community Charter School, and EduStart-LLP expressed support for this section of proposed rules if the changes will allow fraudulent and consistently low-performing charter schools to be closed in a timely manner. There is support for stronger language if needed.

Agency Response. No response required.

Comment. The Association of Charter Educators raised concerns about the agency evaluating charter school performance based solely on standardized test scores when applying §100.1022.