The Texas Education Agency (TEA) proposes new §109.2001, concerning financial exigency. The new rule implements the requirements of the Texas Education Code (TEC), §44.011, as added by Senate Bill (SB) 8, 82nd Texas Legislature, First Called Session, 2011. The TEC, §44.011, requires that the commissioner of education adopt minimum standards concerning school district financial conditions that must exist for declaration of a financial exigency by the board of trustees of the district.

Previously there were no rules or regulations as to when a school district may declare financial exigency for the district. New TEC, §44.011, allows the board of trustees of a school district to adopt a resolution declaring a financial exigency for the district. Each time the board adopts a resolution under this section, the board must notify the commissioner.

Proposed new 19 TAC Chapter 109, Subchapter BB, §109.2001, would define financial exigency and establish in rule procedures for consistent implementation of the statutorily required written notification. In accordance with the TEC, §44.011, proposed new 19 TAC §109.2001 would adopt minimum standards concerning school district financial conditions that must exist for declaration of financial exigency by the board of trustees of the district. Also in accordance with statute, the proposed new rule would prescribe the time and manner in which notice must be given to the commissioner. This new section was submitted for adoption on an emergency basis simultaneous to the submission as proposed.

The proposed new section will require school districts to provide notice to the commissioner when the district declares financial exigency. The notice must be provided within 20 calendar days of adoption by a school district's board of trustees. School districts will be required to maintain documentation supporting the declaration of financial exigency for auditing purposes.

In conjunction with the addition of minimum standards concerning the declaration of financial exigency, School FIRST rules in 19 TAC Chapter 109, Subchapter AA, will be amended in 2012 for the fiscal year 2011-2012 data for financial accountability ratings to be published in summer 2013. A district declaring financial exigency will not be able to obtain the highest rating of Superior Achievement.

Nora Hancock, associate commissioner for grants and fiscal compliance, has determined that for the first five-year period the new section is in effect there will be no additional costs for state or local government as a result of enforcing or administering the rule action.

Dr. Hancock has determined that for each year of the first five years the new section is in effect the public benefit anticipated as a result of enforcing the rule action will be the establishment of procedures for consistent implementation of the statutory requirements related to the declaration of financial exigency. There is no anticipated economic cost to persons who are required to comply with the proposed new section.

There is no direct adverse economic impact for small businesses and microbusinesses; therefore, no regulatory flexibility analysis, specified in Texas Government Code, §2006.002, is required.

The public comment period on the proposal begins December 9, 2011, and ends January 9, 2012. Comments on the proposal may be submitted to Cristina De La Fuente-Valadez, Rulemaking, Texas Education Agency, 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) 463-5337. A request for a public hearing on the proposal submitted under the Administrative Procedure Act must be received by the commissioner of education not more than 14 calendar days after notice of the proposal has been published in the Texas Register on December 9, 2011.

The new section is proposed under the TEC, §44.011, as added by Senate Bill 8, 82nd Texas Legislature, 2011, which authorizes the commissioner to adopt by rule minimum standards concerning school district financial conditions that must exist for declaration of a financial exigency by the board of trustees of the district.

The new section implements the TEC, §44.011.