The Texas Education Agency (TEA) adopts an amendment to §109.41, concerning the Financial Accountability System Resource Guide. The amendment is adopted without changes to the proposed text as published in the May 11, 2012, issue of the Texas Register (37 TexReg 3521) and will not be republished. 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, Governmental Accounting Standards Board (GASB) 34, and dropout audits. The Resource Guide also 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 adopted amendment to §109.41 updates Module 4 - Auditing as a result of recent legislative and authoritative accounting changes and to remove confusing references. While the current amendment is adopted to implement immediate, necessary changes, the Financial Accountability System Resource Guide will undergo a further, comprehensive review, which may result in additional revisions.

The adopted amendment has no procedural or reporting implications. The adopted amendment has no locally maintained paperwork requirements.

The TEA determined that 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 began May 11, 2012, and ended June 11, 2012. Following is a summary of public comments received and corresponding agency responses regarding the proposed amendment to §109.41.

Comment: The Texas Charter Schools Association (TCSA) recommended the addition of a reference in Module 4 - Auditing of the Resource Guide to clarify that only Financial Accounting Standards Board (FASB) accounting standards and not GASB accounting standards are applicable to open-enrollment charter schools.

Agency Response: The agency disagrees that this revision be made because this would be a piecemeal change to the Resource Guide that the TEA will comprehensively revise in the near future. A separate module, Module 10 Special Supplement - Charter Schools, houses the financial accounting and reporting guidance specifically applicable to open-enrollment charter schools. Module 10 will be reviewed for possible revisions at that time and these comments could be made in that context. Module 10, along with all of the modules in the Resource Guide, will be revised in the next Resource Guide update. The comments by the TCSA should be submitted during that rule revision.

Comment: The TCSA recommended the addition to Module 4 - Auditing of the requirement that open-enrollment charter schools accrue salaries and benefits as expenses as is required by school districts.

Agency Response: The agency disagrees that this revision be made because this would be a piecemeal change to the Resource Guide that the TEA will comprehensively revise in the near future. A separate module, Module 10 Special Supplement - Charter Schools, houses the financial accounting and reporting guidance specifically applicable to open-enrollment charter schools. Module 10 will be reviewed for possible revisions at that time and these comments could be made in that context. Module 10, along with all of the modules in the Resource Guide, will be revised in the next Resource Guide update. The comments by the TCSA should be submitted during that rule revision.

Comment: The TCSA recommended that Module 4 - Auditing be clarified to permit the accrual of state revenue for student days taught and earned at month end as an allowable accounting practice by open-enrollment charter schools.

Agency Response: The agency disagrees that this revision be made because this would be a piecemeal change to the Resource Guide that the TEA will comprehensively revise in the near future. A separate module, Module 10 Special Supplement - Charter Schools, houses the financial accounting and reporting guidance specifically applicable to open-enrollment charter schools. Module 10 will be reviewed for possible revisions at that time and these comments could be made in that context. Module 10, along with all of the modules in the Resource Guide, will be revised in the next Resource Guide update. The comments by the TCSA should be submitted during that rule revision.

Comment: The TCSA recommended that Module 4 - Auditing be clarified to permit the accrual of federal revenue for expenses incurred at month end but not yet requested in a drawdown as an acceptable accounting practice for open-enrollment charter schools.

Agency Response: The agency disagrees that this revision be made because this would be a piecemeal change to the Resource Guide that the TEA will comprehensively revise in the near future. A separate module, Module 10 Special Supplement - Charter Schools, houses the financial accounting and reporting guidance specifically applicable to open-enrollment charter schools. Module 10 will be reviewed for possible revisions at that time and these comments could be made in that context. Module 10, along with all of the modules in the Resource Guide, will be revised in the next Resource Guide update. The comments by the TCSA should be submitted during that rule revision.

The amendment is adopted under the TEC, §§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 amendment implements the TEC, §§7.055, 7.102(c)(32), 44.001, 44.007, and 44.008.