The Texas Education Agency (TEA) proposes amendments to 19 TAC §109.51 and §109.52, concerning uniform bank bids and depository contracts. Section 109.51 establishes the requirement that each school district submit a blank uniform bid form to each bank located in the district and, if desired, to other banks interested in acting as depository for all funds. The section includes the bid form prescribed by the State Board of Education (SBOE). Section 109.52 establishes the requirement that each school district select a bank or banks as school depository or depositories and enter into a depository contract or contracts with the bank or banks. A school district may also enter into a bond or bonds with the bank or banks. The section includes the depository contract form with the content prescribed by the SBOE.

The proposed amendments include updates to the bid form and the contract form and the addition of a new surety bond form. Proposed revisions to the bid form and contract form include: wording to specify that the content of a surety bond is defined in SBOE rule; details relating to surety bonds such as payments, signatures, school district board of trustee approval, and bond conditioning; specifications regarding the location for the venue for litigation; and conditions for early withdrawal penalties related to interest rates. In addition, a proposed revision to the contract form stipulates that the length of the contract extends until a successor is selected and qualified. The new surety bond form sets forth requirements relating to: guarantee; designation of depository owner(s) and account(s); limit of liability; payment of loss; termination or cancellation; responsibility of bank; consolidation or merger; and sole use and benefits. Specific details relating to the proposed amendments follow.

No changes are proposed to the rule text in §109.51; however proposed revisions are reflected in the uniform bank bid form entitled "Bid Form for Acting as Depository for All Funds," which is referenced as Figure 19 TAC §109.51(b). Specific revisions to the uniform bank bid form, as referenced in the figure, include the following. Language in paragraph J has been revised to specify that the surety bond form filed by a depository must be in the form and with the content prescribed by SBOE rule. Paragraph J has been expanded by adding subparagraphs 1-4 with language to address payments, signatures, school district board of trustee approval, and bond conditioning. Paragraph K has been amended by adding a new subparagraph 7 relating to location for the venue for any litigation arising from a contractual dispute between a depository and the school district. The existing subparagraphs have been retained and renumbered accordingly. Paragraph Q has been amended by adding language to establish provisions relating to a depository imposing an early withdrawal penalty on a time deposit withdrawn within six days of creation of the deposit.

The title of §109.52 has been amended to include reference to the proposed new surety bond form. A technical edit has been made to subsection (a) to include the acronym for TEA. Subsection (b) includes the depository contract form entitled "Depository Contract for Funds of Independent School Districts Under Texas Education Code, Chapter 45, Subchapter G, School District Depositories," which is referenced as Figure 19 TAC §109.52(b). Specific revisions to the depository contract form, as referenced in Figure 19 TAC §109.52(b), include the following. Language has been added in Article I to stipulate that the length of the contract extends until a successor is selected and has qualified. Language in Article III, paragraph A, has been revised to specify that the surety bond form filed by a depository must be in the form and with the content prescribed by SBOE rule. Article III, paragraph A, has been expanded by adding subparagraphs 1-4 with language to address payments, signatures, school district board of trustee approval, and bond conditioning. Article III, paragraph B, has been amended by adding a new subparagraph 7 relating to location for the venue for any litigation arising from a contractual dispute between a depository and the school district. The existing subparagraph has been retained and renumbered accordingly. Article III, paragraph D, has been amended by adding language to establish provisions relating to a depository imposing an early withdrawal penalty on a time deposit withdrawn within six days of creation of the deposit.

Content in new §109.52(c) has been added to establish requirements to be followed if a school district's depository elects to use a surety bond to secure school district deposit amounts. New §109.52(d) has been added to establish the surety bond form prescribed by the SBOE entitled "Texas School Depository Surety Bond Form," which is referenced as Figure 19 TAC §109.52(d). The new surety bond form has been added to set forth requirements relating to: guarantee; designation of depository owner(s) and account(s); limit of liability; payment of loss; termination or cancellation; responsibility of bank; consolidation or merger; and sole use and benefits.

Thomas Canby, Jr., managing director for school financial audits, has determined that for the first five-year period the sections are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the sections.

Mr. Canby and Criss Cloudt, associate commissioner for accountability reporting and research, have determined that for each year of the first five years the section is in effect the public benefit anticipated as a result of enforcing the section will be the protection of public funds deposited in the event of any bank closures. Additionally, the bidding process and the proposed standard forms help ensure fair and open competition for depository bank contracts. Standard forms provide also an advantage to districts in evaluating the best bid in regard to depository bank services and related fees. There will not be an effect on small businesses. There is no anticipated economic cost to persons required to comply with the sections as proposed.

Comments on the proposal may be submitted to Criss Cloudt, Accountability Reporting and Research, 1701 North Congress Avenue, Austin, Texas 78701, (512) 463-9701. Comments may also be submitted electronically to rules@tmail.tea.state.tx.us or faxed to (512) 475-3499. All requests for a public hearing on the proposed sections 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 amendments are proposed under the Texas Education Code, §7.102(b)(34), which requires the SBOE to prescribe uniform bid blanks for school districts to use in selecting a depository bank as required under §45.206; and §45.208, which requires the SBOE to prescribe the form and content of a depository contract or contracts, bond or bonds, or other necessary instruments setting forth the duties and agreements pertaining to a depository.

The amendments implement the Texas Education Code, §7.102(b)(34) and §45.208.