The State Board of Education (SBOE) proposes amendment to §109.52, concerning the uniform depository bank contract and surety bond forms. The proposed amendment would update the depository contract adopted in rule to reflect changes made by Senate Bill (SB) 754, 85th Texas Legislature, Regular Session, 2017.

Section 109.52 establishes the requirement that each school district select at least one bank as a depository and enter into a depository contract with the bank, providing the completed contract to the Texas Education Agency (TEA). Section 109.52 also establishes the requirement that a district provide a completed surety bond form to the TEA if the depository bank uses a surety bond to secure district deposits. The section includes the depository contract form and surety bond form with the content prescribed by the SBOE.

SB 754, 85th Texas Legislature, Regular Session, 2017, amended the Texas Education Code (TEC), §45.205(b), to allow the school district depository contract to be extended a total of three two-year terms. In addition, the bill allows the depository contract to be modified for each two-year extension if both the school district and the district's depository bank mutually agree to the terms.

The proposed amendment to §109.52 would implement SB 754 by modifying Figure: 19 TAC §109.52(b) to allow a school district depository contract to be extended to the number of two-year terms allowed by the TEC, §45.205(b).

The SBOE approved the amendment for first reading and filing authorization at its November 10, 2017 meeting.

Section 109.52 requires school districts to submit to the TEA an executed depository contract. The proposed amendment would require school districts to submit to the TEA an extension form every two years (for a maximum of three extensions) communicating that they are still under the same depository contract. The proposed amendment would have no new locally maintained paperwork requirements.

FISCAL NOTE. Leo Lopez, associate commissioner for school finance/ chief school finance officer, has determined that for the first five-year period the proposed amendment is in effect there will be no additional costs to state or local government as a result of enforcing or administering the proposed amendment. There is no effect on local economy for the first five years that the proposed amendment is in effect; therefore, no local employment impact statement is required under Texas Government Code, §2001.022. The proposed amendment does not impose a cost on regulated persons and, therefore, are not subject to Texas Government Code, §2001.0045.

GOVERNMENT GROWTH IMPACT. In accordance with Texas Government Code, §2001.0221, TEA staff has determined that the proposed amendment would expand an existing regulation. The proposed regulation would add an additional two-year extension period for school districts to extend their current depository contracts. It also provides additional flexibility during the extension periods to allow for modification of the contract.

PUBLIC BENEFIT/COST NOTE. Mr. Lopez has determined that for each year of the first five years the proposed amendment is in effect, the public benefit anticipated as a result of enforcing the amendment will be an updated contract for use with a depository bank and additional flexibility in extension years. There is no anticipated economic cost to persons who are required to comply with the proposed amendment.

ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS FOR SMALL BUSINESSES, MICROBUSINESSES, AND RURAL COMMUNITIES. There is no direct adverse economic impact for small businesses, microbusinesses, and rural communities; therefore, no regulatory flexibility analysis, specified in Texas Government Code, §2006.002, is required.

REQUEST FOR PUBLIC COMMENT. Comments on the proposal may be submitted to Cristina De La Fuente-Valadez, Rulemaking, Texas Education Agency, 1701 North Congress Avenue, Austin, Texas 78701. Comments may also be submitted electronically to rules@tea.texas.gov. A request for a public hearing on the proposed amendment 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.

STATUTORY AUTHORITY. The amendment is proposed under the Texas Education Code (TEC), §7.102(c)(34), which requires the State Board of Education (SBOE) to prescribe uniform bid blanks for school districts to use in selecting a depository bank as required by the TEC, §45.206; TEC, §45.205(b), as amended by SB 754, 85th Texas Legislature, Regular Session, 2017, which provides the term for a contract between a school district and the district's depository bank; TEC, §45.206, which requires a school district to acquire a bank to be its depository by utilizing either a bid or proposal using the forms prescribed by the SBOE; and TEC, §45.208, which requires that a school district use the depository contract prescribed by the SBOE; and that the depository bank secure the highest daily amount of cash in the bank using a bond or other surety agreements; and that the contract, bid or proposal, and bond be filed with the agency.

CROSS REFERENCE TO STATUTE. The amendment implements the Texas Education Code (TEC), §§7.102(c)(34); 45.205(b), as amended by SB 754, 85th Texas Legislature, Regular Session, 2017; 45.206; and 45.208.