The Texas Education Agency (TEA) adopts new §§109.1001-109.1005, concerning the financial accountability rating system, without changes to the proposed text as published in the August 2, 2002, issue of the Texas Register (27 TexReg 6792) and will not be republished. The adopted new sections detail the purpose, ratings, types of ratings, criteria, reporting, and sanctions for the financial accountability rating system.

Senate Bill (SB) 875, 76th Texas Legislature, 1999, added TEC, §39.201, requiring the commissioner of education in consultation with the comptroller of public accounts to develop proposals for a school district financial accountability rating system that was to be presented to the legislature no later than December 15, 2000. TEC, §39.201, expired September 1, 2001. Subsequently, SB 218, 77th Texas Legislature, 2001, added TEC, §§39.201-39.204, requiring the commissioner to adopt rules for the implementation and administration of the financial accountability rating system prescribed by TEC, Chapter 39, Subchapter I.

The adopted new 19 TAC Chapter 109, Budgeting, Accounting, and Auditing, Subchapter AA, Commissioner's Rules Concerning Financial Accountability Rating System, includes provisions that detail the purpose, ratings, types of ratings, criteria, reporting, and sanctions for the financial accountability rating system, in accordance with SB 218, 77th Texas Legislature, 2001. The adopted new rules include the financial accountability rating form entitled "School FIRST - Rating Worksheet" that explains the indicators that the TEA will analyze to assign school district financial accountability ratings. This form specifies the minimum financial accountability rating information that a district is to report to parents and taxpayers in the district. School districts will have to prepare an annual financial management report and have a public meeting on the report.

The following comment was received regarding adoption of the new sections.

Comment. An individual asked if a different scale will be used to determine financial accountability for charter schools and if the language will be changed to public schools rather than school districts so that the rule applies to charter schools.

Agency Response. This financial rating system will not apply to charter schools. A separate financial rating system will be proposed at a later date to cover charter schools.

The new sections are adopted under the Texas Education Code, §§39.201-39.204, which authorizes the commissioner of education to adopt rules as necessary for the implementation and administration of a financial accountability rating system.