Bill Text: TX SB2145 | 2017-2018 | 85th Legislature | Introduced


Bill Title: Relating to the public school finance system.

Spectrum: Partisan Bill (Republican 2-0)

Status: (Introduced) 2017-05-23 - Co-author authorized [SB2145 Detail]

Download: Texas-2017-SB2145-Introduced.html
  85R6487 CAE-F
 
  By: Taylor of Galveston S.B. No. 2145
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the public school finance system.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
  ARTICLE 1.  FOUNDATION SCHOOL PROGRAM
         SECTION 1.01.  The heading to Chapter 41, Education Code, is
  amended to read as follows:
  CHAPTER 41. FOUNDATION SCHOOL PROGRAM ADMINISTRATION [EQUALIZED
  WEALTH LEVEL]
         SECTION 1.02.  Section 41.001, Education Code, is amended to
  read as follows:
         Sec. 41.001.  DEFINITION [DEFINITIONS]. In this chapter,
  weighted[:
               [(1)     "Equalized wealth level" means the wealth per
  student provided by Section 41.002.
               [(2)     "Wealth per student" means the taxable value of
  property, as determined under Subchapter M, Chapter 403, Government
  Code, divided by the number of students in weighted average daily
  attendance.
               [(3)  "Weighted] average daily attendance" has the
  meaning assigned by Section 42.302.
         SECTION 1.03.  Section 42.004, Education Code, is
  transferred to Subchapter A, Chapter 41, Education Code,
  redesignated as Section 41.002, Education Code, and amended to read
  as follows:
         Sec. 41.002 [42.004].  ADMINISTRATION OF THE PROGRAM. (a)
  The commissioner, in accordance with the rules of the State Board of
  Education, shall take such action and require such reports
  consistent with this chapter as may be necessary to implement and
  administer the Foundation School Program.
         (b)  Except as provided by Subsection (c), the commissioner
  may adopt rules as necessary to implement this chapter.
         (c)  The commissioner may not adopt any rule that allows a
  district to retain state and local revenue under Sections
  42.253(a)(2) and (3) in excess of the amount of the district's
  entitlement under Section 42.253(a)(1).
         SECTION 1.04.  Section 42.003, Education Code, is
  transferred to Subchapter A, Chapter 41, Education Code, and
  redesignated as Section 41.003, Education Code, to read as follows:
         Sec. 41.003 [42.003].  STUDENT ELIGIBILITY. (a) A student
  is entitled to the benefits of the Foundation School Program if, on
  September 1 of the school year, the student:
               (1)  is 5 years of age or older and under 21 years of age
  and has not graduated from high school, or is at least 21 years of
  age and under 26 years of age and has been admitted by a school
  district to complete the requirements for a high school diploma; or
               (2)  is at least 19 years of age and under 26 years of
  age and is enrolled in an adult high school diploma and industry
  certification charter school pilot program under Section 29.259.
         (b)  A student to whom Subsection (a) does not apply is
  entitled to the benefits of the Foundation School Program if the
  student is enrolled in a prekindergarten class under Section 29.153
  or Subchapter E-1, Chapter 29.
         (c)  A child may be enrolled in the first grade if the child
  is at least six years of age at the beginning of the school year of
  the district or has been enrolled in the first grade or has
  completed kindergarten in the public schools in another state
  before transferring to a public school in this state.
         (d)  Notwithstanding Subsection (a), a student younger than
  five years of age is entitled to the benefits of the Foundation
  School Program if:
               (1)  the student performs satisfactorily on the
  assessment instrument administered under Section 39.023(a) to
  students in the third grade; and
               (2)  the district has adopted a policy for admitting
  students younger than five years of age.
         SECTION 1.05.  Sections 42.005, 42.0051, 42.0052, 42.006,
  and 42.007, Education Code, are transferred to Subchapter A,
  Chapter 41, Education Code, redesignated as Sections 41.004,
  41.005, 41.006, 41.007, and 41.008, Education Code, and amended to
  read as follows:
         Sec. 41.004 [42.005].  AVERAGE DAILY ATTENDANCE. (a) In
  this chapter, average daily attendance is:
               (1)  the quotient of the sum of attendance for each day
  of the minimum number of days of instruction as described under
  Section 25.081(a) divided by the minimum number of days of
  instruction;
               (2)  for a district that operates under a flexible year
  program under Section 29.0821, the quotient of the sum of
  attendance for each actual day of instruction as permitted by
  Section 29.0821(b)(1) divided by the number of actual days of
  instruction as permitted by Section 29.0821(b)(1); or
               (3)  for a district that operates under a flexible
  school day program under Section 29.0822, the average daily
  attendance as calculated by the commissioner in accordance with
  Sections 29.0822(d) and (d-1).
         (b)  A school district that experiences a decline of two
  percent or more in average daily attendance shall be funded on the
  basis of:
               (1)  the actual average daily attendance of the
  preceding school year, if the decline is the result of the closing
  or reduction in personnel of a military base; or
               (2)  [subject to Subsection (e),] an average daily
  attendance not to exceed 98 percent of the actual average daily
  attendance of the preceding school year, if the decline is not the
  result of the closing or reduction in personnel of a military base.
         (c)  The commissioner shall adjust the average daily
  attendance of a school district that has a significant percentage
  of students who are migratory children as defined by 20 U.S.C.
  Section 6399.
         (d)  Except as provided by Section 41.005(e), the [The]
  commissioner may adjust the average daily attendance of a school
  district in which a disaster, flood, extreme weather condition,
  fuel curtailment, or other calamity has a significant effect on the
  district's attendance.
         (e)  [For each school year, the commissioner shall adjust the
  average daily attendance of school districts that are entitled to
  funding on the basis of an adjusted average daily attendance under
  Subsection (b)(2) so that:
               [(1)     all districts are funded on the basis of the same
  percentage of the preceding year's actual average daily attendance;
  and
               [(2)     the total cost to the state does not exceed the
  amount specifically appropriated for that year for purposes of
  Subsection (b)(2).
         [(f)]  An open-enrollment charter school is not entitled to
  funding based on an adjustment under Subsection (b)(2).
         (f) [(g)]  If a student may receive course credit toward the
  student's high school academic requirements and toward the
  student's higher education academic requirements for a single
  course, including a course provided under Section 28.009 by a
  public institution of higher education, the time during which the
  student attends the course shall be counted as part of the minimum
  number of instructional hours required for a student to be
  considered a full-time student in average daily attendance for
  purposes of this section.
         (g) [(h)]  Subject to rules adopted by the commissioner
  under Section 41.006(b) [42.0052(b)], time that a student
  participates in an off-campus instructional program approved under
  Section 41.006(a) [42.0052(a)] shall be counted as part of the
  minimum number of instructional hours required for a student to be
  considered a full-time student in average daily attendance for
  purposes of this section.
         Sec. 41.005 [42.0051].  AVERAGE DAILY ATTENDANCE FOR
  DISTRICTS IN DISASTER AREA. (a) From funds specifically
  appropriated for the purpose or other funds available to the
  commissioner for that purpose, the commissioner shall adjust the
  average daily attendance of a school district all or part of which
  is located in an area declared a disaster area by the governor under
  Chapter 418, Government Code, if the district experiences a decline
  in average daily attendance that is reasonably attributable to the
  impact of the disaster.
         (b)  The adjustment must be sufficient to ensure that the
  district receives funding comparable to the funding that the
  district would have received if the decline in average daily
  attendance reasonably attributable to the impact of the disaster
  had not occurred.
         (c)  The commissioner shall make the adjustment required by
  this section for the two-year period following the date of the
  governor's initial proclamation or executive order declaring the
  state of disaster.
         (d)  Section 41.004(b)(2) [42.005(b)(2)] does not apply to a
  district that receives an adjustment under this section.
         (e)  A district that receives an adjustment under this
  section may not receive any additional adjustment under Section
  41.004(d) [42.005(d)] for the decline in average daily attendance
  on which the adjustment under this section is based.
         (f)  For purposes of this title, a district's adjusted
  average daily attendance under this section is considered to be the
  district's average daily attendance as determined under Section
  41.004 [42.005].
         Sec. 41.006 [42.0052].  OFF-CAMPUS PROGRAMS APPROVED FOR
  PURPOSES OF AVERAGE DAILY ATTENDANCE. (a) The commissioner may,
  based on criteria developed by the commissioner, approve
  instructional programs provided off campus by an entity other than
  a school district or open-enrollment charter school as a program in
  which participation by a student of a district or charter school may
  be counted for purposes of determining average daily attendance in
  accordance with Section 41.004(g) [42.005(h)].
         (b)  The commissioner shall adopt by rule verification and
  reporting procedures concerning time spent by students
  participating in instructional programs approved under Subsection
  (a).
         Sec. 41.007 [42.006].  PUBLIC EDUCATION INFORMATION
  MANAGEMENT SYSTEM (PEIMS). (a) Each school district shall
  participate in the Public Education Information Management System
  (PEIMS) and shall provide through that system information required
  for the administration of this chapter and of other appropriate
  provisions of this code.
         (b) [(a-1)]  The commissioner by rule shall require each
  school district and open-enrollment charter school to report
  through the Public Education Information Management System
  information regarding the number of students enrolled in the
  district or school who are identified as having dyslexia.  The
  agency shall maintain the information provided in accordance with
  this subsection.
         (c) [(b)]  Each school district shall use a uniform
  accounting system adopted by the commissioner for the data required
  to be reported for the Public Education Information Management
  System.
         (d) [(c)]  Annually, the commissioner shall review the
  Public Education Information Management System and shall repeal or
  amend rules that require school districts to provide information
  through the Public Education Information Management System that is
  not necessary.  In reviewing and revising the Public Education
  Information Management System, the commissioner shall develop
  rules to ensure that the system:
               (1)  provides useful, accurate, and timely information
  on student demographics and academic performance, personnel, and
  school district finances;
               (2)  contains only the data necessary for the
  legislature and the agency to perform their legally authorized
  functions in overseeing the public education system; and
               (3)  does not contain any information related to
  instructional methods, except as provided by Section 29.066 or
  required by federal law.
         (e) [(d)]  The commissioner's rules must ensure that the
  Public Education Information Management System links student
  performance data to other related information for purposes of
  efficient and effective allocation of scarce school resources, to
  the extent practicable using existing agency resources and
  appropriations.
         Sec. 41.008 [42.007].  EQUALIZED FUNDING ELEMENTS. (a) The
  Legislative Budget Board shall adopt rules, subject to appropriate
  notice and opportunity for public comment, for the calculation for
  each year of a biennium of the qualified funding elements, in
  accordance with Subsection (c), necessary to achieve the state
  policy under Section 42.001.
         (b)  Before each regular session of the legislature, the
  board shall, as determined by the board, report the equalized
  funding elements to the commissioner and the legislature.
         (c)  The funding elements must include:
               (1)  a basic allotment for the purposes of Section
  42.101 that[, when combined with the guaranteed yield component
  provided by Subchapter F,] represents the cost per student of a
  regular education program that meets all mandates of law and
  regulation;
               (2)  adjustments designed to reflect the variation in
  known resource costs and costs of education beyond the control of
  school districts;
               (3)  appropriate program cost differentials and other
  funding elements for the programs authorized under Subchapter C,
  Chapter 42, with the program funding level expressed as dollar
  amounts and as weights applied to the adjusted [basic] allotment
  for the appropriate year;
               (4)  [the maximum guaranteed level of qualified state
  and local funds per student for the purposes of Subchapter F;
               [(5)     the enrichment and facilities tax rate under
  Subchapter F;
               [(6)]  the computation of students in weighted average
  daily attendance under Section 42.302; and
               (5) [(7)]  the amount to be appropriated for the school
  facilities assistance program under Chapter 46.
         SECTION 1.06.  Sections 41.003 and 41.004, Education Code,
  are redesignated as Sections 41.009 and 41.010, Education Code, and
  amended to read as follows:
         Sec. 41.009 [41.003].  OPTIONS TO ENSURE EFFICIENCY OF
  FOUNDATION SCHOOL PROGRAM [ACHIEVE EQUALIZED WEALTH LEVEL]. A
  district to which Section 42.254(a) applies [with a wealth per
  student that exceeds the equalized wealth level] may take any
  combination of the following actions to comply with the
  requirements of Section 42.254 [achieve the equalized wealth
  level]:
               (1)  consolidation with another district as provided by
  Subchapter B;
               (2)  detachment of territory as provided by Subchapter
  C;
               (3)  payment to the state for the efficiency of the
  Foundation School Program [purchase of average daily attendance
  credit] as provided by Subchapter D; or
               (4)  [education of nonresident students as provided by
  Subchapter E; or
               [(5)]  tax base consolidation with another district as
  provided by Subchapter F.
         Sec. 41.010 [41.004].  DETERMINATION OF FUNDING LEVELS 
  [ANNUAL REVIEW OF PROPERTY WEALTH]. (a) Not later than July 1 of
  each year, the commissioner shall determine the estimated amount of
  state and local funding for each school district for the following
  school year under Section 42.253.
         (b)  Not later than July 15 of each year, [using the estimate
  of enrollment under Section 42.254,] the commissioner shall review
  the estimated entitlements and local revenue [wealth per student]
  of school districts in the state and shall notify:
               (1)  each district to which Section 42.254(a) applies
  [with wealth per student exceeding the equalized wealth level];
               (2)  each district to which the commissioner proposes
  to annex property detached from a district notified under
  Subdivision (1), if necessary, under Subchapter G; and
               (3)  each district to which the commissioner proposes
  to consolidate a district notified under Subdivision (1), if
  necessary, under Subchapter H.
         (c) [(b)]  If, before the dates provided by this subsection,
  a district notified under Subsection (b)(1) [(a)(1)] has not
  successfully exercised one or more options under Section 41.009 to
  comply with Section 42.254(a) [41.003 that reduce the district's
  wealth per student to a level equal to or less than the equalized
  wealth level], the commissioner shall order the detachment of
  property from that district as provided by Subchapter G. If that
  detachment will not bring the district into full compliance with
  Section 42.254(a) [reduce the district's wealth per student to a
  level equal to or less than the equalized wealth level], the
  commissioner may not detach property under Subchapter G but shall
  order the consolidation of the district with one or more other
  districts as provided by Subchapter H. An agreement under Section
  41.009(1) or (2) [41.003(1) or (2)] must be executed not later than
  September 1 immediately following the notice under Subsection (b)
  [(a)]. An election for an option under Section 41.009(3) or (4)
  [41.003(3), (4), or (5)] must be ordered before September 1
  immediately following the notice under Subsection (b) [(a)].
         (d) [(c)]  A district notified under Subsection (b) [(a)]
  may not adopt a tax rate for the tax year in which the district
  receives the notice until the commissioner certifies that the
  district is in compliance with Section 42.254(a) [has achieved the
  equalized wealth level].
         (e) [(d)]  A detachment and annexation or consolidation
  under this chapter:
               (1)  is effective for Foundation School Program funding
  purposes for the school year that begins in the calendar year in
  which the detachment and annexation or consolidation is agreed to
  or ordered; and
               (2)  applies to the ad valorem taxation of property
  beginning with the tax year in which the agreement or order is
  effective.
         SECTION 1.07.  Section 41.005, Education Code, is
  redesignated as Section 41.011, Education Code, to read as follows:
         Sec. 41.011 [41.005].  COMPTROLLER AND APPRAISAL DISTRICT
  COOPERATION. The chief appraiser of each appraisal district and
  the comptroller shall cooperate with the commissioner and school
  districts in implementing this chapter.
         SECTION 1.08.  Sections 41.007, 41.008, and 41.009,
  Education Code, are redesignated as Sections 41.012, 41.013, and
  41.014, Education Code, and amended to read as follows:
         Sec. 41.012 [41.007].  COMMISSIONER TO APPROVE SUBSEQUENT
  BOUNDARY CHANGES. A school district that is involved in an action
  under this chapter that results in boundary changes to the district
  or in the consolidation of tax bases is subject to consolidation,
  detachment, or annexation under Chapter 13 only if the commissioner
  certifies that the change under Chapter 13 will not result in a
  district to which Section 42.254(a) applies [with a wealth per
  student that exceeds the equalized wealth level].
         Sec. 41.013 [41.008].  HOMESTEAD EXEMPTIONS. (a) The
  governing board of a school district that results from
  consolidation under this chapter, including a consolidated taxing
  district under Subchapter F, for the tax year in which the
  consolidation occurs may determine whether to adopt a homestead
  exemption provided by Section 11.13, Tax Code, and may set the
  amount of the exemption, if adopted, at any time before the school
  district adopts a tax rate for that tax year. This section applies
  only to an exemption that the governing board of a school district
  is authorized to adopt or change in amount under Section 11.13, Tax
  Code.
         (b)  This section prevails over any inconsistent provision
  of Section 11.13, Tax Code, or other law.
         Sec. 41.014 [41.009].  TAX ABATEMENTS. (a) A tax abatement
  agreement executed by a school district that is involved in
  consolidation or in detachment and annexation of territory under
  this chapter is not affected and applies to the taxation of the
  property covered by the agreement as if executed by the district
  within which the property is included.
         (b)  The commissioner shall determine the taxable value
  [wealth per student] of a school district under this chapter as if
  any tax abatement agreement executed by a school district on or
  after May 31, 1993, had not been executed.
         SECTION 1.09.  Section 41.010, Education Code, is
  redesignated as Section 41.015, Education Code, to read as follows:
         Sec. 41.015 [41.010].  TAX INCREMENT OBLIGATIONS. The
  payment of tax increments under Chapter 311, Tax Code, is not
  affected by the consolidation of territory or tax bases or by
  annexation under this chapter. In each tax year a school district
  paying a tax increment from taxes on property over which the
  district has assumed taxing power is entitled to retain the same
  percentage of the tax increment from that property that the
  district in which the property was located before the consolidation
  or annexation could have retained for the respective tax year.
         SECTION 1.10.  Section 41.011, Education Code, is
  redesignated as Section 41.016, Education Code, and amended to read
  as follows:
         Sec. 41.016 [41.011].  CONTINGENCY. (a) If any of the
  options described by Section 41.009 [41.003] as applied to a school
  district are held invalid by a final decision of a court of
  competent jurisdiction, a school district is entitled to exercise
  any of the remaining valid options in accordance with a schedule
  approved by the commissioner.
         (b)  If a final order of a court of competent jurisdiction
  should hold each of the options provided by Section 41.009 [41.003]
  invalid, the commissioner shall act under Subchapter G or H to
  achieve compliance with Section 42.254(a) [the equalized wealth
  level] only after notice and hearing is afforded to each school
  district affected by the order. The commissioner shall adopt a plan
  that least disrupts the affected school districts. If because the
  exigency to adopt a plan prevents the commissioner from giving a
  reasonable time for notice and hearing, the commissioner shall
  timely give notice to and hold a hearing for the affected school
  districts, but in no event less than 30 days from time of notice to
  the date of hearing.
         (c)  If a final order of a court of competent jurisdiction
  should hold an option provided by Section 41.009 [41.003] invalid
  and order a refund to a district of any amounts paid by a district
  choosing that option, the amount shall be refunded but held in
  reserve and not expended by the district until released by order of
  the commissioner. The commissioner shall order the release
  immediately on the commissioner's determination that, through one
  of the means provided by law, the district has achieved compliance
  with Section 42.254(a) [the equalized wealth level]. The amount
  released shall be deducted from any state aid payable to the
  district according to a schedule adopted by the commissioner.
         SECTION 1.11.  Section 41.012, Education Code, is
  redesignated as Section 41.017, Education Code, to read as follows:
         Sec. 41.017 [41.012].  DATE OF ELECTIONS. An election under
  this chapter for voter approval of an agreement entered by the board
  of trustees shall be held on a Tuesday or Saturday not more than 45
  days after the date of the agreement. Section 41.001, Election
  Code, does not apply to the election.
         SECTION 1.12.  Section 41.013, Education Code, is
  redesignated as Section 41.018, Education Code, and amended to read
  as follows:
         Sec. 41.018 [41.013].  PROCEDURE. (a) Except as provided
  by Subchapter G, a decision of the commissioner under this chapter
  is appealable under Section 7.057.
         (b)  Any order of the commissioner issued under this chapter
  shall be given immediate effect and may not be stayed or enjoined
  pending any appeal.
         (c)  Chapter 2001, Government Code, does not apply to a
  decision of the commissioner under this chapter.
         (d)  On the request of the commissioner, the secretary of
  state shall publish any rules adopted under this chapter in the
  Texas Register and the Texas Administrative Code.
         SECTION 1.13.  Section 41.031, Education Code, is amended to
  read as follows:
         Sec. 41.031.  AGREEMENT. The governing boards of any two or
  more school districts may consolidate the districts by agreement in
  accordance with this subchapter to establish a consolidated
  district to which Section 42.254(a) does not apply [with a wealth
  per student equal to or less than the equalized wealth level]. The
  agreement is not effective unless the commissioner certifies that
  Section 42.254(a) does not apply to the consolidated district[,] as
  a result of actions taken under this chapter[, will have a wealth
  per student equal to or less than the equalized wealth level].
         SECTION 1.14.  Sections 41.034(a) and (c), Education Code,
  are amended to read as follows:
         (a)  For the first and second school years after creation of
  a consolidated district under this subchapter, the commissioner
  shall adjust allotments to the consolidated district to the extent
  necessary to preserve the effects of an adjustment under Section
  42.102, 42.103, or 42.104 [42.105] to which either of the
  consolidating districts would have been entitled but for the
  consolidation.
         (c)  Four or more districts that consolidate into one
  district under this subchapter within a period of one year may elect
  to receive incentive aid under this section or to receive incentive
  aid for not more than five years under Subchapter G, Chapter 13.
  [Incentive aid under this subsection may not provide the
  consolidated district with more revenue in state and local funds
  than the district would receive at the equalized wealth level.]
         SECTION 1.15.  Section 41.061, Education Code, is amended to
  read as follows:
         Sec. 41.061.  AGREEMENT. (a) By agreement of the governing
  boards of two school districts, territory may be detached from one
  of the districts and annexed to the other district if[,] after the
  action Section 42.254(a) does not apply to [:
               [(1)]  the [wealth per student of the] district from
  which territory is detached or [is equal to or less than the
  equalized wealth level; and
               [(2)]  the [wealth per student of the] district to
  which territory is annexed [is not greater than the greatest level
  for which funds are provided under Subchapter F, Chapter 42].
         (b)  The agreement is not effective unless the commissioner
  certifies that, after all actions taken under this chapter, Section
  42.254(a) does not apply to [the wealth per student of] each
  district involved [will be equal to or less than the applicable
  level permitted by Subsection (a)].
         SECTION 1.16.  The heading to Subchapter D, Chapter 41,
  Education Code, is amended to read as follows:
  SUBCHAPTER D. PAYMENT TO STATE FOR EFFICIENCY OF FOUNDATION SCHOOL
  PROGRAM [PURCHASE OF ATTENDANCE CREDIT]
         SECTION 1.17.  Section 41.091, Education Code, is amended to
  read as follows:
         Sec. 41.091.  AGREEMENT. A school district to which Section
  42.254(a) applies [with a wealth per student that exceeds the
  equalized wealth level] may execute an agreement with the
  commissioner to make payments to the state or have deductions made
  to funds owed by the state to the district [purchase attendance
  credits] in an amount sufficient to comply with the requirements of
  Section 42.254[, in combination with any other actions taken under
  this chapter, to reduce the district's wealth per student to a level
  that is equal to or less than the equalized wealth level].
         SECTION 1.18.  Sections 41.093(a) and (c), Education Code,
  are amended to read as follows:
         (a)  The [Subject to Subsection (b-1), the cost of each
  credit is an] amount of payments made by a district or funds
  withheld from a district as provided by Section 41.091 must be at
  least equal to the amount by which the district's total revenue
  under Sections 42.253(a)(2) and (3) exceeds the district's
  entitlement under Section 42.253(a)(1) [greater of:
               [(1)     the amount of the district's maintenance and
  operations tax revenue per student in weighted average daily
  attendance for the school year for which the contract is executed;
  or
               [(2)     the amount of the statewide district average of
  maintenance and operations tax revenue per student in weighted
  average daily attendance for the school year preceding the school
  year for which the contract is executed].
         (c)  The amount of maintenance and operations tax revenue
  [cost of an attendance credit] for a school district is computed
  using the final tax collections of the district.
         SECTION 1.19.  Section 41.094(a), Education Code, is amended
  to read as follows:
         (a)  If a [A] school district agrees to make payments to the
  state under this subchapter, the payments shall be made [pay for
  credits purchased] in equal monthly installments [payments] as
  determined by the commissioner beginning February 15 and ending
  August 15 of the school year for which the agreement is in effect.
         SECTION 1.20.  Section 41.095, Education Code, is amended to
  read as follows:
         Sec. 41.095.  DURATION. An agreement under this subchapter
  [section] is valid for one school year and, subject to Section
  41.096, may be renewed annually.
         SECTION 1.21.  Section 41.096(b), Education Code, is amended
  to read as follows:
         (b)  The ballot shall be printed to permit voting for or
  against the proposition: "Authorizing the board of trustees of
  ________ School District to make payments to [purchase attendance
  credits from] the state with local tax revenues to prevent
  detachment of property within the district or consolidation of the
  district by the commissioner for the efficiency of the state
  education system."
         SECTION 1.22.  The heading to Section 41.097, Education
  Code, is amended to read as follows:
         Sec. 41.097.  PAYMENT [CREDIT] FOR APPRAISAL COSTS.
         SECTION 1.23.  Section 41.097(a), Education Code, is amended
  to read as follows:
         (a)  Using funds received from a school district [The total
  amount required under Section 41.093 for a district to purchase
  attendance credits] under this subchapter for any school year, the
  state shall pay to the appraisal district or districts in which the
  school district participates [is reduced by] an amount equal to the
  product of the school district's total costs under Section 6.06,
  Tax Code, for the appraisal district or districts in which it
  participates multiplied by a percentage that is computed by
  dividing the total amount required under Section 41.093 by the
  total amount of taxes imposed by [in] the district for that year on
  property in the appraisal district, less any amounts paid into a tax
  increment fund under Chapter 311, Tax Code.
         SECTION 1.24.  Section 41.151, Education Code, is amended to
  read as follows:
         Sec. 41.151.  AGREEMENT. The board of trustees of two or
  more school districts may execute an agreement to conduct an
  election on the creation of a consolidated taxing district for the
  maintenance and operation of the component school districts. The
  agreement is subject to approval by the commissioner. The
  agreement is not effective unless the commissioner certifies that
  Section 42.254(a) does not apply to the consolidated taxing
  district [will have a wealth per student equal to or less than the
  equalized wealth level] after all actions taken under this chapter.
         SECTION 1.25.  Section 41.202(a), Education Code, is amended
  to read as follows:
         (a)  For purposes of this subchapter, the taxable value of an
  individual parcel or other item of property and the total taxable
  value of property in a school district resulting from the
  detachment of property from or annexation of property to that
  district is determined by applying the appraisal ratio for the
  appropriate category of property determined under Subchapter M,
  Chapter 403, Government Code, for the current [preceding] tax year
  to the taxable value of the detached or annexed property determined
  under Title 1, Tax Code, for the current [preceding] tax year.
         SECTION 1.26.  Section 41.205, Education Code, is amended to
  read as follows:
         Sec. 41.205.  DETACHMENT OF PROPERTY. (a) The commissioner
  shall detach property under this section from each school district
  from which the commissioner is required under Section 41.010
  [41.004] to detach property under this subchapter.
         (b)  The commissioner shall detach from each school district
  covered by Subsection (a) one or more whole parcels or items of
  property in descending order of the taxable value of each parcel or
  item, beginning with the parcel or item having the greatest taxable
  value, until Section 42.254(a) does not apply to the school
  district [district's wealth per student is equal to or less than the
  equalized wealth level, except as otherwise provided by Subsection
  (c)].
         (c)  [If the detachment of whole parcels or items of
  property, as provided by Subsection (a) would result in a
  district's wealth per student that is less than the equalized
  wealth level by more than $10,000, the commissioner may not detach
  the last parcel or item of property and shall detach the next one or
  more parcels or items of property in descending order of taxable
  value that would result in the school district having a wealth per
  student that is equal to or less than the equalized wealth level by
  not more than $10,000.
         [(d)]  Notwithstanding Subsections (a) and[,] (b), [and
  (c),] the commissioner may detach only a portion of a parcel or item
  of property if[:
               [(1)     it is not possible to reduce the district's wealth
  per student to a level that is equal to or less than the equalized
  wealth level under this subchapter unless some or all of the parcel
  or item of property is detached and the detachment of the whole
  parcel or item would result in the district from which it is
  detached having a wealth per student that is less than the equalized
  wealth level by more than $10,000; or
               [(2)]  the commissioner determines that a partial
  detachment of that parcel or item of property is preferable to the
  detachment of one or more other parcels or items having a lower
  taxable value in order to minimize the number of parcels or items of
  property to be detached consistent with the purposes of this
  chapter.
         SECTION 1.27.  Sections 41.206(a) and (c), Education Code,
  are amended to read as follows:
         (a)  The commissioner shall annex property detached under
  Section 41.205 to school districts eligible for annexation in
  accordance with this section. A school district is eligible for
  annexation of property to it under this subchapter only if, after
  [before] any detachments or annexations are made in a year, Section
  42.254(a) does not apply to the district [district's wealth per
  student is less than the greatest level for which funds are provided
  under Subchapter F, Chapter 42].
         (c)  The commissioner shall adopt rules on the detachment and
  annexation of property, subject to Section 41.002(c) [annex
  property detached from school districts beginning with the property
  detached from the school district with the greatest wealth per
  student before detachment, and continuing with the property
  detached from each other school district in descending order of the
  district's wealth per student before detachment].
         SECTION 1.28.  Section 41.211, Education Code, is amended to
  read as follows:
         Sec. 41.211.  STUDENT ATTENDANCE. A student who is a
  resident of real property detached from a school district may
  choose to attend school in that district or in the district to which
  the property is annexed. For purposes of determining average daily
  attendance under Section 41.004 [42.005], the student shall be
  counted in the district [to which the property is annexed. If the
  student chooses to attend school in the district from which the
  property is detached, the state shall withhold any foundation
  school funds from the district to which the property is annexed and
  shall allocate to the district] in which the student attends [is
  attending] school [those funds and the amount of funds equal to the
  difference between the state funds the district is receiving for
  the student and the district's cost in educating the student].
         SECTION 1.29.  Section 41.251, Education Code, is amended to
  read as follows:
         Sec. 41.251.  COMMISSIONER ORDER. If the commissioner is
  required under Section 41.010 [41.004] to order the consolidation
  of districts, the consolidation is governed by this subchapter.
  The commissioner's order shall be effective on a date determined by
  the commissioner, but not later than the earliest practicable date
  after November 8.
         SECTION 1.30.  Sections 41.252 and 41.257, Education Code,
  are amended to read as follows:
         Sec. 41.252.  SELECTION CRITERIA. (a) The commissioner
  shall adopt rules for the selection of [In selecting] the districts
  to be consolidated with a district to which Section 42.254(a)
  applies [that has a property wealth greater than the equalized
  wealth level, the commissioner shall select one or more districts
  with a wealth per student that, when consolidated, will result in a
  consolidated district with a wealth per student equal to or less
  than the equalized wealth level. In achieving that result, the
  commissioner shall give priority to school districts in the
  following order:
               [(1)     first, to the contiguous district that has the
  lowest wealth per student and is located in the same county;
               [(2)     second, to the district that has the lowest
  wealth per student and is located in the same county;
               [(3)     third, to a contiguous district with a property
  wealth below the equalized wealth level that has requested the
  commissioner that it be considered in a consolidation plan;
               [(4)     fourth, to include as few districts as possible
  that fall below the equalized wealth level within the consolidation
  order that have not requested the commissioner to be included;
               [(5)     fifth, to the district that has the lowest wealth
  per student and is located in the same regional education service
  center area; and
               [(6)     sixth, to a district that has a tax rate similar
  to that of the district that has a property wealth greater than the
  equalized wealth level].
         (b)  The rules adopted by the commissioner under Subsection
  (a):
               (1)  may not result in [select] a district to which
  Section 42.254(a) applies; and
               (2)  must be in compliance with Section 41.002(c) [that
  has been created as a result of consolidation by agreement under
  Subchapter B to be consolidated under this subchapter with a
  district that has a property wealth greater than the equalized
  wealth level].
         Sec. 41.257.  APPLICATION OF SMALL AND SPARSE ADJUSTMENTS
  AND TRANSPORTATION ALLOTMENT. The budget of the consolidated
  district must apply the benefit of the adjustment or allotment to
  the schools of the consolidating district to which Section 42.103,
  42.104 [42.105], or 42.201 [42.155] would have applied in the event
  that the consolidated district still qualifies as a small or sparse
  district.
         SECTION 1.31.  Chapter 41, Education Code, is amended by
  adding Subchapter I and adding a subchapter heading to read as
  follows:
  SUBCHAPTER I. RULES FOR DISTRICT COST ADJUSTMENTS
         SECTION 1.32.  Section 42.102(b), Education Code, is
  transferred to Subchapter I, Chapter 41, Education Code, as added
  by this Act, redesignated as Section 41.301, Education Code, and
  amended to read as follows:
         Sec. 41.301.  COST OF EDUCATION INDEX ADJUSTMENT. (a) [(b)]
  The commissioner shall determine the revised cost of education
  adjustment for each school district. In determining the revised
  cost of education adjustment, the commissioner shall use [is] the
  cost of education index adjustment adopted by the foundation school
  fund budget committee and contained in Chapter 203, Title 19, Texas
  Administrative Code, as that chapter existed on March 26, 1997,
  adjusted in the manner provided by Section 203.25, Title 19, Texas
  Administrative Code.
         (b)  The commissioner shall determine the adjusted allotment
  for each school district under Section 42.102 by multiplying the
  value of the cost of education adjustment for the school district by
  the basic allotment determined under Section 42.101.
         SECTION 1.33.  Section 42.105, Education Code, is
  transferred to Subchapter I, Chapter 41, Education Code, as added
  by this Act, redesignated as Section 41.302, Education Code, and
  amended to read as follows:
         Sec. 41.302 [42.105].  SPARSITY ADJUSTMENT. (a)
  Notwithstanding Sections 42.101, 42.102, and 42.103, a school
  district that has fewer than 130 students in average daily
  attendance shall be provided an adjusted [basic] allotment on the
  basis of 130 students in average daily attendance if it offers a
  kindergarten through grade 12 program and has preceding or current
  year's average daily attendance of at least 90 students or is 30
  miles or more by bus route from the nearest high school district. A
  district offering a kindergarten through grade 8 program whose
  preceding or current year's average daily attendance was at least
  50 students or which is 30 miles or more by bus route from the
  nearest high school district shall be provided an adjusted [basic]
  allotment on the basis of 75 students in average daily attendance.
  An average daily attendance of 60 students shall be the basis of
  providing the adjusted [basic] allotment if a district offers a
  kindergarten through grade 6 program and has preceding or current
  year's average daily attendance of at least 40 students or is 30
  miles or more by bus route from the nearest high school district.
         (b)  Subsection (c) applies only to a school district that:
               (1)  does not offer each grade level from kindergarten
  through grade 12 and whose prospective or former students generally
  attend school in a state that borders this state for the grade
  levels the district does not offer;
               (2)  serves both students residing in this state and
  students residing in a state that borders this state who are
  subsequently eligible for in-state tuition rates at institutions of
  higher education in either state regardless of the state in which
  the students reside; and
               (3)  shares students with an out-of-state district that
  does not offer competing instructional services.
         (c)  Notwithstanding Subsection (a) or Sections 42.101,
  42.102, and 42.103, a school district to which this subsection
  applies, as provided by Subsection (b), that has fewer than 130
  students in average daily attendance shall be provided an adjusted
  [basic] allotment on the basis of 130 students in average daily
  attendance if it offers a kindergarten through grade four program
  and has preceding or current year's average daily attendance of at
  least 75 students or is 30 miles or more by bus route from the
  nearest high school district.
         SECTION 1.34.  Chapter 41, Education Code, is amended by
  adding Subchapter J and adding a subchapter heading to read as
  follows:
  SUBCHAPTER J. RULES FOR SPECIAL PROGRAMS AND ALLOTMENTS
         SECTION 1.35.  Sections 42.151(c), (d), (e), (g), (h), (i),
  and (k), Education Code, are transferred to Subchapter J, Chapter
  41, Education Code, as added by this Act, redesignated as Section
  41.351, Education Code, and amended to read as follows:
         Sec. 41.351.  RULES FOR SPECIAL EDUCATION ALLOTMENT. (a)
  This section applies to Section 42.151.
         (b) [(c)]  For funding purposes, the number of contact hours
  credited per day for each student in the off home campus
  instructional arrangement may not exceed the contact hours credited
  per day for the multidistrict class instructional arrangement in
  the 1992-1993 school year.
         (c) [(d)]  For funding purposes the contact hours credited
  per day for each student in the resource room; self-contained, mild
  and moderate; and self-contained, severe, instructional
  arrangements may not exceed the average of the statewide total
  contact hours credited per day for those three instructional
  arrangements in the 1992-1993 school year.
         (d) [(e)]  The State Board of Education by rule shall
  prescribe the qualifications an instructional arrangement must
  meet in order to be funded as a particular instructional
  arrangement under Section 42.151 [this section]. In prescribing
  the qualifications that a mainstream instructional arrangement
  must meet, the board shall establish requirements that students
  with disabilities and their teachers receive the direct, indirect,
  and support services that are necessary to enrich the regular
  classroom and enable student success.
         (e) [(g)]  The State Board of Education shall adopt rules and
  procedures governing contracts for residential placement of
  special education students. The legislature shall provide by
  appropriation for the state's share of the costs of those
  placements.
         (f) [(h)]  Funds allocated under Section 42.151 [this
  section], other than an indirect cost allotment established under
  State Board of Education rule, must be used in the special education
  program under Subchapter A, Chapter 29.
         (g) [(i)]  The agency shall encourage the placement of
  students in special education programs, including students in
  residential instructional arrangements, in the least restrictive
  environment appropriate for their educational needs.
         (h) [(k)]  A school district that provides an extended year
  program required by federal law for special education students who
  may regress is entitled to receive funds in an amount equal to 75
  percent, or a lesser percentage determined by the commissioner, of
  the adjusted [basic] allotment resulting from Section 42.102 or
  42.103, as applicable, or adjusted allotment, as applicable, for
  each full-time equivalent student in average daily attendance,
  multiplied by the amount designated for the student's instructional
  arrangement under this section, for each day the program is
  provided divided by the number of days in the minimum school year.
  The total amount of state funding for extended year services under
  this section may not exceed $10 million per year. A school district
  may use funds received under this subsection [section] only in
  providing an extended year program.
         SECTION 1.36.  Sections 42.152(c), (c-1), (c-2), (d), (q),
  (q-1), (q-2), (q-3), (q-4), and (r), Education Code, are
  transferred to Subchapter J, Chapter 41, Education Code, as added
  by this Act, redesignated as Section 41.352, Education Code, and
  amended to read as follows:
         Sec. 41.352.  RULES FOR COMPENSATORY EDUCATION ALLOTMENT.
  (a) This section applies to Section 42.152.
         (b) [(c)]  Funds allocated under Section 42.152 [this
  section] shall be used to fund supplemental programs and services
  designed to eliminate any disparity in performance on assessment
  instruments administered under Subchapter B, Chapter 39, or
  disparity in the rates of high school completion between students
  at risk of dropping out of school, as defined by Section 29.081, and
  all other students. Specifically, the funds, other than an
  indirect cost allotment established under State Board of Education
  rule, which may not exceed 45 percent, may be used to meet the costs
  of providing a compensatory, intensive, or accelerated instruction
  program under Section 29.081 or a disciplinary alternative
  education program established under Section 37.008, to pay the
  costs associated with placing students in a juvenile justice
  alternative education program established under Section 37.011, or
  to support a program eligible under Title I of the Elementary and
  Secondary Education Act of 1965, as provided by Pub. L. No. 103-382
  and its subsequent amendments, and by federal regulations
  implementing that Act, at a campus at which at least 40 percent of
  the students are educationally disadvantaged. In meeting the costs
  of providing a compensatory, intensive, or accelerated instruction
  program under Section 29.081, a district's compensatory education
  allotment shall be used for costs supplementary to the regular
  education program, such as costs for program and student
  evaluation, instructional materials and equipment and other
  supplies required for quality instruction, supplemental staff
  expenses, salary for teachers of at-risk students, smaller class
  size, and individualized instruction. A home-rule school district
  or an open-enrollment charter school must use funds allocated under
  Section 42.152 [Subsection (a)] for a purpose authorized in this
  subsection but is not otherwise subject to Subchapter C, Chapter
  29. For purposes of this subsection, a program specifically
  designed to serve students at risk of dropping out of school, as
  defined by Section 29.081, is considered to be a program
  supplemental to the regular education program, and a district may
  use its compensatory education allotment for such a program.
         (c) [(c-1)]  Notwithstanding Subsection (b) [(c)], funds
  allocated under Section 42.152 [this section] may be used to fund in
  proportion to the percentage of students served by the program that
  meet the criteria in Section 29.081(d) or (g):
               (1)  an accelerated reading instruction program under
  Section 28.006(g); or
               (2)  a program for treatment of students who have
  dyslexia or a related disorder as required by Section 38.003.
         (d) [(c-2)]  Notwithstanding Subsection (b) [(c)], funds
  allocated under Section 42.152 [this section] may be used to fund a
  district's mentoring services program under Section 29.089.
         (e) [(d)]  The agency shall evaluate the effectiveness of
  accelerated instruction and support programs provided under
  Section 29.081 for students at risk of dropping out of school.
         (f) [(q)]  The State Board of Education, with the assistance
  of the comptroller, shall develop and implement by rule reporting
  and auditing systems for district and campus expenditures of
  compensatory education funds to ensure that compensatory education
  funds, other than the indirect cost allotment, are spent only to
  supplement the regular education program as required by Subsection
  (b) [(c)]. The reporting requirements shall be managed
  electronically to minimize local administrative costs. A district
  shall submit the report required by this subsection not later than
  the 150th day after the last day permissible for resubmission of
  information required under Section 41.007 [42.006].
         (g) [(q-1)]  The commissioner shall develop a system to
  identify school districts that are at high risk of having used
  compensatory education funds other than in compliance with
  Subsection (b) [(c)] or of having inadequately reported
  compensatory education expenditures. If a review of the report
  submitted under Subsection (f) [(q)], using the risk-based system,
  indicates that a district is not at high risk of having misused
  compensatory education funds or of having inadequately reported
  compensatory education expenditures, the district may not be
  required to perform a local audit of compensatory education
  expenditures and is not subject to on-site monitoring under this
  section.
         (h) [(q-2)]  If a review of the report submitted under
  Subsection (f) [(q)], using the risk-based system, indicates that a
  district is at high risk of having misused compensatory education
  funds, the commissioner shall notify the district of that
  determination. The district must respond to the commissioner not
  later than the 30th day after the date the commissioner notifies the
  district of the commissioner's determination. If the district's
  response does not change the commissioner's determination that the
  district is at high risk of having misused compensatory education
  funds or if the district does not respond in a timely manner, the
  commissioner shall:
               (1)  require the district to conduct a local audit of
  compensatory education expenditures for the current or preceding
  school year;
               (2)  order agency staff to conduct on-site monitoring
  of the district's compensatory education expenditures; or
               (3)  both require a local audit and order on-site
  monitoring.
         (i) [(q-3)]  If a review of the report submitted under
  Subsection (f) [(q)], using the risk-based system, indicates that a
  district is at high risk of having inadequately reported
  compensatory education expenditures, the commissioner may require
  agency staff to assist the district in following the proper
  reporting methods or amending a district or campus improvement plan
  under Subchapter F, Chapter 11. If the district does not take
  appropriate corrective action before the 45th day after the date
  the agency staff notifies the district of the action the district is
  expected to take, the commissioner may:
               (1)  require the district to conduct a local audit of
  the district's compensatory education expenditures; or
               (2)  order agency staff to conduct on-site monitoring
  of the district's compensatory education expenditures.
         (j) [(q-4)]  The commissioner, in the year following a local
  audit of compensatory education expenditures, shall withhold from a
  district's foundation school fund payment an amount equal to the
  amount of compensatory education funds the agency determines were
  not used in compliance with Subsection (b) [(c)]. The commissioner
  shall release to a district funds withheld under this subsection
  when the district provides to the commissioner a detailed plan to
  spend those funds in compliance with Subsection (b) [(c)].
         (k) [(r)]  The commissioner shall grant a one-year exemption
  from the requirements of Subsections (f)-(j) [(q)-(q-4)] to a
  school district in which the group of students who have failed to
  perform satisfactorily in the preceding school year on an
  assessment instrument required under Section 39.023(a), (c), or (l)
  subsequently performs on those assessment instruments at a level
  that meets or exceeds a level prescribed by commissioner rule. Each
  year the commissioner, based on the most recent information
  available, shall determine if a school district is entitled to an
  exemption for the following school year and notify the district of
  that determination.
         SECTION 1.37.  Sections 42.153(b) and (c), Education Code,
  are transferred to Subchapter J, Chapter 41, Education Code, as
  added by this Act, redesignated as Section 41.353, Education Code,
  and amended to read as follows:
         Sec. 41.353.  RULES FOR BILINGUAL EDUCATION ALLOTMENT. (a)
  This section applies to Section 42.153.
         (b)  Funds allocated under Section 42.153 [this section],
  other than an indirect cost allotment established under State Board
  of Education rule, must be used in providing bilingual education or
  special language programs under Subchapter B, Chapter 29, and must
  be accounted for under existing agency reporting and auditing
  procedures.
         (c)  A district's bilingual education or special language
  allocation may be used only for program and student evaluation,
  instructional materials and equipment, staff development,
  supplemental staff expenses, salary supplements for teachers, and
  other supplies required for quality instruction and smaller class
  size.
         SECTION 1.38.  Sections 42.154(c) and (d), Education Code,
  are transferred to Subchapter J, Chapter 41, Education Code, as
  added by this Act, redesignated as Section 41.354, Education Code,
  and amended to read as follows:
         Sec. 41.354.  RULES FOR CAREER AND TECHNOLOGY EDUCATION
  ALLOTMENT. (a) This section applies to Section 42.154.
         (b) [(c)]  Funds allocated under Section 42.154 [this
  section], other than an indirect cost allotment established under
  State Board of Education rule, must be used in providing career and
  technology education programs in grades nine through 12 or career
  and technology education programs for students with disabilities in
  grades seven through 12 under Sections 29.182, 29.183, and 29.184.
         (c) [(d)]  The commissioner shall conduct a cost-benefit
  comparison between career and technology education programs and
  mathematics and science programs.
         SECTION 1.39.  Chapter 41, Education Code, is amended by
  adding Subchapter K and adding a subchapter heading to read as
  follows:
  SUBCHAPTER K. RULES FOR TRANSPORTATION FUNDING
         SECTION 1.40.  Sections 42.155(d), (e), (f), (g), (h), (i),
  (k), and (l), Education Code, are transferred to Subchapter K,
  Chapter 41, Education Code, as added by this Act, redesignated as
  Section 41.401, Education Code, and amended to read as follows:
         Sec. 41.401.  RULES FOR TRANSPORTATION ALLOTMENT. (a) This
  section applies to Section 42.201.
         (b) [(d)]  A district or county may apply for and on approval
  of the commissioner receive an additional amount of up to 10 percent
  of its regular transportation allotment to be used for the
  transportation of children living within two miles of the school
  they attend who would be subject to hazardous traffic conditions if
  they walked to school. Each board of trustees shall provide to the
  commissioner the definition of hazardous conditions applicable to
  that district and shall identify the specific hazardous areas for
  which the allocation is requested. A hazardous condition exists
  where no walkway is provided and children must walk along or cross a
  freeway or expressway, an underpass, an overpass or a bridge, an
  uncontrolled major traffic artery, an industrial or commercial
  area, or another comparable condition.
         (c) [(e)]  The commissioner may grant an amount set by
  appropriation for private or commercial transportation for
  eligible students from isolated areas. The need for this type of
  transportation grant shall be determined on an individual basis and
  the amount granted shall not exceed the actual cost. The grants may
  be made only in extreme hardship cases. A grant may not be made if
  the students live within two miles of an approved school bus route.
         (d) [(f)]  The cost of transporting career and technology
  education students from one campus to another inside a district or
  from a sending district to another secondary public school for a
  career and technology program or an area career and technology
  school or to an approved post-secondary institution under a
  contract for instruction approved by the agency shall be reimbursed
  based on the number of actual miles traveled times the district's
  official extracurricular travel per mile rate as set by the board of
  trustees and approved by the agency.
         (e) [(g)]  A school district or county that provides special
  transportation services for eligible special education students is
  entitled to a state allocation paid on a previous year's
  cost-per-mile basis. The maximum rate per mile allowable shall be
  set by appropriation based on data gathered from the first year of
  each preceding biennium. Districts may use a portion of their
  support allocation to pay transportation costs, if necessary. The
  commissioner may grant an amount set by appropriation for private
  transportation to reimburse parents or their agents for
  transporting eligible special education students. The mileage
  allowed shall be computed along the shortest public road from the
  student's home to school and back, morning and afternoon. The need
  for this type transportation shall be determined on an individual
  basis and shall be approved only in extreme hardship cases.
         (f) [(h)]  Funds allotted under Section 42.201 or this
  section must be used in providing transportation services.
         (g) [(i)]  In the case of a district belonging to a county
  transportation system, the district's transportation allotment for
  purposes of determining a district's foundation school program
  allocations is determined on the basis of the number of approved
  daily route miles in the district multiplied by the allotment per
  mile to which the county transportation system is entitled.
         (h) [(k)]  Notwithstanding any other provision of Section
  42.201 or this section, the commissioner may not reduce the
  allotment to which a district or county is entitled under Section
  42.201 [this section] because the district or county provides
  transportation for an eligible student to and from a child-care
  facility, as defined by Section 42.002, Human Resources Code, or a
  grandparent's residence instead of the student's residence, as
  authorized by Section 34.007, if the transportation is provided
  within the approved routes of the district or county for the school
  the student attends.
         (i) [(l)]  A school district may, with the funds allotted
  under Section 42.201 or this section, provide a bus pass or card for
  another transportation system to each student who is eligible to
  use the regular transportation system of the district but for whom
  the regular transportation system of the district is not a feasible
  method of providing transportation. The commissioner by rule shall
  provide procedures for a school district to provide bus passes or
  cards to students under this subsection.
         SECTION 1.41.  Chapter 41, Education Code, is amended by
  adding Subchapter L and adding a subchapter heading to read as
  follows:
  SUBCHAPTER L.  RULES FOR FINANCING FOUNDATION SCHOOL PROGRAM
         SECTION 1.42.  Sections 42.2514 and 42.2515, Education Code,
  are transferred to Subchapter L, Chapter 41, Education Code, as
  added by this Act, redesignated as Sections 41.451 and 41.452,
  Education Code, and amended to read as follows:
         Sec. 41.451 [42.2514].  ADDITIONAL STATE AID FOR TAX
  INCREMENT FINANCING PAYMENTS.  For each school year, a school
  district's entitlement under Section 42.253(a)(1) [district,
  including a school district that is otherwise ineligible for state
  aid under this chapter,] is increased by [entitled to state aid in]
  an amount equal to the amount the district is required to pay into
  the tax increment fund for a reinvestment zone under Section
  311.013(n), Tax Code.
         Sec. 41.452 [42.2515].  ADDITIONAL STATE AID FOR AD VALOREM
  TAX CREDITS UNDER TEXAS ECONOMIC DEVELOPMENT ACT. (a) For each
  school year, a school district's entitlement under Section
  42.253(a)(1) [district, including a school district that] is
  increased by [otherwise ineligible for state aid under this
  chapter, is entitled to state aid in] an amount equal to the amount
  of all tax credits credited against ad valorem taxes of the district
  in that year under former Subchapter D, Chapter 313, Tax Code.
         (b)  The commissioner may adopt rules to implement and
  administer this section.
         SECTION 1.43.  Section 42.2524, Education Code, as effective
  September 1, 2017, is transferred to Subchapter L, Chapter 41,
  Education Code, as added by this Act, redesignated as Section
  41.453, Education Code, and amended to read as follows:
         Sec. 41.453 [42.2524].  REIMBURSEMENT FOR DISASTER
  REMEDIATION COSTS. (a) This section applies only to a school
  district all or part of which is located in an area declared a
  disaster area by the governor under Chapter 418, Government Code,
  and that incurs disaster remediation costs as a result of the
  disaster.
         (b)  During the two-year period following the date of the
  governor's initial proclamation or executive order declaring a
  state of disaster, a district may apply to the commissioner for
  reimbursement of disaster remediation costs that the district pays
  during that period and does not anticipate recovering through
  insurance proceeds, federal disaster relief payments, or another
  similar source of reimbursement.
         (c)  [The commissioner may provide reimbursement under this
  section only if funds are available for that purpose as follows:
               [(1)     reimbursement for a school district not required
  to take action under Chapter 41 may be provided from:
                     [(A)     amounts appropriated for that purpose,
  including amounts appropriated for those districts for that purpose
  to the disaster contingency fund established under Section 418.073,
  Government Code; or
                     [(B)     Foundation School Program funds available
  for that purpose, based on a determination by the commissioner that
  the amount appropriated for the Foundation School Program,
  including the facilities component as provided by Chapter 46,
  exceeds the amount to which districts are entitled under this
  chapter and Chapter 46; and
               [(2)     reimbursement for a school district required to
  take action under Chapter 41 may be provided from funds described by
  Subdivision (1)(B) if funds remain available after fully
  reimbursing each school district described by Subdivision (1) for
  its disaster remediation costs.
         [(d)     If the amount of money available for purposes of
  reimbursing school districts not required to take action under
  Chapter 41 is not sufficient to fully reimburse each district's
  disaster remediation costs, the commissioner shall reduce the
  amount of assistance provided to each of those
  districts     proportionately.     If the amount of money available for
  purposes of reimbursing school districts required to take action
  under Chapter 41 is not sufficient to fully reimburse each
  district's disaster remediation costs, the commissioner shall
  reduce the amount of assistance provided to each of those districts
  proportionately.
         [(e)]  A district seeking reimbursement under this section
  must provide the commissioner with adequate documentation of the
  costs for which the district seeks reimbursement.
         (d) [(f)     A district required to take action under Chapter
  41:
               [(1)     may, at its discretion, receive assistance
  provided under this section either as a payment of state aid under
  this chapter or as a reduction in the total amount required to be
  paid by the district for attendance credits under Section 41.093;
  and
               [(2)     may not obtain reimbursement under this section
  for the payment of any disaster remediation costs that resulted in a
  reduction under Section 41.0931 of the district's cost of
  attendance credits.
         [(h)]  The commissioner shall adopt rules necessary to
  implement this section, including rules defining "disaster
  remediation costs" for purposes of this section and specifying the
  type of documentation required under Subsection (c) [(e)].
         (e) [(i)]  Notwithstanding any other provision of this
  section, the commissioner may permit a district to use amounts
  provided to a district under this section to pay the costs of
  replacing a facility instead of repairing the facility.  The
  commissioner shall ensure that a district that elects to replace a
  facility does not receive an amount under this section that exceeds
  the lesser of:
               (1)  the amount that would be provided to the district
  if the facility were repaired; or
               (2)  the amount necessary to replace the facility.
         (f) [(j)]  This section does not require the commissioner to
  provide any requested reimbursement.  A decision of the
  commissioner regarding reimbursement is final and may not be
  appealed.
         (g)  Payments under this section are considered part of a
  school district's entitlement under Section 42.253(a)(1).
         SECTION 1.44.  Sections 42.2525, 42.2526, and 42.2527,
  Education Code, are transferred to Subchapter L, Chapter 41,
  Education Code, as added by this Act, and redesignated as Sections
  41.454, 41.455, and 41.456, Education Code, to read as follows:
         Sec. 41.454 [42.2525].  ADJUSTMENTS FOR CERTAIN DISTRICTS
  RECEIVING FEDERAL IMPACT AID.  The commissioner is granted the
  authority to ensure that school districts receiving federal impact
  aid due to the presence of a military installation or significant
  concentrations of military students do not receive more than an
  eight percent reduction should the federal government reduce
  appropriations to those schools.
         Sec. 41.455 [42.2526].  ADJUSTMENT FOR DISTRICT OPERATING
  PILOT PROGRAM. (a) This section applies only to a school district
  operating a pilot program authorized by Section 28.0255.
         (b)  Beginning with the first school year that follows the
  first school year in which students receive high school diplomas
  under the pilot program authorized by Section 28.0255 and
  continuing for every subsequent school year that the district
  operates the pilot program, the commissioner shall provide funding
  for the district's prekindergarten program under Section 29.153 on
  a full-day basis for a number of prekindergarten students equal to
  twice the number of students who received a high school diploma
  under the pilot program authorized by Section 28.0255 during the
  preceding school year.
         (c)  This section expires September 1, 2023.
         Sec. 41.456 [42.2527].  ADJUSTMENT FOR CERTAIN DISTRICTS
  WITH EARLY HIGH SCHOOL GRADUATION PROGRAMS. (a) As a pilot program
  to enable the state to evaluate the benefit of providing additional
  funding at the prekindergarten level for low-income students, the
  commissioner shall provide prekindergarten funding in accordance
  with this section to a school district located in a county that
  borders the United Mexican States and the Gulf of Mexico.
         (b)  The commissioner shall provide funding for a school
  district's prekindergarten program on a half-day basis for a number
  of low-income prekindergarten students equal to twice the number of
  students who received, as a result of participation in an early high
  school graduation program operated by the district, a high school
  diploma from the district during the preceding school year after
  three years of secondary school attendance.
         (c)  The commissioner may adopt rules necessary to implement
  this section.
         (d)  This section expires September 1, 2023.
         SECTION 1.45.  Section 42.2528, Education Code, is
  transferred to Subchapter L, Chapter 41, Education Code, as added
  by this Act, redesignated as Section 41.457, Education Code, and
  amended to read as follows:
         Sec. 41.457 [42.2528].  EXCESS FUNDS FOR VIDEO SURVEILLANCE
  OF SPECIAL EDUCATION SETTINGS. (a)  Notwithstanding any other
  provision of law, if the commissioner determines that the amount
  appropriated for the purposes of the Foundation School Program
  exceeds the amount to which school districts are entitled under
  Chapter 42 [this chapter], the commissioner by rule shall establish
  a grant program through which excess funds are awarded as grants for
  the purchase of video equipment, or for the reimbursement of costs
  for previously purchased video equipment, used for monitoring
  special education classrooms or other special education settings
  required under Section 29.022.
         (b)  In awarding grants under this section, the commissioner
  shall give highest priority to districts with maintenance and
  operations tax rates at the greatest rates permitted by law.  The
  commissioner shall also give priority to:
               (1)  districts with the [maintenance and operations tax
  rates at least equal to the state maximum compressed tax rate, as
  defined by Section 42.101(a), and] lowest amounts of maintenance
  and operations tax revenue per weighted student; and
               (2)  districts with debt service tax rates near or
  equal to the greatest rates permitted by law.
         (c)  The commissioner may adopt rules to implement and
  administer this section.
         SECTION 1.46.  Sections 42.253(d), (g), (i), (j), and (k),
  Education Code, are transferred to Subchapter L, Chapter 41,
  Education Code, as added by this Act, redesignated as Section
  41.458, Education Code, and amended to read as follows:
         Sec. 41.458.  RULES FOR DISTRIBUTION OF FOUNDATION SCHOOL
  FUND. (a) This section applies to Section 42.253.
         (b) [(d)]  The commissioner shall approve warrants to each
  school district equaling the amount of its entitlement except as
  provided by this section. Warrants for all money expended
  according to Chapter 42 and this chapter shall be approved and
  transmitted to treasurers or depositories of school districts in
  the same manner that warrants for state payments are transmitted.
  The total amount of the warrants issued under this section may not
  exceed the total amount appropriated for Foundation School Program
  purposes for that fiscal year.
         (c) [(g)]  If a school district demonstrates to the
  satisfaction of the commissioner that the estimate of the
  district's tax rate, student enrollment, tax collections, or
  taxable value of property used in determining the amount of state
  funds to which the district is entitled are so inaccurate as to
  result in undue financial hardship to the district, the
  commissioner may adjust funding to that district in that school
  year to the extent that funds are available for that year.
         (e) [(i)]  Not later than March 1 each year, the commissioner
  shall determine the actual amount of state funds to which each
  school district is entitled under the allocation formulas in this
  chapter and Chapter 42 for the current school year and shall compare
  that amount with the amount of the warrants issued to each district
  for that year. If the amount of the warrants differs from the
  amount to which a district is entitled because of variations in the
  district's tax rate, student enrollment, tax collections, or
  taxable value of property, the commissioner shall adjust the
  district's entitlement for the next fiscal year accordingly.
         (f) [(j)]  The legislature may appropriate funds necessary
  for increases under Subsection (e) [(i)] from funds that the
  comptroller, at any time during the fiscal year, finds are
  available.
         (g) [(k)]  The commissioner shall compute for each school
  district the total amount by which the district's allocation of
  state funds is increased or reduced under Subsection (e) [(i)] and
  shall certify that amount to the district.
         SECTION 1.47.  Section 42.253(h), Education Code, as
  effective September 1, 2017, is transferred to Subchapter L,
  Chapter 41, Education Code, as added by this Act, redesignated as
  Section 41.458(d), Education Code, and amended to read as follows:
         (d) [(h)]  If the amount appropriated for the Foundation
  School Program for the second year of a state fiscal biennium is
  less than the amount to which school districts and open-enrollment
  charter schools are entitled for that year, the commissioner shall
  certify the amount of the difference to the Legislative Budget
  Board not later than January 1 of the second year of the state
  fiscal biennium. The Legislative Budget Board shall propose to the
  legislature that the certified amount be transferred to the
  foundation school fund from the economic stabilization fund and
  appropriated for the purpose of increases in allocations under this
  subsection. If the legislature fails during the regular session to
  enact the proposed transfer and appropriation and there are not
  funds available under Subsection (f) [(j)], the commissioner shall
  adjust the total amounts due to each school district and
  open-enrollment charter school under Chapter 42 and this chapter
  and the total amounts necessary for each school district to comply
  with the requirements of Section 42.254(a) [Chapter 41] by an
  amount determined by applying to each district and school the same
  percentage adjustment to the total amount of state and local
  revenue due to the district or school under this chapter and Chapter
  42 [41] so that the total amount of the adjustment to all districts
  and schools results in an amount equal to the total adjustment
  necessary. The following fiscal year:
               (1)  a district's or school's entitlement under Section
  42.253 [this section] is increased by an amount equal to the
  adjustment  made under this subsection; and
               (2)  the amount necessary for a district to comply with
  the requirements of Section 42.254(a) [Chapter 41] is reduced by an
  amount necessary to ensure a district's full recovery of the
  adjustment made under this subsection.
         SECTION 1.48.  Subchapter L, Chapter 41, Education Code, as
  added by this Act, is amended by adding Sections 41.459, 41.460, and
  41.461 to read as follows:
         Sec. 41.459.  DELINQUENT MAINTENANCE AND OPERATIONS TAX
  COLLECTION.  (a) If the collection of delinquent maintenance and
  operations taxes of a district not previously required to take
  action under Section 41.009 results in the district being subject
  to Section 42.254(a) only for the year in which the delinquent taxes
  are collected, the commissioner shall permit the district to take
  action under this section in lieu of taking action under Section
  41.009.
         (b)  The district shall deposit the amount by which the
  district's revenue under Sections 42.253(a)(2) and (3) exceeds the
  district's entitlement under Section 42.253(a)(1) into a separate
  account that may be used only as provided by this section.
         (c)  For the school year following the year the deposit was
  made as provided by Subsection (b), the commissioner shall reduce
  the amount of state aid to which the district is entitled under this
  chapter and Chapter 42 by an amount equal to the excess revenue in
  the separate account and the district may withdraw the money from
  the account to replace the reduction in state aid.
         (d)  If the amount of state aid to which the district is
  entitled under this chapter and Chapter 42 is less than the amount
  in the separate account, the difference must remain in the separate
  account and the commissioner will again reduce the district's state
  aid in the subsequent school year.
         (e)  If money remains in the separate account after three
  school years, the remaining money in the account is considered part
  of the district's revenue under Sections 42.253(a)(2) and (3) and
  the district is subject to Section 42.254(a).
         (f)  If at any time money remains in the separate account and
  the commissioner makes a determination under Section 41.010 that
  the district is subject to Section 42.254(a), the remaining money
  in the separate account must be included in determining:
               (1)  the amount the district is required to pay under
  Section 41.009(3); or
               (2)  whether the district has taken sufficient action
  under Section 41.009(1), (2), or (4).
         Sec. 41.460.  FAILURE TO COLLECT DELINQUENT MAINTENANCE AND
  OPERATIONS TAXES. (a) If a district fails to collect a delinquent
  maintenance and operations tax owed to the district for two years
  after the year in which the tax is initially due, the collection of
  the delinquent tax reverts to the state.
         (b)  The comptroller shall collect the delinquent
  maintenance and operations tax on behalf of the district, with
  penalties and interest owed, at the earliest opportunity.
         (c)  The attorney general shall assist the comptroller in the
  collection of delinquent maintenance and operations taxes.
         (d)  If the attorney general cannot successfully collect the
  delinquent maintenance and operations tax, penalties, and interest
  in the first year in which the obligation reverts to the state, the
  comptroller may contract with private attorneys for collection in
  subsequent years, subject to the terms and limitations that apply
  to a school district contracting with private attorneys for that
  purpose.
         (e)  All taxes, penalties, and fees collected under this
  section are included in the district's collections under Section
  42.253(a)(3) in the year in which they are collected.
         Sec. 41.461.  ESTIMATES REQUIRED. (a) Not later than
  October 1 of each even-numbered year:
               (1)  the agency shall submit to the legislature an
  estimate of the tax rate and student enrollment of each school
  district for the following biennium; and
               (2)  the comptroller shall submit to the legislature an
  estimate of the total taxable value of all property in the state as
  determined under Subchapter M, Chapter 403, Government Code, for
  the following biennium.
         (b)  The agency and the comptroller shall update the
  information provided to the legislature under Subsection (a) not
  later than March 1 of each odd-numbered year.
         SECTION 1.49.  Section 42.255, Education Code, is
  transferred to Subchapter L, Chapter 41, Education Code, as added
  by this Act, redesignated as Section 41.462, Education Code, and
  amended to read as follows:
         Sec. 41.462 [42.255].  FALSIFICATION OF RECORDS; REPORT.
  When, in the opinion of the agency's director of school audits,
  audits or reviews of accounting, enrollment, or other records of a
  school district reveal deliberate falsification of the records, or
  violation of the provisions of this chapter or Chapter 42, through
  which the district's share of state funds allocated under the
  authority of this chapter and Chapter 42 would be, or has been,
  illegally increased, the director shall promptly and fully report
  the fact to the State Board of Education, the state auditor, and the
  appropriate county attorney, district attorney, or criminal
  district attorney.
         SECTION 1.50.  Section 42.259(g), Education Code, is
  transferred to Subchapter L, Chapter 41, Education Code, as added
  by this Act, redesignated as Section 41.463, Education Code, and
  amended to read as follows:
         Sec. 41.463.  FOUNDATION SCHOOL FUND TRANSFERS. (a) The
  commissioner shall adopt rules regarding the timing of payments
  from the foundation school fund to each school district and
  open-enrollment charter school.
         (b) [(g)]  The commissioner shall make all annual Foundation
  School Program payments under this section for purposes described
  by Sections 45.252(a)(1) and (2) before the deadline established
  under Section 45.263(b) for payment of debt service on bonds.  
  Notwithstanding any other provision of this section, the
  commissioner may make Foundation School Program payments under this
  section after the deadline established under Section 45.263(b) only
  if the commissioner has not received notice under Section 45.258
  concerning a district's failure or inability to pay matured
  principal or interest on bonds.
         SECTION 1.51.  Chapter 41, Education Code, is amended by
  adding Subchapter M and adding a subchapter heading to read as
  follows:
  SUBCHAPTER M. SCHOOL FACILITIES INVENTORY AND STANDARDS
         SECTION 1.52.  Section 42.352, Education Code, is
  transferred to Subchapter M, Chapter 41, Education Code, as added
  by this Act, and redesignated as Section 41.501, Education Code, to
  read as follows:
         Sec. 41.501 [42.352].  STANDARDS. The State Board of
  Education shall establish standards for adequacy of school
  facilities. The standards shall include requirements related to
  space, educational adequacy, and construction quality. All
  facilities constructed after September 1, 1992, must meet the
  standards in order to be financed with state or local tax funds.
         SECTION 1.53.  Section 42.002(b), Education Code, is amended
  to read as follows:
         (b)  The Foundation School Program consists of:
               (1)  [two tiers that in combination provide for:
                     [(A)]  sufficient financing to provide [for] all
  school districts with the resources to provide a basic program of
  education that is rated acceptable or higher under Section 39.054
  and meets other applicable legal standards[;] and to provide all
  school districts with
                     [(B)]  substantially equal access to funds to
  provide an enriched program; and
               (2)  a facilities component as provided by Chapter 46.
         SECTION 1.54.  The heading to Subchapter B, Chapter 42,
  Education Code, is amended to read as follows:
  SUBCHAPTER B. REGULAR PROGRAM [BASIC] ENTITLEMENT
         SECTION 1.55.  Sections 42.101(a) and (c), Education Code,
  are amended to read as follows:
         (a)  For each student in average daily attendance, not
  including the time students spend each day in special education
  programs in an instructional arrangement other than mainstream or
  career and technology education programs, for which an additional
  allotment is made under Subchapter C, a district is entitled to a
  basic [an] allotment equal to $______ , subject to adjustments
  under Sections 42.102, 42.103, and 42.104 [the lesser of $4,765 or
  the amount that results from the following formula:
  [A = $4,765 X (DCR/MCR)
  [where:
         ["A" is the allotment to which a district is entitled;
         ["DCR" is the district's compressed tax rate, which is the
  product of the state compression percentage, as determined under
  Section 42.2516, multiplied by the maintenance and operations tax
  rate adopted by the district for the 2005 tax year; and
         ["MCR" is the state maximum compressed tax rate, which is the
  product of the state compression percentage, as determined under
  Section 42.2516, multiplied by $1.50].
         (c)  The basic allotment is multiplied by the cost of
  education index under Section 42.102 and, if applicable, adjusted
  by the small district adjustment under Section 42.103 to calculate
  a district's adjusted allotment for purposes of the regular program
  entitlement under this chapter and the special program allotments
  under Subchapter C  [This subsection applies to a school district
  for which the compressed tax rate ("DCR") is determined in
  accordance with Subsection (a-1).   Any reduction in the district's
  adopted maintenance and operations tax rate is applied to the
  following components of the district's tax rate in the order
  specified:
               [(1)  tax effort described by Section 42.302(a-1)(2);
               [(2)     tax effort described by Section 42.302(a-1)(1);
  and
               [(3)     tax effort included in the determination of the
  district's compressed tax rate ("DCR") under Subsection (a-1)].
         SECTION 1.56.  Section 42.102(a), Education Code, is amended
  to read as follows:
         (a)  The basic allotment for each district is multiplied by
  the revised cost of education adjustment determined under Section
  41.301 [adjusted] to reflect the geographic variation in known
  resource costs and costs of education due to factors beyond the
  control of the school district.
         SECTION 1.57.  Section 42.103, Education Code, is amended to
  read as follows:
         Sec. 42.103.  SMALL [AND MID-SIZED] DISTRICT ADJUSTMENT.
  (a) The small district adjustment is intended to account for the
  increased per student cost of education in districts with fewer
  than 5,000 students.
         (b)  The basic allotment for certain small [and mid-sized]
  districts is adjusted in accordance with this section. In this
  section:
               (1)  "AA" is the district's adjusted allotment per
  student;
               (2)  "ADA" is the number of students in average daily
  attendance for which the district is entitled to an allotment under
  Section 42.101; and
               (3)  "ABA" is the adjusted basic allotment determined
  under Section 42.102.
         (c) [(b)]  The basic allotment of a school district that
  [contains at least 300 square miles and] has not more than 5,000
  [1,600] students in average daily attendance is adjusted by
  applying the following formula that results in the greatest
  adjusted allotment:
  (1) AA = (1 + ((1,600 - ADA) X .0004)) X ABA;
         [(c)     The basic allotment of a school district that contains
  less than 300 square miles and has not more than 1,600 students in
  average daily attendance is adjusted by applying the formula:
  [AA = (1 + ((1,600 - ADA) X .00025)) X ABA
         [(d)     The basic allotment of a school district that offers a
  kindergarten through grade 12 program and has less than 5,000
  students in average daily attendance is adjusted by applying the
  formula, of the following formulas, that results in the greatest
  adjusted allotment:
               [(1)     the formula in Subsection (b) or (c) for which the
  district is eligible;] or
               (2)  AA = (1 + ((5,000 - ADA) X .000025)) X ABA.
         SECTION 1.58.  Subchapter B, Chapter 42, Education Code, is
  amended by adding a new Section 42.104 to read as follows:
         Sec. 42.104.  SPARSITY ADJUSTMENT. Notwithstanding
  Sections 42.101, 42.102, and 42.103, a school district that has
  fewer than 130 students in average daily attendance shall be
  provided an adjusted allotment under the applicable provisions of
  Section 41.302.
         SECTION 1.59.  Section 42.151(a), Education Code, is amended
  to read as follows:
         (a)  For each student in average daily attendance in a
  special education program under Subchapter A, Chapter 29, in a
  mainstream instructional arrangement, a school district is
  entitled to an annual allotment equal to the adjusted [basic]
  allotment multiplied by 1.1. For each full-time equivalent student
  in average daily attendance in a special education program under
  Subchapter A, Chapter 29, in an instructional arrangement other
  than a mainstream instructional arrangement, a district is entitled
  to an annual allotment equal to the adjusted [basic] allotment
  multiplied by a weight determined according to instructional
  arrangement as follows:
                     Homebound5.0
                     Hospital class3.0
                     Speech therapy5.0
                     Resource room3.0
                     Self-contained, mild and moderate,
                     regular campus3.0
                     Self-contained, severe, regular campus3.0
                     Off home campus2.7
                     Nonpublic day school1.7
                     Vocational adjustment class2.3
         SECTION 1.60.  Section 42.151(f), Education Code, is
  redesignated as Section 42.151(c), Education Code, to read as
  follows:
         (c) [(f)]  In this section, "full-time equivalent student"
  means 30 hours of contact a week between a special education student
  and special education program personnel.
         SECTION 1.61.  Section 42.152(a), Education Code, is amended
  to read as follows:
         (a)  For each student who is educationally disadvantaged or
  who is a student who does not have a disability and resides in a
  residential placement facility in a district in which the student's
  parent or legal guardian does not reside, a district is entitled to
  an annual allotment equal to the adjusted [basic] allotment
  multiplied by 0.2, and by 2.41 for each full-time equivalent
  student who is in a remedial and support program under Section
  29.081 because the student is pregnant.
         SECTION 1.62.  Section 42.152(b-1), Education Code, is
  redesignated as Section 42.152(c), Education Code, to read as
  follows:
         (c) [(b-1)]  A student receiving a full-time virtual
  education through the state virtual school network may be included
  in determining the number of educationally disadvantaged students
  under Subsection (b) if the school district submits to the
  commissioner a plan detailing the enhanced services that will be
  provided to the student and the commissioner approves the plan.
         SECTION 1.63.  Section 42.153(a), Education Code, is amended
  to read as follows:
         (a)  For each student in average daily attendance in a
  bilingual education or special language program under Subchapter B,
  Chapter 29, a district is entitled to an annual allotment equal to
  the adjusted [basic] allotment multiplied by 0.1.
         SECTION 1.64.  Section 42.154(a), Education Code, is amended
  to read as follows:
         (a)  For each full-time equivalent student in average daily
  attendance in an approved career and technology education program
  in grades nine through 12 or in career and technology education
  programs for students with disabilities in grades seven through 12,
  a district is entitled to:
               (1)  an annual allotment equal to the adjusted [basic]
  allotment multiplied by a weight of 1.35; and
               (2)  $50, if the student is enrolled in:
                     (A)  two or more advanced career and technology
  education classes for a total of three or more credits; or
                     (B)  an advanced course as part of a tech-prep
  program under Subchapter T, Chapter 61.
         SECTION 1.65.  Chapter 42, Education Code, is amended by
  adding Subchapter D and adding a subchapter heading to read as
  follows:
  SUBCHAPTER D. TRANSPORTATION ALLOTMENT
         SECTION 1.66.  Sections 42.155(a), (b), (c), and (j),
  Education Code, are transferred to Subchapter D, Chapter 42,
  Education Code, as added by this Act, redesignated as Section
  42.201, Education Code, and amended to read as follows:
         Sec. 42.201.  TRANSPORTATION ALLOTMENT. (a) Each district
  or county operating a transportation system is entitled to
  allotments for transportation costs as provided by this section.
         (b)  As used in this section:
               (1)  "Regular eligible student" means a student who
  resides two or more miles from the student's campus of regular
  attendance, measured along the shortest route that may be traveled
  on public roads, and who is not classified as a student eligible for
  special education services.
               (2)  "Eligible special education student" means a
  student who is eligible for special education services under
  Section 29.003 and who would be unable to attend classes without
  special transportation services.
               (3)  "Linear density" means the average number of
  regular eligible students transported daily, divided by the
  approved daily route miles traveled by the respective
  transportation system.
         (c)  Each district or county operating a regular
  transportation system is entitled to an allotment based on the
  daily cost per regular eligible student of operating and
  maintaining the regular transportation system and the linear
  density of that system. In determining the cost, the commissioner
  shall give consideration to factors affecting the actual cost of
  providing these transportation services in each district or county.
  The average actual cost is to be computed by the commissioner and
  included for consideration by the legislature in the General
  Appropriations Act. The allotment per mile of approved route may
  not exceed the amount set by appropriation.
         (d) [(j)]  The Texas School for the Deaf is entitled to an
  allotment under this section. The commissioner shall determine the
  appropriate allotment.
         SECTION 1.67.  Section 42.251, Education Code, is amended to
  read as follows:
         Sec. 42.251.  FINANCING; GENERAL RULE. (a) A school
  district's Foundation School Program maintenance and operations
  cost is the [The] sum of:
               (1)  the district's effective tax rate, as provided
  under Section 42.2511, multiplied by the sum of the regular program
  entitlement to which the district is entitled [basic allotment]
  under Subchapter B and the sum of the special allotments under
  Subchapter C to which the district is entitled, computed in
  accordance with this chapter; and
               (2)  the transportation allotment under Subchapter D[,
  constitute the tier one allotments].
         (b)  The sum of the Foundation School Program maintenance and
  operations costs for all accredited school districts in this state
  constitutes [tier one allotments and the guaranteed yield
  allotments under Subchapter F, computed in accordance with this
  chapter, constitute] the total maintenance and operations cost of
  the Foundation School Program.
         (c) [(b)]  The program shall be financed by:
               (1)  state available school funds distributed in
  accordance with law  [ad valorem tax revenue generated by an
  equalized uniform school district effort];
               (2)  ad valorem tax revenue generated by local school
  district effort [in excess of the equalized uniform school district
  effort]; and
               (3)  [state available school funds distributed in
  accordance with law; and
               [(4)]  state funds appropriated for the purposes of
  public school education and allocated to each district in an amount
  sufficient to finance the maintenance and operations cost of each
  district's Foundation School Program not covered by other funds
  specified in this subsection.
         SECTION 1.68.  Subchapter E, Chapter 42, Education Code, is
  amended by adding Section 42.2511 to read as follows:
         Sec. 42.2511.  EFFECTIVE TAX RATE. (a) A district's
  effective tax rate is the district's adopted maintenance and
  operations tax rate per $100 of taxable value multiplied by the
  ratio of the district's appraised value of property for maintenance
  and operations tax purposes to the taxable value of property in the
  school district for the current tax year determined under
  Subchapter M, Chapter 403, Government Code.
         (b)  The effective tax rate for an open-enrollment charter
  school under Chapter 12 is the state average effective tax rate.
         SECTION 1.69.  The heading to Section 42.252, Education
  Code, is amended to read as follows:
         Sec. 42.252.  LOCAL SHARE OF PROGRAM COST [(TIER ONE)].
         SECTION 1.70.  Section 42.252(a), Education Code, is amended
  to read as follows:
         (a)  Each school district's share of the maintenance and
  operations cost of the Foundation School Program is the sum of the
  district's distribution from the state available school fund and
  the district's maintenance and operations tax collections for the
  current year [determined by the following formula:
  [LFA = TR X DPV
  [where:
         ["LFA" is the school district's local share;
         ["TR" is a tax rate which for each hundred dollars of
  valuation is an effective tax rate of the amount equal to the
  product of the state compression percentage, as determined under
  Section 42.2516, multiplied by the lesser of:
               [(1)  $1.50; or
               [(2)     the maintenance and operations tax rate adopted
  by the district for the 2005 tax year; and
         ["DPV" is the taxable value of property in the school
  district for the preceding tax year determined under Subchapter M,
  Chapter 403, Government Code].
         SECTION 1.71.  Sections 42.253(a) and (c), Education Code,
  are amended to read as follows:
         (a)  For each school year the commissioner shall determine:
               (1)  the amount of money to which a school district is
  entitled under Subchapters B, [and] C, and D;
               (2)  [the amount of money to which a school district is
  entitled under Subchapter F;
               [(3)]  the amount of money allocated to the district
  from the available school fund; and
               (3) [(4)     the amount of each district's tier one local
  share under Section 42.252; and
               [(5)]  the amount of each district's maintenance and
  operations tax collections [tier two local share under Section
  42.302].
         (c)  Each school district is entitled to an amount equal to
  the difference for that district between Subsection [the sum of
  Subsections] (a)(1) [and (a)(2)] and the sum of Subsections (a)(2)
  and (a)(3)[, (a)(4), and (a)(5)].
         SECTION 1.72.  Section 42.254, Education Code, is amended to
  read as follows:
         Sec. 42.254.  OPTIONS TO ENSURE EFFICIENCY OF FOUNDATION
  SCHOOL PROGRAM [ESTIMATES REQUIRED]. (a) If a school district's
  total revenue under Sections 42.253(a)(2) and (3) exceeds the
  district's entitlement under Section 42.253(a)(1), a district may
  choose to exercise one or more options under Subchapter B, C, D, or
  E, Chapter 41, to eliminate all excess revenue. If the district
  fails to elect an option, the commissioner shall exercise an option
  under Subchapter F or G, Chapter 41, to reduce the district's
  anticipated revenue by an amount sufficient to eliminate any excess
  revenue [Not later than October 1 of each even-numbered year:
               [(1)     the agency shall submit to the legislature an
  estimate of the tax rate and student enrollment of each school
  district for the following biennium; and
               [(2)     the comptroller shall submit to the legislature
  an estimate of the total taxable value of all property in the state
  as determined under Subchapter M, Chapter 403, Government Code, for
  the following biennium].
         (b)  The total amount to be remitted to the state by a
  district under Subchapter D, Chapter 41, must at least equal the
  amount by which the district's total revenue under Sections
  42.253(a)(2) and (3) exceeds the district's entitlement under
  Section 42.253(a)(1) [The agency and the comptroller shall update
  the information provided to the legislature under Subsection (a)
  not later than March 1 of each odd-numbered year].
         (c)  If a district subject to this section chooses another
  option to achieve the efficiency of the system under Chapter 41 or
  the commissioner takes action under Subchapter F or G, Chapter 41,
  any district involved may not have a resulting amount of total
  revenue under Sections 42.253(a)(2) and (3) that exceeds the
  district's entitlement under Section 42.253(a)(1).
         SECTION 1.73.  The heading to Section 42.258, Education
  Code, is amended to read as follows:
         Sec. 42.258.  RECOVERY OF OVERALLOCATED FUNDS OR
  INSUFFICIENT PAYMENTS.
         SECTION 1.74.  Section 42.258(a), Education Code, is amended
  to read as follows:
         (a)  If a school district has received an overallocation of
  state funds or has failed to make sufficient payments to the state
  under Section 42.254, the agency shall, by withholding from
  subsequent allocations of state funds or increasing the amount of
  payments owed for the current or subsequent school year or by
  requesting and obtaining a refund, recover from the district an
  amount equal to the overallocation or insufficient payments.
         SECTION 1.75.  The heading to Subchapter F, Chapter 42,
  Education Code, is amended to read as follows:
  SUBCHAPTER F. CALCULATION OF WEIGHTED AVERAGE DAILY ATTENDANCE
  [GUARANTEED YIELD PROGRAM]
         SECTION 1.76.  Section 42.301, Education Code, is amended to
  read as follows:
         Sec. 42.301.  PURPOSE. The purpose of the calculation of
  weighted students under this subchapter is to provide a method of
  comparison of student funding under [the guaranteed yield component
  of] the Foundation School Program. By accounting for the state
  recognized and funded uncontrollable cost differences in educating
  students, the use of weighted students in funding comparisons
  reflects the state policy under Section 42.001. Weighted students
  are not used in the determination of funding for school districts
  [is to provide each school district with the opportunity to provide
  the basic program and to supplement that program at a level of its
  own choice. An allotment under this subchapter may be used for any
  legal purpose other than capital outlay or debt service].
         SECTION 1.77.  The heading to Section 42.302, Education
  Code, is amended to read as follows:
         Sec. 42.302.  CALCULATION OF WEIGHTED STUDENTS [ALLOTMENT].
         SECTION 1.78.  Section 42.302(a), Education Code, is amended
  to read as follows:
         (a)  For comparing student funding under Section 42.301,
  [Each school district is guaranteed a specified amount per weighted
  student in state and local funds for each cent of tax effort over
  that required for the district's local fund assignment up to the
  maximum level specified in this subchapter.     The amount of state
  support, subject only to the maximum amount under Section 42.303,
  is determined by the formula:
  [GYA = (GL X WADA X DTR X 100) - LR
  [where:
         ["GYA" is the guaranteed yield amount of state funds to be
  allocated to the district;
         ["GL" is the dollar amount guaranteed level of state and
  local funds per weighted student per cent of tax effort, which is an
  amount described by Subsection (a-1) or a greater amount for any
  year provided by appropriation;
         ["WADA" is] the number of students in weighted average daily
  attendance[, which] is calculated by dividing the sum of the school
  district's allotments under Subchapters B and C[, less any
  allotment to the district for transportation, any allotment under
  Section 42.158 or 42.160, and 50 percent of the adjustment under
  Section 42.102,] by the basic allotment for the applicable year[;
         ["DTR" is the district enrichment tax rate of the school
  district, which is determined by subtracting the amounts specified
  by Subsection (b) from the total amount of maintenance and
  operations taxes collected by the school district for the
  applicable school year and dividing the difference by the quotient
  of the district's taxable value of property as determined under
  Subchapter M, Chapter 403, Government Code, or, if applicable,
  under Section 42.2521, divided by 100; and
         ["LR" is the local revenue, which is determined by
  multiplying "DTR" by the quotient of the district's taxable value
  of property as determined under Subchapter M, Chapter 403,
  Government Code, or, if applicable, under Section 42.2521, divided
  by 100].
         SECTION 1.79.  The following provisions of the Education
  Code are repealed:
               (1)  Section 41.002, as effective immediately before
  the effective date of this Act;
               (2)  Sections 41.0031 and 41.0041;
               (3)  Section 41.006, as effective immediately before
  the effective date of this Act;
               (4)  Section 41.092;
               (5)  Section 41.093(b-1);
               (6)  Section 41.0931;
               (7)  Section 41.097(b);
               (8)  Sections 41.098 and 41.099;
               (9)  Subchapter E, Chapter 41, as effective immediately
  before the effective date of this Act;
               (10)  Section 41.157(d);
               (11)  Section 41.159(b);
               (12)  Sections 41.206(d), (e), (f), (g), (h), (i), (j),
  and (k);
               (13)  Sections 41.207, 41.208, 41.209, and 41.210;
               (14)  Section 41.252(c);
               (15)  Section 42.009;
               (16)  Sections 42.101(a-1) and (a-2);
               (17)  Section 42.104, as effective immediately before
  the effective date of this Act;
               (18)  Section 42.106;
               (19)  Section 42.151(l);
               (20)  Section 42.154(e);
               (21)  the heading to Section 42.155;
               (22)  Sections 42.1541, 42.156, 42.157, 42.158,
  42.160, 42.2513, 42.2516, 42.2517, and 42.2518;
               (23)  Sections 42.252(a-1), (b), (c), and (d);
               (24)  Sections 42.2521, 42.2522, and 42.2523;
               (25)  Section 42.253(b);
               (26)  Sections 42.2531 and 42.257;
               (27)  Sections 42.258(a-1) and (b);
               (28)  Sections 42.259(a), (b), (c), (d), (e), and (f);
               (29)  Sections 42.2591, 42.260, and 42.262;
               (30)  Sections 42.302(a-1), (a-2), (b), (c), (d), (e),
  and (f); and
               (31)  Sections 42.303, 42.304, and 42.4101.
         SECTION 1.80.  Any rule adopted by the commissioner of
  education under Chapter 41 or 42, Education Code, before the
  effective date of this Act continues to apply to Chapter 41 or 42,
  Education Code, as amended by this Act, if Chapter 41 or 42,
  Education Code, as amended by this Act, includes a section that is
  substantially the same as a section of Chapter 41 or 42, Education
  Code, that existed before the effective date of this Act.
  ARTICLE 2. CONFORMING AMENDMENTS
 
  [[[to be added at a later date]]]
  ARTICLE 3. EFFECTIVE DATE
         SECTION 3.01.  This Act takes effect September 1, 2017
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