84R11276 JSL-F
	By: Walle	H.B. No. 3671

	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:
	SECTION 1.  Section 29.918(a), Education Code, is amended to
	read as follows:
	(a)  Notwithstanding Section [39.234 or] 42.152, a school
	district or open-enrollment charter school with a high dropout
	rate, as determined by the commissioner, must submit a plan to the
	commissioner describing the manner in which the district or charter
	school intends to use the compensatory education allotment under
	Section 42.152 [and the high school allotment under Section 42.160]
	for developing and implementing research-based strategies for
	dropout prevention.  The district or charter school shall submit
	the plan not later than December 1 of each school year preceding the
	school year in which the district or charter school will receive the
	compensatory education allotment or high school allotment to which
	the plan applies.
	SECTION 2.  Section 39.0233(a), Education Code, is amended
	to read as follows:
	(a)  The agency, in coordination with the Texas Higher
	Education Coordinating Board, shall adopt a series of questions to
	be included in an end-of-course assessment instrument administered
	under Section 39.023(c) to be used for purposes of Section 51.3062.
	The questions adopted under this subsection must be developed in a
	manner consistent with any college readiness standards adopted
	under Section [Sections 39.233 and] 51.3062.
	SECTION 3.  Section 41.002(a), Education Code, is amended to
	read as follows:
	(a)  A school district may not have a wealth per student that
	exceeds:
	(1)  the wealth per student that generates the amount
	of maintenance and operations tax revenue per weighted student
	available to a district with maintenance and operations tax revenue
	per cent of tax effort equal to the maximum amount provided per cent
	under Section 42.101(a) or (b), for the district's maintenance and
	operations tax effort equal to or less than the rate equal to 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;
	(2)  the wealth per student that generates the amount
	of maintenance and operations tax revenue per weighted student
	available to the Austin Independent School District, as determined
	by the commissioner in cooperation with the Legislative Budget
	Board, for the first six cents by which the district's maintenance
	and operations tax rate exceeds the rate equal to 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, subject to Section 41.093(b-1);
	or
	(3)  $544,000 for the 2015-2016 school year and
	$584,000 for the 2016-2017 and subsequent school years [$319,500],
	for the district's maintenance and operations tax effort that
	exceeds the first six cents by which the district's maintenance and
	operations tax effort exceeds the rate equal to 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.
	SECTION 4.  Subchapter A, Chapter 42, Education Code, is
	amended by adding Sections 42.010 and 42.013 to read as follows:
	Sec. 42.010.  COMPREHENSIVE REVIEW OF PUBLIC SCHOOL FINANCE
	WEIGHTS, ALLOTMENTS, AND ADJUSTMENTS. (a) The agency shall
	conduct a comprehensive review of weights, allotments, and
	adjustments under the public school finance system, including all
	current weights, allotments, and adjustments provided under this
	chapter and any additional weights, allotments, and adjustments
	that the agency determines may be appropriate.  The review must
	determine the effectiveness of existing weights, allotments, and
	adjustments in fulfilling the mission of the public education
	system stated in Section 4.001(a) and furthering the state policy
	stated in Section 42.001. At a minimum, the review must determine
	how closely and appropriately each of the following elements
	reflects and provides financing for costs beyond the control of
	school districts:
	(1)  adjustments for costs related to the geographic
	variation in known resource costs and costs of education,
	controlling for the impact of unequalized wealth and hold-harmless
	provisions, and properly reflecting the impact of high
	concentrations of poverty on the compensation that school districts
	must pay to attract and retain teachers of comparable or
	appropriate quality;
	(2)  adjustments for costs related to the size and
	diseconomies of scale of school districts;
	(3)  adjustments for costs related to the varying
	instructional needs and characteristics of students and the extent
	to which the adjustments provide each student with access to
	programs and services that are appropriate to the student's
	educational needs;
	(4)  other factors, in addition to economic status,
	that correlate to at-risk status and the need for compensatory
	education, and the degree to which those factors correspond to
	additional educational costs; and
	(5)  the manner in which the cost adjustments are
	applied to and affect the overall school finance system.
	(b)  The review of the adjustments described in Subsection
	(a)(1) must:
	(1)  address all uncontrollable costs that can
	reasonably be quantified;
	(2)  consider the qualifications, experience, and
	turnover rate of personnel and the impact of those factors on
	student achievement in considering the adequacy and comparability
	of salaries;
	(3)  properly address the impact of factors that have a
	large impact on certain types of school districts, such as extreme
	isolation, regardless of general state impact;
	(4)  include only factors for which a rational economic
	argument can be made;
	(5)  be carefully constructed to make sure that a cost
	factor does not significantly affect more than one variable; and
	(6)  not be artificially adjusted to meet predetermined
	outcomes and must not use arbitrary limits.
	(c)  In determining whether any additional weights,
	allotments, and adjustments are appropriate under the public school
	finance system, as required by Subsection (a), the agency shall
	include consideration of an additional weight for educational
	services provided to students in prekindergarten on a half-day
	basis and on a full-day basis.
	(d)  The agency may contract with one or more consultants if
	necessary to enable the agency to perform its duties under this
	section.
	(e)  The Legislative Budget Board, the comptroller, the
	state auditor, and any other state agency, official, or personnel
	shall cooperate with the agency in carrying out its duties under
	this section.
	(f)  Not later than December 1, 2016, the agency shall
	provide a report that:
	(1)  states the findings of the review conducted under
	this section; and
	(2)  includes recommendations for updated weights,
	allotments, and adjustments and any other statutory changes
	considered appropriate by the agency.
	(g)  This section expires January 1, 2017.
	Sec. 42.013.  STUDY OF LEGISLATION ON SCHOOL FUNDING. (a)
	After each legislative session, the commissioner shall conduct a
	study assessing the manner in which any statute enacted or amended
	during that legislative session affects the equalized wealth level
	of a school district under Chapter 41 or the foundation school
	program under this chapter and whether the standard of neutrality
	described under Section 42.001(b) is maintained.
	(b)  The study under this section must:
	(1)  include an analysis of the effects of legislation
	on each school district in the state; and
	(2)  indicate how a school district compares to other
	districts with respect to:
	(A)  property wealth per weighted student;
	(B)  revenue per weighted student;
	(C)  tax effort; and
	(D)  revenue per cent of tax effort.
	(c)  The commissioner shall issue a report on the study's
	findings to the governor, the lieutenant governor, the speaker of
	the house of representatives, and the legislature.  The
	commissioner shall make the report available to the public on the
	agency's Internet website.
	SECTION 5.  Section 42.101, Education Code, as effective
	September 1, 2015, is amended by amending Subsection (a) and adding
	Subsection (c) to read as follows:
	(a)  Except as provided by Subsection (c), for [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 an allotment
	equal to the lesser of $5,440 [$4,765] or the amount that results
	from the following formula:
	A = $5,440 [$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)  For a school district that would be entitled under this
	section to a basic allotment of more than $6,500 for each student in
	average daily attendance, the commissioner shall adjust the
	district's basic allotment by a factor of 0.9239.
	SECTION 6.  Effective September 1, 2016, Section 42.101(a),
	Education Code, as effective September 1, 2015, is amended to read
	as follows:
	(a)  Except as provided by Subsection (c), for [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 an allotment
	equal to the lesser of $5,840 [$4,765] or the amount that results
	from the following formula:
	A = $5,840 [$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.
	SECTION 7.  Sections 42.152(a) and (c), Education Code, are
	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 0.25 [0.2], and by 2.41 for each full-time equivalent
	student who is in a compensatory, intensive, or accelerated
	[remedial and support] program under Section 29.081 because the
	student is pregnant.
	(c)  Funds allocated under 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 25 [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 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.
	SECTION 8.  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 0.25 [0.1].
	SECTION 9.  Sections 42.2516(b) and (i), Education Code, as
	effective until September 1, 2017, are amended to read as follows:
	(b)  Notwithstanding any other provision of this title, a
	school district that imposes a maintenance and operations tax at a
	rate at least equal to the product of the state compression
	percentage multiplied by the maintenance and operations tax rate
	adopted by the district for the 2005 tax year is entitled to at
	least the amount of state revenue necessary to provide the district
	with the sum of:
	(1)  the percentage specified by Subsection (i) of the
	amount, as calculated under Subsection (e), of state and local
	revenue per student in weighted average daily attendance for
	maintenance and operations that the district would have received
	during the 2009-2010 school year under Chapter 41 and this chapter,
	as those chapters existed on January 1, 2009, at a maintenance and
	operations tax rate equal to the product of the state compression
	percentage for that year multiplied by the maintenance and
	operations tax rate adopted by the district for the 2005 tax year;
	and
	(2)  [the percentage specified by Subsection (i) of an
	amount equal to the product of $120 multiplied by the number of
	students in weighted average daily attendance in the district; and
	[(3)]  any amount to which the district is entitled
	under Section 42.106.
	(i)  The percentage to be applied for purposes of Subsection
	[Subsections] (b)(1) [and (2)] and Subsection (d)(1) is 92.35
	[100.00] percent for the 2015-2016 [2011-2012] school year and
	84.70 [92.35] percent for the 2016-2017 [2012-2013] school
	year.  [For the 2013-2014 school year and each subsequent school
	year, the legislature by appropriation shall establish the
	percentage reduction to be applied.]
	SECTION 10.  Sections 42.302(a) and (a-1), Education Code,
	are amended to read as follows:
	(a)  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.
	(a-1)  [In this section, "wealth per student" has the meaning
	assigned by Section 41.001.]  For purposes of Subsection (a), the
	dollar amount guaranteed level of state and local funds per
	weighted student per cent of tax effort ("GL") for a school district
	is:
	(1)  [the greater of] the amount of district tax
	revenue per weighted student per cent of tax effort that would be
	available to the Austin Independent School District, as determined
	by the commissioner in cooperation with the Legislative Budget
	Board, if the reduction of the limitation on tax increases as
	provided by Section 11.26(a-1), (a-2), or (a-3), Tax Code, did not
	apply, [or the amount of district tax revenue per weighted student
	per cent of tax effort used for purposes of this subdivision in the
	preceding school year,] for the first six cents by which the
	district's maintenance and operations tax rate exceeds the rate
	equal to 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
	(2)  $54.40 for the 2015-2016 school year and $58.40
	for the 2016-2017 and subsequent school years [$31.95], for the
	district's maintenance and operations tax effort that exceeds the
	amount of tax effort described by Subdivision (1).
	SECTION 11.  The following provisions of the Education Code
	are repealed:
	(1)  Section 29.097(g);
	(2)  Section 29.098(e);
	(3)  Section 39.233;
	(4)  Section 39.234; and
	(5)  Section 42.160.
	SECTION 12.  Except as otherwise provided by this Act, this
	Act takes effect September 1, 2015.