Proposed Rules Title 19

TITLE 19. EDUCATION

CHAPTER 100. CHARTERS

SUBCHAPTER AA. COMMISSIONER'S RULES CONCERNING OPEN-ENROLLMENT CHARTER SCHOOLS

The Texas Education Agency (TEA) proposes the repeal of §§100.1001 - 100.1007, 100.1010, 100.1013, 100.1015, 100.1017, 100.1019, 100.1021 - 100.1023, 100.1025 - 100.1027, 100.1029, 100.1031 - 100.1033, 100.1035, 100.1041, 100.1043, 100.1045, 100.1047, 100.1049 - 100.1052, 100.1063, 100.1065, 100.1067, 100.1069, 100.1071, 100.1073, 100.1101 - 100.1108, 100.1111 - 100.1116, 100.1131 - 100.1135, 100.1151, 100.1153, 100.1155, 100.1157, 100.1159, and 100.1217; new §§100.1001, 100.1003, 100.1011, 100.1013, 100.1015, 100.1017, 100.1021, 100.1023, 100.1025, 100.1031, 100.1035, 100.1037, 100.1039, 100.1041, 100.1043, 100.1045, 100.1047, 100.1049, 100.1051, 100.1053, 100.1055, 100.1061, 100.1063, 100.1065, 100.1067, 100.1069, 100.1071, 100.1073, 100.1075, 100.1077, 100.1079, 100.1091, 100.1093, 100.1095, 100.1097, 100.1099, 100.1101, 100.1111, 100.1113, 100.1115, 100.1117, 100.1119, 100.1121, 100.1123, 100.1125, 100.1127, 100.1131, 100.1133, 100.1135, 100.1137, 100.1139, 100.1141, 100.1143, 100.1145, 100.1147, 100.1149, 100.1151, 100.1153, 100.1155, 100.1157, 100.1159, 100.1161, and 100.1163; and amendments to §§100.1203, 100.1205, 100.1207, 100.1209, and 100.1211 - 100.1213, concerning open-enrollment charter schools. The proposed revisions would reorganize the subchapter as well as reflect changes to the Texas Education Code (TEC) resulting from House Bill (HB) 1707, 88th Texas Legislature, Regular Session, 2023; Senate Bill (SB) 2032, 88th Texas Legislature, Regular Session, 2023; SB 879 , 87th Texas Legislature, Regular Session, 2021; HB 189, 87th Texas Legislature, Regular Session, 2021; SB 1615, 87th Texas Legislature, Regular Session, 2021; and SB 2293, 86th Texas Legislature, 2019.

BACKGROUND INFORMATION AND JUSTIFICATION: Chapter 100, Subchapter AA, outlines the commissioner's rules concerning open-enrollment charter schools. The proposed revisions would allow for an overall reorganization of the chapter, amend existing rules, and add new rules. Following is a summary of the significant changes proposed to Chapter 100, Subchapter AA.

Section 100.1001, Definitions, would include new definitions for various types of charter schools referenced throughout Chapter 100, as defined in TEC, Chapter 12. This would provide clarity throughout Chapter 100 as to which types of charter schools are being addressed in each section. The section would also include a definition for "related party transactions" as required by TEC, §12.1166. The definition of "former charter holder" would be updated to include provisions for high quality operators. A provision for allowing scaled scores to be used for discretionary decision making in lieu of academic accountability ratings when such ratings are not issued for any reason would also be included.

Section 100.1002, Application and Selection Procedures and Criteria, would be proposed as new §100.1011, Application Requirements and Selection Process, and would contain changes including grammatical edits, organization of information into smaller paragraphs and subparagraphs, and a reformatted reference structure that assumes all paragraphs and subparagraphs are applicable to all charter applications unless expressly provided elsewhere. The reformatted reference structure would provide a clearer applicability of rule to each of TEA's authorization pathways.

Section 100.1003, Application to Dropout Recovery Charters, would be proposed as new §100.1015 and would modify eligibility criteria to align with updated statute.

Section 100.1004, Application to Public Senior College or University Charters and Public Junior College Charters, and §100.1015, Applicants for an Open-Enrollment Charter, Public Senior College or University Charter, or Public Junior College Charter, would be combined and proposed as new §100.1017, Applicant Eligibility and Form Contents. The new section would contain the following changes: a new section title to more accurately reflect the section's contents, grammatical edits, organization of information into smaller paragraphs and subparagraphs, and a reformatted reference structure that assumes all paragraphs and subparagraphs are applicable to all charter applications unless expressly provided elsewhere. The reformatted reference structure would provide a clearer applicability of rule to each of TEA's authorization pathways. Additionally, new applicability of the TEC, Subchapter G application pathway and educational, financial, governance, and operational standards by which applicants are assessed would be updated to better align with statute and current organizational priorities. The new section would also include a change to reflect TEC, §12.265(c), regarding the enrollment cap for adult high school charter programs.

Section 100.1005, Notification of Charter Application, would be proposed as new §100.1013 and contain the following changes: updates to who is responsible for notification of charter and a clarification of who is required to be notified. These changes would be made to decrease the administrative burden on applicants and provide a streamlined method of communication with potentially impacted stakeholders.

Section 100.1006, Optional Open-Enrollment Charter Provisions for Contracting and Purchasing, would be proposed as new §100.1079 and include non-substantive technical edits; no content changes would be made.

Section 100.1007, Annual Report on Open-Enrollment Charter Governance, would be proposed as new §100.1111 and contain the following proposed changes: modifications to the filing of governance information on an annual basis from no later than December 1 to a timeline approved by the commissioner; removal of the requirement for the charter holder to file amendments, articles of incorporation, and bylaws because TEA already possesses these documents; and removal of the requirement for a screenshot of the names of governing body members and a screenshot of the superintendent's salary, since the posting of this information is already required in statute. This new section would also remove outdated language.

Section 100.1010, Performance Frameworks, would be proposed as new §100.1031, Performance Frameworks for Subchapters D and E Charter Schools, and would contain the following proposed changes: clarification that Subchapter D and E charters will be evaluated against criteria set forth in the Charter School Performance Frameworks (CSPF) Manual and clarification that the manual will be updated annually to reflect the requirements and data sources for each indicator. Additional proposed changes would include clarification that tier ratings will be assigned based on academic, financial, operational, and governance criteria set forth in the CSPF Manual to allow further delineation as to the indicators that measure operational standards and those that measure governance standards. These changes are proposed based on feedback from stakeholders to make the CSPF a more useful instrument that communicates charter performance in a clear and concise manner.

Section 100.1013, Filing of Documents, would be proposed as new §100.1003 and include a change to define and outline the requirements for electronic transmission of documents.

Section 100.1017, Application of Law and Rules to Public Senior College or University Charters and Public Junior College Charters, would be proposed as new §100.1021, Applicability of Law and Rules to Public Senior College or University Charters and Public Junior College Charters, to more accurately reflect statutory language.

Section 100.1019, Application to Adult High School Charters, would be proposed as new §100.1023, Applicability of Law and Rules to Adult High School Charters, to more accurately reflect statutory language. This new section would include new provisions to govern applicability of TEC, Chapter 12, Subchapter D, to adult high school charter schools. These changes would be made to account for programmatic requirements that were not otherwise explicitly addressed in existing law. The requirements would be aligned to other provisions that govern charters and public schools as appropriate.

Section 100.1021, Revocation and Modification of Governance of an Open-Enrollment Charter, would be proposed as new §100.1049 and include a change to remove outdated references to academic performance ratings and financial accountability performance ratings for specific years.

Section 100.1022, Standards to Revoke and Modify the Governance of an Open-Enrollment Charter, would be proposed as new §100.1051 and include the removal of language defining "imminently insolvent" as this is included in another rule.

Section 100.1023, Intervention Based on Charter Violations, would be proposed as new §100.1045 with no substantive changes to rule text.

Section 100.1025, Intervention Based on Health, Safety, or Welfare of Students, would be proposed as new §100.1047 with no changes in rule text.

Proposed new §100.1025, Authorization for High-Performing Entities, would be added to implement TEC, §12.1011, which requires the commissioner to adopt rules regarding charter authorization for high-performing entities.

Section 100.1026, Management of Charter Campus(es) Following Revocation, Surrender, or Expiration, would be proposed as new §100.1053 with no substantive changes in rule text.

Section 100.1027, Accountability Ratings and Sanctions, would be proposed as new §100.1041 and include clarification that the commissioner may take any action relating to the charter holder or its campus as authorized by TEC, Chapter 39A. This change would remove outdated language.

Section 100.1029, Agency Audits, Monitoring, and Investigations, would be proposed as new §100.1043 and include non-substantive technical edits; no content changes would be made.

Section 100.1031, Renewal of an Open-Enrollment Charter, would be proposed as new §100.1037, including a clarification that written notice from the commissioner regarding renewal decisions will be provided electronically and removing references to academic performance ratings and financial accountability performance ratings for specific school years. These changes remove outdated language.

Section 100.1032, Standards for Discretionary Renewal, would be proposed as new §100.1039 and include a change to remove failure to operate a campus with at least 50% of students in tested grades as a standard for non-renewal of a charter. This change reflects the current practice of some campuses serving only early childhood grades that are not considered tested grades.

Section 100.1033, Charter Amendment, would be proposed as new §100.1035 and include reorganization of the text to eliminate duplicative and contradictory language. The following changes would also be made. The timeline for amendment submission would be updated from 18 to 36 months to reflect changes to statutory language. Language would clarify that expansion requests can be expedited expansion requests if charters meet the requirements in TEC, §12.101(b-4), or discretionary expansion requests if charters do not meet the expedited requirements. Geographic boundary would be eliminated as a type of expansion amendment request. Language would classify types of non-expansion requests as material non-expansion amendments with the charter holder receiving a commissioner decision with 60 calendar days of a completed amendment request or non-material non-expansion requests that allow the charter to proceed with the request 30 calendar days after the submission of a completed amendment request unless otherwise notified by the commissioner. These changes would be made to reflect current best practices for authorizing as well as feedback from stakeholders to improve the overall process for amending a charter.

Section 100.1035, Compliance Records on Nepotism, Conflicts of Interest, and Restrictions on Serving, would be proposed as new §100.1163 and include non-substantive technical edits; no content changes would be made.

Section 100.1041, State Funding, would be proposed as new §100.1061 and include clarification on statutory references on allowable and unallowable fees.

Section 100.1043, Status and Use of State Funds; Depository Contract, would be proposed as new §100.1063 with no changes to rule text.

Section 100.1045, Investment of State Funds, would be proposed as new §100.1065 and include non-substantive technical edits; no content changes would be made.

Section 100.1047, Accounting for State and Federal Funds, would be proposed as new §100.1067 and include non-substantive technical edits; no content changes would be made.

Section 100.1049, Disclosure of Campaign Contributions, would be proposed as new §100.1071 and include non-substantive technical edits; no content changes would be made.

Section 100.1050, Disclosure of Financial Information, would be proposed as new §100.1073 with no changes to rule text.

Section 100.1051, Audit by Commissioner; Records in the Possession of a Management Company, would be proposed as new §100.1075 with no changes to rule text.

Section 100.1052, Final Audit Upon Revocation, Surrender, or Closure of an Open-Enrollment Charter, would be proposed as new §100.1077 with no changes to rule text.

Section 100.1063, Use of Public Property by a Charter Holder, would be proposed as new §100.1091 with no changes to rule text.

Section 100.1065, Property Acquired with State Funds Received Before September 1, 2001--Special Rules, would be proposed as new §100.1093 and include non-substantive technical edits; no content changes would be made.

Section 100.1067, Possession and Control of the Public Property of a Former Charter Holder, would be proposed as new §100.1095 with no changes to rule text.

Section 100.1069, Rights and Duties Not Affected, would be proposed as new §100.1097 and include non-substantive technical edits; no content changes would be made.

Proposed new §100.1069, Disclosure of Related Party Transactions, would include requirements from TEC, §12.1166, which requires the commissioner to adopt a rule defining "related party."

Section 100.1071, Real Property Held in Trust, would be proposed as new §100.1099 and include non-substantive technical edits; no content changes would be made.

Section 100.1073, Improvements to Real Property, would be proposed as new §100.1101 and include non-substantive technical edits; no content changes would be made.

Section 100.1101, Delegation of Powers and Duties, would be proposed as new §100.1113 and move the non-delegable duties of board members and superintendents from another rule. This change would align the provisions with other information on governance powers and duties.

Section 100.1102, Training for Members of Governing Bodies of Charter Holder and School, would be proposed as new §100.1115, Training Requirements for Governing Board Members and Officers, and would add the opportunity for training to be provided online. This change would remove outdated language.

Section 100.1103, Training for Chief Executive and Central Administrative Officers, would be proposed as new §100.1117, Core Training for New Governing Board Members and Officers, and would clarify core training content for governance board members and officers under each training topic. This change would update curriculum training requirements to reflect current statute, rule, and best practice.

Section 100.1104, Training for Campus Administrative Officers, would be proposed as new §100.1119, Additional Training for New Governing Board Members and Officers, and would clarify additional training content for campus administrative officers under each training topic. This change would update curriculum training requirements to reflect current statute, rule, and best practice.

Section 100.1105, Training for Business Managers, would be proposed as new §100.1121, Continuing Training for Governing Board Members and Officers, and would outline continuing training content for governance board members and officers under each training topic. This change would update curriculum training requirements to reflect current statute, rule, and best practice.

Section 100.1106, Exemption for Participation in a Shared Services Cooperative, would be proposed as new §100.1123 with no changes to rule text.

Section 100.1107, Course Providers, would be proposed as new §100.1125, Training Providers, and would clarify that training for governance board members and officers must be provided by an authorized training provider; specify that training providers may be required to complete a charter training program prior to initial authorization as a trainer; and make initial authorization as a training provider effective for 24 months with re-registration available for a period of up to three years. These changes would help ensure that the individuals who train charter governing boards and charter officers have a deep understanding of the statutes, rules, and best practices associated with Texas charter schools.

Section 100.1108, Record of Compliance and Disclosure of Non-compliance, would be proposed as new §100.1127 and include non-substantive technical edits; no content changes would be made.

Section 100.1111, Applicability of Nepotism Provisions; Exception for Acceptable Performance, would be proposed as new §100.1131 and include non-substantive technical edits; no content changes would be made.

Section 100.1112, General Nepotism Provisions, would be proposed as new §100.1133 and include non-substantive technical edits; no content changes would be made.

Section 100.1113, Relationships By Consanguinity or By Affinity, would be proposed as new §100.1135 with no changes to rule text.

Section 100.1114, Nepotism Prohibitions, would be proposed as new §100.1137 and include non-substantive technical edits; no content changes would be made.

Section 100.1115, Nepotism Exceptions, would be proposed as new §100.1139 and include non-substantive technical edits; no content changes would be made.

Section 100.1116, Enforcement of Nepotism Prohibitions, would be proposed as new §100.1141 and include non-substantive technical edits; no content changes would be made.

Section 100.1131, Conflicts of Interest and Board Member Compensation; Exception, would be proposed as new §100.1143 and include non-substantive technical edits; no content changes would be made.

Section 100.1132, General Conflict of Interest Provisions, would be proposed as new §100.1145 and include non-substantive technical edits; no content changes would be made.

Section 100.1133, Conflicts Requiring Affidavit and Abstention From Voting, would be proposed as new §100.1147 with no changes to rule text.

Section 100.1134, Conflicts Requiring Separate Vote on Budget, would be proposed as new §100.1149 with no changes to rule text.

Section 100.1135, Acting as Surety and other Conflicts; Criminal Penalties, would be proposed as new §100.1151 and include non-substantive technical edits; no content changes would be made.

Section 100.1151, Criminal History; Restrictions on Serving, would be proposed as new §100.1153 and include non-substantive technical edits; no content changes would be made.

Section 100.1153, Substantial Interest in Management Company; Restrictions on Serving, would be proposed as new §100.1155 and include non-substantive technical edits; no content changes would be made.

Section 100.1155, Procedures for Prohibiting a Management Contract, would be proposed as new §100.1157 and align the process for review of proposed management contracts with the charter amendment process.

Section 100.1157, Loan from Management Company Prohibited, would be proposed as new §100.1159 and include non-substantive technical edits; no content changes would be made.

Section 100.1159, Public Records Maintained by Management Company; Contract Provision, would be proposed as new §100.1161 with no changes to rule text.

The proposed amendment to §100.1203, Records Management, would include non-substantive technical edits.

The proposed amendment to §100.1205, Procurement of Professional Services, would include non-substantive technical edits.

The proposed amendment to §100.1207, Student Admission, would include changes regarding the updated requirements of TEC, §12.1173, which requires the commissioner to adopt rules to implement charter school waiting lists for admission, including a common application form published by TEA.

The proposed amendment to §100.1209, Municipal Ordinances, would incorporate changes resulting from HB 1707, 88th Texas Legislature, Regular Session, 2023, by including notification to political subdivisions as required by TEC, §12.1058.

The proposed amendment to §100.1211, Students, would include an updated cross reference.

The proposed amendment to §100.1212, Personnel, would require charter schools to consult the do not hire registry prior to hiring and at least every three years thereafter.

The proposed amendment to §100.1213, Failure to Operate, would update provisions related to charter school dormancy and move information related to written notice of suspended operation to §100.1035.

Section 100.1217, Eligible Entity; Change in Status or Revocation, would be proposed as new §100.1055 with no changes to rule text.

FISCAL IMPACT: Kelvey Oeser, deputy commissioner for educator systems and support, has determined that for the first five-year period the proposal is in effect, there are no additional costs to state or local government, including school districts and open-enrollment charter schools, required to comply with the proposal.

LOCAL EMPLOYMENT IMPACT: The proposal has no effect on local economy; therefore, no local employment impact statement is required under Texas Government Code, §2001.022.

SMALL BUSINESS, MICROBUSINESS, AND RURAL COMMUNITY IMPACT: The proposal has no direct adverse economic impact for small businesses, microbusinesses, or rural communities; therefore, no regulatory flexibility analysis, specified in Texas Government Code, §2006.002, is required.

COST INCREASE TO REGULATED PERSONS: The proposal does not impose a cost on regulated persons, another state agency, a special district, or a local government and, therefore, is not subject to Texas Government Code, §2001.0045.

TAKINGS IMPACT ASSESSMENT: The proposal does not impose a burden on private real property and, therefore, does not constitute a taking under Texas Government Code, §2007.043.

GOVERNMENT GROWTH IMPACT: TEA staff prepared a Government Growth Impact Statement assessment for this proposed rulemaking. During the first five years the proposed rulemaking would be in effect, it would repeal existing regulations, create new regulations, and expand existing regulations to implement statute and reorganize the subchapter.

The proposed rulemaking would not create or eliminate a government program; would not require the creation of new employee positions or elimination of existing employee positions; would not require an increase or decrease in future legislative appropriations to the agency; would not require an increase or decrease in fees paid to the agency; would not limit existing regulations; would not increase or decrease the number of individuals subject to its applicability; and would not positively or adversely affect the state's economy.

PUBLIC BENEFIT AND COST TO PERSONS: Ms. Oeser has determined that for each year of the first five years the proposal is in effect, the public benefit anticipated as a result of enforcing the proposal would be to provide guidance for the administration of open-enrollment charter schools. As outlined in TEC, §12.001, the intention of charter schools is to improve student learning, increase the choice of learning opportunities, and encourage different learning models, which would provide a direct benefit to the public. There is no anticipated economic cost to persons who are required to comply with the proposal.

DATA AND REPORTING IMPACT: The proposal would have no data and reporting impact.

PRINCIPAL AND CLASSROOM TEACHER PAPERWORK REQUIREMENTS: TEA has determined that the proposal would not require a written report or other paperwork to be completed by a principal or classroom teacher.

PUBLIC COMMENTS: The public comment period on the proposal begins March 15, 2024, and ends April 15, 2024. A request for a public hearing on the proposal submitted under the Administrative Procedure Act must be received by the commissioner of education not more than 14 calendar days after notice of the proposal has been published in the Texas Register on March 15, 2024. A form for submitting public comments is available on the TEA website at https://tea.texas.gov/About_TEA/Laws_and_Rules/Commissioner_Rules_(TAC)/Proposed_Commissioner_of_Education_Rules/.

DIVISION 1. GENERAL PROVISIONS

19 TAC §§100.1001 - 100.1007, 100.1010, 100.1013, 100.1015, 100.1017, 100.1019

STATUTORY AUTHORITY. The repeals are proposed under Texas Education Code (TEC), §12.101, which requires the commissioner to adopt rules regarding the criteria for granting a charter and providing notification for the establishment of new charters or campuses; TEC, §12.1011, which requires the commissioner to adopt rules regarding charter authorization for high-performing entities; TEC, §12.103, which allows the commissioner to adopt rules regarding applicable provisions to open-enrollment charter schools; TEC, §12.104, as amended by House Bill (HB) 189, 87th Texas Legislature, Regular Session, 2021, which allows the commissioner to adopt rules permitting an open-enrollment charter school to voluntarily participate in any state program available to school districts if the school complies with all terms of the program; TEC, §12.1055, which allows the commissioner to adopt rules regarding nepotism under Texas Government Code, Chapter 573; TEC, §12.1058, as amended by HB 1707, 88th Texas Legislature, Regular Session, 2023, which requires a political subdivision to consider an open-enrollment charter school as a school district for the purposes of municipal ordinances if the open-enrollment charter school meets notification requirements; TEC, §12.110, which requires the commissioner to adopt an application form and procedure that must be used to apply for an open-enrollment charter school; TEC, §12.1101, which requires the commissioner to adopt a procedure for providing notice to the outlined persons on receipt by the commissioner of an application for a charter for an open-enrollment charter school or of notice of the establishment of a campus; TEC, §12.114, which allows the commissioner to define expansion amendment requests; TEC, §12.1141, as amended by Senate Bill (SB) 879, 87th Texas Legislature, Regular Session, 2021, which requires the commissioner to adopt a procedure for renewal, denial of renewal, or expiration of a charter for an open-enrollment charter school at the end of the term of the charter; TEC, §12.1166, which requires the commissioner to adopt a rule defining "related party;" TEC, §12.1173, as amended by SB 2293, 86th Texas Legislature, 2019, which requires the commissioner to adopt rules to implement charter school waiting lists for admission; TEC, §12.1181, requires the commissioner to adopt performance frameworks that establish standards by which to measure the performance of an open-enrollment charter school; TEC, §12.123, which requires the commissioner to adopt rules prescribing the training for members of the governing body of a charter school and its officers; TEC, §12.153, which allows the commissioner to adopt rules to implement college of university or junior college charter schools; TEC, §12.265, as amended by SB 1615, 87th Texas Legislature, Regular Session, 2021, which requires the commissioner to adopt rules necessary to administer adult high school charter school programs; and TEC, §39.0548, which requires the commissioner to authorize and determine designation as a dropout recovery school.

CROSS REFERENCE TO STATUTE. The repeals implement Texas Education Code, §§12.101; 12.1011; 12.103; 12.104, as amended by House Bill (HB) 189, 87th Texas Legislature, Regular Session, 2021; 12.1055; 12.1058, as amended by HB 1707, 88th Texas Legislature, Regular Session, 2023; 12.110; 12.1101; 12.114; 12.1141, as amended by Senate Bill (SB) 879, 87th Texas Legislature, Regular Session, 2021; 12.1166; 12.1173, as amended by SB 2293, 86th Texas Legislature, 2019; 12.1181; 12.123; 12.153; 12.265, as amended by SB 1615, 87th Texas Legislature, Regular Session, 2021; and 39.0548.

§100.1001.Definitions.

§100.1002.Application and Selection Procedures and Criteria.

§100.1003.Application to Dropout Recovery Charters.

§100.1004.Application to Public Senior College or University Charters and Public Junior College Charters.

§100.1005.Notification of Charter Application.

§100.1006.Optional Open-Enrollment Charter Provisions for Contracting and Purchasing.

§100.1007.Annual Report on Open-Enrollment Charter Governance.

§100.1010.Performance Frameworks.

§100.1013.Filing of Documents.

§100.1015.Applicants for an Open-Enrollment Charter, Public Senior College or University Charter, or Public Junior College Charter.

§100.1017.Application of Law and Rules to Public Senior College or University Charters and Public Junior College Charters.

§100.1019.Application to Adult High School Charters.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on March 4, 2024.

TRD-202400941

Cristina De La Fuente-Valadez

Director, Rulemaking

Texas Education Agency

Earliest possible date of adoption: April 14, 2024

For further information, please call: (512) 475-1497

DIVISION 2. COMMISSIONER ACTION AND INTERVENTION

19 TAC §§100.1021 - 100.1023, 100.1025 - 100.1027, 100.1029, 100.1031 - 100.1033, 100.1035

§100.1021.Revocation and Modification of Governance of an Open-Enrollment Charter.

§100.1022.Standards to Revoke and Modify the Governance of an Open-Enrollment Charter.

§100.1023.Intervention Based on Charter Violations.

§100.1025.Intervention Based on Health, Safety, or Welfare of Students.

§100.1026.Management of Charter Campus(es) Following Revocation, Surrender, or Expiration.

§100.1027.Accountability Ratings and Sanctions.

§100.1029.Agency Audits, Monitoring, and Investigations.

§100.1031.Renewal of an Open-Enrollment Charter.

§100.1032.Standards for Discretionary Renewal.

§100.1033.Charter Amendment.

§100.1035.Compliance Records on Nepotism, Conflicts of Interest, and Restrictions on Serving.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on March 4, 2024.

TRD-202400943

Cristina De La Fuente-Valadez

Director, Rulemaking

Texas Education Agency

Earliest possible date of adoption: April 14, 2024

For further information, please call: (512) 475-1497

DIVISION 3. CHARTER SCHOOL FUNDING AND FINANCIAL OPERATIONS

19 TAC §§100.1041, 100.1043, 100.1045, 100.1047, 100.1049 - 100.1052

§100.1041.State Funding.

§100.1043.Status and Use of State Funds; Depository Contract.

§100.1045.Investment of State Funds.

§100.1047.Accounting for State and Federal Funds.

§100.1049.Disclosure of Campaign Contributions.

§100.1050.Disclosure of Financial Information.

§100.1051.Audit by Commissioner; Records in the Possession of a Management Company.

§100.1052.Final Audit Upon Revocation, Surrender, or Closure of an Open-Enrollment Charter.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on March 4, 2024.

TRD-202400945

Cristina De La Fuente-Valadez

Director, Rulemaking

Texas Education Agency

Earliest possible date of adoption: April 14, 2024

For further information, please call: (512) 475-1497

DIVISION 4. PROPERTY OF OPEN-ENROLLMENT CHARTER SCHOOLS

19 TAC §§100.1063, 100.1065, 100.1067, 100.1069, 100.1071, 100.1073

§100.1063.Use of Public Property by a Charter Holder.

§100.1065.Property Acquired with State Funds Received Before September 1, 2001--Special Rules.

§100.1067.Possession and Control of the Public Property of a Former Charter Holder.

§100.1069.Rights and Duties Not Affected.

§100.1071.Real Property Held in Trust.

§100.1073.Improvements to Real Property.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on March 4, 2024.

TRD-202400947

Cristina De La Fuente-Valadez

Director, Rulemaking

Texas Education Agency

Earliest possible date of adoption: April 14, 2024

For further information, please call: (512) 475-1497

DIVISION 5. CHARTER SCHOOL GOVERNANCE

19 TAC §§100.1101 - 100.1108, 100.1111 - 100.1116, 100.1131 - 100.1135, 100.1151, 100.1153, 100.1155, 100.1157, 100.1159

§100.1101.Delegation of Powers and Duties.

§100.1102.Training for Members of Governing Bodies of Charter Holder and School.

§100.1103.Training for Chief Executive and Central Administrative Officers.

§100.1104.Training for Campus Administrative Officers.

§100.1105.Training for Business Managers.

§100.1106.Exemption for Participation in a Shared Services Cooperative.

§100.1107.Course Providers.

§100.1108.Record of Compliance and Disclosure of Non-compliance.

§100.1111.Applicability of Nepotism Provisions; Exception for Acceptable Performance.

§100.1112.General Nepotism Provisions.

§100.1113.Relationships By Consanguinity or By Affinity.

§100.1114.Nepotism Prohibitions.

§100.1115.Nepotism Exceptions.

§100.1116.Enforcement of Nepotism Prohibitions.

§100.1131.Conflicts of Interest and Board Member Compensation; Exception.

§100.1132.General Conflict of Interest Provisions.

§100.1133.Conflicts Requiring Affidavit and Abstention From Voting.

§100.1134.Conflicts Requiring Separate Vote on Budget.

§100.1135.Acting as Surety and other Conflicts; Criminal Penalties.

§100.1151.Criminal History; Restrictions on Serving.

§100.1153.Substantial Interest in Management Company; Restrictions on Serving.

§100.1155.Procedures for Prohibiting a Management Contract.

§100.1157.Loan from Management Company Prohibited.

§100.1159.Public Records Maintained by Management Company; Contract Provision.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on March 4, 2024.

TRD-202400950

Cristina De La Fuente-Valadez

Director, Rulemaking

Texas Education Agency

Earliest possible date of adoption: April 14, 2024

For further information, please call: (512) 475-1497

DIVISION 6. CHARTER SCHOOL OPERATIONS

19 TAC §100.1217

STATUTORY AUTHORITY. The repeal is proposed under Texas Education Code (TEC), §12.101, which requires the commissioner to adopt rules regarding the criteria for granting a charter and providing notification for the establishment of new charters or campuses; TEC, §12.1011, which requires the commissioner to adopt rules regarding charter authorization for high-performing entities; TEC, §12.103, which allows the commissioner to adopt rules regarding applicable provisions to open-enrollment charter schools; TEC, §12.104, as amended by House Bill (HB) 189, 87th Texas Legislature, Regular Session, 2021, which allows the commissioner to adopt rules permitting an open-enrollment charter school to voluntarily participate in any state program available to school districts if the school complies with all terms of the program; TEC, §12.1055, which allows the commissioner to adopt rules regarding nepotism under Texas Government Code, Chapter 573; TEC, §12.1058, as amended by HB 1707, 88th Texas Legislature, Regular Session, 2023, which requires a political subdivision to consider an open-enrollment charter school as a school district for the purposes of municipal ordinances if the open-enrollment charter school meets notification requirements; TEC, §12.110, which requires the commissioner to adopt an application form and procedure that must be used to apply for an open-enrollment charter school; TEC, §12.1101, which requires the commissioner to adopt a procedure for providing notice to the outlined persons on receipt by the commissioner of an application for a charter for an open-enrollment charter school or of notice of the establishment of a campus; TEC, §12.114, which allows the commissioner to define expansion amendment requests; TEC, §12.1141, as amended by Senate Bill (SB) 879, 87th Texas Legislature, Regular Session, 2021, which requires the commissioner to adopt a procedure for renewal, denial of renewal, or expiration of a charter for an open-enrollment charter school at the end of the term of the charter; TEC, §12.1166, which requires the commissioner to adopt a rule defining "related party;" TEC, §12.1173, as amended by SB 2293, 86th Texas Legislature, 2019, which requires the commissioner to adopt rules to implement charter school waiting lists for admission; TEC, §12.1181, requires the commissioner to adopt performance frameworks that establish standards by which to measure the performance of an open-enrollment charter school; TEC, §12.123, which requires the commissioner to adopt rules prescribing the training for members of the governing body of a charter school and its officers; TEC, §12.153, which allows the commissioner to adopt rules to implement college of university or junior college charter schools; TEC, §12.265, as amended by SB 1615, 87th Texas Legislature, Regular Session, 2021, which requires the commissioner to adopt rules necessary to administer adult high school charter school programs; and TEC, §39.0548, which requires the commissioner to authorize and determine designation as a dropout recovery school.

CROSS REFERENCE TO STATUTE. The repeal implements Texas Education Code, §§12.101; 12.1011; 12.103; 12.104, as amended by House Bill (HB) 189, 87th Texas Legislature, Regular Session, 2021; 12.1055; 12.1058, as amended by HB 1707, 88th Texas Legislature, Regular Session, 2023; 12.110; 12.1101; 12.114; 12.1141, as amended by Senate Bill (SB) 879, 87th Texas Legislature, Regular Session, 2021; 12.1166; 12.1173, as amended by SB 2293, 86th Texas Legislature, 2019; 12.1181; 12.123; 12.153; 12.265, as amended by SB 1615, 87th Texas Legislature, Regular Session, 2021; and 39.0548.

§100.1217.Eligible Entity; Change in Status or Revocation.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on March 4, 2024.

TRD-202400952

Cristina De La Fuente-Valadez

Director, Rulemaking

Texas Education Agency

Earliest possible date of adoption: April 14, 2024

For further information, please call: (512) 475-1497

DIVISION 1. GENERAL PROVISIONS

19 TAC §100.1001, §100.1003

STATUTORY AUTHORITY. The new sections are proposed under Texas Education Code (TEC), §12.101, which requires the commissioner to adopt rules regarding the criteria for granting a charter and providing notification for the establishment of new charters or campuses; TEC, §12.1011, which requires the commissioner to adopt rules regarding charter authorization for high-performing entities; TEC, §12.103, which allows the commissioner to adopt rules regarding applicable provisions to open-enrollment charter schools; TEC, §12.104, as amended by House Bill (HB) 189, 87th Texas Legislature, Regular Session, 2021, which allows the commissioner to adopt rules permitting an open-enrollment charter school to voluntarily participate in any state program available to school districts if the school complies with all terms of the program; TEC, §12.1055, which allows the commissioner to adopt rules regarding nepotism under Texas Government Code, Chapter 573; TEC, §12.1058, as amended by HB 1707, 88th Texas Legislature, Regular Session, 2023, which requires a political subdivision to consider an open-enrollment charter school as a school district for the purposes of municipal ordinances if the open-enrollment charter school meets notification requirements; TEC, §12.110, which requires the commissioner to adopt an application form and procedure that must be used to apply for an open-enrollment charter school; TEC, §12.1101, which requires the commissioner to adopt a procedure for providing notice to the outlined persons on receipt by the commissioner of an application for a charter for an open-enrollment charter school or of notice of the establishment of a campus; TEC, §12.114, which allows the commissioner to define expansion amendment requests; TEC, §12.1141, as amended by Senate Bill (SB) 879, 87th Texas Legislature, Regular Session, 2021, which requires the commissioner to adopt a procedure for renewal, denial of renewal, or expiration of a charter for an open-enrollment charter school at the end of the term of the charter; TEC, §12.1166, which requires the commissioner to adopt a rule defining "related party;" TEC, §12.1173, as amended by SB 2293, 86th Texas Legislature, 2019, which requires the commissioner to adopt rules to implement charter school waiting lists for admission; TEC, §12.1181, requires the commissioner to adopt performance frameworks that establish standards by which to measure the performance of an open-enrollment charter school; TEC, §12.123, which requires the commissioner to adopt rules prescribing the training for members of the governing body of a charter school and its officers; TEC, §12.153, which allows the commissioner to adopt rules to implement college of university or junior college charter schools; TEC, §12.265, as amended by SB 1615, 87th Texas Legislature, Regular Session, 2021, which requires the commissioner to adopt rules necessary to administer adult high school charter school programs; and TEC, §39.0548, which requires the commissioner to authorize and determine designation as a dropout recovery school.

CROSS REFERENCE TO STATUTE. The new sections implement Texas Education Code, §§12.101; 12.1011; 12.103; 12.104, as amended by House Bill (HB) 189, 87th Texas Legislature, Regular Session, 2021; 12.1055; 12.1058, as amended by HB 1707, 88th Texas Legislature, Regular Session, 2023; 12.110; 12.1101; 12.114; 12.1141, as amended by Senate Bill (SB) 879, 87th Texas Legislature, Regular Session, 2021; 12.1166; 12.1173, as amended by SB 2293, 86th Texas Legislature, 2019; 12.1181; 12.123; 12.153; 12.265, as amended by SB 1615, 87th Texas Legislature, Regular Session, 2021; and 39.0548.

§100.1001.Definitions.

The following words and terms, when used in this subchapter, have the following meaning, unless the context clearly indicates otherwise.

(1) Business manager--A person charged with managing the finances of a charter holder or charter school.

(2) Campus administration officer--A person charged with the duties of, or acting as, a principal or assistant principal of a charter school campus, including one or more of the following functions:

(A) approving teacher or staff appointments for a charter school campus, unless this function is performed by a central administration officer under the terms of the open-enrollment charter;

(B) setting specific education objectives for a charter school campus, unless this function is performed by a central administration officer under the terms of the open-enrollment charter;

(C) developing budgets for a charter school campus, unless this function is performed by a central administration officer under the terms of the open-enrollment charter;

(D) assuming the administrative responsibility or instructional leadership, under the supervision of a central administration officer, for discipline at a charter school campus;

(E) assigning, evaluating, or promoting personnel assigned to a charter school campus, unless this function is performed by a central administration officer under the terms of the open-enrollment charter; or

(F) recommending to a central administration officer the termination or suspension of an employee assigned to a charter school campus, or recommending the non-renewal of a term contract of such an employee.

(3) Capitalized personal property, fixed assets, ownership interest, cost basis, accumulated depreciation, loan, debt, credit, and fair market valuation--The definitions of these terms are as assigned either by §109.41 of this title (relating to Financial Accountability System Resource Guide) and/or by generally accepted accounting principles.

(4) Central administration officer--A person charged with the duties of, or acting as, a chief operating officer, director, or assistant director of a charter holder or charter school, including one or more of the following functions:

(A) assuming administrative responsibility and leadership for the planning, operation, supervision, or evaluation of the education programs, services, or facilities of a charter holder or charter school, or for appraising the performance of the charter holder's or charter school's staff;

(B) assuming administrative authority or responsibility for the assignment or evaluation of any of the personnel of the charter holder or charter school, including those employed by a management company;

(C) making recommendations to the governing body of the charter holder or the charter school regarding the selection of personnel of the charter holder or charter school, including those employed by a management company;

(D) recommending the termination, non-renewal, or suspension of an employee or officer of the charter holder or charter school, including those employed by a management company; or recommending the termination, non-renewal, suspension, or other action affecting a management contract;

(E) managing the day-to-day operations of the charter holder or charter school as its administrative manager;

(F) preparing or submitting a proposed budget to the governing body of the charter holder or charter school (except for developing budgets for a charter school campus, if this is a function performed by a campus administration officer under the terms of the open-enrollment charter);

(G) preparing recommendations for policies to be adopted by the governing body of the charter holder or charter school, or overseeing the implementation of adopted policies, except for legal services provided by an attorney licensed to practice law in this state or public accountancy services provided by a certified public accountant licensed to practice public accountancy services in this state;

(H) developing or causing to be developed appropriate administrative regulations to implement policies established by the governing body of the charter holder or charter school, except for legal services provided by an attorney licensed to practice law in this state or public accountancy services provided by a certified public accountant licensed to practice public accountancy services in this state;

(I) providing leadership for the attainment of student performance in a charter school operated by the charter holder, based on the indicators adopted under Texas Education Code (TEC), §39.053 and §39.054, or other indicators adopted by the charter holder in its open-enrollment charter; or

(J) organizing the central administration of the charter holder or charter school.

(5) Charter holder, governing body of a charter holder, and governing body of a charter school--The definitions of these terms are assigned in TEC, §12.1012. The charter holder shall reference an entity authorized by one or more of the following:

(A)TEC, Chapter 12, Subchapter D--An eligible entity as defined in TEC, §12.101, that is authorized to operate an open-enrollment charter school;

(B) TEC, Chapter 12, Subchapter E--A public junior college, senior college, or university as defined in TEC, §61.003, that is authorized to operate an open-enrollment charter school; or

(C) TEC, Chapter 12, Subchapter G--An eligible entity as defined in TEC, §12.256, that is authorized to operate an open-enrollment charter school for adults ages 18-50.

(6) Charter school--A Texas public school operated by a charter holder under an open-enrollment charter contract granted either by the State Board of Education (SBOE) or commissioner of education, whichever is applicable, pursuant to TEC, §12.101, identified with its own county district number.

(A) An "employee of a charter school," as used in this subchapter, means a person paid to work at a charter school under the direction and control of an officer of a charter school, regardless of whether the person is on the payroll of the charter holder, a charter school operated by the charter holder, a management company providing management services to the charter holder, or any other person.

(B) A charter school "campus," as used in this subchapter, means an organizational unit of a charter school determined by the Texas Education Agency (TEA) to be an instructional campus for purposes of data collection and reporting. A campus may be a single site or may include multiple sites as described in subparagraph (C) of this paragraph.

(C) A charter school "site," as used in this subchapter, means an organizational unit of a charter school with administrative personnel identified by a separate street address within 25 miles of the campus with which it is associated and fully described in the open-enrollment charter. A "site" must be approved for instructional use either in the original open-enrollment charter as granted by the SBOE or commissioner or in an amendment granted under §100.1035 of this title (relating to Charter Amendment).

(D) A charter school "facility," as used in this subchapter, means a building located on the same contiguous land as the campus with which it is associated or within one mile of the campus. The facility and its associated address must be approved for instructional use through the submission of a certificate of occupancy to the commissioner prior to serving students in said facility.

(7) Chief executive officer--A person (or persons) directly responsible to the governing body of the charter holder for supervising one or more central administration officers, campus administration officers, and/or business managers.

(8) Determination of academic accountability--The process used to determine the applicable year's accountability ratings to measure the academic performance of a charter.

(A) For the purposes of this chapter, the term "academically acceptable" for the following rating years shall mean:

(i) 2004-2011: the category of acceptable performance shall include a rating of Exemplary, Recognized, Academically Acceptable, and alternative education accountability (AEA): Academically Acceptable;

(ii) 2013-2016: the category of acceptable performance shall include a rating of Met Standard and Met Alternative Standard; and

(iii) 2017 and beyond: the category of acceptable performance shall include a grade of A, B, or C, or as otherwise indicated in the applicable year's academic accountability manual.

(B) For purposes of determination, an academic performance rating during the 2011-2012 school year will not be considered.

(C) For the purposes of this chapter, the term "academically unacceptable" performance means a rating of Academically Unacceptable, AEA: Academically Unacceptable, Improvement Required, or Unacceptable Performance or as otherwise indicated in the applicable year's academic accountability manual.

(D) If academic ratings are not issued for any reason, scaled scores may be used to determine "academically acceptable" and "academically unacceptable" performance.

(9) Determination of financial accountability--The process used to determine the applicable year's Financial Integrity Rating System of Texas (FIRST) rating to measure the financial performance of a charter.

(A) For purposes of this chapter, a satisfactory rating shall mean: Superior Achievement, Above Standard Achievement, or Standard Achievement.

(B) For the purposes of this chapter, a lower than satisfactory financial performance rating shall mean a FIRST rating of Substandard Achievement, Suspended: Data Integrity, or as otherwise indicated in the applicable year's financial accountability manual.

(10) Donate--Services are donated if:

(A) given free of any charge, cost, fee, compensation, reimbursement, remuneration, or any other thing of value or consideration, whether direct or indirect, from the donee to the donor, or from any other person or entity to the donor on behalf of the donee;

(B) given free of any condition, stipulation, promise, requirement, or any other obligation, whether direct or indirect, enforceable by the donor or by any other person or entity; and

(C) separately and clearly recorded in the accounting, auditing, budgeting, reporting, and recordkeeping systems for the management and operation of the charter school.

(11) Employee of a charter holder--A charter holder employee who engages in no charter school activity, is not compensated with public funds, and is not an officer of any charter school.

(12) Former charter holder--An entity that is or was a charter holder, but that has ceased to operate a charter school because its open-enrollment charter has been revoked, surrendered, abandoned, or denied renewal, or because all programs have been ordered closed under TEC, Chapter 39.

(A) A charter holder whose authority to operate has been suspended under TEC, §12.1162, is not a former charter holder.

(B) A charter holder with more than one open-enrollment charter is a former charter holder only with respect to the open-enrollment charter that authorizes a charter school that has ceased to operate. The charter holder is not a former charter holder with respect to an open-enrollment charter that authorizes a charter school that continues to operate.

(C) A charter holder who was eligible for high quality designation under §100.1035 of this title immediately prior to ceasing to operate that has surrendered its charter, provided that there was no settlement agreement requiring closure or a required closure under TEC, Chapter 39. A former charter holder that has relinquished its charter is not subject to the prohibitions in TEC, §12.101(b), or §100.1017 of this title (relating to Applicant Eligibility and Form Contents).

(13) High-performing entity--An entity that satisfies the criteria under TEC, §12.1011(a)(1), for out-of-state operations or an entity that satisfies the criteria for TEC, §12.1011(a)(2), for in-state operations that meets the performance criteria for the most recent rating years available.

(14) Lease interest--The legal rights obtained under a capital or operating lease. These include the right to occupy, use, and enjoy the real estate given by the property owner in exchange for rental payments or other consideration specified in the lease, together with any associated rights that the lease confers on the tenant under the lease or other law.

(15) Management company--A natural person or a corporation, partnership, sole proprietor, association, agency, or other legal entity that provides any management services to a charter holder or charter school, except that:

(A) a charter holder and its employees may provide management services to a charter school that is under the charter holder's supervision and control pursuant to the open-enrollment charter, and such charter holder is not thereby a management company;

(B) a nonprofit corporation that is exempt from taxation under 26 United States Code (U.S.C.), §501(c)(3), may donate management services to a charter holder, and the donor corporation is not thereby a management company if the donee charter holder is a subsidiary corporation controlled by the donor corporation under the articles of incorporation and bylaws of the donee charter holder;

(C) a regional education service center providing services to a charter school under TEC, Chapter 8, is not a management company;

(D) the fiscal agent of a shared services cooperative providing services to a member of the shared services cooperative is not a management company; and

(E) a nonprofit corporation that is exempt from taxation under 26 U.S.C., §115, is not a management company if it performs management services exclusively for a charter holder that is an eligible entity under TEC, §12.101(a)(1) or (4) or §12.152, and if:

(i) its articles of incorporation and bylaws, and any changes thereto, must be approved by such charter holder;

(ii) its board of directors must be appointed by such charter holder; and

(iii) its assets become the property of such charter holder upon dissolution.

(16) Management company breach--An action or failure to act by a management company that is contrary to a duty owed under a management contract, a rule adopted under TEC, Chapter 12, Subchapter D, or any other legal obligation, and constitutes sufficient grounds for action against the management company under TEC, §12.127 (Liability of Management Company), and/or §100.1157 of this title (relating to Procedures for Prohibiting a Management Contract). Where a provision in this subchapter uses this term, such use is for clarity and emphasis only and does not:

(A) establish that any breach of a duty occurred in a given case or what sanction is appropriate under the facts of that case; or

(B) imply that any other provision where the term is not used is not material or less important, or that the breach of a duty imposed by the provision is not grounds for action against the management company.

(17) Management services--Services related to the management or operation of a charter school. Management services include any of the following:

(A) planning, operating, supervising, or evaluating a charter school's educational programs, services, or facilities;

(B) making recommendations to the governing body of a charter holder or charter school relating to the selection of school personnel;

(D) preparing a proposed budget or budget amendments or submitting it to the governing body of a charter holder or charter school;

(E) recommending policies to be adopted by the governing body of a charter holder or charter school, except that legal services provided by an attorney licensed to practice law in this state, and public accountancy services provided by a certified public accountant licensed to practice public accountancy services in this state, are not management services, notwithstanding that such services may include recommending policies to be adopted by the governing body of a charter holder or charter school;

(F) developing procedures or practices to implement policies adopted by the governing body of a charter holder or charter school, except that legal services by an attorney licensed to practice law in this state and public accountancy services provided by a certified public accountant licensed to practice public accountancy services in this state are not management services, notwithstanding that such services may include developing procedures or practices to implement policies adopted by the governing body of a charter holder or charter school;

(G) overseeing the implementation of policies adopted by the governing body of a charter holder or charter school; or

(H) providing leadership for the attainment of student performance at a charter school based on the indicators adopted under TEC, §39.053 and §39.054, or adopted by the governing body of a charter holder or charter school.

(18) Material charter violation--An action or failure to act by a charter holder that is contrary to the terms of its open-enrollment charter and constitutes sufficient grounds for action against the charter holder under §§100.1049, 100.1045, 100.1047, and/or 100.1037 of this title (relating to Revocation and Modification of Governance of an Open-Enrollment Charter; Intervention Based on Charter Violations; Intervention Based on Health, Safety, or Welfare of Students; and Renewal of an Open-Enrollment Charter).

(19) Misuse or misapplication of funds or property--A use of state funds or public property that is contrary to:

(A) the open-enrollment charter under which a charter holder holds the funds or property;

(B) an agreement under which an employee or contractor holds the funds or property;

(C) a law, regulation, or rule that prescribes the manner of acquisition, sale, lease, custody, or disposition of the funds or property, including, but not limited to, violations of Local Government Code, §§171.002-171.007 and Chapter 271, Subchapter B, and TEC, §12.1053 and §12.1054, unless otherwise stated in the charter contract;

(D) a limited purpose for which the funds or property is delivered or received; or

(E) the use authorized by the governing body of the charter holder.

(20) Officer of a charter school--A person charged with the duties of, or acting as, a chief executive officer, a central administration officer, a campus administration officer, or a business manager, regardless whether the person is an employee or contractor of a charter holder, charter school, management company, or any other person; or a volunteer working under the direction of a charter holder, charter school, or management company. A charter holder employee or independent contractor engaged solely in non-charter activities for the charter holder is not an "officer of a charter school."

(21) Open-enrollment charter--A charter holder's authorization to operate a publicly funded charter school consistent with TEC, §12.102 (Authority Under Charter). The terms of an open-enrollment charter include:

(A) the applicable contract for charter ("charter contract") between the charter holder and the SBOE or commissioner of education;

(B) all applicable state and federal laws, rules, and regulations;

(C) the request for application issued by TEA to which the charter holder's application for open-enrollment charter responds;

(D) any condition, amendment, modification, revision, or other change to the open-enrollment charter adopted or ratified by the SBOE or the commissioner; and

(E) to the extent they are consistent with subparagraphs (A)-(D) of this paragraph, all statements, assurances, written submissions, commitments, and/or representations made by the charter holder in writing in its application for charter, attachments, or related documents or orally during its interview with the commissioner or commissioner's designee or orally at a public meeting of the SBOE or any of its committees.

(22) Personal property--An interest in personal property recognized by Texas law, including:

(A) furniture, equipment, supplies, and other goods;

(B) computer hardware and software;

(D) cash, currency, funds, bank accounts, securities, and other investment instruments;

(E) the right to repayment of a loan, advance, or prepayment or to the payment of other receivables; and

(F) any other form of personal property recognized by Texas law.

(23) Property acquired, improved, or maintained using state funds--Property for which the title, control over the property, use of the property, or benefit from the property is obtained directly or indirectly through expenditure of or control over state funds. This includes property acquired, improved, or maintained through a management company under a contract for management services, and includes the proceeds of loans, credit, or other financing that:

(A) is secured with state funds, or with property acquired, improved, or maintained using state funds; or

(B) is extended, in whole or part, based on the charter holder's control over state funds.

(24) Real estate--An interest, including a lease interest, in real property recognized by Texas law or in improvements such as buildings, fixtures, utilities, landscaping, construction in progress, or other improvements.

(25) Related party transaction--Includes a transaction between the charter holder or charter school and:

(A) a person who is:

(i) a current or former (within the last five years) board member for the charter holder or the charter school;

(ii) a current or former (within the last five years) administrator for the charter holder or the charter school;

(iii) a current officer of a charter school;

(iv) a person who is related to a person described in clauses (i)-(iii) of this subparagraph within the third degree of consanguinity or second degree of affinity, as determined under Texas Government Code, Chapter 573;

(v) a person who within the last five years ending on the date of the transaction was in a position to exercise substantial influence over the organization including any "disqualified person" as defined under Internal Revenue Code (IRC), §4958, or Treasury Regulation 26 CFR §53.4958-3;

(vi) a family member of a person described in clause (v) of this subparagraph, which includes:

(I) the person's spouse or ancestor; or

(II) the person's children, grandchildren, great grandchildren, siblings, half-siblings, and their spouses;

(vii) any person described in clause (v) or (vi) of this subparagraph with respect to an organization described in IRC, §509(a)(3), that was organized and operated exclusively for the benefit of, to perform the functions of, or to carry out the purposes of the charter holder; or

(viii) any person who is a donor or donor advisor;

(B) an entity that:

(i) is related to the charter holder;

(ii) is participating in a joint venture with the charter holder;

(iii) is jointly governed with the charter holder;

(iv) has a current or former (within last five years) board member, administrator, or officer who is either:

(I) a current board member, administrator or officer of the charter holder or charter school; or

(II) related to within the third degree of consanguinity or second degree of affinity of a person described in clause (i) of this subparagraph as determined under Texas Government Code, Chapter 573;

(v) is more than 35% controlled by individuals described in subparagraph (A)(v) and (vi) of this paragraph, including:

(I) a corporation in which such persons own more than 35% of the total combined voting power;

(II) a partnership in which such persons own more than 35% of the profits interest;

(III) a trust or estate in which such persons own more than 35% of the beneficial interest; or

(IV) for purposes of this subsection, an entity for which the constructive ownership rules of IRC, §4946(a)(3) and (a)(4), apply; or

(vi) any entity that is described in IRC, §509(a)(3), that:

(I) is organized and operated exclusively for the benefit of, to perform the functions of, or to carry out the purposes of the charter holder; and

(II) meets the control test in clause (v) of this subparagraph;

(C) a donor-advised fund if a donor (or any person appointed or designated by such donor) has, or reasonably expects to have, advisory privileges with respect to the distribution or investment of amounts held in such fund or account by reason of the donor's status as a donor;

(D) any person or entity associated with the section regarding sponsoring entity;

(E) a lender providing secured or unsecured debt to the charter holder or charter school other than bonds or tax-exempt facility financing, for any transaction other than the loan or note agreement; or

(F) a major donor to the charter holder or charter school under a written grant agreement or other contract, for any transaction with the donor other than the written grant agreement.

(26) Shared services cooperative or shared services arrangement--A contractual arrangement among charter holders or between a charter holder(s) and other Texas governmental entities, through which one member of the cooperative, acting as the fiscal and administrative agent for the other members, provides educational services, operational services and/or management services to member charter holders under a written contract executed by each member. A contract establishing a shared services cooperative must at a minimum:

(A) establish clear procedures for administering services under the direction and control of the cooperative and for assigning responsibility for all costs and liabilities associated with services provided under the contract;

(B) establish the duties, responsibilities, and accountability of the fiscal agent and of each member for services provided under the contract;

(C) establish clear procedures for withdrawal of a member from the agreement and for the dissolution and winding up of the affairs of the cooperative; and

(D) be approved in writing by the commissioner before any services are provided.

(27) State funds--Funds received by the charter holder under TEC, §12.106, and any grant or discretionary funds received through or administered by TEA, including all federal funds. The rules in this division apply to property acquired, improved, or maintained with federal funds to the extent that such application is consistent with applicable federal law or regulations.

(28) State funds received before September 1, 2001--State funds are received before September 1, 2001, if the Texas Comptroller of Public Accounts issued a warrant for such funds before that date, or if an electronic transfer of such funds was made before that date.

(29) State funds received on or after September 1, 2001--State funds are received on or after September 1, 2001, if the Texas Comptroller of Public Accounts issues a warrant for such funds on or after that date, or if an electronic transfer of such funds is made on or after that date.

§100.1003.Filing of Documents.

The following provisions apply to a document filed with the Texas Education Agency (TEA) under a provision of this subchapter. Grant applications and other documents filed with TEA under provisions other than this subchapter are governed by the filing rules specific to those documents.

(1) Hand delivery. A document shall be deemed filed only when stamped received by the receiving division of TEA. A document stamped received after 5:00 p.m. Central Time (CT) shall be deemed filed on the following business day.

(2) Mail or courier. A document may be filed by mail if sent by certified United States mail, return receipt requested, or by an overnight courier service. A document shall be deemed timely filed if it is mailed on the filing deadline, as evidenced by a legible postmark placed on the envelope by the United States Postal Service or date provided by courier service, and the document is stamped received by the receiving division by 5:00 p.m. CT on the fifth business day following the filing deadline.

(3) Facsimile transmission. Where facsimile transmission is permitted by the receiving division, the following provisions apply.

(A) Facsimile transmission of a document via telecopier to the receiving division constitutes filing if received in legible form. Filing by facsimile completed after 5:00 p.m. CT shall be deemed filed on the following business day.

(B) If the document requires an original signature or must be an original under applicable rules, then facsimile transmission constitutes filing only if, by 5:00 p.m. on the tenth calendar day following the filing deadline, the original is stamped received by the receiving division.

(4) Electronic transmission. Where electronic transmission is permitted by the receiving division, the following provisions apply.

(A) Electronic transmission of a document shall constitute electronic mail, secure file sharing, or any other digital exchange of information.

(B) An electronic document shall be deemed timely filed if it is received on the filing deadline, as evidenced by an electronic time stamp. Filing by electronic transmission received after 5:00 p.m. CT shall be deemed filed on the following business day.

(5) Receiving division. The receiving division is the division of TEA specified by any rule in Part 2 of this title (relating to Texas Education Agency), requiring that a document be filed with TEA. If a rule does not specify a division, the receiving division is the TEA division responsible for charter schools.

(6) Misdirected filing. A document sent to a division other than the receiving division shall not be deemed filed unless and until received by the receiving division. It shall not be the responsibility of any division to timely redirect a document sent to a division other than the receiving division.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on March 4, 2024.

TRD-202400942

Cristina De La Fuente-Valadez

Director, Rulemaking

Texas Education Agency

Earliest possible date of adoption: April 14, 2024

For further information, please call: (512) 475-1497

DIVISION 2. APPLICATION [~~COMMISSIONER ACTION~~] AND SELECTION PROCESS [~~INTERVENTION~~]

19 TAC §§100.1011, 100.1013, 100.1015, 100.1017, 100.1021, 100.1023, 100.1025

§100.1011.Application Requirements and Selection Process.

(a) Except as expressly provided in the rules in this subchapter, provisions in this section apply to applications affiliated and published under the following Texas Education Code (TEC) subchapters:

(1) TEC, Chapter 12, Subchapter D;

(2) TEC, Chapter 12, Subchapter E; and

(3) TEC, Chapter 12, Subchapter G.

(b) Prior to each application cycle, the commissioner of education shall approve an application form for submission by new and returning applicants seeking to operate a high quality open-enrollment charter school. The application form shall address the content requirements specified in TEC, §12.111, for the Subchapter D form; TEC, §12.154, for the Subchapter E form; and TEC, §12.257, for the Subchapter G form, and contain the following:

(1) the timeline for selection;

(2) applicant conferences and training prerequisites;

(3) scoring criteria and procedures for use by the review panel selected under subsection (d) of this section;

(4) the minimum score necessary for an application to be eligible for capacity interview; and

(5) the earliest date an open-enrollment charter school selected in the cycle may open.

(1) No applicant will be considered if it meets either of the conditions in the following subparagraphs. This paragraph does not apply to an applicant that has previously relinquished a charter, under the circumstances described in §100.1001(12)(C) of this title (relating to Definitions).

(A) Within the preceding 10 years, the applicant had a charter under Texas law or similar charter under the laws of another state surrendered under a settlement agreement, revoked, denied renewal, or returned.

(B) The applicant is considered to be a corporate affiliate of, or substantially related to, an entity that within the preceding 10 years, had a charter under Texas law or similar charter under the laws of another state surrendered under a settlement agreement, revoked, denied renewal, or returned.

(2) The commissioner of education may not grant more than one charter for an open-enrollment charter school to any charter holder.

(3) Upon receipt, TEA shall review applications for completeness and provide each applicant with a notice that documents the status of each requirement as complete or incomplete.

(A) TEA shall remove applications without further processing if documents are:

(i) received after the submission deadline as provided in the request for application;

(ii) substantially incomplete; or

(iii) determined not to meet the standards in TEC, §§12.101, 12.152, 12.257, or 12.255, or §100.1011 or §100.1017 of this title (relating to Application Requirements and Selection Process and Applicant Eligibility and Form Contents).

(B) If TEA determines that an application is not complete, TEA shall notify the applicant of all documents that are eligible for remedy and allow five business days for the applicant to submit the requested documentation.

(C) Once additional review is complete, the decision of the commissioner or commissioner's designee is final and may not be appealed.

(D) Failure of TEA to identify any deficiency, or notify an applicant thereof, does not constitute a waiver of the requirement and does not bind the commissioner.

(E) Upon written notice to TEA and without penalty for future application cycles, an applicant may withdraw an application.

(F) Applications that are determined complete shall be reviewed and scored by an external application review panel.

(i) The external application review panel shall be selected from a pool of qualified candidates. To the greatest extent practicable, an external review panelist will not be assigned applications for schools planning to locate within the geographic area in which they have a primary physical address or employment address and served by the same regional education service center.

(ii) Members of the review panel shall disclose to TEA immediately the discovery of any past or present relationship with an open-enrollment charter applicant, including any current or prospective employee, agent, officer, or director of the sponsoring entity, an affiliated entity, or other party with an interest in the selection of the application.

(iii) Reviewers must be individuals with the knowledge and skills associated with one or more of the following: curriculum and instruction, education service and delivery, charter authorization, charter school organization and management, facilities use and management, pedagogy, innovative education programs or technologies, assessments, diverse learning populations, school leadership, human resources, school finance, and/or charter school governance and policy.

(iv) The panel shall review and score applications in accordance with the procedures and criteria established in the application form.

(v) Review panel members shall not discuss applications with anyone except TEA staff. Review panel members shall not accept meals, entertainment, gifts, or gratuities in any form from any person or organization with an interest in the results of the selection process for open-enrollment charters.

(vi) Applications that are not scored at or above the minimum score established in the application form are not eligible for commissioner selection during that cycle.

(vii) Upon completion of external review, TEA will provide all applicants with the results of their reviews by the panel, notice of their status as meeting or not meeting the minimum score, whether the applicant will advance to capacity interviews, the average scores, and individual scoring rubrics, including comments from independent external review panelists.

(G) The commissioner may, at the commissioner's sole discretion, decline to grant an open-enrollment charter to an applicant whose application was scored at or above the minimum score.

(i) No recommendation, ranking, or other type of endorsement by a member or members of the review panel is binding on the commissioner.

(ii) The commissioner or commissioner's designee shall provide written notice to any applicant that is removed under this paragraph.

(iii) The decision of the commissioner or commissioner's designee is final and may not be appealed.

(H) All parts of the application are releasable to the public under the Texas Public Information Act and will be posted to the TEA website; therefore, the following must be excluded or redacted:

(i) personal email addresses;

(ii) proprietary material;

(iii) copyrighted material;

(iv) documents that could violate the Family Educational Rights and Privacy Act by identifying potential students of the charter school, including, but not limited to, sign-in lists at public meetings about the school, photographs of existing students if the school is currently operating or photographs of prospective students, and/or letters of support from potential charter school parents and/or students; and

(v) any other information or documentation that cannot be released in accordance with Texas Government Code, Chapter 552.

(I) The commissioner or the commissioner's designee(s) in coordination with TEA staff shall conduct a capacity interview with applicants whose applications received the minimum score established in the application form. The commissioner may specify individuals required to attend the interview and may require the submission of additional information and documentation prior or subsequent to an interview.

(d) The commissioner shall approve or deny a Subchapter D charter school application based on:

(1) documented evidence gathered through the application review process;

(2) merit;

(3) criteria for applicants that apply as new operators that include, at a minimum:

(A) indications that the charter school will possess the capability to carry out responsibilities as provided in the charter;

(B) indications that the charter school will improve student performance and encourage innovative programs;

(i) evidence that the school will receive the highest or second highest performance rating category under TEC, Chapter 39, Subchapter C, beginning in the first year of eligibility; and

(ii) evidence that the charter school will earn seventy or more points without failing a critical indicator on the Charter Financial Integrity Rating System of Texas beginning in Year 1; and

(D) a statement from any school district whose enrollment is likely to be affected by the charter school, including information relating to any financial difficulty that a loss in enrollment may have on the district;

(4) criteria for applicants that apply as experienced operators that include, at a minimum:

(A) the criteria described in paragraphs (1)-(3) of this subsection;

(B) the strength of the applicant's existing portfolio, or their affiliate; and

(5) all other criteria published in the application.

(e) The commissioner shall approve or deny a Subchapter E charter school application based on:

(1) the criteria described in subsection (d)(1)-(3) of this section;

(2) indications that the applicant's educational program will be implemented under the direct supervision of a member of the teaching or research faculty of the public junior college, senior college, or university;

(3) indications that the faculty member supervising the applicant's educational program has substantial experience and expertise in education research, teacher education, classroom instruction, or educational administration;

(4) indications that the applicant's educational program has been designed to meet specific goals described in the charter application and each aspect of the program is directed toward the attainment of the goals;

(5) indications that the financial operations of the applicant will be supervised by the business office of the public junior college, senior college, or university; and

(6) all other criteria published in the application.

(f) The commissioner shall approve or deny a Subchapter G charter school application based on:

(1) documented evidence gathered through the application review process;

(2) merit; and

(3) criteria that include:

(A) indications that the education program will enable program participants to successfully earn a diploma and take career and technology education courses that can lead to an industry certification;

(B) indications that the applicant, or a member of the applicant's executive leadership has a successful history of providing education services, including industry certifications and job placement services, to adults 18 years of age and older whose educational and training opportunities have been limited by educational disadvantages, disabilities, homelessness, criminal history, or similar marginalizing circumstances;

(C) indications that a significant portion of instruction will be delivered in a teacher-led, interactive classroom environment;

(D) indications that the educational program will provide access to:

(i) career readiness training;

(ii) postsecondary counseling; and

(iii) job-placement services;

(E) indications that the educational program will provide support services that include:

(i) child care at no cost to students;

(ii) life coaching services as outlined in TEC, §12.159;

(iii) mental health counseling;

(iv) instructional support services for students with identified disabilities; and

(v) transportation assistance;

(F) indications that the charter school will possess the capability to carry out responsibilities as provided in the charter;

(G) indications that the proposed governance structure will maintain sound fiscal management and administrative practices; and

(H) indications that the financial plan is viable.

(g) Priority shall be given to applicants that propose a school in an attendance zone of a school district campus assigned an unacceptable performance rating under TEC, §39.054, for two preceding years. This paragraph does not apply to an application form released under TEC, Chapter 12, Subchapter G.

(h) An applicant or any person or entity acting on behalf of an applicant for an open-enrollment charter shall not knowingly communicate with any member of an external application review panel concerning a charter school application beginning on the date the application is submitted and ending 90 days after the commissioner's proposal. On finding a material violation of the no-contact period, the commissioner may reject the application and deem it ineligible for award.

(i) An applicant or any person or entity acting on behalf of an applicant for an open-enrollment charter shall not knowingly communicate with any member of the State Board of Education beginning on the date the application is submitted and ending on the date the applicant passes through an external review with a qualifying score. On finding a material violation of the no-contact period, the commissioner may reject the application and deem it ineligible for award. This paragraph does not apply to a charter the commissioner authorizes under TEC, Chapter 12, Subchapter E and Subchapter G.

(j) The commissioner shall notify the SBOE of each charter the commissioner proposes to authorize. A charter proposed by the commissioner will be granted on the 90th day after the date on which the SBOE receives the notice from the commissioner unless either of the conditions in the following paragraphs are met. This paragraph does not apply to a charter the commissioner proposed to authorize under TEC, Chapter 12, Subchapters E and G.

(1) The SBOE votes against the charter in accordance with TEC, §12.101(b-0).

(2) The commissioner withdraws the proposal.

(k) The commissioner may defer granting an open-enrollment charter subject to contingencies and shall require fulfillment of such contingencies before the charter school is issued a contract. Such conditions must be fulfilled by the awardee, as determined by the commissioner, no later than 60 days after the date of the notification of contingencies by the commissioner or the proposal of the charter is withdrawn. The commissioner may establish timelines for submission by the awardee of any documentation to be considered by the commissioner in determining whether contingencies have been met.

(l) The commissioner may decline to finally grant or award a charter based on misrepresentations during the application process or failure to comply with commissioner rules, application requirements, or State Board of Education rules.

(m) An open-enrollment charter shall be in the form and substance of a written contract signed by the commissioner, the board chair of the charter holder or charter school, and the chief operating officer of the school but is not a contract for goods or services within the meaning of Texas Government Code, Chapter 2260. The chief operating officer of the school shall mean the chief executive officer of the open-enrollment charter holder under TEC, §12.1012.

(n) The charter contract shall be for an initial term of five years beginning on July 1 following the execution of the initial contract or July 1 following an approved extension under subsection (o) of this section.

(o) The charter must open and serve students within one school year of the awarding of the charter contract, unless an extension is approved by the commissioner. Failure to operate by the approved extension date shall constitute an automatic abandonment of the charter contract and the charter is automatically considered void and returned to the commissioner.

§100.1013.Notification of Charter Application.

(a) Upon receipt of an application for an open-enrollment charter school, the commissioner of education or the commissioner's designee shall provide notification by electronic mail to:

(1) the board of trustees and superintendent for each school district from which the proposed open-enrollment charter school or campus is likely to draw students, as defined by the applicant's anticipated zip code of location; and

(2) each member of the legislature and State Board of Education that represents the geographic area to be served by each applicant, as defined by the anticipated zip code of location.

(b) Should a change in the location of the charter school be approved after notification but prior to opening, the commissioner or the commissioner's designee is required to notify as required by subsection (a) of this section based on the zip code of the new location.

§100.1015.Application to Dropout Recovery Charters.

A charter granted under Texas Education Code, §12.101(b-7), for a dropout recovery school shall not be considered for the purposes of the limit on the number of charters for open enrollment under the cap. A dropout recovery school shall be defined as a school that:

(1) serves students in Grades 9-12;

(2) has an enrollment of which 60% of students are 16 years of age or older as of September 1 of the school year as reported for the fall semester Public Education Information Management System submission; and

(3) meets eligibility requirements for and is registered under alternative education accountability procedures.

§100.1017.Applicant Eligibility and Form Contents.

(a) Except as expressly provided in the rules in this subchapter, provisions in this section apply to all applications affiliated and published under the following Texas Education Code (TEC) subchapters:

(1) TEC, Chapter 12, Subchapter D;

(2) TEC, Chapter 12, Subchapter E; and

(3) TEC, Chapter 12, Subchapter G.

(b) Any existing entity applying for the charter must be in good standing with the Internal Revenue Service (IRS), the Texas Secretary of State, and the Texas Comptroller of Public Accounts. An existing entity must also be in good standing with all regulatory agencies in its home state.

(c) Notwithstanding any other provisions in this chapter, the following provisions apply to charter applicants and successful charter awardees authorized by the commissioner under requests for applications adopted after November 1, 2012.

(1) Financial standards. An applicant for a TEC, Chapter 12, Subchapter D, E, or G charter school, as applicable, shall meet each of the following financial standards to demonstrate the financial viability of the charter, as determined by the commissioner of education or the commissioner's designee, prior to being considered for award of a charter and must attest that any failure to maintain ongoing compliance with these requirements, if awarded a charter, will be considered a material violation of the charter contract and may be grounds for revocation.

(A) Each entity must provide evidence of financial competency and sustainability by providing evidence of an appropriate financial plan that includes each of the following:

(i) a brief analysis of the educational opportunities in the area(s) for the same students and the methods that the proposed school will use to recruit and retain students;

(ii) a brief narrative of the growth plan for the first five years of operation of the proposed school that matches all projections included in the budget;

(iii) an unqualified opinion as provided in the most recent audited financial statements of the applicant if the entity has been in existence at least a year;

(iv) a five-year budget projection of revenue and expenditures for the proposed charter using the template that will be provided in the application;

(v) a response, based on the revenue and expenditures provided in the template that will be provided in the application, detailing the ways in which the budget projections were derived, including any assumptions used; and

(vi) support documentation for budget projections as detailed in the budget template that will be provided with the application.

(B) Loans and lines of credit are liabilities that must be repaid and will be considered as available funding. Loans or lines of credit may be characterized as assets and as cash on hand.

(C) The applicant must identify in the template provided in the application available funding for start-up costs, as documented by current assets listed in the balance sheet and/or pledges for donation that do not require repayment.

(D) The applicant must identify revenue and expenses on a per-student amount and may not reflect a net operating loss for any projection year.

(E) To ensure financial viability, the entity must commit to serving a minimum of 100 students at all times.

(F) The entity applying for the charter must have liabilities that are less than 80% of its assets.

(G) The aggregate of projected budgeted expenses must be less than the aggregate of projected total revenues by the end of the first year of operation provided that:

(i) projected revenues are documented and use the amount per student designated in the application when calculating Foundation School Program funding that will begin during the first year of operation; and

(ii) all reasonable start-up and first-year expenditures are included in the budgets or an explanation for not needing to include them is included in the budget narratives.

(2) Governing standards. An applicant for a TEC, Chapter 12, Subchapter D, E, or G charter school, as applicable, shall meet each of the following governing standards to demonstrate sound establishment and oversight of the charter's educational mission, as determined by the commissioner or the commissioner's designee, prior to being considered for award of a charter and must attest that any failure to maintain ongoing compliance with these requirements, if awarded a charter, will be considered a material violation of the charter contract and may be grounds for revocation, except as provided by TEC, §12.1054(a)(2).

(A) To qualify as an eligible entity in accordance with TEC, §12.101(a)(3), as an organization that is exempt under 26 United States Code (U.S.C.), §501(c)(3), the applicant must have its own 501(c)(3) exemption in its own name, as evidenced by a 501(c)(3) letter of determination issued by the IRS.

(i) An applicant cannot attain status as an eligible entity that is exempt under 26 U.S.C., §501(c)(3), as a disregarded entity, a supporting organization, or a member of a group exemption of a currently recognized 501(c)(3) tax-exempt organization.

(ii) Entities that have applied for 501(c)(3) status but have yet to receive the exemption from the IRS must provide the letter of determination of the 501(c)(3) status issued by the IRS prior to a recommendation by the commissioner. Failure to secure 501(c)(3) status deems an entity ineligible.

(iii) A religious organization, sectarian school, or religious institution that applies must have an established separate non-sectarian entity that is exempt under 26 U.S.C., §501(c)(3), to be considered an eligible entity.

(B) The articles of incorporation or certificate of formation as applicable, and the bylaws of the applicant must vest the management of the corporate affairs in the board of directors.

(i) The charter holder may not vest the management of corporate affairs in any member or members.

(ii) Articles of incorporation, certificate of formation, bylaws, or any policy or other agreement may not confer on or reserve to any other entity or person the ability to overrule, remove, replace, or name the members of the governing body or board of the charter holder or charter school at any time.

(C) Any other change in the aforementioned governance documents pursuant to the management of the corporate affairs of the nonprofit entity may only occur with the approval of the commissioner in accordance with §100.1035(b) of this title (relating to Charter Amendment) or in accordance with any other power granted to the commissioner in state law or rule.

(D) If the sponsoring entity is a 501(c)(3) nonprofit corporation, its bylaws must clearly state that the charter holder and charter school will comply with the Texas Open Meetings Act and will appropriately respond to Texas Public Information Act requests.

(E) No family members within the third degree of consanguinity or second degree of affinity shall simultaneously serve on the charter holder or charter school board.

(F) No family member within the third degree of consanguinity or second degree of affinity of any charter holder board member, charter school board member, or superintendent shall receive compensation in any form from the charter school, the charter holder, or any management company that operates or provides services to the charter school.

(G) The applicant shall specify that the governing body accepts and will not delegate ultimate responsibility for the school, including academic performance and financial and operational viability, and is responsible for overseeing any management company providing management services for the school.

(3) Educational and operational standards for applications published under TEC, Chapter 12, Subchapters D and E. An applicant shall successfully meet each of the following educational and operational standards to ensure alignment of curricula to the Texas Essential Knowledge and Skills, as determined by the commissioner or the commissioner's designee, prior to being considered for award of a charter and must attest that any failure to maintain ongoing compliance with these requirements, if awarded a charter, will be considered a material violation of the charter contract and may be grounds for revocation.

(A) The charter applicant must provide a succinct long-term vision for the proposed school and clearly explain the overall educational philosophy to be promoted at the school, if authorized.

(B) The charter applicant must provide a succinct explanation of the reasons for choosing the target location.

(C) The charter applicant must clearly explain in succinct terms the specific curricular programs that the school, if authorized, will provide to students and the ways in which the charter staff, board members, and others will use these programs to maintain high expectations for and the continuous improvement of student performance.

(D) The charter applicant must clearly explain in succinct terms the ways in which the school, if authorized, will improve student learning, increase the choice of high-quality educational opportunities in the proposed area, create professional environments that will attract new teachers to the public school system, set a high standard for school accountability and student achievement, and encourage different and innovative learning methods.

(E) The charter applicant must clearly explain how classroom practices will reflect the connections among curriculum, instruction, and assessment.

(F) The charter applicant must describe in succinct terms the specific ways in which the school, if authorized, will:

(i) address the instructional needs of students performing both below and above grade levels in major content areas;

(ii) differentiate instruction to meet the needs of diverse learners;

(iii) provide a continuum of services in the least restrictive environment for students with special needs as required by state and federal law;

(iv) provide bilingual and/or English as a second language instruction to English language learners as required by state law; and

(v) implement an educational program that supports compliance with all course requirements pursuant to state law.

(G) As evidenced in required documentation, the charter applicant must commit to hiring personnel with appropriate qualifications as follows.

(i) Except as provided in clause (iv) of this subparagraph, all teachers, regardless of subject matter taught, must have a baccalaureate degree.

(ii) Special education teachers, bilingual teachers, and teachers of English as a second language must be certified in the fields in which they are assigned to teach as required in state and/or federal law.

(iii) Paraprofessionals must be certified as required to meet state and/or federal law.

(iv) In an open-enrollment charter school that serves youth referred to or placed in a residential trade center by a local or state agency, a person may be employed as a teacher for a noncore vocational course without holding a baccalaureate degree, subject to the requirements described in §100.1212 of this title (relating to Personnel).

(H) With the exception of an early education (prekindergarten for age three through Grade 2) or prekindergarten-only model, the charter applicant must commit to serving, by its fourth year of operation, students in grades assessed for state accountability purposes.

(I) The charter applicant must provide a final copy of any management contract, if applicable, that will be entered into by the charter holder that will provide any management services, including the monetary amount that will be paid to the management company for providing school services.

(J) This paragraph does not apply to an application published under TEC, Chapter 12, Subchapter G.

(4) Educational and operational standards for applications published under TEC, Chapter 12, Subchapter G. An applicant for an adult high school charter shall successfully meet each of the following educational and operational standards to ensure careful alignment of curricula to the industry-based certifications, and workforce preparation and training as determined by the commissioner or the commissioner's designee, prior to being considered for award of a charter and must attest that any failure to maintain ongoing compliance with these requirements, if awarded a charter, will be considered a material violation of the charter contract and may be grounds for revocation.

(A) The charter applicant must provide a succinct long-term vision for the proposed school and clearly explain the overall educational philosophy to be promoted at the school, if authorized.

(B) The charter applicant must clearly explain in succinct terms the specific curricular programs that the school, if authorized, will provide to program participants in order to earn a high school diploma and the ways in which the charter staff, board members, and others will use these programs to maintain high expectations for and the continuous improvement of student performance.

(C) The charter applicant must clearly explain in succinct terms the ways in which the school, if authorized, will offer interactive, teacher-led instruction to program participants.

(D) The charter applicant must clearly explain how career and technology programs for industry-based certifications will be implemented at the school.

(E) The charter applicant must submit a letter of intent if contracting with a public junior college, provider, organization approved by the Texas Workforce Commission to provide career and technology courses that lead to an industry certification.

(F) The charter applicant must provide evidence that the entity or a member of its executive leadership has a successful history of providing education services, including industry certifications and job placement services, to adults 18 years of age and older whose educational and training opportunities have been limited by educational disadvantages, disabilities, homelessness, criminal history, or similar marginalizing circumstances.

(G) The charter applicant must describe in succinct terms the specific ways in which the school, if authorized, will:

(i) address how participants can receive a diploma through successful completion of the Foundation High School program curriculum requirements or other appropriate curriculum requirements applicable to the program participant;

(ii) provide career readiness training, post-secondary counseling, and job placement services;

(iii) offer support services, including childcare at no cost, life coaching services, mental health counseling, and transportation assistance;

(iv) provide a continuum of services in the least restrictive environment for program participants with special needs as required by state and federal law;

(v) provide bilingual and/or English as a second language instruction to emergent bilingual students as required by state law; and

(vi) implement an educational program that supports compliance with all course requirements pursuant to state law.

(H) As evidenced in required documentation, the charter applicant must commit to hiring personnel with appropriate qualifications as follows.

(i) Except as provided in §100.1212(b) of this title, all teachers, regardless of subject matter taught, must have a baccalaureate degree.

(iii) Paraprofessionals must be certified as required to meet state and/or federal law.

(I) The charter applicant may not propose to serve more than 2,000 students.

(J) The charter applicant must provide a final copy of any management contract, if applicable, that will be entered into by the charter holder that will provide any management services, including the monetary amount that will be paid to the management company for providing school services.

(K) The charter applicant must provide a final memorandum of understanding if partnering with a public junior college, provider, organization approved by the Texas Workforce Commission to provide career and technology courses that lead to an industry certification.

§100.1021.Applicability of Law and Rules to College or University or Junior College Charters.

(a) Except as expressly provided in the rules in this subchapter, or where required by Texas Education Code (TEC), Chapter 12, Subchapter E (College or University or Junior College Charter School), a provision of the rules in this subchapter applies to a public senior college or university charter school or junior college charter school as though the public senior college or university charter school or junior college charter school were granted a charter under TEC, Chapter 12, Subchapter D (Open-Enrollment Charter School).

(b) Section 100.1011(b) of this title (relating to Application Requirements and Selection Process) applies, except that the commissioner of education may adopt a separate application form for applicants seeking a charter to operate a public senior college or university charter school or a public junior college charter school, which need not be similar to the application form adopted under that subsection for other charter applicants. The commissioner may approve or amend this separate application form without regard to the selection cycle referenced in that subsection.

(c) Section 100.1011(b), (c), (e), (g), (h), and (k)-(o) of this title apply unless provided otherwise in the charter contract.

(d) The following provisions of this subchapter do not apply to a public senior college or university charter school or a public junior college charter school:

(1) §100.1031 and §100.1113 of this title (relating to Performance Frameworks for Subchapters D and E Charter Schools and Delegation of Powers and Duties), except as authorized in the charter contract upon written request of the governing body of the university, college, or junior college;

(2) §100.1127 of this title (relating to Record of Compliance and Disclosure of Non-compliance);

(3) §100.1101 of this title (relating to Improvements to Real Property);

(4) §§100.1131-100.1141 of this title (relating to Applicability of Nepotism Provisions; Exception for Acceptable Performance; General Nepotism Provisions; Relationships By Consanguinity or By Affinity; Nepotism Prohibitions; Nepotism Exceptions; and Enforcement of Nepotism Prohibitions);

(5) §100.1145 and §100.1147 of this title (relating to General Conflict of Interest Provisions and Conflicts Requiring Affidavit and Abstention from Voting);

(6) §100.1203(a) of this title (relating to Records Management); and

(7) §100.1205 of this title (relating to Procurement of Professional Services).

§100.1023.Applicability of Law and Rules to Adult High School Charters.

The following provisions apply as indicated in this section to an adult education charter school as though the adult education charter school was granted a charter under Texas Education Code (TEC), Chapter 12, Subchapter D.

(1) Section 100.1011(b) of this title (relating to Application Requirements and Selection Process) applies, except that the commissioner of education may adopt a separate application form for applicants seeking a charter to operate an adult education charter school, which need not be similar to the application form adopted under that subsection for other charter applicants. The commissioner may approve or amend this separate application form without regard to the selection cycle referenced in that subsection.

(2) Section 100.1011(b); (c)(3)(A)(i), (B)-(E), (F)(i)-(v) and (vii), and (G)-(I); (f); (h); and (k)-(o) apply unless provided otherwise in the charter contract.

(3) The following sections of TEC, Chapter 12.

(A) TEC, §12.1012, related to definitions.

(B) TEC, §12.10125, related to open-enrollment charter schools not in operation.

(D) TEC, §12.1051, related to open meetings and public information laws.

(E) TEC, §12.1052, related to local government records applicability.

(F) TEC, §12.1053, related to public purchasing and contracting laws.

(G) TEC, §12.1054, related to conflict of interest law applicability.

(H) TEC, §12.1055, related to nepotism law applicability.

(I) TEC, §12.1056, related to immunity from liability and suit.

(J) TEC, §12.1057, related to membership in Teacher Retirement System of Texas.

(K) TEC, §12.1059, related to employment requirements.

(L) TEC, §12.107, related to status and use of funds.

(M) TEC, §12.108, related to tuition and fees.

(N) TEC, §12.109, related to transportation.

(O) TEC, §12.1141, related to renewal and expiration.

(P) TEC, §12.1162, related to sanctions.

(Q) TEC, §12.1163, related to audit by commissioner.

(R) TEC, §12.1164, related to notice to Teacher Retirement System of Texas.

(S) TEC, §12.1166, related to related party transactions.

(T) TEC, §12.1168, related to financial report of certain schools.

(U) TEC, §12.117, related to admission.

(V) TEC, §12.119, related to bylaws and annual report.

(W) TEC, §12.101(b)(2), related to prohibition of charter holder having had a charter removed or surrendered in the 10 years prior.

(X) TEC, §12.101(b-5), related to the initial term of a charter.

(Y) TEC, §12.120, related to board member restrictions.

(Z) TEC, §12.1202, related to qualified voter requirement.

(AA) TEC, §12.1211, related to board website posting requirement.

(BB) TEC, §12.122, related to liability of board members.

(CC) TEC, §12.123, related to training for board members and officers.

(DD) TEC, §12.124, related to management company loans.

(EE) TEC, §12.125, related to management services contracts.

(FF) TEC, §12.126, related to prohibitions of certain management services contracts.

(GG) TEC, §12.127, related to management company liability.

(HH) TEC, §12.128, related to property purchased or leased with state funds.

(II) TEC, §12.129, related to minimum qualifications for principals and teachers.

(JJ) TEC, §12.130, related to notice of teacher qualifications.

(KK) TEC, §12.131, related to removal of students to disciplinary alternative education program and expulsion of students.

(LL) TEC, §12.135, related to designation as charter district for purposes of bond guarantee.

(MM) TEC, §12.136, related to posting of chief executive officer salary.

(NN) TEC, §12.137, related to certain charter holders authorized to provide combined services for certain adult and high school dropout recovery programs.

(OO) TEC, §12.141, related to reclaimed funds.

(PP) TEC, §12.104(a-1)(1), related to security officer employment.

(QQ) TEC, §12.104(a-1)(2), related to memorandums of understanding with law enforcement.

(RR) TEC, §12.104(a-2), related to peace officer applicability.

(SS) TEC, §12.104(b)(1), related to criminal offense.

(TT) TEC, §12.104(b)(2), related to protections for reporting violations.

(UU) TEC, §12.104(b)(3)(A), related to PEIMS.

(VV) TEC, §12.104(b)(3)(B), related to criminal history records.

(WW) TEC, §12.104(b)(3)(F), related to special education programs.

(XX) TEC, §12.104(b)(3)(G), related to bilingual education.

(YY) TEC, §12.104(b)(3)(J), related to discipline management techniques.

(ZZ) TEC, §12.104(b)(3)(K), related to health and safety.

(AAA) TEC, §12.104(b)(3)(L), related to accountability.

(BBB) TEC, §12.104(b)(3)(M), related to accountability and investigations.

(CCC) TEC, §12.104(b)(3)(N), related to reporting educator misconduct.

(DDD) TEC, §12.104(b)(3)(O), related to intensive programs of instruction.

(EEE) TEC, §12.104(b)(3)(P), related to right of employees to report crimes.

(FFF) TEC, §12.104(b)(3)(R), related to the right to place a student in a disciplinary alternative education program or to expel the student for certain behaviors.

(GGG) TEC, §12.104(b)(3)(S), related to right to report assault or harassment.

(HHH) TEC, §12.104(b)(3)(T), related to parent rights to information regarding interventions.

(III) TEC, §12.104(b)(3)(V), related to school safety requirements.

(JJJ) TEC, §12.104(b)(3)(X), related to college, career, and military readiness plans.

(KKK) TEC, §12.104(b)(3)(Y), related to parent option to retain a student.

(LLL) TEC, §12.1058, related to applicability of municipal and government codes.

§100.1025.Authorization for High-Performing Entities.

(a) In accordance with Texas Education Code (TEC), §12.1011, notwithstanding TEC, §12.101(b), the commissioner of education may grant a charter to high-performing entities.

(b) For an applicant to be eligible for consideration as a high-performing entity, the applicant must demonstrate the following criteria.

(1) The entity is affiliated with a charter operator that operates one or more charter schools in another state. The affiliated charter operator must have performed at an overall level that is comparable to the highest or second highest performance rating category under TEC, Chapter 39, Subchapter C.

(A) The entity must propose to operate the charter school program that is currently implemented in the affiliated charter operator's existing charter schools.

(B) A charter operator may be considered affiliated with an entity if it utilizes shared structures, practices, or materials, including, but not limited to, a shared management structure, shared financial management or staff development practices, or shared proprietary materials, including those related to instruction.

(2) The entity is currently operating charter programs under TEC, Chapter 12, Subchapter C or E. The entity must have performed at an overall level in the highest or second highest performance rating category under TEC, Chapter 39, Subchapter C.

(d) If the applicant or its affiliate is a high-performing entity, then it may vest management of corporate affairs in a member provided that the entity may change the members of the governing body of the charter holder prior to the expiration of a member's term only with commissioner's written approval.

(e) Entities granted a charter under this provision have an initial contract term of five years.

(f) In determining a charter award for a high-performing entity, the commissioner will consider the criteria identified in §100.1011(d)(4) of this title (relating to Application Requirements and Selection Process) as established for experienced operators.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on March 4, 2024.

TRD-202400944

Cristina De La Fuente-Valadez

Director, Rulemaking

Texas Education Agency

Earliest possible date of adoption: April 14, 2024

For further information, please call: (512) 475-1497

DIVISION 3. COMMISSIONER ACTION, PERFORMANCE MONITORING, [~~CHARTER SCHOOL FUNDING~~] AND INTERVENTION [~~FINANCIAL OPERATIONS~~]

19 TAC §§100.1031, 100.1035, 100.1037, 100.1039, 100.1041, 100.1043, 100.1045, 100.1047, 100.1049, 100.1051, 100.1053, 100.1055

§100.1031.Performance Frameworks for Subchapters D and E Charter Schools.

(a) The performance of an open-enrollment charter school will be measured annually against a set of criteria set forth in the Charter School Performance Framework (CSPF) Manual established under Texas Education Code (TEC), §12.1181. Notwithstanding substantial modifications to the framework, the manual will be updated annually to reflect the requirements and data sources for each indicator.

(b) The CSPF Manual will include measures for Subchapters D and E charter schools registered under the standard accountability system and measures for charters registered under the alternative education accountability system as adopted under §97.1001 of this title (relating to Accountability Rating System).

(c) The assignment of performance levels, Tier 1, Tier 2, or Tier 3 for charter schools on the CSPF report is based on specific criteria, which include:

(1) Academic Indicator: the charter school's overall academic rating as assigned under TEC, §39.053. For charter schools not issued a rating under TEC, §39.053, the CSPF Manual will identify substitute academic indicators;

(2) Financial Indicator: the charter school's overall financial rating as assigned under TEC, Chapter 39, Subchapter D;

(3) Operational Indicators, which evaluate each charter school's compliance with educational, operational, safety, and reporting requirements as required by federal law, state law, state rules or regulations, and/or the charter contract, including those outlined in TEC, Chapter 12, and this chapter; and

(4) Governance Indicators, which evaluate each charter school's compliance with state law, state rules or regulations with governance requirements, including those outlined in TEC, Chapter 12, and this chapter.

§100.1035.Charter Amendment.

(a) Subject to the requirements of this section, the terms of an open-enrollment charter may be revised with the consent of the charter holder by expansion or non-expansion amendment as approved by the commissioner of education.

(b) Information relevant to all amendment requests.

(1) Filing of amendment request. Prior to implementation, the charter holder shall file a request, in the form prescribed, with the Texas Education Agency (TEA) division responsible for charter schools.

(2) Board resolution. The request must be attached to a written resolution adopted by the governing body of the charter holder and signed by a majority of the members indicating approval of the requested amendment.

(3) Relevant information considered. As directed by the commissioner, a charter holder requesting an amendment shall submit current information required by the prescribed amendment form, as well as any other information requested by the commissioner. In considering the amendment request, the commissioner may consider any relevant information concerning the charter holder, including its performance on the Charter School Performance Frameworks (CSPF) adopted by rule in §100.1031 of this title (relating to Performance Frameworks for Subchapters D and E Charter Schools); student and other performance; compliance, staff, financial, and organizational data; and other information.

(4) Best interest of students. The commissioner may approve an amendment only if the charter holder meets all applicable requirements, and only if the commissioner determines that the amendment is in the best interest of students. The commissioner may consider the performance of all charters operated by the same charter holder in the decision to finally grant or deny an amendment.

(5) Conditional approval. The commissioner may grant the amendment without condition or may require compliance with such conditions and/or requirements as may be in the best interest of students.

(6) Required forms and formats. The TEA division responsible for charter schools may develop and promulgate, from time to time, forms or formats for requesting charter amendments under this section. If a form or format is promulgated for a particular type of amendment, it must be used to request an amendment of that type.

(7) Ineligibility. The commissioner will not consider any amendment that is submitted by a charter holder that has been notified by the commissioner of the commissioner's intent to allow the expiration of the charter or intent to revoke the charter. This subsection does not limit the commissioner's authority to accept the surrender of a charter.

(1) Timeline for submission. A charter holder may submit a request for approval for an expansion amendment:

(A) up to 36 months before the date on which the expansion will be effective; and

(B) no later than the first day of March before the school year for which the expansion will be effective.

(2) Notification.

(A) Upon receipt of an expansion amendment request by a charter holder, the TEA division responsible for charter schools will notify the following:

(i) the superintendent and the board of trustees of each school district from which the proposed open-enrollment charter school or campus is likely to draw students, as defined in §100.1013 of this title (relating to Notification of Charter Application); and

(ii) each member of the legislature that represents the geographic area to be served by the proposed school or campus, as defined in §100.1013 of this title.

(B) To be considered a school district for purposes related to land development standards, licensing, zoning, and various purposes and services, a charter school must meet the notification requirements as outlined in §100.1209 of this title (relating to Municipal Ordinances).

(C) Should a change in the location of a campus be approved after notification but prior to opening, the commissioner of education or the commissioner's designee is required to notify as required by subparagraph (A) of this paragraph based on the zip code of the new location.

(3) Expansion types. A charter holder of an open-enrollment charter may submit, as described by this section, a request for approval for either:

(A) expedited expansion; or

(B) discretionary expansion.

(4) Expedited expansion amendments. An expedited expansion amendment allows for the establishment of a new charter campus under Texas Education Code (TEC), §12.101(b-4).

(A) In order to submit an expedited expansion amendment, the charter school must meet the following requirements:

(i) an accreditation status of Accredited;

(ii) currently has at least 50% of its student population in grades assessed under TEC, Chapter 39, Subchapter B, or has had at least 50% of the students in the grades assessed enrolled in the school for at least three years;

(iii) is currently evaluated under the standard accountability procedures for evaluation under TEC, Chapter 39, and received a district rating in the highest or second highest performance rating category under TEC, Chapter 39, Subchapter C, for three of the last five ratings;

(iv) at least 75% of the campuses rated under the charter school also received a rating in the highest or second highest performance rating category in the most recent ratings; and

(v) no campus received a rating in the lowest performance rating category in the most recent ratings.

(B) Unless the commissioner provides written notice that the charter holder does not meet the requirements outlined in TEC, §12.101(b-4), within 60 days of the date the charter holder submits a completed expedited expansion amendment, the amendment is considered enacted. If the commissioner denies the amendment, the commissioner must identify the legal and factual basis for denial, including the specific criteria under TEC, §12.101(b-4), that was not met.

(5) Discretionary expansion amendments. A discretionary expansion amendment permits commissioner-approved changes to the terms of an open-enrollment charter school related to expansion.

(A) Discretionary expansion amendment types. There are three types of discretionary amendments.

(i) Maximum enrollment. The commissioner may approve an expansion amendment request seeking to increase maximum allowable enrollment.

(ii) Grade span. The commissioner may approve an expansion amendment request seeking to extend the grade levels it serves only if it is accompanied by appropriate educational plans for the additional grade levels in accordance with Chapter 74, Subchapter A, of this title (relating to Required Curriculum), and such plan has been reviewed and approved by the charter governing board.

(iii) Adding a campus or site. The commissioner may approve an expansion amendment request seeking to add a new campus or site under a campus only if it meets the following criteria:

(I) the charter holder has operated at least one charter school campus in Texas for a minimum of three consecutive years; and

(II) a new site under an existing campus will be located within 25 miles of the campus with which it is associated.

(B) Board certification. Before voting to request a discretionary expansion amendment, the charter holder governing board must certify that they have considered a business plan and has determined by majority vote of the board that the growth proposed is financially prudent relative to the financial and operational strength of the charter school and includes such a statement in the board resolution. The commissioner may request submission of the business plan, which must be comprised of the following components:

(i) a statement discussing the need for the expansion;

(ii) a statement discussing the current and projected financial condition of the charter holder and charter school;

(iii) an unaudited statement of financial position for the current fiscal year;

(iv) an unaudited statement of financial activities for the current fiscal year;

(v) an unaudited statement of cash flows for the current fiscal year;

(vi) a pro forma budget that includes the costs of operating the charter school, including the implementation of the expansion amendment;

(vii) a statement or schedule that identifies the assumptions used to calculate the charter school's estimated Foundation School Program revenues;

(viii) a statement discussing the use of debt instruments to finance part or all of the charter school's incremental costs;

(ix) a statement discussing the incremental cost of acquiring additional facilities, furniture, and equipment to accommodate the anticipated increase in student enrollment;

(x) a statement discussing the incremental cost of additional on-site personnel and identifying the additional number of full-time equivalents that will be employed;

(xi) the required statement that the growth proposed is financially prudent relative to the financial and operational strength of the charter school;

(xii) there are no instances of nepotism, conflicts of interest, or revelations in criminal history checks that deemed any board member or employee ineligible to serve as reported in the Governance Reporting Forms submitted to TEA for the previous three years; and

(xiii) the charter holder meets all other requirements applicable to expansion amendment requests and other amendments.

(i) the expansion will be effective no earlier than the start of the fourth full school year at the affected charter school. This restriction does not apply if the affected charter school has a district rating of an A, B, or C and is operated by a charter holder that operates multiple charter campuses and all of that charter holder's most recent campus ratings of an A, B, or C;

(ii) the charter school has an accreditation status of Accredited;

(iii) the most recent district rating for the charter school is an A, B, or C;

(iv) the most recent district financial accountability rating for the charter school in the Financial Integrity Rating System of Texas for charter schools is "satisfactory" as defined by §100.1001(2) of this title (relating to Definitions);

(v) a charter holder that operates multiple charter campuses meets the criteria in subclause (I) or (II) of this clause. When calculating the percentages described, campuses that receive a 'Not Rated' rating shall not be included in the calculation.

(I) At least 90% of the campuses that receive an accountability rating are rated as an A, B, or C.

(II) If 75-89% of campuses that receive an accountability rating under the charter school are rated as an A, B, or C, the charter holder must provide additional information with the expansion request; and

(vi) the most recent designation for the charter school under the CSPF is "Tier 1" or "Tier 2" as defined by §100.1031 of this title.

(D) Discretionary expansion amendment determination timeline. Notice of the commissioner's decision regarding a discretionary expansion amendment will be made within 60 calendar days of the date the charter holder submits a completed amendment request. The notice of the commissioner's determination may be sent electronically.

(6) High-quality campus designation. A high-quality campus designation is a separate designation and must be paired with an expansion amendment. If approved by the commissioner, this designation permits a charter holder to establish an additional charter school campus under an existing open-enrollment charter school. Charter holders of charter schools that receive high-quality campus designation from the commissioner will be eligible to participate in the charter school program competitive grant process when federal funding for the Texas charter school program is available.

(A) The commissioner may approve a high-quality campus designation for a charter only if:

(i) the charter holder meets all requirements applicable to an expansion amendment set forth in this section and has operated at least one charter school campus in Texas for a minimum of five consecutive years;

(ii) the charter school has been evaluated under the accountability rating system established in §97.1001 of this title (relating to Accountability Rating System), has an accreditation status of Accredited, is currently evaluated under the standard accountability procedures, currently has an "A" or "B" rating at the local education agency level, and has an "A" or "B" rating in the previous two years in which ratings were issued with all of the campuses that received a rating and operated under the charter also receiving an "A" or "B" rating as defined by §100.1001(8) of this title in the most recent state accountability ratings;

(iii) no charter campus has been identified for federal interventions in the most current report;

(iv) the charter school is not under any sanction imposed by TEA authorized under TEC, Chapter 39; Chapter 97, Subchapter EE, of this title (relating to Accreditation Status, Standards, and Sanctions); or federal requirements;

(v) is rated "Tier 1" in the most recent CSPF and meets the requirements of federal law and TEC, §12.111(a)(3) and (4);

(vi) the charter holder completes an application approved by the commissioner;

(vii) the amendment complies with all requirements of this paragraph; and

(viii) the commissioner determines that the designation is in the best interest of students.

(B) In addition to the requirements of subparagraph (A) of this paragraph, the commissioner may approve a high-quality campus designation only if the campus with the proposed designation:

(i) satisfies each element of the definition of a public charter school as set forth in federal law, including:

(I) admits students on the basis of a lottery, consistent with Elementary and Secondary Education Act, §4303(c)(3)(A), if more students apply for admission than can be accommodated; or

(II) in the case of a school that has an affiliated charter school (such as a school that is part of the same network of schools), automatically enrolls students who are enrolled in the immediate prior grade level of the affiliated charter school and, for any additional student openings or student openings created through regular attrition in student enrollment in the affiliated charter school and the enrolling school, admits students on the basis of a lottery as described in subclause (I) of this clause;

(ii) is separate and distinct from the existing charter school campus(es) established under the open-enrollment charter school with a separate facility and county-district-campus number; and

(iii) holds a valid charter contract issued by TEA.

(i) the terms of the open-enrollment charter school as a whole, as modified by the high-quality campus designation; and

(ii) whether the campus with the proposed designation shall be established and recognized as a separate school under Texas law.

(D) Failure to meet any standard or requirement for high-quality campus designation or agreed to in a performance agreement shall mean the immediate termination of any federal charter school program grant and/or any waiver exempting a charter from some of the expansion amendment requirements that may have been granted to a charter holder as a result of the high-quality campus designation.

(d) Non-expansion amendment. A non-expansion amendment permits changes to the terms of an open-enrollment charter school not related to expansion.

(1) Timeline for submission. All non-expansion amendments may be filed with the commissioner at any time throughout the year.

(2) Non-expansion amendment types. A non-expansion amendment is either material or non-material.

(A) Material non-expansion amendments include changes to the terms of an open-enrollment charter, including the following: relocation of a campus, campus or charter dormancy, closing or returning an active campus or site, charter holder governance, articles of incorporation, corporate bylaws, management company, admission and enrollment policy, and curriculum programs not already approved by TEA.

(i) Relocation amendment. A material non-expansion amendment to relocate solely permits a charter holder to relocate an existing campus or site to an alternate address while serving the same students and grade levels without a significant disruption to the delivery of the educational services. The alternate address of the relocation shall not be in excess of 25 miles from the existing campus address.

(ii) Material charter language change. Any material non-expansion amendment that requires changes to charter language shall set forth the text and page references in electronic format of the current open-enrollment charter language to be changed, and the text proposed as the new open-enrollment charter language.

(B) Non-material non-expansion amendments include changes to the terms of an open-enrollment charter, including the following: charter holder name, charter school (district) name, charter campus name, grade levels served on a campus, campus start date change, closing or returning a dormant campus or site, and fiscal year change.

(C) Any non-expansion amendment not identified in subparagraph (A) or (B) of this paragraph is subject to commissioner determination as material or non-material.

(D) The following timelines apply to non-expansion amendment requests.

(i) Charter holders that submit material non-expansion requests will receive notice of the commissioner's decision within 60 calendar days of a completed amendment request.

(ii) Charter holders that submit non-material non-expansion requests may proceed with the request 30 calendar days after the date the charter holder submits a completed amendment request unless otherwise notified by the commissioner.

§100.1037.Renewal of an Open-Enrollment Charter.

(a) Petition for renewal.

(1) A charter holder of an open-enrollment charter may submit, as described by this section, a petition for:

(A) expedited renewal; or

(B) discretionary renewal.

(2) A petition for renewal of the charter must be submitted on the date provided by the Texas Education Agency (TEA) annually, prior to the expiration of the charter contract.

(3) A petition for renewal must be in the form provided by TEA and shall include all information and documentation required by the form.

(4) If a charter holder fails to submit a timely and sufficient petition for renewal of an open-enrollment charter, the existing charter may expire at the end of its term.

(b) Expedited renewal. If a charter holder submits the petition for expedited renewal, the commissioner of education will approve or deny the expedited renewal not later than the 30th day after the date of the charter holder submission. A charter holder may submit a petition for expedited renewal if:

(1) the charter holder has been assigned the highest or second highest performance rating under Texas Education Code (TEC), Chapter 39, Subchapter C, for the three preceding school years;

(2) the charter holder has been assigned a financial performance accountability rating under TEC, Chapter 39, Subchapter D, indicating financial performance that is satisfactory or better for the three preceding school years; and

(3) no campus operating under the charter has been assigned an unacceptable performance rating under TEC, Chapter 39, Subchapter C, for the three preceding school years or such a campus has been closed.

(c) Expiration. Notwithstanding any other law and in accordance with TEC, §12.1141(e), a determination by the commissioner of education under this subsection is final and may not be appealed. The commissioner may not renew the charter and must allow the charter to expire if:

(1) the charter holder has been assigned the unacceptable performance rating under TEC, Chapter 39, Subchapter C, for any three of the five preceding school years;

(2) the charter holder has been assigned a financial accountability performance rating under TEC, Chapter 39, Subchapter D, indicating financial performance that is lower than satisfactory for any three of the five preceding school years;

(3) the charter holder has been assigned any combination of the ratings described by paragraph (1) or (2) of this subsection for any three of the five preceding school years. For purposes of determining a combination, a school that earned a financial and academic rating as described in paragraphs (1) and (2) of this subsection in the same year will count once; or

(4) any campus operating under the charter has been assigned an unacceptable performance rating under TEC, Chapter 39, Subchapter C, for the three preceding school years and such a campus, and if applicable, all sites associated with the campus, has not been closed.

(d) Discretionary renewal.

(1) A charter holder may submit a petition for discretionary renewal if it:

(A) does not qualify to submit the petition for expedited renewal; or

(B) is not subject to an expiration under subsection (c) of this section.

(2) In evaluating the petition for discretionary renewal, the commissioner shall consider:

(A) the results of the charter's annual evaluation under the performance framework set forth in the Charter School Performance Framework (CSPF) Manual established under TEC, §12.1181; and

(B) the criteria described under §100.1039 of this title (relating to Standards for Discretionary Renewal).

(e) Special rules for alternative education accountability (AEA) charters. The following provisions apply to the renewal of the charter of an open-enrollment charter school that is registered under the TEA AEA procedures for evaluation under TEC, Chapter 39.

(1) Discretionary renewal of AEA charters. An AEA charter may submit the petition for discretionary renewal and the petition must be considered under the discretionary renewal process. An AEA charter may not submit a petition for expedited renewal.

(2) Academic criteria for discretionary renewal of AEA charters.

(A) In considering a petition for discretionary renewal by an AEA charter such as a dropout recovery school or a school providing education within a residential treatment facility, the commissioner shall use academic criteria as outlined in the CSPF Manual established under TEC, §12.1181, that is appropriate to measure the specific goals of the school.

(B) For purposes of this subsection, the commissioner shall designate as a dropout recovery school an open-enrollment charter school or a campus of an open-enrollment charter school that:

(i) serves students in Grades 9-12 and has an enrollment of which at least 60% of the students are 16 years of age or older as of September 1 of the school year as reported for the fall semester Public Education Information Management System submission or applies for and receives designation as a dropout recovery school in accordance with commissioner rule; and

(ii) meets the eligibility requirements for and is registered under alternative education accountability procedures adopted by the commissioner.

(3) Expiration of AEA charters. The commissioner may not renew and must allow an AEA charter to expire if the charter holder has been assigned a financial accountability performance rating under TEC, Chapter 39, Subchapter D, indicating financial performance that is lower than satisfactory for any three of the five preceding school years.

(f) Notice and content of renewal decision or determination.

(1) Expedited renewal decision. Not later than the 30th day after the submission of a petition for expedited renewal, the commissioner shall provide written notice to the charter holder of the commissioner's decision to grant or deny the petition. If the expedited renewal is denied, the notice shall include an explanation of the factual and legal basis for the decision, a description of the legally relevant factors considered, an explanation of why the result reached is reasonable, and a description of the procedures to seek a review of the decision.

(2) Discretionary renewal decision. Not later than the 90th day after the submission of a petition for discretionary renewal, the commissioner shall provide written notice to the charter holder of the commissioner's decision to grant or deny the petition. If the discretionary renewal is denied, the notice shall include an explanation of the factual and legal basis for the decision, a description of the legally relevant factors considered, an explanation of why the result reached is reasonable, and a description of the procedures to seek a review of the determination.

(3) Expiration determination. The commissioner shall provide written notice to the charter holder of the commissioner's determination that the charter must expire. In the event a charter holder that meets the criteria for expiration submits a petition for renewal, the commissioner, not later than the 90th day after the submission, shall provide written notice to the charter holder of the commissioner's decision to deny the petition. Determinations made by the commissioner are final and may not be appealed. The notice shall include an explanation of the factual and legal basis for the determination, a description of the legally relevant factors considered, and an explanation of why the result reached is reasonable.

(4) Delivery and effective date of notice. The commissioner shall provide written notice electronically to the charter holder. Notice is effective on the sent date of the electronic notification.

(g) Appeal of renewal decisions and determinations. A decision by the commissioner to deny the petition for an expedited renewal or the petition for a discretionary renewal is subject to review by the State Office of Administrative Hearings under an arbitrary and capricious or clearly erroneous standard as described under Chapter 157, Subchapter EE, Division 4, of this title (relating to State Office of Administrative Hearings Arbitrary and Capricious or Clearly Erroneous Review).

(h) Use of ratings and data. The following provisions apply to the petition for renewal or expiration under this section.

(1) If a rating is not issued during one or more of the preceding school years, then the term "three preceding school years" means the most recent three school years during which a rating was issued, and the term "three of the five preceding school years" means three out of the most recent five school years during which a rating was issued, not to exceed more than the six most recent years.

(2) A rating that does not meet the criteria for "academically acceptable" as defined by §100.1001(8) of this title (relating to Definitions) shall not be considered the highest or second highest academic performance rating for purposes of this section.

(3) For purposes of renewal or expiration under this section, the term "unacceptable performance" means an unacceptable academic performance rating as defined by §100.1001(8) of this title.

(4) For purposes of renewal under this section, the term "financial performance lower than satisfactory" means a financial performance rating as defined by §100.1001(9) of this title.

(i) Conflict of rule. Except as provided by subsection (c) of this section, a contract term that conflicts with any rule in Part 2 of this title (relating to Texas Education Agency) is superseded by the rule to the extent that the rule conflicts with the contract term.

(j) Conditional approval. Notwithstanding any other rule in Part 2 of this title, the commissioner may require, as a condition of renewal, that the charter holder amend a contract under TEC, §12.114(a), to correct any ambiguities, defects, or other infirmities.

§100.1039.Standards for Discretionary Renewal.

Criteria for discretionary renewal. The following criteria shall be considered by the commissioner of education during the discretionary renewal process. The commissioner may non-renew a charter contract based on any of the following.

(1) Academic:

(A) assignment of an "academically unacceptable" rating as defined in §100.1001(8) of this title (relating to Definitions);

(B) failure to meet academic performance standards for students not measured in the accountability system;

(D) failure to meet program requirements for special populations, including, but not limited to, special education, bilingual/English as a second language, and career and technical education.

(2) Financial:

(A) failure to use state funds for purposes for which a school district may use local funds under Texas Education Code (TEC), §45.105(e);

(B) failure to hold state funds in trust for the benefit of the students of the charter school;

(D) failure to resolve a lien, levy, or other garnishment within 30 days;

(E) existence of a Foundation School Program (FSP) allotment subject to a warrant hold and that warrant has not been removed within 30 days;

(F) failure to timely file annual financial report required under TEC, §44.008;

(G) existence of an annual financial report containing adverse, qualified, or disclaimed opinion(s);

(H) assignment of a lower than satisfactory financial performance rating as defined in §100.1001(9) of this title;

(I) submission of attendance accounting data resulting in an overallocation from the FSP;

(J) existence of the following interested transactions:

(i) failure to comply with Local Government Code, Chapter 171;

(ii) failure to record and report on the governance reporting forms all financial transactions between charter school and non-charter activities of charter holder; and

(iii) failure to timely and accurately record and report on the governance reporting forms all financial transactions required in the governance reporting form;

(K) failure to post all financial information, including the salary of the chief executive officer (CEO), annual financial statement, most current annual financial report, and approved budget, on the charter school's website;

(L) payment of salaries of the CEO and/or other administrative position(s) that exceed reasonable fair market value for the services provided. Fair market value shall be based on size of school, individual's education, prior salary history, job duties actually performed, and what a typical person with similar skills, experience, and job duties would earn;

(M) renting or purchasing property for amounts in excess of fair market value;

(N) loss of eligibility to participate in the child nutrition program for more than 30 days;

(O) charter holder being imminently insolvent as defined by this chapter;

(P) failure to conduct fiscal mismanagement, including, but not limited to, the loss of financial records or a material non-compliance with State Board of Education or commissioner accounting requirements and failure to comply with the Financial Accountability System Resource Guide adopted under §109.41 of this title (relating to Financial Accountability System Resource Guide); and

(Q) failure to comply with applicable purchasing requirements, including Local Government Code, Chapter 271, if applicable.

(3) Operational:

(A) Governance:

(i) failure to timely file accurate and complete governance reporting forms;

(ii) non-compliance with required charter board training;

(iii) failure to timely and accurately report board training in the annual financial report;

(iv) failure to maintain verification of criminal history check/fingerprinting;

(v) failure to maintain verification of compliance with reporting requirements of the Secretary of State, the Texas Family Code, the Texas Open Meetings Act, the Texas Public Information Act, government and local records, applicability of public purchasing and contracting, and conflicts of interest and nepotism;

(vi) allowing a person with a criminal record to be employed or serve as a volunteer, officer, or board member in violation of TEC, Chapters 12 and 22;

(vii) failure of an employee or officer of the charter school to report child abuse or neglect as required by the Texas Family Code, Chapter 261;

(viii) failure to disclose and report all conflict of interest and nepotistic relationships to the Texas Education Agency (TEA) in the applicable minutes of the charter holder's corporate records;

(ix) failure to submit to the Secretary of State a listing of all current members of the charter holder, the articles of incorporation, the by-laws, assumed name, and any other matter of the corporate business required to be reported to the Secretary of State; and

(x) failure to maintain the 501(c)(3) status of the charter holder at all times;

(B) Complaints: failure to timely respond to and correct any complaints as directed by TEA;

(C) Property and campus operations (campuses of charter holders that provide instructional services within residential detention, treatment, or adjudication facilities are not subject to clauses (ii) and (iii) of this subparagraph):

(i) operation of any campus that does not meet the definition of a campus according to §100.1001(6)(B) of this title and that does not serve a minimum of 100 students as reflected in the Public Education Information Management System (PEIMS) fall snapshot;

(ii) failure of the charter holder to serve a minimum of 100 students, as reflected in the PEIMS fall snapshot, unless a lower number is declared and approved in the charter contract or approved by the commissioner;

(iii) failure to document and fully disclose any step transactions in the purchase or sale of property; and

(iv) failure to ensure that all charter holder buildings used for educational purposes have a valid certificate of occupancy for educating children;

(D) Activity fees and volunteer requirements:

(i) requiring any activity fees or any compulsory fees that are not authorized by TEC, §11.158, or other law; and

(ii) requiring any parental involvement, donation, or volunteerism as a condition of enrollment or continued enrollment;

(E) Management contracts:

(i) charter holder board allowing any entity to exercise control or ultimate responsibility for the school, including the academic performance, financial accountability, or operational viability;

(ii) charter holder board not retaining or exercising ultimate responsibility for the management of the charter school without regard to execution of a management contract with a charter management organization (CMO);

(iii) failure to timely file a current copy of the executed management contract, including any and all amendments, with TEA;

(iv) failure of the board of directors of the charter holder to ensure that both the charter holder and CMO are compliant with all the rules applicable to charter schools, including, but not limited to:

(I) financial accounting;

(II) record retention;

(III) health, safety, and welfare of students;

(IV) educational program accountability;

(V) Texas Open Meetings Act;

(VI) Texas Public Information Act; and

(VII) policies, procedures, and legal requirements found in state and federal laws/guidelines and the charter contract; and

(v) failure to comply with requirements in §100.1155 of this title (relating to Substantial Interest in Management Company; Restrictions on Serving) prohibiting a board member from having a substantial interest in the CMO; and

(F) Charter school performance framework: failure to satisfy applicable performance framework measures as prescribed in the Charter School Performance Framework Manual established under TEC, §12.1181.

§100.1041.Accountability Ratings and Sanctions.

(a) Commissioner authority. The commissioner of education may take any action relating to the charter holder or any of its charter campuses authorized by Texas Education Code (TEC), Chapter 39A, and the rules adopted under that chapter. Except as expressly provided by statute, the commissioner may take any accountability action against a charter holder or charter campus that the commissioner is authorized to take against a school district or campus under the subchapters of TEC, Chapter 39A.

(b) Charter holder cooperation. A charter holder and its employees and agents shall fully cooperate with an action under subsection (a) of this section and shall take all actions necessary to secure the cooperation of a management company. Failure to comply with lawful requests, directives, or other Texas Education Agency (TEA) actions under subsection (a) of this section constitutes a material charter violation.

(c) Management company cooperation. A management company and its employees and agents shall fully cooperate with an action under subsection (a) of this section. Failure to comply with lawful requests, directives, or other TEA actions under subsection (a) of this section constitutes a management company breach.

§100.1043.Agency Audits, Monitoring, and Investigations.

(a) Agency authority. The Texas Education Agency (TEA) may conduct routine audits, monitoring, and other investigations of the charter school or charter holder to determine compliance with the terms of the open-enrollment charter, with the terms of federal or state grants, or as authorized in the Texas Education Code or other law.

(b) Charter holder cooperation. A charter holder and its employees and agents shall fully cooperate with audits, monitoring, and investigations under subsection (a) of this section and shall take all actions necessary to secure the cooperation of a management company. Failure to comply with lawful requests, directives, or other TEA actions under subsection (a) of this section constitutes a material charter violation.

(c) Management company cooperation. A management company and its employees and agents shall fully cooperate with audits, monitoring, and investigations under subsection (a) of this section. Failure to comply with lawful requests, directives, or other TEA actions under subsection (a) of this section constitutes a management company breach.

§100.1045.Intervention Based on Charter Violations.

(a) The commissioner of education shall temporarily withhold state funds, suspend the authority of an open-enrollment charter school to operate, impose any sanction under Texas Education Code, Chapter 39, Subchapter E, and/or take any other reasonable action the commissioner determines necessary, if the commissioner determines that a charter holder:

(1) committed a material violation of the school's charter;

(2) failed to satisfy generally accepted accounting standards of fiscal management; or

(3) failed to comply with this subchapter or another applicable rule or law.

(b) A determination under this section shall be made through a final investigative report issued by the Texas Education Agency.

(c) The commissioner shall notify the open-enrollment charter school in writing of the action taken under this section. The notice must state the legal and factual basis for the action.

§100.1047.Intervention Based on Health, Safety, or Welfare of Students.

(a) The commissioner of education may temporarily withhold state funds, suspend the authority of an open-enrollment charter school to operate in its entirety or at one or more locations, and/or take any other reasonable action the commissioner determines necessary to protect the health, safety, or welfare of students enrolled at the school based on evidence that conditions at the school present a danger to the health, safety, or welfare of the students.

(b) The commissioner must notify the charter holder in writing of the action taken in subsection (a) of this section.

(c) If the commissioner's actions under subsection (a) of this section relate to circumstances that present an imminent danger of material harm to the health, safety, or welfare of students, the open-enrollment charter school may not receive state funds and may not resume operating until a determination is made that:

(1) despite initial evidence, the conditions at the school do not present an imminent danger of material harm to the health, safety, or welfare of students; or

(2) the conditions at the school that presented an imminent danger of material harm to the health, safety, or welfare of students have been corrected.

(d) Not later than the third business day after the date the commissioner acts under subsection (a) of this section to address circumstances that present an imminent danger of material harm to the health, safety, or welfare of students, the commissioner shall provide the charter holder an opportunity for a hearing.

(e) The hearing under this section shall be conducted under the procedures governing informal review of a preliminary investigative report specified in Chapter 157, Subchapter EE, Division 1, of this title (relating to Informal Review).

(f) An action under subsection (a) of this section to address circumstances that present an imminent danger of material harm to the health, safety, or welfare of students remains in effect until a determination under subsection (e) of this section becomes final.

(1) If the determination is in favor of the charter holder, the commissioner must cease the action under subsection (a) of this section immediately and restore all funds to which the charter holder would be entitled but for such action.

(2) If the determination is against the charter holder, the commissioner must initiate adverse action against the charter under §100.1049 of this title (relating to Revocation and Modification of Governance of an Open-Enrollment Charter). The action under subsection (a) of this section then remains in effect until the final decision under §100.1049 of this title.

§100.1049.Revocation and Modification of Governance of an Open-Enrollment Charter.

(a) Mandatory revocation or reconstitution. Except as provided by subsection (b) of this section, the commissioner of education shall either revoke the charter of an open-enrollment charter school or reconstitute the governing body of the charter holder if the commissioner determines that the charter holder:

(1) committed a material violation of the charter, including failure to satisfy accountability provisions prescribed by the charter;

(2) failed to satisfy generally accepted accounting standards of fiscal management;

(3) failed to protect the health, safety, or welfare of the students enrolled at the school;

(4) failed to comply with Texas Education Code (TEC), Chapter 12, Subchapter D, or another applicable law or rule;

(5) failed to satisfy the performance framework standards as set forth in the Charter School Performance Framework Manual established under TEC, §12.1181; or

(6) is imminently insolvent as determined by the commissioner in accordance with §100.1051(c) of this title (relating to Standards to Revoke and Modify the Governance of an Open-Enrollment Charter).

(b) Mandatory revocation.

(1) Use of criteria. Notwithstanding §100.1051 of this title, the commissioner shall revoke the charter of an open-enrollment charter school if for the three preceding school years:

(A) the charter holder has been assigned an "academically unacceptable" performance rating under TEC, Chapter 39, Subchapter C;

(B) the charter holder has been assigned a financial accountability performance rating under TEC, Chapter 39, Subchapter D, indicating financial performance lower than satisfactory; or

(C) the charter holder has been assigned any combination of an academic performance rating of "academically unacceptable" under TEC, Chapter 39, Subchapter C, and/or a financial performance rating lower than satisfactory under TEC, Chapter 39, Subchapter D. For purposes of determining a combination, a school that earned a financial and academic rating as described in subparagraphs (A) and (B) of this paragraph in the same year will count once.

(2) Use of determinations and data. The following provisions apply to a mandatory revocation under this section.

(A) If a rating or scaled score is not issued during one or more of the preceding school years, then the term "three preceding school years" means the most recent three school years during which a rating was issued.

(B) For purposes of revocation under paragraph (1)(A) of this subsection, the term "unacceptable performance" means an academic accountability rating that is unacceptable as defined in §100.1001(8) of this title (relating to Definitions).

(C) For purposes of revocation under paragraph (1)(B) of this subsection, the term "financial performance lower than satisfactory "means a financial accountability rating that is lower than satisfactory as defined in §100.1001(9) of this title.

(c) Notice and content of decision to revoke or modify. The commissioner shall provide written notice to the charter holder of the commissioner's decision to revoke or modify the governance of a charter. The notice shall include an explanation of the factual and legal basis for the decision, a description of the legally relevant factors considered, an explanation of why the result reached is reasonable, and a description of the procedures to seek a review of the decision.

(d) State Office of Administrative Hearing (SOAH) review of revocation. A decision by the commissioner to revoke the charter of an open-enrollment charter school under TEC, §12.115, is subject to review by the SOAH under an arbitrary and capricious or clearly erroneous standard as described by Chapter 157, Subchapter EE, Division 4, of this title (relating to State Office of Administrative Hearings Arbitrary and Capricious or Clearly Erroneous Review).

(e) Reconstitution of governing body of charter holder and/or creation of a new 501(c)(3) organization. With the exception of revocation actions taken under subsection (b) of this section, the commissioner may choose to reconstitute the governing board of a charter holder and/or require the creation of a new 501(c)(3) organization if it is determined that the charter holder committed any violation under subsection (a) of this section.

(1) To reconstitute the board, the commissioner shall appoint members to the governing body and shall consider local input from community members and parents as well as appropriate credentials and expertise for membership, including financial expertise, residency, and educator background. The commissioner may reappoint current members of the governing body.

(2) The commissioner may also require the charter holder board to create a new single purpose organization that is exempt from taxation under 26 United States Code, §501(c)(3), if the governing body of a charter holder subject to reconstitution governs enterprises other than the open-enrollment charter school. The commissioner shall appoint the members of the governing body of the newly created organization.

(3) The commissioner may require the charter holder to surrender the charter to the commissioner for transfer to the newly created organization.

(4) A decision by the commissioner to reconstitute the governing body of the charter of an open-enrollment charter school or to create a new 501(c)(3) organization under the Internal Revenue Code of 1986 under TEC, §12.115, is subject to a hearing as described by Chapter 157, Subchapter EE, Division 2, of this title (relating to Hearing Following Investigation).

§100.1051.Standards to Revoke and Modify the Governance of an Open-Enrollment Charter.

(a) Criteria for taking action. The action the commissioner of education takes under §100.1049(a) of this title (relating to Revocation and Modification of Governance of an Open-Enrollment Charter) to either revoke or modify the governance of a charter shall be based on the best interest of the charter school's students as it relates to the violation charged in the notice, the severity of the violation, and any previous violation the school has committed.

(1) These criteria are not listed in order of importance. Rather, the commissioner shall assign weight to each criterion as indicated by the facts of the case presented. For example, serious or persistent charter violations may warrant revocation or non-renewal even if the violations benefited or had neutral effect on the students enrolled in the charter school. The state's interest in legal compliance is sufficient basis for action.

(2) The "best interest of the charter school's students" is not a decisional criterion independent of the violation charged in the notice. Rather, the commissioner shall consider the best interests of students only as this criterion relates to the violation charged in the notice. For example, evidence of serious and persistent violations in one area of performance may not be offset or excused by evidence of benefit to students in an area of performance that is unrelated to the violation charged in the notice.

(b) Minimum academic performance required. Continuation of an open-enrollment charter is contingent on satisfactory academic performance as measured by the academic accountability ratings and accreditation statuses assigned under the Texas Education Code (TEC), Chapter 39, as well as any supplemental accountability requirements in the open-enrollment charter pursuant to TEC, §12.111(a)(3) and (4). Such supplemental requirements are in addition to, and may not supplant, satisfactory academic performance as measured by the ratings assigned under TEC, Chapter 39.

(1) Consideration of campus ratings. The commissioner shall revoke an open-enrollment charter of a charter holder if all of the campuses operated under that charter have been closed under TEC, Chapter 39.

(2) Determination of academic performance. For purposes of this subsection, required minimum academic performance shall be determined as follows.

(A) An "unsatisfactory rating" shall mean an academic accountability rating that is " academically unacceptable" as defined in §100.1001(8) of this title (relating to Definitions). For any school year, if the Texas Education Agency (TEA) assigns no district-level ratings to open-enrollment charter schools generally, but does assign campus-level ratings in that year, then unsatisfactory ratings for a majority of the campuses operated by the charter holder in such year shall constitute an unsatisfactory rating for the charter holder at the "district" level.

(B) A "satisfactory rating" shall mean an academic accountability rating that is "academically acceptable" as defined in §100.1001(8) of this title.

(C) Ratings are "consecutive" if they are not separated by a rating period in which TEA assigned accountability ratings to charter schools. For example, TEA did not assign academic accountability ratings to charter schools for the 2011-2012 school year. Thus, the ratings for the 2010-2011 and 2012-2013 school years are consecutive both for charter holders registered under the standard accountability system as well as charter holders registered under the alternative education accountability (AEA) system.

(D) If the performance of an applicant for renewal under §100.1037 of this title (relating to Renewal of an Open-Enrollment Charter) cannot be determined because the applicant's charter school has not received accountability ratings and/or accreditation statuses for a sufficient number of years to support a judgment on its student performance:

(i) the commissioner shall make a decision on student performance under the discretionary review process under §100.1037(d) of this title; and

(ii) the commissioner's review under this subparagraph shall include the charter's annual evaluation under the Charter School Performance Framework Manual established under TEC, §12.1181, and the criteria described in §100.1039 of this title (relating to Standards for Discretionary Renewal).

(E) If the performance of a charter holder cannot be determined because the small numbers of students or the grade levels served by the program prevented, limited, or significantly impacted the application of TEA's standard ratings and/or accreditation criteria, then the commissioner may evaluate substitute data chosen by the commissioner in taking action under this section.

(i) Based on evaluation under this subparagraph, the commissioner shall determine whether the applicant has demonstrated a history of unsatisfactory academic performance. Any appeal under §100.1049 of this title of a determination under this clause may include the question whether the campus has had unsatisfactory academic performance.

(ii) Regardless of whether the campus has satisfactory student performance, the commissioner may modify the open-enrollment charter to require the charter holder to serve additional students or grade levels that will cause the campus to receive academic ratings and/or statuses in the future.

(F) If the performance of a charter holder cannot be determined because a high proportion of students served are in prekindergarten-Grade 2 or another grade for which an assessment instrument is not administered under TEC, §39.023, then the commissioner may evaluate the performance of the charter holder.

(3) Finality of ratings.

(A) Any appeal to a specific rating must be brought using the appeals procedures in the relevant accountability manual, which includes AEA, adopted under Chapter 97, Subchapter AA, of this title (relating to Accountability and Performance Monitoring).

(B) Any challenge to a TEA rule, ratings standard, or process must be brought using the procedures outlined in Texas Government Code, Chapter 2001, for requesting agency rulemaking or challenging agency rules.

(c) Minimum financial performance required. Continuation of an open-enrollment charter is contingent on the charter holder satisfying generally accepted accounting standards of fiscal management.

(1) Determination. For purposes of this subsection, generally accepted standards of fiscal management shall be determined as follows.

(A) Any of the following constitutes failure to comply with generally accepted standards of fiscal management.

(i) Payment is made in excess of bonafide compensation agreements. The payment of compensation to an individual in excess of the fair market value of the services provided is a serious unsatisfactory financial performance. For purposes of this subsection, the fair market value of the services rendered shall be based on the individual's education, experience, prior salary history, the job duties actually performed, and what a typical person with similar skills, experience, and job duties would earn.

(ii) Rental or purchase of property is in excess of its fair market value.

(iii) The charter school received a significant overallocation from the Foundation School Program based on data reported by the charter holder.

(iv) The charter school becomes imminently insolvent as determined in subparagraph (C) of this paragraph.

(v) The charter school's financial auditor issues an adverse opinion regarding the school's financial statements or the school's financial auditor disclaims an opinion on the financial statements, and the issue resulting in the adverse or disclaimed opinion involves a significant amount of financial resources that were not properly documented or a material weakness that led to the misallocation of financial resources.

(vi) The charter holder exhibits other instances of fiscal mismanagement, including, but not limited to, the loss of financial records or a material non-compliance with §109.41 of this title (relating to Financial Accountability System Resource Guide) or related supplement resulting in a significant wasting of financial resources.

(vii) A final investigative report issued by TEA finds material noncompliance with the standards of this subsection.

(viii) The annual audit report required by TEC, §44.008, is more than 180 days delinquent.

(ix) The charter holder's property is subject to a lien, levy, or other garnishment and that lien, levy, or other garnishment is not removed within 30 days.

(x) The charter holder is subject to a warrant hold and that warrant hold is not removed within 30 days.

(xi) The charter holder loses its eligibility to participate in child nutrition programs for a period of more than 30 days.

(xii) The charter holder has received an audit containing an adverse or disclaimed opinion, and based on the opinion is assigned a financial accountability rating that is less than satisfactory.

(B) Charter holder financial performance will be evaluated in accordance with the following standards.

(i) Step transactions. The commissioner may view the transaction as a whole and may disregard any non-substantive intervening transaction taken to achieve the final results.

(ii) Arm's length transaction. A transaction that is described in subparagraph (A) of this paragraph that is the result of an arm's length transaction between completely unrelated parties is only a serious unsatisfactory financial performance if the transaction resulted in a significant wasting of financial resources.

(C) For purposes of this section, "imminently insolvent" means that the charter holder meets one of the following standards:

(i) has incurred liabilities in excess of net assets;

(ii) is unable to pay its debts or financial obligations within 90 days of the date they become due;

(iii) has declared bankruptcy;

(iv) has otherwise sought the protection of bankruptcy laws;

(v) had a lien or warrant hold placed against it by the Internal Revenue Service;

(vi) had a warrant hold placed against it by the Teacher Retirement System; or

(vii) has a judgment lien placed against it.

(2) Finality of audits and reports.

(A) Any review of a specific audited financial statement or investigative report must be brought using the procedures provided in the notice of the statement or report.

(B) Any challenge to a TEA rule, financial standard, or audit procedure must be brought using the procedures outlined in Texas Government Code, Chapter 2001, for requesting agency rulemaking or challenging agency rules.

(d) Minimum compliance performance required. Continuation of an open-enrollment charter is contingent on the charter holder's compliance with TEC, Chapter 12, Subchapter D; federal and state laws and rules; financial accountability standards, including student attendance accounting and grant requirements; and data integrity standards as demonstrated by monitoring reports under TEC, §7.028, final investigative reports issued by TEA, and other evidence.

(1) Standard of required performance. The open-enrollment charter authorizing a charter school that has unsatisfactory compliance performance for three consecutive school years will be revoked.

(2) Determination of performance. For purposes of this subsection, required minimum compliance performance shall be determined as follows. A charter holder's compliance with TEC, Chapter 12, Subchapter D; federal and state laws and rules; financial accountability standards, including student attendance accounting and grant requirements; or data integrity standards may be determined by applying the applicable standards to the facts as found by TEA monitoring reports under TEC, §7.028, or final investigative reports issued by TEA. Such reports establish non-compliance if the facts found therein are not in compliance with the standards set forth in this subsection. Other evidence may be considered.

(3) Finality of compliance reports.

(A) Any review of a specific monitoring report or investigative report must be brought using the procedures described in the notice of the report.

(B) Any challenge to a TEA rule or compliance standard must be brought using the procedures outlined in Texas Government Code, Chapter 2001, for requesting agency rulemaking or challenging agency rules.

(e) Minimum health and safety performance required. Continuation of an open-enrollment charter is contingent on the charter holder protecting the health, safety, and welfare of the students enrolled at the school, as determined by the commissioner under §100.1047 of this title (relating to Intervention Based on Health, Safety, or Welfare of Students) and this subsection or by an official report issued by a federal, state, or local authority with jurisdiction to issue the report.

(1) Standard of required performance. The open-enrollment charter authorizing a charter school that fails to protect the health, safety, or welfare of the students enrolled at its school while on school property, while at school-related events, or at any time while under the supervision of school personnel shall be revoked effective immediately.

(2) Determination of performance. For purposes of this subsection, required minimum health and safety performance shall be determined as follows.

(A) A final investigative report issued by TEA is admissible to prove whether the charter holder failed to protect the health, safety, or welfare of the students enrolled at its school.

(B) An official report issued by a federal, state, or local authority acting within its jurisdiction, as well as hearsay evidence and telephone testimony offered by officials from such authority, are admissible to prove whether the charter holder failed to protect the health, safety, or welfare of the students enrolled at its school.

(C) Documents and testimony considered by the commissioner in making a determination under §100.1047 of this title are admissible to prove whether the charter holder failed to protect the health, safety, or welfare of the students enrolled at its school.

(3) Finality of health and safety reports.

(A) Any appeal to a specific official report issued by a federal, state, or local authority acting within its jurisdiction must be brought using the procedures provided in law for the review of such findings.

(f) Minimum charter contract performance required. Continuation of an open-enrollment charter is contingent on the charter holder's implementation of and compliance with the terms of its open-enrollment charter as defined by §100.1001(21) of this title.

(1) Standard of required performance. The open-enrollment charter authorizing a charter school that commits a material violation of its open-enrollment charter shall be revoked.

(2) Determination of performance. For purposes of this subsection, required minimum charter performance shall be determined as follows.

(A) A charter holder's compliance with its open-enrollment charter may be determined by applying the charter terms to the facts as found by TEA monitoring reports under TEC, §7.028, or final investigative reports issued by TEA. Such reports establish non-compliance if the facts found therein are not in compliance with these terms. Other evidence may be considered.

(B) A violation of the contract for charter, request for applications (RFA), or other document approved by the State Board of Education (SBOE) or of a condition, amendment, modification, or revision of a charter approved by the commissioner is material if it directly violates the purpose of the contract, the RFA, or other documents approved by the SBOE or a condition, amendment, modification, or revision of the contract.

(C) An open-enrollment charter as defined by §100.1001(21) of this title includes all applicable state and federal laws, rules, and regulations. A violation of such laws, rules, or regulations may be considered both under this subsection and under subsections (b)-(e) of this section, as appropriate.

(3) Finality of charter violation reports. Any review of a specific investigative report must be brought using the procedures set forth in the notice of the report.

(g) Performance frameworks. Continuation of an open-enrollment charter is contingent upon the charter holder's satisfaction of standards set forth in the Charter School Performance Framework Manual established under TEC, §12.1181.

§100.1053.Management of Charter Campus(es) Following Revocation, Surrender, or Expiration.

Upon revocation, surrender, or expiration of a charter, the commissioner of education or the commissioner's designee may:

(1) assign one or more campuses to a consenting charter holder that meets the minimum qualifications for a campus expansion amendment approval as designated in §100.1035 of this title (relating to Charter Amendment); or

(2) provide for the management of the day-to-day operations of the campus(es) until alternative arrangements have been made.

§100.1055.Eligible Entity; Change in Status or Revocation.

(a) A charter holder shall take and refrain from all acts necessary to maintain its status as an "eligible entity" within the meaning of Texas Education Code, §12.101(a), and shall notify the commissioner of education immediately in writing of any change in such status.

(b) If a charter holder's exemption from taxation under 26 United States Code, §501(c)(3), is ever revoked by action of the Internal Revenue Service, for any reason, the charter shall be null and void and shall return to the commissioner without any further action on the part of the commissioner.

(c) Failure to act in accordance with subsections (a) and (b) of this section shall not only affect eligibility for state funding as outlined in §100.1061(d)(1) of this title (relating to State Funding), it will also constitute a material violation of the charter contract.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on March 4, 2024.

TRD-202400946

Cristina De La Fuente-Valadez

Director, Rulemaking

Texas Education Agency

Earliest possible date of adoption: April 14, 2024

For further information, please call: (512) 475-1497

DIVISION 4. [~~PROPERTY OF OPEN-ENROLLMENT~~] CHARTER SCHOOL FUNDING AND FINANCIAL OPERATIONS [~~SCHOOLS~~]

19 TAC §§100.1061, 100.1063, 100.1065, 100.1067, 100.1069, 100.1071, 100.1073, 100.1075, 100.1077, 100.1079

§100.1061.State Funding.

(a) Funding formula elements. A charter school is entitled to funding from both tiers of the Foundation School Program (FSP) in accordance with the funding formulas for school districts pursuant to Texas Education Code (TEC), Chapter 42.

(1) Tier I program allocations are determined by substituting the statewide average adjusted allotment in place of the district's calculated adjusted allotment. The state average adjusted allotment takes into account the cost of education index and the small, mid-size, and sparsity adjustments specified in TEC, §§42.102, 42.103, 42.104, and 42.105. The state average adjusted allotment is computed by averaging the adjusted allotment for each independent school district (ISD) in the state for the relevant school year.

(2) An allocation for the guaranteed yield allotment for Tier II of the FSP is determined by substituting a statewide average enrichment tax rate in place of the district's calculated enrichment tax rate (DTR) pursuant to TEC, §42.302. The state average tax rate is computed by averaging the DTR for each component of Tier II for each ISD in the state for the relevant school year.

(b) Implementation schedule. The formula elements described in subsection (a) of this section will take effect for charter schools that begin operation in the 2001-2002 school year or later. Charter schools that report attendance that occurs prior to September 2, 2001, are considered to be in operation on September 1, 2001, and will be funded as described in House Bill 6, Section 40(b), 77th Texas Legislature, 2001. Charter schools that report no attendance that occurs prior to September 2, 2001, are considered to begin operation in the 2001-2002 school year or later and will be funded according to subsection (a) of this section and TEC, §12.106.

(c) Tuition and fees. The governing board of the charter school shall adopt policies that clearly outline allowable and unallowable fees subject to requirements of TEC, §11.158 (a) and (b). A charter school shall not charge tuition and shall not charge a fee except:

(1) a charter school may charge a fee listed in TEC, §11.158(a), and shall not charge any fee prohibited under TEC, §11.158(b);

(2) if authorized under §100.1201(6) of this title (relating to Voluntary Participation in State Programs), a charter holder may charge tuition for certain prekindergarten classes in compliance with TEC, §29.1531 and §29.1532; and

(3) a charter school shall accept tuition for students holding certain student visas as described in TEC, §25.0031(a).

(d) Eligibility for state funding. A charter holder is not eligible to receive state funds, including grant funds, prior to execution of its contract by the charter holder or charter school board chair and the commissioner of education.

(1) If a charter holder, before or without approval of an amendment under §100.1035 of this title (relating to Charter Amendment), extends the grade levels it serves, adds or changes the address of a campus, facility, or site, or exceeds its maximum allowable enrollment, then the charter holder is not eligible to receive state funds for the activities of the unapproved amendment of its charter school operations.

(2) A former charter holder is not eligible to receive state funds.

(e) Return of overallocated funds.

(1) Within 30 days of receiving notice of an overallocation and a request for refund under TEC, §42.258, a charter holder shall transmit to the Texas Education Agency (TEA) an amount equal to the requested refund. Failure to comply with a request for refund under this subsection is a material charter violation and a management company breach. Funds allocated for student attendance in a program affected by an unapproved expansion under subsection (d)(1) of this section are overallocated within the meaning of this subsection.

(2) If the charter holder fails to make the requested refund, TEA may recover the overallocation by any means permitted by law, including, but not limited to, the process set forth in TEC, §42.258.

(3) Notwithstanding paragraph (2) of this subsection, TEA may not garnish or otherwise recover funds actually paid to and received by a charter holder under TEC, §12.106, if:

(A) the basis of the garnishment or recovery is that:

(i) the number of students enrolled in the school during a school year exceeded the student enrollment described by the school's charter during that period; and

(ii) the school received the funds under TEC, §12.106, based on an accurate report of the school's actual student enrollment; and

(B) the school used all funds received under TEC, §12.106, to provide education services to students and:

(i) submits to the commissioner a timely request to revise the maximum student enrollment described by the school's charter and the commissioner does not notify the school in writing of an objection to the proposed revision before the 90th day after the date on which the commissioner received the request, provided that the number of students enrolled at the school does not exceed the enrollment described by the school's request; or

(ii) exceeds the maximum student enrollment described by the school's charter only because a court mandated that a specific child enroll in that school.

(4) Nothing in paragraph (3) of this subsection requires the agency to fund activities that are ineligible for state funding under subsection (d)(1) of this section.

§100.1063.Status and Use of State Funds; Depository Contract.

(a) Status and use of state funds.

(1) State funds received by a charter holder are public funds for all purposes under state law and may be used only for a purpose for which a school district may use local funds under Texas Education Code (TEC), §45.105(c). Any other use or application of such funds constitutes misuse and misapplication of public funds and is subject to the civil and criminal laws governing misuse or misapplication of Texas public funds.

(2) State funds received by a charter holder are held by the charter holder in trust for the benefit of the students of the charter school. In their use of public funds, the governing body of a charter holder, and the governing body and officers of a charter school, shall be held to the standard of care and fiduciary duties that a trustee owes a beneficiary under Texas law.

(3) A charter school shall accept tuition for students holding certain student visas as described in TEC, §25.0031(a).

(b) Depository contract. Pending their use, state funds received by a charter holder must be deposited into a bank with which the charter holder has entered into a depository contract. Each year within the period prescribed by §100.1111 of this title (relating to Annual Report on Open-Enrollment Charter Governance) for filing articles of incorporation, the charter holder must file a copy of the depository contract with the Texas Education Agency division responsible for school financial audits; however, if there has been no change since the last filing, the charter holder may file a statement to this effect in lieu of a copy of the depository contract.

(1) State funds received by a charter holder must be deposited into an account owned and controlled exclusively by the charter holder pending their use. Once properly deposited, the charter holder may immediately use the funds for any purpose described in subsection (a)(1) of this section, subject to the standard of care and fiduciary duties described in subsection (a)(2) of this section.

(2) A "bank" is defined by TEC, §45.201. Although the term excludes a bank the deposits of which are not insured by the Federal Deposit Insurance Corporation (FDIC), deposits exceeding FDIC-insured amounts need not be collateralized for the institution to constitute a "bank" under this subsection.

(3) Notwithstanding this subsection, if required by a contract executed prior to September 1, 2001, state funds may be deposited into an account managed by a bond trustee acting on behalf of a charter holder for the sole purpose of complying with debt service obligations of the charter holder on a bond issued under TEC, Chapter 53.

§100.1065.Investment of State Funds.

(a) This section applies to a charter holder unless alternative requirements for investing state funds have been approved by the commissioner of education under §100.1079 of this title (relating to Optional Open-Enrollment Charter Provisions for Contracting and Purchasing), and the open-enrollment charter has been amended by the commissioner to adopt the approved procedures.

(b) A charter holder shall invest state funds in accordance with Texas Government Code, §§2256.009-2256.016.

(1) A requirement in those sections that applies to a school district or the board of trustees of a school district applies to a charter school, the governing body of a charter holder, or the governing body of a charter school.

(2) State funds invested by a charter holder shall be maintained in a discrete charter investment account, separate and distinct from the operating accounts for the charter school and separate and distinct from any investment accounts related to non-charter activities.

(3) A charter holder shall invest state funds in accordance with any applicable provision or covenant contained in a debt instrument, bond indenture, or similar agreement.

(4) Nothing in this subsection shall authorize the investment of state or federal grant funds, unless investment of such funds is expressly authorized under the terms of the grant.

(c) Investment of state funds shall be made with judgment and care, under prevailing circumstances, that a person of prudence, discretion, and intelligence would exercise in the management of the person's own affairs, not for speculation, but for investment, considering the probable safety of capital and the probable income to be derived.

(1) Investment of state funds shall be governed by the following investment objectives, in order of priority:

(A) preservation and safety of principal;

(B) liquidity; and

(2) In determining whether a charter holder, or its employee or agent, has exercised prudence with respect to an investment decision respecting state funds, the determination shall be made taking into consideration:

(A) the investment of all funds, or funds under the entity's control, over which the officer had responsibility rather than a consideration as to the prudence of a single investment; and

(B) whether the investment decision was consistent with the written investment policy of the entity.

§100.1067.Accounting for State and Federal Funds.

(a) Fiscal year. A charter holder shall adopt a fiscal year consistent with Texas Education Code (TEC), §44.0011.

(b) Financial accounting. A charter holder shall comply fully with:

(1) Generally Accepted Accounting Principles;

(2) the Financial Accountability System Resource Guide, as adopted by reference in §109.41 of this title (relating to Financial Accountability System Resource Guide);

(3) the federal standards for financial management systems, 34 Code of Federal Regulations, §80.20, Office of Management and Budget Circular A-87, and/or other applicable federal standards; and

(4) the financial accountability rating system (Financial Integrity Rating System of Texas for charter schools) specified in Chapter 109, Subchapter AA, of this title (relating to Commissioner's Rules Concerning Financial Accountability).

(c) Annual audit. A charter holder shall at its own expense have the financial and programmatic operations of the charter school audited annually by a certified public accountant licensed by the Texas State Board of Public Accountancy and registered as a provider of public accounting services.

(1) The charter holder shall file a copy of the annual audit report, approved by a charter holder, with the Texas Education Agency (TEA) division responsible for school financial audits not later than the deadline specified by TEC, §44.008.

(2) The audit must comply with Generally Accepted Auditing Standards and must include an audit of the accuracy of the fiscal information provided by the charter school through the Public Education Information Management System.

(3) Financial statements in the audit must comply with Government Auditing Standards and the Office of Management and Budget Circular A-133 or its successor.

(d) Attendance accounting. A charter holder shall comply with the Student Attendance Accounting Handbook, as adopted by reference in §129.1025 of this title (relating to Adoption by Reference: Student Attendance Accounting Handbook); TEC, §25.002; and Chapter 129 of this title (relating to Student Attendance), except that a charter school shall report its actual student attendance data to TEA at six-week intervals or as directed by TEA.

(e) Non-charter activities. A charter holder shall keep separate and distinct accounting, auditing, budgeting, reporting, and recordkeeping systems for the management and operation of the charter school.

(1) Any business activities of a charter holder not directly related to the management and operation of the program described in the open-enrollment charter shall be kept in separate and distinct accounting, auditing, budgeting, reporting, and recordkeeping systems from those recording the business activities of the charter school.

(2) Any commingling of charter and non-charter business in the accounting, auditing, budgeting, reporting, and recordkeeping systems of the charter school shall be a material charter violation.

(f) Interested transactions. A charter holder shall comply with Local Government Code, Chapter 171, in the manner provided by the conflict of interest provisions described in §§100.1143-100.1151 of this title (relating to Conflicts of Interest and Board Member Compensation; Exception; General Conflict of Interest Provisions; Conflicts Requiring Affidavit and Abstention from Voting; Conflicts Requiring Separate Vote on Budget; and Acting as Surety and Other Conflicts; Criminal Penalties). In addition, the following shall be discretely and clearly recorded in the accounting, auditing, budgeting, reporting, and recordkeeping systems for the management and operation of the charter school:

(1) financial transactions between the charter school and the non-charter activities of the charter holder;

(2) financial transactions between the charter school and an officer or employee of the charter holder or the charter school;

(3) financial transactions between the charter school and a member of the governing body of the charter holder or the charter school;

(4) financial transactions between the charter school and a management company charged with managing the finances of a charter school; and

(5) financial transactions between the charter school and any other person or entity in a position of influence over the charter holder or the charter school.

(g) Position of influence. A person or entity is in a position of influence over the charter holder or the charter school, within the meaning of subsection (f)(5) of this section, if:

(1) the charter holder or charter school is a subsidiary of or shares governing body members, officers, or employees with another organization and:

(A) the person or entity is a shareholder, partner, administrator, official, or employee of the other organization; or

(B) the person or entity by any other means participates in the business decisions of the affiliate or parent organization; or

(2) a relative of the person is in a position of influence over the charter holder or the charter school under this section, within the third degree by consanguinity or affinity, as determined under Texas Government Code, §§573.021-573.025, and §100.1135 of this title (relating to Relationships By Consanguinity or By Affinity).

§100.1069.Disclosure of Related Party Transactions.

(a) Related parties defined. A related party is such a party as defined in §100.1001 of this title (relating to Definitions) or identified as at least one of the following:

(1) a founder or current or former board member, administrator, or officer who meets the criteria in the following subparagraphs. For purposes of this paragraph, a person is a former board member, administrator, or officer if the person served in that capacity within one year of the date on which a financial transaction between the charter holder and a related party occurred:

(A) a board member, administrator, or officer of an open-enrollment charter school; or

(B) related within the third degree of consanguinity or affinity, as determined under Texas Government Code, Chapter 573, to a board member, administrator, or officer of an open-enrollment charter school;

(2) a charter holder's related organizations, joint ventures, and jointly governed organizations, including a management company or any other charter schools or network in another state operated by the same charter management company or under the same charter school network brand-identity by license, other written agreement or otherwise;

(3) an open-enrollment charter school's board members, administrators, or officers or a person related to a board member, administrator, or officer within the third degree of consanguinity or affinity, as determined under Texas Government Code, Chapter 573; or

(4) any other disqualified person, as that term is defined by 26 United States Code, §4958(f), including:

(A) any person who was, at any time during the 5-year period ending on the date of such transaction, in a position to exercise substantial influence over the affairs of the organization, such as a voting member of the governing body, a person who has ultimate responsibility for implementing the decisions of the governing body or for supervising the management, administration, or operation of the organization, or a person who has ultimate responsibility for managing the finances of the organization;

(B) a member of the family of an individual described in subparagraph (A) of this paragraph; or

(b) Related party property transactions. A charter holder shall notify the commissioner of education that it intends to enter into a property transaction with a related party as defined by subsection (a) of this section and §100.1001 of this title.

(1) The charter holder shall provide such notice to the commissioner through the Texas Education Agency division responsible for charter schools no later than 10 days prior to the transaction.

(2) If the amount of the transaction exceeds $5,000, upon request and by a date specified by the commissioner, the charter holder shall provide an appraisal from a certified appraiser to TEA.

(c) Other related party transactions. All other related party transactions shall be reported in the annual audit as required by §100.1067(f) of this title (related to Accounting for State and Federal Funds).

§100.1071.Disclosure of Campaign Contributions.

(a) The governing body of a charter holder shall adopt policies implementing the disclosure requirements of State Board of Education Operating Rule, §4.3 (Disclosure of Campaign Contributions and Gifts), or its successor, and shall insure compliance by:

(1) the members of the governing body of the charter holder and charter school;

(2) the employees and agents of the charter holder and charter school; and

(3) any management company under contract with the charter holder or charter school.

(b) The governing body of a charter holder shall insure that no state funds are expended by the charter holder, the charter school, or its management company for any political advertising within the meaning of Texas Election Code, §251.001(16), as interpreted by the advisory opinions of the Texas Ethics Commission.

§100.1073.Disclosure of Financial Information.

The governing board of an open-enrollment charter school shall continuously post on the school's internet website the following information:

(1) the salary of the school's superintendent or, as applicable, the administrator serving as the educational leader and chief executive officer; and

(2) the school's annual financial statement.

§100.1075.Audit by Commissioner; Records in the Possession of a Management Company.

(a) Commissioner authority. To the extent consistent with subsection (b) of this section, the commissioner of education may audit the records of:

(1) a charter school;

(2) a charter holder; or

(3) a management company that has provided management services to a charter school or a charter holder.

(b) Scope of audit.

(1) An audit under subsection (a) of this section must be limited to matters directly related to the management or operation of a charter school, including the allocation of costs shared between the charter school and any non-charter business activity. The audit may examine any financial or administrative records related to the charter school that are in the possession of a management company or a former management company, including records related to the allocation of shared costs.

(2) Unless the commissioner has specific cause to conduct an additional audit, the commissioner may not conduct more than one on-site audit under this section during any fiscal year, including any financial and administrative records. For purposes of this subsection, an audit of a charter holder or management company associated with a charter school is not considered an audit of the school.

(c) Charter holder cooperation. A charter holder and its employees and agents shall fully cooperate with an audit under subsection (a) of this section and shall take all actions necessary to secure the cooperation of a management company. Failure to comply timely with a request for access to records or other cooperation from the charter holder constitutes a material charter violation.

(d) Management company cooperation. A management company and its employees and agents shall fully cooperate with an audit under subsection (a) of this section. Failure to timely comply with a request for access to records or other cooperation from the management company constitutes a management company breach, which may result in the commissioner taking action to prohibit, deny renewal of, suspend, or revoke the management contract as provided in Texas Education Code, §12.126.

§100.1077.Final Audit Upon Revocation, Surrender, or Closure of an Open-Enrollment Charter.

(a) Upon closure of a charter, the charter holder governing board must at their expense conduct a final audit.

(b) The commissioner of education will assign a conservator to oversee the winding down of charter operations, protection of school assets, and recovery of any overallocation of state funds.

(c) Revocation, surrender, or closure of a charter does not terminate the authority of the commissioner over the charter holder to ensure compliance of this section or applicable laws.

§100.1079.Optional Open-Enrollment Charter Provisions for Contracting and Purchasing.

Improvements to real property. Section 100.1101 of this title (relating to Improvements to Real Property) applies to a charter holder unless the charter holder amends its open-enrollment charter to include a statement expressly adopting the provisions of Texas Education Code (TEC), Chapter 44, Subchapter B, as the charter holder's process for awarding a contract for the construction, repair, or renovation of a structure, road, highway, or other improvement or addition to real property. If such a statement is included in the open-enrollment charter, then the provisions of TEC, Chapter 44, Subchapter B, control in lieu of §100.1101 of this title. Nothing in this section shall require a charter holder to comply with TEC, Chapter 44, Subchapter B, except when awarding a contract for the construction, repair, or renovation of a structure, road, highway, or other improvement or addition to real property.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on March 4, 2024.

TRD-202400949

Cristina De La Fuente-Valadez

Director, Rulemaking

Texas Education Agency

Earliest possible date of adoption: April 14, 2024

For further information, please call: (512) 475-1497

DIVISION 5. PROPERTY OF OPEN-ENROLLMENT CHARTER SCHOOLS [~~SCHOOL GOVERNANCE~~]

19 TAC §§100.1091, 100.1093, 100.1095, 100.1097, 100.1099, 100.1101

§100.1091.Use of Public Property by a Charter Holder.

(a) Public property. An interest in real estate or personal property acquired, improved, or maintained using state funds that were received by the charter holder on or after September 1, 2001, is public property for all purposes under state law. The date on which the property was acquired, improved, or maintained is not determinative. An interest in real estate acquired, improved, or maintained using state funds that were received by the charter holder before September 1, 2001, is public property only to the extent specified by §100.1093 of this title (relating to Property Acquired with State Funds Received Before September 1, 2001--Special Rules). Where the property is acquired with federal funds, federal law may preempt this section in whole or part.

(b) Fiduciary duty respecting public property. Public property is held by the charter holder in trust for the benefit of the students of the charter school. With respect to the public property they manage, the members of the governing body of a charter holder, and the members of the governing body and officers of a charter school, are trustees under Texas law; and the students enrolled in the school are beneficiaries of a trust. Each trustee shall be held to the standard of care and fiduciary duties that a trustee owes the beneficiary of a trust under Texas law.

(c) Use of public property. Public property may be used only for a purpose for which a school district may use school district property and only to implement a program that is described in the open-enrollment charter and is consistent with Texas Education Code (TEC), §12.107.

(1) Any use or application of public property for a purpose other than implementing a program that is described in the open-enrollment charter and is consistent with TEC, §12.107, constitutes misuse and misapplication of such property, and is subject to Texas law governing misuse or misapplication of public property.

(2) The governing body of a charter holder shall adopt and enforce local policies governing the use and application of public property by its employees, agents, contractors, and management companies. The policies shall prohibit the use or application of public property for any purpose, but a program described in the open-enrollment charter, except that the policies may authorize charter holder employees to use local telephone service, cellular phones, electronic mail, Internet connections, and similar public property for incidental personal use, if the policies:

(A) do not result in any direct cost paid with state funds, or the charter holder is reimbursed for any direct cost incurred;

(B) do not impede charter school functions;

(D) authorize only incidental amounts of employee time--time periods comparable to reasonable coffee breaks during the day--for personal matters.

(3) The governing body of a charter holder shall by separate vote approve any joint use of real property for charter and non-charter activities. In the minutes of the vote approving the joint use, the governing body of a charter holder shall set forth the methodology used to allocate shared costs and the percentage allocation basis between charter and non-charter activities.

(4) The members of the governing body of a charter holder, and the members of the governing body and officers of a charter school, shall authorize all uses and applications of the public property under their control, and shall not authorize any use or application that is inconsistent with the policy required by paragraph (2) of this subsection.

(5) If, pursuant to TEC, §12.111(9), the daily management of public property is delegated to any person, including a management company, the members of the governing body of the charter holder, and the members of the governing body and officers of the charter school, shall remain fully responsible to authorize all uses and applications of public property and enforce the policy required by paragraph (2) of this subsection.

(6) Nothing in this section prevents a charter holder from authorizing the use of its public property by a contractor for the purpose of providing goods or services under the contract, if such use is an express contract term, factored into the price of the contract, and the contract is duly authorized by the governing body of the charter holder under this section.

(d) Ownership of public property. Public property is owned by the charter holder, regardless of the funds used to acquire it. Subject to the requirements of §100.1095 of this title (relating to Possession and Control of the Public Property of a Former Charter Holder) and this section, a charter holder retains all title to the property, exercises complete control over the property, and is entitled to all use and benefit from the property.

(e) Public property mixed with private property. Property acquired, improved, or maintained partly using state funds and partly using other funds is mixed public and private property, and is subject to all requirements of this section.

(f) Accounting for public property. Each charter holder shall include in its annual audit report an exhibit identifying the fixed assets of the charter holder and the ownership interest of all parties for all real estate and capitalized personal property presently held by the charter holder or acquired, improved, or maintained by the charter holder during the term of the open-enrollment charter.

(1) Pursuant to the requirements in §109.41 of this title (relating to Financial Accountability System Resource Guide), the annual audit report must separately disclose the cost basis and accumulated depreciation of all public property as determined by this division, and all other property held, acquired, improved, or maintained by the charter holder.

(2) Alternatively, the charter holder may omit the exhibit required by paragraph (1) of this subsection and substitute a statement, in accordance with the requirements in §109.41 of this title, that all property acquired, improved, or maintained during the term of the open-enrollment charter, and all property presently held by the charter holder, is public property under this division.

(3) All property held, acquired, improved, or maintained by the charter holder is subject to this subsection regardless of whether it is public or private property.

§100.1093.Property Acquired with State Funds Received Before September 1, 2001--Special Rules.

(a) Non-public property.

(1) An interest in personal property acquired, improved, and maintained solely using state funds that were received by the charter holder before September 1, 2001, is non-public property. If any part of the state funds used were received on or after September 1, 2001, then subsection (b) of this section applies to that property.

(2) An interest in real estate acquired, improved, and maintained using less than 50% state funds is non-public property if all state funds used were received before September 1, 2001. If any part of the state funds used were received on or after September 1, 2001, then subsection (b) of this section applies to that property.

(3) Non-public property under this section is exempt from §100.1091 and §100.1095 of this title (relating to Use of Public Property by a Charter Holder and Possession and Control of the Public Property of a Former Charter Holder). However, non-public property under this section must be included in the exhibit required by §100.1091(f) of this title.

(b) Public property.

(1) An interest in real estate acquired, improved, or maintained using 50% or more state funds is public property, even if all the state funds used were received by the charter holder before September 1, 2001.

(2) An interest in real estate acquired, improved, or maintained partly using state funds received on or after September 1, 2001, and partly using state funds received before September 1, 2001, is public property.

(3) An interest in personal property acquired, improved, or maintained partly using state funds received on or after September 1, 2001, and partly using state funds received before September 1, 2001, is public property.

(4) Public property under this section is subject to §100.1091 of this title.

(5) Public property under this section is subject to §100.1095 of this title only to the extent it was acquired, improved, or maintained using state funds received on or after September 1,2001.

§100.1095.Possession and Control of the Public Property of a Former Charter Holder.

(a) Disposition of audited property. The commissioner of education shall take possession, assume control, and supervise the disposition of the public property disclosed by the annual audit report as filed with the Texas Education Agency (TEA) or as revised pursuant to subsection (b) of this section. At any time, the commissioner may appoint a board of managers to transfer the property or may direct the governing board of the charter holder to transfer the property. The commissioner may transfer or direct the transfer of property to any public school if the commissioner determines that the transfer is in the best interest of students. For purposes of this section, references to a charter holder refers to both an organization that currently holds a charter contract and an organization that formerly held a charter contract.

(b) Disposition of property--defective audit. If the annual audit reports filed by a former charter holder are not in substantial compliance with §100.1091(f) of this title (relating to Use of Public Property by a Charter Holder), the commissioner shall use such legal process as may be available under Texas law to take possession and assume control of all property of the former charter holder and, using such legal process, supervise the disposition of such property in accordance with law. The commissioner may transfer or direct the transfer of property to any public school if the commissioner determines that the transfer is in the best interest of students.

(1) At any time, the commissioner may determine whether the exhibits to the annual audit reports filed by a former charter holder substantially comply with §100.1091(f) of this title.

(2) At the commissioner's sole discretion, the commissioner may cure any defects in the annual audit reports by reviewing the audit reports and reclassifying the transactions and restating the financial statements or by securing, at the former charter holder's expense, such professional services as may be required to create and/or audit the necessary exhibits to the annual audit reports.

(3) The commissioner may, at the commissioner's sole discretion, take possession, assume control, and supervise the disposition of the public property disclosed by those exhibits as provided by subsection (c) of this section.

(c) Method of disposition of property. The commissioner may take possession, assume control, and supervise the disposition of property by taking one or more of the following actions.

(1) For real property purchased with funds received under the Texas Education Code (TEC), §12.106, the commissioner shall direct the charter holder to dispose of the property through one of the following methods.

(A) The charter holder may retain or sell the property and provide reimbursement to the state. The following provisions apply to a charter holder that retains or sells the property.

(i) The charter holder must notify the commissioner more than 30 calendar days prior to the last day of instruction that the charter holder intends to reimburse the state for its interest in the property and specify whether the charter holder intends to retain or sell the real property.

(ii) The charter holder must provide the commissioner a written assurance that the charter holder will comply with the requirements of TEC, §12.1284.

(iii) The charter holder must obtain the written consent of the commissioner.

(iv) The charter holder must file an affidavit in the real property records of the county in which the real property is located disclosing the state interest in the property at least 30 calendar days prior to the last day of instruction.

(v) Not later than 30 calendar days after the charter school's last day of operation, the charter holder must deposit with the Texas Comptroller of Public Accounts an amount equal to 110% of the estimated state reimbursement for the property as directed by the commissioner, which TEA will calculate by taking the fair-market value of the property as determined by an appraisal approved by the commissioner, subtracting the principal amount of any debt described by TEC, §12.128(e), and multiplying that result by a fraction for which the numerator is the funds received under TEC, §12.106, used to purchase the property and the denominator is the funds received under TEC, §12.106, plus any non-state funds used to purchase the property. If an appraisal cannot be obtained in 30 calendar days, the charter holder may request that the commissioner grant an extension.

(vi) The charter holder must prepare and submit a final audit under TEC, §44.008. This audit must be filed by the deadline specified in TEC, §44.008, and must disclose:

(I) the total amount of funds received under TEC, §12.106, that were used to purchase each separate item of real property to be retained or sold by the charter holder;

(II) the total amount of federal funds that were used to purchase each separate item of real property to be retained or sold by the former charter holder; and

(III) the total amount of state, federal, or any other private funds that were used to purchase the property to be retained or sold by the former charter holder.

(vii) The charter holder shall timely make all required payments relating to the property, including note payments; shall maintain the premises; and shall maintain full insurance coverage as determined by the commissioner until the state has received its full reimbursement and released its claim to the property.

(viii) The following provisions apply if the charter holder elects to retain the property.

(I) After the final annual audit report is filed, TEA will calculate the final state reimbursement amount, which is calculated by taking the fair-market value of the property as determined by the commissioner less the final principal amount of any debt described by TEC, §12.128(e), that was incurred prior to the charter school's cessation of operations and multiplying that amount by a fraction for which the numerator is the funds received under TEC, §12.106, used to purchase the property and the denominator is the funds received under TEC, §12.106, plus any non-state funds used to purchase the property.

(II) If the final state reimbursement amount is greater than the deposit made with the comptroller under this section, the former charter holder must make the additional deposit to the comptroller within 30 calendar days of TEA's determination of the final state reimbursement amount or as otherwise ordered by the commissioner.

(III) Once the charter holder has filed its final audit report under TEC, §44.008, and sufficient funds are on deposit with the comptroller to pay the final reimbursement amount, the commissioner may request the comptroller to distribute the deposit as directed by TEA and release any state claim on the property. Any remaining funds on deposit with the comptroller may be returned to the former charter holder once the state has received the full final reimbursement amount.

(IV) If the charter holder fails to complete its final financial audit under TEC, §44.008, or fails to make an additional payment to the comptroller as required, the charter holder shall forfeit the amount deposited with the comptroller and shall dispose of the property as ordered by the commissioner. The commissioner may extend this deadline upon request of the charter holder.

(ix) The following provisions apply if the charter holder sells the property.

(I) The property must be sold for at least fair-market value, as determined under this section.

(II) The property must be sold and fully closed no later than one year after the last day of instruction.

(III) If the property is sold prior to the completion of the final audit report under TEC, §44.008, for an amount greater than the fair-market value used to determine the estimated state reimbursement amount, the charter holder shall deposit with the comptroller an amount equal to the difference between the estimated fair-market value and the sales price multiplied by the percentage of state funds used to purchase the property based on the most recent audit pursuant to TEC, §44.008.

(IV) After the property has been sold and the final audit report, pursuant to TEC, §44.008, has been filed, TEA shall calculate the final state reimbursement amount.

(V) The final state reimbursement amount is calculated by taking the final gross sales price of the property less the remaining principal amount of any debt described by TEC, §12.128(e), that was incurred prior to the charter school's cessation of operations and multiplying that amount by a fraction for which the numerator is the funds received under TEC, §12.106, used to purchase the property and the denominator is the funds received under TEC, §12.106, plus any non-state funds used to purchase the property.

(VI) If the final state reimbursement amount is greater than the total deposit made with the comptroller, the former charter holder must make the additional deposit to the comptroller within 30 calendar days or as otherwise ordered by the commissioner.

(VII) Once the former charter holder has filed its final audit report under TEC, §44.008, and sold the property, and once sufficient funds are on deposit with the state comptroller's office to pay the final reimbursement amount, the commissioner may request the comptroller to distribute the deposit and release any state claim on the property. Any funds on deposit with the comptroller may be returned to the former charter holder once the state has received the full final reimbursement amount.

(VIII) The release of claims may be made in a closing where an independent third party is responsible for distributing the funds necessary to supplement the escrow account with the comptroller's office. If the property is sold before the final audit has been submitted to TEA, TEA may elect to release its claim on the property based on the most recent audit report.

(IX) If the charter holder fails to complete its final financial audit under TEC, §44.008, fails to sell the property within one year after the last day of instruction, or fails to make an additional payment to the comptroller as required, the charter holder shall forfeit the amount deposited with the state comptroller and shall dispose of the property as ordered by the commissioner.

(x) For purposes of determining the fair-market value of the real property, the charter holder shall provide an appraisal from a certified appraiser approved by the commissioner not less than 60 calendar days after the final order of revocation, non-renewal, surrender, or return of the charter, or as otherwise directed by the commissioner. If the charter holder cannot provide an appraisal within 60 calendar days, the charter holder may request that the commissioner grant an extension.

(xi) The commissioner may direct the charter holder to contract with a specified, certified appraiser or require the charter holder to obtain additional appraisals and may then choose which appraisal will be used to calculate fair-market value.

(xii) Subject to the satisfaction of any security interest or lien described by TEC, §12.128(e), if the commissioner determines a former charter holder failed to comply with this section or TEC, §12.1282, on request of TEA, the attorney general shall take any appropriate legal action to compel the former charter holder to convey title to TEA or other governmental entity authorized by TEA to maintain or dispose of the property.

(xiii) All payments made by the charter holder to retain real property must be made with non-state funds. Lease payments received for state property are state property.

(xiv) A decision by the commissioner under this section is final and may not be appealed.

(B) The charter holder may transfer the property using one of the following methods.

(i) Transfer to TEA.

(I) Subject to the satisfaction of any security interest or lien, the former charter holder shall transfer the property, including a conveyance of title, to TEA no later than two weeks after the last day of instruction.

(II) The following provisions apply to the sale of public real property by TEA.

(-a-) After TEA receives title to real property described by TEC, §12.128, TEA may sell the property at any price acceptable to TEA.

(-b-) On request of TEA, the General Land Office shall enter into a memorandum of understanding to sell real property for TEA as required by TEC, §12.1283. The memorandum of understanding may allow the General Land Office to recover from the sale proceeds any cost incurred by the office or commission in the sale of the property.

(-c-) Subject to the satisfaction of any security interest or lien described by TEC, §12.128(e), proceeds from the sale of property under this section shall be deposited in the charter school liquidation fund.

(ii) Transfer to a school district or open-enrollment charter school under TEC, §12.1282.

(I) The following order of priority shall be used when transferring to a school district or open-enrollment charter school under this clause. No property may be transferred to a school district or charter school if it has a financial accountability rating of lower than satisfactory.

(-a-) A charter school with the highest or second-highest academic accountability rating with no campus rated at the lowest or second-lowest accountability rating.

(-b-) A school district that has the highest or second-highest academic accountability rating with no campus rated at the lowest or second-lowest accountability rating.

(-c-) A charter school with the third-highest academic accountability rating with no campus rated at the lowest or second-lowest accountability rating.

(-d-) A school district with the third-highest academic accountability rating with no campus rated at the lowest or second-lowest accountability rating.

(II) A school district or an open-enrollment charter school may receive property under this clause only if:

(-a-) the open-enrollment charter school or school district receiving the property:

(-1-) has not received notice of the expiration or revocation of the contract for charter, notice of reconstitution of its governing body, or the assignment of an accreditation rating of Not Accredited-Revoked;

(-2-) agrees to the transfer;

(-3-) agrees to identify the property as purchased wholly using state funds on the school's annual financial report filed under TEC, §44.008; and

(-4-) agrees that if the property is sold within three years, the charter holder or school district will remit the sales proceeds back to TEA to be deposited in the charter school liquidation fund;

(-b-) any creditor with a security interest in or lien on the property described by TEC, §12.128(e), agrees to the transfer; and

(-c-) the transfer of the property does not make the open-enrollment charter school or school district receiving the property insolvent.

(III) Property received by an open-enrollment charter school or school district under this clause is considered state property. TEA may require a set amount of remuneration in exchange for the property, may accept bids, or may accept bids with a minimum bid amount established. If TEA takes bids, TEA shall transfer the property to the highest qualified bidder from the highest priority category established in subclause (I) of this clause, except as provided by subsection (g) of this section.

(2) For personal property purchased with state funds, the commissioner shall direct the charter holder to dispose of the property through one of the following methods.

(A) If TEA determines that the cost of disposing of personal property described by TEC, §12.128, transferred to TEA by an open-enrollment charter school that ceases to operate exceeds the return of value from the sale of the property, TEA may distribute the personal property to open-enrollment charter schools and school districts in a manner determined by the commissioner.

(B) On request of TEA, the Texas Facilities Commission shall enter into a memorandum of understanding to sell personal property for TEA as required by TEC, §12.1283.

(i) A memorandum of understanding entered into as provided by this subparagraph may allow the Texas Facilities Commission to recover from the sale proceeds any cost incurred by the office or commission in the sale of the property.

(ii) Subject to the satisfaction of any security interest or lien described by TEC, §12.128(e), proceeds from the sale of personal property under this section shall be deposited in the charter school liquidation fund.

(3) For property leased with state funds, the commissioner may direct the charter holder to assign the charter holder's interest in the lease to TEA or may direct the charter holder to cancel the lease.

(d) Maintenance of property. TEA may approve an expenditure of remaining funds by a former charter holder for insurance or utilities for or maintenance, repairs, or improvements to property described by this section, and TEA may lease the property in its possession if TEA determines that the action is reasonably necessary to dispose of the property or preserve the property's value.

(e) Funds and assets following termination of operations. After extinguishing all payable obligations owed by the charter school that ceases to operate, and after disposing of all real and personal property owned by the charter school that ceases to operate, the former charter holder shall:

(1) remit to TEA any remaining funds as described by TEC, §12.106(h), and any state reimbursement amounts as described by TEC, §12.128, to be deposited in the charter school liquidation fund;

(2) transfer all or a portion of the remaining funds to another charter school that has all or part of the operations of the former charter school assigned to it under TEC, §12.116(d)(2), if ordered by the commissioner, only if the charter school:

(A) has not received notice of possible adverse action or sanction by the commissioner;

(B) has an academic accountability rating at the district level of A or B and no campus with a rating of D or F;

(C) has a rating under the Financial Integrity Rating System of Texas for charter schools of Meets Standard Achievement or above;

(D) has an accreditation rating of Accredited;

(E) does not have any warrant holds by which state payments issued to payees indebted to the state, or payees with a tax delinquency, are held by the comptroller until the debt is satisfied in accordance with Texas Government Code, §403.055; and

(F) agrees to classify the property as state property; or

(3) take any combination of the actions described by paragraphs (1) and (2) of this subsection.

(f) Use of legal process. Notwithstanding subsection (c) of this section, the commissioner may use such legal process as may be available under Texas law to take possession and assume control over the public property disclosed by the annual audit reports and, using such legal process, supervise the disposition of such property in accordance with law.

(g) Commissioner authority. The commissioner has discretion to direct disposition of the property in the best interest of Texas students.

§100.1097.Rights and Duties Not Affected.

Nothing in this subchapter, and nothing in Texas Education Code, §12.128:

(1) affects a security interest in or lien on property established by a creditor in compliance with law if the security interest or lien arose in connection with the sale or lease of the property to the charter holder;

(2) obligates the state of Texas or any agency of the state of Texas to fulfill any lease agreement or any other contractual or legal obligation entered into by a charter holder on behalf of an open-enrollment charter school; or

(3) affects the right or the duty of the attorney general to bring suit under the Texas Miscellaneous Corporations Act, the Texas Deceptive Trade Practices Act, or other law respecting Texas non-profit corporations.

§100.1099.Real Property Held in Trust.

(a) This section applies to a charter holder unless alternative procedures for purchasing and selling real property held in trust have been approved by the commissioner of education under §100.1079 of this title (relating to Optional Open-Enrollment Charter Provisions for Contracting and Purchasing), and the open-enrollment charter has been amended by the commissioner to adopt the approved procedures.

(b) A requirement in Texas Government Code, Chapter 2252, Subchapter D, which applies to a school district or the board of trustees of a school district applies to a charter school, the governing body of a charter holder, or the governing body of a charter school.

(1) A charter holder may not purchase real property held in trust until the trustee submits to the governing body of the charter holder a copy of the trust agreement identifying the true owner of the property. The trustee shall identify the true owner of the property to the charter holder.

(2) A charter holder may not sell real property to a trustee until the charter holder receives from the trustee a copy of the trust agreement identifying the person who will be the true owner of the property. The trustee shall identify the person who will be the true owner of the property to the charter holder.

(3) A conveyance of property subject to this section is void if a charter holder fails to comply with this section.

(4) A trust agreement submitted to the governing body of the charter holder is confidential information excepted from the requirements of Texas Government Code, §552.021, but must be disclosed to the Texas Education Agency under §100.1043 (relating to Agency Audits, Monitoring, and Investigations).

§100.1101.Improvements to Real Property.

(a) This section applies to a charter holder unless alternative procedures for awarding a contract for the construction, repair, or renovation of a structure, road, highway, or other improvement or addition to real property have been approved by the commissioner of education under §100.1079 of this title (relating to Optional Open-Enrollment Charter Provisions for Contracting and Purchasing) and the open-enrollment charter has been amended by the commissioner of education to adopt the approved procedures.

(b) A charter holder shall comply with Local Government Code, Chapter 271, Subchapter B, in awarding any contract for the construction, repair, or renovation of a structure, road, highway, or other improvement or addition to real property if the contract requires the expenditure of public funds in the amount specified by Local Government Code, §271.024. A requirement in that subchapter applies to a school district or the board of trustees of a school district applies to a charter school, the governing body of a charter holder, or the governing body of a charter school.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on March 4, 2024.

TRD-202400951

Cristina De La Fuente-Valadez

Director, Rulemaking

Texas Education Agency

Earliest possible date of adoption: April 14, 2024

For further information, please call: (512) 475-1497

DIVISION 6. CHARTER SCHOOL GOVERNANCE [~~OPERATIONS~~]

19 TAC §§100.1111, 100.1113, 100.1115, 100.1117, 100.1119, 100.1121, 100.1123, 100.1125, 100.1127, 100.1131, 100.1133, 100.1135, 100.1137, 100.1139, 100.1141, 100.1143, 100.1145, 100.1147, 100.1149, 100.1151, 100.1153, 100.1155, 100.1157, 100.1159, 100.1161, 100.1163

§100.1111.Annual Report on Open-Enrollment Charter Governance.

(a) Using a format and timeline as approved by the commissioner of education, each open-enrollment charter holder shall file under §100.1003 of this title (relating to Filing of Documents), the following information on an annual basis:

(1) identifying information for and compensation of each officer and member of the governing body of the open-enrollment charter holder;

(2) identifying information for and compensation of each officer of the charter school;

(3) identifying information for and compensation of each member of the governing body of the charter school, if the charter holder has established a governing body for the charter school;

(4) identifying information for and compensation of all family members, within the third degree of consanguinity or third degree of affinity of each board member, chief executive officer/superintendent, and chief financial officer for purposes of conflict of interest; and

(5) identifying information for and compensation of all family members, within the third degree of consanguinity or second degree of affinity of each board member and chief executive officer/superintendent for purposes of nepotism.

(b) The identifying information required for each member of the governing body of the open-enrollment charter holder, each member of the governing body of the charter school, and each chief executive officer/superintendent shall include:

(1) the title of each position held, or function performed, by the individual;

(2) the specific powers and duties that the governing body of the charter holder or charter school have delegated to the individual, as described by the powers and duties listed in the charter;

(3) the legal name of the individual;

(4) any aliases or names formerly used by the individual, including maiden name;

(5) a mailing address unique for the individual;

(6) a telephone number and electronic mail address unique for the individual;

(7) the county and state in which the individual is registered to vote, if a governing body member of the charter holder or charter school; and

(8) assurance that criminal records history check has been made and reported to the Texas Education Agency pursuant to §100.1153 of this title (relating to Criminal History; Restrictions on Serving).

(c) The compensation information required for an individual under subsection (a) of this section shall include all compensation, remuneration, and benefits received by the individual in any capacity from the charter holder or the charter school, or from any contractor or management company doing business with the charter holder or charter school. The compensation reported shall include without limitation:

(1) all salary, bonuses, benefits, or other compensation received pursuant to an employment relationship;

(2) all compensation received for goods or services under contract, agreement, informal arrangement, or otherwise;

(3) all payment of or reimbursement for personal expenses;

(4) all credit extended to the individual by the charter holder or charter school;

(5) the fair market value of all personal use of property paid for by the charter holder or charter school;

(6) the fair market value of all in-kind transfers of property;

(7) all compensation for goods or services provided to the charter holder through transactions unrelated to the charter school;

(8) all other forms of compensation or remuneration received by the individual from the charter holder or charter school;

(9) all forms of compensation received from a business in which a person under subsection (a) of this section has a significant interest in, pursuant to Texas Government Code, Chapter 171; and

(10) any payment or form of compensation to an individual under subsection (a) of this section by any and all family members, within the third degree of consanguinity or third degree of affinity.

§100.1113.Delegation of Powers and Duties.

(a) Primary responsibility. The governing body of a charter holder has the primary responsibility for implementing the public school program authorized by the open-enrollment charter and ensuring the performance of the students enrolled in its charter schools in accordance with the Texas Education Code (TEC).

(1) Governing board non-delegable duties. The following powers and duties must generally be exercised by the governing body of the charter holder itself, acting as a body corporate in meetings posted in compliance with Texas Government Code, Chapter 551. Absent a specific written exception of this paragraph, setting forth good cause why a specific function listed in subparagraphs (A)-(F) of this paragraph cannot reasonably be carried out by the charter holder governing body, the commissioner of education may not grant an amendment delegating such functions to any person or entity through a contract for management services or otherwise. An amendment that is not authorized by such a specific written exception is not effective for any purpose. Absent such exception, the governing body of the charter holder shall not delegate:

(A) final authority to hear or decide employee grievances, citizen complaints, or parental concerns;

(B) final authority to adopt or amend the budget of the charter holder or the charter school or to authorize the expenditure or obligation of state funds or the use of public property;

(C) final authority to direct the disposition or safekeeping of public records, except that the governing body may delegate this function to any person, subject to the governing body's superior right of immediate access to, control over, and possession of such records;

(D) final authority to adopt policies governing charter school operations;

(E) final authority to approve audit reports under TEC, §44.008(d); or

(F) final authority to select, employ, direct, evaluate, renew, non-renew, terminate, or set compensation for the superintendent or, as applicable, the administrator serving as the educational leader and chief executive officer.

(2) Superintendent non-delegable duties. The following powers and duties must be exercised by the superintendent or, as applicable, the administrator serving as the educational leader and chief executive officer of the charter school. Absent a specific written exception of this paragraph, setting forth good cause why a specific function listed in subparagraphs (A)-(C) of this paragraph cannot reasonably be carried out by the superintendent or, as applicable, the administrator serving as the educational leader and chief executive officer of the charter school, the commissioner may not grant an amendment permitting the superintendent/chief executive officer to delegate such function through a contract for management services or otherwise. An amendment that is not authorized by such a specific written exception is not effective for any purpose. Absent such exception, the superintendent/chief executive officer of the charter school shall not delegate final authority:

(A) to organize the charter school's central administration;

(B) to approve reports or data submissions required by law; or

(b) Alienation of open-enrollment charter. An open-enrollment charter grants to the governing body of a charter holder the authority to operate a charter school.

(1) The governing body of the charter holder shall, acting as a body corporate in meetings posted in compliance with Texas Government Code, Chapter 551, oversee the management of the charter school.

(2) Except as provided by this section, the governing body's powers and duties to operate the charter school shall not be delegated, transferred, assigned, encumbered, pledged, subcontracted, or in any way alienated by the governing body of the charter holder. Any attempt to do so shall be null and void and of no force or effect and shall constitute abandonment of the contract for charter.

(3) A charter holder shall notify the Texas Education Agency (TEA) in writing prior to initiating any type of bankruptcy proceeding respecting the charter holder. Filing for any form of bankruptcy relief prior to such notice shall constitute abandonment of the contract for charter.

(c) Exclusive method for delegating charter powers and duties. An open-enrollment charter must specify the powers or duties of the governing body of the charter holder that the governing body may delegate to an officer, employee, contractor, management company, creditor, or any other person. The exclusive method for making such a delegation shall be to file a request for a delegation amendment with the TEA division responsible for charter schools under §100.1035 of this title (relating to Charter Amendment), specifying the power or duty delegated and the particular person or entity to which it is delegated. The commissioner may approve a delegation amendment only if the conditions in the following paragraphs are met. The commissioner may grant the amendment without condition or may require compliance with such conditions and/or requirements as may be in the best interest of students:

(1) the charter holder meets all requirements applicable to delegation amendments and amendments generally;

(2) the amendment complies with all requirements of this division; and

(3) the commissioner determines that the amendment is in the best interest of students.

(d) Accountability for delegated powers and duties retained. The governing body of a charter holder remains responsible for the management, operation, and accountability of the charter school operated by the charter holder, regardless of whether the governing body delegates any of its powers or duties.

(e) Standards for delegated persons or entities. The person or entity to which any power or duty is delegated shall be held to the same standards as the governing body with respect to use of property, funds or resources, and including as fiduciaries to the students enrolled in the charter school and must act in the best interest of the students, and may be held liable under TEC, §12.122, for breach of fiduciary duty, including misapplication of public funds. The commissioner may rescind any delegation amendment for any reason in the commissioner's sole discretion.

§100.1115.Training Requirements for Governing Board Members and Officers.

(a) Training required. All governing board members or officers of a charter school must complete all applicable training requirements under §§100.1117, 100.1119, and 100.1121 of this title (relating to Core Training for New Governing Board Members and Officers; Additional Training for New Governing Board Members and Officers; and Continuing Training for Governing Board Members and Officers), unless otherwise exempted by subsection (e) of this section.

(b) Instructional hours. All training requirements in this division are expressed as instructional hours, meaning they exclude time spent for breaks, administrative tasks, and other non-instructional tasks.

(c) Training providers. All training must be delivered by a training provider registered under §100.1125 of this title (relating to Training Providers).

(d) Training delivery. Unless otherwise specified by curriculum outlines disseminated by the commissioner of education under §100.1117 or §100.1119 of this title, training may be provided through online instruction by an authorized training provider, provided that the training offers an opportunity for interaction with the instructor in real time.

(e) Exemptions.

(1) A member of the governing body of a charter holder who serves on the governing body of a governmental entity or an institution of higher education as defined under Texas Education Code, §61.003, is exempt from the training required by this section if, by virtue of such service, the member is subject to other mandatory training and the members of the governing body of the charter school operated by the charter holder comply with this section.

(2) A central administrative officer is exempt from the training required by this section if the person is the holder in good standing of a standard superintendent certificate, or its lifetime equivalent, issued by the State Board for Educator Certification and all other officers of the charter school comply with this division.

(3) A campus administrative officer is exempt from the training required by this section if the person is the holder in good standing of a standard principal certificate, or its lifetime equivalent, issued by the State Board for Educator Certification, and all other officers of the charter school comply with this division.

(4) A business manager is exempt from:

(A) the training required by this section if the person is the holder in good standing of one or more of the following credentials issued by the Texas Association of School Business Officials, and if all other officers of the charter school comply with this division:

(i) Registered Texas School Business Administrator;

(ii) Certified Texas School Business Official;

(iii) Certified Texas School Business Specialist;

(iv) Certified Texas School Business Administrator; or

(v) Charter School Business Officer Certification; and

(B) any single part of required training, if:

(i) the business manager is a certified public accountant (CPA) registered in good standing with the Texas State Board of Public Accountancy; and

(ii) the subject matter of the module of required training is covered by the Uniform CPA Examination administered by the Texas State Board of Public Accountancy.

§100.1117.Core Training for New Governing Board Members and Officers.

(a) Training required. A new governing board member or officer, defined as any board member or officer who has not served in their position or similar position requiring the core program training with a Texas charter school in the last three years, must complete core training that consists of 10 instructional hours outlined in this section.

(b) Timeline for completing training. The core training must be completed within one calendar year of appointment or election to such governing body or employment by the charter, as applicable, unless otherwise indicated in subsection (d) of this section or as required by Texas law.

(c) Required curriculum outline. The commissioner of education shall approve and disseminate a curriculum outline that specifies all core training content, time, and delivery requirements. Training that does not conform to the core curriculum outline does not satisfy the requirements of this section.

(d) Core training content. The core training shall cover, at minimum, the following topics:

(1) Charter Law, including:

(A) history and purpose of charter schools;

(B) charter holder contractual obligations to the Texas Education Agency (TEA);

(D) charter School Performance Framework;

(E) charter contract renewal with TEA;

(F) charter amendments;

(G) contract revocation;

(H) student enrollment and lotteries;

(I) roles and responsibilities by officer type;

(J) ensuring services to special populations;

(K) student code of conduct, student discipline, and parental rights; and

(L) other laws and rules that apply to charter holders;

(2) Accountability to the Public, including:

(A) Texas Open Meetings Act, open meetings requirements under Texas Government Code, Chapter 551, with special emphasis on posting the agenda, executive sessions, accessibility of the meeting location to the public, employee board members, and civil and criminal sanctions, which must be completed by new governing board members within the first 90 days after joining the board;

(B) Texas Public Information Act requirements under Texas Government Code, Chapter 552, which must be completed by new governing board members within the first 90 days after joining the board;

(D) audits, investigations, and sanctions, with an emphasis on mandatory revocation for three consecutive unacceptable performance ratings required by Texas Education Code (TEC), §12.115(c), and mandatory expiration for three out of five unacceptable performance ratings required by TEC, §12.1141(d);

(E) student records and privacy; and

(F) other accountability or transparency requirements that apply to charter holders;

(3) Evaluating and Improving Student Outcomes, including:

(A) Texas Essential Knowledge and Skills;

(B) State of Texas Assessments of Academic Readiness;

(D) setting school board required specific, quantifiable student outcome goals for all students and disaggregated student groups;

(E) adopting plans to improve early literacy and numeracy and college, career, and military readiness;

(F) Results Driven Accountability;

(G) progress monitoring practices to improve student outcomes; and

(H) other best practices for improving student outcomes;

(4) Accountability for Public Funds, including:

(A) school finance in Texas, with an emphasis on charter finance;

(B) Financial Integrity Rating System of Texas;

(D) Financial Accountability System Resource Guide;

(E) financial controls and monitoring financial health;

(F) annual budgets; and

(G) other items related to school finance, risk management, related party transactions, or financial oversight; and

(5) School Safety, including:

(A) school safety plans and audits;

(B) school emergency and safety drills;

(D) school safety and security committee;

(E) school security guard;

(F) traumatic injury response;

(G) identifying child abuse and human trafficking;

(H) school safety facility standards; and

(I) other items related to school safety or student health.

§100.1119.Additional Training for New Governing Board Members and Officers.

(a) Training required. A new governing board member or officer who has completed the core training under §100.1117 of this title (relating to Core Training for New Governing Board Members and Officers) next must complete additional training as outlined in this section.

(b) Timeline for completing training. The additional training requirements must be completed after the core training is completed and within one calendar year of appointment or election to such governing body or employment by the charter, as applicable.

(c) Optional curriculum outline. The commissioner of education may approve and disseminate a curriculum outline that specifies all additional training content for this subsection. Training that does not conform to any curriculum outline released by the commissioner does not satisfy the requirements of this section.

(d) Governing board member requirements. A new governing board member must complete two additional instructional hours on board governance requirements and best practices, including:

(1) hiring and evaluating a superintendent;

(2) required training and governance requirements;

(3) non-delegable board governance duties;

(4) board meeting protocols; and

(5) other practices for effective governance and continuous improvement.

(e) Officer requirements. A new officer must complete additional training hours specific to their role as follows.

(1) Chief executive and central administrative officers must complete 20 additional instructional hours that further explore the core training topics outlined in §100.1117(d) of this title, including:

(A) two hours on Charter Law;

(B) two hours on Accountability to the Public;

(D) three hours on Accountability for Public Funds;

(E) three hours on School Safety; and

(F) four hours on any other core training topic outlined in §100.1117(d) of this title.

(2) Campus administrative officers are not required to complete additional instructional hours.

(3) Business managers must complete 20 additional instructional hours that further explore the core training topics outlined in §100.1117(d) of this title, including:

(A) two hours on Charter Law;

(B) two hours on Accountability to the Public;

(D) nine hours on Accountability for Public Funds; and

(E) four hours on any other core training topic outlined in §100.1117(d) of this title.

(f) Excess hours earned. Twenty-five percent of instructional hours earned in excess of the requirements set forth in this section by a new governing board member or officer may be carried over to meet the following year's requirement under §100.1121 of this title (relating to Continuing Training for Governing Board Members and Officers).

§100.1121.Continuing Training for Governing Board Members and Officers.

(a) Training required. Any governing board member or officer who has completed the training requirements under §100.1117 and §100.1119 of this title (relating to Core Training for New Governing Board Members and Officers Additional Training for New Governing Board Members and Officers) must annually thereafter complete additional training as outlined in this section.

(b) Training content. Continuing training under this subsection shall:

(1) fulfill training needs determined by the charter based on charter needs;

(2) address updated items identified in the core training topics outlined in §100.1117(d) of this title or cover in greater depth than the curriculum outline indicates for initial training on those topics; or

(3) address applicable topics if a charter holder has lower than a C in the Texas A-F Accountability System, lower than a C in the Financial Integrity Rating System of Texas for charter schools, or is rated in TIER 3 on the Charter School Performance Framework, or is being sanctioned, investigated, or is required by the Texas Education Agency to take corrective action the training.

(c) Governing board member requirements. Governing board members must annually receive six instructional hours of training.

(d) Officer requirements. An officer must complete additional training hours specific to their role as follows.

(1) Campus administrative officers must annually receive five instructional hours of training.

(2) Business managers must annually receive 15 instructional hours of training.

(3) Chief executive and central administrative officers must annually receive 15 instructional hours of training.

(e) Excess hours earned. Twenty-five percent of instructional hours earned in excess of the requirements set forth in this section by a governing board member or officer may be carried over to meet the following year's requirement under this section.

§100.1123.Exemption for Participation in a Shared Services Cooperative.

(a) Shared service cooperative exemption. An officer of a charter school is exempt from a module of required training on a specific duty or responsibility if:

(1) the charter holder is a member of a shared services cooperative;

(2) the written contract establishing the cooperative assigns to the cooperative the specific duty or responsibility, and assigns to the cooperative the requirement to complete that module of training, by:

(A) ensuring that all relevant employees attend that module of required training and receive a certificate of course completion for that module from a regional education service center or training provider registered under §100.1125 of this title (relating to Training Providers); or

(B) if the cooperative is a registered training provider, ensuring that all relevant employees attend that module of training and receive a certificate of course completion for that module from the cooperative; and

(3) all relevant employees of the cooperative actually attend that module of training and receive a certificate of completion for that module.

(b) Nothing in this section affects an exemption available by virtue of another section in this division.

§100.1125.Training Providers.

(a) Authorized training providers. Training under this section may be provided only by a Texas Education Agency (TEA)-authorized training provider approved by the commissioner of education. Training that is not provided by an authorized TEA training provider at the time of training does not satisfy training requirements specified in this division. The fee for a course or module of training shall be determined by the registered training provider.

(b) Application to become an authorized training provider. An education service center (ESC), entity, or individual may apply to be an authorized training provider. An applicant must file with the commissioner documents and information demonstrating a history of training experience and subject-matter expertise in each area covered by a training required by this division. If the applicant is an ESC or entity, the ESC or entity must designate one or more individuals as their lead provider. TEA may request qualification information about the lead provider and how the lead provider will supervise any instructors. The lead provider or individual may be required to complete a charter training program prior to serving as a training provider in an area or subject matter.

(1) The training provider may apply to be authorized to provide training in one or more areas or subjects. If the training provider is an ESC or entity, the ESC or entity may assign training to one or more instructors, so long as the instructors are supervised by the ESC or entity for quality instruction that is aligned to the authorized areas or subject matters.

(2) The training provider is not authorized under this section until it receives written notice of authorization under this section.

(c) Compliance with training rules. An authorized training provider that fails to comply with §§100.1115-100.1125 of this title (relating to Training Requirements for Governing Board Members and Officers; Core Training for New Governing Board Members and Officers; Additional Training for New Governing Board Members and Officers; Continuing Training for Governing Board Members and Officers; Exemption for Participation in a Shared Services Cooperative; and Training Providers) will not be authorized in any subsequent year. An ESC, entity, or individual who completes a training that does not comply with §§100.1115-100.1121 of this title has not satisfied the requirements for continued service.

(d) Authorization timeline. Initial authorization under this section is effective for 24 months. Thereafter, re-registration may be for a period of up to three years. Re-registration is by original application under this section, except that the process for re-registration of a registered training provider may include an opportunity for stakeholder comment on that provider's performance. A successful application for authorization in a prior authorization period confers no right or expectation that the commissioner will grant an application for authorization in a subsequent year.

(e) Post-training requirements. Training providers shall provide training certificates upon request to any individual who attends training and shall keep accurate training records. The training provider is required to periodically survey individuals after a training to determine their satisfaction. TEA may request training records from any authorized training provider at any time.

§100.1127.Record of Compliance and Disclosure of Non-compliance.

Record of compliance; non-compliance.

(1) Record of compliance. It is the obligation of the charter holder to comply with this section, including compliance with §§100.1115-100.1121 of this title (relating to Training Requirements for Governing Board Members and Officers; Core Training for New Governing Board Members and Officers; Additional Training for New Governing Board Members and Officers; and Continuing Training for Governing Board Members and Officers) by each a member of the governing body of the charter holder, each member of any governing body of a charter school operated by the charter holder, and each chief executive officer, central administrative officer, campus administrative officer, and business manager of any charter school operated by the charter holder. The charter holder shall document its compliance with §§100.1115-100.1121 of this title and this section.

(2) Continued service. A person may not continue to serve as a member of the governing body of a charter holder, as a member of the governing body of a charter school, or as an officer of a charter school, unless the person is in compliance with §§100.1115-100.1121 of this title and this section.

(3) Audit disclosure. A charter holder shall separately disclose, in its annual audit report required by §100.1067(c) of this title (relating to Accounting for State and Federal Funds), any member of the governing body of the charter holder or a charter school, and any officer of a charter school, who fails to comply with §§100.1115-100.1121 of this title and this section and who continues to serve in such capacity as of the date of the audit report.

(4) Material charter violation. Failure to comply with §§100.1115-100.1121 of this title and this section is a material charter violation that may be considered by the commissioner of education in any action or intervention under Division 3 of this subchapter (relating to Commissioner Action, Performance Monitoring, and Intervention).

§100.1131.Applicability of Nepotism Provisions; Exception for Acceptable Performance.

(a) Nepotism laws generally apply. Except as provided by this section, a member of the governing body of a charter holder, a member of the governing body of a charter school, and an officer of a charter school who retain final authority to select and terminate charter school employees shall comply with Texas Government Code, Chapter 573, in the manner provided by the nepotism provisions, prohibitions, and exceptions described in this section and §§100.1133-100.1141 of this title (relating to General Nepotism Provisions; Relationships By Consanguinity or By Affinity; Nepotism Prohibitions; Nepotism Exceptions; and Enforcement of Nepotism Prohibitions).

(b) Existing charter holders partly grandfathered. A person who was not restricted or prohibited under Texas Education Code, §12.1055, before September 1, 2013, from being employed by an open-enrollment charter school and who was lawfully employed by an open-enrollment charter school before September 1, 2013, is considered to have been in continuous employment as provided by Texas Government Code, §573.062(a), and is not prohibited from continuing employment with the school. Any break in service, however, shall render the eligibility under this subsection null and void. Continuous employment for the purposes of this subsection applies only to relationships that existed on September 1, 2013, and does not exempt relationships created after September 1, 2013.

(c) Employment status. This section only applies to the employment of those charter employees reported to the Texas Workforce Commission (TWC) as being employees of the charter on September 1, 2013. The charter holder must supply to the Texas Education Agency (TEA) the TWC list that includes each employee's name, position held, and relationship, if any, to officer and/or board member(s). This list will serve as a baseline for determination of those individuals grandfathered under this section.

(d) Submission requirement. The list referenced in subsection (c) of this section shall be received by the TEA division of charter schools no later than December 1, 2014. Failure to comply with this subsection constitutes a material charter violation.

(e) No quorum of relatives. Notwithstanding any other provision of this section, persons related to one another within the third degree by consanguinity or within the second degree by affinity, as determined under §100.1135 of this title, shall not constitute a quorum of the governing body or any committee of the governing body of the charter holder or charter school.

§100.1133.General Nepotism Provisions.

(a) Definitions. The following words and terms, when used in this division, shall have the following meaning, unless the context clearly indicates otherwise.

(1) Public official--A member of the governing body of a charter holder, a member of the governing body of a charter school, or an officer of a charter school who retains final authority to select and terminate charter school employees.

(2) Candidate--A person who applies for, seeks, is nominated for, or is considered for selection, appointment, employment or in any other manner to be made a member of the governing body of a charter holder, a member of the governing body of a charter school, or an officer of an open-enrollment charter school.

(3) Charter position:

(A) an office, employment, function, or duty that is to be directly or indirectly compensated from state funds received by a charter holder after September 1, 2001; or

(B) a member of the governing body of a charter holder that receives state funds after September 1, 2001, or a member of the governing body or an officer of a charter school operated by such charter holder.

(b) Degrees of relationship. Except as specifically provided by this subchapter, §§100.1131 and 100.1135-100.1141 of this title (relating to Applicability of Nepotism Provisions; Exception for Acceptable Performance; General Nepotism Provisions; Relationships By Consanguinity or By Affinity; Nepotism Prohibitions; Nepotism Exceptions; and Enforcement of Nepotism Prohibitions) and this section apply to relationships within the third degree by consanguinity or within the second degree by affinity.

§100.1135.Relationships By Consanguinity or By Affinity.

(a) Method of computing degree of relationship. The degree of a relationship is computed by the civil law method.

(b) Determination of consanguinity. Two individuals are related to each other by consanguinity if one is a descendant of the other, or if they share a common ancestor. An adopted child is considered to be a child of the adoptive parent for this purpose.

(c) Computation of degree of consanguinity. The degree of relationship by consanguinity between an individual and the individual's descendant is determined by the number of generations that separate them.

(1) A parent and child are related in the first degree, a grandparent and grandchild in the second degree, a great-grandparent and great-grandchild in the third degree, and so on.

(2) If an individual and the individual's relative are related by consanguinity, but neither is descended from the other, the degree of relationship is determined by adding:

(A) the number of generations between the individual and the nearest common ancestor of the individual and the individual's relative; and

(B) the number of generations between the relative and the nearest common ancestor.

(3) An individual's relatives within the third degree by consanguinity are the individual's:

(A) parent or child (relatives in the first degree);

(B) brother, sister, grandparent, or grandchild (relatives in the second degree); and

(C) great-grandparent, great-grandchild, aunt who is a sister of a parent of the individual, uncle who is a brother of a parent of the individual, nephew who is a child of a brother or sister of the individual, or niece who is a child of a brother or sister of the individual (relatives in the third degree).

(d) Determination of affinity. Two individuals are related to each other by affinity if they are married to each other, or the spouse of one of the individuals is related by consanguinity to the other individual.

(1) The ending of a marriage by divorce or the death of a spouse ends relationships by affinity created by that marriage unless a child of that marriage is living, in which case the marriage is considered to continue as long as a child of that marriage lives.

(2) Paragraph (1) of this subsection applies only until the youngest child of the marriage reaches the age of 21 years.

(e) Computation of degree of affinity. A husband and wife are related to each other in the first degree by affinity. For other relationships by affinity, the degree of relationship is the same as the degree of the underlying relationship by consanguinity.

(1) If two individuals are related to each other in the second degree by consanguinity, the spouse of one of the individuals is related to the other individual in the second degree by affinity.

(2) An individual's relatives within the third degree by affinity are:

(A) anyone related by consanguinity to the individual's spouse in one of the ways named in this section; and

(B) the spouse of anyone related to the individual by consanguinity in one of the ways named in this section.

§100.1137.Nepotism Prohibitions.

(a) Prohibition applicable to public official. A public official may not hire, select, appoint, confirm the appointment of, or vote for the hiring, selection, appointment, or confirmation of an individual to a charter position if, within a degree described by Texas Government Code, §§573.021-573.025, and §100.1135 of this title (relating to Relationships By Consanguinity or By Affinity):

(1) the individual is related to the public official; or

(2) the public official holds the authority to hire, select, appoint, confirm the appointment of, or vote for the hiring, selection, appointment, or confirmation as a member of a governing body, and the individual is related to another member of that governing body.

(b) Prohibition applicable to candidate. Except for a candidate's actions taken regarding a bona fide class or category of employees or prospective employees, a candidate may not take an affirmative action to influence the following individuals regarding the appointment, reappointment, confirmation of the appointment or reappointment, employment, reemployment, change in status, compensation, or dismissal of another individual related to the candidate within a degree described by Texas Government Code, §§573.021-573.025, and §100.1135 of this title:

(1) an employee of the office that the candidate seeks, applies for, is nominated for, or is considered for; or

(2) an employee or officer under the direction or control of a governing body, if the candidate seeks, applies for, is nominated for, or is considered for membership on that governmental body.

(c) Prohibition applicable to trading. A public official may not hire, select, appoint, confirm the appointment of, or vote for the hiring, selection, appointment, or confirmation of an individual to a charter position in which the individual's services are under the public official's direction or control if, within a degree described by Texas Government Code, §§573.021-573.025, and §100.1135 of this title:

(1) the individual is related to another public official; or

(2) the hiring, selection, appointment, confirmation, or vote would be carried out in whole or partial consideration for the other public official hiring, selecting, appointing, confirming, or voting for an individual who is related to the first public official.

§100.1139.Nepotism Exceptions.

(a) General. Section 100.1137(a) of this title (relating to Nepotism Prohibitions) does not apply to:

(1) an appointment or employment of a bus driver by a charter school if:

(A) the charter school is located wholly in a county with a population of less than 35,000; or

(B) the charter school is located in more than one county and the county in which the largest part of the charter school is located has a population of less than 35,000;

(2) an appointment or employment of a personal attendant by a public official for attendance on the public official who, because of physical infirmities, is required to have a personal attendant; or

(3) an appointment or employment of a substitute teacher.

(b) Continuous employment. A nepotism prohibition prescribed by §100.1137(a) of this title does not apply to the hiring, selection, appointment, confirmation, or vote for the hiring, selection, appointment, or confirmation of an individual to a charter position if:

(1) the individual was employed in the position immediately before the public official to whom the individual is related in a prohibited degree became a public official, by whatever means; and

(2) that prior employment of the individual was continuous for at least:

(A) 30 days, if the public official is an officer of a charter school;

(B) six months, if the public official is a member of the governing body of a charter school; or

(c) Prohibition against deliberation or voting on continued relative. If an individual continues in a position under subsection (b) of this section, the public official to whom the individual is related in a prohibited degree may not participate in any deliberation or voting on the appointment, reappointment, confirmation of the appointment or reappointment, employment, reemployment, change in status, compensation, or dismissal of the individual if that action applies only to the individual and is not taken regarding a bona fide class or category of employees.

§100.1141.Enforcement of Nepotism Prohibitions.

(a) Removal by charter holder. An individual who violates §100.1137 or §100.1139(c) of this title (relating to Nepotism Prohibitions and Nepotism Exceptions) shall be removed from the individual's position by the charter holder. Failure to comply with this subsection is a material charter violation.

(1) The removal must be made in accordance with the removal provisions in the articles of incorporation and bylaws of the corporation, if applicable, the terms of the open-enrollment charter, any applicable local policies, and state and federal law.

(2) A public official may not approve an account or draw or authorize the drawing of a warrant or order to pay the compensation of an ineligible individual if the official knows the individual is ineligible.

(b) Removal by attorney general. An individual who violates §100.1137 or §100.1139(c) of this title may be removed from the individual's position by suit brought by the Texas attorney general under Texas Government Code, §573.082.

(c) Criminal penalties. An individual who violates Texas Government Code, Chapter 573, Subchapter C, or §573.062(b) or §573.083, as applied by this subchapter, may be subject to criminal penalties under Texas Government Code, §573.084.

(1) On final conviction of an offense under Texas Government Code, §573.084, an individual shall immediately and summarily be removed from the individual's position by the charter holder.

(2) If the removal under paragraph (1) of this subsection is not made within 30 days after the date the conviction becomes final, the individual holding the position may be removed by the commissioner of education or by suit brought by the Texas attorney general under Texas Government Code, §573.082.

§100.1143.Conflicts of Interest and Board Member Compensation; Exception.

(a) Process governing conflicts of interest. A member of the governing body of a charter holder, a member of the governing body of a charter school, and an officer of a charter school shall comply with Local Government Code, Chapter 171, in the manner provided by the conflict of interest provisions described in this section and §§100.1145-100.1151 of this title (relating to General Conflict of Interest Provisions; Conflicts Requiring Affidavit and Abstention from Voting; Conflicts Requiring Separate Vote on Budget; and Acting as Surety and Other Conflicts; Criminal Penalties).

(b) Compensated board members generally prohibited. Except as provided by this section, a person who receives compensation or remuneration from a nonprofit corporation holding an open-enrollment charter may not serve on the governing body of the charter holder. As used in this subsection, compensation or remuneration includes, without limitation:

(1) salary, bonuses, benefits, or other compensation received by the local public official pursuant to an employment relationship;

(2) payment of or reimbursement for personal expenses of the local public official, excluding reimbursement for allowable travel expenses;

(3) credit extended to the local public official by the charter holder or charter school;

(4) the local public official's personal use of property paid for by the charter holder or charter school;

(5) in-kind transfers of property to the local public official; and

(6) all other forms of compensation or remuneration to the local public official.

(c) Satisfactory student performance. If each charter school operated by a charter holder has received a satisfactory rating, as defined by §100.1051(b)(2)(B) of this title (relating to Standards to Revoke and Modify the Governance of an Open-Enrollment Charter), for at least two of the preceding three school years, then charter school employees may serve on the governing body of the charter holder in accordance with subsection (f) of this section.

(d) Existing charter holders partly grandfathered. If a charter holder has operated at least one charter school which reported attendance that occurred prior to September 2, 2001, but no charter school operated by the charter holder has received a sufficient number of academic or financial ratings to determine whether it has received a satisfactory rating for at least two of the preceding three school years, then charter school employees may serve on the governing body of the charter holder in accordance with subsection (f) of this section.

(1) For purposes of this subsection, a charter school has a sufficient number of substantive ratings to determine whether it has received a satisfactory rating for at least two of the preceding three school years if:

(A) the charter school has received two consecutive academic ratings, and neither rating meets the criteria set forth in subsection (c) of this section; or

(B) the charter school has received three academic ratings.

(2) If a charter holder operates charter schools that have received a sufficient number of academic ratings to determine whether it has received a satisfactory rating for at least two of the preceding three school years, but also operates charter schools that have not received a sufficient number of academic ratings, then its eligibility to comply with subsection (f) of this section is determined by applying the criteria in subsection (c) of this section only to those schools with a sufficient number of substantive ratings.

(e) No annual ratings assigned. For purposes of this section, two academic accountability ratings are "consecutive" as determined by §100.1051(b)(2)(C) of this title.

(f) Exception to prohibition on compensated board members. Notwithstanding subsection (b) of this section, an employee of a charter school subject to this subsection may serve as a member of the governing body of the charter holder if:

(1) only employees of the charter school, and not employees of the charter holder, serve on the governing body of the charter holder;

(2) the only compensation or remuneration received by the board member is salary, bonuses, benefits, or other compensation received pursuant to the employment relationship with the charter school;

(3) charter school employees do not constitute a quorum of the governing body or any committee of the governing body; and

(4) all charter school employees serving on the governing body comply with all conflict of interest provisions referenced in subsection (a) of this section.

(g) Accounting for interested transactions. Notwithstanding compliance with this section, a charter holder shall comply fully with the requirements of §100.1067(f) of this title (relating to Accounting for State and Federal Funds).

(h) Compliance following ratings change. Notwithstanding this section, a charter holder must comply with the prohibition on compensated board members described in subsection (b) of this section within 30 days after it is assigned a rating that causes it to become ineligible for the exception provided by subsection (f) of this section.

(1) Subject to paragraph (2) of this subsection, if a ratings appeal is provided in the applicable Accountability Manual, and if a timely and sufficient appeal is filed by the charter holder, then the time for compliance provided by this subsection is extended until 30 days after the date on which the appeal is finally determined.

(2) Notwithstanding any other deadline, an appeal is "timely" for purposes of the extension of time provided in paragraph (1) of this subsection if it is received by the appeals deadline specified in the relevant Accountability Manual, or under the alternative education accountability ratings procedures, if applicable.

§100.1145.General Conflict of Interest Provisions.

(a) Definitions. The following words and terms, when used in this division, shall have the following meaning, unless the context clearly indicates otherwise.

(1) Local public official--A member of the governing body of a charter holder, a member of the governing body of a charter school, or an officer of a charter school.

(2) Business entity--A sole proprietorship, partnership, firm, corporation, holding company, joint-stock company, receivership, trust, agency, political subdivision, or any other entity recognized by law.

(b) Substantial interest in business entity. For purposes of this chapter, a person has a substantial interest in a business entity if:

(1) the person owns 10% or more of the voting stock or shares of the business entity or owns either 10% or more or $15,000 or more of the fair market value of the business entity; or

(2) funds received by the person from the business entity exceed 10% of the person's gross income for the previous year.

(c) Substantial interest in real estate. A person has a substantial interest in real estate if the interest is an equitable or legal ownership with a fair market value of $2,500 or more.

(d) Substantial interest through a relative. A local public official is considered to have a substantial interest under this section if a person related to the official in the third degree by consanguinity or affinity, as determined under Texas Government Code, §§573.021-573.025, and §100.1135 of this title (relating to Relationships By Consanguinity or By Affinity), has a substantial interest under this section.

§100.1147.Conflicts Requiring Affidavit and Abstention from Voting.

(a) Affidavit and abstention required. If a local public official has a substantial interest in a business entity or in real property, the official must file, before a vote, decision, or other action on any matter involving the business entity or the real property, an affidavit stating the nature and extent of the interest and must abstain from further participation in the matter if:

(1) in the case of a substantial interest in a business entity, the vote, decision, or other action on the matter will have a special economic effect on the business entity that is distinguishable from the effect on the public; or

(2) in the case of a substantial interest in real property, it is reasonably foreseeable that a vote, decision, or other action on the matter will have a special economic effect on the value of the property, distinguishable from its effect on the public.

(b) Affidavit filed. The affidavit described in subsection (a) of this section must be filed with the official recordkeeper of the charter holder.

(c) Abstention excused. If a local public official is required to file and does file an affidavit under subsection (a) of this section, the local public official is not required to abstain from further participation in the matter requiring the affidavit if:

(1) the local public official is a member of the governing body of the charter holder or the charter school; and

(2) a majority of the members of the governing body of which the local public official is a member is composed of persons who are likewise required to file and who do file affidavits of similar interests on the same official action.

(d) Local public official. A member of a governing body of a charter holder, a member of the governing body of an open-enrollment charter school, or an officer of an open-enrollment charter school is considered to be a local public official for purposes of this section.

(e) Minutes. The minutes of a meeting during which a matter subject to this section is discussed or decided must clearly identify each person participating, each person abstaining, each person voting, and the vote of each person.

(f) Resolution. A matter subject to this section must be approved through a written resolution adopted by the governing board of the charter holder and signed by the members voting in favor of it.

(g) Violation. A violation of this section or Local Government Code, Chapter 171, constitutes a material violation of charter contract.

§100.1149.Conflicts Requiring Separate Vote on Budget.

(a) Separate vote required. The governing body of a charter holder shall take a separate vote on any budget item specifically dedicated to a contract with a business entity in which a member of the governing body of the charter holder has a substantial interest.

(b) Abstention required. Except as provided by §100.1147(c) of this title (relating to Conflicts Requiring Affidavit and Abstention from Voting), the affected member may not participate in that separate vote. The member may vote on a final budget if:

(1) the member has complied with this chapter; and

(2) the matter in which the member is concerned has been resolved.

§100.1151.Acting as Surety and Other Conflicts; Criminal Penalties.

(a) Acting as surety. A local public official commits a criminal offense if the official knowingly:

(1) acts as surety for a business entity that has work, business, or a contract with the charter holder; or

(2) acts as surety on any official bond required of a member of the governing body or charter school, or of an officer of the charter school.

(b) Knowing violation of requirements. A local public official commits a criminal offense if the official knowingly violates Local Government Code, §171.004, as applied by this subchapter.

§100.1153.Criminal History; Restrictions on Serving.

(a) Restrictions on serving. A person may not serve as a member of the governing body of a charter holder, as a member of the governing body of a charter school, or as an officer or employee of a charter school if the person has been convicted of:

(1) a misdemeanor involving moral turpitude or any felony;

(2) an offense listed in Texas Education Code (TEC), §37.007(a); or

(3) an offense listed in Code of Criminal Procedure, Article 62.001(5).

(b) Exception. Notwithstanding subsection (a) of this section, a person may be employed in any position by an open-enrollment charter school if a school district could employ the person in that position and the Texas Education Agency (TEA) approves of the employment pursuant to TEC, §12.1059.

(c) Required criminal history checks--general. Before the person begins service, and every third year thereafter, a charter holder shall obtain from the Texas Department of Public Safety (DPS) all criminal history record information that relates to:

(1) an employee or a person whom the charter school intends to employ in any capacity, or whom the charter holder intends to employ in any capacity relating to its charter school activities;

(2) a member of the governing body of the charter holder or charter school or a person who has agreed to serve as a member of the governing body of the charter holder or charter school; and

(3) a person who files, in writing, an intention to serve as a volunteer at the charter school, if the duties are or will be performed on school property or at another location where students are regularly present.

(d) Required criminal history checks--transportation. Except as provided by paragraphs (3) and (4) of this subsection, a charter holder that contracts with a person for transportation services shall obtain from DPS all criminal history record information that relates to a person employed by the person as a bus driver or a person the person intends to employ as a bus driver.

(1) Except as provided by paragraphs (3) and (4) of this subsection, a person or management company that contracts with a charter holder to provide transportation services shall submit to the charter holder the name and other identification data required to obtain criminal history record information of each person described by this section.

(2) If the charter holder obtains information that a person described by this section has been convicted of a felony or a misdemeanor involving moral turpitude, the charter holder shall inform the chief personnel officer of the person or management company with whom the charter holder has contracted, and the person or management company may not employ that person to drive a bus on which students are transported without the permission of the governing body of the charter holder.

(3) A commercial transportation company that contracts with a charter holder to provide transportation services may obtain from any law enforcement or criminal justice agency all criminal history record information that relates to a person employed by the commercial transportation company, or to a person it intends to employ, as a bus driver, bus monitor, or bus aide.

(4) If the commercial transportation company obtains information that a person employed or to be employed by the company has been convicted of a felony or a misdemeanor involving moral turpitude, the company may not employ that person to drive or to serve as a bus monitor or bus aide on a bus on which students are transported without the permission of the governing body of the charter holder. Paragraphs (1) and (2) of this subsection do not apply if information is obtained as provided by paragraph (3) of this subsection.

(e) Permissive criminal history checks. A charter holder may obtain from any law enforcement or criminal justice agency, including DPS, all criminal history record information that relates to:

(1) a volunteer, employee, or member of a governing body under subsection (c) of this section;

(2) an employee of or an applicant for employment with a public or commercial transportation company that contracts with the charter holder to provide transportation services if the employee drives or the applicant will drive a bus in which students are transported or is employed or is seeking employment as a bus monitor or bus aide on a bus in which students are transported, under subsection (d) of this section; and

(3) an employee of or applicant for employment by a management company or other person that contracts with the charter school to provide management services or other services, if:

(A) the employee or applicant has or will have continuing duties related to the contracted services; and

(B) the duties are or will be performed on school property or at another location where students are regularly present.

(f) Entitlement to criminal history checks. A charter holder is entitled to obtain from DPS, no more than twice each year, all criminal history record information maintained by DPS that the charter holder is required or authorized to obtain under this section.

(g) Reduced fees for criminal history checks. In accordance with Texas Government Code, §411.097, if a regional education service center or commercial transportation company that receives criminal history record information from DPS under this section requests the information by providing to DPS a list, including the name, date of birth, and any other personal descriptive information required by DPS for each person, through electronic means, magnetic tape, or disk, as specified by DPS, DPS may not charge the service center or commercial transportation company more than the lesser of:

(1) DPS's cost for providing the information; or

(2) the amount prescribed by another law.

(h) Disclosure prohibited. Criminal history record information obtained by a charter holder under this section may not be released or disclosed to any person, other than the individual who is the subject of the information, TEA, the State Board for Educator Certification (SBEC), or the chief personnel officer of the transportation company, if the information is obtained under subsection (d) of this section.

(i) Removal by charter holder. If a person is prohibited by this section from serving as a member of the governing body of a charter holder, as a member of the governing body of a charter school, or as an officer or employee of a charter school, the charter holder shall remove the individual from such position immediately.

(2) The governing body of the charter holder may not approve an account or draw or authorize the drawing of a warrant or order to pay the compensation of a person if the person is prohibited by this section from serving in the capacity for which compensation is due.

(j) Teaching certificate applicant or holder. A charter holder shall promptly notify the SBEC in writing if it obtains or has knowledge of information showing that an applicant for or holder of a certificate issued under TEC, Chapter 21, Subchapter B, has a reported criminal history.

(k) Implementation schedule and transition. Notwithstanding this section:

(1) beginning September 1, 2001, a charter holder shall obtain, in compliance with this section, criminal history record information relating to each person identified in subsections (c) and (d) of this section; and

(2) if a person is prohibited by this section from serving as a member of the governing body of a charter holder, as a member of the governing body of a charter school, or as an officer or employee of a charter school, and if removing such person would violate an employment or other written contract that was executed prior to September 1, 2001, then the employment or other contract may continue in effect past September 1, 2001, if each of the following conditions is met:

(A) no state funds are used to pay any amounts due the person under the employment or other contract, and all such amounts are paid from a clearly identified source of non-state funds;

(B) the terms of the employment or other contract have not been renewed, modified, or otherwise altered since September 1, 2001; and

§100.1155.Substantial Interest in Management Company; Restrictions on Serving.

(a) Restriction on serving. A person may not serve as a member of the governing body of a charter holder as a member of the governing body of a charter school, or as an officer or employee of a charter school, if the person has a substantial interest in a management company that has a contract for management services with the charter holder or a charter school. A person has a substantial interest in a management company if the person:

(1) has a controlling interest in the company;

(2) owns more than 10% of the voting interest in the company;

(3) owns more than $25,000 of the fair market value of the company;

(4) has a direct or indirect participating interest by shares, stock, or otherwise, regardless of whether voting rights are included, in more than 10% of the profits, proceeds, or capital gains of the company;

(5) is a member of the board of directors or other governing body of the company;

(6) serves as an elected officer of the company; or

(7) is an employee of the company.

(b) Management company as officer. Notwithstanding subsection (a) of this section, a person who has a substantial interest in a management company may provide management services that include the functions of a central administration officer, campus administration officer, or business manager, if:

(1) the person provides all management services under a contract for management services;

(2) the person provides all management services as an agent of the management company;

(3) the person does not serve as an employee or volunteer of the charter holder or charter school, and does not otherwise serve as a contractor of the charter holder or charter school;

(4) the person does not serve as a member of the governing body of the charter school or charter holder; and

(5) the management services provided by the person do not include powers or duties that are non-delegable under §100.1113 of this title (relating to Delegation of Powers and Duties).

(c) Audit disclosure. A charter holder shall separately disclose, in its annual audit report required by §100.1067(c) of this title (relating to Accounting for State and Federal Funds), all persons listed in subsection (a) of this section with a substantial interest in a management company as defined by subsection (a) of this section.

(d) Removal by charter holder. If a person is prohibited by this section from serving as a member of the governing body of a charter holder, as a member of the governing body of a charter school, or as an officer or employee of a charter school, the charter holder shall remove the individual from such position immediately.

(e) Implementation schedule and transition. Notwithstanding this section:

(1) beginning with the fiscal year in which September 1, 2001, falls, a charter holder shall separately disclose, in its annual audit report required by §100.1067(c) of this title, all persons listed in subsection (a) of this section with a substantial interest in a management company as defined by subsection (a); and

(A) no state funds are used to pay any amounts due the person under the employment or other contract, and all such amounts are paid from a clearly identified source of non-state funds;

(B) the terms of the employment or other contract have not been renewed, modified, or otherwise altered since September 1, 2001; and

§100.1157.Procedures for Prohibiting a Management Contract.

(a) Action prohibiting management contract. The commissioner of education may prohibit, deny renewal of, suspend, or revoke a contract between an open-enrollment charter school and a management company providing management services to the school if the commissioner determines that the management company has:

(1) failed to provide educational or related services in compliance with the company's contractual or other legal obligation to any open-enrollment charter school in Texas or to any other similar school in another state;

(2) failed to protect the health, safety, or welfare of the students enrolled at an open-enrollment charter school served by the company;

(3) violated this subchapter or a rule adopted under this subchapter; or

(4) otherwise failed to comply with any contractual or other legal obligation to provide services to the school.

(b) Procedures for making determination. A determination under subsection (a) of this section shall be made through a final investigative report issued by the Texas Education Agency. In making this determination:

(1) the commissioner may rely on one or more of the following:

(A) any finding or determination made by a court or other tribunal of competent jurisdiction, whether in Texas or in any other state, or by the United States, if the order or judgment is final under the rules governing such proceedings;

(B) any finding or determination made by the commissioner under §§100.1049, 100.1045, 100.1047, 100.1041, or 100.1037 of this title (relating to Revocation and Modification of Governance of an Open-Enrollment Charter; Intervention Based on Charter Violations; Intervention Based on Health, Safety, or Welfare of Students; Accountability Ratings and Sanctions; and Renewal of an Open-Enrollment Charter), if the finding or determination is final under the rules governing such proceedings; or

(C) any finding or determination made by a court in an action for declaratory judgment or other action pertaining to the commissioner's determination under this section, if the order or judgment is final under the rules governing such proceedings; and

(2) to the extent that a finding or determination under paragraph (1) of this subsection pertains to a charter holder or charter school served by a management company, but does not directly pertain to the management company, the focus shall be on the question of whether the relevant contract for management services creates a legal duty for the management company to provide services to the charter school in areas of performance that are the subject of the finding or determination against the charter holder or charter school.

(c) Review of proposed management contract. A proposed management contract shall be submitted for commissioner approval through the non-expansion amendment process.

(1) A contract for management services is unenforceable, void, and of no force or effect until the non-expansion amendment containing the management contract is approved by the commissioner. In addition, performance under the contract prior to approval by the commissioner is a material charter violation.

(2) Notwithstanding this section, if an affected contract for management services was executed prior to September 1, 2001, then the management contract may continue in effect past September 1, 2001, if each of the following conditions is met:

(A) no state funds are used to pay any amounts due the management company under the management contract, and all such amounts are paid from a clearly identified source of non-state funds; and

(B) the terms of the management contract have not been renewed, modified, or otherwise altered since September 1, 2001.

§100.1159.Loan from Management Company Prohibited.

(a) Loan prohibited. Neither a charter holder or a charter school may accept any loan or credit from, or incur any debt to, a management company that has a contract to provide management services to:

(1) that charter school; or

(2) another charter school that operates under a charter granted to the charter holder.

(b) Management contract prohibited. A charter holder or charter school that accepts a loan or credit from, or incurs a debt to, a management company, may not enter into a contract with that management company to provide management services to the school.

(c) Audit disclosure. A charter holder shall separately disclose, in its annual audit report required by §100.1067(c) of this title (relating to Accounting for State and Federal Funds), all loans or credit received or indebtedness incurred by the charter holder or the charter school to any person or entity providing management services to the charter school or another charter school that operates under a charter granted to the charter holder.

(d) Agency review. Compliance with this section shall be reviewed in conjunction with the review required by §100.1157(c) of this title (relating to Procedures for Prohibiting a Management Contract).

(e) Implementation schedule and transition. Notwithstanding this subsection, if the affected management contract was executed prior to September 1, 2001, and the affected promissory note or other debt instrument was also executed prior to September 1, 2001, then:

(1) both the management contract and the indebtedness may continue in effect past September 1, 2001, if each of the following conditions is met:

(A) no state funds are used to pay any amounts due the management company under the management contract, and all such amounts are paid from a clearly identified source of non-state funds;

(B) no state funds are used to pay any amounts due the management company under the promissory note or other debt instrument, and all such amounts are paid from a clearly identified source of non-state funds; and

(C) the terms of the management contract and the promissory note or other debt instrument have not been renewed, modified, or otherwise altered since September 1, 2001; or

(2) the indebtedness may be refinanced after September 1, 2001, and the management contract may be renegotiated after September 1, 2001, if each of the following conditions is met:

(A) on or before September 1, 2002, the charter holder and the management company shall file with the Texas Education Agency (TEA) division responsible for legal services the following:

(i) a copy of each and every contract, promissory note, debt instrument, agreement or document executed, or in effect, at any time on or after September 1, 2001, between or among: the charter holder or any of its charter schools or management companies; the management company or any of its subsidiaries, parents, affiliates, or related companies; and the lender or any of its subsidiaries, parents, affiliates, or related companies; and

(ii) additional documents as requested by the TEA division responsible for legal services during its review under this subsection;

(B) the documents filed under subparagraph (A) of this paragraph shall establish that, upon approval by the TEA division responsible for legal services, the management company will not be the lender of any funds, but will merely act as the guarantor or co-signer on loans totaling an amount equal to or less than the indebtedness owed by the charter holder to the management company prior to September 1, 2001;

(C) the documents filed under subparagraph (A) of this paragraph shall establish that the management company may not take any action in its capacity as guarantor or co-signer to prevent, deter, or discourage the charter holder from taking any action respecting the management company under its contract for management services;

(D) the documents filed under subparagraph (A) of this paragraph shall establish that the term of the contract for management services between the management company and the charter holder may not extend beyond the term of the current contract for charter between the charter holder and the State Board of Education, and that the contract for management services is renewable beyond the current term of the open-enrollment charter only through negotiation and execution of a new contract for management services;

(E) the documents filed under subparagraph (A) of this paragraph shall establish that the management company may not take any action in its capacity as guarantor or co-signer to coerce, influence, or encourage the charter holder to negotiate or execute another contract for management services under subparagraph (D) of this paragraph; and

(F) the TEA division responsible for legal services finds, in writing, that the documents filed under subparagraph (A) of this paragraph meet the criteria specified in this paragraph and finds that any compliance problems concerning the governance and the financial or other management of the charter holder do not prevent the approval of the arrangements reflected in the documents.

§100.1161.Public Records Maintained by Management Company; Contract Provision.

(a) Maintenance of records. A management company that provides, or did provide, any management services to a charter holder or charter school shall maintain, as required by §100.1203 of this title (relating to Records Management), all records related to its management services separately from any other records of the management company.

(b) Contract provision. Any contract, including a contract renewal, between a charter holder or charter school and a management company for management services to the charter school must contain a contract provision expressly requiring the management company to comply with subsection (a) of this section.

§100.1163.Compliance Records on Nepotism, Conflicts of Interest, and Restrictions on Serving.

(a) A charter holder shall collect, maintain, and make available on request for inspection under this division, the following information on a form or in a format approved by the commissioner of education:

(1) information identifying each member of the governing body of the charter holder and related compliance information as required by subsection (b) of this section;

(2) information identifying each chief executive officer and chief financial officer of the charter school and related compliance information as required by subsection (b) of this section;

(3) information identifying each member of the governing body of the charter school, if the charter holder has established a governing body for the charter school, and related compliance information as required by subsection (b) of this section; and

(4) information identifying each employee of the charter school and related compliance information as required by subsection (b) of this section.

(b) The compliance information recorded for each individual identified under subsection (a) of this section shall include:

(1) the title of each position held, or function performed, by the individual;

(2) the specific powers and duties that the governing body of the charter holder or charter school have delegated to the individual, if any, as described by the powers and duties listed in the charter pursuant to §100.1113 of this title (relating to Delegation of Powers and Duties);

(3) the legal name of the individual;

(4) any aliases or names formerly used by the individual, including maiden name;

(5) a complete criminal history record of convictions for the individual, issued by the Texas Department of Public Safety within three years of the date of the compliance record;

(6) a list of all relatives of the individual, within the third degree of consanguinity or affinity, under Texas Government Code, Chapter 573, that:

(A) are employed by the charter holder or the charter school;

(B) conduct business transactions with the charter holder or the charter school;

(D) have a substantial interest in a management company under Texas Education Code, §12.120; and

(7) a full and complete list of the individual's business interests in, or transactions with, any charter holder, charter school, or management company.

(c) Not later than 30 days following any change in the information recorded under this section, a charter holder shall make corrections to its most recent charter school compliance record.

(d) A charter holder shall file the information with the Texas Education Agency (TEA) division responsible for charter schools within 10 business days of receiving a written request from TEA.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on March 4, 2024.

TRD-202400953

Cristina De La Fuente-Valadez

Director, Rulemaking

Texas Education Agency

Earliest possible date of adoption: April 14, 2024

For further information, please call: (512) 475-1497

DIVISION 7. CHARTER SCHOOL OPERATIONS

19 TAC §§100.1203, 100.1205, 100.1207, 100.1209, 100.1211 - 100.1213

STATUTORY AUTHORITY. The amendments are proposed under Texas Education Code (TEC), §12.101, which requires the commissioner to adopt rules regarding the criteria for granting a charter and providing notification for the establishment of new charters or campuses; TEC, §12.1011, which requires the commissioner to adopt rules regarding charter authorization for high-performing entities; TEC, §12.103, which allows the commissioner to adopt rules regarding applicable provisions to open-enrollment charter schools; TEC, §12.104, as amended by House Bill (HB) 189, 87th Texas Legislature, Regular Session, 2021, which allows the commissioner to adopt rules permitting an open-enrollment charter school to voluntarily participate in any state program available to school districts if the school complies with all terms of the program; TEC, §12.1055, which allows the commissioner to adopt rules regarding nepotism under Texas Government Code, Chapter 573; TEC, §12.1058, as amended by HB 1707, 88th Texas Legislature, Regular Session, 2023, which requires a political subdivision to consider an open-enrollment charter school as a school district for the purposes of municipal ordinances if the open-enrollment charter school meets notification requirements; TEC, §12.110, which requires the commissioner to adopt an application form and procedure that must be used to apply for an open-enrollment charter school; TEC, §12.1101, which requires the commissioner to adopt a procedure for providing notice to the outlined persons on receipt by the commissioner of an application for a charter for an open-enrollment charter school or of notice of the establishment of a campus; TEC, §12.114, which allows the commissioner to define expansion amendment requests; TEC, §12.1141, as amended by Senate Bill (SB) 879, 87th Texas Legislature, Regular Session, 2021, which requires the commissioner to adopt a procedure for renewal, denial of renewal, or expiration of a charter for an open-enrollment charter school at the end of the term of the charter; TEC, §12.1166, which requires the commissioner to adopt a rule defining "related party;" TEC, §12.1173, as amended by SB 2293, 86th Texas Legislature, 2019, which requires the commissioner to adopt rules to implement charter school waiting lists for admission; TEC, §12.1181, requires the commissioner to adopt performance frameworks that establish standards by which to measure the performance of an open-enrollment charter school; TEC, §12.123, which requires the commissioner to adopt rules prescribing the training for members of the governing body of a charter school and its officers; TEC, §12.153, which allows the commissioner to adopt rules to implement college of university or junior college charter schools; TEC, §12.265, as amended by SB 1615, 87th Texas Legislature, Regular Session, 2021, which requires the commissioner to adopt rules necessary to administer adult high school charter school programs; and TEC, §39.0548, which requires the commissioner to authorize and determine designation as a dropout recovery school.

CROSS REFERENCE TO STATUTE. The amendments implement Texas Education Code, §§12.101; 12.1011; 12.103; 12.104, as amended by House Bill (HB) 189, 87th Texas Legislature, Regular Session, 2021; 12.1055; 12.1058, as amended by HB 1707, 88th Texas Legislature, Regular Session, 2023; 12.110; 12.1101; 12.114; 12.1141, as amended by Senate Bill (SB) 879, 87th Texas Legislature, Regular Session, 2021; 12.1166; 12.1173, as amended by SB 2293, 86th Texas Legislature, 2019; 12.1181; 12.123; 12.153; 12.265, as amended by SB 1615, 87th Texas Legislature, Regular Session, 2021; and 39.0548.

§100.1203.Records Management.

(a) Retention of government records. With respect to its operation of a charter school, a charter holder is considered to be a local government for purposes of Local Government Code, Title 6, Subtitle C, [~~Local Government Code,~~] and Texas Government Code, Chapter 441, Subchapter J.

(1) Government records. Records of a charter school and records of a charter holder that relate to a charter school are government records for all purposes under state law.

(2) Retention and destruction of records. Any requirement in Local Government Code, Title 6, Subtitle C, [~~Local Government Code,~~] or Texas Government Code, Chapter 441, Subchapter J, that applies to a school district, the board of trustees of a school district, or an officer or employee of a school district applies to a charter school, the governing body of its charter holder, the governing body of the charter school, and each officer and employee of the charter school.

(3) Maintained within this state. Records of a charter school shall be maintained physically within the state [~~State~~ ] of Texas at all times, except those records stored electronically in accordance with the requirements of Local Government Code, Chapter 205, may be maintained outside the state [~~State~~] of Texas if such records remain accessible from within the state [~~State~~] of Texas during normal business hours. For purposes of this paragraph, the records of a charter school shall mean the records indicated by the Financial Accountability System Resource Guide, adopted by reference in §109.41 of this title (relating to Financial Accountability System Resource Guide), or its successor, or by the laws and rules summarized therein. The records of a management company related to the charter school may be audited under §100.1075(b) of this title (relating to Audit by Commissioner; Records in the Possession of a Management Company), but are not subject to this paragraph.

(4) Records of former charter holder. Notwithstanding paragraph (2) [2] of this subsection, and notwithstanding Local Government Code, §201.007, the records of a charter holder that ceases to operate a charter school shall be transferred in the manner prescribed by the commissioner of education under subsection (b) of this section.

(b) Transfer of former charter holder records. The records of a charter holder that ceases to operate a charter school shall be transferred as directed by the commissioner to a custodian or custodians designated by the commissioner. The commissioner may designate any appropriate entity to serve as custodian, including the Texas Education Agency, a regional education service center, or a school district. In designating a custodian, the commissioner shall ensure that the transferred records, including student and personnel records, are transferred to a custodian capable of maintaining the records; making the records readily accessible to students, parents, former school employees, and other persons entitled to access; and complying with applicable state or federal law restricting access to the records.

(c) Enforcement. If a charter holder, a charter school, or an officer or employee of a charter school refuses to transfer school records as directed by the commissioner under subsection (b) of this section, the commissioner may ask the attorney general [~~Attorney General~~] to petition a court for recovery of the records. If the court grants the petition, the court shall award attorney's fees and court costs to the state.

§100.1205.Procurement of Professional Services.

(a) Applicability of section. This section applies to a charter holder unless alternative procedures for selecting a provider of professional services or a group or association of providers, or awarding a contract for professional services, have been approved by the commissioner of education under §100.1079 [~~§100.1006~~ ] of this title (relating to Optional Open-Enrollment Charter Provisions for Contracting and Purchasing) and the open-enrollment charter has been amended by the commissioner to adopt the approved procedures.

(b) Selecting professional services. A charter holder shall select a provider of professional services or a group or association of providers, and award a contract for professional services, in accordance with Texas Government Code, Chapter 2254, Subchapter A. A requirement in that subchapter that applies to a school district or the board of trustees of a school district applies to a charter school, the governing body of a charter holder, or the governing body of a charter school.

(1) within the scope of the practice, as defined by state law, of accounting; architecture; landscape architecture; land surveying; medicine; optometry; professional engineering; real estate appraising; or professional nursing; or

(2) provided in connection with the professional employment or practice of a person who is licensed or registered as a certified public accountant; an architect; a landscape architect; a land surveyor; a physician, including a surgeon; an optometrist; a professional engineer; a state certified, or state licensed real estate appraiser; or a registered nurse.

(d) Implementation schedule and transition. Texas Government Code, Chapter 2254, Subchapter A, does not apply to a contract executed prior to September 1, 2001.

§100.1207.Student Admission.

(a) Application deadline. For admission to a charter school, a charter holder shall:

(1) require the applicant to complete and submit a common application form prescribed by the commissioner of education, referred to as the Texas Charter School Admission Application, beginning in the 2020-2021 school year. The application must be submitted not later than a reasonable deadline the charter holder establishes.

(A) The common application form shall be posted on the Texas Education Agency (TEA) website, and the form and all associated fields shall be posted on each open-enrollment charter school's website to be used by an applicant for admission to an open-enrollment charter school campus.

(B) The common application form and the student admission and enrollment policy under subsection (d) or (e) of this section, including the policies and procedures for admission, lotteries, enrollment, student waitlists, withdrawals, reenrollment, and transfers, shall be publicly accessible and easily available on the charter school's website. A charter school must make available the common application form and may not require the use of an account, email, password, or other condition as the sole means to access the information or the common application form. A charter school may also print copies of the common application form and make them available for use during the admission process.

(C) An open-enrollment charter school may not alter the form, unless to signify specific criteria that may not apply to their campus as permitted by TEA, or add any additional criteria, questions, statements, advertisements, or solicitations or require any conditions for a person to access the form. An open-enrollment charter school may not sell, provide, or ask an applicant to agree to share or have the charter school share any student information provided in the application to any person or entity other than TEA;

~~[(1) require the applicant to complete and submit an application not later than a reasonable deadline the charter holder establishes; and]~~

(2) on receipt of more acceptable applications for admission under this section than available positions in the school:

(A) except as permitted by subsection (b) of this section, fill the available positions by lottery; or

(B) subject to subsection (d) [~~(c)~~] of this section, fill the available positions in accordance with the open-enrollment charter school's approved student admission and enrollment policy; and [~~the order in which all timely applications were received.~~]

(3) create and manage a waitlist, as described in subsection (e) of this section, for applicants who are not admitted after all available positions in the charter school have been filled.

(b) Lottery exemption. The charter holder may exempt students from the lottery required by subsection (d) [~~(a)~~ ] of this section to the extent this is consistent with the definition of a "public charter school" under the Elementary and Secondary Education Act (ESEA) as reauthorized under the Every Student Succeeds Act (ESSA), as interpreted by the United States Department of Education (USDE), including but not limited to, siblings of students already admitted to or attending the same charter school; children of a charter school's founders, teachers and staff, and children of employees in a work-site charter school (so long as the total number of students allowed under this exemption does not exceed 10% of the school's total enrollment) [~~No Child Left Behind Act of 2001, P.L. 107-110, §5210 (NCLB), as interpreted by the United States Department of Education (USDE)~~].

(c) Newspaper publication. To the extent this is consistent with the definition of a "public charter school" under ESEA as reauthorized under ESSA [~~the NCLB~~] , as interpreted by the USDE, a charter holder may fill applications for admission under subsection (a)(1) [~~(a)(2)(B)~~] of this section only if it published a notice of the opportunity to apply for admission to the charter school. At a minimum, a [A] notice published under this subsection must:

(1) state the application deadline; and

(2) be published in a newspaper of general circulation in the community in which the school is located not later than the seventh day before the application deadline. For purposes of this chapter, a newspaper of general circulation is defined as one that has more than a minimum number of subscribers among a particular geographic region, which [~~that~~] has a diverse subscribership, and that publishes some news items of general interest to the community.

(d) Student admission and enrollment. Except as provided by this section, the governing body of the charter holder must adopt a student admission and enrollment policy that:

(1) unless as provided in subsection (f) of this section, prohibits discrimination on the basis of sex; national origin; ethnicity; religion; disability; academic, artistic, or athletic ability; or the district the child would otherwise attend under state law; [~~and~~]

(2) specifies any type of non-discriminatory enrollment criteria to be used at each charter school operated by the charter holder. Such non-discriminatory enrollment criteria may make the student ineligible for enrollment based on a history of a criminal offense, a juvenile court adjudication, or discipline problems under Texas Education Code (TEC), Chapter 37, Subchapter A, documented as provided by local policy; and [.]

(3) specifies whether students will be admitted to the charter school campus by lottery or on a first come, first served basis if the application is published in a newspaper of general circulation in the community in which the school is located not later than the seventh day before the application deadline, as described in TEC, §12.117.

(e) Waitlist. Charter holders required to create and maintain a waitlist as a result of receiving more acceptable applications for admission than available positions at the school shall manage and update the student waitlist.

(1) Each school year, the following information must be maintained at the campus level for reporting to TEA no later than the last Friday in October of each school year:

(A) the total number of students on the waitlist;

(B) the number of students on the waitlist disaggregated by grade level; and

(2) The waitlist of each charter school campus shall be managed according to that charter holder's policy, which must include the following criteria.

(A) The names of eligible students with completed applications who apply and are not admitted shall be added to the end of the waitlist in the order in which the applications are received.

(B) As spaces become available at the charter school campus during the school year, the school must consult its campus waitlist and select a new student for enrollment in the order that students appear on the list.

(C) The charter school shall review each campus waitlist no less than every 60 days and eliminate duplicate entries and the names of students who have been admitted to the charter school.

(3) An open-enrollment charter school may not sell, provide, or ask a student to agree to share any student information on the waitlist with any person or entity other than TEA.

(f) [~~(e)~~] Student admission and enrollment at charter schools specializing in performing arts. In accordance with [~~the~~] TEC, §12.111 and §12.1171, a charter school specializing in performing arts, as defined in this subsection, may adopt a student admission and enrollment policy that complies with this subsection in lieu of compliance with subsections (a)-(d) of this section.

(1) A charter school specializing in performing arts as used in this subsection means a school whose open-enrollment charter includes an educational program that, in addition to the required academic curriculum, has an emphasis in one or more of the performing arts, which include music, theatre, and dance. A program with an emphasis in the performing arts may include the following components:

(A) a core academic curriculum that is integrated with performing arts instruction;

(B) a wider array of performing arts courses than are typically offered at public schools;

(D) cooperative programs with other organizations or individuals in the performing arts community; or

(E) other innovative methods for offering performing arts learning opportunities.

(2) To the extent this is consistent with the definition of a "public charter school" as defined in ESEA as reauthorized under ESSA [~~under the NCLB~~] , as interpreted by the USDE, the governing body of a charter holder that operates a charter school specializing in performing arts must require the applicant to complete and submit a common admission application form as described in subsection (a)(1) of this section and may adopt an admission policy that requires a student to demonstrate an interest or ability in the performing arts or to audition for admission to the school.

(3) The governing body of a charter holder that operates a charter school specializing in performing arts must adopt a student admission and enrollment policy that prohibits discrimination on the basis of sex, national origin, ethnicity, religion, disability, academic or athletic ability, or the district the child would otherwise attend under state law.

(4) The governing body of a charter holder that operates a charter school specializing in performing arts must adopt a student admission and enrollment policy that specifies any type of non-discriminatory enrollment criteria to be used at the charter school. Such non-discriminatory enrollment criteria may make the student ineligible for enrollment based on a history of a criminal offense, a juvenile court adjudication, or discipline problems under TEC, Chapter 37, Subchapter A, documented as provided by local policy.

(g) [~~(f)~~] Maximum enrollment. Total enrollment shall not exceed the maximum number of students approved in the open-enrollment charter. A charter school may establish a primary and secondary boundary. Students who reside outside the primary geographic boundary stated in the open-enrollment charter shall not be admitted to the charter school until all eligible applicants that reside within the primary boundary and have submitted a timely application have been enrolled. Then, if the open-enrollment charter so provides for a secondary boundary, the charter holder may admit students who reside within the secondary boundary to the charter school in accordance with the terms of the open-enrollment charter.

§100.1209.Municipal Ordinances.

(a) Municipal ordinances apply. A charter holder is subject to federal and state laws and rules governing public schools and to zoning and all other municipal ordinances governing public schools.

(b) When zoning ordinances do not apply. Notwithstanding subsection (a) of this section, a charter school site located in whole or in part in a municipality with a population of 20,000 or less is not subject to a municipal zoning ordinance governing public schools.

(c) Notification to political subdivisions. A political subdivision shall consider an open-enrollment charter school a school district for purposes related to land development standards, licensing, zoning, and various purposes and services pursuant to the following.

(1) The governing body of an open-enrollment charter school must certify in writing to the political subdivision that no employee, board member or charter holder of the charter school received any personal financial benefits from a real estate transaction with the charter school.

(2) The open-enrollment charter school files notice of the new property location within 10 business days of the completing the purchase or lease of real property for that location to the Texas Education Agency division responsible for charter schools and the division will notify the following within 10 business days:

(A) the superintendent and the board of trustees of each school district from which the proposed location is likely to draw students, as defined in §100.1013 of this title (relating to Notification of Charter Application); and

(B) each member of the legislature that represents the geographic area to be served by the location, as defined in §100.1013 of this title.

(d) Charter school related purposes. An agreement between a municipality and an open-enrollment charter school may require that any revised land development standards can only apply while the property is used for charter school related purposes and that any property in use subject to open-enrollment charter school land development standards must become compliant with all applicable non-school commercial development regulations after the closure or relocation of the charter school.

§100.1211.Students.

(a) Student performance. Notwithstanding any provision in an open-enrollment charter, acceptable student performance under Texas Education Code, §12.111(a)(3), shall at a minimum require overall student performance meeting the standards for an "academically acceptable" rating as defined by §100.1001(8) [~~§100.1001(28)~~ ] of this title (relating to Definitions).

(b) Reporting child abuse or neglect. A charter holder shall adopt and disseminate to all charter school staff and volunteers a policy governing child abuse reports required by Texas Family Code, Chapter 261. The policy shall require that employees, volunteers, or agents of the charter holder and the charter school report child abuse or neglect directly to an appropriate entity listed in Texas Family Code, Chapter 261.

(c) Admission and enrollment. A charter holder for an open-enrollment charter school shall have an admission and enrollment policy as outlined in §100.1207 of this title (relating to Student Admission), including prohibiting discrimination on the basis of sex; national origin; ethnicity; religion; disability; academic, artistic, or athletic ability; or the district the child would otherwise attend under state law.

(d) Notice of expulsion or withdrawal. A charter school shall notify the school district in which the student resides within three business days of any action expelling or withdrawing a student from the charter school.

(e) Data reporting. A charter holder and its charter school shall report timely and accurate information required by the commissioner of education to the Texas Education Agency (TEA), except as expressly waived by the commissioner.

(f) Student records. Student records shall be secure and maintained physically within the state of Texas at all times. Charter school personnel shall respond to requests for records in a timely and appropriate manner. Charter schools shall participate in the Texas Records Exchange (TREx) system and shall follow TREx data standards.

(g) Scholastic year. A charter holder shall adopt a school year for the charter school, with fixed beginning and ending dates. The charter school shall submit a copy of the charter school's campus calendars to the TEA division responsible for charter school administration prior to the first day of August of each year.

§100.1212.Personnel.

(a) Minimum qualifications. Except as provided by subsection (b) of this section, all persons employed as a principal or teacher by an open-enrollment charter school must hold a baccalaureate degree.

(b) Exception. In an open-enrollment charter school that serves youth referred to or placed in a residential trade center by a local or state agency, a person may be employed as a teacher for a noncore vocational course without holding a baccalaureate degree if the person has:

(1) demonstrated subject matter expertise related to the subject taught, such as professional work experience; formal training and education; holding a relevant active professional industry license, certification, or registration; or any combination of work experience, training and education, and industry license, certification, or registration; and

(2) received at least 20 hours of classroom management training, as determined by the governing body of the open-enrollment charter school. Documentation of the training is to be maintained locally and provided to the Texas Education Agency within 10 business days upon request.

(c) Certification. Special education teachers, bilingual teachers, and teachers of English as a second language must be certified in the fields in which they are assigned to teach as required by state and/or federal law.

(d) Paraprofessionals. All persons employed as paraprofessionals must be certified as required to meet state and/or federal law.

(e) Criminal history. A charter school shall obtain from the Department of Public Safety (DPS), prior to the hiring of personnel and at least every third year thereafter, all criminal history record information maintained by [~~the~~] DPS that the charter school is authorized to obtain.

(f) Do not hire registry. A charter school is prohibited from hiring personnel who are not eligible for hire in a Texas public school if they are listed on the Registry of Persons Not Eligible for Employment in Public Schools.

§100.1213.Failure to Operate.

(a) Continuous operation. Except as provided in this section, a charter holder shall operate the program as described in the open-enrollment charter for the full school term described in the open-enrollment charter during each year that the open-enrollment charter is in effect.

(b) Delayed opening [~~Dormant open-enrollment charter~~]. A charter holder may not delay opening the charter school (district) or any charter campus [~~or suspend operation~~] for longer than 21 days without an amendment to its open-enrollment charter, approved by the commissioner of education, stating that the charter school district or campus is dormant and setting forth the date on which operations shall resume and any applicable conditions for resuming operation that may be imposed by the commissioner. The period of dormancy shall last no longer than 12 months and will expire no later than June 30 in the school year in which the dormancy occurs. At the end of a period of dormancy the charter holder may request an additional period of dormancy of no more than 12 months through an amendment to its open-enrollment charter.

[(c) Written notice. A charter holder may not suspend operation of the charter school, or any campus or site of the charter school, for a period of more than three days without mailing written notice to the parent or guardian of each student and filing such notice with the Texas Education Agency (TEA) division responsible for charter schools at least 14 days in advance of the suspension, except that in an emergency the charter holder shall notify the TEA division responsible for charter schools by telephone or other means within 24 hours of suspending operations.]

(c) [~~(d)~~] Abandonment. Delay of opening or suspension of operations in violation of this section constitutes abandonment of the open-enrollment charter and constitutes a material violation of the charter contract.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on March 4, 2024.

TRD-202400954

Cristina De La Fuente-Valadez

Director, Rulemaking

Texas Education Agency

Earliest possible date of adoption: April 14, 2024

For further information, please call: (512) 475-1497

PART 7. STATE BOARD FOR EDUCATOR CERTIFICATION

CHAPTER 227. PROVISIONS FOR EDUCATOR PREPARATION CANDIDATES

(Editor's note: In accordance with Texas Government Code, §2002.014, which permits the omission of material which is "cumbersome, expensive, or otherwise inexpedient," the figure in 19 TAC §227.10(a)(4)(C) is not included in the print version of the Texas Register. The figure is available in the on-line version of the March 15, 2024, issue of the Texas Register.)

The State Board for Educator Certification (SBEC) proposes amendments to 19 Texas Administrative Code (TAC) §§227.1, 227.5, 227.10, and 227.103, concerning provisions for educator preparation candidates. The proposed amendments would make conforming changes to the Chapter 227 rules given proposed updates to Chapter 228, Requirements for Educator Preparation Programs, and Chapter 230, Professional Educator Preparation and Certification. The proposed changes would also update the Pre-Admission Content Test (PACT) figure to include the proposed new certificates and aligned PACT exams as well as proposed cut scores.

BACKGROUND INFORMATION AND JUSTIFICATION: The SBEC rules in 19 TAC Chapter 227 are organized as follows: Subchapter A, Admission to Educator Preparation Programs, and Subchapter B, Preliminary Evaluation of Certification Eligibility. These subchapters establish requirements for admission into an educator preparation program (EPP) and preliminary evaluation of certification eligibility.

These requirements ensure that EPPs attract and admit applicants who demonstrate the knowledge and skills necessary to improve the performance of the diverse student population of Texas.

The following is a description of the proposed amendments to 19 TAC Chapter 227. The proposed amendments would update rule references based on the proposed revisions to 19 TAC Chapter 228 and would update the PACT figure to include the new certificate names and aligned PACT names and associated passing standards based on the proposed revisions to 19 TAC Chapter 230.

Subchapter A. Admission to Educator Preparation Programs

Proposed Amendment to 19 TAC §227.1. General Provisions

The proposed amendment to 19 TAC §227.1(c)(3) would update the statutory reference from Texas Education Code (TEC), §21.044(e)(3), to TEC, §21.044(g), to conform with updates to statute.

Proposed Amendment to 19 TAC §227.5. Definitions

The proposed amendment to the definition for alternative certification program in 19 TAC §227.5(2) would update the reference from 19 TAC §228.20(a) to proposed new 19 TAC §228.25, Governance of Educator Preparation Programs. The proposed amendment to the definition for clinical teaching in 19 TAC §227.5(7) would update the reference from 19 TAC §228.35 to proposed new 19 TAC §228.67, Clinical Teaching. The proposed amendment to the definition for content pedagogy examinations in 19 TAC §227.5(9) would change "examinations" to "examination" to mirror use of the singular term in the definition for content certification examination in 19 TAC §227.5(8).

Proposed Amendment to 19 TAC §227.10. Admission Criteria

The proposed amendment to 19 TAC §227.10(a)(1) would update the language from "an undergraduate university program" to "a university undergraduate or post-baccalaureate program" to align with the exit policy in proposed new 19 TAC §228.31(b), Minimum Educator Preparation Program Obligations to All Candidates.

The proposed amendment to 19 TAC §227.10(g) would update the reference from 19 TAC §228.35(i)(2) to proposed new 19 TAC §228.45(b), Coursework and Training Requirements for Early Childhood-Grade 3. The proposed amendment would also expand the list of certificates, from 17 to 22, that a certified educator may hold to enroll in an EPP and complete the course of instruction that qualifies him or her to pursue the early childhood certification, including five proposed new Core: Early Childhood-Grade 6 certificates, which are proposed updates to 19 TAC Chapter 233, Categories of Classroom Teaching Certificates.

Proposed Amendment to 19 TAC §227.10(a)(4)(C)

Update to Figure for Pre-Admission Content Test Requirements

The proposed amendment to Figure: 19 TAC §227.10(a)(4)(C) would provide two technical edits, including moving the certificate Early Childhood: Prekindergarten-Grade 3 from Core Subjects to Early Childhood and removing the section header language for "Certification category (continued)" throughout to align with proposed updates to Figure: 19 TAC §230.21(e).

The proposed amendment to Figure: 19 TAC §227.10(a)(4)(C) would remove the certificates Core Subjects Early Childhood-Grade 6, Core Subjects Grades 4-8, English Language Arts and Reading Grades 4-8, and English Language Arts and Reading/Social Studies Grades 4-8 to align with proposed updates to Figure: 19 TAC §230.21(e).

The proposed amendment to Figure: 19 TAC §227.10(a)(4)(C) would adjust the passing standard for 790 Texas PACT Core Subjects 4-8 from 94 out of 160 selected response items to 82 out of 128 selected response items, based on updated standard setting committee recommendations.

The proposed amendment to Figure: 19 TAC §227.10(a)(4)(C) would also add the certificates for Core/Fine Arts/Physical Education/Health with the Science of Teaching Reading: Early Childhood-Grade 6, Core/Special Education with the Science of Teaching Reading: Early Childhood-Grade 6, Core/Bilingual Education Spanish with the Science of Teaching Reading: Early Childhood-Grade 6, Core/English as a Second Language with the Science of Teaching Reading: Early Childhood-Grade 6, and Special Education Specialist: Early Childhood-Grade 12 to align with proposed updates to Figure: 19 TAC §230.21(e), including the proposed PACT and associated passing standard.

Finally, the proposed amendment to Figure: 19 TAC §227.10(a)(4)(C) would add a new certification category and PACT for Tamil: Early Childhood-Grade 12, in alignment with proposed updates to Figure: 19 TAC §230.21(e). The proposed amendment would also clarify that a passing standard for Tamil: Early Childhood-Grade 12 would be established in the future, in alignment with the launch of the certificate and associated exam in September 2025, which would be codified in future rulemaking.

Subchapter B. Preliminary Evaluation of Certification Eligibility

Proposed Amendment to 19 TAC §227.103. Application

The proposed amendment to 19 TAC §227.103(a) would update the section to mirror language used in 19 TAC §227.107(a) to reference the schedule of fees for certification services.

FISCAL IMPACT: Emily Garcia, associate commissioner for educator preparation, certification, and enforcement has determined that for the first five years the proposal is in effect, there is no additional fiscal impact on state and local governments and that there are no additional costs to entities required to comply with the proposal.

LOCAL EMPLOYMENT IMPACT: The proposal has no effect on local economy; therefore, no local employment impact statement is required under Texas Government Code (TGC), §2001.022.

TAKINGS IMPACT ASSESSMENT: The proposal does not impose a burden on private real property and, therefore, does not constitute a taking under TGC, §2007.043.

GOVERNMENT GROWTH IMPACT: Texas Education Agency (TEA) staff prepared a Government Growth Impact Statement assessment for this proposed rulemaking. During the first five years the proposed rulemaking would be in effect, it would not create or eliminate a government program; would not require the creation of new employee positions or elimination of existing employee positions; would not require an increase or decrease in future legislative appropriations to the agency; would not require an increase or decrease in fees paid to the agency; would not create a new regulation; would not expand, limit, or repeal an existing regulation; would not increase or decrease the number of individuals subject to its applicability; and would not positively or adversely affect the state's economy.

PUBLIC BENEFIT AND COST TO PERSONS: Ms. Garcia has determined that for the first five years that the rule will be in effect that the public benefit anticipated as a result of the proposal would be supporting EPPs in ensuring that educator candidates have the appropriate content knowledge in the subject they intend to teach upon admission to the program. TEA staff has determined there is no anticipated cost to persons required to comply with the proposal.

DATA AND REPORTING IMPACT: The proposal would have no new data and reporting impact.

ENVIRONMENTAL IMPACT STATEMENT: The proposal does not require an environmental impact analysis because the proposal does not include major environmental rules under TGC, §2001.0225.

PRINCIPAL AND CLASSROOM TEACHER PAPERWORK REQUIREMENTS: TEA staff has determined that the proposal would not require a written report or other paperwork to be completed by a principal or classroom teacher.

PUBLIC COMMENTS: The public comment period on the proposal begins March 15, 2024, and ends April 15, 2024. A form for submitting public comments is available on the TEA website at https://tea.texas.gov/About_TEA/Laws_and_Rules/SBEC_Rules_(TAC)/Proposed_State_Board_for_Educator_Certification_Rules/. The SBEC will take registered oral and written comments on the proposal during the April 26, 2024, meeting's public comment period in accordance with the SBEC board operating policies and procedures.

SUBCHAPTER A. ADMISSION TO EDUCATOR PREPARATION PROGRAMS

19 TAC §§227.1, 227.5, 227.10

STATUTORY AUTHORITY. The amendments are proposed under Texas Education Code (TEC), §21.031, which authorizes the State Board for Educator Certification (SBEC) to regulate and oversee all aspects of the certification, continuing education, and standards of conduct of public school educators and states that in proposing rules under TEC, Chapter 21, Subchapter B, the SBEC shall ensure that all candidates for certification or renewal of certification demonstrate the knowledge and skills necessary to improve the performance of the diverse student population of this state; TEC, §21.041(b)(1), which requires the SBEC to propose rules that provide for the regulation of educators and the general administration of TEC, Chapter 21, Subchapter B, in a manner consistent with TEC, Chapter 21, Subchapter B; TEC, §21.041(b)(4), which specifies the requirements for the issuance and renewal of an educator certificate; TEC, §21.044(a), which requires SBEC to propose rules establishing training requirements a person must accomplish to obtain a certificate, enter an internship, or enter an induction-year program; TEC, §21.044(g)(2) and (3), which requires each educator preparation program (EPP) to provide certain information related to the effect of supply and demand forces on the educator workforce of the state and the performance over time of the EPP; TEC, §21.0441, which requires SBEC to adopt rules setting certain admission requirements for EPPs; TEC, §21.0489(c), which requires SBEC to adopt rules establishing eligibility requirements for an Early Childhood: Prekindergarten-Grade 3 certificate; TEC, §21.049(a), which authorizes SBEC to propose rules providing for educator certification programs as an alternative to traditional EPPs; and TEC, §21.050(a), which requires a person who applies for a teaching certificate for which SBEC rules require a bachelor's degree must possess a bachelor's degree received with an academic major or interdisciplinary academic major, including reading, other than education, that is related to the curriculum as prescribed under TEC, Chapter 28, Subchapter A; and Texas Occupations Code (TOC), §53.151, which sets the definitions of "licensing authority" and "occupational license" to have the meanings assigned to those terms by TOC, §58.001; TOC, §53.152, which requires EPPs to provide applicants and enrollees certain notice regarding potential ineligibility for a certificate based on convicted offenses, the SBEC rules regarding the certificate eligibility of an individual with a criminal history, and the right of the individual to request a criminal history evaluation letter; and TOC, §53.153, which requires an EPP to refund tuition, application fees, and examination fees paid by an individual if the EPP failed to provide the required notice under the TOC, §53.152, to an individual who was denied a certificate because the individual was convicted of an offense.

CROSS REFERENCE TO STATUTE. The amendments implement Texas Education Code, §§21.031; 21.041(b)(1) and (4); 21.044(a) and (g)(2) and (3); 21.0441; 21.0489(c); 21.049(a); and 21.050(a); and Texas Occupations Code, §§53.151, 53.152, and 53.153.

§227.1.General Provisions.

(a) It is the responsibility of the education profession as a whole to attract applicants and to retain educators who demonstrate the knowledge and skills necessary to improve the performance of the diverse student population of this state.

(b) Educator preparation programs (EPPs) shall inform all applicants that:

(1) pursuant to the Texas Education Code (TEC), §22.083, candidates must undergo a criminal history background check prior to employment as an educator; and

(2) pursuant to the TEC, §22.0835, candidates must undergo a criminal history background check prior to clinical teaching.

(1) the admission requirements as specified in this chapter;

(2) the requirements for program completion as specified in Chapter 228 of this title (relating to Requirements for Educator Preparation Programs); and

(3) in accordance with TEC, §21.044(g): [~~§21.044(e)(3):~~]

(A) the effect of supply and demand forces on the educator workforce in this state; and

(B) the performance over time of the EPP for the past five years.

(d) EPPs shall notify, in writing by mail, personal delivery, facsimile, email, or an electronic notification, each applicant to and enrollee in the EPP of the following regardless of whether the applicant or enrollee has been convicted of an offense:

(1) the potential ineligibility of an individual who has been convicted of an offense for issuance of a certificate on completion of the EPP;

(2) the current State Board for Educator Certification (SBEC) rules prescribed in §249.16 of this title (relating to Eligibility of Persons with Criminal History for a Certificate under Texas Occupations Code, Chapter 53, and Texas Education Code, Chapter 21); and

(3) the right to request a criminal history evaluation letter as provided in Chapter 227, Subchapter B, of this title (relating to Preliminary Evaluation of Certification Eligibility).

(e) If the SBEC determines that an EPP has failed to provide the notice required by subsection (d) of this section to an individual entitled to receive the notice and that the individual's application for a certificate for which the EPP prepares the individual was denied because the individual has been convicted of an offense prior to the EPP providing notice, the SBEC shall order the EPP to:

(1) refund the amount of any tuition paid by the individual to the EPP; and

(2) pay to the individual an amount equal to the total of the following, as applicable:

(A) the amount of any application fees paid by the individual to the SBEC; and

(B) the amount of any examination fees paid by the individual to the SBEC and/or to a provider of examinations required for certification. An EPP is not liable for examination fees if the examination was not required to be passed to meet the admission requirements of the EPP and/or the EPP did not provide test approval for the examination.

(f) If the governor of Texas declares a state of disaster consistent with the Texas Government Code, §418.014, Texas Education Agency staff may extend deadlines in this chapter for up to 90 days as necessary to accommodate persons in the affected disaster areas.

§227.5.Definitions.

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Accredited institution of higher education--An institution of higher education that, at the time it conferred the degree, was accredited or otherwise approved by an accrediting organization recognized by the Texas Higher Education Coordinating Board.

(2) Alternative certification program--An approved educator preparation program, delivered by entities described in §228.25 of this title (relating to Governance of Educator Preparation Programs), [~~§228.20(a) of this title (relating to Governance of Educator Preparation Programs),~~] specifically designed as an alternative to a traditional undergraduate certification program, for individuals already holding at least a bachelor's degree from an accredited institution of higher education.

(3) Applicant--An individual seeking admission to an educator preparation program for any class of certificate.

(4) Candidate--An individual who has been formally or contingently admitted to an educator preparation program; also referred to as an enrollee or participant.

(5) Certification category--A certificate type within a certification class, as described in Chapter 233 of this title (relating to Categories of Classroom Teaching Certificates).

(6) Certification class--A certificate, as described in §230.33 of this title (relating to Classes of Certificates), that has defined characteristics; may contain one or more certification categories.

(7) Clinical teaching--An assignment, as described in §228.67 of this title (relating to Clinical Teaching). [~~§228.35 of this title (relating to Preparation Program Coursework and/or Training).~~]

(8) Content certification examination--A standardized test or assessment required by statute or State Board for Educator Certification rule that governs an individual's admission to an educator preparation program.

(9) Content pedagogy examination [~~examinations~~ ]--A standardized test or assessment required by statute or State Board for Educator Certification rule that governs an individual's certification as an educator.

(10) Contingency admission--Conditional admission to an educator preparation program when an applicant meets all admission requirements specified in §227.10 of this title (relating to Admission Criteria) except graduation and degree conferred from an accredited institution of higher education.

(11) Educator preparation program--An entity that must be approved by the State Board for Educator Certification to recommend candidates in one or more classes of certificates.

(12) Formal admission--Admission to an educator preparation program when an applicant meets all admission requirements specified in §227.10 of this title (relating to Admission Criteria).

(13) Incoming class--Individuals contingently or formally admitted between September 1 and August 31 of each year by an educator preparation program.

(14) Post-baccalaureate program--An educator preparation program, delivered by an accredited institution of higher education and approved by the State Board for Educator Certification to recommend candidates for certification, that is designed for individuals who already hold at least a bachelor's degree from an accredited institution of higher education and are seeking an additional degree.

(15) Semester credit hour--One semester credit hour is equal to 15 clock-hours at an accredited institution of higher education.

(16) Undergraduate degree--A bachelor's degree earned from and conferred by an accredited institution of higher education.

§227.10.Admission Criteria.

(a) The educator preparation program (EPP) delivering educator preparation shall require the following minimum criteria of all applicants seeking initial certification in any class of certificate, unless specified otherwise, prior to admission to the program.

(1) For a university undergraduate or post-baccalaureate program, [~~an undergraduate university program,~~] an applicant shall be enrolled in an accredited institution of higher education (IHE).

(2) For an alternative certification program or post-baccalaureate program, an applicant shall have, at a minimum, a bachelor's degree earned from and conferred by an accredited IHE.

(3) For an undergraduate university program, alternative certification program, or post-baccalaureate program, to be eligible for admission into an EPP, an applicant shall have a grade point average (GPA) of at least 2.5 before admission.

(A) The GPA shall be calculated from an official transcript as follows:

(i) 2.5 on all coursework previously attempted by the person at an accredited IHE:

(II) from which the most recent bachelor's degree or higher from an accredited IHE was conferred (alternative certification program formal admission or post-baccalaureate program formal admission); or

(ii) 2.5 in the last 60 semester credit hours on all coursework previously attempted by the person at an accredited IHE:

(I) at which the applicant is currently enrolled (undergraduate university program formal admission, alternative certification program contingency admission, or post-baccalaureate program contingency admission). If an applicant has less than 60 semester credit hours on the official transcript from the accredited IHE at which the applicant is currently enrolled, the EPP shall use grades from all coursework previously attempted by a person at the most recent accredited institution(s) of higher education, starting with the most recent coursework from the official transcript(s), to calculate a GPA for the last 60 semester credit hours; or

(II) from which the most recent bachelor's degree or higher from an accredited IHE was conferred. If an applicant has hours beyond the most recent degree, an EPP may use grades from the most recent 60 hours of coursework from an accredited IHE (alternative certification program formal admission or post-baccalaureate program formal admission).

(B) In accordance with the Texas Education Code, (TEC), §21.0441(b), an exception to the minimum GPA requirement may be granted by the program director only in extraordinary circumstances and may not be used by a program to admit more than 10% of any incoming class of candidates. An applicant is eligible for this exception if:

(i) documentation and certification from the program director that an applicant's work, business, or career experience demonstrates achievement equivalent to the academic achievement represented by the GPA requirement; and

(ii) in accordance with the TEC, §21.0441(a)(2)(B), an applicant must pass an appropriate content certification examination as specified in paragraph (4)(C) of this subsection for each subject in which the applicant seeks certification prior to admission. In accordance with the TEC, §21.0441(b), applicants who do not meet the minimum GPA requirement and have previously been admitted into an EPP may request permission to register for an appropriate content certification examination if the applicant is not seeking admission to the same EPP that previously granted test approval for a certification examination in the same certification class.

(C) An applicant who is seeking a career and technical education (CTE) certificate that does not require a degree from an accredited IHE is exempt from the minimum GPA requirement.

(D) An applicant who does not meet the minimum GPA requirement and is seeking certification in a class other than classroom teacher must perform at or above a score equivalent to a 2.5 GPA on the Verbal Reasoning, Quantitative Reasoning, and Analytic Writing sections of the GRE® (Graduate Record Examinations) revised General Test. The State Board for Educator Certification will use equivalency scores established by the Educational Testing Service, and the Texas Education Agency (TEA) will publish those equivalency scores annually on the TEA website.

(4) For an applicant who will be seeking an initial certificate in the classroom teacher class of certificate, the applicant shall have successfully completed, prior to admission, at least:

(A) a minimum of 12 semester credit hours in the subject-specific content area for the certification sought, unless certification sought is for mathematics or science at or above Grade 7; or

(B) 15 semester credit hours in the subject-specific content area for the certification sought if the certification sought is for mathematics or science at or above Grade 7; or

(C) a passing score on the appropriate content certification examination as specified in the figure provided in this subparagraph.

Figure: 19 TAC §227.10(a)(4)(C) (.pdf)

[~~Figure: 19 TAC §227.10(a)(4)(C)~~]

(5) For an applicant who will be seeking an initial certificate in a class other than classroom teacher, the applicant shall meet the minimum requirements for admission described in Chapter 239 of this title (relating to Student Services Certificates); Chapter 241 of this title (relating to Certification as Principal); and Chapter 242 of this title (relating to Superintendent Certificate). If an applicant has not met the minimum certification, degree, and/or experience requirement(s) for issuance of a standard certificate prior to admission, the EPP shall inform the applicant in writing of any deficiency prior to admission.

(6) An applicant must demonstrate basic skills in reading, written communication, and mathematics by meeting the requirements of the Texas Success Initiative under the rules established by the Texas Higher Education Coordinating Board (THECB) in Part 1, Chapter 4, Subchapter C, of this title (relating to Texas Success Initiative), including one of the requirements established by §4.54 of this title (relating to Exemptions, Exceptions, and Waivers).

(7) An applicant must demonstrate the English language proficiency skills as specified in §230.11 of this title (relating to General Requirements).

(A) An applicant for CTE certification that does not require a bachelor's degree from an accredited IHE may satisfy the English language proficiency requirement with an associate's degree or high school diploma or the equivalent that was earned at an accredited IHE or an accredited high school in the United States.

(B) An applicant to a university undergraduate program that leads to a bachelor's degree may satisfy the English language proficiency requirement by meeting the English language proficiency requirement of the accredited IHE at which the applicant is enrolled.

(8) An applicant must submit an application and participate in either an interview or other screening instrument to determine if the EPP applicant's knowledge, experience, skills, and aptitude are appropriate for the certification sought.

(9) An applicant must fulfill any other academic criteria for admission that are published and applied consistently to all EPP applicants.

(b) An EPP may adopt admission requirements in addition to and not in conflict with those required in this section.

(1) has been reported as completing all EPP requirements by another EPP in the same certification category or class, unless the applicant only needs certification examination approval; or

(2) has been employed for three years in a public school under a permit, intern, or probationary certificate as specified in Chapter 230, Subchapter D, of this title (relating to Types and Classes of Certificates Issued), unless the applicant is seeking clinical teaching that may lead to the issuance of an initial standard certificate.

(d) An EPP may admit an applicant for CTE certification who has met the experience and preparation requirements specified in Chapter 230 of this title (relating to Professional Educator Preparation and Certification) and Chapter 233 of this title (relating to Categories of Classroom Teaching Certificates).

(e) An EPP may admit an applicant for the Trade and Industrial Workforce Training: Grades 6-12 certification who has met the following requirements:

(1) has been issued a high school diploma or a postsecondary credential, certificate, or degree;

(2) has seven years of full-time wage-earning experience within the preceding 10 years in an approved occupation for which instruction is offered;

(3) holds with respect to that occupation a current license, certificate, or registration, as applicable, issued by a nationally recognized accrediting agency based on a recognized test or measurement; and

(4) within the period described by paragraph (2) of this subsection, has not been the subject of a complaint filed with a licensing entity or other agency that regulates the occupation of the person, other than a complaint that was determined baseless or unfounded by that entity or agency.

(f) An EPP may admit an applicant who has met the minimum academic criteria through credentials from outside the United States that are determined to be equivalent to those required by this section using the procedures and standards specified in Chapter 245 of this title (relating to Certification of Educators from Other Countries). An EPP at an entity that is accredited by an accrediting organization recognized by the THECB may use its own foreign credential evaluation service to meet the requirement described in §245.10(a)(2) of this title (relating to Application Procedures), if the entity is in good standing with its accrediting organization.

(g) An applicant is eligible to enroll in an EPP for the purpose of completing the course of instruction, defined in §228.45(b) [~~§228.35(i)(2)~~] of this title (relating to Coursework and Training Requirements for Early Childhood: Prekindergarten-Grade 3 Certification [~~Preparation Program Coursework and/or Training~~], that is required for the issuance of an Early Childhood: Prekindergarten-Grade 3 certificate if the individual holds a valid standard, provisional, or one-year certificate specified in §230.31 of this title (relating to Types of Certificates) in one of the following certificate categories:

(1) Bilingual Generalist: Early Childhood-Grade 4;

(2) Bilingual Generalist: Early Childhood-Grade 6;

(3) Core Subjects: Early Childhood-Grade 6;

(4) Core/Fine Arts/Physical Education/Health with the Science of Teaching Reading: Early Childhood-Grade 6;

(5) Core/Special Education with the Science of Teaching Reading: Early Childhood-Grade 6;

(6) Core/Bilingual Education Spanish with the Science of Teaching Reading: Early Childhood-Grade 6;

(7) Core/English as a Second Language Supplemental with the Science of Teaching Reading: Early Childhood-Grade 6;

(8) Core with the Science of Teaching Reading: Early Childhood-Grade 6;

(9) [~~(4)~~] Early Childhood Education;

(10) [~~(5)~~] Elementary--General;

(11) [~~(6)~~] Elementary--General (Grades 1-6);

(12) [~~(7)~~] Elementary--General (Grades 1-8);

(13) [~~(8)~~] Elementary Early Childhood Education (Prekindergarten-Grade 6);

(14) [~~(9)~~] Elementary Self-Contained (Grades 1-8);

(15) [~~(10)~~] English as a Second Language Generalist: Early Childhood-Grade 4;

(16) [~~(11)~~] English as a Second Language Generalist: Early Childhood-Grade 6;

(17) [~~(12)~~] Generalist: Early Childhood-Grade 4;

(18) [~~(13)~~] Generalist: Early Childhood-Grade 6;

(19) [~~(14)~~] Kindergarten;

(20) [~~(15)~~] Prekindergarten-Grade 5--General;

(21) [~~(16)~~] Prekindergarten-Grade 6--General; or

(22) [~~(17)~~] Teacher of Young Children--General.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on March 4, 2024.

TRD-202400935

Cristina De La Fuente-Valadez

Director, Rulemaking

State Board of Educator Certification

Earliest possible date of adoption: April 14, 2024

For further information, please call: (512) 475-1497

SUBCHAPTER B. PRELIMINARY EVALUATION OF CERTIFICATION ELIGIBILITY

19 TAC §227.103

STATUTORY AUTHORITY. The amendment is proposed under Texas Occupations Code (TOC), §53.105, which specifies that a licensing authority may charge a person requesting an evaluation under TOC, Chapter 53, Subchapter D, a fee adopted by the authority. Fees adopted by a licensing authority under TOC, Chapter 53, Subchapter D, must be in an amount sufficient to cover the cost of administering this subchapter.

CROSS REFERENCE TO STATUTE. The amendment implements Texas Occupations Code, §53.105.

§227.103.Application.

(a) A request for preliminary criminal history evaluation must be preceded by payment of the required criminal history evaluation fee specified in §230.101 of this title (relating to Schedule of Fees for Certification Services). [~~§230.101(a)(19) of this title (relating to Schedule of Fees for Certification Services).~~]

(b) A request for preliminary criminal history evaluation must include the following:

(1) a signed and dated application, in the form provided on the Texas Education Agency (TEA) website, containing contact information and the date and description of each offense requested to be evaluated;

(2) an attached statement of the circumstances upon which the arrest is based and the disposition relating to each offense to be evaluated;

(3) court documentation relating to each offense, including, at a minimum, the formal disposition of the offense(s) and related charge(s) (e.g., Judgment, Order of Probation, Sentence, Deferred Adjudication Order, etc.); and

(4) a copy of the receipt for the request for preliminary criminal history evaluation fee.

(c) All required documents and information specified in subsection (b) of this section must be provided with the request for preliminary criminal history evaluation. Any documents or information not provided in the original request will not be considered reasonably available.

(d) The preliminary criminal history evaluation will be based solely on the application and court or law enforcement documents provided. Any information not provided by the requestor shall be considered not reasonably available at the time of the request and may be considered at the time the requestor subsequently applies for a certificate issued by the State Board for Educator Certification. Additional documentation that should be provided, if possible, includes the following:

(1) the formal charge(s) (e.g., indictment, information, or complaint);

(2) evidence that the condition(s) of the court have been met (e.g., completion of probation, receipt for restitution, etc.); and

(3) any available law enforcement report(s) describing the offense or the investigation of the offense.

(e) The application, the statement of circumstances, the required court documentation, and a copy of the receipt for the request for preliminary criminal history evaluation fee must be submitted to the TEA division responsible for educator investigations by United States certified mail, return receipt requested, to the address provided on the application or by facsimile to the facsimile number provided on the application.

(f) A request for preliminary criminal history evaluation is incomplete unless it includes a copy of the receipt for the request for preliminary criminal history evaluation fee, a completed application, a statement of circumstances, and the required court documentation. The TEA staff will take no action on a request that is incomplete.

(g) All documents submitted in connection with a request for preliminary criminal history evaluation, whether complete or incomplete, will not be returned to the requestor. All documents will be retained or destroyed by the TEA in accordance with the TEA records retention schedule.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on March 4, 2024.

TRD-202400936

Cristina De La Fuente-Valadez

Director, Rulemaking

State Board of Educator Certification

Earliest possible date of adoption: April 14, 2024

For further information, please call: (512) 475-1497