September 2017 Committee on School Finance Permanent School Fund Item 3
Discussion of Proposed Amendment to 19 TAC Chapter 109, Budgeting, Accounting, and Auditing, Subchapter D, Uniform Bank Bid or Request for Proposal and Depository Contract, §109.52, Uniform Depository Bank Contract and Surety Bond Forms
September 14, 2017
COMMITTEE ON SCHOOL FINANCE/PERMANENT SCHOOL FUND: DISCUSSION
STATE BOARD OF EDUCATION: NO ACTION
SUMMARY: This item provides an opportunity for the committee to discuss a proposed amendment to 19 TAC Chapter 109, Budgeting, Accounting, and Auditing, Subchapter D, Uniform Bank Bid or Request for Proposal and Depository Contract, §109.52, Uniform Depository Bank Contract and Surety Bond Forms. The proposed amendment would update the depository contract adopted in rule to reflect changes made by Senate Bill (SB) 754, 85th Texas Legislature, Regular Session, 2017.
STATUTORY AUTHORITY: Texas Education Code, §§7.102(c)(34); 45.205(b), as amended by SB 754, 85th Texas Legislature, Regular Session, 2017; 45.206; and 45.208.
TEC, §7.102(c)(34), requires the State Board of Education (SBOE) to prescribe uniform bid blanks for school districts to use in selecting a depository bank as required by the TEC, §45.206.
TEC, §45.205(b), as amended by SB 754, 85th Texas Legislature, Regular Session, 2017, provides the term for a contract between a school district and the district's depository bank.
TEC, §45.206, requires a school district to acquire a bank to be its depository by utilizing either a bid or proposal using the forms prescribed by the SBOE.
TEC, §45.208, requires that a school district use the depository contract prescribed by the SBOE; that the depository bank secure the highest daily amount of cash in the bank using a bond or other surety agreements; and that the contract, bid or proposal, and bond be filed with the agency.
BOARD RESPONSE: This item is presented for review and comment.
PREVIOUS BOARD ACTION: The SBOE adopted §109.52 effective September 1, 1997, and last amended it effective May 15, 2014.
FUTURE ACTION EXPECTED: The proposed amendment to §109.52 will be presented for first reading and filing authorization at the November 2017 SBOE meeting.
BACKGROUND INFORMATION AND SIGNIFICANT ISSUES: Section 109.52 establishes the requirement that each school district select at least one bank as a depository and enter into a depository contract with the bank, providing the completed contract to the Texas Education Agency (TEA). Section 109.52 also establishes the requirement that a district provide a completed surety bond form to the TEA if the depository bank uses a surety bond to secure district deposits. The section includes the depository contract form and surety bond form with the content prescribed by the SBOE.
SB 754, 85th Texas Legislature, Regular Session, 2017, amended the TEC, §45.205(b), to allow the school district depository contract to be extended a total of three two-year terms. In addition, the bill allows the depository contract to be modified for each two-year extension if both the school district and the district's depository bank mutually agree to the terms.
The proposed amendment to §109.52 would implement SB 754 by modifying Figure: 19 TAC §109.52(b) to allow a school district depository contract to be extended to the number of two-year terms allowed by the TEC, §45.205(b).
The proposed amendment to §109.52, including the revised contract adopted as a figure, will be provided to the committee at the November 2017 meeting. The current text of §109.52 is provided as an attachment to this item.
FISCAL IMPACT: The TEA does not anticipate any additional costs to persons or entities required to comply with the proposed amendment; however, fiscal implications will be assessed and included when the proposed amendment is presented for first reading and filing authorization.
PUBLIC AND STUDENT BENEFIT: The proposed amendment would update the contract with a depository bank and provide additional flexibility in extension years.
PROCEDURAL AND REPORTING IMPLICATIONS: The proposed amendment would update and streamline the filing process and reduce paperwork for a school district to select and contract with a depository bank.
LOCALLY MAINTAINED PAPERWORK REQUIREMENTS: The proposed amendment would have no new locally maintained paperwork requirements.
PUBLIC COMMENTS: The official public comment period will begin when the proposal, approved for first reading and filing authorization, is published in the Texas Register.
ALTERNATIVES: None.
OTHER COMMENTS AND RELATED ISSUES: None.
Staff Members Responsible:
Leo Lopez, Associate Commissioner
School Finance / Chief School Finance Officer
David Marx, Director
Financial Compliance
Attachments:
I. Statutory Citations (PDF, 25KB)
II. Text of 19 TAC Chapter 109, Budgeting, Accounting, and Auditing, Subchapter D, Uniform Bank Bid or Request for Proposal and Depository Contract, §109.52, Uniform Depository Bank Contract and Surety Bond Forms (including forms) (PDF, 125KB)