November 2025 Committee on School Finance/Permanent School Fund Item 1
Discussion of Proposed Revisions to 19 TAC Chapter 109, Budgeting, Accounting, and Auditing, Subchapter B, Texas Education Agency Audit Functions, §109.25, State Compensatory Education Program Reporting and Auditing System, and Subchapter D, Uniform Bank Bid or Request for Proposal and Depository Contract
November 20, 2025
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 proposed revisions to 19 Texas Administrative Code (TAC) Chapter 109, Budgeting, Accounting, and Auditing, Subchapter B, Texas Education Agency Audit Functions, §109.25, State Compensatory Education Program Reporting and Auditing System, and Subchapter D, Uniform Bank Bid or Request for Proposal and Depository Contract. The proposed revisions would repeal §109.25, whose statutory authority, Texas Education Code (TEC), §48.104(j-1), (k), (l), (m), (n), and (o), was removed by House Bill (HB) 2, 89th Texas Legislature, Regular Session, 2025. The proposed revisions would also align language in Subchapter D with TEC, §45.208, which no longer requires depository contracts to be submitted to the Texas Education Agency (TEA).
STATUTORY AUTHORITY: HB 2, Section 7.24, 89th Texas Legislature, Regular Session, 2025; and (TEC), §45.208.
HB 2, Section 7.24, 89th Texas Legislature, Regular Session, 2025, amended TEC, §48.104, to repeal the authority of the SBOE to direct how the state compensatory education allotments funds are spent and how the expenditures are reported to TEA.
TEC, §45.208, requires that a school district use the depository contract prescribed by the SBOE and that the depository bank secure the highest daily amount of cash in the bank using a bond or other surety agreements.
The full text of statutory citations can be found in the links above.
FUTURE ACTION EXPECTED: The proposed revisions to Chapter 109 will be presented for first reading and filing authorization at the January 2026 SBOE meeting.
BACKGROUND INFORMATION AND JUSTIFICATION: Section 109.25 requires each school district and charter school to report financial information relating to the expenditure of the state compensatory education allotment under the Foundation School Program to TEA. HB 2, 89th Texas Legislature, Regular Session, 2025, repealed the SBOE's authority to direct how the state compensatory education allotment funds are spent and how the funds are reported to TEA. Therefore, the proposed repeal of §109.25 is necessary to implement HB 2.
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 TEA. Section 109.52 also establishes the requirement that a district provide a completed surety bond form to 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. Senate Bill (SB) 1376, 86th Texas Legislature, 2019, repealed the requirement for districts to submit certain depository information to TEA. Therefore, §109.52 would be amended to remove filing requirements.
Section 109.51 would be amended to make non-substantive changes to align with language in §109.52.
Staff Member Responsible:
David Marx, Senior Director, Financial Compliance
Attachment I:
Text of Proposed Revisions to 19 TAC Chapter 109, Budgeting, Accounting, and Auditing, Subchapter B, Texas Education Agency Audit Functions, §109.25, State Compensatory Education Program Reporting and Auditing System, and Subchapter D, Uniform Bank Bid or Request for Proposal and Depository Contract
Attachment II:
Figure: 19 TAC §109.51(c)
Attachment III:
Figure: 19 TAC §109.51(d)
Attachment IV:
Figure: 19 TAC §109.52(b)
Attachment V:
Figure: 19 TAC §109.52(d)