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Stake Holders Stake Holders Accreditation IssuesAccreditation Issues

Rita ChaseRita ChaseDivision of Financial AuditsDivision of Financial Audits

Texas Education AgencyTexas Education Agency

Texas Administrative CodeTexas Administrative Code

§97.1055. Accreditation Status.§97.1055. Accreditation Status. (a)-(f)(a)-(f) (No change.)(No change.) (g)(g) Charter school accreditation. In Charter school accreditation. In

considering the financial performance considering the financial performance of a charter operator during a fiscal of a charter operator during a fiscal year for which no financial year for which no financial accountability ratings were assigned accountability ratings were assigned to charter operators under §109.1002 to charter operators under §109.1002 of this title, the commissioner shall of this title, the commissioner shall apply the following substitute criteria.apply the following substitute criteria.

TAC TAC §§97.105597.1055

(1)(1) Finding in lieu of rating. Any of the Finding in lieu of rating. Any of the following findings, made after an following findings, made after an opportunity for a record review under opportunity for a record review under paragraph (2)(B) of this subsection, paragraph (2)(B) of this subsection, shall be deemed the equivalent of a shall be deemed the equivalent of a financial accountability rating of financial accountability rating of Substandard Achievement or Substandard Achievement or Suspended--Data Quality under Suspended--Data Quality under §109.1002 of this title:§109.1002 of this title: In place of a School FIRST ratingIn place of a School FIRST rating

TAC TAC §§97.105597.1055

(A)(A) the Annual Audit Report required the Annual Audit Report required for that fiscal year by TEC, §44.008, for that fiscal year by TEC, §44.008, and §100.1047 of this title (relating and §100.1047 of this title (relating to Accounting for State Funds) was to Accounting for State Funds) was received more than 180 days after received more than 180 days after the close of the entity's fiscal year;the close of the entity's fiscal year; June 30 fiscal year end – received after June 30 fiscal year end – received after

December 29December 29 August 31 fiscal year end – received August 31 fiscal year end – received

after February 27after February 27

TAC TAC §§97.105597.1055

(B)(B) the Annual Audit Report required for the Annual Audit Report required for that fiscal year by TEC, §44.008, and that fiscal year by TEC, §44.008, and §100.1047 of this title disclosed net §100.1047 of this title disclosed net assets of less than 80% of net liabilities; assets of less than 80% of net liabilities; oror Statement of Financial PositionStatement of Financial Position

Example 1:Example 1: Net Assets - $1,582,742Net Assets - $1,582,742 Liabilities - $474,672 * 80% = $379,737.60 (Passed)Liabilities - $474,672 * 80% = $379,737.60 (Passed)

Example 2:Example 2: Net Assets - $86,988Net Assets - $86,988 Liabilities - $128,873 * 80% = $103,098.40 (Failed)Liabilities - $128,873 * 80% = $103,098.40 (Failed)

(C)(C) the Annual Audit Report required for the Annual Audit Report required for that fiscal year by TEC, §44.008, and that fiscal year by TEC, §44.008, and §100.1047 of this title contained:§100.1047 of this title contained: (i) an adverse opinion, including a going (i) an adverse opinion, including a going

concern disclosure, or a disclaimer of opinion; concern disclosure, or a disclaimer of opinion; andand

(ii) the adverse or disclaimed opinion that (ii) the adverse or disclaimed opinion that pertained to:pertained to:

(I) financial resources or expenditures that were not (I) financial resources or expenditures that were not properly documented; orproperly documented; or

(II) a material weakness in internal controls that led (II) a material weakness in internal controls that led to the misallocation of financial resources.to the misallocation of financial resources.

(2)(2) Provisions concerning finding. Provisions concerning finding. Whenever a provision of this section Whenever a provision of this section calls for consideration of the financial calls for consideration of the financial accountability rating of a charter accountability rating of a charter operator for a fiscal year, a finding operator for a fiscal year, a finding described by paragraph (1) of this described by paragraph (1) of this subsection shall be deemed the subsection shall be deemed the financial accountability rating and financial accountability rating and applied as if such finding were issued applied as if such finding were issued under §109.1002 of this title.under §109.1002 of this title.

(A)(A) If a provision of this section calls for If a provision of this section calls for consideration of the financial accountability consideration of the financial accountability rating of a charter operator for more than rating of a charter operator for more than one fiscal year, and financial accountability one fiscal year, and financial accountability ratings were assigned to charter operators ratings were assigned to charter operators under §109.1002 of this title for at least under §109.1002 of this title for at least one but fewer than all of the relevant fiscal one but fewer than all of the relevant fiscal years, a finding described by paragraph (1) years, a finding described by paragraph (1) of this subsection shall be deemed the of this subsection shall be deemed the financial accountability rating only for the financial accountability rating only for the fiscal year(s) for which no financial fiscal year(s) for which no financial accountability ratings were assigned to accountability ratings were assigned to charter operators.charter operators.

(B)(B) A finding described by A finding described by paragraph (1) of this subsection shall paragraph (1) of this subsection shall be issued using the process provided be issued using the process provided by §97.1035 of this title (relating to by §97.1035 of this title (relating to Procedures for Accreditation Procedures for Accreditation Sanctions) and shall be subject to a Sanctions) and shall be subject to a record review under §97.1037 of this record review under §97.1037 of this title (relating to Record Review of title (relating to Record Review of Certain Decisions).Certain Decisions).

(C)(C) A finding described by A finding described by paragraph (1) of this subsection shall paragraph (1) of this subsection shall be issued pertaining to each fiscal be issued pertaining to each fiscal year beginning with the 2007-2008 year beginning with the 2007-2008 fiscal year. For the 2006-2007 fiscal fiscal year. For the 2006-2007 fiscal year, the TEA shall report the year, the TEA shall report the performance of each open-performance of each open-enrollment charter operator for enrollment charter operator for informational purposes only.informational purposes only.

RatingsRatings

School YearSchool Year Audit DueAudit Due RatingRating

06-0706-07 January 2008January 200820092009

07-0807-08 January 2009January 200920102010

08-0908-09 January 2010January 201020112011 09-1009-10 January 2011January 2011

20122012

10-1110-11 January 2012January 201220132013

(h)(h) Third-party accreditation. The Third-party accreditation. The commissioner may recognize a commissioner may recognize a supplemental accreditation issued by a supplemental accreditation issued by a rating agency approved by the rating agency approved by the commissioner to a charter operator that commissioner to a charter operator that meets the standards determined by the meets the standards determined by the commissioner under subsection (a)(1)(A) of commissioner under subsection (a)(1)(A) of this section. A charter operator that fails to this section. A charter operator that fails to meet the standards for accreditation under meet the standards for accreditation under subsection (a)(1)(A) of this section may not subsection (a)(1)(A) of this section may not receive such recognition until the charter receive such recognition until the charter operator meets the standards for the operator meets the standards for the Accredited status as determined by the Accredited status as determined by the commissioner.commissioner.

Questions?????Questions?????

Texas Administrative Code, Chapter 97Texas Administrative Code, Chapter 97 http://www.tea.state.tx.us/rules/commissioner/proposed/http://www.tea.state.tx.us/rules/commissioner/proposed/

0808/97dd-ee-ltrprop.html0808/97dd-ee-ltrprop.html

Texas Education Code, Chapter 39.071Texas Education Code, Chapter 39.071 http://tlo2.tlc.state.tx.us/statutes/ed.toc.htmhttp://tlo2.tlc.state.tx.us/statutes/ed.toc.htm

rita.chase@tea.state.tx.usrita.chase@tea.state.tx.us

512-463-7595512-463-7595