|(a) Definitions. In this section, the following terms
have the following meanings.
(1) Severance payment--Any amount paid by the board
of trustees of an independent school district to or in behalf of a
superintendent on early termination of the superintendent's contract
that exceeds the amount earned by the superintendent under the contract
as of the date of termination, including any amount that exceeds the
amount of earned standard salary and benefits that is paid as a condition
of early termination of the contract. Payments to a former superintendent
who remains employed by a school district in another capacity or contracts
with a school district to provide the district services may be severance
payments in whole or in part if the payments are compensation for
the early termination of a prior employment agreement. Severance payments
include any payment for actual or threatened litigation involving
or related to the employment contract.
(2) Superintendent--The educational leader and chief
executive officer of an independent school district. "Departing superintendent"
means an individual no longer acting as superintendent and includes
a former superintendent who is employed or contracted to work in any
other capacity by the same school district that previously employed
him or her as superintendent.
(3) Foundation School Program (FSP) funding reduction
amount--The portion of the amount of a severance payment to a superintendent
that is deducted from an independent school district's FSP funding.
The FSP funding reduction amount is calculated according to the provisions
in subsection (c) of this section.
(b) Severance payment reporting and identification
of districts subject to funding reductions.
(1) An independent school district that makes a payment
of any kind to a departing superintendent must file with the Texas
Education Agency (TEA) a Superintendent Payment Disclosure Form, which
is available on the TEA website. However, no form is required to be
filed for a payment already earned and payable under the terms of
a terminated employment contract, such as a payment for accrued vacation.
(2) The form must be filed by the 60th day after the
district executes the agreement to make the payment or the 60th day
after any payment under such an agreement, whichever is sooner. The
interim superintendent, new superintendent, or school board president
is responsible for timely filing of the Superintendent Payment Disclosure
Form. Filing of the disclosure form is required regardless of whether
a district considers a payment to be a severance payment as that term
is defined in subsection (a) of this section. As stated in the disclosure
form, a district must enclose with the submitted form a copy of the
superintendent employment contract and a copy of the termination or
(3) The commissioner of education determines whether
a payment to a departing superintendent is a severance payment for
purposes of this section, and whether an independent school district
is subject to reductions in FSP funding under this section, based
on information the district reports on the Superintendent Payment
Disclosure Form and any additional documentation the commissioner
requires to make these determinations. The commissioner may also make
these determinations based on agency documents that are made available
to the district. The commissioner's determinations under this paragraph
are the final agency administrative decisions and may not be appealed
under the Texas Education Code (TEC), §7.057(a).
(4) A school district must provide the commissioner
with any information or documentation that the commissioner requests
to make the determinations described in paragraph (3) of this subsection.
Information and documentation that the commissioner may request includes
but is not limited to the following:
(A) the canceled check for any payment made to the
departing superintendent beyond the amount earned under the contract
at the time employment was terminated;
(B) the Internal Revenue Service Form W-2, Wage and
Tax Statement, reporting any payment of supplemental wages (compensation
paid in addition to the employee's regular wages) and any special
wage payment (amount paid to an employee or former employee for services
performed in a prior year) made to the departing superintendent;
(C) worksheets documenting calculation of earned payroll
amounts through the departing superintendent's last day of employment;
(D) general ledger detail documenting transactions
involving payments to the departing superintendent;
(E) minutes of the meeting of the board of trustees
documenting approval of a final agreement to make a payment or payments
to the departing superintendent;
(F) the departing superintendent's employment contract
for the period (year) of employment immediately preceding the most
recent period (year), if applicable;
(G) the compensation plan or salary schedule for the
departing superintendent for the most recent contractual period (year)
of employment and for the period (year) immediately preceding, if
(H) salary distribution records for the departing superintendent's
most recent contractual period (year) of employment and for the period
(year) immediately preceding, if applicable;
(I) any agreement for employment of the departing superintendent
after that individual's employment as superintendent; and
(J) the board policy covering employee benefits, including
monthly allowances, deferred compensation, and payments for leave
(sick, personal, vacation, compensatory, or any other type of leave)
that is earned but unused upon termination, that was in effect at
the time the departing superintendent's employment was terminated.
(c) Reduction in FSP funding.
(1) The commissioner will reduce a school district's
FSP funding by the amount that a severance payment to a superintendent
exceeds the amount that is equal to one year's salary and benefits
under the superintendent's terminated contract. The commissioner will
reduce the district's FSP funding for the school year following the
school year in which the first payment requiring an FSP funding reduction
under this section is made to the former superintendent. The commissioner
also will reduce the district's FSP funding in the school year following
each school year that any additional payment requiring an FSP reduction
under this section is made to the former superintendent. If a district's
liability to the state under this section exceeds the total of the
district's estimated payments of FSP funding for the remainder of
the school year, the district is subject to reductions in its FSP
funding for subsequent school years until the liability has been fully
liquidated. The reduction in FSP funding may be applied to any source
of FSP estimated earned revenue. A proportionate amount of the reduction
in FSP funding will be deducted from each FSP state aid payment for
the school year or years.
(2) For a school district subject to the provisions
of the TEC, Chapter 41, any FSP funding reduction amount will be deducted
from the FSP Tier I allotment for the district before computation
of weighted average daily attendance for purposes of determining the
district's equalized wealth level.
(3) A reduction in FSP funding under this section does
not affect a school district's obligation to comply with all provisions
of the TEC, Chapter 42, including its obligation under that chapter
to provide educational services to special populations.
(d) Review and consequences of failure to comply with
this section. The information a district reports on its Superintendent
Payment Disclosure Form is subject to review by the TEA division responsible
for school financial reviews. Compliance with the reporting requirements
of this section is considered part of the district's compliance with
required financial accounting practices under the TEC, §39.057(a)(4).
Failure to comply with this section's reporting requirements may result
in sanctions as authorized by the TEC, §39.057(d) and (e).