1. First Annual Charter School Budget Boot Camp Stake Holders Accreditation Issues Rita Chase Division of Financial Audits Texas Education Agency

2. Texas Administrative Code §97.1055. Accreditation Status. §97.1055. Accreditation Status. (a)-(f)(No change.) (a)-(f)(No change.) (g)Charter school accreditation. In considering the financial performance of a charter operator during a fiscal year for which no financial accountability ratings were assigned to charter operators under §109.1002 of this title, the commissioner shall apply the following substitute criteria. (g)Charter school accreditation. In considering the financial performance of a charter operator during a fiscal year for which no financial accountability ratings were assigned to charter operators under §109.1002 of this title, the commissioner shall apply the following substitute criteria.

3. TAC §97.1055 (1)Finding in lieu of rating. Any of the following findings, made after an opportunity for a record review under paragraph (2)(B) of this subsection, shall be deemed the equivalent of a financial accountability rating of Substandard Achievement or Suspended--Data Quality under §109.1002 of this title: (1)Finding in lieu of rating. Any of the following findings, made after an opportunity for a record review under paragraph (2)(B) of this subsection, shall be deemed the equivalent of a financial accountability rating of Substandard Achievement or Suspended--Data Quality under §109.1002 of this title: In place of a School FIRST rating In place of a School FIRST rating

4. TAC §97.1055 (A)the Annual Audit Report required for that fiscal year by TEC, §44.008, and §100.1047 of this title (relating to Accounting for State Funds) was received more than 180 days after the close of the entity's fiscal year; (A)the Annual Audit Report required for that fiscal year by TEC, §44.008, and §100.1047 of this title (relating to Accounting for State Funds) was received more than 180 days after the close of the entity's fiscal year; June 30 fiscal year end – received after December 29 June 30 fiscal year end – received after December 29 August 31 fiscal year end – received after February 27 August 31 fiscal year end – received after February 27

5. TAC §97.1055 (B)the Annual Audit Report required for that fiscal year by TEC, §44.008, and §100.1047 of this title disclosed net assets of less than 80% of net liabilities; or (B)the Annual Audit Report required for that fiscal year by TEC, §44.008, and §100.1047 of this title disclosed net assets of less than 80% of net liabilities; or Statement of Financial Position Statement of Financial Position Example 1: Example 1: Net Assets - $1,582,742 Net 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 - $86,988 Net Assets - $86,988 Liabilities - $128,873 * 80% = $103,098.40 (Failed) Liabilities - $128,873 * 80% = $103,098.40 (Failed)

6. (C)the Annual Audit Report required for that fiscal year by TEC, §44.008, and §100.1047 of this title contained: (C)the Annual Audit Report required for that fiscal year by TEC, §44.008, and §100.1047 of this title contained: (i) an adverse opinion, including a going concern disclosure, or a disclaimer of opinion; and (i) an adverse opinion, including a going concern disclosure, or a disclaimer of opinion; and (ii) the adverse or disclaimed opinion that pertained to: (ii) the adverse or disclaimed opinion that pertained to: (I) financial resources or expenditures that were not properly documented; or (I) financial resources or expenditures that were not properly documented; or (II) a material weakness in internal controls that led to the misallocation of financial resources. (II) a material weakness in internal controls that led to the misallocation of financial resources.

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

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

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

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

11. Ratings School YearAudit DueRating School YearAudit DueRating 06-07January 20082009 07-08January 20092010 08-09January 20102011 09-10January 20112012 10-11January 20122013

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

13. Questions????? Texas Administrative Code, Chapter 97 Texas Administrative Code, Chapter 97 http://www.tea.state.tx.us/rules/commissioner/proposed/0808/9 7dd-ee-ltrprop.html http://www.tea.state.tx.us/rules/commissioner/proposed/0808/9 7dd-ee-ltrprop.html http://www.tea.state.tx.us/rules/commissioner/proposed/0808/9 7dd-ee-ltrprop.html http://www.tea.state.tx.us/rules/commissioner/proposed/0808/9 7dd-ee-ltrprop.html Texas Education Code, Chapter 39.071 Texas Education Code, Chapter 39.071 http://tlo2.tlc.state.tx.us/statutes/ed.toc.htm http://tlo2.tlc.state.tx.us/statutes/ed.toc.htm http://tlo2.tlc.state.tx.us/statutes/ed.toc.htm rita.chase@tea.state.tx.us rita.chase@tea.state.tx.us rita.chase@tea.state.tx.us 512-463-7595 512-463-7595