HBA-MPM H.B. 1682 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 1682 By: Uher Public Education 3/25/1999 Introduced BACKGROUND AND PURPOSE In 1950, federal legislation gave school districts (districts) the option to participate in the Social Security retirement program. Until 1983, districts that opted to participate also had the option to withdraw from the program if they held an election among affected employees and gave a two-year withdrawal notice. The Social Security Amendments Act of 1983 prohibited districts from leaving the system in the future, and prevented those that had already posted notice from completing the notice period and withdrawing from the system. Fourteen districts in Texas cover all employees under Social Security, while another 34 provide coverage from some or all nonprofessional employees. The costs associated with participation in the program can be substantial, especially for a district covering professional employees, which must offer higher salaries to offset the required employee contribution. H.B. 1682 reduces the amount paid to the commissioner of education or to another district by districts participating in the Social Security system, and also reduces the local share of the Foundation School Program by an amount equal to the taxes paid by a district into the Social Security system. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the commissioner of education in SECTION 2 (Section 42.252, Education Code), of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter A, Chapter 41, Education Code, by adding Section 41.014, as follows: Sec. 41.014. REDUCTION FOR SOCIAL SECURITY TAXES. Authorizes a school district (district) that participates in the Social Security system to reduce the amount paid to the commissioner of education (commissioner) under Subchapter D (Purchase of Attendance Credit) or to another district under Subchapter E (Contract for Education of Nonresident Student) by an amount equivalent to the taxes paid under 26 U.S.C., Section 3111(a) (Rate of Tax, Old-Age, Survivors, and Disability Insurance), and its subsequent amendments, in the preceding calendar year. Requires the district to report payment of those taxes in the time and manner prescribed by rule of the commissioner. SECTION 2. Amends Section 42.252, Education Code, by adding Subsection (f), as follows: (f) Specifies that the local share of the Foundation School Program of a district that participates in the Social Security system is reduced by an amount equivalent to the taxes paid by the district under 26 U.S.C., Section 3111(a), and its subsequent amendments in the preceding calendar year. Requires the district to report payment of those taxes in the time and manner prescribed by rule of the commissioner. Makes this section inapplicable to a district with a wealth per student, as defined in Section 41.004 (Annual Review of Property Wealth), Education Code, that exceeds the equalized wealth level under Section 41.002 (Equalized Wealth Level), Education Code. SECTION 3. Makes this Act applicable beginning with the 1999-2000 school year. SECTION 4.Emergency clause. Effective date: upon passage.