1. (a) On August 31, 1993, the governing board of each CED shall distribute all funds paid to a county education district in 1993 except any penalties under the Texas Tax Code, §33.07. In the following order of priority, the governing board of each CED shall distribute the funds:

   1. (1) to pay any outstanding debts of the former CED, including refunds, and establish a reasonable reserve for refunds to be held by the successor-in-interest;
   2. (2) to the school districts in the CED as required by the Texas Education Code, §16.501, as that section existed on May 1, 1993, in the full amount of the 1992-1993 district entitlement as determined by the 1992-1993 Summary of Finances issued by the Texas Education Agency (TEA), Division of State Funding;
   3. (3) to the school districts of the former CED according to the ratio of each district's reduction in revenues, resulting solely from formula changes between the 1992-1993 school year and the 1993-1994 school year, to the sum of all reductions in revenues for school districts in the former CED. This ratio shall be computed and sent to the districts by TEA, Division of State Funding. This distribution ratio shall apply until 100% of the loss in revenues as defined in this subsection has been paid; and
   4. (4) to the school districts of the former CED according to the ratio of each district's number of weighted average daily attendance for the 1992-1993 school year to the number of weighted average daily attendance in the CED for the same school year. This ratio shall be computed and sent to the districts by TEA, Division of State Funding.
2. (b) The successor-in-interest shall continue to collect all delinquent taxes of the CED, including any accrued but unpaid penalties and interest, and to distribute any amounts collected under subsections (d) and (e) of this section according to the priorities specified in subsection (a) of this section. Funds may be distributed on a monthly basis or less often according to administrative costs for processing small monetary amounts.
3. (c) All penalties under the Texas Tax Code, §33.07, shall be allocated to the entity collecting the delinquent CED tax. All other CED revenues, including interest, shall be paid according to the priorities specified in subsection (a) of this section.
4. (d) The successor-in-interest of a CED shall collect or contract for the collection of any taxes levied by the former CED that are delinquent.
5. (e) The successor-in-interest of a CED may sell any assets, other than funds, of the former CED that the successor does not need to perform the duties of successor-in-interest.
6. (f) Not later than December 31 of each year, beginning with 1994, each successor-in-interest shall file with the commissioner of education an annual report compiled by an independent certified public accountant of the amount of delinquent taxes collected, the amount of proceeds received from the sale of assets, the amount of debts paid, the amount of distributions made to school districts, and the related administrative costs of the successor-in-interest during the preceding fiscal year. The financial report shall include a supplemental schedule of assets and liabilities transferred to the successor-in-interest or any component school district.
7. (g) A majority of the boards of trustees of the component districts of a former CED may by a majority vote redesignate the successor-in-interest of the former CED. The commissioner of education may require the board of trustees of component districts of a former CED to redesignate the successor-in-interest of the former CED.
8. (h) The successor-in-interest of a former CED may pay necessary administrative costs from penalties and other delinquent tax proceeds. Administrative costs include, but are not limited to, audit expenses, payroll, contracted services, supplies and materials, and other operating costs associated with continuing delinquent tax collection and distribution activities.
9. (i) The successor-in-interest of a former CED shall report delinquent taxes collected and funds distributed, administrative costs, and delinquent tax receivable balances to each component school district of the former CED within 30 days after the end of any month during which the successor-in-interest collects or distributes any delinquent taxes. Reports may be made on a monthly basis or less often according to administrative costs for communicating small transaction reports amounts.
10. (j) For funding purposes under the Texas Education Code, §16.303 (Tier II), as enacted by Senate Bill 7, 73rd Texas Legislature, 1993, the commissioner of education shall increase the maximum tax rate of any school district that was located within the boundaries of a former CED that experienced a decline in state-assigned property values in excess of 8.0% for the 1992 tax year. This increase shall be in addition to any other modifications to the maximum tax rates used for Tier II purposes for school years 1993-1994 and 1994-1995.
11. (k) The increase in the school district's maximum tax rate under subsection (j) of this section shall be a rate calculated by dividing the school district allocation of CED revenue loss by the tax year 1991 property values for the district. For purposes of this calculation, a CED revenue loss is defined as the amount of local share required of the CED that would not have been required if declines greater than 8.0% had been used to adjust 1991 assigned property values. A school district allocation of CED revenue loss shall follow the same pattern established under subsection (a)(3) of this section.

Source Note:The provisions of this §61.1001 adopted to be effective September 13, 1993, 18 TexReg 5741; amended to be effective May 8, 1996, 21 TexReg 3706; amended to be effective October 18, 1996, 21 TexReg 9823; amended to be effective March 20, 2003, 28 TexReg 2319.