1. (a) Annual compensation includes performance pay earned under a total compensation plan specifically approved by vote of the governing board of an employer. Such approval must be reflected in the minutes of the governing board. Any employer reporting to the retirement system is considered a school district for the purposes of this section.
2. (b) For purposes of including performance pay as a part of annual compensation under this rule, a total compensation plan must describe all elements of compensation received by all employees of the employer.
3. (c) Performance pay is compensation for service as an employee in a Texas public educational institution that is paid under a valid employment agreement based upon a performance standard published in written documents adopted by the employer. The performance standard may be based on evaluations or goal achievement of the individual employee or of the group in which the individual belongs. Specific amounts of performance pay will be credited to the year in which the standards establishing the right to the performance pay are met or in which the service occurred, whichever is earlier.
4. (d) An employer shall certify each year to the retirement system, by a date specified by the system, whether it is providing performance pay under this section. A district that has properly made this certification shall report all qualifying performance pay as compensation and make appropriate deductions for member contributions unless the retirement system advises the employer that such pay does not qualify as performance pay under this rule. Employer shall maintain records that show it provides such pay for a period not less than 7 years after such pay is reported to the retirement system.

Source Note:The provisions of this §25.24 adopted to be effective October 28, 1999, 24 TexReg 9298.