TITLE 34. PUBLIC FINANCE

PART 1. COMPTROLLER OF PUBLIC ACCOUNTS

CHAPTER 1. CENTRAL ADMINISTRATION

SUBCHAPTER G. GIFT ACCEPTANCE

The Comptroller of Public Accounts proposes new §1.400 concerning gift acceptance policy and procedures. The new section will be located in Chapter 1, new Subchapter G, titled "Gift Acceptance".

No legislation was enacted within the last four years that provides the statutory authority for this section.

Subsection (a) outlines certain definitions regarding gift acceptance.

Subsection (b) describes the authority of the agency to solicit or accept gifts.

Subsection (c) outlines the criteria the agency will use to determine whether to refuse a gift. The agency will refuse gifts to the agency from any person who is: currently a party in a contested case with the agency until at least 30 days have passed since the date of the final order; currently a party in litigation with the agency until at least 30 days have passed since the date of the final order; currently indebted to the state or owes delinquent taxes to the state based on the records of the agency; currently under investigation by the agency's Criminal Investigations Division; currently in default on a guaranteed student loan based on the records of the agency; currently indebted to the state for past due child support based on Attorney General records provided to the agency; a foreign (non-U.S.) business entity that is not licensed to do business in Texas; or a foreign adversary.

Subsection (d) outlines a procedure in which prospective donors may provide advance notice to the agency of their intent to make a gift, so that the prospective donor can be screened for potential conflicts of interest.

Subsection (e) describes the review procedures the agency will use to determine if the gift is consistent with applicable law, agency policies, and the agency's gift acceptance rule.

Subsection (f) sets forth gift acceptance procedures.

Subsection (g) outlines steps the agency will take if the agency refuses to accept a gift.

Subsection (h) allows the agency to deposit a donation of money into a suspense account, pending completion of the review.

Subsection (i) prescribes the process and notice requirements for using a refused gift to offset certain indebtedness owed to the state by the donor.

Subsection (j) specifies that for gifts valued at $500 or more, the agency will keep certain records regarding the gift and the donor.

Subsection (k) specifies that gifts will be used for public purposes, will not be used for the monetary enrichment of any agency employee, and donors may not direct the use or investment of the gift.

Subsection (l) addresses the donation of services to the agency.

Subsection (m) provides that this section does not address acceptance of gifts by individual employees. Gift acceptance by individual employees and the restrictions on such acceptance, are governed by Government Code, Chapter, 572 (Standards of Conduct); Penal Code, Chapter 36 (Prohibited Gifts); Penal Code, Chapter 39 (Misuse of State Resources); and the agency's ethics policies.

Tetyana Melnyk, Director of Revenue Estimating Division, has determined that during the first five years that the proposed new rule is in effect, the rule: will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to the agency; will not require an increase or decrease in fees paid to the agency; will not increase or decrease the number of individuals subject to the rule's applicability; and will not positively or adversely affect this state's economy.

Ms. Melnyk also has determined that the proposed new rule would have no significant fiscal impact on the state government, units of local government, or individuals. The proposed new rule would benefit the public by fulfilling a statutory requirement, establishing a program whereby the agency could enhance its capacity to perform its duties, and protect state funding. There would be no significant economic cost to the public. The proposed new rule would have no significant fiscal impact on small businesses or rural communities.

You may submit comments on the proposal to Chris Conradt, Senior Counsel, Fiscal and Agency Affairs Legal Services Division, P.O. Box 13528 Austin, Texas 78711 or to the email address: chris.conradt@cpa.texas.gov. The agency must receive your comments no later than 30 days from the date of publication of the proposal in the Texas Register.

The new section is proposed under Government Code, §403.011(b), which authorizes the comptroller to solicit, accept or refuse gifts to the state; Government Code, Chapter 575, which governs acceptance of gifts by state agencies; and Government Code, §2255.001, which requires a state agency to adopt rules regarding the relationship between private donors and the agency and its employees.

The new section implements the Government Code, §403.011(b).

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 14, 2025.

TRD-202502872

Victoria North

General Counsel for Fiscal and Agency Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: September 28, 2025

For further information, please call: (512) 475-2220

CHAPTER 3. TAX ADMINISTRATION

SUBCHAPTER S. MOTOR FUEL TAX

The Comptroller of Public Accounts proposes the repeal of §3.434, concerning liquefied gas tax decal.

The comptroller repeals this section following the passage of House Bill 1905, 84th Legislature, 2015, effective September 1, 2015, which repealed the tax on liquefied gas.

The last taxable period for liquefied gas is now outside the four-year statute of limitations for assessments and refund claims. See Tax Code, §111.107(a) (When Refund or Credit Is Permitted) and §111.201 (Assessment Limitation).

Brad Reynolds, Chief Revenue Estimator, has determined that during the first five years that the proposed rule repeal is in effect, the repeal: will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to the agency; will not require an increase or decrease in fees paid to the agency; will not increase or decrease the number of individuals subject to the rule's applicability; and will not positively or adversely affect this state's economy.

Mr. Reynolds also has determined that the proposed rule repeal would benefit the public by conforming the rule to current statute. This rule is proposed under Tax Code, Title 2, and does not require a statement of fiscal implications for small businesses or rural communities. The proposed rule repeal would have no fiscal impact on the state government, units of local government, or individuals. There would be no anticipated economic cost to the public.

You may submit comments on the proposal to Jenny Burleson, Director, Tax Policy Division, P.O. Box 13528 Austin, Texas 78711 or to the email address: tp.rule.comments@cpa.texas.gov. The comptroller must receive your comments no later than 30 days from the date of publication of the proposal in the Texas Register.

This repeal is proposed under Tax Code, §111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of Tax Code, Title 2.

This proposal implements the repeal of Tax Code, §162.001, which defined liquefied gas as a motor fuel.

§ 3.434. Liquefied Gas Tax Decal.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 15, 2025.

TRD-202502952

Jenny Burleson

Director, Tax Policy

Comptroller of Public Accounts

Earliest possible date of adoption: September 28, 2025

For further information, please call: (512) 475-2220

The Comptroller of Public Accounts proposes the repeal of §3.436, concerning liquefied gas dealer licenses.

The comptroller repeals this section following the passage of House Bill 1905, 84th Legislature, 2015, effective September 1, 2015, which repealed the tax on liquefied gas.

The last taxable period for liquefied gas is now outside the four-year statute of limitations for assessments and refund claims. See Tax Code, §111.107(a) (When Refund or Credit Is Permitted) and §111.201 (Assessment Limitation).

Brad Reynolds, Chief Revenue Estimator, has determined that during the first five years that the proposed rule repeal is in effect, the repeal: will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to the agency; will not require an increase or decrease in fees paid to the agency; will not increase or decrease the number of individuals subject to the rule's applicability; and will not positively or adversely affect this state's economy.

Mr. Reynolds also has determined that the proposed rule repeal would benefit the public by conforming the rule to current statute. This rule is proposed under Tax Code, Title 2, and does not require a statement of fiscal implications for small businesses or rural communities. The proposed rule repeal would have no fiscal impact on the state government, units of local government, or individuals. There would be no anticipated economic cost to the public.

You may submit comments on the proposal to Jenny Burleson, Director, Tax Policy Division, P.O. Box 13528 Austin, Texas 78711 or to the email address: tp.rule.comments@cpa.texas.gov. The comptroller must receive your comments no later than 30 days from the date of publication of the proposal in the Texas Register.

This repeal is proposed under Tax Code, §111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of Tax Code, Title 2.

This proposal implements the repeal of Tax Code, §162.001, which defined liquefied gas as a motor fuel.

§ 3.436. Liquefied Gas Dealer Licenses.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 15, 2025.

TRD-202502953

Jenny Burleson

Director, Tax Policy

Comptroller of Public Accounts

Earliest possible date of adoption: September 28, 2025

For further information, please call: (512) 475-2220

CHAPTER 5. FUNDS MANAGEMENT (FISCAL AFFAIRS)

SUBCHAPTER D. CLAIMS PROCESSING--PAYROLL

The Comptroller of Public Accounts proposes amendments to §5.40, concerning overpayments and underpayments of compensation, §5.41, concerning payroll requirements, and §5.48, concerning deductions for contributions to charitable organizations.

No legislation was enacted within the last four years that provides the statutory authority for the amendments.

The amendments to §5.40 reformat the definitions listed in subsections (a), (b), and (c) to conform with other definitions in Chapter 5; add a definition of "CAPPS" (Centralized Accounting, Payroll and Personnel System) in new subsection (b)(1)(A); delete the definition of "USPS" (Uniform Statewide Payroll System) in subsection (b)(1)(N) and the reference to USPS in subsection (b)(3)(B) because USPS is no longer used by the comptroller; and add a reference to CAPPS in subsection (b)(3)(B) because CAPPS replaces the functions of USPS as it relates to this subsection.

The amendments to §5.41 alphabetize the definitions in subsection (a) for ease of use; delete the definitions of "appropriation year," "fiscal year," "standard work schedule" and "non-standard work schedule" because these terms either do not appear anywhere else in this section or will not appear anywhere else in this section if these amendments become effective; add a definition of "comptroller" in new subsection (a)(4); delete the definition of "USPS" in subsection (a)(16) and all references to "USPS" in subsections (c), (h), (i), (l), (m), and (n) because USPS is no longer used by the comptroller; change "Comptroller of Public Accounts" to "comptroller" in subsection (a)(6) to use the defined term; shorten the deadline by which a payroll document must be received by the comptroller if a state agency wants to pick up its warrants before payday under a bailment contract the agency has executed with the comptroller in subsection (c)(2)(A), from seven workdays to one workday before the day on which the agency wants to pick up the warrants because our current business process has improved; substitute "CAPPS" for references to "USPS" in subsections (n)(2) and (n)(2)(A) because CAPPS replaces the functions of USPS as it relates to this subsection; delete "or to use the payroll and personnel components of CAPPS" as a conforming change in subsection (n)(2)(B); update the title to §5.46 in subsection (r)(1)(A), the statutory reference and title for the State University Employees Uniform Insurance Benefits Act in subsection (r)(3)(N), and the reference to the Judicial Retirement System of Texas Plan One and Plan Two in subsection (r)(3)(T); delete the Department of Assistive and Rehabilitative Services from the list of authorized payroll deductions in subsection (r)(3)(R) because this agency no longer exists; and add the Texas School for the Deaf and the Texas School for the Blind and Visually Impaired to the list of authorized payroll deductions in subsection (r)(3)(R) in compliance with Vernon's Civil Statutes, Art. 6228a-5.

The amendments to §5.48 delete the definitions of "direct services" and "indirect services" in subsections (a)(9) and (a)(19) respectively because these terms are no longer used in this section; correct the statutory reference in subsection (a)(35) to Government Code, Chapter 659, Subchapter I; delete the definition of "uniform statewide payroll/personnel system" in subsection (a)(38) because this system is no longer used by the comptroller; update the language in subsections (b)(1)(E)(i) and (e)(2) regarding the first day a state agency, other than an institution of higher education, is required to permit its state employees to authorize a deduction to mirror the language in Government Code, Section 659.132 regarding authorized deductions; change "generic materials" to "generic campaign materials" in subsection (n)(2)(K) to use the defined term; and correct a typographical error in subsection (y)(1).

Tetyana Melnyk, Director of Revenue Estimating Division, has determined that during the first five years that the proposed amended rules are in effect, the rules: will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to the agency; will not require an increase or decrease in fees paid to the agency; will not increase or decrease the number of individuals subject to the rules' applicability; and will not positively or adversely affect this state's economy.

Ms. Melnyk also has determined that the proposed amended rules would have no fiscal impact on the state government, units of local government, or individuals. The proposed amended rules would benefit the public by improving the clarity and implementation of the sections. There would be no anticipated economic cost to the public. The proposed amended rules would have no fiscal impact on small businesses or rural communities.

You may submit comments on the proposal to Clarisse Roquemore, Director, Fiscal Management Division, at clarisse.roquemore@cpa.texas.gov or at P.O. Box 13528 Austin, Texas 78711. The comptroller must receive your comments no later than 30 days from the date of publication of the proposal in the Texas Register.

The amendments to §5.40 are proposed under Government Code, §659.006, which requires the comptroller by rule to prescribe procedures for state agencies to follow in making adjustments to payrolls for the pay period immediately following the period in which an inaccurate payment or deduction is made or in which other error occurs. The amendments are also proposed under Government Code, §666.008, which authorizes the comptroller to adopt rules and establish procedures to administer Government Code, Chapter 666, regarding recovering excess compensation paid to a state officer or employee.

The amendments to §5.41 are proposed under Government Code, §659.004(b), which authorizes the comptroller, in consultation with the state auditor, to adopt rule that prescribe uniform procedures for payroll and personnel reporting. The comptroller has consulted with the state auditor regarding the amendments to §5.41 as required by Government Code, §659.004(b).

The amendments to §5.48 are proposed under Government Code, §659.142(d), which requires the comptroller to adopt rules for the administration of Government Code, Chapter 659, Subchapter I regarding charitable contributions, with the advice of the State Employee Charitable Campaign Advisory Committee (State Advisory Committee). The comptroller provided a copy of the proposed amendments to Section 5.48 to the State Advisory Committee and has received their response.

The amendments to §5.40 implement Government Code, §659.006 and Government Code, Chapter 666.

The amendments to §5.41 implement Government Code, §659.004 regarding payroll and personnel reporting.

The amendments to §5.48 implement Government Code, Chapter 659, Subchapter I.

§ 5.40. Overpayments and Underpayments of Compensation.

(a) Definitions. The following words and terms, when used in [In] this section, shall have the following meanings, unless the context clearly indicates otherwise. [:]

(1) "Community college" --Has [has] the meaning assigned to "public junior college."

(2) "Comptroller" --The Comptroller [means the comptroller] of Public Accounts [public accounts] for the State of Texas.

(3) "Institution of higher education"--Has [has] the meaning assigned by Education Code, §61.003, except that the term does not include a public junior college or a community college.

(4) "Public junior college"--Has [has] the meaning assigned by Education Code, §61.003.

(b) Recovering overpayments of compensation.

(1) Special definitions. The following words and terms, when used in [In] this subsection, shall have the following meanings, unless the context clearly indicates otherwise. [:]

(B) [(A)] "Compensation"--Has [has] the meaning assigned by Government Code, §666.001(1). The term:

(i) includes any type of bonus or performance reward; and

(ii) does not include a workers' compensation payment.

(C) [(B)] "Comptroller object code"--The [means the] four-digit code that indicates in USAS the type of expenditure made.

(D) [(C)] "Deduction"--A [means a] deduction of the amount of a state employee's indebtedness from any amount of compensation that a state agency owes the employee or the employee's successor.

(E) [(D)] "Fiscal year"--The [means the] accounting period beginning on September 1st and ending the following August 31st.

(F) [(E)] "HRIS"--The [means the] human resource information system.

(G) [(F)] "Indebtedness"--Money [means money] that a state employee owes a state agency because the employee received an overpayment of compensation from the agency.

(H) [(G)] "Overpayment of compensation"--Compensation [means compensation] paid to a state employee that exceeds the amount the employee was eligible to receive under law because at the time the compensation was paid:

(i) the employee was ineligible to receive all or a portion of the amount paid; or

(ii) the employee's eligibility to receive all or a portion of the amount paid was conditioned on the occurrence of an event that did not occur or the employee's fulfillment of a promise that the employee did not fulfill.

(I) [(H)] "Reduction"--A [means a] reduction in the gross amount of base salary or wages that a state agency owes a state employee or the employee's successor for services provided by the employee during any pay period after the pay period in which the indebtedness was incurred.

(J) [(I)] "SPRS"--The [means the] standardized payroll/personnel reporting system.

(K) [(J)] "State agency"--Has [has] the meaning assigned by Government Code, §666.001(3).

(L) [(K)] "State employee"--Has [has] the meaning assigned by Government Code, §666.001(4).

(M) [(L)] "Successor"--Has [has] the meaning assigned by Government Code, §666.001(5).

(N) [(M)] "USAS"--The [means the] uniform statewide accounting system.

(2) Exclusive authority to recover indebtedness.

(A) The comptroller has exclusive authority to recover an indebtedness if the comptroller is responsible under Government Code, §§404.046, 404.069, or 2103.003 for paying compensation to the employee or successor on behalf of a state agency. For example, if a payment of compensation is processed through USAS, then the comptroller has exclusive authority to recover the indebtedness.

(B) If the comptroller is not responsible under Government Code, §§404.046, 404.069, or 2103.003 for paying compensation to the employee or successor on behalf of a state agency, then only the agency that pays compensation to the employee or successor may recover the indebtedness. For example, a state agency that issues a check to pay the compensation of a state employee has exclusive authority to recover the indebtedness.

(3) General preconditions for the comptroller recovering an indebtedness.

(A) This paragraph applies only to the recovery of an indebtedness by deduction or reduction.

(B) A state agency's request for the comptroller to recover an indebtedness is invalid unless the request complies with any applicable requirements of HRIS, SPRS, USAS, and CAPPS [USPS].

(C) A state agency's request to the comptroller to recover an indebtedness constitutes the agency's certification to the comptroller that the agency already has:

(i) provided proper notice to the employee or successor according to paragraph (4) of this subsection; and

(ii) complied with Government Code, §666.005(a).

(D) A state agency may avoid making the certifications listed in subparagraph (C) of this paragraph only if the agency does not request the comptroller to recover the indebtedness.

(4) Notice requirements. A state agency's notice to a state employee or the employee's successor is "proper" for purposes of recovering an indebtedness only if the notice:

(A) complies with Government Code, §666.003(b)(1)-(3); and

(B) reasonably describes the method by which the indebtedness may be recovered if the indebtedness is not paid on or before the date specified.

(5) Calculating the hourly rate for the recovery of an indebtedness. This paragraph applies only if an indebtedness resulted from a state agency believing that a state employee worked more hours than the employee actually worked. When the agency calculates the amount of a deduction or a reduction, the agency shall use the hourly rate of pay that was in effect during the payroll period the hours were worked.

(6) Effect of the recovery of an indebtedness on payroll deductions. If a deduction (other than the deduction described in this subsection) was made from an overpayment of compensation at the time the overpayment occurred, then a refund of that deduction must be made in conjunction with the recovery of that overpayment. For example, the amount deducted to make a retirement contribution or to comply with the Federal Insurance Contributions Act must be refunded when the overpayment is recovered.

(7) Timing of a deduction. A deduction may be made from any payment of compensation and may be made more often than once monthly.

(8) Sufficiency of compensation to support a deduction.

(A) If the amount of a state employee's compensation is insufficient to support a deduction after all other deductions with a higher priority have been made, then a portion of the deduction must be made. The amount of the deduction that could not be made must be deducted in succeeding payroll periods until the full amount is deducted.

(B) This subparagraph applies to a state employee who has agreed to pay an indebtedness through deduction but under an installment plan. The amount that could not be deducted in a payroll period because of insufficient compensation must be added to the amount of the regularly scheduled installment in the next payroll period.

(9) Sufficiency of base salary or wages to support a reduction.

(A) If the amount of a state employee's base salary or wages is insufficient to support a reduction, then a portion of the reduction must be made. The amount of the reduction that could not be made must be subtracted from gross salary or wages in succeeding payroll periods until the full amount of the reduction is realized.

(B) This subparagraph applies to a state employee who has agreed to pay an indebtedness through a reduction but under an installment plan. The amount of the reduction that could not occur in a payroll period because of insufficient base salary or wages must be added to the amount of the regularly scheduled installment in the next payroll period.

(10) Reimbursement of accounts and funds in the state treasury.

(A) This paragraph applies only to a state agency that:

(i) directly used money in the state treasury to make an overpayment of compensation; or

(ii) initially used local money controlled by the agency to make an overpayment of compensation and then was reimbursed for that overpayment with money in the state treasury.

(B) A state agency that recovers an indebtedness must reimburse the appropriate account or fund in the state treasury. The agency must credit that reimbursement to the comptroller object code that corresponds to the type of compensation recovered, e.g., salary, benefit replacement pay, longevity pay. The reimbursement must be credited to the same fiscal year that was charged for the overpayment. If the fiscal year already has closed, then the agency must first deposit the reimbursement in a suspense account and then manually adjust the appropriate accounts.

(C) For purposes of this paragraph, "state treasury" means money that may be spent only on a warrant issued or electronic funds transfer initiated by the comptroller.

(11) Adjustments to payroll accumulators. A state agency that recovers an indebtedness shall adjust all relevant payroll accumulators, including agency paid taxes, employee paid taxes, and limits on benefit replacement pay and deferred compensation. The agency shall maintain sufficient records about these adjustments to prove compliance with state and federal laws and to support an audit.

(12) Terminations or interagency transfers of state employees. A deduction or a reduction that started while a state employee was employed by a state agency may not continue after the employee transfers to a different state agency. The amount of overpaid compensation that remains outstanding after the transfer may not be recovered through deduction or reduction.

(c) Correcting underpayments of compensation.

(1) Special definitions. The following words and terms, when used in [In] this subsection, shall have the following meanings, unless the context clearly indicates otherwise. [: ]

(A) "Casual or task employee" means an individual who is employed by an institution of higher education for a short period or a particular task.

(B) "State agency"--A [means a ] department, board, commission, committee, council, agency, office, or other entity in the executive, legislative, or judicial branch of Texas state government, the jurisdiction of which is not limited to a geographical portion of this state. The term includes the State Bar of Texas, the Board of Law Examiners, and an institution of higher education.

(C) "State employee"--Includes [includes] a state officer, a casual or task employee, and an individual whose employment with a state agency is conditional on the individual being a student.

(2) Quality control measures. Each state agency must ensure that its internal operating procedures include quality control measures that will detect any underpayment of compensation to a state employee.

(3) Deadline for correcting underpayments.

(A) Except as provided in subparagraph (B) or (C) of this paragraph, a state agency shall correct an underpayment of compensation for a particular pay period not later than the following pay period.

(B) A state agency shall promptly process a supplemental payroll to correct an underpayment of compensation to a state employee if delaying the correction would cause employee hardship.

(C) This subparagraph applies when a state agency does not detect an underpayment of compensation in time to correct it during the pay period following the pay period for which the underpayment occurred. The agency shall promptly correct the underpayment through a supplemental payroll.

(4) Choosing the hourly rate for the correction. This paragraph applies only if an underpayment of compensation resulted from a state agency believing that a state employee worked fewer hours than the employee actually worked. The agency shall calculate the amount of the correction by using the hourly rate of pay that was in effect during the payroll period the hours were worked.

(5) Adjustments to payroll accumulators. A state agency that corrects an underpayment of compensation shall adjust all relevant payroll accumulators, including agency paid taxes, employee paid taxes, and limits on benefit replacement pay and deferred compensation. The agency shall maintain sufficient records about these adjustments to prove compliance with state and federal laws and to support an audit.

§ 5.41. Payroll Requirements.

(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Calendar month--The period from the first day through the last day of January, February, March, April, May, June, July, August, September, October, November or December [Appropriation year--The year that the legal authorization for the charge was granted by the legislature. Multiple appropriation year activity may occur within a single fiscal year].

(3) [(2)] Casual or task employee--An individual who is employed by an institution of higher education for a short time period or a specific task.

(5) [(4)] FLSA--The Fair Labor Standards Act of 1938.

(6) [(5)] GAA--The General Appropriations Act.

(7) [(6)] HRIS--The human resource information system maintained by the comptroller [Comptroller of Public Accounts]. It captures personnel and payroll information submitted by institutions of higher education and locally funded agencies.

(8) [(7)] Institution of higher education--Has the meaning assigned by Education Code, §61.003, except that the term does not include a public junior college.

(10) [(8)] Payroll document--The type of document that a state agency submits to the comptroller in the required format when requesting payment of the compensation of state employees or certain other types of payments as required by the comptroller.

(11) [(9)] Payroll information--Information concerning the type and amount of compensation earned by a state employee, deductions from the compensation earned by the employee, and the source of funding for the payment of compensation to the employee. The term includes other types of information that the comptroller requires to be reported as payroll information.

(12) [(10)] Personnel information--Information about a state employee's job, compensation, or personal characteristics. The term includes other types of information that the comptroller requires to be reported as personnel information. Personnel information includes all information related to the individual as an employee and must support statewide reporting, such as for military employment [veteran's] preference and Equal Employment Opportunity type information.

(13) [(11)] Qualified deferred compensation plan--A deferred compensation plan that is governed by Internal Revenue Code of 1986, §401(k).

(15) [(12)] State agency--A department, board, commission, committee, council, agency, office, or other entity in the executive, legislative, or judicial branch of Texas state government, the jurisdiction of which is not limited to a geographical portion of this state. The term includes the State Bar of Texas, the Board of Law Examiners, and an institution of higher education.

(16) [(13)] State employee--An officer or employee of a state agency. The term includes an elected or appointed officer; a full-time or part-time employee or officer; an hourly employee; a temporary state employee; a casual or task employee; an individual whose employment with a state agency is conditional on the individual being a student; a line item exempt employee; or an employee not covered by the Position Classification Act; an employee that works in a nonacademic position at a state institution of higher education and any other individual to whom wages are paid by a state agency or institution of higher education.

(17) [(14)] USAS--The uniform statewide accounting system maintained by the Comptroller of Public Accounts. It is the official accounting system for the State of Texas.

(18) [(15)] USAS format--The USAS layout that a state agency uses to submit payroll documents to the comptroller.

(19) [(18)] Workday--Any day except Saturday and Sunday. The term includes a state or national holiday under GAA or Government Code, §§662.001 - 662.010.

(b) Required submission of payroll documents.

(1) A state agency must submit a payroll document to the comptroller if the agency is requesting reimbursement for the agency's payment of compensation to its employees. The payroll document must be in proper USAS format.

(2) A state agency may electronically submit a payroll detail to the comptroller according to the comptroller's requirements.

(c) Deadline for receipt of payroll documents.

(1) Generally. Except as provided in paragraph (2) of this subsection, a payroll document must be received by the comptroller, according to the comptroller's requirements, not later than the seventh workday before payday. This applies regardless of how often a state agency pays its employees.

(2) Exceptions.

(A) If a state agency wants to pick up its warrants before payday under a bailment contract the agency has executed with the comptroller, then the agency's payroll document must be received not later than one [the seventh] workday before the day on which the agency wants to pick up the warrants.

(B) A payroll document that is submitted by a state agency that uses [ USPS or uses ] CAPPS or reports to SPRS must be received by the comptroller, according to the comptroller's requirements, not later than the fourth workday before payday to ensure direct deposit of net pay.

(d) Supplemental payroll documents.

(1) When allowed. A state agency may submit a supplemental payroll document to the comptroller if a change occurs between the agency's submission of its regular payroll document and the end of the month.

(2) Adjustments in compensation. When a change results in a state agency owing money to a state employee, the agency should adjust the employee's compensation for the following month instead of submitting a supplemental payroll if the delay would not cause hardship to the employee.

(e) Non-regular payments. A state agency may make a payment to a state employee for other than the employee's regular compensation on a regular payroll document. The agency must select the proper comptroller object code for the payment.

(f) Cancellations of payments of compensation.

(1) Cancellations of warrants. When a state agency needs to cancel a payroll warrant, the agency must follow the comptroller's warrant cancellation procedures.

(2) Cancellation of electronic funds transfers. When a state agency needs to cancel a payment of compensation via the comptroller's electronic funds transfer system, the agency must follow the procedures specified by the comptroller.

(3) Issuance of new warrants. When a state agency needs to issue a new payroll warrant after canceling the original payroll warrant, the agency must follow the comptroller's procedures for supplemental payrolls.

(g) Payroll conversions. In early September of each year, state agencies that are subject to the Position Classification Act must furnish payroll conversion information to the comptroller and the state auditor according to their guidelines. Although the comptroller sends the guidelines to each state agency once each year, the guidelines are always available from the comptroller upon request.

(h) Reporting of personnel information to HRIS.

(1) Applicability. This subsection applies to a state agency only if it does not use [ USPS, ] CAPPS or report to SPRS.

(2) Reporting requirements.

(A) A state agency shall report personnel information to HRIS if:

(i) a state employee is added to or removed from the agency's payroll;

(ii) the agency changes a state employee's compensation rate;

(iii) the agency changes a state employee's classification or job title;

(iv) the legal name of a state employee of the agency changes;

(v) the social security number of a state employee of the agency changes;

(vi) a state employee of the agency goes on leave without pay or faculty development leave;

(vii) the home address of a state employee of the agency changes;

(viii) deduction information concerning a state employee of the agency changes, if HRIS requires reporting of that information; or

(ix) other job or descriptive information concerning a state employee of the agency changes, if HRIS requires reporting of that information.

(B) A state agency shall ensure that HRIS receives its report not later than the seventh day of the month after the month in which the change or event occurs that triggers the requirement for the agency to file the report.

(C) A report to HRIS under this paragraph must be made in the manner, frequency, and form required by the comptroller.

(i) Reporting of payroll information to HRIS.

(1) Applicability. This subsection applies to:

(A) an institution of higher education that does not use [USPS,] CAPPS or report to SPRS;

(B) the State Bar of Texas; and

(C) the Board of Law Examiners.

(2) Reporting requirements.

(A) A state agency shall report payroll information to HRIS.

(B) A state agency's report of payroll information must be complete not later than the seventh day of the month following the month covered by the report. A report is complete only if:

(i) it encompasses all the pay periods that end in the month covered by the report; and

(ii) HRIS receives it by the deadline.

(C) A report to HRIS under this paragraph must be made in the manner, frequency, and form required by the comptroller.

(j) Reporting errors. If the comptroller detects an error in a state agency's report of personnel or payroll information, then the comptroller shall provide a description of the error to the agency. The agency shall then correct the error according to the comptroller's requirements. The agency must correct the error not later than the seventh day of the month following the month in which the agency receives a description of the error.

(k) Additional mail codes. A state agency may establish an additional mail code for a state employee only by submitting the proper application to the comptroller's Fiscal Management division.

(l) Reporting of personnel information to [USPS,] CAPPS or SPRS.

(1) Applicability. This subsection applies to a state agency only if it does not report to HRIS.

(2) Reporting requirements.

(A) A state agency shall be considered to have reported personnel information to [USPS,] CAPPS or SPRS if:

(i) a state employee is added to or removed from the agency's payroll;

(ii) the agency changes a state employee's compensation rate;

(iii) the agency changes a state employee's classification or job title;

(iv) the legal name of a state employee of the agency changes;

(v) the social security number of a state employee of the agency changes;

(vi) a state employee of the agency goes on leave without pay or faculty development leave;

(vii) the home address of a state employee of the agency changes;

(viii) deduction information concerning a state employee of the agency changes; or

(ix) other job or descriptive information concerning a state employee of the agency changes.

(B) A state agency must ensure that the information is provided in the manner, frequency, and form required by the comptroller.

(m) Reporting of payroll information to [USPS,] CAPPS or SPRS.

(1) Applicability. This subsection applies to a state agency that does not report to HRIS.

(2) Reporting requirements.

(A) A state agency shall be considered to have reported payroll information to [USPS,] CAPPS or SPRS if the agency successfully completes the processing of payroll information.

(B) A state agency's report of payroll information must include any payments of regular salary, twice monthly salary, overtime pay, longevity, benefit replacement pay, lump sum payment of unused vacation and sick leave, emoluments and special pays such as bilingual or fire brigade pay. A report is complete only if:

(i) it encompasses all the pay periods that end in the month covered by the report; and

(ii) the comptroller receives it by the deadline.

(C) Payroll information under this paragraph must be processed in the manner, frequency, and form required by the comptroller.

(D) Reporting errors. If the comptroller detects an error in a state agency's report of personnel or payroll information, then the comptroller shall provide a description of the error to the agency. The agency shall then correct the error according to the comptroller's requirements.

(n) Standard payroll calculation.

(1) Exemption. This subsection does not apply to an institution of higher education.

(2) Required use of CAPPS [USPS].

(A) Except as provided in subparagraph (B) of this paragraph, a state agency must use CAPPS [USPS] to:

(i) calculate and otherwise generate the agency's payments of compensation to its state employees; and

(ii) maintain the agency's personnel and payroll information.

(B) A state agency is not subject to subparagraph (A) of this paragraph if the comptroller has allowed the agency to report to SPRS [or to use the payroll and personnel components of CAPPS].

(3) Conforming to payroll calculation. A state agency must conform its payroll calculation with the payroll calculation set forth in comptroller policies and procedures.

(o) Deceased state employees.

(1) Required payees. A state agency must pay the compensation earned by a deceased state employee to the employee's estate unless Estates Code, §453.004, or another law authorizes or requires a different payment method.

(2) Additional mail codes. When a state agency pays the estate of a deceased state employee, the agency must establish an additional mail code under the payee identification number of the employee.

(p) Overtime payments.

(1) Generally. A state employee covered by the overtime provisions of the FLSA must be credited or paid for overtime hours worked according to the GAA, the FLSA, and the regulations adopted by the United States Department of Labor under the FLSA. Those regulations and the FLSA prevail over the GAA to the extent of conflict, if any.

(2) Method for making overtime payments. A state agency may pay overtime on any payroll document submitted to the comptroller, including a supplemental payroll document.

(q) Payments of compensation for working partial months.

(1) State employees paid once each month.

(A) This paragraph applies only to a state employee who is paid once each month.

(B) A state agency must calculate the amount of compensation a state employee is entitled to receive for working less than a full month by:

(i) calculating the employee's hourly rate of pay according to the comptroller's requirements; and

(ii) multiplying the employee's hourly rate of pay by the number of hours worked to determine the correct amount of compensation.

(C) Subparagraph (B) of this paragraph also applies to the compensation paid to a state employee who is on leave without pay for less than an entire calendar month.

(2) State employees paid twice each month.

(A) This paragraph applies only to a state employee who is paid twice each month.

(B) This subparagraph applies to a state employee who does not work all the available hours in the first half of a month but works all the available hours in the second half of the month.

(i) The total compensation that must be paid to a state employee for an entire month is equal to the product of:

(I) the hours worked in the month by the employee; and

(II) the employee's hourly rate for the month calculated according to the comptroller's requirements.

(ii) The amount of compensation that must be paid to a state employee for services provided during the first half of a month is equal to the product of:

(I) the hours worked in that half of the month by the employee; and

(II) the employee's hourly rate for the month calculated according to the comptroller's requirements.

(iii) The amount of compensation that must be paid to a state employee for services provided during the second half of a month equals the difference between:

(I) the total compensation that must be paid to the employee for the entire month as determined under clause (i) of this subparagraph; and

(II) the compensation that must be paid to the employee for services provided during the first half of the month as determined under clause (ii) of this subparagraph.

(C) This subparagraph applies to a state employee who works all the available hours in the first half of a month but does not work all the available hours in the second half of that month.

(i) The total compensation that must be paid to a state employee for an entire month is equal to the product of:

(I) the hours worked in the month by the employee; and

(II) the employee's hourly rate for the month calculated according to the comptroller's requirements.

(ii) The amount of compensation that must be paid to a state employee for services provided during the first half of a month equals 50% of the employee's compensation for the month.

(iii) The amount of compensation that must be paid to a state employee for services provided during the second half of a month equals the difference between:

(I) the total compensation that must be paid to the employee for the entire month as determined under clause (i) of this subparagraph; and

(II) the compensation that must be paid to the employee for services provided during the first half of the month as determined under clause (ii) of this subparagraph.

(r) Payroll deductions.

(1) Special definitions. The following words and terms, when used in this subsection, shall have the following meanings unless the context clearly indicates otherwise.

(A) Certified state employee organization--A state employee organization that the comptroller has certified according to §5.46 of this title (relating to Deductions for Paying Membership Fees to Certain State Employee Organizations).

(B) State agency--

(i) a board, commission, department, office, or other agency that is in the executive branch of state government and that was created by the constitution or a statute of the state, including an institution of higher education as defined by Education Code, §61.003;

(ii) the legislature or a legislative agency; or

(iii) the supreme court, the court of criminal appeals, a court of appeals, the State Bar of Texas, or another state judicial agency.

(2) Statutory limitation. Government Code, §659.002, prohibits a state agency from making a deduction from the compensation paid to an employee whose compensation is paid in full or in part from state funds unless the deduction is authorized by law.

(3) List of authorized deductions. The deductions authorized by law are:

(A) court-ordered deductions under Bankruptcy Code, Chapter 13;

(B) deductions required by levies imposed by the Internal Revenue Service;

(C) deductions required by payroll deduction agreements between the Internal Revenue Service and state employees if the agreements are legally binding on employing state agencies;

(D) federal income tax withholding;

(E) deductions required by the Federal Insurance Contributions Act, which includes social security and Medicare withholding;

(F) income tax deductions required by states other than Texas or by local governments outside Texas in which state employees live and work;

(G) contributions to the Employees Retirement System of Texas, the Teacher Retirement System of Texas, the optional retirement program, the Judicial Retirement System of Texas Plan One, or the Judicial Retirement System of Texas Plan Two;

(H) fees charged to state employees by their employing state agencies for complying with court-ordered child support deductions from the employees' compensation;

(I) court-ordered child support deductions;

(J) extra federal income tax withholding;

(K) deferrals to and repayments of loans from the qualified deferred compensation plan;

(L) deductions required by a valid assignment, transfer, or pledge of compensation as security for an indebtedness under Education Code, §51.934;

(M) health benefits plan deductions, cafeteria plan deductions, and other deductions authorized by Insurance Code, Chapter 1551, Texas Employees Group Insurance Benefits Act;

(N) health benefits plan deductions, cafeteria plan deductions, and other deductions authorized by Insurance Code, Chapter 1601 [1551],[Texas] State [College and] University Employees Uniform Insurance Benefits Act;

(O) deductions for goods and services provided to employees by the institutional division of the Department of Criminal Justice;

(P) deductions for services provided to state employees of agencies as authorized in statute or the GAA;

(Q) deferrals to the deferred compensation plans governed by Internal Revenue Code of 1986, §457;

(R) contributions by employees of the Texas Higher Education Coordinating Board, the Texas Education Agency, the Texas School for the Deaf, the Texas School for the Blind and Visually Impaired [Department of Assistive and Rehabilitative Services], the Department of State Health Services, the Texas Juvenile Justice Department, and the governing boards of state-supported institutions of higher education to any investment authorized under Internal Revenue Code of 1986, §403(b);

(S) deductions to pay membership fees to certified state employee organizations;

(T) service purchase installment deductions for contributing members of the Employees Retirement System of Texas, the Judicial Retirement System of Texas Plan One [I], or the Judicial Retirement System of Texas Plan Two [II];

(U) deductions from the compensation paid to certain faculty members who take English proficiency courses under Education Code, §51.917;

(V) deductions for contributions to eligible charitable organizations;

(W) deductions for payments to credit unions;

(X) deductions required by federal law for the repayment of guaranteed student loans;

(Y) deductions for savings bond purchases;

(Z) deductions for supplemental optional benefit programs approved by the Employees Retirement System of Texas under Government Code, §659.102;

(AA) deductions to make payments under a prepaid tuition contract; and

(BB) deductions for contributions to a qualified football coaches plan.

(s) Garnishments.

(1) Delivery of garnishment notices. A notice to garnish the compensation of a state employee must be delivered directly to the employing state agency.

(2) Garnishment notices for terminated employees. If a state agency receives a garnishment notice for a person no longer employed by the agency, then the agency must:

(A) return the notice to the entity that issued the notice;

(B) inform the entity that the person is no longer employed; and

(C) identify to the entity the retirement system that the entity should contact to seek information about the person's retirement contribution balance.

(3) Compliance with garnishment notices. Upon receipt of a valid garnishment notice, the receiving state agency must:

(A) inform the affected state employee about the notice and the procedures the agency will follow to comply with the notice;

(B) establish a mail code on the comptroller's Texas payee information system for the recipient of the garnishment proceeds unless a payee number has already been designated for all state agencies to use; and

(C) show the garnishment as a miscellaneous deduction on the affected state employee's payroll record.

(4) Effective date of garnishment notices. A garnishment notice takes effect with the first payroll document submitted to the comptroller after the notice is received. Therefore, if a state agency receives a garnishment notice after the agency has submitted a payroll document to the comptroller, the notice does not apply to that document.

(t) Refunds of deductions. A state agency may refund amounts previously deducted in error only by using credit amounts in the appropriate deduction column on a payroll document.

§ 5.48. Deductions for Contributions to Charitable Organizations.

(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Campaign coordinator--The state employee who has volunteered and been designated by the chief administrator of a state agency to coordinate the state employee charitable campaign for that agency.

(2) Campaign material--A logo identifying the state employee charitable campaign, a campaign slogan, a campaign film, a campaign donor brochure, a donor authorization form, an online giving tool website and/or application, and other materials as approved by the state policy committee.

(3) Campaign year--For salary or wages paid once each month, the payroll periods from December 1st through November 30th. For salary or wages paid twice each month, the payroll periods from December 16th through December 15th. For salary or wages paid every other week by a state agency that is not an institution of higher education, the 26 consecutive payroll periods beginning with the period that corresponds to the payment of salary or wages occurring on or closest to, but not after, December 31st. For salary or wages paid every other week by an institution of higher education, the 26 consecutive payroll periods beginning with the period designated by the institution if the period is entirely within December.

(4) Charitable organization--Has the meaning assigned by Government Code, §659.131.

(5) Comptroller--The Comptroller of Public Accounts for the State of Texas.

(6) Comptroller's electronic funds transfer system--The system authorized by Government Code, §403.016, that the comptroller uses to initiate payments instead of issuing warrants.

(7) Deduction--The amount subtracted from a state employee's salary or wages to make a contribution to a local campaign manager or a statewide federation or fund that has been assigned a payee identification number by the comptroller.

(8) Designated representative--A state employee volunteer or other individual named by a local campaign manager or a statewide federation or fund as its representative.

(9) [(10)] Eligible charitable organization--A charitable organization that is determined to be eligible to participate in the state employee charitable campaign as provided by this section and Government Code, §659.146.

(10) [(11)] Eligible local charitable organization--A local charitable organization that has been approved for local participation in the state employee charitable campaign.

(11) [(12)] Employer--A state agency that employs at least one state employee.

(12) [(13)] Federated community campaign organization--Has the meaning assigned by Government Code, §659.131.

(13) [(14)] Federation or fund--Has the meaning assigned by Government Code, §659.131.

(14) [(15)] Generic campaign materials--Campaign materials that have not been modified to reflect a particular local campaign area's participants or a local employee committee.

(15) [(16)] Health and human services--Has the meaning assigned by Government Code, §659.131.

(16) [(17)] Holiday--A state or national holiday as specified by Government Code, §662.003. The term does not include a state or national holiday if the General Appropriations Act prohibits state agencies from observing the holiday.

(17) [(18)] Include--A term of enlargement and not of limitation or exclusive enumeration. The use of the term does not create a presumption that components not expressed are excluded.

(18) [(20)] Institution of higher education--Has the meaning assigned by Education Code, §61.003. The term does not include a public junior college that has decided not to participate in the state employee charitable contribution program in accordance with subsection (x) of this section.

(19) [(21)] Local campaign area--Has the meaning assigned by Government Code, §659.131.

(20) [(22)] Local campaign manager--Any local campaign manager or managers appointed by the state policy committee under Government Code, §659.140(e)(1)(C).

(21) [(23)] Local campaign materials--Campaign materials that have been modified to reflect a particular local campaign area's participants and the local employee committee for the area if the state policy committee has approved the modifications, and additional materials that the state policy committee has approved because they are based on and consistent with the campaign materials approved by the committee.

(22) [(24)] Local charitable organization--Has the meaning assigned by Government Code, §659.131.

(23) [(25)] Local employee committee--Any local employee committee or committees appointed by the state policy committee under Government Code, §659.140(e)(1)(B).

(24) [(26)] May not--A prohibition. The term does not mean "might not" or its equivalents.

(25) [(27)] Payee identification number--The 14-digit number that the comptroller assigns to each direct recipient of a payment made by the comptroller for the State of Texas.

(26) [(28)] Public junior college--Has the meaning assigned by Education Code, §61.003. The term includes a community college.

(27) [(29)] Salary or wages--Base salary or wages, longevity pay, or hazardous duty pay.

(28) [(30)] State advisory committee--Has the meaning assigned by Government Code, §659.131.

(29) [(31)] State agency--Has the meaning assigned by Government Code, §659.131.

(30) [(32)] State campaign manager--A federated community campaign organization or a charitable organization that is selected by the state policy committee as provided by this section to coordinate state employee charitable campaign operations with any local campaign managers appointed by the state policy committee.

(31) [(33)] State employee--An employee of a state agency. The term does not include an employee of a public junior college that is not participating in the state employee charitable contribution program in accordance with subsection (x) of this section.

(32) [(34)] State employee charitable campaign--Has the meaning assigned by Government Code, §659.131.

(33) [(35)] State employee charitable contribution program--The charitable deduction program authorized by Government Code, Chapter 659, Subchapter I [D] (exclusive of the deductions authorized by Government Code, §659.1311(b) - (c)).

(34) [(36)] State policy committee--Has the meaning assigned by Government Code, §659.131.

(35) [(37)] Statewide federation or fund--A federation or fund that has been approved for statewide participation in the state employee charitable campaign.

(36) [(39)] Workday--A calendar day other than Saturday, Sunday, or a holiday.

(b) Deductions.

(1) Authorization of deductions.

(A) A state employee who is not employed by an institution of higher education may authorize not more than three monthly deductions from the employee's salary or wages.

(B) A state employee who is employed by an institution of higher education may authorize not more than three monthly deductions from the employee's salary or wages, if the institution has not specified a higher maximum number of deductions that its employees may authorize, If the institution has specified a higher maximum number, then the employee may authorize not more than that number.

(C) A state employee may authorize only one deduction to any particular statewide federation or fund or local campaign manager.

(D) A state employee may authorize a deduction only if the employee:

(i) properly completes an authorization form or an electronic deduction authorization entered through the online giving tool website or application; and

(ii) submits the form to a designated representative of the statewide federation or fund or the local campaign manager to which the deduction will be paid or completes an electronic deduction authorization through the online giving tool website or application.

(E) Except as provided in this subparagraph, a state employee may authorize a deduction only during a state employee charitable campaign.

(i) State law says that a state agency, other than an institution of higher education, is not required to permit its state employees to authorize a deduction until the first full payroll period after the agency is converted to a system in which [the] uniform statewide payroll procedures are followed [payroll/personnel system]. A state agency covered by that law shall permit its state employees to authorize deductions so that they are effective not later than the first full payroll period after conversion of the agency. Those authorizations may be made even if a state employee charitable campaign is not occurring when the authorizations are made.

(ii) A state employee who begins employment with the state may authorize a deduction if the employee's employer receives the employee's properly completed authorization form or electronic deduction authorization not later than the 30th day after the employee's first day of employment with the agency. A new state employee may authorize a deduction even if a state employee charitable campaign is not occurring when the employment begins or the form or access to the electronic online giving tool website or application is provided. This clause does not apply to a state employee who transfers from one state agency to a second state agency.

(F) Neither the comptroller nor a state agency is liable or responsible for any damages or other consequences resulting from a state employee authorizing an incorrect amount of a deduction.

(2) Minimum amount of deductions. If a state employee authorizes a deduction, the minimum amount of the deduction is two dollars per month. This minimum applies to each deduction authorized by the employee. For example, if the employee authorizes two deductions, then the amount of each of those deductions must be at least two dollars per month.

(3) Changes in the amount of deductions.

(A) At any time during a campaign year, a state employee may authorize a change in the amount to be deducted from the employee's salary or wages during that year.

(B) A state employee may authorize a change only by submitting a written authorization or electronic deduction authorization change to the employee's employer. The authorization may be a properly completed authorization form, electronic deduction authorization entered through the online giving tool website or application, or another type of written communication that complies with subparagraph (C) of this paragraph.

(C) To be valid, a written communication, other than an authorization form or electronic deduction authorization, that a state employee submits for the purpose of authorizing a change must specify or contain:

(i) the employee's name and appropriate identifying information;

(ii) the name of the employee's employer;

(iii) the six-digit code number of the charity for which the change is being authorized or, if the number is unknown, the charity's name;

(iv) the new amount to be deducted;

(v) the effective date of the change; and

(vi) the employee's original signature.

(D) A state employee may not change the statewide federation or fund or the local campaign manager that receives deducted amounts if the change would be provided outside the time a state employee charitable campaign is being conducted.

(E) A state employee may not change the eligible charitable organizations designated to receive deducted amounts paid to a statewide federation or fund if the change would be provided outside the time a state employee charitable campaign is being conducted.

(F) A state employee may not change the eligible local charitable organizations designated to receive deducted amounts paid to a local campaign manager if the change would be provided outside the time a state employee charitable campaign is being conducted.

(4) Sufficiency of salary or wages to support a deduction.

(A) A state employee is solely responsible for ensuring that the employee's salary or wages are sufficient to support a deduction.

(B) If a state employee's salary or wages are sufficient to support only part of a deduction, then no part of the deduction may be made.

(C) If a state employee has multiple deductions and the employee's salary or wages are insufficient to support all the deductions, then none of the deductions may be made.

(D) The amount that may not be deducted from a state employee's salary or wages because they are insufficient to support the deduction may not be made up by deducting the amount from subsequent payments of salary or wages.

(5) Timing of deductions.

(A) Except as provided in subparagraph (B) of this paragraph, a deduction may be made only from the salary or wages that are paid on the first workday of a month.

(B) If a state employee is not entitled to receive a payment of salary or wages on the first workday of a month, then the employee's employer may designate the payment of salary or wages during the month from which a deduction will be made. A deduction may be made only once each month.

(6) Cancellation of deductions.

(A) A state employee may cancel a deduction at any time by submitting a written cancellation notice to the employee's employer or by canceling an electronic deduction authorization through the online giving tool website or application. The notice may be a properly completed authorization form, another type of written communication, or an entry into the online giving tool website or application cancelling the deduction authorization. The authorization form or written communication shall comply with subparagraph (B) of this paragraph.

(B) To be valid, a written communication, other than an authorization form or electronic deduction authorization, that a state employee submits for the purpose of canceling a deduction must specify or contain:

(i) the employee's name and appropriate identifying information;

(ii) the name of the employee's employer;

(iii) the six-digit code number of the charity for which the cancellation is being made or, if the number is unknown, the charity's name;

(iv) the amount of the deduction to be canceled;

(v) the effective date of the cancellation; and

(vi) the employee's original signature.

(7) Interagency transfers of state employees.

(A) A deduction that started while a state employee was employed by a state agency may resume after the employee transfers to a second state agency only if:

(i) the employee requests a copy of the employee's authorization form from the first state agency and submits the copy to the second state agency or alternatively requests a copy of the report from the online giving tool website or application or other documentation acceptable to the second state agency;

(ii) the employee properly completes and submits an additional authorization form to the second state agency or completes an electronic deduction authorization, if the agency requires submission of the form or completion of the electronic deduction authorization; and

(iii) the second state agency receives the copy of the employee's authorization form or electronic deduction authorization and the additional authorization form or electronic deduction authorization, if required, not later than the 30th day after the employee's first day of employment by the second state agency.

(B) A deduction that may resume under subparagraph (A) of this paragraph shall become effective at the second state agency not later than with the salary and wages paid on the first workday of the second month following the later of:

(i) the month in which the agency receives the copy of the authorization form or electronic deduction authorization to which subparagraph (A)(i) of this paragraph refers; or

(ii) the month in which the agency receives the additional authorization form or electronic deduction authorization, if the agency requires submission of the form or completion of the electronic deduction authorization.

(C) This subparagraph applies only if a state agency requires an additional authorization form or electronic deduction authorization to be submitted under subparagraph (A)(ii) of this paragraph. The statewide federation or fund or the local campaign manager named on the form or electronic deduction authorization must be the same as that named on the original authorization form or electronic deduction authorization. The additional authorization form or electronic deduction authorization may not make any changes other than those that a state employee who has not changed employers may make after a state employee charitable campaign has ended.

(c) Designation of charitable organizations to receive deducted amounts.

(1) Receiving deducted amounts through local campaign managers.

(A) This subparagraph applies to a state employee only if not employed by an institution of higher education. A state employee's authorization of a deduction to a local campaign manager may designate not more than nine eligible local charitable organizations to receive the deducted amounts through the manager.

(B) This subparagraph applies to a state employee only if employed by an institution of higher education. A state employee's authorization of a deduction to a local campaign manager may designate one or more eligible local charitable organizations to receive the employee's deducted amounts through the manager. The employee may designate not more than nine organizations if the employing institution of higher education has not specified a higher maximum number of designations that its employees may make. If the institution has specified a higher maximum number, then the employee may designate not more than that number.

(C) If a state employee's authorization of a deduction to a local campaign manager designates only one eligible local charitable organization, then the organization's designated initial distribution amount with respect to the employee is equal to the employee's entire deduction to the local campaign manager.

(D) If a state employee's authorization of a deduction to a local campaign manager designates more than one eligible local charitable organization, then the designation is valid only if it specifies the designated initial distribution amount for each organization.

(E) If an eligible local charitable organization that a state employee designates under subparagraph (A) or (B) of this paragraph is a federation or fund, then the federation or fund shall distribute the deducted amounts it receives to its affiliated eligible charitable organizations according to its policy.

(F) This subparagraph applies if a state employee's authorization of a deduction to a local campaign manager does not contain a valid designation. The undesignated initial distribution amounts with respect to the employee for eligible local charitable organizations and statewide federations or funds shall be determined according to this subparagraph.

(i) Only an eligible local charitable organization that has been approved to participate in the local campaign area may have an undesignated initial distribution amount. Only a statewide federation or fund to which state employees in the local campaign area have authorized deductions may have an undesignated initial distribution amount.

(ii) The undesignated initial distribution amount for an eligible local charitable organization is equal to the distribution percentage for the organization multiplied by the amount of the employee's deduction authorization to the local campaign manager. The distribution percentage is equal to the organization's total designated initial distribution amount as determined or specified under subparagraphs (C) and (D) of this paragraph for all state employees in the local campaign area divided by the sum of:

(I) the total designated initial distribution amount for all eligible local charitable organizations in the local campaign area as determined or specified under subparagraphs (C) and (D) of this paragraph; and

(II) the total amount of deductions authorized to statewide federations or funds by state employees in the local campaign area.

(iii) The undesignated initial distribution amount for a statewide federation or fund is equal to the distribution percentage for the federation or fund multiplied by the amount of the employee's deduction authorization to the local campaign manager. The distribution percentage is equal to the total amount of deductions authorized to the federation or fund by state employees in the local campaign area divided by the sum of:

(I) the total designated initial distribution amount for all eligible local charitable organizations in the local campaign area as determined or specified under subparagraphs (C) and (D) of this paragraph; and

(II) the total amount of deductions authorized to statewide federations or funds by state employees in the local campaign area.

(G) The following example illustrates the calculation of undesignated initial distribution amounts according to subparagraph (F) of this paragraph.

(i) The following assumptions apply in this example.

(I) State employees in the Austin local campaign area have authorized $15,000 in deductions to the Austin local campaign manager. Of that amount, state employees have designated $10,000 for distribution to the following eligible local charitable organizations. Organization 1 has been designated to receive $5,000. Organization 2 has been designated to receive $3,000. And Organization 3 has been designated to receive $2,000.

(II) Of the $15,000 in authorized deductions to the Austin local campaign manager, $5,000 is undesignated.

(III) State employees in the Austin local campaign area have authorized total deductions of $10,000 to the following statewide federations or funds. Organizations 4 and 5 have each been authorized to receive $5,000.

(ii) The calculation of undesignated initial distribution amounts in this subparagraph relates only to the $5,000 in undesignated deductions to the Austin local campaign manager. This is because an eligible local charitable organization or a statewide federation or fund has an undesignated initial distribution amount only with respect to undesignated deductions.

(iii) The first step is to determine the designated initial distribution amount for each eligible local charitable organization listed in clause (i)(I) of this subparagraph. That amount for each organization is the total amount of deductions that state employees have designated to the organization. Therefore, the designated initial distribution amount for Organization 1 is $5,000, Organization 2 is $3,000, and Organization 3 is $2,000.

(iv) The second step is to determine the distribution percentage for each eligible local charitable organization listed in clause (i)(I) of this subparagraph. The distribution percentage must be determined according to subparagraph (F)(ii) of this paragraph. The distribution percentage for each organization is as follows:

(I) Organization 1--25%;

(II) Organization 2--15%;

(III) Organization 3--10%.

(v) The third step is to determine the distribution percentage for each statewide federation or fund listed in clause (i)(III) of this subparagraph. The distribution percentage must be determined according to subparagraph (F)(iii) of this paragraph. The distribution percentage for each federation or fund is as follows:

(I) Organization 4--25%;

(II) Organization 5--25%.

(vi) The fourth step is to determine the undesignated initial distribution amount for each eligible local charitable organization listed in clause (i)(I) of this subparagraph. The amount must be determined by multiplying the organization's distribution percentage by the amount of undesignated deductions to the Austin local campaign manager. The amount for each organization is as follows:

(I) Organization 1--$1,250;

(II) Organization 2--$750;

(III) Organization 3--$500.

(vii) The fifth and final step is to determine the undesignated initial distribution amount for each statewide federation or fund listed in clause (i)(III) of this subparagraph. The amount must be determined by multiplying the federation or fund's distribution percentage by the amount of undesignated deductions to the Austin local campaign manager. The amount for each organization is as follows:

(I) Organization 4--$1,250;

(II) Organization 5--$1,250.

(H) Notwithstanding anything in this paragraph, a local campaign manager shall distribute deducted amounts to an eligible local charitable organization or a statewide federation or fund according to the percentage method required by subsection (j) of this section. A designated or undesignated initial distribution amount specified or determined under this paragraph is only the starting point for calculating the amount to be distributed.

(2) Receiving deducted amounts through statewide federations or funds.

(A) This subparagraph applies to a state employee only if not employed by an institution of higher education. A state employee's authorization of a deduction to a statewide federation or fund may designate not more than nine eligible charitable organizations to receive the deducted amounts through the federation or fund.

(B) This subparagraph applies to a state employee only if employed by an institution of higher education. A state employee's authorization of a deduction to a statewide federation or fund may designate one or more eligible charitable organizations to receive the employee's deducted amounts through the federation or fund. The employee may designate not more than nine organizations if the employing institution of higher education has not specified a higher maximum number of designations that its employees may make. If the institution has specified a higher maximum number, then the employee may designate not more than that number.

(C) If a state employee's authorization of a deduction to a statewide federation or fund designates only one eligible charitable organization, then the organization's designated initial distribution amount with respect to the employee is equal to the employee's entire deduction to the statewide federation or fund.

(D) If a state employee's authorization of a deduction to a statewide federation or fund designates more than one eligible charitable organization, then the designation is valid only if it specifies the designated initial distribution amount for each organization.

(E) This subparagraph applies if a state employee's authorization of a deduction to a statewide federation or fund does not contain a valid designation. The statewide federation or fund shall determine the undesignated initial distribution amount with respect to the employee for each eligible charitable organization affiliated with the federation or fund. The determination must be accomplished according to the federation or fund's policy.

(F) Notwithstanding anything in this paragraph, a statewide federation or fund shall distribute deducted amounts to an eligible charitable organization according to the percentage method required by subsection (k) of this section. A designated or undesignated initial distribution amount specified or determined under this paragraph is only the starting point for calculating the amount to be distributed.

(d) State employee charitable campaign.

(1) Time of the state employee charitable campaign. The state employee charitable campaign shall be conducted annually during the period after August 31st and before November 1st.

(2) Reimbursement of expenses incurred by state employees while representing charitable organizations. A state agency may not reimburse a state employee for expenses incurred while acting as a representative of a charitable organization.

(3) Participation by state employees. Participation by a state employee in the state employee charitable campaign is voluntary.

(e) Effective dates of authorization forms and electronic deduction authorizations.

(1) Effective date of authorization forms and electronic deduction authorizations provided during a state employee charitable campaign. A state employee's authorization form or electronic deduction authorization that is provided during a state employee charitable campaign is effective for the following campaign year if the form or electronic deduction authorization is completed properly, the form or electronic deduction authorization is signed by the employee, and the employee's employer receives the properly completed and signed form or electronic deduction authorization not later than November 15th before the start of that year. The deductions may not start before the beginning of that year.

(2) Effective date of authorization forms and electronic deduction authorizations provided immediately after a state agency is converted to a system in which [the] uniform statewide payroll procedures are followed [payroll/personnel system]. State law says that a state agency, other than an institution of higher education, is not required to permit its state employees to authorize a deduction until the first full payroll period after the agency is converted to a system in which [the] uniform statewide payroll procedures are followed [payroll/personnel system]. A state agency covered by that law shall permit its employees to authorize deductions so that they are effective not later than the first full payroll period after conversion of the agency. To be effective by that date, a properly completed authorization form or electronic deduction authorization must be received by the agency not later than the tenth workday before the first day of the agency's first full monthly payroll period after conversion.

(3) Effective date of authorization forms and electronic deduction authorizations provided by new state employees.

(A) Paragraph (1) of this subsection applies to a new state employee's authorization form or electronic deduction authorization if it:

(i) is received by the employee's employer during a state employee charitable campaign; and

(ii) authorizes a deduction to begin during the campaign year following the campaign year in which the form or electronic deduction authorization is received.

(B) This subparagraph applies to a new state employee's authorization form or electronic deduction authorization only if the form or electronic deduction authorization authorizes a deduction to begin during the same campaign year as the campaign year in which the employee's employer receives the form or electronic deduction authorization. The employer may decide when the deduction will take effect, subject to the following limitations.

(i) Except as provided in clause (ii) of this subparagraph, the deduction must begin not later than with the employee's salary or wages that are paid on the first workday of the second month following the month in which the employer receives the form or electronic deduction authorization.

(ii) If the employer receives the form or electronic deduction authorization during October or November, then the employer may decide whether and when to give effect to the form or electronic deduction authorization.

(4) Effective date of authorization forms and electronic deduction authorizations that request changes in deductions.

(A) This paragraph applies only to a state employee's authorization form or electronic deduction authorization that requests a change to a deduction.

(B) The employer of the employee may decide when the change will take effect, subject to the following limitations.

(i) Except as provided in clause (ii) of this subparagraph, the change must take effect not later than with the employee's salary or wages that are paid on the first workday of the second month following the month in which the employer receives the form or electronic deduction authorization.

(ii) If the employer receives the form or electronic deduction authorization during October or November of a campaign year and the form or electronic deduction authorization requests a change in a deduction for the year, then the employer may decide whether and when to give effect to the form or electronic deduction authorization.

(C) The following example illustrates the requirements of this paragraph. Assume that a state agency receives an authorization form or electronic deduction authorization on July 2, 2016, and that the form or electronic deduction authorization requests a decrease in the amount of a deduction. The agency may make the decrease effective with the deduction that occurs on the August 1, 2016, salary payment. If the agency does not, then the agency must make the decrease effective with the deduction that occurs on the September 1, 2016, salary payment.

(5) Effective date of authorization forms and electronic deduction authorizations that request cancellations of deductions.

(A) This paragraph applies only to a state employee's authorization form or electronic deduction authorization that requests the cancellation of a deduction.

(B) The employer of the employee may decide when the cancellation will take effect. The cancellation must take effect, however, not later than with the employee's salary or wages that are paid on the first workday of the second month following the month in which the employer receives the form or electronic deduction authorization.

(C) The following example illustrates the requirements of this paragraph. Assume that a state agency receives an authorization form or electronic deduction authorization on July 2, 2016, and that the form or electronic deduction authorization requests the cancellation of a deduction. The agency may make the cancellation effective with the August 1, 2016, salary payment. If the agency does not, then the agency must make the cancellation effective with the September 1, 2016, salary payment.

(f) Requirements for the content and format of authorization forms.

(1) Prohibition against distributing or providing authorization forms. A local campaign manager or a statewide federation or fund may distribute or provide an authorization form to a state employee only if both the comptroller and the state policy committee have approved the form.

(2) Requirement to produce authorization forms. A local campaign manager or a statewide federation or fund must produce an authorization form that complies with the comptroller's requirements and this section.

(3) Restrictions on approval of authorization forms. Neither the comptroller nor the state policy committee may approve the authorization form of a local campaign manager or a statewide federation or fund unless the form:

(A) is at least 8 1/2 inches wide and 11 inches long;

(B) states that statewide federations or funds and local campaign managers are required to use the percentage method to distribute a state employee's deducted amounts to eligible charitable organizations designated by the employee instead of matching deducted amounts received to actual designations;

(C) accurately describes the percentage method; and

(D) complies with the comptroller's requirements for format and substance.

(g) Procedure for federations or funds to apply for statewide participation.

(1) Request for statewide participation. A federation or fund may not be a statewide federation or fund unless the federation or fund applies to the state policy committee for that status in accordance with this section, Government Code, §659.146, and the committee's procedures.

(2) Requirements for the application. The application of a federation or fund to be a statewide federation or fund must include:

(A) a letter from the presiding officer of the federation or fund's board of directors certifying compliance by the federation or fund and its affiliated agencies with the eligibility requirements of Government Code, §659.146;

(B) a copy of a letter from each affiliate of the federation or fund certifying that the federation or fund serves as the affiliate's representative and fiscal agent in the state employee charitable campaign;

(C) a copy of the conflict of interest policy approved by the federation or fund's board of directors, which prohibits its board members, executive director, and staff from engaging in business transactions in which they have material conflicting interests;

(D) if the executive director of the federation or fund receives material compensation for services rendered to any organization other than the federation or fund, a full disclosure of:

(i) the name of the organization;

(ii) the nature and amount of the compensation; and

(iii) the relationship of the organization to the federation or fund;

(E) a copy of the federation or fund's current operating budget, signed by the presiding officer of the federation or fund's board of directors; and

(F) an acknowledgment that the federation or fund is responsible for filing any appeals from its affiliated agencies that have not secured approval for statewide or local participation in the state employee charitable campaign.

(3) Notification of the comptroller. Upon approval of a federation or fund for statewide participation in the state employee charitable campaign, the state policy committee shall submit to the comptroller:

(A) the complete name of the federation or fund;

(B) the mailing address of the federation or fund;

(C) the full name, title, telephone number, and mailing address of the federation or fund's primary contact;

(D) the payee identification number of the federation or fund, when available; and

(E) the other information deemed necessary by the comptroller.

(4) Payee identification numbers. A federation or fund that has been approved for statewide participation and that does not have a payee identification number shall submit a request for one to the comptroller.

(5) Electronic funds transfers.

(A) A federation or fund that has been approved for statewide participation in the state employee charitable campaign shall submit a request to be paid by the comptroller through electronic funds transfers under rules adopted by the comptroller. This subparagraph applies only to the extent that the comptroller's electronic funds transfer system is used.

(B) A federation or fund that has been approved for statewide participation in the state employee charitable campaign shall submit a request to be paid by an institution of higher education through electronic funds transfers under rules or procedures adopted by the institution. This subparagraph applies only to the extent that the comptroller's electronic funds transfer system is not used.

(6) Beginning of deductions. The first payment of deducted amounts to a statewide federation or fund shall occur the first month of the first campaign year that begins after the federation or fund is approved for statewide participation in the state employee charitable campaign.

(h) Procedure for charitable organizations to apply for local participation.

(1) Request for local participation.

(A) A charitable organization may not be an eligible local charitable organization unless it applies to the state policy committee and any applicable local employee committee appointed by the state policy committee in accordance with this section, Government Code, §659.147, and the committee's procedures.

(B) A federation or fund that wants to be an eligible local charitable organization may apply on behalf of its affiliated agencies.

(2) Requirements for applications from federations or funds. If a charitable organization applying to be an eligible local charitable organization is a federation or fund, then the organization must provide to the state policy committee and any applicable local employee committee appointed by the state policy committee:

(A) a letter from the presiding officer of the federation or fund's board of directors certifying compliance by the federation or fund and its affiliated agencies with the eligibility requirements of Government Code, §659.147;

(B) a copy of a letter from each affiliate of the federation or fund certifying that the federation or fund serves as the affiliate's representative and fiscal agent in the state employee charitable campaign;

(C) a copy of the conflict of interest policy approved by the federation or fund's board of directors, which prohibits its board members, executive director, and staff from engaging in business transactions in which they have material conflicting interests;

(D) if the executive director of the federation or fund receives material compensation for services rendered to any organization other than the federation or fund, a full disclosure of:

(i) the name of the organization;

(ii) the nature and amount of the compensation; and

(iii) the relationship of the organization to the federation or fund;

(E) a copy of the federation or fund's current operating budget, signed by the presiding officer of the federation or fund's board of directors; and

(F) an acknowledgment that the federation or fund is responsible for filing any appeals from its affiliated agencies that have not secured approval for statewide or local participation in the state employee charitable campaign.

(3) Beginning of deductions. The first deduction to pay an eligible local charitable organization shall occur the first month of the first campaign year that begins after the charitable organization is approved for local participation in the state employee charitable campaign.

(i) Payments of deductions.

(1) Prohibited payments to eligible local charitable organizations.

(A) Neither the comptroller nor an institution of higher education may pay deducted amounts directly to an eligible local charitable organization.

(B) Except as otherwise provided in this subparagraph, deducted amounts shall be paid directly to the appropriate local campaign manager if one has been appointed by the state policy committee. If the eligible local charitable organization involved is an affiliate of a statewide federation or fund, then the deducted amounts shall be paid directly to the federation or fund.

(2) Payments by the comptroller through electronic funds transfers. If feasible, the comptroller shall pay deducted amounts to a local campaign manager or a statewide federation or fund by electronic funds transfer.

(3) Payments through warrants issued by the comptroller.

(A) This paragraph applies only if it is infeasible for the comptroller to pay deducted amounts by electronic funds transfer.

(B) The comptroller shall pay deducted amounts by warrant and make the warrant available for pick up by the state agency whose employees' deductions are being paid by the warrant.

(C) A state agency shall mail or hand deliver a warrant picked up under subparagraph (B) of this paragraph to the payee of the warrant.

(D) Except as provided in subparagraph (E) of this paragraph, the deadline for mailing or hand delivering a warrant is the tenth workday of the month following the month when the salary or wages from which the deductions are made were earned.

(E) This subparagraph applies only to a deduction that occurs after the tenth workday of the month following the month when the salary or wages from which the deduction is made were earned. The deadline for a state agency to mail or hand deliver a warrant to pay the deduction is the second workday after the agency receives the warrant.

(4) Payments by institutions of higher education.

(A) This paragraph applies to deducted amounts from the salary or wages of a state employee of an institution of higher education only if the comptroller does not pay those amounts directly to a local campaign manager or a statewide federation or fund.

(B) If feasible, an institution of higher education shall pay deducted amounts to a local campaign manager or a statewide federation or fund by electronic funds transfer.

(C) If it is infeasible for an institution of higher education to pay deducted amounts by electronic funds transfer, then the institution shall make the payment by check.

(D) This subparagraph applies only if an institution of higher education pays deducted amounts by check.

(i) This clause applies only to deductions from salary or wages that are paid on the first workday of a month. An institution of higher education shall mail or hand deliver its check to the payee of the check not later than the 10th workday of the month.

(ii) This clause applies only to deductions from salary or wages that are paid on a day other than the first workday of a month. An institution of higher education shall mail or hand deliver its check to the payee of the check not later than the 10th workday of the month following the month in which the salary or wages were earned.

(j) Distributions of deductions by any local campaign managers appointed by the state policy committee.

(1) Requirement to use the percentage method. A local campaign manager shall use the percentage method to distribute deducted amounts to eligible local charitable organizations and statewide federations or funds.

(2) Description of the percentage method.

(A) Immediately after the end of a state employee charitable campaign, a local campaign manager shall calculate the contribution percentage for:

(i) each eligible local charitable organization that has been approved to participate in the local campaign area under the manager's responsibility; and

(ii) each statewide federation or fund to which state employees in the local campaign area have authorized deductions.

(B) The contribution percentage for an eligible local charitable organization is the ratio of:

(i) the sum of:

(I) the organization's designated initial distribution amount with respect to all state employees in the local campaign area as determined under subsection (c)(1)(C) - (D) of this section; and

(II) the organization's undesignated initial distribution amount with respect to all state employees in the local campaign area as determined under subsection (c)(1)(F)(ii) of this section; to

(ii) the total amount of deductions authorized to the local campaign manager on authorization forms and electronic deduction authorizations completed during the campaign.

(C) The contribution percentage for a statewide federation or fund is the ratio of:

(i) the federation or fund's undesignated initial distribution amount with respect to all state employees in the local campaign area as determined under subsection (c)(1)(F)(iii) of this section; to

(ii) the total amount of deductions authorized to the local campaign manager on authorization forms and electronic deduction authorizations completed during the campaign.

(D) The contribution percentage for an eligible local charitable organization or a statewide federation or fund may not be recalculated before the conclusion of the next state employee charitable campaign.

(E) The amount of deductions that a local campaign manager distributes to an eligible local charitable organization or a statewide federation or fund is equal to the product of:

(i) the contribution percentage of the organization or federation or fund; and

(ii) the total amount of deductions the manager is distributing.

(3) Example of the percentage method. This paragraph illustrates the percentage method described in paragraph (2) of this subsection.

(A) The following assumptions apply in this example.

(i) Organization 1, an eligible local charitable organization, has a designated initial distribution amount of $5,000 and an undesignated initial distribution amount of $1,250.

(ii) Organization 2, an eligible local charitable organization, has a designated initial distribution amount of $3,000 and an undesignated initial distribution amount of $750.

(iii) Organization 3, an eligible local charitable organization, has a designated initial distribution amount of $2,000 and an undesignated initial distribution amount of $500.

(iv) Organization 4, a statewide federation or fund, has an undesignated initial distribution amount of $1,250.

(v) Organization 5, a statewide federation or fund, has an undesignated initial distribution amount of $1,250.

(vi) The total amount of deductions authorized to the local campaign manager is $15,000.

(vii) The local campaign manager has actually received $10,000 in deducted amounts.

(B) The first step is to calculate the contribution percentage for each organization according to paragraph (2)(B) - (C) of this subsection. The contribution percentage for each organization is as follows:

(i) Organization 1--41.67%;

(ii) Organization 2--25%;

(iii) Organization 3--16.67%;

(iv) Organization 4--8.33%;

(v) Organization 5--8.33%.

(C) The second and final step is to calculate the amount that the local campaign manager distributes to each organization according to paragraph (2)(E) of this subsection. The amount for each organization is as follows:

(i) Organization 1--$4,167;

(ii) Organization 2--$2,500;

(iii) Organization 3--$1,667;

(iv) Organization 4--$833;

(v) Organization 5--$833.

(4) Prohibition of distributions until payment reports reconciled. A local campaign manager may not make a distribution before the manager reconciles the payment reports received from the comptroller or an institution of higher education with the payments received by electronic funds transfer or by warrant or check.

(5) Frequency of distributions. A local campaign manager shall make distributions quarterly or more frequently than quarterly.

(k) Distributions of deductions by statewide federations or funds.

(1) Requirement to use the percentage method. A statewide federation or fund shall use the percentage method to distribute deducted amounts to eligible charitable organizations.

(2) Description of the percentage method.

(A) Immediately after the end of a state employee charitable campaign, a statewide federation or fund shall calculate the contribution percentage for each eligible charitable organization that is an affiliate of the federation or fund.

(B) The contribution percentage for an eligible charitable organization is the ratio of:

(i) the sum of:

(I) the organization's designated initial distribution amount with respect to all state employees who have authorized deductions to the statewide federation or fund as determined under subsection (c)(2)(C) - (D) of this section; and

(II) the organization's undesignated initial distribution amount with respect to all state employees who have authorized deductions to the statewide federation or fund as determined under subsection (c)(2)(E) of this section; to

(ii) the total amount of deductions authorized to the statewide federation or fund on authorization forms and electronic deduction authorizations completed during the campaign.

(C) The contribution percentage for an eligible charitable organization may not be recalculated before the conclusion of the next state employee charitable campaign.

(D) The amount of deductions that a statewide federation or fund distributes to an eligible charitable organization is equal to the product of:

(i) the contribution percentage of the organization; and

(ii) the total amount of deductions the federation or fund is distributing.

(3) Example of the percentage method. This paragraph illustrates the percentage method described in paragraph (2) of this subsection.

(A) The following assumptions apply in this example.

(i) Eligible charitable organization 1 has a designated initial distribution amount of $5,000 and an undesignated initial distribution amount of $1,250.

(ii) Eligible charitable organization 2 has a designated initial distribution amount of $3,000 and an undesignated initial distribution amount of $750.

(iii) Eligible charitable organization 3 has a designated initial distribution amount of $2,000 and an undesignated initial distribution amount of $500.

(iv) The total amount of deductions authorized to the statewide federation or fund is $12,500.

(v) The statewide federation or fund has actually received $10,000 in deducted amounts.

(B) The first step is to calculate the contribution percentage for each eligible charitable organization according to paragraph (2)(B) of this subsection. The contribution percentage for each organization is as follows:

(i) Organization 1--50%;

(ii) Organization 2--30%;

(iii) Organization 3--20%.

(C) The second and final step is to calculate the amount that the statewide federation or fund distributes to each organization according to paragraph (2)(D) of this subsection. The amount for each organization is as follows:

(i) Organization 1--$5,000;

(ii) Organization 2--$3,000;

(iii) Organization 3--$2,000.

(4) Prohibition of distributions until payment reports reconciled. A statewide federation or fund may not make a distribution before the federation or fund reconciles the payment reports received from the comptroller or an institution of higher education with the payments received by electronic funds transfer or by warrant or check.

(5) Frequency of distributions. A statewide federation or fund shall make distributions quarterly or more frequently than quarterly.

(l) Charging administrative fees to cover costs incurred to make deductions. The comptroller has determined that the costs which would be covered by the charging of an administrative fee to charitable organizations would be insignificant. Therefore, the comptroller has decided not to charge the fee.

(m) Refunding excessive payments of deductions.

(1) Authorization of refunds. If the amount of deductions paid to a local campaign manager or a statewide federation or fund exceeds the amount that should have been paid, then the excess may be refunded to the state agency on whose behalf the payment was made.

(2) Methods for accomplishing refunds. If a refund is authorized by paragraph (1) of this subsection, then the refund shall be accomplished by:

(A) the state agency on whose behalf the payment was made subtracting the amount of the refund from a subsequent payment of deductions to the local campaign manager or statewide federation or fund; or

(B) the local campaign manager or the statewide federation or fund issuing a check in the amount of the refund to the state agency on whose behalf the payment was made, if authorized by paragraph (3) of this subsection.

(3) Paying refunds by check. A local campaign manager or a statewide federation or fund may issue a refund check only if the payee of the check first submits a written request for the refund to be made by check.

(4) Deadline for paying refunds by check. This paragraph applies only if a local campaign manager or a statewide federation or fund is authorized by paragraph (3) of this subsection to make a refund by check. The local campaign manager or the statewide federation or fund shall ensure that the refund check is received by the payee not later than the 30th day after the date on which the written request for the refund to be made by check is received.

(n) Responsibilities of the state policy committee.

(1) Statutory responsibilities. The state policy committee shall fulfill its statutory responsibilities as set forth in Government Code, Chapter 659, Subchapter I.

(2) Additional responsibilities. In addition to its statutory responsibilities, the state policy committee:

(A) shall establish an annual application, eligibility determination, and appeals period for statewide or local participation in the state employee charitable campaign;

(B) shall determine the eligibility of a federation or fund and its affiliated agencies for statewide participation in the state employee charitable campaign;

(C) shall review and resolve the appeals of entities not accepted for statewide or local participation in the state employee charitable campaign under procedures that comply with paragraph (3) of this subsection;

(D) shall disqualify a federation or fund from statewide participation in the state employee charitable campaign if the committee determines that the federation or fund intentionally filed an application that contains false or misleading information;

(E) shall establish penalties for non-compliance with this section by a statewide federation or fund, an eligible local charitable organization, the state campaign manager, or any local campaign managers appointed by the state policy committee;

(F) shall establish procedures for the selection and oversight of the state campaign manager and any local campaign managers appointed by the state policy committee;

(G) shall select to act as the state campaign manager:

(i) a federated community campaign organization in accordance with the criteria listed in paragraph (4) of this subsection, if any federated community campaign organization has applied to be the manager; or

(ii) a charitable organization in accordance with the criteria listed in paragraph (4) of this subsection, if no federated community campaign organization has applied to be the manager;

(H) may establish policies and procedures for the operation and administration of the state employee charitable campaign, including policies and procedures about the hearing of any grievance concerning the operation and administration of the campaign;

(I) shall consult with the state campaign manager and the state advisory committee before approving the campaign plan, budget, and materials;

(J) may not approve campaign materials if:

(i) they do not state that statewide federations or funds may or may not provide services in all local campaign areas;

(ii) they list a charitable organization as both a statewide federation or fund and an eligible local charitable organization;

(iii) they list a charitable organization as an affiliate of two or more statewide federations or funds unless the organization serves separate and distinct populations as part of each statewide federation or fund;

(iv) they list similarly named eligible local charitable organizations in the same local campaign area unless the applicable local employee committee, if one has been appointed by the state policy committee, has determined that each organization delivers services in different geographical areas within the local campaign area;

(v) they list a charitable organization as an affiliate of more than one federation or fund certified as an eligible local charitable organization unless the applicable local employee committee, if one has been appointed by the state policy committee, has determined that the charitable organization delivers services to separate and distinct populations in the local campaign area as part of its membership in the federations or funds;

(vi) they do not state that a local campaign manager or a statewide federation or fund may distribute quarterly a state employee's deductions;

(vii) they do not state that a local campaign manager or a statewide federation or fund is required to distribute a state employee's deductions based on the percentage method instead of matching deducted amounts received by the local campaign manager or statewide federation or fund to the employee's designations; or

(viii) they do not accurately describe the percentage method;

(K) shall review and approve or disapprove the generic campaign materials used by the state campaign manager and any local campaign managers appointed by the state policy committee;

(L) shall ensure that local campaign areas do not overlap;

(M) shall ensure that only one local campaign manager, if one has been appointed by the state policy committee, is responsible for solicitation of all state employees in the local campaign area for which the manager has responsibility;

(N) shall submit to the comptroller the name and boundaries of each local campaign area not later than the 30th day after the end of the annual application period;

(O) shall compile and submit to the comptroller not later than the 30th day after the end of the annual application period a list of any local campaign managers appointed by the state policy committee and the name, address, and telephone number of each manager's primary contact;

(P) shall notify the comptroller immediately after a change occurs to the name or mailing address of a statewide federation or fund or local campaign manager;

(Q) shall notify the comptroller immediately after a change occurs to the name, title, telephone number, or mailing address of the primary contact of a local campaign manager or a statewide federation or fund; and

(R) shall represent all statewide federations or funds and local campaign managers for the purposes of:

(i) communicating with the comptroller, including receiving and responding to correspondence from the comptroller; and

(ii) disseminating information, including information about the requirements of this section, to representatives of federations or funds, any local employee committees appointed by the state policy committee, and any local campaign managers appointed by the state policy committee.

(3) Appeals procedures. The procedures that the state policy committee adopts to review and resolve the appeal of an entity that was not accepted for statewide or local participation in the state employee charitable campaign must:

(A) prohibit the consideration of information that the committee has considered previously;

(B) provide sufficient time for a federation or fund to reapply for participation in that campaign; and

(C) permit a federation or fund that was not accepted for statewide participation to apply for participation in a local campaign area during the campaign.

(4) Criteria for selection of a state campaign manager. The state policy committee shall consider the following criteria when evaluating the application of a federated community campaign organization or a charitable organization to act as the state campaign manager:

(A) the number and diversity of voluntary health and human services agencies or affiliates that rely on the organization for financial support;

(B) the capability of the organization to conduct employee campaigns, as demonstrated by records of the amount of funds raised during the organization's last completed annual public solicitation of funds;

(C) the percent of solicited funds received by the organization during its last completed annual public solicitation of funds that were distributed to voluntary health and human services agencies;

(D) the geographic area serviced by the organization; and

(E) the organization's capability and expertise to provide effective campaign counsel and management as demonstrated by staff and equipment resources and examples of past campaign management.

(5) Comptroller's reliance on decisions made by the state policy committee. The comptroller is entitled to rely on the state policy committee's:

(A) determination about the eligibility of a federation or fund and its affiliated agencies for statewide participation in the state employee charitable campaign;

(B) disqualification of a federation or fund from statewide participation in the state employee charitable campaign; and

(C) other decision unless the committee has no legal authority over the subject covered by the decision.

(o) Responsibilities of the state advisory committee. The state advisory committee shall fulfill its statutory responsibilities as set forth in Government Code, Chapter 659, Subchapter I.

(p) Responsibilities of any local employee committees appointed by the state policy committee.

(1) Statutory responsibilities. A local employee committee shall fulfill its statutory responsibilities as set forth in Government Code, Chapter 659, Subchapter I, along with any duties prescribed by the state policy committee under Government Code, §659.140.

(2) Additional responsibilities. In addition to its statutory responsibilities and any duties prescribed by the state policy committee under Government Code, §659.140, any local employee committee appointed by the state policy committee:

(A) shall determine the eligibility of a local charitable organization for local participation in the state employee charitable campaign;

(B) may call upon and use outside expertise and resources available to the committee to assess the eligibility of a local charitable organization;

(C) shall disqualify a local charitable organization from local participation in the state employee charitable campaign if the committee determines that the organization intentionally filed an application that contains false or misleading information;

(D) shall, contingent upon the appointment of a local campaign manager by the state policy committee, select to act as the local campaign manager:

(i) a federated community campaign organization in accordance with the criteria listed in paragraph (3) of this subsection, if any federated community campaign organization has applied to be the manager; or

(ii) a charitable organization in accordance with the criteria listed in paragraph (3) of this subsection, if no federated community campaign organization has applied to be the manager;

(E) shall, contingent upon the appointment of a local campaign manager by the state policy committee, contract with the organization selected as the local campaign manager;

(F) shall, contingent upon the appointment of a local campaign manager by the state policy committee, consult with the local campaign manager before approving the local campaign plan, budget, and materials; and

(G) shall, contingent upon the appointment of a local campaign manager by the state policy committee, submit to the state policy committee upon contracting with the organization selected as the local campaign manager:

(i) the name of the local campaign area;

(ii) the name of the organization with which the local employee committee has contracted; and

(iii) the name, address, and telephone number of the primary contact of the local campaign manager.

(3) Criteria for selection of a local campaign manager. A local employee committee shall, contingent upon the appointment of a local campaign manager by the state policy committee, consider the following criteria when evaluating the application of a federated community campaign organization or a charitable organization to act as the local campaign manager:

(A) the number and diversity of voluntary health and human services agencies or affiliates that rely on the organization for financial support;

(B) the capability of the organization to conduct employee campaigns, as demonstrated by records of the amount of funds raised during the organization's last completed annual public solicitation of funds;

(C) the percent of solicited funds received by the organization during its last completed annual public solicitation of funds that were distributed to voluntary health and human services agencies;

(D) the geographic area serviced by the organization; and

(E) the organization's capability and expertise to provide effective campaign counsel and management as demonstrated by staff and equipment resources and examples of past campaign management.

(4) Comptroller's reliance on decisions made by a local employee committee. The comptroller is entitled to rely on a local employee committee's:

(A) determination about the eligibility of a local charitable organization for local participation in the state employee charitable campaign;

(B) disqualification of a local charitable organization from local participation in the state employee charitable campaign; and

(C) other decision unless the committee has no legal authority over the subject covered by the decision.

(q) Responsibilities of the state campaign manager.

(1) Statutory responsibilities. The state campaign manager shall fulfill the manager's statutory responsibilities as set forth in Government Code, Chapter 659, Subchapter I.

(2) Additional responsibilities. In addition to the state campaign manager's statutory responsibilities, the manager shall:

(A) develop the state employee charitable campaign plan in consultation with the state advisory committee;

(B) serve as liaison to the state policy committee, the state advisory committee, any local campaign managers appointed by the state policy committee, and any local employee committees appointed by the state policy committee on behalf of statewide federations or funds and eligible local charitable organizations;

(C) structure the state employee charitable campaign fairly and equitably according to the policies and procedures established by the state policy committee;

(D) provide for involvement of all statewide federations or funds, including the use of their resources, at all levels of the state employee charitable campaign;

(E) conduct the manager's responsibilities on behalf of the state employee participants in the state employee charitable campaign separately from the manager's internal operations;

(F) prepare and submit for review by the state advisory committee a single statewide campaign budget that has been prepared in cooperation with any local campaign managers appointed by the state policy committee and that includes campaign materials, staff time, and other expenses incurred for the state employee charitable campaign;

(G) establish, after consulting with the state advisory committee, the state policy committee, and any local campaign managers appointed by the state policy committee, a uniform campaign reporting form to allow reporting of designated deductions, undesignated deductions, campaign expenses, and other information deemed necessary by the state campaign manager; and

(H) submit a statewide campaign report that complies with paragraph (3) of this subsection.

(3) Statewide campaign reports. A statewide campaign report shall represent a compilation of the local campaign managers' campaign reports, if any local campaign managers have been appointed by the state policy committee. The state campaign manager shall ensure that the state policy committee, the state advisory committee, and the comptroller receive the statewide campaign report not later than February 5th of the calendar year following the calendar year in which the campaign covered by the report ended. If February 5th is not a workday, then the first workday after February 5th is the deadline.

(r) Responsibilities of any local campaign managers appointed by the state policy committee.

(1) Statutory responsibilities. A local campaign manager shall fulfill the manager's statutory responsibilities as set forth in Government Code, Chapter 659, Subchapter I, along with any duties prescribed by the state policy committee under Government Code, §659.140.

(2) Additional responsibilities. In addition to a local campaign manager's statutory responsibilities and any duties prescribed by the state policy committee under Government Code, §659.140, any appointed manager shall:

(A) recruit, train, and supervise state employee volunteers;

(B) involve participating eligible local charitable organizations and statewide federations or funds in the training of state employee volunteers;

(C) consult with eligible local charitable organizations and statewide federations or funds about the operation of the state employee charitable campaign and the preparation of local campaign materials;

(D) provide eligible local charitable organizations and statewide federations or funds with the opportunity to participate in local state employee charitable campaign events and access to all records for the local campaign area;

(E) maintain campaign records for the local campaign area, including total pledges, total pledges by eligible local charitable organization and statewide federation or fund, state agencies contacted, and other records deemed necessary by the state policy committee for organization, control, and progress reporting;

(F) submit to the state campaign manager a final campaign report of designated deductions, undesignated deductions, campaign expenses, and other information deemed necessary by the state campaign manager;

(G) ensure that the state campaign manager receives the local campaign manager's final campaign report not later than January 15th of the calendar year following the calendar year in which the campaign covered by the report ended or, if January 15th is not a workday, not later than the first workday after January 15th;

(H) establish an account at a financial institution for the purpose of receiving payments from the comptroller and institutions of higher education by electronic funds transfer, warrant, or check;

(I) distribute interest accrued during a campaign year as soon as possible after December 31st to each eligible local charitable organization and statewide federation or fund in the same manner that undesignated deductions are distributed, subject to the limitation in paragraph (3) of this subsection;

(J) submit a request to the comptroller to be paid by the comptroller through electronic funds transfers under rules adopted by the comptroller, but only to the extent those transfers are initiated by the comptroller on behalf of the comptroller or other state agencies;

(K) submit a request to an institution of higher education to be paid by the institution through electronic funds transfers under rules or procedures adopted by the institution, but only to the extent those transfers are not initiated by the comptroller on behalf of the institution;

(L) reconcile the payment report provided by the comptroller or an institution of higher education with the amount of deductions paid to the manager;

(M) report to the comptroller or an institution of higher education, as appropriate, each discrepancy between a payment report provided by the comptroller or an institution and the actual amount of deductions received not later than the 30th day after the day on which the comptroller or the institution mailed or delivered the report;

(N) report to each eligible local charitable organization and statewide federation or fund the amount of its undesignated and designated initial distribution amounts as determined under subsection (c)(1) of this section; and

(O) report to each eligible local charitable organization and statewide federation or fund its contribution percentage as determined under subsection (j)(2) of this section.

(3) Limitation on distributions of accrued interest. A local campaign manager may not distribute accrued interest to:

(A) an eligible local charitable organization that did not receive deducted amounts through the manager during the campaign year; or

(B) a statewide federation or fund that did not receive deducted amounts through the manager during the campaign year, unless the only reason for not receiving the deducted amounts through the manager is the direct payment requirement of the second sentence of subsection (i)(1)(B) of this section.

(4) Prohibition against solicitation. A local campaign manager may not solicit a deduction from a state employee at the employee's worksite unless the solicitation is pursuant to the state employee charitable campaign.

(s) Responsibilities of statewide federations or funds.

(1) Reconciliation of payment reports. A statewide federation or fund shall reconcile the payment report provided by the comptroller or an institution of higher education with the amount of deductions paid to the federation or fund.

(2) Reports of discrepancies.

(A) A statewide federation or fund shall report to the comptroller or an institution of higher education, as appropriate, each discrepancy between a payment report provided by the comptroller or an institution and the actual amount of deductions received.

(B) A report of discrepancies is due not later than the 30th day after the day on which the comptroller or the institution of higher education mailed or delivered the report.

(3) Prohibition against solicitation. A statewide federation or fund may not solicit a deduction from a state employee at the employee's worksite unless the solicitation is pursuant to the state employee charitable campaign.

(t) Prohibition against certain solicitation by eligible local charitable organizations. An eligible local charitable organization may not solicit a deduction from a state employee at the employee's worksite unless the solicitation is pursuant to the state employee charitable campaign.

(u) Acceptance of authorization forms and electronic deduction authorizations by state agencies.

(1) Prohibition against accepting certain authorization forms and electronic deduction authorizations. A state agency may accept an authorization form or electronic deduction authorization only if it complies with the comptroller's requirements.

(2) Reviewing authorization forms and electronic deduction authorizations. An authorization form or electronic deduction authorization submitted by a state employee to a state agency must be reviewed by the agency's campaign coordinator to ensure that the form or electronic deduction authorization has been completed properly.

(3) Acceptance of altered authorization forms and electronic deduction authorizations. A state agency is not required to accept an authorization form or electronic deduction authorization that contains an obvious alteration without the appropriate state employee's written consent to the alteration.

(4) Review of online giving tool website and application data by agency campaign coordinator. A state agency's campaign coordinator may view the data from the online giving tool website and application to ensure that the information has been completed properly and to validate the accuracy of the information.

(v) Payment reports.

(1) Monthly submission of payment reports.

(A) An institution of higher education shall submit a payment report each month to each local campaign manager or statewide federation or fund that has received during the month deducted amounts from the institution's state employees.

(B) The comptroller shall submit a payment report each month to each local campaign manager or statewide federation or fund that has received during the month deducted amounts through the comptroller's electronic funds transfer system.

(2) Information included in payment reports.

(A) An institution of higher education's payment report must include the amount and date of each check written to or electronic funds transfer made to a local campaign manager or a statewide federation or fund by the institution.

(B) The comptroller's payment report must include the amount and date of each electronic funds transfer made to a local campaign manager or statewide federation or fund by the comptroller.

(3) Format of payment reports. An institution of higher education's payment report must be in the format prescribed by the comptroller.

(4) Deadline for submission of payment reports.

(A) Except as otherwise provided in this subparagraph, an institution of higher education shall mail or deliver a payment report not later than the tenth workday of the month in which the institution paid the deducted amounts covered by the report. For deductions from salary or wages paid by an institution of higher education after the tenth workday of a month, the institution may include the deductions in the institution's payment report for the following month.

(B) Except as otherwise provided in this subparagraph, the comptroller shall mail or deliver a payment report not later than the fifth workday of the month in which the comptroller paid the deducted amounts covered by the report. For deductions from salary or wages paid by the comptroller after the first workday of a month, the comptroller may include the deductions in the comptroller's payment report for the following month.

(w) Complaints by state employees about coercive activity.

(1) Definition.

(A) In this section, "coercive activity" includes:

(i) a state agency or its representative pressuring a state employee to participate in a state employee charitable campaign;

(ii) a state agency or its representative inquiring about:

(I) whether a state employee has chosen to participate in a state employee charitable campaign; or

(II) the amount of a state employee's deduction except as necessary to administer the deduction;

(iii) a state agency or its representative establishing a goal for 100% of the agency's state employees to authorize a deduction;

(iv) a state agency or its representative establishing a dollar contribution goal or quota for a state employee;

(v) a state agency, a statewide federation or fund, a local campaign manager, or a representative of the preceding developing or using a list of state employees who did not complete an authorization form or electronic deduction authorization during a state employee charitable campaign;

(vi) a state agency, a statewide federation or fund, a local campaign manager, or a representative of the preceding using or providing to others a list of state employees who completed an authorization form or electronic deduction authorization during a state employee charitable campaign, unless the purpose of the list is to make a deduction or transmit deducted amounts to a local campaign manager or a statewide federation or fund; and

(vii) a state agency or its representative using as a factor in a performance appraisal the results of a state employee charitable campaign in a particular section, division, or other level of the agency.

(B) Notwithstanding subparagraph (A) of this paragraph, "coercive activity" does not include:

(i) the head of a state agency's participation in the customary activities associated with a state employee charitable campaign; or

(ii) the head of a state agency's demonstration of support for the campaign in newsletters or other routine communications with state employees.

(2) Submission of complaints to the comptroller. A state employee may submit a written complaint to the comptroller when the employee believes that coercive activity has occurred in a state employee charitable campaign.

(3) Investigation by the comptroller of complaints.

(A) The comptroller shall investigate a state employee's written complaint about coercive activity. The comptroller shall mail or deliver a description of the comptroller's findings about the complaint to the employee not later than the 30th day after the comptroller receives the complaint.

(B) If the comptroller finds that coercive activity has occurred, then the comptroller shall mail or deliver notice of the finding to the state policy committee not later than the 30th day after the comptroller makes the finding.

(4) Action by the state policy committee.

(A) If the state policy committee receives written notification that the comptroller has found that coercive activity has occurred, then the committee shall take appropriate action. Actions that the state policy committee may take include suspension of the person or entity that engaged in the coercive activity from participation in the state employee charitable campaign for one campaign year.

(B) A person or entity that has been suspended from the state employee charitable campaign for a campaign year may apply to the state policy committee for participation in the campaign for the next campaign year.

(x) Public junior colleges and their employees.

(1) Classification as institutions of higher education and state employees. For the purposes of this section, a public junior college is considered to be an institution of higher education and the college's employees are considered to be state employees unless the college's governing board affirmatively decides for the college not to participate in the state employee charitable contribution program.

(2) Decisions not to participate in the state employee charitable contribution program.

(A) The decision of a public junior college's governing board for the college not to participate in the state employee charitable contribution program is effective for only one fiscal year.

(B) To be valid, the decision of a public junior college's governing board for the college not to participate in the state employee charitable contribution program for a fiscal year must be made not earlier than September 1 and not later than April 1 of the preceding fiscal year.

(C) A public junior college's governing board shall ensure that the state campaign manager receives written notice of the board's decision for the college not to participate in the state employee charitable contribution program. The board's failure to comply with this requirement does not, however, invalidate that decision.

(3) Charitable deductions outside the state employee charitable contribution program.

(A) This paragraph applies to a public junior college only if the college's governing board has decided for the college not to participate in the state employee charitable contribution program.

(B) The governing board of a public junior college may allow the college's employees to authorize deductions from their salaries or wages for charitable contributions. The deductions must be voluntary.

(C) The deductions must be made in accordance with any policies adopted by the board. Except for this paragraph, this section does not apply to those deductions.

(y) Requirements for online giving tool website and application.

(1) An online giving tool website and/or application may be used by a state employee to submit an electronic deduction authorization only if both the comptroller and the state policy committee have approved the online giving tool website and/or application.

(2) Restrictions on approval of online giving tool website and/or application. Neither the comptroller nor the state policy committee may approve an online giving tool website and/or application unless the electronic deduction authorization produced through the electronic online giving tool:

(A) states that statewide federations or funds and local campaign managers are required to use the percentage method to distribute a state employee's deducted amounts to eligible charitable organizations designated by the employee instead of matching deducted amounts received to actual designations;

(B) accurately describes the percentage method; and

(C) complies with the comptroller's requirements for format and substance.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 15, 2025.

TRD-202502947

Victoria North

General Counsel for Fiscal and Agency Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: September 28, 2025

For further information, please call: (512) 475-2220

SUBCHAPTER F. CLAIMS PROCESSING--GENERAL REQUIREMENTS

The Comptroller of Public Accounts proposes amendments to §5.61, concerning approval and certification of certain payment, SPRS, and USPS documents.

No legislation was enacted within the last four years that provides the statutory authority for the amendments.

The amendments to §5.61 delete all references to "USPS" (Uniform Statewide Payroll/Personnel System) throughout this section because USPS is no longer used by the comptroller.

The amendments to subsection (a) alphabetize the definitions for ease of use; delete the definition of "appropriation year" in paragraph (1) because the term does not appear anywhere else in this section; change "comptroller of public accounts" to "Comptroller of Public Accounts" in paragraph (4) to format the term the same as it is formatted in other sections of Chapter 5; and delete the definitions of "USPS" and "USPS document" in paragraphs (18) and (19) respectively because USPS is no longer used by the comptroller.

The amendments to subsection (i) shorten from ten days to five days the deadline by which the comptroller must receive written notice of a revocation by a governing body of an authorization of a presiding officer or executive director to designate individuals to approve the agency's payment and SPRS documents in paragraph (1)(B), and the deadline by which the comptroller must receive written notice of a revocation by a head of agency of the authorization of a chief deputy to designate individuals to approve the agency's payment and SPRS documents in paragraph (2)(A) because modern communication methods, such as email, can be used to provide faster notice than was available when this section was written, preventing an individual from approving, or designating others from approving, the agency's payment and SPRS documents after the individual's authorization has been revoked.

The amendments to subsection (k) shorten from ten days to five days the deadline in paragraphs (1)(D) and (2)(C) by which the comptroller must receive written notice of a revocation of the designation of an individual to approve payment and SPRS document if the individual does not have a security profile or a user identification number in USAS or SPRS providing the individual with authority to approve payment; set forth a process in new paragraphs (1)(E) and (2)(D) for notifying the comptroller of the revocation of the designation of an individual to approve payment and SPRS documents if the individual has a security profile or a user identification number in USAS or SPRS providing the individual with authority to approve payment and SPRS documents, and describe the process, in paragraph (3)(B) and new paragraph (3)(C), for notifying the comptroller of the revocation of an individual's authority to approve payment and SPRS documents if the individual's employment has been terminated because modern communication methods, such as email, can be used to provide faster notice than was available when this section was written, preventing an individual from approving, or designating others to approve, the agency's payment and SPRS documents after the individual's authorization has been revoked.

The amendments to subsection (o) change the Penal Code reference in paragraph (5) from "§33.02(b)" to "§33.02" to correct the statutory reference.

Tetyana Melnyk, Director of Revenue Estimating Division, has determined that during the first five years that the proposed amended rule is in effect, the rule: will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to the agency; will not require an increase or decrease in fees paid to the agency; will not increase or decrease the number of individuals subject to the rule's applicability; and will not positively or adversely affect this state's economy.

Ms. Melnyk also has determined that the proposed amended rule would have no fiscal impact on the state government, units of local government, or individuals. The proposed amended rule would benefit the public by improving the clarity and implementation of the sections. There would be no anticipated economic cost to the public. The proposed amended rule would have no fiscal impact on small businesses or rural communities.

You may submit comments on the proposal to Clarisse Roquemore, Director, Fiscal Management Division, at clarisse.roquemore@cpa.texas.gov or at P.O. Box 13528 Austin, Texas 78711. The comptroller must receive your comments no later than 30 days from the date of publication of the proposal in the Texas Register.

The amendments are proposed under Government Code, §2101.035(a), which authorizes the comptroller to adopt procedures and rules for the effective operation of the uniform statewide accounting system. The amendments are also proposed under Government Code, §2103.032(a), which authorizes the comptroller by rule to establish a system for state agencies to submit and approve vouchers electronically if the comptroller determines that the system will facilitate the operation and administration of the uniform statewide accounting system.

The amendments implement Government Code, §2101.035 regarding administration of USAS and §2103.032 regarding approval and submission of vouchers.

§ 5.61. Approval and Certification of Certain Payment and[,] SPRS[, and USPS] Documents.

(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1) [(2)] Certification--A state agency's declaration to the comptroller that:

(A) the goods or services received by the agency comply with contract requirements; and

(B) the invoice received by the agency for the goods or services is correct.

(2) [(3)] Chief deputy--For a state agency that is administered by an elected or appointed state official, the individual authorized by law to administer the agency during the official's absence or inability to act.

(3) [(4)] Comptroller--The Comptroller of Public Accounts [comptroller of public accounts] for the State of Texas.

(4) [(5)] Executive director--The individual who is the chief administrative officer of a state agency that is headed by a governing body. The term excludes a member of that body.

(5) [(6)] Governing body--The board, commission, committee, council, or other group of individuals that is collectively authorized by law to administer a state agency.

(6) [(7)] Head of agency--The elected or appointed state official who is authorized by law to administer a state agency.

(7) [(8)] Include--A term of enlargement and not of limitation or exclusive enumeration. The use of the term does not create a presumption that components not expressed are excluded.

(8) [(9)] Institution of higher education--Has the meaning assigned by Education Code, §61.003.

(10) May not--A prohibition. The term does not mean "might not" or its equivalents.

(11) Non-payment document--The paper or electronic document that a state agency submits to the comptroller for the purpose of requesting the comptroller to post or correct certain accounting information in USAS. The term does not include a payment or [,] SPRS[, or USPS] document.

(12) [(14)] Payment document--The paper or electronic document that a state agency submits to the comptroller for the purpose of requesting the comptroller to make a payment on the agency's behalf. The term includes a document that uses the appropriated or other funds of a state agency to make a payment to another state agency. The term does not include a [USPS or] SPRS document or a non-payment document.

(13) [(15)] Payroll document--The type of payment document that the comptroller requires a state agency to submit when requesting payment of the compensation of state officers and employees or certain other types of payments. The term does not include a [USPS or] SPRS document.

(14) [(16)] State agency--A department, board, commission, committee, council, agency, office, or other entity in the executive, legislative, or judicial branch of Texas state government, the jurisdiction of which is not limited to a geographical portion of this state. The term includes an institution of higher education.

(16) [(17)] USAS--The uniform statewide accounting system.

(17) [(20)] SPRS--The standardized payroll/personnel reporting system.

(18) [(21)] SPRS document--The document that a state agency electronically submits to SPRS for the purpose of requesting the comptroller to pay the compensation of state officers and employees or to make certain other types of payments. The term does not include a payment[, USPS,] or non-payment document.

(b) Required approval and certification of payment and [USPS or] SPRS documents.

(1) General Requirements. The comptroller may not make a payment on behalf of a state agency unless:

(A) the agency properly submits a payment or [USPS or] SPRS document to the comptroller requesting the payment;

(B) the document has been approved according to this section; and

(C) the requirements, if applicable, of paragraph (2) of this subsection have been satisfied.

(2) Certification of payment and [USPS or] SPRS documents. To the extent a payment or [,] SPRS[, or USPS] document requests payment of anything other than the compensation of a state officer or employee, a certification concerning the document must be given to the comptroller according to this section.

(3) Multiple approvals of payment and [USPS or] SPRS documents.

(A) If a payment document is approved more than once, the individual who provides the last approval is responsible for the truth and accuracy of the statement in subsection (o)(2)(B) of this section.

(B) If a [USPS or] SPRS document is approved more than once, the individual who provides the last approval is responsible for the truth and accuracy of the statement in subsection (o)(4)(B) of this section.

(c) Combined approval and certification of payment and [USPS or] SPRS documents.

(1) Automatic certification. When an individual approves a payment or [USPS or] SPRS document, the individual automatically provides its certification if the certification is required by subsection (b)(2) of this section. An individual may not approve a payment or [USPS or] SPRS document without also providing its required certification.

(2) Automatic approval. When an individual provides the required certification for a payment or [,] SPRS[, or USPS] document, the individual automatically approves it. An individual may not provide the required certification for a payment or [,] SPRS[, or USPS] document without also approving it.

(3) References. A specific reference in subsections (e) - (q) of this section to the approval of a payment or [,] SPRS[, or USPS] document is also a reference to any required certification provided for that document.

(d) Fact findings concerning the electronic approval of payment and [USPS or] SPRS documents.

(1) Security. The comptroller has determined that the degree of security provided by the electronic approval of payment and [USPS or] SPRS documents under this section is at least equal to the degree of security that would be provided by the non-electronic approval of those documents.

(2) Operation and maintenance of USAS. The comptroller has determined that the electronic approval of payment and [USPS or] SPRS documents under this section would facilitate the operation and administration of USAS.

(e) Who may not approve payment and [USPS or] SPRS documents.

(1) State officers and employees.

(A) An officer or employee of a state agency may not approve and may not be designated to approve another agency's payment and [USPS or] SPRS documents.

(B) This subparagraph applies when a state agency submits a payment or [,] SPRS[, or USPS] document that requests payment out of the funds of a second state agency. No officer or employee of the agency that submits the document may approve it.

(2) Individuals not employed by a state agency. An individual who is not employed by a state agency may not approve and may not be designated to approve a state agency's payment or [,] SPRS[, or USPS] documents.

(f) Who may approve payment and [USPS or] SPRS documents.

(1) Generally. Only an individual who is described in paragraph (2) or (4) of this subsection may approve a payment or [,] SPRS[, or USPS] document. When this section refers to an individual approving a payment or [,] SPRS[, or USPS] document without further qualification or description, the reference is only to an individual who may approve a payment or [,] SPRS, or USPS document under this paragraph.

(2) Individuals with inherent authority to approve payment and [USPS or] SPRS documents.

(A) The presiding officer of the governing body of a state agency may approve a payment or [,] SPRS[, or USPS] document of the agency after:

(i) the comptroller has received a signature card that complies with subsection (l) of this section; and

(ii) the officer's security profile has been established according to:

(I) USAS security's procedures and requirements if the approval is of a payment document; or

(II) [USPS or] SPRS security's procedures and requirements if the approval is of a SPRS [USPS] document.

(B) This subparagraph applies only to a state agency that is headed by an elected or appointed state official. The agency's head of agency may approve a payment or [,] SPRS[, or USPS] document of the agency after:

(i) the comptroller has received a signature card that complies with subsection (l) of this section; and

(ii) the head of agency's security profile has been established according to:

(I) USAS security's procedures and requirements if the approval is of a payment document; or

(II) [USPS or] SPRS security's procedures and requirements if the approval is of a [USPS or] SPRS document.

(C) Notwithstanding subparagraphs (A)(ii) and (B)(ii) of this paragraph, a presiding officer or a head of agency may provide non-electronic approval of a payment or [,] SPRS[, or USPS] document without establishing a security profile. This subparagraph applies only if the comptroller does not require the approval to be provided electronically.

(3) USAS and [USPS or] SPRS security profile changes.

(A) This paragraph applies only when an individual ceases being either the presiding officer of a governing body or a head of agency.

(B) The individual's security profile in USAS, if any, must be changed so that USAS no longer recognizes the individual's user identification number as belonging to an individual who has authority to approve payment documents. The individual's security profile in [USPS or] SPRS, if any, must be changed so that [USPS or] SPRS no longer recognizes the individual's user identification number as belonging to an individual who has authority to approve [USPS or] SPRS documents. The changes must take effect not later than the date the individual ceases being the presiding officer or head of agency.

(C) The security coordinator of the state agency with which the individual serves as presiding officer or head of agency is responsible for requesting the comptroller to change the individual's security profiles.

(D) If the comptroller determines that a security coordinator has not complied with subparagraph (C) of this paragraph, then the comptroller may unilaterally change the security profiles.

(E) This subparagraph applies to a payment or [,] SPRS[, or USPS] document only if the comptroller determines that an individual approved the document after the individual ceased being a presiding officer or a head of agency. The comptroller may take any necessary steps to prevent a warrant from being issued or an electronic funds transfer from being initiated until the document is properly approved. If the comptroller is unable to prevent a warrant from being issued or an electronic funds transfer from being initiated, then the comptroller may take any necessary steps to prevent the warrant from being honored or to reverse the electronic funds transfer. The state agency whose payment or [,] SPRS[, or USPS] document results in the warrant or electronic funds transfer shall cooperate fully with the comptroller.

(4) Individuals without inherent authority but who may be designated to approve payment documents. An officer or employee of a state agency who does not have inherent authority to approve the agency's payment and [USPS or] SPRS documents may be designated to approve those documents. A designation is valid only if it is made:

(A) by someone with the authority to make designations; and

(B) according to the procedures required by this section.

(g) Who may designate individuals to approve payment and [USPS or] SPRS documents.

(1) State agencies headed by a governing body.

(A) The governing body of a state agency may designate one or more individuals to approve its payment and [USPS or] SPRS documents.

(B) The governing body of a state agency may authorize the governing body's presiding officer or the agency's executive director, or both, to designate one or more individuals to approve the agency's payment and [USPS or] SPRS documents. The presiding officer or executive director may make a designation only if the authorization is effective according to subsection (h)(1) of this section.

(2) State agencies headed by an elected or appointed state official.

(A) The head of agency of a state agency may designate one or more individuals to approve the agency's payment and [USPS or] SPRS documents.

(B) The head of agency of a state agency may authorize the agency's chief deputy to designate one or more individuals to approve the agency's payment and [USPS or] SPRS documents. The chief deputy may make a designation only if the authorization is effective according to subsection (h)(2) of this section.

(h) How to authorize individuals to designate other individuals to approve payment and [USPS or] SPRS documents.

(1) State agencies headed by a governing body.

(A) The authorization of a presiding officer or executive director to designate individuals to approve payment and [USPS or] SPRS documents is effective only after the comptroller has received proper written notice of the authorization.

(B) Written notice to the comptroller is proper only if the notice satisfies the requirements of this subparagraph.

(i) The notice must be:

(I) a certified copy of the minutes of the meeting of the governing body during which it made the authorization; or

(II) a letter, memorandum, or other writing.

(ii) If the notice consists of a copy of the minutes, then the copy must be certified and signed by:

(I) the presiding officer of the governing body; or

(II) the member of the governing body who is responsible for keeping those minutes.

(iii) If the notice is in the form of a letter, memorandum, or other writing, then it must be signed by the presiding officer of the governing body.

(iv) The notice must state in substance that the governing body has authorized the presiding officer or executive director, as applicable, to designate individuals to approve the agency's payment and [USPS or] SPRS documents.

(v) The notice must state an effective date for the authorization.

(C) The authorization of a presiding officer or executive director to designate individuals to approve payment and [ USPS or ] SPRS documents may be of a named individual or, alternatively, anyone who holds the position of presiding officer or executive director.

(i) If the comptroller receives notification that a governing body has authorized the "presiding officer" or the "executive director," then the body is deemed to have authorized whoever holds the position of presiding officer or executive director.

(ii) If the comptroller receives notification that a governing body has authorized a named individual, then the body is deemed to have decided that its authorization terminates automatically upon the individual's leaving the position of presiding officer or executive director.

(D) The authorization of a presiding officer or executive director may not be limited to designating individuals to approve only payment documents or only [USPS and] SPRS documents. If the comptroller receives notification that a governing body has authorized the presiding officer or executive director to designate individuals to approve only one type of document, then the body is deemed to have authorized the designation of individuals to approve both types of documents.

(2) State agencies headed by an elected or appointed state official.

(A) The authorization of a chief deputy to designate individuals to approve payment and [ USPS or ] SPRS documents is effective only after the comptroller has received proper written notice of the authorization.

(B) Written notice to the comptroller is proper only if the notice:

(i) contains the head of agency's original signature;

(ii) states in substance that the head of agency has authorized the chief deputy to designate individuals to approve the agency's payment and [USPS or] SPRS documents; and

(iii) states an effective date for the authorization.

(C) The authorization of a chief deputy to designate individuals to approve payment and [USPS or] SPRS documents may be of a named individual or, alternatively, anyone who holds the position of chief deputy.

(i) If the comptroller receives notification that a head of agency has authorized the "chief deputy," then the head of agency is deemed to have authorized whoever holds the position of chief deputy.

(ii) If the comptroller receives notification that a head of agency has authorized a named individual, then the head of agency is deemed to have decided that the authorization terminates automatically upon the individual's leaving the position of chief deputy.

(D) The authorization of a chief deputy may not be limited to designating individuals to approve only payment documents or only [USPS and] SPRS documents. If the comptroller receives notification that a head of agency has authorized the chief deputy to designate individuals to approve only one type of document, then the head of agency is deemed to have authorized the designation of individuals to approve both types of documents.

(i) How to revoke authorizations of individuals to designate other individuals to approve payment and [USPS or] SPRS documents.

(1) State agencies headed by a governing body.

(A) The governing body of a state agency may revoke its authorization of a presiding officer or executive director to designate individuals to approve the agency's payment and [USPS or] SPRS documents.

(B) If a governing body revokes an authorization, then the body's presiding officer shall ensure that the comptroller receives written notice of the revocation not later than the fifth [tenth] day after its effective date.

(C) If the comptroller determines that an individual made a designation after the effective date of the revocation of the individual's authority to make designations, then the comptroller may not recognize the designation.

(D) This subparagraph applies only if the governing body of a state agency has authorized a named individual to designate individuals to approve the agency's payment and [USPS or] SPRS documents.

(i) The comptroller shall stop recognizing the authorization of an individual who, at the time of the authorization, was the body's presiding officer if the comptroller determines that the individual no longer holds that position.

(ii) The comptroller shall stop recognizing the authorization of an individual who, at the time of the authorization, was the agency's executive director if the comptroller determines that the individual no longer holds that position.

(iii) A determination under clause (i) or (ii) of this subparagraph may be based on any information the comptroller deems credible.

(E) A change in the membership of a governing body does not automatically revoke an authorization made by that body. Whether an authorization would be revoked automatically by the abolishment of a governing body, the wholesale substitution of one governing body for another, or the transfer of a state agency from the jurisdiction of one governing body to another would depend on the legislation enacting the abolishment, substitution, or transfer.

(2) State agencies headed by an elected or appointed state official.

(A) The head of agency of a state agency may revoke the authorization of a chief deputy to designate individuals to approve the agency's payment and [USPS or] SPRS documents. The head of agency shall ensure that the comptroller receives written notice of the revocation not later than the fifth [tenth] day after its effective date. If the comptroller determines that an individual made a designation after the effective date of the revocation of the individual's authority to make designations, then the comptroller may not recognize the designation.

(B) This subparagraph applies only if the head of agency of a state agency has authorized a named individual to designate individuals to approve the agency's payment and [USPS or] SPRS documents. The comptroller shall stop recognizing the authorization of an individual who, at the time of the authorization, was the chief deputy if the comptroller determines that the individual no longer holds that position. This determination may be based on any information the comptroller deems credible.

(C) When an individual stops being the head of agency of a state agency, all authorizations made by that individual are revoked automatically. Whether an authorization would be revoked automatically by the transfer of a state agency from the jurisdiction of one head of agency to another would depend on the legislation enacting the abolishment, substitution, or transfer.

(j) How to designate individuals to approve payment and [USPS or] SPRS documents.

(1) State agencies headed by a governing body.

(A) An individual who has been designated to approve a state agency's payment and [USPS or] SPRS documents may approve one of those documents if:

(i) the comptroller has received proper written notice of the designation;

(ii) the comptroller has received a signature card that complies with subsection (l) of this section; and

(iii) the individual's security profile has been established according to:

(I) USAS security's procedures and requirements if the approval is of a payment document; or

(II) [USPS or] SPRS security's procedures and requirements if the approval is of a [USPS or] SPRS document.

(B) Written notice to the comptroller is proper only if the notice satisfies the requirements of this subparagraph.

(i) The notice must be:

(I) a certified copy of the minutes of the meeting of the governing body during which it made the designation; or

(II) a letter, memorandum, or other writing.

(ii) If the notice consists of a copy of the minutes, then the copy must be certified and signed by:

(I) the presiding officer of the governing body; or

(II) the member of the governing body who is responsible for keeping those minutes.

(iii) If the notice is in the form of a letter, memorandum, or other writing, then it must be signed by:

(I) the presiding officer of the governing body if it made the designation; or

(II) the individual who made the designation if the governing body did not.

(iv) The notice must:

(I) identify the governing body or individual who made the designation;

(II) list the legal name of the designated individual;

(III) state an effective date for the designation; and

(IV) say in substance that the individual has been designated to approve payment and [USPS or] SPRS documents.

(C) Notwithstanding subparagraph (A)(iii) of this paragraph, an individual may provide non-electronic approval of a payment or [,] SPRS[, or USPS] document without establishing a security profile. This subparagraph applies only if the comptroller does not require the approval to be provided electronically.

(D) The designation of an individual to approve payment or [,] SPRS[, or USPS] documents must be of a named individual. The designation may not be of just anyone who holds a particular office or position. If the comptroller receives notification that a particular office or position has been designated, then the designation will be deemed to have been of the individual who holds the office or position as of the date the designation is made. The comptroller's failure to specifically refuse to recognize the designation of an office or position does not constitute the comptroller's acceptance of the designation of the office or position.

(E) The designation of an individual may not be limited to approving only payment documents or only [USPS and] SPRS documents. If the comptroller receives notification that an individual has been designated to approve only one type of document, then the designation will be deemed to include approval of both types of documents.

(2) State agencies headed by an elected or appointed state official.

(A) An individual who has been designated to approve a state agency's payment and [USPS or] SPRS documents may approve one of those documents if:

(i) the comptroller has received proper written notice of the designation;

(ii) the comptroller has received a signature card that complies with subsection (l) of this section; and

(iii) the individual's security profile has been established according to:

(I) USAS security's procedures and requirements if the approval is of a payment document; or

(II) [USPS or] SPRS security's procedures and requirements if the approval is of a [USPS or] SPRS document.

(B) Written notice to the comptroller is proper only if the notice:

(i) is signed by the individual who made the designation;

(ii) lists the legal name of the designated individual;

(iii) says who made the designation;

(iv) states an effective date for the designation; and

(v) says in substance that the individual has been designated to approve payment and [USPS or] SPRS documents.

(C) Notwithstanding subparagraph (A)(iii) of this paragraph, an individual may provide non-electronic approval of a payment or [,] SPRS[, or USPS] document without establishing a security profile. This subparagraph applies only if the comptroller does not require the approval to be provided electronically.

(D) The designation of an individual to approve payment and [ USPS or ] SPRS documents must be of a named individual. The designation may not be of just anyone who holds a particular office or position. If the comptroller receives notification that a particular office or position has been designated, then the designation will be deemed to have been of the individual who holds the office or position as of the date the designation is made. The comptroller's failure to specifically refuse to recognize the designation of an office or position does not constitute the comptroller's acceptance of the designation of the office or position.

(E) The designation of an individual may not be limited to approving only payment documents or only [USPS and] SPRS documents. If the comptroller receives notification that an individual has been designated to approve only one type of document, then the designation will be deemed to include approval of both types of documents.

(k) How to revoke designations of individuals to approve payment and [USPS or] SPRS documents.

(1) State agencies headed by a governing body.

(A) The governing body of a state agency may, at anytime, revoke the designation of an individual to approve the agency's payment and [USPS or] SPRS documents, regardless of who made the designation.

(B) This subparagraph applies only if a state agency's presiding officer is authorized to designate individuals to approve the agency's payment and [USPS or] SPRS documents. The presiding officer may revoke the designation of an individual only if:

(i) the presiding officer made the designation;

(ii) an individual who previously held the position of presiding officer made the designation while holding that position;

(iii) the agency's executive director made the designation; or

(iv) an individual who previously held the position of executive director made the designation while holding that position.

(C) This subparagraph applies only if a state agency's executive director is authorized to designate individuals to approve the agency's payment and [ USPS or ] SPRS documents. The executive director may revoke the designation of an individual only if:

(i) the executive director made the designation; or

(ii) an individual who previously held the position of executive director made the designation while holding that position.

(D) If the designation of an individual to approve payment and [USPS or] SPRS documents is revoked and the individual does not have a security profile or a user identification number in USAS or SPRS providing the individual with authority to approve payment, then the comptroller must receive written notification of the revocation not later than the fifth [tenth] day after the revocation decision is made. [The ten day period starts running when the revocation decision is made, not when the revocation takes effect.] The notification must be provided by the presiding officer of a governing body if that body revoked the designation. Otherwise, the notification must be provided by the individual who revoked the designation.

(F) [(E)] A change in the membership of a state agency's governing body does not automatically revoke the body's designation of any individual to approve payment and [USPS or] SPRS documents. Whether designations would be revoked automatically by the abolishment or creation of a governing body, the substitution of one governing body for another, or the transfer of a state agency from the jurisdiction of one governing body to another would depend on the legislation that enacts the change.

(G) [(F)] A notification to the comptroller under subparagraph (D) of this paragraph must satisfy the requirements of this subparagraph.

(i) The notification must be:

(I) a certified copy of the minutes of the meeting of the governing body during which it revoked the designation; or

(II) a letter, memorandum, or other writing.

(ii) If the notification consists of a copy of the minutes, then the copy must be certified and signed by:

(I) the presiding officer of the governing body; or

(II) the member of the governing body who is responsible for keeping those minutes.

(iii) If the notification is in the form of a letter, memorandum, or other writing, then it must be signed by:

(I) the presiding officer of the governing body if it revoked the designation; or

(II) the individual who revoked the designation if the governing body did not.

(iv) The notification must:

(I) identify the governing body or individual who revoked the designation;

(II) list the legal name of the individual whose designation is revoked;

(III) state an effective date for the revocation; and

(IV) say in substance that the individual's designation to approve payment and [USPS or] SPRS documents is revoked.

(2) State agencies headed by an elected or appointed state official.

(A) The head of agency of a state agency may, at anytime, revoke the designation of an individual to approve the agency's payment and [USPS or] SPRS documents, regardless of who made the designation.

(B) This subparagraph applies only if a state agency's chief deputy is authorized to designate individuals to approve the agency's payment and [USPS or] SPRS documents. The chief deputy may revoke the designation of an individual only if:

(i) the chief deputy made the designation; or

(ii) an individual who previously held the position of chief deputy made the designation while holding that position.

(C) If the designation of an individual to approve payment and [USPS or] SPRS documents is revoked and the individual does not have a security profile or a user identification number in USAS or SPRS providing the individual with authority to approve payment, then the comptroller must receive written notification of the revocation not later than the fifth [tenth] day after the revocation is made. [The ten day period starts running when the revocation decision is made, not when the revocation takes effect.] The notification must be provided by the individual who revoked the designation.

(E) [(D)] A change in a state agency's head of agency does not automatically revoke the head of agency's designation of any individual to approve payment and [USPS or] SPRS documents. Whether designations would be revoked automatically by the transfer of a state agency from the jurisdiction of one head of agency to another would depend on the legislation that enacts the change.

(F) [(E)] A notification to the comptroller under subparagraph (C) of this paragraph must:

(i) be signed by the individual who revoked the designation;

(ii) identify the individual who revoked the designation;

(iii) list the legal name of the individual whose designation is revoked;

(iv) state an effective date for the revocation; and

(v) say in substance that the individual's designation to approve payment and [USPS or] SPRS documents is revoked.

(3) Mandatory revocations because of termination of employment.

(A) This paragraph applies to all state agencies.

(B) When an individual terminates employment with a state agency and does not have a security profile or a user identification number in USAS or SPRS providing the individual with authority to approve payment, the individual's designation to approve the agency's payment and [USPS or] SPRS documents ends on the effective date of the termination. The comptroller must receive notification of the revocation [Any officer or employee of the agency may notify the comptroller about the termination. Regardless of who provides the notification, the agency must ensure that the comptroller receives it] not later than [the fifth day after] the effective date of the termination. The notification may be provided by any officer or employee of the agency.

(D) [(C)] The comptroller shall stop recognizing the designation of an individual to approve a state agency's payment and [USPS or] SPRS documents if the comptroller determines that the individual has terminated employment with the agency. This determination may be based on any information the comptroller deems credible.

(4) Revocations by the comptroller.

(A) This paragraph applies to all state agencies.

(B) The comptroller may unilaterally revoke the designation of any individual to approve payment and [USPS or] SPRS documents for any reason the comptroller deems appropriate.

(5) USAS security profile changes.

(A) If the designation of an individual to approve payment and [USPS or] SPRS documents is revoked, then the individual's security profiles in USAS and [USPS or] SPRS, if any, must be changed so that:

(i) USAS no longer recognizes the individual's user identification number as belonging to an individual who has authority to approve payment documents; and

(ii) [USPS or] SPRS no longer recognizes the individual's user identification number as belonging to an individual who has authority to approve [USPS or] SPRS documents.

(B) A security profile change required by subparagraph (A) of this paragraph must take effect not later than the date the revocation takes effect.

(C) The comptroller is responsible for changing the security profiles if the comptroller revoked the designation. Otherwise, the security coordinator of the state agency that revoked the designation is responsible.

(D) If the comptroller determines that a security coordinator has not complied with subparagraph (C) of this paragraph, then the comptroller may unilaterally change the security profiles of the individual whose designation has been revoked.

(6) Unauthorized approvals of payment and [USPS or] SPRS documents.

(A) This paragraph applies to a payment or [USPS or] SPRS document only if the comptroller determines that an individual approved the document after the taking effect of the revocation of the individual's designation to approve payment and [USPS or] SPRS documents.

(B) The comptroller may take any necessary steps to prevent a warrant from being issued or an electronic funds transfer from being initiated until a payment or[,] SPRS[, or USPS] document subject to this paragraph is properly approved.

(C) If the comptroller is unable to prevent a warrant from being issued or an electronic funds transfer from being initiated, then the comptroller may take any necessary steps to prevent the warrant from being honored or to reverse the electronic funds transfer. The state agency whose payment or[,] SPRS[, or USPS] document resulted in the warrant or electronic funds transfer shall cooperate fully with the comptroller in this regard.

(l) Signature card requirements.

(1) Presiding officers and heads of agency. A signature card submitted by a state agency concerning the approval of payment and [USPS or] SPRS documents by the presiding officer of a governing body or by a head of agency is valid only if the card:

(A) specifies the legal name, Texas identification number, mail code, and position of the presiding officer or head of agency;

(B) provides the presiding officer's or head of agency's user identification number, if the officer or head of agency has one;

(C) contains the presiding officer's or head of agency's original signature;

(D) specifies the agency's name and identification number;

(E) provides a contact phone number for the agency; and

(F) lists an effective date.

(2) Designated individuals. A signature card submitted by a state agency concerning the designation of an individual to approve payment and [USPS or] SPRS documents is valid only if the card:

(A) specifies the designated individual's legal name, Texas identification number, mail code, and position;

(B) provides the designated individual's user identification number, if the individual has one;

(C) contains the designated individual's original signature;

(D) specifies the agency's name and identification number;

(E) provides a contact phone number for the agency; and

(F) lists an effective date that is the same as the date listed in the accompanying written notification.

(m) Limitations adopted by state agencies concerning approval and designation authority.

(1) Limitations on approval authority. The comptroller may not enforce a state agency's decision to limit an individual's approval authority to particular types of payment or[,] SPRS[, or USPS] documents if the limit is stricter than required by state law and this section. Enforcement of that decision is solely the agency's responsibility.

(2) Limitations on designation authority. The comptroller may not enforce a state agency's decision to limit a presiding officer's, executive director's, or chief deputy's authority to designate individuals to approve payment or [,] SPRS[, or USPS] documents if the limit is stricter than required by state law and this section. Enforcement of that decision is solely the agency's responsibility.

(n) Signature card and notification forms adopted by the comptroller.

(1) Adoption of forms. The comptroller may adopt one or more forms to facilitate compliance with the signature card and written notice and notification requirements of this section.

(2) Use of forms. If the comptroller adopts a form under paragraph (1) of this subsection, then a state agency must use the form to comply with the requirements of this section to the extent the comptroller intends the form to be used for that purpose.

(o) How electronic approvals of payment and [USPS or] SPRS documents are provided.

(1) Release of payment documents into USAS for processing.

(A) A state agency may request USAS to process a batch of the agency's payment documents only by releasing the batch on-line according to this section and the procedures adopted by the comptroller.

(B) A batch that a state agency has released must be released again by the agency if:

(i) a transaction within the batch is altered after its original release; or

(ii) a transaction is added to the batch after its original release.

(C) An individual may approve a payment document only if:

(i) the individual begins an on-line session in USAS by entering the individual's user identification number and password; and

(ii) USAS determines that the user identification number and password belong to an individual who USAS recognizes as authorized to approve the agency's payment documents.

(D) USAS recognizes an individual as authorized to release a state agency's payment documents only if the comptroller has given the individual the necessary security to release those documents.

(E) A state agency that wants an individual to have release capabilities for the agency's payment documents must properly request necessary security for the individual from the comptroller. The comptroller will grant the request only if the comptroller determines that the individual:

(i) has inherent authority to approve payment documents and the requirements of subsection (f)(2) of this section have been satisfied; or

(ii) the individual has been designated to approve the agency's payment documents, the requirements of subsection (j) of this section have been satisfied, and the individual's designation has not been revoked according to subsection (k) of this section.

(2) Legal significance of releasing batches of payment documents into USAS for processing.

(A) The on-line release of a batch of payment documents into USAS for processing constitutes the electronic approval of all those documents.

(B) An individual who releases a batch of payment documents into USAS for processing is responsible for the truth and accuracy of the following statement with respect to each payment document and transaction in the batch: "I approve each purchase, travel, and payroll document in this batch. Employees at my state agency have determined that each document complies with applicable law, including the General Appropriations Act (GAA) and the rules of the comptroller of public accounts. For each purchase or travel document, employees at my state agency have determined that: the goods and services covered by the document comply with the requirements of the contracts under which they were purchased; and that the invoices for the goods and services are correct. For each transaction included in a travel document, employees at my state agency have determined that the information included in the transaction has been approved by the claimant. For each payroll document, employees at my state agency have determined that: the payroll is correct and unpaid; and that any salary supplementation report required by the GAA to be filed with the comptroller of public accounts and the secretary of state has been filed. My state agency has authorized me to make this statement for the agency, and I accept responsibility for it." An individual who does not want to be responsible for this statement about a batch may not release the batch. An individual may not both release a batch and avoid responsibility for the statement.

(C) The chief fiscal officer of a state agency shall ensure that each individual who is authorized or designated to approve the agency's payment documents understands this paragraph. The agency's executive director or head of agency, as applicable, shall ensure that the chief fiscal officer satisfies this requirement. However, the failure of the chief fiscal officer, the executive director, or the head of agency to comply with a requirement of this subparagraph does not relieve any individual from responsibility for the truth and accuracy of the statement in subparagraph (B) of this paragraph.

(D) A state agency may not adopt a policy, procedure, or rule that conflicts with this paragraph.

(3) Release of [USPS or] SPRS documents into [USPS or] SPRS for processing.

(A) A state agency may request [USPS or] SPRS to process a batch of the agency's [USPS or] SPRS documents only by releasing the batch on-line according to this section and the procedures adopted by the comptroller.

(B) A batch that a state agency has released must be released again by the agency if:

(i) a transaction within the batch is altered after its original release; or

(ii) a transaction is added to the batch after its original release.

(C) An individual may approve a [USPS or] SPRS document only if:

(i) the individual begins an on-line session in [USPS or] SPRS by entering the individual's user identification number and password; and

(ii) [USPS or] SPRS determines that the user identification number and password belong to an individual who [USPS or] SPRS recognizes as authorized to approve the agency's [USPS or] SPRS documents.

(D) [USPS or] SPRS recognizes an individual as authorized to release a state agency's [USPS or] SPRS documents only if the comptroller has given the individual the necessary security to release those documents.

(E) A state agency that wants an individual to have release capabilities for the agency's [USPS or] SPRS documents must properly request necessary security for the individual from the comptroller. The comptroller will grant the request only if the comptroller determines that the individual:

(i) has inherent authority to approve [USPS or] SPRS documents and the requirements of subsection (f)(2) of this section have been satisfied; or

(ii) the individual has been designated to approve the agency's [USPS or] SPRS documents, the requirements of subsection (j) of this section have been satisfied, and the individual's designation has not been revoked according to subsection (k) of this section.

(4) Legal significance of releasing batches of [USPS or] SPRS documents into [USPS or] SPRS for processing.

(A) The on-line release of a batch of USPS or SPRS documents into USPS or SPRS for processing constitutes the electronic approval of all those documents.

(B) An individual who releases a batch of [USPS or] SPRS documents into [USPS or] SPRS for processing is responsible for the truth and accuracy of the following statement with respect to each document and transaction in the batch: "I approve each document in this batch. Employees at my state agency have determined that each document complies with applicable law, including the General Appropriations Act (GAA) and the rules of the comptroller of public accounts. For each document that involves the payment of compensation to a state officer or employee, employees at my state agency have determined that: the payroll is correct and unpaid; and that any salary supplementation report required by the GAA to be filed with the comptroller of public accounts and the secretary of state has been filed. For each document that does not involve the payment of compensation to a state officer or employee, employees at my state agency have determined that: the goods and services covered by the document comply with the requirements under which they were purchased; and that the invoices for the goods or services are correct. For each transaction that involves the reimbursement of a meal expense incurred during non-overnight travel, employees at my state agency have determined that the information included in the transaction has been approved by the claimant. My state agency has authorized me to make this statement for the agency, and I accept responsibility for it." An individual who does not want to be responsible for this statement about a batch may not release the batch. An individual may not both release a batch and avoid responsibility for the statement.

(C) The chief fiscal officer of a state agency shall ensure that each individual who is authorized or designated to approve the agency's [USPS or] SPRS documents understands this paragraph. The agency's executive director or head of agency, as applicable, shall ensure that the chief fiscal officer satisfies this requirement. However, the failure of the chief fiscal officer, the executive director, or the head of agency to comply with a requirement of this subparagraph does not relieve any individual from responsibility for the truth and accuracy of the statement in subparagraph (B) of this paragraph.

(D) A state agency may not adopt a policy, procedure, or rule that conflicts with this paragraph.

(5) Disclosure of user identification numbers and passwords. An individual may not disclose the individual's user identification number or password, or both, to any individual or entity. Therefore, an individual may not authorize another individual to release a batch of payment or[,] SPRS[, or USPS] documents by using the first individual's user identification number and password. Penal Code, §33.02 [§33.02(b)] criminalizes the intentional or knowing disclosure of a password or personal identification number to an individual or entity without the effective consent of the computer owner.

(p) Non-electronic approvals of paper payment documents.

(1) Special definition. In this subsection, "payment document" means only a paper payment document.

(2) General requirements. A state agency may provide non-electronic approval of a payment document only if the comptroller consents to that approval method.

(3) Requirements of other subsections. In addition to this subsection, subsections (a) - (o) of this section govern all aspects of non-electronic approvals of payment documents, with the exceptions specified in those subsections.

(4) Method for providing approvals.

(A) The non-electronic approval of a payment document must be provided through the original signature of an individual who is authorized or designated to approve the document.

(B) An individual's original signature on a payment document is a valid approval of that document only if the signature matches the individual's signature on the appropriate signature card or, if adopted by the comptroller, on the form used in lieu of signature cards.

(5) Reapprovals. If a payment document is altered in any manner after an individual has properly approved the document, then the document must be properly approved again.

(q) Non-electronic approvals of payment documents submitted to USAS electronically and of [USPS or] SPRS documents.

(1) Special definition. In this subsection, "payment document" means only a payment document that is submitted to USAS electronically.

(2) General requirements. A state agency may provide non-electronic approval of a payment or[,] SPRS[, or USPS] document only if the comptroller consents to that approval method.

(3) Requirements of other subsections. In addition to this subsection, subsections (a) - (o) of this section govern all aspects of non-electronic approvals of payment and [USPS or] SPRS documents, with the exceptions specified in those subsections.

(4) Method for providing approvals.

(A) The non-electronic approval of a payment or[,] SPRS[, or USPS] document must be provided through the original signature of an individual who is authorized or designated to approve the document.

(B) An individual's original signature on a payment or[,] SPRS[, or USPS] document is a valid approval of that document only if the signature matches the individual's signature on the appropriate signature card or, if adopted by the comptroller, on the form used in lieu of signature cards.

(5) Reapprovals. If a payment or[,] SPRS[, or USPS] document is altered in any manner after an individual has properly approved the document, then the document must be properly approved again.

(6) When the release of a payment or[,] SPRS[, or USPS] document does not constitute approval of that document.

(A) If the comptroller has consented to the contract, a state agency may contract with an individual not employed by the agency or with another entity to:

(i) release the agency's payment documents into USAS for processing;

(ii) release the agency's [USPS or] SPRS documents into [USPS or] SPRS for processing; or

(iii) release the agency's payment documents into USAS for processing and the agency's [USPS or] SPRS documents into [USPS or] SPRS for processing.

(B) The release of a payment or[,] SPRS[, or USPS] document under subparagraph (A) of this paragraph does not constitute approval of the document. The document may be approved only according to paragraph (4) of this subsection.

(C) The comptroller may consent to a contract described by subparagraph (A) of this paragraph if:

(i) the comptroller is satisfied that the state agency whose payment or[,] SPRS[, or USPS] documents are being released has statutory authority to enter into the contract;

(ii) the comptroller is satisfied that the state agency, if any, that will be releasing the payment or[,] SPRS[, or USPS] documents has statutory authority to enter into the contract;

(iii) the contract is in writing;

(iv) the comptroller is satisfied that the agency whose payment or[,] SPRS[, or USPS] documents are being released has established an internal system for properly authorized or designated individuals to approve those documents before their release according to paragraph (4) of this subsection;

(v) the comptroller is satisfied that approvals under the internal system described in clause (iv) of this subparagraph can be verified easily by the comptroller and the individual or entity that releases the payment or[,] SPRS[, or USPS] documents;

(vi) before an individual or entity releases a payment or[,] SPRS[, or USPS] document, the contract requires the individual or entity to verify that the approval methods described in paragraph (4) of this subsection have been followed;

(vii) the individual or entity has entered into a contract with the comptroller that obligates the individual or entity to comply with the requirements of this paragraph, if the comptroller determines the contract is necessary;

(viii) the agency whose payment or[,] SPRS[, or USPS] documents are being released has agreed in its post-payment contract, if any, with the comptroller that the release of those documents into USAS or[,] SPRS, [or USPS,] as applicable, does not constitute approval of the document; and

(ix) the comptroller is satisfied that the security provided under the contract is at least equivalent to the security that would exist if the agency released its own payment or[,] SPRS[, or USPS] documents.

(D) The burden of demonstrating that a state agency has statutory authority to enter into a contract described in subparagraph (A) of this paragraph is with the agency. The comptroller may require the submission of whatever information and legal arguments the comptroller deems necessary to satisfy the comptroller that the authority exists.

(E) The comptroller must be kept informed about who is authorized to release the payment or[,] SPRS[, or USPS] documents of a state agency that has entered into a contract described in subparagraph (A) of this paragraph. The authorized individuals may not appear on the agency's signature cards or, if adopted by the comptroller, the form used in lieu of the cards. The officer or employee of the agency who has the authority to enter into accounting services contracts is responsible for complying with this subparagraph.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 15, 2025.

TRD-202502948

Victoria North

General Counsel for Fiscal and Agency Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: September 28, 2025

For further information, please call: (512) 475-2220

SUBCHAPTER L. CLAIMS PROCESSING--REPLACEMENT PAYMENTS

The Comptroller of Public Accounts proposes amendments to §5.140, concerning replacement payments.

No legislation was enacted within the last four years that provides the statutory authority for the amendments.

The amendments to subsection (a) change "comptroller of public accounts" to "comptroller" in subsection (a)(9)(A) to use the defined term and delete "the Uniform Statewide Payroll/Personnel System" from the definition of "statewide accounting system" in subsection (a)(10) because this system is no longer used by the comptroller.

The amendments also correct references to Labor Code, Chapter 210, in subsections (e)(1), (e)(2), and (g)(3).

Tetyana Melnyk, Director of Revenue Estimating Division, has determined that during the first five years that the proposed amended rule is in effect, the rule: will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to the agency; will not require an increase or decrease in fees paid to the agency; will not increase or decrease the number of individuals subject to the rule's applicability; and will not positively or adversely affect this state's economy.

Ms. Melnyk also has determined that the proposed amended rule would have no significant fiscal impact on the state government, units of local government, or individuals. The proposed amended rule would benefit the public by improving the clarity and implementation of the sections. There would be no significant anticipated economic cost to the public. The proposed amended rule would have no significant fiscal impact on small businesses or rural communities.

You may submit comments on the proposal to Clarisse Roquemore, Director, Fiscal Management Division, at clarisse.roquemore@cpa.texas.gov or at P.O. Box 13528 Austin, Texas 78711. The comptroller must receive your comments no later than 30 days from the date of publication of the proposal in the Texas Register.

The amendments are proposed under Government Code, §403.016(f) and §403.054(h), which require the comptroller to adopt rules regarding electronic funds transfer and the issuance of replacement warrants.

The amendments implement Government Code, §403.016 regarding electronic funds transfers and §403.054 regarding replacement warrants.

§ 5.140. Replacement Payments.

(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Appropriation year--The year for which legal authorization for the charge was granted by the legislature. Multiple appropriation year activity may occur within a single fiscal year.

(2) Comptroller--The Comptroller of Public Accounts for the State of Texas.

(3) Fiscal year--The accounting period for the state government which begins on September 1 and ends on August 31.

(4) Include--A term of enlargement and not of limitation or exclusive enumeration. The use of the term does not create a presumption that components not expressed are excluded.

(5) May not--A prohibition. The term does not mean "might not" or its equivalents.

(6) Payee--A person to whom a payment is made payable. A payee may include an individual, a corporation, an organization, a government or governmental subdivision or agency, a business trust, an estate, a trust, a partnership, an association, and any other legal entity.

(7) Payment cancellation voucher--The form prescribed by the comptroller that a state agency completes when requesting cancellation of a warrant by the comptroller.

(8) Replacement payment--A payment issued to replace an original warrant, either by issuing a replacement warrant or initiating an electronic funds transfer.

(9) State agency--

(A) a board, commission, department, or other agency in the executive branch of state government that is created by the constitution or a statute of this state, including the comptroller [of public accounts] and an institution of higher education as defined by Education Code, §61.003, other than a public junior college;

(B) the legislature or a legislative agency; or

(C) the supreme court, the court of criminal appeals, a court of appeals, or a state judicial agency.

(10) Statewide accounting system--Includes the Uniform Statewide Accounting System, [the Uniform Statewide Payroll/Personnel System,] the Statewide Payroll/Personnel Reporting System and the Centralized Accounting and Payroll/Personnel System.

(11) Warrant--A state payment in the form of paper issued to a payee by or on behalf of a state agency.

(b) Request for issuance. The payee of an original warrant may request issuance of a replacement payment. The request must be directed to the state agency that initiated the original warrant and must be accompanied by any statements or documentation required by the agency.

(c) Issuance by comptroller. The comptroller may issue a replacement payment only if:

(1) the state agency that initiated the original warrant provides to the comptroller proper notification that:

(A) the agency has received a request for issuance of a replacement payment from the payee of the original warrant;

(B) the replacement payment would replace an original warrant previously issued by the agency; and

(C) the agency has determined that:

(i) the original warrant was lost, destroyed, or stolen;

(ii) the payee did not receive the original warrant; or

(iii) the payee's endorsement on the original warrant was forged; and

(2) subsection (f) of this section does not prohibit issuance of the replacement payment.

(d) Issuance by other agency. A state agency other than the comptroller may issue a replacement payment only if:

(1) the comptroller has delegated to the agency the authority to print and deliver warrants under Government Code, §403.060;

(2) the replacement payment would replace an original warrant previously issued by the agency;

(3) the agency has determined that:

(A) the original warrant was lost, destroyed, or stolen;

(B) the payee did not receive the original warrant; or

(C) the payee's endorsement on the original warrant was forged; and

(4) subsection (f) of this section does not prohibit issuance of the replacement payment.

(e) Notification.

(1) For all warrants except financial assistance warrants governed by Human Resources Code, §31.038 and back pay award warrants governed by Labor Code, Chapter 210, Subchapter A [B], notification to the comptroller under subsection (c)(1) of this section is proper only if the agency:

(A) submits the information directly to the comptroller's Web cancellation system in accordance with the comptroller's requirements, if the agency's documentation is retained in the agency's files for audit by the comptroller; or

(B) complies with the comptroller's requirement to submit a payment cancellation voucher to the comptroller for cancellation of warrants that are not eligible to be canceled on the comptroller's Web cancellation system.

(i) The agency must complete and submit the payment cancellation voucher to the comptroller.

(ii) The agency may substitute the comptroller's payment cancellation voucher with an agency payment cancellation voucher only upon approval by the comptroller.

(2) For financial assistance warrants governed by Human Resources Code, §31.038 and back pay award warrants governed by Labor Code, Chapter 210, Subchapter A [B], notification to the comptroller under subsection (c)(1) of this section is proper only if the agency completes and submits the appropriate documentation to the comptroller.

(3) After a warrant is canceled, the state agency that requested its cancellation may request issuance of a replacement payment in accordance with the procedures adopted by the comptroller. The request for a replacement payment must be submitted to the appropriate statewide accounting system.

(f) Prohibition on issuance. A replacement payment may not be issued if:

(1) the original warrant has been paid, unless a refund of the payment has been obtained by the state;

(2) the period during which the comptroller may pay the original warrant has expired under Government Code, §404.046, or other applicable law;

(3) the payee of the replacement payment is not the same as the payee of the original warrant; or

(4) state or federal law prohibits the issuance of a payment to the payee of the replacement payment.

(g) Limitations and exceptions.

(1) A replacement warrant must reflect the same appropriation year as the original warrant and may not be paid unless presented to the comptroller or a financial institution before the expiration of two years after the close of the fiscal year in which the original warrant was issued.

(2) Except as provided by paragraph (1) of this subsection, a replacement payment for a federal guaranteed student loan identified by the Texas Higher Education Coordinating Board must be issued within 120 calendar days from its original date of issuance and may not be paid unless presented to the comptroller or a financial institution before its expiration date.

(3) Except as provided by this paragraph, the Texas Workforce Commission shall comply with this section when issuing a replacement payment. The deadline for issuance of the replacement payment is the deadline specified in Labor Code, Chapter 210, Subchapter A [B].

(4) A replacement payment issued to replace a state employee payroll warrant may not be issued by initiating an electronic funds transfer. Such replacement payment may be issued only in the form of a replacement warrant.

(5) The state agency that issues a replacement payment under subsection (c) or (d) of this section is authorized to determine whether the replacement payment is issued in the form of a replacement warrant or an electronic funds transfer. The state agency must follow the appropriate comptroller procedures for issuing a replacement payment.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 15, 2025.

TRD-202502949

Victoria North

General Counsel for Fiscal and Agency Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: September 28, 2025

For further information, please call: (512) 475-2220

SUBCHAPTER O. UNIFORM STATEWIDE ACCOUNTING SYSTEM

The Comptroller of Public Accounts proposes amendments to §5.210 regarding uniform statewide accounting system.

No legislation was enacted within the last four years that provides the statutory authority for the amendments.

The amendments to subsection (b) alphabetize the definitions for ease of use; update the definition of "Individual Accounting and/or Payroll System" to clarify that this system is not a direct component of the uniform statewide accounting system, but this system must report to it; delete the definition of "USPS" (Uniform Statewide Payroll/Personnel System) and delete the reference to "USPS" from the definition of "SPRS" (Standardized Payroll/Personnel Reporting System) because USPS is no longer used by the comptroller.

The amendments to subsection (c) delete the reference to "USPS" because USPS is no longer used by the comptroller, and change "comptroller" to "the comptroller" in paragraph (2) to correct a typographical error.

Tetyana Melnyk, Director of Revenue Estimating Division, has determined that during the first five years that the proposed amended rule is in effect, the rule: will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to the agency; will not require an increase or decrease in fees paid to the agency; will not increase or decrease the number of individuals subject to the rule's applicability; and will not positively or adversely affect this state's economy.

Ms. Melnyk also has determined that the proposed amended rule would have no significant fiscal impact on the state government, units of local government, or individuals. The proposed amended rule would benefit the public by improving the clarity and implementation of the sections. There would be no significant anticipated economic cost to the public. The proposed amended rule would have no significant fiscal impact on small businesses or rural communities.

You may submit comments on the proposal to Clarisse Roquemore, Director, Fiscal Management Division, at Clarisse.roquemore@cpa.texas.gov or at P.O. Box 13528 Austin, Texas 78711. The comptroller must receive your comments no later than 30 days from the date of publication of the proposal in the Texas Register.

The amendments are proposed under Government Code, §2101.035(a) and §2101.036(a), which authorize the comptroller to adopt procedures and rules for the effective operation of the uniform statewide accounting system and adopt rules related to state agency internal accounting systems.

The amendments implement Government Code, §2101.035 regarding the uniform statewide accounting system, and Government Code, §2101.036 regarding state agency internal accounting systems.

§ 5.210. Uniform Statewide Accounting System.

(a) Purpose. The purpose of this section is to allow the comptroller to administer, maintain, modify and operate the uniform statewide accounting system, including any required component systems, to serve as the financial system of record for the State of Texas. The uniform statewide accounting system includes each component designated by the comptroller. The comptroller may require state agencies to use any or all components of the uniform statewide accounting system as their internal system or may allow agencies to report required information from existing individual systems that conform to reporting and calculation requirements specified by the comptroller.

(b) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1) [(2)] HRIS--The Human Resource Information System, which is the higher education reporting system and a component of the uniform statewide accounting system. HRIS is the system to which the institutions of higher education must report information in the format and by the timeframes required by the comptroller.

(3) SPA--The Statewide Property Accounting system, which is the personal property fixed asset component of the uniform statewide accounting system.

(7) [(4)] TINS--The Texas Identification Number System, which is a component of the uniform statewide accounting system. TINS is used to track payees paid through USAS and records the payments.

(8) [(5)] USAS--The Uniform Statewide Accounting System, which is the integrated financial system of record for the State of Texas financial records.

(c) The comptroller shall be responsible for the administration, maintenance, and operation of the Uniform Statewide Accounting System that it has previously implemented through HRIS, SPA, SPRS, TINS, and USAS [and USPS] as follows:

(1) The comptroller shall notify state agencies of the requirements of the USAS components and provide user guides, manuals, and policy statements accessible on the comptroller's website.

(2) The comptroller shall assist and consult with state agencies in the implementation and use of the USAS components in reporting to the comptroller.

(3) The comptroller shall be available for discussions or meetings with state agencies to explain and assist with use and implementation of USAS components as well as to provide training.

(4) The comptroller may require reports from state agencies regarding implementation of USAS components.

(5) The comptroller may require state agencies to stop, delay, or modify implementation of individual accounting and/or payroll systems to ensure that those systems are compatible with USAS.

(6) The comptroller may require state agencies to replace individual accounting and/or payroll systems to ensure that those systems are compatible with USAS.

(7) Any expenditure of state funds by state agencies for the establishment, modification, or maintenance of an individual accounting and/or payroll system must be in compliance with rules, user guides, manuals and policy statements issued by the comptroller, regarding the development, implementation or use of USAS.

(8) State agencies may use centralized computer systems other than USAS but such agencies must comply with the comptroller's rule on enterprise resource planning in §5.300 of this title (referring to Monitoring and Implementation of Enterprise Resource Planning Systems) and must follow interoperability standards contained in the comptroller's user guides, manuals, and policy statements available on the comptroller's website.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 15, 2025.

TRD-202502950

Victoria North

General Counsel for Fiscal and Agency Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: September 28, 2025

For further information, please call: (512) 475-2220

CHAPTER 9. PROPERTY TAX ADMINISTRATION

SUBCHAPTER O. TEXAS JOBS, ENERGY, TECHNOLOGY AND INNOVATION PROGRAM

The Comptroller of Public Accounts proposes amendments to §9.5001 concerning applicant eligibility requirements, §9.5002 concerning application requirements, §9.5004 concerning application process, §9.5005 concerning agreement for limitation on taxable value of eligible property, §9.5008 concerning job and wage requirements; penalty for failure to comply with job or wage requirement, and §9.5009 concerning biennial compliance report.

The legislation enacted within the last four years that provides the statutory authority for the amendments are House Bill 5, 88th Legislature, R.S. 2023 and House Bill 1620, 89th Legislature, R.S., 2025.

The amendments to §§9.5001, 9.5002, 9.5004, 9.5005, 9.5008 and 9.5009 incorporate statutory changes from House Bill 1620, 89th Legislature, R.S., 2025, including the renumbering of Sections 403.601-605 as Sections 403.651-655, Government Code, and the revising of the ineligibility criteria in Section 403.606.

The amendments to §9.5004 also clarify that once the comptroller issues a recommendation, an applicant may modify their application before agreement execution only if the comptroller's recommendation is positive.

Tetyana Melnyk, Director of Revenue Estimating Division, has determined that during the first five years that the proposed amended rules are in effect, the rules: will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to the agency; will not require an increase or decrease in fees paid to the agency; will not increase or decrease the number of individuals subject to the rules' applicability; and will not positively or adversely affect this state's economy.

Ms. Melnyk also has determined that the proposed amended rules would have no fiscal impact on the state government, units of local government, or individuals. The proposed amended rules would benefit the public by improving the clarity and implementation of the sections. There would be no anticipated economic cost to the public. The proposed amended rules would have no fiscal impact on small businesses or rural communities.

You may submit comments on the proposal to Desiree Caufield, Manager, Economic Development & Local Government at Desiree.Caulfield@cpa.texas.gov or at P.O. Box 13528, Austin, Texas 78711-3528. The comptroller must receive your comments no later than 30 days from the date of publication of the proposal in the Texas Register.

The amendments are proposed under Government Code, §403.623, which requires the comptroller to adopt rules necessary to implement the Texas Jobs, Energy, Technology and Innovation Act.

The amendments implement Government Code, Chapter 403, Subchapter T, concerning the Texas Jobs, Energy, Technology and Innovation Act.

§ 9.5001. Applicant Eligibility Requirements.

(a) An applicant that is listed as ineligible to receive a state contract or investment or is otherwise ineligible to contract with a state governmental entity under Government Code, Chapters 808, 809, 2270, 2271, [or] 2274, 2275 or 2276, is ineligible to apply for an agreement for limitation on taxable value of eligible property under Government Code, Chapter 403.

(b) The comptroller may reject an application based on an applicant's ineligibility under subsection (a) of this section.

(c) The comptroller shall send notice of the rejection described in subsection (b) of this section to the applicant.

(d) An applicant may not submit an administrative appeal to the comptroller for reconsideration of an application that has been rejected under subsection (b) of this section.

§ 9.5002. Application Requirements.

(a) Each application shall include:

(1) a completed application form;

(2) proof of a $30,000 payment as a nonrefundable application fee, payable to the applicable school district;

(3) a sworn affidavit by an agent authorized to bind an applicant attesting that the applicant is not ineligible under Government Code, §403.606;

(4) a map of the proposed project site;

(5) an economic benefit statement for the proposed project as described in Government Code, §403.608; and

(6) any additional information requested by the comptroller to complete its evaluation of the application.

(b) Applicants must segregate confidential information described by Government Code, §403.621, or information that is confidential as a matter of law from other information in their application, amended application or supplement to an application. A cover sheet marked "Confidential" with the legal justification for confidential treatment must accompany all information that is considered confidential.

(c) If an applicant proposes to place an eligible property in a qualified opportunity zone, the entire project including its boundaries must fall within that qualified opportunity zone in order to be subject to the taxable value prescribed in Government Code, §403.655 [§403.605(a)(2)].

§ 9.5004. Application Process.

(a) An applicant must submit an application for a limitation on taxable value of eligible property in the form and manner prescribed by the comptroller. The comptroller may require applications to be submitted electronically.

(b) After the eligibility of the applicant is assessed in §9.5001 of this chapter, the comptroller shall review an application to determine if it is administratively complete. An application is considered administratively complete when it includes all the information requested by the comptroller.

(c) The comptroller shall provide notice of an administratively complete application to the applicant, the governor and the applicable school district. The comptroller may provide notice electronically.

(d) If an application is not administratively complete, the comptroller may require an applicant to submit the necessary information by a deadline.

(e) To assess whether a project proposed in an application is an eligible project, the comptroller must find that:

(1) an applicant satisfies the application requirements;

(2) the proposed project meets the definition of eligible project in §9.5000 of this title and Government Code, §403.652 [§403.602(8)]; and

(3) The applicant is willing to agree and accept the terms described in Government Code, §403.654 [§403.604], and the agreement terms.

(f) To assess whether an agreement is a compelling factor and whether the applicant would make the proposed investment in the absence of the agreement under Government Code, §403.609(b)(3), the comptroller may consider:

(1) any public documents and statements relating to the applicant, the proposed project or the proposed eligible property that is subject to the application;

(2) official statements by the applicant, government officials or industry officials concerning the proposed project;

(3) alternative sites and prospects explored including any specific incentive information;

(4) any information concerning the proposed project's impact on the Texas economy;

(5) previous applications for and subsequent granting of economic development incentives;

(6) documents pertaining to the proposed project's financials, real estate transactions, utilities, infrastructure, transportation, regulatory environment, permits, workforce, marketing, existing facilities, nature of market conditions, and raw materials that demonstrate whether the incentive is a compelling factor in a competitive site selection process to locate the proposed project in Texas; and

(7) any other information that may aid the comptroller in its determination.

(g) Upon request, the comptroller may require that an applicant provides additional documents to demonstrate a compelling factor in a competitive site selection process to locate the proposed project in Texas. Failure to provide these documents may result in the comptroller being unable to make a recommendation under Government Code, §403.609.

(h) Within 60 days of an application being deemed complete, the comptroller shall examine and determine whether the application should be recommended or not recommended for approval based on the criteria in Government Code, §403.609(b).

(i) The comptroller shall provide written notice of action under Government Code, §403.609(a), to the applicant, the governor and the applicable school district.

(1) The notice shall indicate the comptroller's recommendation either for approval or non-approval of the application along with a copy of the application, and all documents or information relied upon to make the findings prescribed by Government Code, §403.609(b).

(2) A recommendation for approval shall specify a performance bond amount that is 10% of the estimated gross tax benefit to the applicant.

(j) An applicant may submit an amended or supplemental application to the comptroller at any time after the submission of the original application. If an applicant modifies an application that previously received a positive comptroller recommendation [recommended by the comptroller] prior to the execution of the agreement, the applicant must submit said modifications to the comptroller to make a recommendation pursuant to Government Code, §403.609, before the agreement can be executed.

§ 9.5005. Agreement for Limitation on Taxable Value of Eligible Property.

(a) An applicant, the governor and the governing body of the applicable school district must mutually agree to enter into an agreement for limitation on taxable value of eligible property that includes the requisite terms in Government Code, §403.654 [§403.604] and §403.612.

(b) An applicant must satisfy the criteria required to enter in a contract with the state of Texas.

(c) The agreement must be based on information from an application that was recommended for approval by the comptroller.

(d) The agreement must comply with all applicable rules, regulations and statutes.

§ 9.5008. Job and Wage Requirements; Penalty for Failing to Comply with Job or Wage Requirement.

(a) Except as otherwise provided in Government Code, §403.654 [§403.604(a)], the number of required jobs may not be waived.

(b) The wage requirement applies to required jobs and additional jobs, as the terms are defined in §9.5000 of this title and Government Code, §403.652 [§403.602]. The wage requirement may not be waived.

(c) The comptroller shall conduct a biennial review of the periods covered by two consecutive reports submitted by an agreement holder to determine whether the agreement holder has created the number of required jobs and has met the wage requirement under Government Code, Chapter 403.

(d) To make the determination, the comptroller may:

(1) review the Biennial Compliance Report submitted by the agreement holder;

(2) request additional information from the agreement holder to substantiate the number of required jobs and the wage requirement and/or inspect the eligible property with a 3-day advance notice to the agreement holder in order to perform the inspection at a mutually agreeable time during regular business hours; or

(3) consider any other information that is available to the comptroller.

(e) The comptroller may issue a determination that a job created by the agreement holder is not a required job if the job as identified by the agreement holder:

(1) does not provide 1,600 hours or more of work for that year;

(2) is not a new job but rather a position that was transferred from a facility of the agreement holder from one area of the state to the project covered by the agreement, unless the agreement holder fills the vacancy caused by the transfer;

(3) is not a new job but rather a position that replaced an existing job of the agreement holder, unless the agreement holder filled the vacancy caused by the replacement;

(4) is not covered by a group health benefit plan for which the agreement holder contributes; or

(5) does not meet the wage requirement.

(f) If the comptroller makes a determination that the agreement holder did not create the required number of jobs or meet the wage requirement, the comptroller shall provide notice to the agreement holder, which shall include an explanation for the adverse determination.

(g) If the comptroller finds that an agreement holder received two consecutive adverse determinations for failing to meet the wage requirement prescribed by the agreement, the comptroller shall impose a penalty on the agreement holder in an amount equal to two times the difference between:

(1) the product of:

(A) the actual average annual wage paid to all persons employed by the agreement holder in connection with the project that is the subject of the agreement as computed under Government Code, §403.612(b)(6); and

(B) the number of required jobs prescribed by the agreement; and

(2) the product of:

(A) the average annual wage prescribed by the agreement; and

(B) the number of required jobs prescribed by the agreement.

(h) If the comptroller finds that an agreement holder received two consecutive adverse determinations for failing to maintain at least the number of required jobs prescribed by the agreement, the comptroller shall impose a penalty on the agreement holder in an amount equal to two times the difference between:

(1) the product of:

(A) the number of required jobs prescribed by the agreement; and

(B) the number of required jobs actually created as stated in the most recent report submitted by the agreement holder under Government Code, §403.616; and

(2) the average annual wage prescribed by the agreement during the most recent four quarters for which data is available, as computed by the Texas Workforce Commission.

(i) A determination by the comptroller under subsection (f) of this section is a deficiency determination under Tax Code, §111.008. A penalty imposed under this section is an amount the comptroller is required to collect, receive, administer, or enforce and is subject to the payment and redetermination requirements of Tax Code, §111.0081 and §111.009. A redetermination under Tax Code, §111.009, of a determination under this section is a contested case as defined by Government Code, §2001.003.

(j) In no event shall a penalty imposed under this section exceed the amount of the ad valorem tax benefit received by the agreement holder under the agreement.

(k) The comptroller shall deposit a penalty collected under this section and any interest on the penalty to the credit of the foundation school fund.

§ 9.5009. Biennial Compliance Report.

(a) Each agreement holder must submit a biennial compliance report with the supportive documents required by Government Code, §403.616 in the manner and form prescribed by the comptroller. The comptroller may require the report to be submitted electronically.

(b) The report must be submitted by June 1 of every even numbered year from the start to the conclusion of the incentive period.

(c) The report must include the minimum number of required jobs described in Government Code, §403.654 [§403.604(b)] for every tax year throughout the duration of the incentive period.

(d) The report must include the signature of agreement holder's authorized representative(s) by which the representative confirms and attests to the truth and accuracy of the information submitted in the form to the best knowledge and belief of the agreement holder and its representative(s).

(e) Agreement holders must segregate confidential information described by Government Code, §403.621(b) or information that is confidential as a matter of law from other information within the biennial report. A cover sheet marked "Confidential" with the legal justification for confidential treatment must accompany all information that is considered confidential.

(f) For trainees identified in the report, the agreement holder must also submit documentation confirming its approval to take part in the Texans Work Program as set forth in Labor Code, §308.003, along with proof of the trainee's participation in the program including the beginning and ending dates of the trainee's participation.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 15, 2025.

TRD-202502951

Victoria North

General Counsel for Fiscal and Agency Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: September 28, 2025

For further information, please call: (512) 475-2220

CHAPTER 16. COMPTROLLER GRANT PROGRAMS

SUBCHAPTER D. RURAL LAW ENFORCEMENT SALARY ASSISTANCE PROGRAM

The Comptroller of Public Accounts proposes amendments to §16.300, concerning definitions, §16.302, concerning review by comptroller, and §16.304, concerning authorized uses of grant funds; limitations.

The legislation enacted within the last four years that provides the statutory authority for these sections is Senate Bill 22, 88th Legislature, R.S., 2023 and General Appropriations Act of the 89th Legislature.

The amendments to §16.300 modify the current definition of "grant" to clarify sources of funding in accordance with the General Appropriations Act of the 89th Legislature.

The amendments to §16.302 modify subsection (c) to clarify other law may allow for the comptroller to deny an application.

The amendments to §16.304 amend subsections (a), (b), (c), and (g) to remove duplicative statutory references. The amendments in subsection (g) also refer to the appropriate subsections within the rule. The amendments make non-substantive changes to subsections (i)(3), (i)(5) and (j)(3).

Tetyana Melnyk, Director of Revenue Estimating Division, has determined that during the first five years that the proposed amended rules are in effect, the rules: will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to the agency; will not require an increase or decrease in fees paid to the agency; will not increase or decrease the number of individuals subject to the rules' applicability; and will not positively or adversely affect this state's economy.

Ms. Melnyk also has determined that the proposed amended rules would have no significant fiscal impact on the state government, units of local government, or individuals. The proposed amended rules would benefit the public by improving the clarity and implementation of the sections. There would be no significant anticipated economic cost to the public. The proposed amended rules would have no significant fiscal impact on small businesses or rural communities.

You may submit comments on the proposal to Russell Gallahan, Manager, Local Government and Transparency, Comptroller of Public Accounts, P.O. Box 13186, Austin, Texas 78701-3186 or to the email address: SB22.Grants@cpa.texas.gov. The comptroller must receive your comments no later than 30 days from the date of publication of the proposal in the Texas Register.

These amendments are proposed under Local Government Code, §§130.911(h), 130.912(g) and 130.913(g), which require the comptroller to adopt rules to administer a grant program to provide financial assistance to qualified sheriff's offices, constable's offices, and prosecutor's offices in rural counties.

The amendments implement Local Government Code, §§130.911, 130.912 and 130.913 and the General Appropriations Act.

§ 16.300. Definitions.

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise:

(1) Applicant--For an entity that applies for a grant under Local Government Code, §130.911 or §130.912, a qualified county, or, for an entity that applies for a grant under Local Government Code, §130.913, a qualified prosecutor's office.

(2) County sheriff--A person elected or appointed as the county sheriff and who performs the duties of the office after complying with Local Government Code, §85.001.

(3) Deputy sheriff--A person appointed as deputy sheriff pursuant to Local Government Code, §85.003 who performs motor vehicle stops in the routine performance of their duties.

(4) Fiscal year--The twelve consecutive calendar months during which an applicant tracks its finances for budget and accounting purposes.

(5) Grant--A grant awarded under this subchapter that is a rural sheriff's office salary assistance grant under Local Government Code, §130.911 and as provided by the General Appropriation Act , a rural constable's office salary assistance grant under Local Government Code, §130.912, or a rural prosecutor's office salary assistance grant under Local Government Code, §130.913.

(6) Grant agreement--An agreement between the comptroller and a grant recipient that governs the terms of a grant.

(7) Grant recipient--A qualified county or a qualified prosecutor's office that receives a grant under this subchapter.

(8) Investigator--A person employed by and appointed by the prosecutor's office as an investigator under Government Code, §41.102 and §41.109, and who is licensed under Occupations Code, §1701.301.

(9) Jailer--A person employed by the county sheriff as a jailer under Local Government Code, §85.005, who is licensed with a permanent or temporary county jailer license issued under Occupations Code, §1701.301 and §1701.307, or Government Code, §511.00905, and whose duties include the safekeeping of prisoners and the security of a jail operated by the county.

(10) Population--The population shown by the most recent federal decennial census.

(11) Qualified constable--A constable who meets the following standards:

(A) is elected to, and currently holds, an office created on or before January 1, 2023;

(B) performs motor vehicle stops in the routine performance of their duties for the majority of their time on duty; and

(C) meets all eligibility requirements to serve under Local Government Code, §86.0021, and Code of Criminal Procedure, article 2.12(2).

(12) Qualified county--A county with a population of 300,000 or less.

(13) Qualified prosecutor's office--An office of a district attorney, criminal district attorney, or county attorney with criminal prosecution duties whose jurisdiction has a population of 300,000 or less.

(14) Safety equipment--Any tangible equipment used by a sheriff's office that is necessary to protect the health and physical safety of a county sheriff or deputy sheriff or county jailer while performing their duties, and may include radio equipment or in-car camera systems added to previously owned vehicles, ballistic helmets, ballistic plates, ballistic shields, entry tools, body armor, medical gear & masks, outer carriers, pepper spray, plate carriers, personal alarm, riot batons, riot helmets, riot shields, body cameras, and miscellaneous safety gear which consists of door jams, disposable cuffs and knee pads. The term does not include software unless it is purchased in connection with the purchase of tangible safety equipment and is necessary for that safety equipment to be functional.

(15) Victim Assistance Coordinator--The person designated to serve as victim assistance coordinator under Code of Criminal Procedure, article 56A.201, by a district attorney, criminal district attorney, or county attorney who prosecutes criminal cases and who is responsible for the duties listed in Code of Criminal Procedure, article 56A.202.

(16) Vehicle--A law enforcement vehicle used by a sheriff's office for transportation while performing duties of the office such as patrols, responses to calls for service, and transport of persons in custody, and includes equipment affixed to the vehicle for law enforcement purposes.

§ 16.302. Review by Comptroller.

(a) Upon receipt of an application, the comptroller shall review the application to ensure that it is complete. If the application is incomplete, as determined by the comptroller, the comptroller may contact the applicant and request any required information. Any required information requested by the comptroller must be submitted by the applicant within 14 calendar days of the request.

(b) An application shall be rejected by the comptroller if the application is submitted:

(1) by an applicant that does not meet the definition of a qualified county or qualified prosecutor's office;

(2) before 60 days prior to the first day of the applicant's fiscal year for which the applicant is seeking a grant;

(3) after the 30th day of a fiscal year for which the applicant is seeking a grant; or

(4) on a form other than the electronic form prescribed by the comptroller.

(c) The comptroller may reject an application if the applicant or the application does not comply with this subchapter, or does not comply with Local Government Code, §§130.911, 130.912, [or] 130.913, or other state law, as applicable.

(d) The comptroller shall make a determination of award not later than 90 days after the date the application is received.

§ 16.304. Authorized Uses [uses] of Grant Funds; Limitations.

(a) A rural sheriff's office salary assistance grant awarded under this subchapter [and Local Government Code, §130.911,] may only be used:

(1) to provide a minimum annual salary of at least:

(A) $75,000 for the county sheriff;

(B) $45,000 for each deputy sheriff; and

(C) $40,000 for each jailer; and

(2) provided that each county sheriff that meets the definition in §16.300(2) of this title, each deputy sheriff that meets the definition in §16.300(3) of this title, and jailer that meets the definition in §16.300(9) of this title that is employed by the county sheriff, regardless of hiring date, receives the minimum salary described by paragraph (1) of this subsection:

(A) to increase the salary of a person described by paragraph (1) of this subsection;

(B) to hire additional deputies or staff for the sheriff's office; or

(C) to purchase vehicles, firearms, and safety equipment for the sheriff's office.

(b) A rural constable's office salary assistance grant awarded under this subchapter [and Local Government Code, §130.912]:

(1) may only be used to provide a minimum annual salary of $45,000 to a qualified constable; and

(2) for each qualified constable whose salary is funded in part by the grant awarded under this subchapter, the county must contribute at least 75% of the money required to meet the minimum annual salary requirement.

(c) A rural prosecutor's office salary assistance grant awarded under this subchapter [and Local Government Code, §130.913,] may only be used:

(1) to increase the salary of an assistant attorney, an investigator, or a victim assistance coordinator employed at the prosecutor's office; or

(2) to hire additional staff for the prosecutor's office.

(d) Grant funds may not be used for indirect costs or direct administrative costs of a grant recipient. Unallowable direct administrative costs include software, trainings, licenses and expenses for the business functions of the office. Grant funds may not be used for contract labor, but a grant recipient may hire an employee with a predetermined termination date.

(e) For the purpose of subsection (a)(1) of this section, if a grant recipient does not have sufficient grant funding to fund the minimum annual salaries required by this subsection, the grant recipient may use grant funds to increase the salaries of the persons described in that subsection on a pro-rata basis.

(f) If a person described by subsection (a)(1) or (b)(1) of this section is a part-time or hourly employee, or holds a dual office or otherwise divides work hours between a position described in this section and another position, the minimum annual salary required by this section may be converted to a minimum hourly wage and will apply only to the hours of work performed for a position described in this section.

(1) For an employee with a 40-hour work week, the minimum hourly wage shall be the product of:

(A) the minimum annual salary described in this section; and

(B) a quotient:

(i) the numerator of which is equal to the number of hours the employee normally works performing duties for a position described in this section each week, not to exceed 40; and

(ii) the denominator of which is equal to 40; and

(2) for an employee with a county adopted work period as authorized by the Fair Labor Standards Act, 29 U.S.C.A. § 207(k), the minimum hourly wage shall be the product of:

(A) the minimum annual salary described in this section; and

(B) a quotient:

(i) the numerator of which is equal to the number of hours the employee normally works performing duties for a position described in this section each period, not to exceed the number of hours that are nonovertime as determined under the Fair Labor Standards Act; and

(ii) the denominator of which is equal to the number of hours that are nonovertime as determined under the Fair Labor Standards Act.

(g) For grants awarded under this subchapter: [Local Government Code, §130.911 or §130.912,]

(1) Grant [grant] funds described by subsection (a) and (b) of this section may only be used for the state purpose of ensuring professional law enforcement throughout the state; and [. For grants awarded under Local Government Code, §130.913,]

(2) Grant [grant] funds described by subsection (c) of this section may only be used for the state purpose of ensuring professional legal representation of the people's [peoples] interests throughout the state.

(h) A person whose salary increase may be paid with grant funds under subsections (a)(2)(A) or (c)(1) of this section may be paid an increase in hourly wages if they are paid an hourly wage rather than an annual salary.

(i) For salary increases required to bring a salary to the minimum annual salary as described by subsections (a)(1) and (b)(1) of this section, and salary increases described by subsections (a)(2)(A) and (c)(1) of this section:

(1) the cost of providing a salary increase includes:

(A) the amount by which the salary increases;

(B) excluding benefits and taxes paid for overtime pay, the amount by which the legally required nonmonetary benefits and taxes for that employee increases as a result of the salary increase, including:

(i) the increase in the employers share of payroll taxes; and

(ii) if applicable, any increase in the employers share of retirement contributions.

(2) The cost of providing a salary increase does not include:

(A) overtime pay;

(B) compensatory time pay that is paid out;

(C) longevity pay; or

(D) any legally required nonmonetary benefit that is not calculated as a percentage of salary or wages.

(3) The increase in a salary is measured based on the salary provided on the last day of the entity's [entitys] fiscal year ending prior to the first year the entity received grant funds.

(4) A county may only use grant funds for the legally required nonmonetary benefits and taxes for a salary if the county provides the minimum annual salary required by subsections (a)(1) and (b)(1) of this section, if applicable. A county may not reduce a salary below a minimum salary required by subsection (a)(1) or (b)(1) of this section in order to use grant funds for legally required nonmonetary benefits and taxes for that salary.

(5) For example, in Fiscal Year 2023, a county sheriff's [sheriffs] minimum annual salary is $50,000 and the county pays $3,825 for the employers share of payroll taxes, pays $2,500 to Texas County and District Retirement System (TCDRS) for an employers matching retirement contribution, and $2,500 for health insurance premiums. In Fiscal Year 2024, because of the grant, the annual salary is $75,000, the employers share of payroll taxes is $5,737.50, the employers matching contribution to TCDRS is $3,750, and health insurance premiums are $2,500. The county may use grant funds to increase the sheriff's [sheriffs] annual budget by $25,000 + $1,912.50 + $1,250 = $28,162.50. In Fiscal Year 2025, because of the grant, the county may use grant funds to continue to fund the increase to the sheriff's [sheriffs] annual budget for the annual salary increase by $25,000 + $1,912.50 + $1,250 = $28,162.50.

(j) For additional employees hired under subsections (a)(2)(B) or (c)(2) of this section:

(1) the cost of hiring the additional employees includes:

(A) the salary, which, if applicable, must meet the minimum annual salary required by subsections (a)(1) and (b)(1) of this section; and

(B) the legally required nonmonetary benefits and taxes for that employee, including:

(i) the employers share of payroll taxes;

(ii) if applicable, the employers share of retirement contributions; and

(iii) if applicable, the employers share of health insurance premiums.

(2) The cost of hiring the additional employees does not include:

(A) overtime pay;

(B) compensatory time pay that is paid out; or

(C) longevity pay.

(3) Determination of whether an employee is an additional employee is based on whether the position existed on the last day of the entity's [entitys] fiscal year ending prior to the first year the entity received grant funds.

(4) For the additional position to be eligible for salary increases funded by the grant, it must be an eligible salary increase under subsection (a)(2)(A) or (c)(1) of this section.

(5) For example, in Fiscal Year 2024, a county hires a new deputy sheriff with the following costs: a salary of $50,000, $3,825 for the employers share of payroll taxes, $2,500 to Texas County and District Retirement System (TCDRS) for an employers matching retirement contribution, and $2,500 for health insurance premiums. Total Fiscal Year 2024 allowable costs are $58,825. In Fiscal Year 2025, the county continues to employ this deputy sheriff and provides a salary increase of $2,500 resulting in an $192 increase in the employers share of payroll taxes, an $192 increase in the employers matching retirement contribution, and no increase in health insurance premiums. This position is eligible for a salary increase under subsection (a)(2)(A) of this section. Total Fiscal Year 2025 allowable costs for this position are $61,709, which include the same amount of $58,825 that it cost to create the position in FY 2024 plus the cost of $2,884 to increase the salary.

(k) For vehicle leases to be considered a purchase as described in subsection (a)(2)(C) of this section, the grant recipient must:

(1) have the right to purchase the vehicle on performing conditions stated in the agreement; [,] and

(2) have an immediate right to possess the vehicle.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 15, 2025.

TRD-202502946

Victoria North

General Counsel for Fiscal and Agency Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: September 28, 2025

For further information, please call: (512) 475-2220

The Comptroller of Public Accounts proposes the repeal of §16.306, concerning provisions applicable to fiscal year 2024.

The legislation enacted within the last four years that provides the statutory authority for these sections is Senate Bill 22, 88th Legislature, R.S., 2023.

The comptroller proposes to repeal §16.306 since it is no longer needed.

Tetyana Melnyk, Director of Revenue Estimating Division, has determined that during the first five years that the proposed rule repeal is in effect, the repeal will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to the agency; will not require an increase or decrease in fees paid to the agency; will not increase or decrease the number of individuals subject to the rule's applicability; and will not positively or adversely affect this state's economy.

Ms. Melnyk also has determined that the proposed rule repeal would have no significant fiscal impact on the state government, units of local government, or individuals. The proposed rule repeal would benefit the public by conforming the rule to current statute. There would be no significant anticipated economic benefit or cost to the public. The proposed rule repeal would have no significant fiscal impact on small businesses or rural communities.

You may submit comments on the proposal to Russell Gallahan, Manager, Local Government and Transparency, Comptroller of Public Accounts, P.O. Box 13186, Austin, Texas 78701-3186 or to the email address: SB22.Grants@cpa.texas.gov. The comptroller must receive your comments no later than 30 days from the date of publication of the proposal in the Texas Register.

The repeal is proposed under Local Government Code, §§130.911(h), 130.912(g) and 130.913(g), which require the comptroller to adopt rules to administer a grant program to provide financial assistance to qualified sheriff's offices, constable's offices, and prosecutor's offices in rural counties.

The repeal implements Local Government Code, §§130.911, 130.912 and 130.913.

§ 16.306. Provisions Applicable to Fiscal Year 2024.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 15, 2025.

TRD-202502945

Victoria North

General Counsel for Fiscal and Agency Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: September 28, 2025

For further information, please call: (512) 475-2220

PART 5. TEXAS COUNTY AND DISTRICT RETIREMENT SYSTEM

CHAPTER 101. PRACTICE AND PROCEDURE REGARDING CLAIMS

The Board of Trustees ("Board") of the Texas County and District Retirement System ("TCDRS") proposes the repeal of current 34 TAC Chapter 101 ("Chapter 101"), relating to practice and procedure regarding claims before TCDRS, and proposes to replace current Chapter 101 with proposed new Chapter 101, also relating to general rules and procedures regarding claims before TCDRS. This proposal is part of the administrative rule review conducted by TCDRS in compliance with Government Code §2001.039.

REPEAL OF CURRENT CHAPTER 101

TCDRS proposes the repeal of current 34 TAC Chapter 101, which includes the following sections: 34 TAC §101.1, Definitions; 34 TAC §101.2 Scope and Application; 34 TAC §101.3, Filing of Documents; 34 TAC §101.4, Computation of Time; 34 TAC §101.5, Applications for Benefits or Asserting Other Claims; 34 TAC §101.6, Time for Filing of Retirement Applications and First Annuity Payments; 34 TAC §101.7, Supporting Documents To Be Submitted; 34 TAC §101.8, Service Retirement Benefits Approved by Director; 34 TAC §101.9, Disability Retirement Applications Referred to Medical Board; 34 TAC §101.10, Disability Retirement Benefits Approved by Director; 34 TAC §101.11, Summary Disposition of Other Approved Applications; 34 TAC §101.12, Contest of Application: Form and Content; 34 TAC §101.13, Notice of Prehearing Disposition; 34 TAC §101.14, Procedure for Obtaining Hearing of Claim Denied in Whole or in Part by Director as Contested Case; 34 TAC §101.15, Hearing of Conflicting and Contested Claims; 34 TAC §101.16, Conduct of Contested Case Hearings; 34 TAC §101.17, Proposals for Decision; 34 TAC §101.18, Filing of Exceptions, Briefs, and Replies; 34 TAC §101.19, Board Consideration and Action; 34 TAC §101.20, Final Decisions and Orders; 34 TAC §101.21, When Decisions Become Final; 34 TAC §101.22, Motions for Rehearing; 34 TAC §101.23, Rendering of Final Decision or Order; 34 TAC §101.24, The Record; 34 TAC §101.25, Proceedings for Review, Suspension, or Revocation of Disability Benefits; and 34 TAC §101.26, Applicability to Pending Proceedings.

PROPOSAL OF NEW CHAPTER 101

As proposed, the new Chapter 101 will address: 34 TAC §101.1, Definitions; 34 TAC §101.2, Scope and Application; 34 TAC §101.3, Filing of Documents; 34 TAC §101.4, Computation of Time; 34 TAC §101.5, Time for Filing of Retirement Applications and First Annuity Payment; 34 TAC §101.6, Supporting Documents to be Submitted; 34 TAC §101.7, Service Retirement Benefits Approved by Director; 34 TAC §101.8, Disability Retirement Applications Referred to Medical Board; 34 TAC §101.9, Disability Retirement Benefits Approved by Director; 34 TAC §101.10, Summary Disposition by the Director; 34 TAC §101.11 Appeal of Administrative Decision; 34 TAC §101.12, Board Consideration and Action; 34 TAC §101.13, Proceedings for Review, Suspension, or Revocation of Disability Benefits, and 34 TAC §101.14, Exclusive Purpose.

BACKGROUND AND PURPOSE

TCDRS proposes to repeal and replace Chapter 101 to update definitions, which will be used consistently throughout all TCDRS administrative rules, and to update procedures for benefit claims and contests. In addition, the repeal and replacement of Chapter 101 is proposed as a result of TCDRS' rule review, which was conducted pursuant to Government Code §2001.039.

Many provisions of proposed new Chapter 101 rules are substantially similar to the provisions of the existing Chapter 101, which is proposed to be repealed. There are, however, some substantive changes in the proposed new rules, which are described below.

SECTION-BY-SECTION SUMMARY

The proposed repeal of Chapter 101, containing §§101.1 - 101.26, allow for updates to be proposed.

Proposed new Chapter 101, General Rules and Procedure Regarding Claims, contains the rules listed below.

Proposed new §101.1 provides new definitions and changes to existing definitions to improve clarity and to enhance understanding of the rules. The new definitions are replaced throughout Chapter 101 and in subsequent chapters.

Proposed new §101.2 permits the Director to delegate authority to a TCDRS employee to take actions, make decisions or execute documents for which the Director has responsibility under these rules and pursuant to §845.202, Government Code.

Proposed new §101.3 updates filing rules to include processes for electronic filing of documents.

Proposed new §101.4 clarifies how computation of time is determined when a deadline falls on a weekend or holiday.

Proposed new §§101.5 - 101.7 include non-substantive updates to terminology pursuant to the new definitions in § 101.1.

Proposed new §101.8 permits the Director to approve a disability retirement application without referral to the medical board when a member has been approved for a disability benefit by the Social Security Administration.

Proposed new §101.9 includes non-substantive updates to terminology pursuant to the new definitions in §101.1.

Proposed new §101.10 permits the Director to approve an Employer's request for credited service (service by employees before the Employer began participation with TCDRS).

Proposed new §101.11 streamlines the process related to the appeal of administrative determinations and clarifies that Chapter 2001 of Government Code governs contested cases before the State Office of Administrative Hearings.

Proposed new §§101.12 - 101.13 include non-substantive updates to terminology pursuant to the new definitions in §101.1.

Proposed new §101.14 states the exclusive purpose rule, which is moved from Chapter 107 to Chapter 101 to improve the organization of the rules.

New Chapter 101 also reorders and renumbers rules to make them procedurally chronological, and current rules §§101.5, 101.12 - 101.24, and 101.26 (all relating to contesting an administrative decision) are deleted as redundant with the administrative hearings process defined in Chapter 2001 of the Government Code.

On June 12, 2025, the TCDRS Board approved the publication for comment of the proposed repeal of current Chapter 101 and the proposed replacement of current Chapter 101 with the proposed Chapter 101 rules.

FISCAL NOTE

Amy Bishop, Executive Director of TCDRS, has determined that for the first five-year period the proposed new rules are in effect there will be no foreseeable fiscal implications to state or local governments as a result of enforcing or administering the proposed rules.

PUBLIC COST/BENEFIT

Ms. Bishop also has determined that for each year of the first five years the proposed new rules are in effect, the public benefit of Chapter 101 will be a more concise and accurate statement of the administrative rules of TCDRS regarding benefits administration and claims, and to enhance comprehension of the rules for TCDRS members, participating Employers, and other interested parties.

LOCAL EMPLOYMENT IMPACT STATEMENT

TCDRS has determined that there will be no adverse economic effects on local economies or local employment because of the proposed new rules, which are proposed for clarification of TCDRS member benefits administration and claims. Therefore, no local employment impact statement is required under Government Code §2001.022.

ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS

TCDRS has determined that there will be no adverse economic effects on small businesses, micro-businesses, or rural communities because the proposed new rules are proposed for clarification of TCDRS member benefits administration and claims. Therefore, neither an economic impact statement nor a regulatory flexibility analysis is required under Government Code §2006.002.

GOVERNMENT GROWTH IMPACT STATEMENT

TCDRS has determined that for each year of the first five years the proposed new rules are in effect, the proposed rules: will not create or eliminate any TCDRS programs; will not require either the creation of or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to TCDRS (TCDRS does not receive any legislative appropriations); will not require an increase or decrease in fees paid to TCDRS; will not create a new regulation (because new Chapter 101 updates and replaces existing Chapter 101); does not expand, limit or repeal an existing regulation (because new Chapter 101 updates and replaces existing Chapter 101); does not increase or decrease the number of individuals subject to the rules' applicability; and, does not affect this state's economy.

TAKINGS IMPACT ASSESSMENT

TCDRS has determined that there are no private real property interests affected by the proposed new rules, therefore a takings impact assessment is not required under Government Code §2007.043.

COSTS TO REGULATED PERSONS

TCDRS has determined that Government Code §2001.0045(b) does not apply to the proposed new rules because they do not impose a cost on regulated persons (including another state agency, a special district, or a local government).

ENVIRONMENTAL RULE ANALYSIS

The proposed new rules are not a "major environmental rule" as defined by Government Code §2001.0225. The proposed rules are not specifically intended to protect the environment or to reduce risks to human health from environmental exposure. Therefore, a regulatory environmental analysis is not required.

COMMENTS

Comments on the proposed rules may be submitted to Ann McGeehan, General Counsel, TCDRS, Barton Oaks Plaza IV, Ste 500, 901 South MoPac Expy, Austin, Texas 78746, or submitted electronically to TCDRSRuleComments@tcdrs.org. Written comments must be received by TCDRS no later than 30 days after publication of this notice in the Texas Register.

STATUTORY AUTHORITY

The repeal of existing Chapter 101 is proposed and implements the authority granted under the following provisions of the TCDRS Act: (i) Government Code §845.102, which allows the Board to adopt rules it finds necessary or desirable for the efficient administration TCDRS; (ii) Government Code §844.403, which allows the Board to adopt rules necessary or desirable to implement Chapter 844, Subchapter D, which relates to disability retirement benefits; (iii) Government Code §845.116, which allows the Board to adopt rules and procedures relating to the electronic filings and transfers. In addition, the rule changes are proposed as a result of TCDRS' rule review, which was conducted pursuant to Government Code §2001.039.

CROSS REFERENCE TO STATUTE

The proposed repeal of Chapter 101 implements §§ 844.403, 845.116 and 845.102 of the Government Code. No other statute, code or article is affected by the proposed rules.

§ 101.1. Definitions.

§ 101.2. Scope and Application.

§ 101.3. Filing of Documents.

§ 101.4. Computation of Time.

§ 101.5. Applications for Benefits or Asserting Other Claims.

§ 101.6. Time for Filing of Retirement Applications and First Annuity Payments.

§ 101.7. Supporting Documents To Be Submitted

§ 101.8. Service Retirement Benefits Approved by Director.

§ 101.9. Disability Retirement Applications Referred to Medical Board.

§ 101.10. Disability Retirement Benefits Approved by Director.

§ 101.11. Summary Disposition of Other Approved Applications.

§ 101.12. Contest of Application: Form and Content.

§ 101.13. Notice of Prehearing Disposition.

§ 101.14. Procedure for Obtaining Hearing of Claim Denied in Whole or in Part by Director as Contested Case.

§ 101.15. Hearing of Conflicting and Contested Claims.

§ 101.16. Conduct of Contested Case Hearings.

§ 101.17. Proposals for Decision.

§ 101.18. Filing of Exceptions, Briefs, and Replies.

§ 101.19. Board Consideration and Action.

§ 101.20. Final Decisions and Orders.

§ 101.21. When Decisions Become Final.

§ 101.22. Motions for Rehearing.

§ 101.23. Rendering of Final Decision or Order.

§ 101.24. The Record.

§ 101.25. Proceedings for Review, Suspension, or Revocation of Disability Benefits.

§ 101.26. Applicability to Pending Proceedings.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 18, 2025.

TRD-202502968

Ann McGeehan

General Counsel

Texas County and District Retirement System

Earliest possible date of adoption: September 28, 2025

For further information, please call: (512) 328-8889

STATUTORY AUTHORITY

Proposal of the new Chapter 101 is proposed and implements the authority granted under the following provisions of the TCDRS Act: (i) Government Code §845.102, which allows the Board to adopt rules it finds necessary or desirable for the efficient administration TCDRS; (ii) Government Code §844.403, which allows the Board to adopt rules necessary or desirable to implement Chapter 844, Subchapter D, which relates to disability retirement benefits; (iii) Government Code §845.116, which allows the Board to adopt rules and procedures relating to the electronic filings and transfers. In addition, the rule changes are proposed as a result of TCDRS' rule review, which was conducted pursuant to Government Code §2001.039.

CROSS REFERENCE TO STATUTE

The proposed new rules implement §§ 844.403, 845.116 and 845.102 of the Government Code. No other statute, code or article is affected by the proposed rules.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 18, 2025.

TRD-202502969

Ann McGeehan

General Counsel

Texas County and District Retirement System

Earliest possible date of adoption: September 28, 2025

For further information, please call: (512) 328-8889

CHAPTER 103. CALCULATIONS OR TYPES OF BENEFITS

The Board of Trustees ("Board") of the Texas County and District Retirement System ("TCDRS") proposes amendments to Chapter 103 concerning Calculations or Types of Benefits. This proposal is part of the administrative rule review conducted by TCDRS in compliance with the Government Code §2001.039.

BACKGROUND AND PURPOSE

As a result of the review, TCDRS proposes amendments to §§103.1 - 103.11. The amendments are mostly non-substantive and include changes to terminology consistent with changes simultaneously proposed to §101.1 concerning definitions, and updates to reflect federal law and current processes. The amendments are discussed below.

SECTION-BY-SECTION SUMMARY

Proposed amendments to §§103.1 - 103.3, 103.8, and 103.11 are non-substantive changes to clarify language and update terminology consistent with the definitions proposed in §101.1.

Proposed amendments to §103.4 include non-substantive changes to terminology consistent with changes simultaneously proposed to §101.1 and repeals unnecessary and outdated language concerning the process to submit prior service data to TCDRS.

Proposed amendments to §103.5 reflect federal changes to the required minimum distribution date. In addition, language is updated to reflect current procedures, including when a required minimum distribution is required to be made when a member is actively working for a TCDRS employer or for an employer that participates in the proportionate retirement program.

Proposed amendments to §103.6 include non-substantive changes to terminology consistent with changes simultaneously proposed to §101.1, and repeals outdated language in subsection (b) that imposes unnecessary time deadlines for receipt of additional contributions.

Proposed amendments to §103.7 include non-substantive changes to terminology consistent with changes simultaneously proposed to §101.1, and repeals subsection (b) that includes outdated language concerning a provision of law that was repealed and subsection (c) which duplicates the language of Section 844.007 of the Government Code.

Proposed amendments to §103.9 include non-substantive changes to terminology consistent with changes simultaneously proposed to §101.1 and repeals unnecessary definitions and language that duplicates Section 844.009 of the Government Code.

Proposed amendments to §103.10 update definitions consistent with the definitions proposed in §101.1 and strikes the restriction on disclaiming a benefit by a beneficiary. This restriction is not required under the TCDRS Act and creates unintended consequences.

On June 12, 2025, the TCDRS Board approved the publication for comment of the proposed amendments to Chapter 103.

FISCAL NOTE

Amy Bishop, Executive Director of TCDRS, has determined that for the first five-year period the proposed new rules are in effect there will be no foreseeable fiscal implications to state or local governments as a result of enforcing or administering the proposed rules.

PUBLIC COST/BENEFIT

Ms. Bishop also has determined that for each year of the first five years the proposed new rules are in effect, the public benefit of Chapter 103 will be a more concise and accurate statement of the administrative rules of TCDRS regarding how benefits are calculated and the types of benefits available under the TCDRS plan, and to enhance comprehension of the rules for TCDRS members, participating Employers, and other interested parties.

LOCAL EMPLOYMENT IMPACT STATEMENT

TCDRS has determined that there will be no adverse economic effects on local economies or local employment because of the proposed new rules, which are proposed for clarification of how TCDRS benefits are calculated and types of benefits available under the TCDRS plan, and to enhance comprehension of the rules for TCDRS members, participating Employers, and other interested parties. Therefore, no local employment impact statement is required under Government Code §2001.022.

ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS

TCDRS has determined that there will be no adverse economic effects on small businesses, micro-businesses, or rural communities because the proposed new rules are proposed for clarification of how TCDRS benefits are calculated and types of benefits available under the TCDRS plan, and to enhance comprehension of the rules for TCDRS members, participating Employers, and other interested parties. Therefore, neither an economic impact statement nor a regulatory flexibility analysis is required under Government Code §2006.002.

GOVERNMENT GROWTH IMPACT STATEMENT

TCDRS has determined that for each year of the first five years the proposed new rules are in effect, the proposed rules: will not create or eliminate any TCDRS programs; will not require either the creation of or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to TCDRS (TCDRS does not receive any legislative appropriations); will not require an increase or decrease in fees paid to TCDRS; will not create a new regulation; does not expand, limit or repeal an existing regulation; does not increase or decrease the number of individuals subject to the rules' applicability; and, does not affect this state's economy.

TAKINGS IMPACT ASSESSMENT

TCDRS has determined that there are no private real property interests affected by the proposed new rules, therefore a takings impact assessment is not required under Government Code §2007.043.

COSTS TO REGULATED PERSONS

TCDRS has determined that Government Code §2001.0045(b) does not apply to the proposed new rules because they do not impose a cost on regulated persons (including another state agency, a special district, or a local government).

ENVIRONMENTAL RULE ANALYSIS

The proposed new rules are not a "major environmental rule" as defined by Government Code §2001.0225. The proposed rules are not specifically intended to protect the environment or to reduce risks to human health from environmental exposure. Therefore, a regulatory environmental analysis is not required.

COMMENTS

Comments on the proposed rules may be submitted to Ann McGeehan, General Counsel, TCDRS, Barton Oaks Plaza IV, Ste 500, 901 South MoPac Expy, Austin, Texas 78746, or submitted electronically to Written comments must be received by TCDRS no later than 30 days after publication of this notice in the Texas Register.

STATUTORY AUTHORITY

The amendment of existing Chapter 103 is proposed and implements the authority granted under Government Code §845.102, which allows the Board to adopt rules it finds necessary or desirable for the efficient administration of TCDRS. In addition, the rule changes are proposed because of TCDRS' rule review, which was conducted pursuant to Government Code §2001.039.

CROSS REFERENCE TO STATUTE

The proposed new rules implements § 845.102 of the Government Code. No other statute, code or article is affected by the proposed rules.

§ 103.1. Actuarial Tables.

(a) Service retirement benefits and disability retirement benefits for which the first benefit payment is payable before January 1, 2018, shall be calculated under the following rules:

(1) The annuity purchase rate is calculated on the basis of the UP-1984 table with an age setback of five years for retirees and an age setback of 10 years for beneficiaries, with a 30% reserve refund assumption for the standard benefit.

(2) Annuity purchase rates are based on the respective retiree's and beneficiary's attained ages in years.

(b) For benefits payable on or after January 1, 2018, service retirement benefits and disability retirement benefits shall be calculated under the following rules:

(1) The annuity purchase rate for the portion of the benefit that is associated with service credit and any prior service credit that accrued before January 1, 2018, and all future interest earned and employer matching attributable to this portion shall be calculated based on the assumptions described in Subsection [subsection] (a)(1) of this section.

(2) The annuity purchase rate for the portion of the benefit that is associated with service credit that accrues on or after January 1, 2018 and is not included in amounts described in (b)(1) above shall be calculated on a generational mortality basis using the RP-2000 Combined Mortality Table, with a one-year set forward for males and no set forward for female, projected to 2014 using Scale AA and for projections after 2014 using 110% of MP-2014 Ultimate Projection Scale, with a 32.79% reserve refund assumption for the standard benefit. Mortality assumptions for these calculations are blended 50% male and 50% female for retirees, and blended 30% male and 70% female for beneficiaries.

(3) The annuity purchase rates are based on the respective retiree's and beneficiary's attained age in years and months regardless of when the service credit was accrued.

(4) For purposes of this rule, service credit means the monetary credits allowed a member for service for a participating employer as defined in Section 841.001(16) of the [Texas] Government Code.

§ 103.2. Additional Optional Retirement Annuities.

(a) A member entitled to retirement may elect to receive, in lieu of a standard retirement benefit, one of the following optional annuities, each of which is a reduced monthly annuity that is the actuarial equivalent of the standard retirement benefit, payable during the lifetime of the retiree, but with the provision that:

(1) after the retiree's death, one hundred percent of the reduced annuity is payable throughout the life of an individual designated by the retiree;

(2) after the retiree's death, three-fourths of the reduced annuity is payable throughout the life of an individual designated by the retiree;

(3) after the retiree's death, one-half of the reduced annuity is payable throughout the life of an individual designated by the retiree;

(4) after the retiree's death, one hundred percent of the reduced annuity is payable throughout the life of an individual designated by the retiree, except that if the designated individual predeceases the retiree, the annuity payable throughout the remaining life of the retiree is the annuity that would be payable if the retiree had originally chosen a standard retirement annuity;

(5) if the retiree dies before 120 reduced monthly annuity payments have been made, the remainder of the 120 payments are payable to the retiree's beneficiary or, if one does not exist, to the retiree's spouse, or if no surviving spouse exists, to the retiree's estate; or

(6) if the retiree dies before 180 reduced monthly annuity payments have been made, the remainder of the 180 payments are payable to the retiree's beneficiary or, if one does not exist, to the retiree's spouse, or if no surviving spouse exists, to the retiree's estate.

(b) If payments under a standard or optional retirement annuity cease before the sum of all such payments equals or exceeds the amount of accumulated contributions in the individual account in the employees saving fund at the time of retirement of the member on whose service the annuity was based, a lump-sum benefit equal to the amount by which the accumulated contributions exceed the sum of all such payments made under the annuity is payable in the manner described in Section 844.402 of the Government Code [§844.402].

§ 103.3. Beneficiary Designations and Payment Elections Requiring Spousal Consent.

(a) A member eligible for retirement must certify to the current marital status of the member on any withdrawal or retirement application filed with TCDRS [the system].

(1) A member eligible for retirement who is married may not select a form of payment of a retirement benefit other than as a qualified joint-and-survivor annuity unless the member's spouse consents to the selection.

(2) A member eligible for retirement who is married may not withdraw from membership and receive a refund unless the member's spouse consents to the refund.

(3) A member who is unmarried may designate any beneficiary and select any form of payment of a retirement benefit permitted under the Act.

(b) The consent required by Subsection [subsection] (a) of this section is not required if it is established to the satisfaction of TCDRS [the system] that:

(1) there is no spouse;

(2) the spouse cannot be located;

(3) the spouse has been judicially declared incompetent in which case the consent may be given by the guardian or other ad litem;

(4) a duly licensed physician has determined that the spouse is not mentally capable of managing his or her own affairs and the Director [s>director] is satisfied that a guardianship of the estate is not necessary;

(5) the spouse and the member will have been married for less than one year as of the date the member files a valid application for a refund of the member's accumulated deposits, or as of the effective retirement date designated by the member on the member's valid application for retirement; or

(6) no service performed by the member as an employee of a participating Employer [subdivision] and credited in TCDRS [the system] was performed during the marriage of the member and the spouse.

(c) For the purposes of this section, the term "qualified joint-and-survivor [joint-and survivor] annuity" means a retirement annuity for the life of the member with a survivor annuity for the life of the member's spouse which is not less than 50% of the amount of the annuity which is payable during the joint lives of the member and spouse.

(d) [(e)] TCDRS [The system] and employees of TCDRS [the system] may rely upon the certification of the member filed under this section, and are not liable to any person for making payments of any benefits in accordance with the certification even though the certification is later shown to have been untrue on the date of execution.

§ 103.4. Certification of Prior Service and Average Prior Service Compensation.

(a) Pursuant to Sections [§§]843.101- 843.104 of the [Texas] Government Code, an Employer [a subdivision] must certify to TCDRS [the system] the service performed by employees of the Employer [subdivision] before the Employer's [subdivision's] participation in TCDRS [the retirement system] became effective and must also certify the average prior service compensation of those members.

(b) The Employer [subdivision] must certify each member's prior service by calculating one month of credited service for each calendar month during which the member performed at least one day of service for the Employer [subdivision] other than as a temporary employee, prior to the month that includes the Employer's [subdivision's] effective participation date. The certification must be submitted in accordance with the instructions provided by TCDRS.

(c) [(g)] An Employer [a subdivision] must certify the prior service and average prior service compensation of all eligible members no later than 90 [30] days after the Employer's [subdivision's] effective date of participation. In the case of a member eligible for prior service credit under Section [§]843.102(a)(2) of the [Texas] Government Code, the Employer [subdivision] must make the certification no later than 90 [30] days after the six month period of re-employment. Calculations of prior service credit are governed by the law in effect at the time of the calculation. TCDRS [The system] may extend the time periods set forth in this subsection [(g)].

(d) [(h)] If, under Section [§]843.201 of the [Texas] Government Code, an Employer [a subdivision] has acquired a public facility or assumed a governmental function, the date of acquisition or assumption shall be the effective date of participation for purposes of calculating the prior service and average prior service compensation of those members eligible under that section.

§ 103.5. Required Distribution [Benefit Distribution Requirements].

(b) General Rules:

(1) [(3)] The remaining interest of a deceased retiree's benefit must continue to be distributed as rapidly as the method of distribution being used before the retiree's death.

(2) [(4)] The entire interest that becomes payable because of the death of a member who has a designated beneficiary as defined in regulations to Section [§]401(a)(9) of the Internal Revenue Code must be distributed over the life of the designated beneficiary or over a period not extending beyond the life expectancy of the designated beneficiary. Distributions shall begin no later than the applicable date specified in Section 401(a)(9) of the Internal Revenue Code. [A distribution under this provision after December 31, 1995, must:]

(3) [(5)] The entire interest that becomes payable because of the death of a member who does not have a designated beneficiary must be distributed within five years of the death of the member.

(4) [(6)] For a distribution made by TCDRS [the retirement system] to which Section [§]401(a)(9) of the Internal Revenue Code applies, TCDRS [the system] shall apply the minimum distribution requirements of Section [§]401(a)(9) of the Internal Revenue Code [of 1986] in a manner that complies with a reasonable good faith interpretation of Section [§]401(a)(9) of the Internal Revenue Code.

§ 103.6. Recalculation of Retirement Annuities to Include Post-Retirement Deposits.

(a) If a contribution that would otherwise be credited to the member's individual account in TCDRS [the system] is deposited after the member's effective retirement date, the retirement annuity shall be recalculated in accordance with this section.

(b) [(c)] A retirement annuity subject to this section will be recalculated as of the effective retirement date by taking into account the additional accumulated contributions and the related increases in current service credit and matching credit. The recalculated retirement annuity will be based on the age of the retiree (and the age of the beneficiary in the case of a joint and survivor option) as of the effective retirement date.

(c) [(d)] The recalculated retirement annuity is payable only prospectively beginning with the month following the month in which TCDRS [the retirement system] receives the deposit.

§ 103.7. Determination of Reestablished Credit.

[(a) Except as provided in subsection (b) of this section,] For [for] purposes of determining the current service credit and multiple matching credit of the member under Section 843.003 [Texas Government Code, §843.403] of the Government Code, the amount deposited by the member (excluding any [the] withdrawal charge) [and the amounts described in subsection (b) of this section) after December 31, 1998,] to reestablish credit in TCDRS [the retirement system] shall be considered to be accumulated contributions made by the member to TCDRS [the retirement system] during the calendar year of deposit. The percentage to be used for the determination of the multiple matching credit of the member with respect to such deposit is that percentage adopted by the governing board of the authorizing Employer [subdivision] and in effect during the month in which the deposit is made. [The multiple matching credit percentage may be increased by the governing board on the terms provided by the Government Code, Chapter 844, Subchapter H.]

§ 103.8. Limit on Payments During the Limitation Year.

(a) The limitation year used by TCDRS [the retirement system] for determining the maximum annual benefit which may be paid under Section [§]415(b) of the Internal Revenue Code [of 1986] is the calendar year. Notwithstanding anything to the contrary, TCDRS [the retirement system] will make no payments of a retirement annuity with respect to a retiree in excess of the annual limit as determined in accordance with Section [§]415(b) of the Internal Revenue Code and the regulations thereunder.

(b) If the benefit recipient is not a participant in the TCDRS [Texas County and District Retirement System] Qualified Replacement Benefit Arrangement (34 TAC §§113.1, et seq), the maximum monthly amount of the retirement annuity payable with respect to the retiree during the limitation year shall be the lesser of:

(1) the amount determined under the provisions of Chapter 844 of the[,] Government Code, without regard to the limitations of Section [§]844.008; or

(2) the amount determined by dividing the annual limit for the limitation year determined in accordance with Section [§]415(b) of the Internal Revenue Code, by the number of monthly payments scheduled to be paid with respect to the retiree during the limitation year.

(c) If the benefit recipient is a participant in the TCDRS [Texas County and District Retirement System] Qualified Replacement Benefit Arrangement, the maximum monthly amount of the retirement annuity payable with respect to the retiree shall be the amount determined under the provisions of Chapter 844 of the[,] Government Code, without regard to the limitations of Section [§]844.008. TCDRS [The system] shall cease making monthly payments of the retirement annuity payable with respect to the retiree at that time during the limitation year that the total of payments made with respect to such limitation year equals the maximum annual benefit payable in accordance with Section [IRC §]415(b) of the Internal Revenue Code.

(d) In no event shall the total amount paid during the limitation year be less than the lesser of that amount payable with respect to the retiree as determined under the provisions of Chapter 844 of the[,] Government Code without regard to Section [§]844.008; or the annual limit for the limitation year determined in accordance with Section [IRC §]415(b) of the Internal Revenue Code.

(e) TCDRS [The system] will make retroactive or prospective adjustments to any benefit payment as appropriate to comply with this section.

§ 103.9. Partial Lump-Sum Distribution on Service Retirement.

(a) [The following words and terms, when used in this section shall have the following meanings unless the context clearly indicates otherwise.]

[(2)] An Employer [Subdivision--A subdivision] participating in TCDRS may authorize [the retirement system that is subject to the provisions of §844.009 of the Act, authorizing] a member to elect to receive a portion of the member's retirement benefit in the form of a single payment as authorized in Section 844.009 of the Government Code.

(b) [(c)] An application for a partial lump sum distribution is a document subject to the certification and spousal consent requirements of Section [§]103.3 [of this title] (relating to Beneficiary Designations and Payment Elections Requiring Spousal Consent).

(c) [(d)] A member may revoke an application for a partial lump sum distribution or reduce the amount of the partial lump sum distribution at any time before the date the first annuity payment becomes due by filing written notice of the revocation or reduction with TCDRS [the system]. The amount of a partial lump sum distribution may not be increased except by the timely filing of a new application.

(d) [(e)] The portion of the partial lump sum distribution that is subject to taxation is a non-periodic distribution for income tax withholding purposes. A member or alternate payee receiving a partial lump sum distribution may elect to have the portion of the partial lump sum distribution that is an eligible rollover distribution transferred directly to a qualified plan, in accordance with the Internal Revenue Code.

§ 103.10. Survivor Annuity.

(a) The beneficiary of a deceased member who had accumulated at least four years of credited service in TCDRS [the system] is eligible to apply for and receive a survivor annuity as described in this section.

(b) The annuity payable under this section to an individual beneficiary shall be the actuarial equivalent, as defined in Section [§]841.001(1) of the Government Code [Act], of the allocated shares of the member's individual account balance and total service credit standing to the credit of the member computed as of the last day of the month preceding the member's death.

(c) An individual designated as beneficiary by the member, or an individual designated as beneficiary under the Act, may elect an annuity to be paid in the form of a life annuity for the beneficiary's life but actuarially reduced to provide a guarantee that the total of all payments will equal or exceed:

(1) the beneficiary's allocated share of the decedent's individual account balance; or

(2) the equivalent of 120 monthly payments; or

(3) the equivalent of 180 monthly payments.

(d) In lieu of an annuity, the beneficiary may elect a refund of the beneficiary's allocated share of the deceased member's individual account, unless the member elected to remove the withdrawal option.

(e) The annuity shall be calculated using the beneficiary's age on the last day of the month preceding the member's death and computed on the beneficiary's allocated shares of the deceased member's individual account balance and total service credit standing to the credit of the member as of the last day of the month preceding the member's death.

(f) [(g)] In the event that multiple persons are designated as beneficiaries by the member, the deceased member's individual account balance and total service credit shall be prorated among all beneficiaries, and each individual beneficiary may select any payment form described in subsection (c) and (d) of this section, above computed on the shares allocated to that individual. A beneficiary designated by the member or designated under the Act that is not an individual will receive installment payments as described in Subsection (g) [subsection (h)] of this section.

(g) [(h)] A designated beneficiary that is not an individual shall receive an amount equal to the allocated shares of the member's individual account balance and total service credit standing to the credit of the member as of the last day of the month preceding the member's death. The Board [board] authorizes the Director [director], subject to the determination made in Subsection (k) [subsection (l)] of this section, to cause the amount to be paid in up to sixty (60) monthly installments, with the final payment made on or before the last day of the calendar year containing the fifth anniversary of the member's death. Notwithstanding Subsection (j) [subsection (k)] of this section, interest shall accrue on unpaid amounts at the rate provided under the plan beginning from the last day of the month in which all necessary documents and applications have been filed with and approved by TCDRS [the system]. A distribution payable under this subsection is not considered to be a service retirement and therefore is not subject to the immediate transfer requirements of [Government Code,] Section 845.316 of the Government Code.

(h) [(i)] A trustee of a trust having a single primary beneficiary may elect with TCDRS [the system] that the beneficiary of the trust be considered as a named beneficiary for purposes of selecting an annuity but such election shall be effective only if the beneficiary of the trust would be considered a named beneficiary for purposes of the rules and regulations of the Internal Revenue Code relating to required minimum distributions.

(i) [(j)] An individual beneficiary who dies before filing an application for benefits or who fails to file an application within 90 days following notice from TCDRS [the system] that a benefit is payable shall be deemed to have selected the life annuity with the guarantee that the total of all payments will equal or exceed the share of the deceased member's individual account balance allocable to the beneficiary.

(j) [(k)] No interest shall accrue on any benefit payable under this section.

(k) [(l)] If the Director [director] determines that the payment under Subsection (g) [subsection (h)] of this section, of the total accrued benefit or of the unpaid balance of the benefit as a single sum will not harm or injure the funded status of the Employer's [subdivision's] account or jeopardize its ability to pay all benefits as benefits become due, the Board [board] authorizes the Director [director] to cause the distribution of the total accrued benefit or the remaining unpaid balance as the case may be, to be paid as a single sum in full satisfaction of all amounts due under the plan.

(l) [(m)] All distributions under this section must comply with the laws and regulations of the Internal Revenue Code.

§ 103.11. Group Term Life Benefit Based on Extended Coverage.

(a) A member of TCDRS [the system] who had coverage in the Group Term Life benefit program during the last month the member was required to make a contribution to TCDRS [the system] and who dies within 24 calendar months following that month, is considered to have received extended coverage in the Group Term Life benefit program provided that the member was unable to engage in gainful employment or was on leave of absence under the Family and Medical Leave Act of 1993 ("the FMLA") throughout the period beginning with the date of the member's last required contribution and ending on the date of the member's death.

(b) The person making the claim for payment of a Group Term Life benefit based on extended coverage has the burden of establishing that the deceased member was unable to engage in gainful employment or was on leave under the FMLA throughout the entire period of extended coverage, and the claimant must provide evidence satisfactory to TCDRS [the retirement system of that fact].

(c) The following are examples of documents relating to the member that may assist the claimant in meeting this burden of proof:

(1) copy of the decedent's death certificate;

(2) certified statements of attending physicians;

(3) certified statements of caregivers and custodians;

(4) certified statements of Employers [subdivisions] regarding absences under the FMLA;

(5) certified statements of individuals having personal knowledge of the decedent's education, training and work experience;

(6) copies of the decedent's tax returns covering the period of extended coverage;

(7) findings of the Social Security Administration, Workers Compensation Commission or other entities providing compensation for disability, illness or injury.

(d) In its determination of a claim filed under this section, TCDRS [the retirement system] may consider whether the impairment or incapacity affecting the decedent's ability to engage in gainful employment could have been safely diminished by the decedent with reasonable effort to the extent that the decedent would have been able to engage in gainful employment.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 18, 2025.

TRD-202502970

Ann McGeehan

General Counsel

Texas County and District Retirement System

Earliest possible date of adoption: September 28, 2025

For further information, please call: (512) 328-8889

CHAPTER 105. CREDITABLE SERVICE

The Board of Trustees ("Board") of the Texas County and District Retirement System ("TCDRS") proposes amendments to Chapter 105 concerning Creditable Service. This proposal is part of the administrative rule review conducted by TCDRS in compliance with the Government Code §2001.039.

BACKGROUND AND PURPOSE

As a result of the review, TCDRS proposes amendments to §§105.1 - 105.9 and 105.41. The amendments are non-substantive changes to clarify language and to update terminology consistent with changes simultaneously proposed to §101.1 concerning definitions. The amendments are discussed below.

SECTION-BY-SECTION SUMMARY

Proposed amendments to §§105.1 - 105.9 and 105.41 are non-substantive changes to clarify language and update terminology consistent with the definitions proposed in §101.1.

On June 12, 2025, the TCDRS Board approved the publication for comment of the proposed amendments to Chapter 105.

FISCAL NOTE

Amy Bishop, Executive Director of TCDRS, has determined that for the first five-year period the proposed new rules are in effect there will be no foreseeable fiscal implications to state or local governments as a result of enforcing or administering the proposed rules.

PUBLIC COST/BENEFIT

Ms. Bishop also has determined that for each year of the first five years the proposed new rules are in effect, the public benefit of Chapter 105 will be a more concise and accurate statement of the administrative rules of TCDRS regarding how service is calculated under the TCDRS plan, and to enhance comprehension of the rules for TCDRS members, participating Employers, and other interested parties.

LOCAL EMPLOYMENT IMPACT STATEMENT

TCDRS has determined that there will be no adverse economic effects on local economies or local employment because of the proposed new rules, which are proposed to clarify how service is calculated under the TCDRS plan. Therefore, no local employment impact statement is required under Government Code §2001.022.

ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS

TCDRS has determined that there will be no adverse economic effects on small businesses, micro-businesses, or rural communities because the proposed new rules are proposed for clarification of how service is calculated under the TCDRS plan. Therefore, neither an economic impact statement nor a regulatory flexibility analysis is required under Government Code §2006.002.

GOVERNMENT GROWTH IMPACT STATEMENT

TCDRS has determined that for each year of the first five years the proposed new rules are in effect, the proposed rules: will not create or eliminate any TCDRS programs; will not require either the creation of or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to TCDRS (TCDRS does not receive any legislative appropriations); will not require an increase or decrease in fees paid to TCDRS; will not create a new regulation; does not expand, limit or repeal an existing regulation; does not increase or decrease the number of individuals subject to the rules' applicability; and, does not affect this state's economy.

TAKINGS IMPACT ASSESSMENT

TCDRS has determined that there are no private real property interests affected by the proposed new rules, therefore a takings impact assessment is not required under Government Code §2007.043.

COSTS TO REGULATED PERSONS

TCDRS has determined that Government Code §2001.0045(b) does not apply to the proposed new rules because they do not impose a cost on regulated persons (including another state agency, a special district, or a local government).

ENVIRONMENTAL RULE ANALYSIS

The proposed new rules are not a "major environmental rule" as defined by Government Code §2001.0225. The proposed rules are not specifically intended to protect the environment or to reduce risks to human health from environmental exposure. Therefore, a regulatory environmental analysis is not required.

COMMENTS

Comments on the proposed rules may be submitted to Ann McGeehan, General Counsel, TCDRS, Barton Oaks Plaza IV, Ste 500, 901 South MoPac Expy, Austin, Texas 78746, or submitted electronically to TCDRSRuleComments@tcdrs.org. Written comments must be received by TCDRS no later than 30 days after publication of this notice in the Texas Register.

STATUTORY AUTHORITY

The amendment of existing Chapter 105 is proposed and implements the authority granted under Government Code §845.102, which allows the Board to adopt rules it finds necessary or desirable for the efficient administration TCDRS. In addition, the rule changes are proposed because of TCDRS' rule review, which was conducted pursuant to Government Code §2001.039.

CROSS REFERENCE TO STATUTE

The proposed new rules implement § 845.102 of the Government Code. No other statute, code or article is affected by the proposed rules.

§ 105.1. Persons Employed by Multiple Employers [ Subdivisions ].

(a) Any person who is concurrently employed by two or more participating Employers [subdivisions] shall be considered a covered employee of each.

(b) Each employee-member shall make monthly employee contributions at the rate specified in the participation order of the particular Employer [employing subdivision] upon all compensation paid that person by such Employer [employer]. Each Employer [employing subdivision] shall withhold the employee contributions required on account of the compensation paid such employee by such Employer [subdivision].

(c) The employee-member may receive only one month of credited service for any calendar month in which covered service was performed for two or more participating Employers [subdivisions]. When determining an employee-member's retirement eligibility with respect to an Employer [employing subdivision], the credited service for a calendar month in which the employee-member was also performing covered service for another participating Employer [subdivision] shall be counted as credited service performed for the Employer [ employing subdivision], for which retirement eligibility is being determined. When determining the retirement eligibility of an employee-member with respect to both Employers [subdivisions] simultaneously, credited service is subject to the general rules of TCDRS [the system] for recognizing and combining service among the several Employers [subdivisions] but in no event may credited service for any calendar month be counted twice.

§ 105.2. Combining Credited Service with Multiple Employers [Subdivisions].

(a) A member must satisfy the retirement eligibility requirement of the particular Employer [subdivision] with which the member is applying for retirement.

(b) All of a member's credited service in TCDRS [this system], as defined in Section 841.001 [§841.001(7)] of the Government Code [Act], will be combined and recognized for purposes of determining eligibility for service and disability retirements with respect to each Employer [subdivision], and eligibility for the survivor annuity.

(c) All credited service described in Subsection [subsection] (b) [of this section] will be combined with all other credited service of the member recognized under the proportionate retirement program for purposes of determining eligibility for service retirement with respect to each Employer [subdivision].

(d) Credited service of the member recognized under the proportionate retirement program may not be combined with the member's credited service in TCDRS [this system], as defined in Section 841.001 [§841.001(7)] of the Government Code [Act ] for purposes of determining eligibility for any disability retirement or survivor annuity.

(e) When combining service for purposes of determining eligibility, only one month of credited service may be recognized for any particular calendar month.

§ 105.3. [Optional] Credited Service for Active Duty Qualified Military Service.

(a) In this section:

(1) The term "credited service" means membership service for determining retirement eligibility only. Member contributions and monetary credits are not required or permitted with respect to credited service for qualified military service [ established after December 31, 1999].

(2) The term "eligible member" means a member of an Employer [eligible subdivision] who has established credited service in TCDRS [the retirement system] for at least the minimum period required to receive a service retirement annuity from the Employer [subdivision] at age 60, who has performed active duty qualified military service, and who has been released from military duty under honorable conditions.

(3) The term "qualified military service" means active duty service in the uniformed services as defined in 38 U.S.C. Section [§]4303(13). It excludes that service which was performed in a month for which the member has received credited service in TCDRS [this retirement system] under any other provision of the TCDRS Act or the Uniformed Services Employment and Reemployments Rights Act of 1994, and that service, credited by another retirement system, that is recognized by TCDRS [this retirement system] under the proportionate retirement program. A member may not be credited with more than one month of service for any calendar month.

(b) Subject to the limitations in Subsection [subsection] (a) [of this section], an eligible member may receive one month of credited service in TCDRS [the retirement system] for each month of qualified military service performed while on active duty. An eligible member may not establish more than 60 months of credited service in TCDRS [the retirement system] for qualified military service under this section.

§ 105.4. Credited Service Under The Uniformed Services Employment And Reemployment Rights Act.

(a) An eligible member may receive credited service for service in the uniformed services in accordance with the Uniformed Services Employment and Reemployment Rights Act (the USERRA) (38 U.S.C. Section [§]4301 et seq.). Notwithstanding any provision to the contrary, the rights and benefits of an eligible member under TCDRS [the Texas County and District Retirement System (the System)] shall not be less than those rights and benefits provided by the USERRA.

(b) The following words and terms, when used in this section shall have the following meanings unless the context clearly indicates otherwise.

(1) Eligible member -- An employee of a participating subdivision who is or would be considered to be employed in a position eligible for membership but who leaves employment with that subdivision to perform service in the uniformed services; whose employer was notified of the obligation or intention of the employee to perform service in the uniformed services; who is released or discharged from such service on or after December 12, 1994 under honorable conditions; whose cumulative period of service in the uniformed services with respect to that participating subdivision does not exceed five years not including periods excluded under 38 U.S.C. Section [§]§1412(c); who applies for reemployment with that participating subdivision within 90 days of release or discharge from the uniformed services, or after recovery from an illness or injury incurred in, or aggravated during, the performance of service in the uniformed services (but such recovery period does not exceed two years); and who is reemployed by the participating subdivision.

(2) Uniformed services -- The Armed Forces of the United States of America; the Army National Guard and the Air National Guard when engaged in active duty for training, inactive duty training, or full-time National Guard duty; the commissioned corps of the Public Health Service; and any other category of persons designated by the President in time of war or emergency.

(3) Service in the uniformed services -- The performance of duty on a voluntary or involuntary basis in a uniformed service under competent authority and includes active duty, active duty for training, initial active duty for training, inactive duty training, full-time National Guard duty, and a period for which an employee is absent from a position of employment for the purpose of an examination to determine the fitness of the employee to perform such duty.

(4) Participating subdivision -- A subdivision that is participating in TCDRS [the Texas County and District Retirement System] at the time the eligible member leaves employment with the subdivision to perform service in the uniformed services; a subdivision that is not participating in TCDRS [the System] at the time the employee leaves employment with the subdivision to perform service in the uniformed services but commences participation during the period of the employee's performance of duty in a uniformed service; or a subdivision participating in TCDRS [the System] that is a successor in interest to the participating subdivision from which the eligible member left employment to perform service in the uniformed services.

(c) Certification of Eligibility by Participating Subdivision. An eligible member will be credited with current service in accordance with the USERRA upon certification by the participating subdivision on forms provided by TCDRS [the System]:

(1) that the eligible member's reemployment application is timely;

(2) that the eligible member has not exceeded the service limitations set forth in the USERRA;

(3) that the eligible member was not released or discharged from the uniformed service under other than honorable conditions;

(4) of the period in which the eligible member performed service in the uniformed services;

(5) that the eligible member did not receive service credit for the period of uniformed service;

(6) of the estimated compensation that the eligible member would have received from the subdivision but for the period of service in the uniformed services; and

(7) of the eligible member's date of reemployment.

(d) Credited Service and Optional Contributions under the USERRA.

(1) Provided the member has not received credited service for the same month under another provision of [Texas] Government Code, Title 8, an eligible member shall be credited with one month of current service credit for each month or part of a month in which both of the following occur:

(A) the eligible member performed service in the uniformed services, and

(B) the participating subdivision participated in TCDRS [the System].

(2) On or before the last day of the fifth calendar year following the year in which the eligible member was reemployed, the eligible member may, but is not required to, deposit with TCDRS [the System] any or all employee contributions that would have been deposited to the member's individual account for each period during which the member performed service in the uniformed services if the eligible member had been employed with the participating subdivision during the period of uniformed service. Deposits under this provision are considered to be employee contributions made in the calendar year of deposit for purposes of employer matching and are subject to the following rules:

(A) The total deposits may not exceed the amount the eligible member would have been required to contribute had the eligible member remained continuously employed by the participating subdivision throughout the period of service in the uniformed services.

(B) The compensation upon which allowable deposits will be calculated is the estimated compensation that the eligible member would have received from the subdivision but for the period of service in the uniformed services.

(C) For purposes of determining the months of credited service and allowable deposits, months of uniformed service and estimated compensation shall be calculated from the later of the date the eligible member entered uniformed service or the date the participating subdivision commenced participation in TCDRS [the System].

(D) Within the allowable period for making deposits and subject to the maximum total amount of deposits, an eligible member may make deposits at any time and in any amount.

(E) Deposits may be paid directly to TCDRS [the System] by the eligible member or by the employer through payroll deduction. Optional deposits made under this section are employee contributions and may not be returned until the member terminates from employment with the participating employer.

(F) Deposits will be allocated prospective interest only, and in the same manner as interest is allocated on member contributions to individual accounts.

(G) An eligible member receiving credited service under this section for a specific month may not receive credited service for the same month under any other provision of the [Texas] Government Code, Title 8.

§ 105.5. Correction of Errors by Employers: Record Adjustments.

(a) An Employer [The sponsoring employer] is responsible for the correction of an error arising from an act or omission of the Employer [employer] that results in a person contributing more or less than the correct amount to TCDRS [the system] or receiving more or less credited service, service credit or benefits than the person is rightfully entitled to receive under TCDRS [the system].

(b) If the error involves member contributions, the Employer [employer] may initiate the correction process directly via the employer portal on the TCDRS [retirement system] website as follows:

(1) The Employer [employer] must provide identifying information for the affected member or members, the time period during which the error occurred, and the amount of the correction to member contributions submitted by the Employer [employer]. The member contributions are determined according to the employee deposit rate in effect at the time that the error occurred.

(2) TheEmployer [employer] will also submit an employer contribution based on the sum total of the member contributions made in connection with the correction and the employer contribution rate in effect at the time that the correction is made by the Employer [employer].

(c) Depending on the nature of adjustment requested pursuant to this section, the Director [director] may require that the application must be approved by the governing board of the Employer [employer] or by the county judge or chief operating officer of the Employer [employer] before it may be accepted by TCDRS [the system].

(d) Adjustments to service credits or benefits shall be considered as part of, and funded in the same manner as, any other pension liabilities of TCDRS [the system].

(e) A person seeking an adjustment to a record based on an act or omission of the Employer [subdivision] must apply to the Employer [sponsoring employer] for a correction of the error. TCDRS [The system] will not receive applications for record adjustments from any person other than an Employer [employer]. If TCDRS [the system] receives information relating to a possible error from a person other than an Employer [employer], TCDRS [the system] shall forward the information to the appropriate Employer [employer].

§ 105.6. Calculation of Current Service Credit.

(a) Except as otherwise provided by law or rules established by TCDRS [the System], TCDRS [the System] shall credit a member with one month of current service for each calendar month for which contributions are made, reported, and certified by the Employer [employing subdivision] for purposes of determining length-of-service requirements and calculating benefits.

(b) Except as otherwise provided by law or rules established by TCDRS [the System], if an elected county or precinct official who is a member declines compensation pursuant to Section [§]152.052 of the [Texas] Local Government Code, TCDRS [the System] shall credit such member with one month of credited service for each month worked without compensation that is reported and certified by the Employer [employing subdivision] for purposes of determining length-of-service requirements, but shall not credit such member with service credit (monetary credit) for months worked without compensation for purposes of calculating benefits.

§ 105.7. Service Credit for Certain Public Employment.

(a) An Employer [A participating subdivision] may by order authorize the establishment of credited service for service performed by employees of a governmental entity that subsequently:

(1) was merged, converted, or otherwise transferred into the Employer [participating subdivision]; or

(2) transferred the employment of the employees to the Employer [participating subdivision].

(b) A member eligible for credited service under this section pursuant to an order adopted under Subsection (a) is one who was employed by a governmental entity on the date that the governmental entity was merged, converted or otherwise transferred into the Employer [participating subdivision] or the date that such member's employment was transferred to the Employer [participating subdivision].

(c) If a member is eligible for proportionate service under Chapter 803 of the [Texas] Government Code for the service for the governmental entity described by Subsection (a), then no additional credited service is available under this section.

§ 105.8. Employee Termination Date.

An Employer [A participating subdivision] must submit the date of termination of employment for each member who is enrolled in TCDRS [the retirement system]. The termination date should be submitted to TCDRS as soon as practicable after [the retirement system within 15 days of] the member’s termination of employment[, or as soon as practicable].

§ 105.9. Notice By Employer [Participating Subdivision] of Certain Felony Convictions of Elected or Appointed Officers.

(a) An Employer [A participating subdivision] must provide written notice on a form prescribed by TCDRS [the Texas County and District Retirement System (the "system")] of the conviction of any member of TCDRS [the system] who was elected or appointed to a public office of the Employer [participating subdivision] and who is convicted of a qualifying felony committed while in office and arising directly from the official duties of that office.

(b) "Qualifying felony" means any felony that is committed on or after June 6, 2017 involving one or more of the following:

(1) bribery;

(2) embezzlement, extortion, or other theft of public money;

(3) perjury;

(4) coercion of public servant or voter;

(5) tampering with governmental record;

(6) misuse of official information;

(7) conspiracy or the attempt to commit any of the offenses described in paragraphs (1) - (6) of this subsection; or

(8) abuse of official capacity.

(c) An Employer [A participating subdivision] must provide the notice required by Subsection [subsection] (a) [of this section] to TCDRS [the system] no later than the 30th day after the conviction of the member.

(d) The notice should be on a form prescribed by TCDRS [the system] and must:

(1) clearly state the convicted member's name, title of public office, date of conviction, court of jurisdiction, case number, qualifying felony violation, date of offense, and an explanation of the connection of the qualifying felony to the member's performance of his or her official duties;

(2) include a copy of the official conviction of the member entered by court, including the judge's affirmative finding of fact that the member is an elected or appointed holder of a public office of the Employer [participating subdivision] who committed a qualifying felony while in office and in the course of performing official duties of the office; and

(3) if applicable, include a copy of the court's award of all or a portion of the member's service retirement annuity to the member's spouse pursuant to a just and right division upon the member's conviction or pursuant to a written agreement between the spouses entered into prior to the member's conviction as provided by Subchapter B, Family Code.

§ 105.41. Credited Service and Survivor Benefits Under the Heroes Earnings Assistance and Relief Tax Act of 2008 (HEART Act).

(a) In accordance with Section [§]401(a)(37) of the Internal Revenue Code (Section [§]104(a) of the HEART Act), the survivors of a member who dies after December 31, 2006, while performing qualified military service under the USERRA, are entitled to any additional benefits (other than benefit accruals relating to the period of qualified military service) that would have been provided under the employer's plan had the member resumed employment and then terminated employment on account of death.

(b) A deceased member described above will receive credited service for the period of the deceased member's qualified military service for purposes of determining eligibility for a Survivor Annuity in accordance with Section [§]844.407 of the Government Code [Act] (but such period of qualified military service will not increase the deceased member's accrued benefit used to determine the amount of any survivor annuity for which the deceased member's survivors may or may not be eligible).

(c) A deceased member described above will be included in the coverage of any Member Optional Group Term Life Program elected by the employer under Section [§]842.004 of the Government Code [Act], with the death benefit based on the annualized regular rate of pay or regular salary paid the member in accordance with Section [§]844.503(c) of the Government Code [Act] during the most recent pay period of active employment prior to the commencement of qualified military service.

(d) TCDRS [The System] does not adopt the permissive provisions of Section [§]104(b) of the HEART Act, as added by Section [§]414(u)(9) of the Internal Revenue Code relating to benefit accruals. However, pursuant to the authority granted the Board by Section [§]845.102 of the Government Code [Act]), and in conformance with 26 CFR Section [§]1.401(a)(4)-11(d)(3) relating to rules for imputing military service and periods of disability as credited service, any member who, after December 31, 2006, becomes disabled (based on the criteria set forth in subparagraphs (A) and (B) of Section [§]844.303(b)(2) of the Government Code [Act]) while performing the member's qualified military service under the USERRA, is entitled to credited service in TCDRS [the retirement system] for the period of qualified military service under the USERRA. However, such period of qualified military service will not increase the disabled member's accrued benefit used to determine the amount of any service, disability or survivor annuity for which the member or the member's survivors may or may not become eligible. The disabled member will be included in the coverage of any Member Optional Group Term Life program elected by the Employer [employer] under Section [§]842.004 of the Government Code [Act] and not terminated and will, subject to Section [§]844.502 of the Government Code [Act], be eligible to receive extended coverage during the two years following the onset of disability, provided that sufficient evidence of the member's continuous disability and its date of onset is submitted to TCDRS [the retirement system] on application for a death benefit based on the disabled member's compensation described in Subsection [subsection] (c) [of this section].

(e) In accordance with Section [§]414(u)(12) of the Internal Revenue Code (Section [§]105(b) of the HEART Act), and effective as of January 1, 2009, amounts received by a member as a "differential wage payment" (within the meaning of the Internal Revenue Code) for any period that such member is not performing services for the employer by reason of qualified military service will be treated as "compensation" for purposes of benefit accruals under the Act and will be treated as compensation for purposes of the Internal Revenue Code to the extent so required.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 18, 2025.

TRD-202502971

Ann McGeehan

General Counsel

Texas County and District Retirement System

Earliest possible date of adoption: September 28, 2025

For further information, please call: (512) 328-8889

CHAPTER 107. MISCELLANEOUS RULES

The Board of Trustees ("Board") of the Texas County and District Retirement System ("TCDRS") proposes the repeal of current 34 TAC Chapter 107 ("Chapter 107"), relating to miscellaneous rules, and proposes to replace current Chapter 107 with proposed new Chapter 107, also relating to miscellaneous rules. This proposal is part of the administrative rule review conducted by TCDRS in compliance with the Government Code §2001.039.

REPEAL OF CURRENT CHAPTER 107

TCDRS proposes the repeal of current 34 TAC Chapter 107, which includes the following sections: 34 TAC §107.1, Confidentiality of Board Records; 34 TAC §107.2 Payments by Members to Purchase Forfeited Benefits; 34 TAC §107.3, Direct Rollovers and Trustee-to-Trustee Transfers; 34 TAC §107.4, Bona Fide Termination of Employment; 34 TAC §107.5, Termination of Membership on Withdrawal; Cancellation of Valid Withdrawal Application; 34 TAC §107.6, Penalty for Late Reporting; Waiver of Penalty; 34 TAC §107.7 Extension of Due Date; 34 TAC §107.8, Electronic Transfer of Funds; 34 TAC §107.9, Electronic Filing of Documents; 34 TAC §107.10, Treatment of Ineligible Benefit Payments; 34 TAC §107.12, Payments Due or Suspended on Death of Annuitant; 34 TAC §107.13, Membership of Leased Employees; 34 TAC §107.14, Acceptance of Rollovers and Transfers; 34 TAC §107.15, Resumption of Enrollment; 34 TAC §107.16, Exclusive Purpose; 34 TAC §107.17, Annual Allocation of Net Investment Income or Loss; and 34 TAC §107.18, Special Prior Service Contribution Rates.

PROPOSAL OF NEW CHAPTER 107

As proposed, the new Chapter 107 will address: 34 TAC §107.1, Payments by Members to Purchase Forfeited Benefits; 34 TAC §107.2, Direct Rollovers from TCDRS and Trustee-to-Trustee Transfers; 34 TAC §107.3, Bona Fide Termination of Employment; 34 TAC §107.4, No Cancellation of Valid Withdrawal Application; 34 TAC §107.5, Electronic Transfer of Funds Relating to Employers; 34 TAC §107.6, Treatment of Ineligible Benefit Payments; 34 TAC §107.7 Payments Due or Suspended on Death of Person Entitled to Benefit; 34 TAC §107.8, Acceptance of Rollovers and Transfers; and 34 107.9 Annual Allocation of Net Investment Income or Loss.

BACKGROUND AND PURPOSE

TCDRS proposes to repeal and replace Chapter 107 to update definitions consistent with changes simultaneously proposed in Chapter 101, eliminate unnecessary rules, and update rules to reflect current procedures. In addition, the repeal and replacement of Chapter 107 is proposed as a result of TCDRS' rule review, which was conducted pursuant to Government Code §2001.039.

Many provisions of proposed new Chapter 107 rules are substantially similar to the provisions of the existing Chapter 107, which is proposed to be repealed. The proposed changes are described below.

SECTION-BY-SECTION SUMMARY

The proposed repeal of Chapter 107, containing §§107.1 - 107.10 and 107.12 - 107.18, allow for updates to be proposed.

In addition to the general reason for the repeal of Chapter 107 as stated above, further explanation is provided below for the following sections of Chapter 107.

§107.1 is proposed for repeal as it is redundant of Section 845.115 of the Government Code, which provides for the confidentiality of participant data.

§§107.6 - 107.7 are proposed for repeal as they are redundant of Section 845.407 of the Government Code, which provides a penalty for late contributions and a process for an employer to request an extension of the contribution deadline.

§107.9 is proposed for repeal as this topic is included in §101.3 Filing of Documents that is being simultaneously proposed.

§107.13 is proposed for repeal as the definition of employee is included in Section 841.001(8) of the Government Code and is not necessary for the administration of the TCDRS plan.

§107.15 is proposed for repeal as the language is archaic and not applicable under current law.

§107.16 is proposed for repeal as this rule is simultaneously being proposed as new Section 101.14 in Chapter 101, as it has general applicability to all the rules.

§107.18 is proposed for repeal as the language is unnecessary as Section 844.703(f) of the Government Code authorizes special prior service contribution rates.

Proposed new Chapter 107, Miscellaneous Rules, contains the rules listed below.

Proposed new §§107.1 - 107.3, §§107.5 - 107.6, and §§107.8 - 107.9 provide non-substantive changes to clarify language and update terminology consistent with the definitions proposed in §101.1 and with current TCDRS processes.

Proposed new §107.4 provides that a person may not cancel a valid withdrawal application after it has been submitted to TCDRS.

Proposed new §107.7 provides non-substantive changes to clarify language and update terminology consistent with the definitions proposed in §101.1 and increases the total benefit amount for which TCDRS will make payment in trust to a relative of the decedent from $5,000 to $10,000.

New Chapter 107 also reorders and renumbers rules to make them procedurally chronological, and current rules §§107.1, 107.6, 107.7, 107.9, 107.13, 107.15, 107.16, and 101.18, are deleted as unnecessary and redundant with other rules.

On June 12, 2025, the TCDRS Board approved the publication for comment of the proposed repeal of current Chapter 107 and the proposed replacement of current Chapter 107 with the new Chapter 107 rules.

FISCAL NOTE

Amy Bishop, Executive Director of TCDRS, has determined that for the first five-year period the proposed new rules are in effect there will be no foreseeable fiscal implications to state or local governments as a result of enforcing or administering the proposed rules.

PUBLIC COST/BENEFIT

Ms. Bishop also has determined that for each year of the first five years the proposed new rules are in effect, the public benefit of Chapter 107 will be a more concise and accurate statement of the administrative rules of TCDRS regarding miscellaneous rules impacting the administration of the TCDRS plan and to enhance comprehension of the rules for TCDRS members, participating Employers, and other interested parties.

LOCAL EMPLOYMENT IMPACT STATEMENT

TCDRS has determined that there will be no adverse economic effects on local economies or local employment because of the proposed new rules, which are proposed to enhance comprehension of the miscellaneous rules impacting the administration of the TCDRS plan for TCDRS members, participating Employers, and other interested parties. Therefore, no local employment impact statement is required under Government Code §2001.022.

ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS

TCDRS has determined that there will be no adverse economic effects on small businesses, micro-businesses, or rural communities because the proposed new rules are proposed to enhance comprehension of the miscellaneous rules impacting the administration of the TCDRS plan. Therefore, neither an economic impact statement nor a regulatory flexibility analysis is required under Government Code §2006.002.

GOVERNMENT GROWTH IMPACT STATEMENT

TCDRS has determined that for each year of the first five years the proposed new rules are in effect, the proposed rules: will not create or eliminate any TCDRS programs; will not require either the creation of or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to TCDRS (TCDRS does not receive any legislative appropriations); will not require an increase or decrease in fees paid to TCDRS; will not create a new regulation (because new Chapter 107 updates and replaces existing Chapter 107); does not expand, limit or repeal an existing regulation (because new Chapter 107 updates and replaces existing Chapter 107); does not increase or decrease the number of individuals subject to the rules' applicability; and, does not affect this state's economy.

TAKINGS IMPACT ASSESSMENT

TCDRS has determined that there are no private real property interests affected by the proposed new rules, therefore a takings impact assessment is not required under Government Code §2007.043.

COSTS TO REGULATED PERSONS

TCDRS has determined that Government Code §2001.0045(b) does not apply to the proposed new rules because they do not impose a cost on regulated persons (including another state agency, a special district, or a local government).

ENVIRONMENTAL RULE ANALYSIS

The proposed new rules are not a "major environmental rule" as defined by Government Code §2001.0225. The proposed rules are not specifically intended to protect the environment or to reduce risks to human health from environmental exposure. Therefore, a regulatory environmental analysis is not required.

COMMENTS

Comments on the proposed rules may be submitted to Ann McGeehan, General Counsel, TCDRS, Barton Oaks Plaza IV, Ste 500, 901 South MoPac Expy, Austin, Texas 78746, or submitted electronically to Written comments must be received by TCDRS no later than 30 days after publication of this notice in the Texas Register.

STATUTORY AUTHORITY

The repeal of existing Chapter 107 is proposed and implements the authority granted under the following provisions of the TCDRS Act: Government Code §845.102, which allows the Board to adopt rules it finds necessary or desirable for the efficient administration of TCDRS. In addition, the rule changes are proposed as a result of TCDRS' rule review, which was conducted pursuant to Government Code §2001.039.

CROSS REFERENCE TO STATUTE

The proposed repeal of Chapter 107 implements § 845.102 of the Government Code. No other statute, code or article is affected by the proposed rules.

§ 107.1. Confidentiality of Board Records.

§ 107.2. Payments by Members to Purchase Forfeited Benefits.

§ 107.3. Direct Rollovers and Trustee-to-Trustee.

§ 107.4. Bona Fide Termination of Employment.

§ 107.5. Termination of Membership on Withdrawal; Cancellation of Withdrawal Application.

§ 107.6. Penalty for Late Reporting; Waiver of Penalty.

§ 107.7. Extension of Due Date.

§ 107.8. Electronic Transfer of Funds.

§ 107.9. Electronic Filing of Documents.

§ 107.10. Treatment of Ineligible Benefit Payments.

§ 107.12. Payments Due or Suspended on Death of Annuitant.

§ 107.13. Membership of Leased Employees.

§ 107.14. Acceptance of Rollovers and Transfers.

§ 107.15. Resumption of Enrollment.

§ 107.16. Exclusive Purpose.

§ 107.17. Annual Allocation of Net Investment Income or Loss.

§ 107.18. Special Prior Service Contribution Rates.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 18, 2025.

TRD-202502972

Ann McGeehan

General Counsel

Texas County and District Retirement System

Earliest possible date of adoption: September 28, 2025

For further information, please call: (512) 328-8889

STATUTORY AUTHORITY

The proposal of new Chapter 107 is proposed and implements the authority granted under the following provisions of the TCDRS Act: Government Code §845.102, which allows the Board to adopt rules it finds necessary or desirable for the efficient administration of TCDRS. In addition, the rule changes are proposed as a result of TCDRS' rule review, which was conducted pursuant to Government Code §2001.039.

CROSS REFERENCE TO STATUTE

The proposed new rules implement § 845.102 of the Government Code. No other statute, code or article is affected by the proposed rules.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 18, 2025.

TRD-202502973

Ann McGeehan

General Counsel

Texas County and District Retirement System

Earliest possible date of adoption: September 28, 2025

For further information, please call: (512) 328-8889

CHAPTER 109. DOMESTIC RELATIONS ORDERS

The Board of Trustees ("Board") of the Texas County and District Retirement System ("TCDRS") proposes the repeal of current 34 TAC Chapter 109 ("Chapter 109"), relating to domestic relations orders, and proposes to replace current Chapter 109 with proposed new Chapter 109, also relating to domestic relations orders. This proposal is part of the administrative rule review conducted by TCDRS in compliance with the Government Code §2001.039.

REPEAL OF CURRENT CHAPTER 109

TCDRS proposes the repeal of current 34 TAC Chapter 109, which includes the following sections: 34 TAC §109.1, Purpose; 34 TAC §109.2 Definitions; 34 TAC §109.3, Notice Regarding Receipt of Order; 34 TAC §109.4, Requirements for Qualified Domestic Relations Orders; 34 TAC §109.5, Contents of Domestic Relations Order; 34 TAC §109.7 Approval of Order; 34 TAC §109.9, Order Appearing Not To Qualify; 34 TAC §109.12, Payments to Alternate Payees; 34 TAC §109.13, Form of Qualified Domestic Relations Order; and 34 TAC §109.14, Provisions Incorporated by Reference.

PROPOSAL OF NEW CHAPTER 109

As proposed, the new Chapter 109 will address: 34 TAC §109.1, Definitions; 34 TAC §107.2, Notice Regarding Receipt of Order; 34 TAC §109.3, Requirements for Qualified Domestic Relations Orders; 34 TAC §107.4, Contents of Domestic Relations Orders; 34 TAC §109.5, Approval of Order; 34 TAC §109.6, Order Appearing Not To Qualify; 34 TAC §109.7, Payments to Alternate Payees; 34 TAC §109.8 Form of Qualified Domestic Relations Order; and 34 TAC §109.9, Provisions Incorporated by Reference.

BACKGROUND AND PURPOSE

TCDRS proposes to repeal and replace Chapter 109 to update definitions consistent with the definitions simultaneously proposed in Chapter 101, eliminate unnecessary rules, and update rules to reflect current procedures. In addition, the repeal and replacement of Chapter 109 is being proposed as a result of TCDRS' rule review, which was conducted pursuant to Government Code §2001.039.

All provisions of proposed new Chapter 109 rules are substantially similar to the provisions of the existing Chapter 109, which is proposed to be repealed. The proposed new rules are described below.

SECTION-BY-SECTION SUMMARY

The proposed repeal of Chapter 109, containing §§109.1 - 109.5, 109.7, 109.9, and 109.12 - 109.14, allow for updates to be proposed.

In addition to the general reasons for the repeal of Chapter 109 as stated above, further explanation is provided below for the following sections of Chapter 109.

§109.1 is proposed for repeal because the stated purpose is unnecessary in a rule.

§109.2(6) is proposed for repeal because it is unnecessary. There is no single person designated as a domestic relations liaison as multiple TCDRS staff process domestic relations orders.

§109.12(e) proposed repeal is to bring the rule in line with the statute. Existing language relates to a repealed statutory provision.

Proposed new Chapter 109, Domestic Relations Orders, contains the rules listed below.

Proposed new §§109.1, 109.2 and §§109.4 - 109.9 provide non-substantive changes to the pre-existing Sections to clarify language and update terminology consistent with the definitions being proposed in §101.1 and with current TCDRS practices.

Proposed new §109.3 amends language to bring the rule in line with the Section 804.003(b) of the Government Code and repeals the requirement that both the participant and the alternate payee must sign the qualified domestic relations order, which added an unnecessary step to the processing of a court issued order.

Proposed new §109.7 removes an incorrect statement regarding when an alternate payee may take a withdrawal.

New Chapter 109 also reorders and renumbers rules to make them procedurally chronological, and current rule §109.1 is deleted as unnecessary.

On June 12, 2025, the TCDRS Board approved the publication for comment of the proposed repeal of current Chapter 109 and the proposed replacement of current Chapter 109 with the new Chapter 109 rules.

FISCAL NOTE

Amy Bishop, Executive Director of TCDRS, has determined that for the first five-year period the proposed new rules are in effect there will be no foreseeable fiscal implications to state or local governments as a result of enforcing or administering the proposed rules.

PUBLIC COST/BENEFIT

Ms. Bishop also has determined that for each year of the first five years the proposed new rules are in effect, the public benefit of Chapter 109 will be a more concise and accurate statement of the administrative rules governing how TCDRS administers domestic relations orders, and to enhance comprehension of the rules for TCDRS members, participating Employers, and other interested parties.

LOCAL EMPLOYMENT IMPACT STATEMENT

TCDRS has determined that there will be no adverse economic effects on local economies or local employment because of the proposed new rules, which are proposed for clarification of how TCDRS administers domestic relations orders. Therefore, no local employment impact statement is required under Government Code §2001.022.

ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS

TCDRS has determined that there will be no adverse economic effects on small businesses, micro-businesses, or rural communities because the proposed new rules are proposed for clarification of how TCDRS administers domestic relations orders. Therefore, neither an economic impact statement nor a regulatory flexibility analysis is required under Government Code §2006.002.

GOVERNMENT GROWTH IMPACT STATEMENT

TCDRS has determined that for each year of the first five years the proposed new rules are in effect, the proposed rules: will not create or eliminate any TCDRS programs; will not require either the creation of or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to TCDRS (TCDRS does not receive any legislative appropriations); will not require an increase or decrease in fees paid to TCDRS; will not create a new regulation (because new Chapter 109 updates and replaces existing Chapter 109); does not expand, limit or repeal an existing regulation (because new Chapter 109 updates and replaces existing Chapter 109); does not increase or decrease the number of individuals subject to the rules' applicability; and, does not affect this state's economy.

TAKINGS IMPACT ASSESSMENT

TCDRS has determined that there are no private real property interests affected by the proposed new rules, therefore a takings impact assessment is not required under Government Code §2007.043.

COSTS TO REGULATED PERSONS

TCDRS has determined that Government Code §2001.0045(b) does not apply to the proposed new rules because they do not impose a cost on regulated persons (including another state agency, a special district, or a local government).

ENVIRONMENTAL RULE ANALYSIS

The proposed new rules are not a "major environmental rule" as defined by Government Code §2001.0225. The proposed rules are not specifically intended to protect the environment or to reduce risks to human health from environmental exposure. Therefore, a regulatory environmental analysis is not required.

COMMENTS

Comments on the proposed rules may be submitted to Ann McGeehan, General Counsel, TCDRS, Barton Oaks Plaza IV, Ste 500, 901 South MoPac Expy, Austin, Texas 78746, or submitted electronically to Written comments must be received by TCDRS no later than 30 days after publication of this notice in the Texas Register.

STATUTORY AUTHORITY

The repeal of existing Chapter 109 is proposed and implements the authority granted under the following provisions of the TCDRS Act: (i) Government Code §845.102, which allows the Board to adopt rules it finds necessary or desirable for the efficient administration of TCDRS. In addition, the rule changes are proposed as a result of TCDRS' rule review, which was conducted pursuant to Government Code §2001.039.

CROSS REFERENCE TO STATUTE

The proposed repeal of Chapter 109 implements § 845.102 of the Government Code. No other statute, code or article is affected by the proposed rules.

§ 109.1. Purpose.

§ 109.2. Definitions.

§ 109.3. Notice Regarding Receipt of Order.

§ 109.4. Requirements for Qualified Domestic Relations Orders.

§ 109.5. Contents of Domestic Relations Order.

§ 109.7. Approval of Order.

§ 109.9. Order Appearing Not To Qualify.

§ 109.12. Payments to Alternate Payees.

§ 109.13. Form of Qualified Domestic Relations Order.

§ 109.14. Provisions Incorporated by Reference.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 18, 2025.

TRD-202502974

Ann McGeehan

General Counsel

Texas County and District Retirement System

Earliest possible date of adoption: September 28, 2025

For further information, please call: (512) 328-8889

STATUTORY AUTHORITY

The proposal of new Chapter 109 is proposed and implements the authority granted under the following provisions of the TCDRS Act: (i) Government Code §845.102, which allows the Board to adopt rules it finds necessary or desirable for the efficient administration of TCDRS. In addition, the rule changes are proposed as a result of TCDRS' rule review, which was conducted pursuant to Government Code §2001.039.

CROSS REFERENCE TO STATUTE

The proposed new rules implement § 845.102 of the Government Code. No other statute, code or article is affected by the proposed rules.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 18, 2025.

TRD-202502975

Ann McGeehan

General Counsel

Texas County and District Retirement System

Earliest possible date of adoption: September 28, 2025

For further information, please call: (512) 328-8889

CHAPTER 111. TERMINATION OF PARTICIPATION: SUBDIVISIONS

The Board of Trustees ("Board") of the Texas County and District Retirement System ("TCDRS") proposes the repeal of current 34 TAC Chapter 111 ("Chapter 111"), relating to termination of participating subdivisions, and proposes to replace current Chapter 111 with proposed new Chapter 111, also relating to termination of participating subdivisions (employers). This proposal is part of the administrative rule review conducted by TCDRS in compliance with the Government Code §2001.039.

REPEAL OF CURRENT CHAPTER 111

TCDRS proposes the repeal of current 34 TAC Chapter 111, which includes the following sections: 34 TAC §111.1, Purpose; 34 TAC §111.2, Definitions; 34 TAC §111.3, Notices Voluntary Termination; and 34 TAC §111.4, Notices Involuntary Termination.

PROPOSAL OF NEW CHAPTER 111

As proposed, the new Chapter 111 will address: 34 TAC §111.1, Notice of an Employer's Intent to Terminate Participation and 34 TAC §111.2, Notice by TCDRS to Members of Terminated Plans.

BACKGROUND AND PURPOSE

TCDRS proposes to repeal and replace Chapter 111 to update definitions consistent with the definitions proposed in Chapter 101, eliminate unnecessary rules, and update rules to reflect current procedures. In addition, the repeal and replacement of Chapter 111 is proposed as a result of TCDRS' rule review, which was conducted pursuant to Government Code §2001.039.

Proposed new Chapter 111 updates notice requirements to reflect current practices.

SECTION-BY-SECTION SUMMARY

The proposed repeal of Chapter 111, containing §§111.1 - 111.4, allow for updates to be proposed.

Proposed new Chapter 111, Termination of Participation: Employers contains the rules listed below.

Proposed new §111.1 defines the content required in a participating employer's notice to TCDRS that the employer intends to terminate its participation. The notice must be filed with TCDRS at least 90 days in advance.

Proposed new §111.2 defines the content required in TCDRS' notice to members of terminated plans and provides that notice must be issued no later than 10 business days after the Board approves the termination terms.

New Chapter 111 also reorders and renumbers rules to make them procedurally chronological, and current rules §§111.1 and 111.2 are deleted as unnecessary.

On June 12, 2025, the TCDRS Board approved the publication for comment of the proposed repeal of current Chapter 111 and the proposed replacement of current Chapter 111 with the new Chapter 111 rules.

FISCAL NOTE

Amy Bishop, Executive Director of TCDRS, has determined that for the first five-year period the proposed new rules are in effect there will be no foreseeable fiscal implications to state or local governments as a result of enforcing or administering the proposed rules.

PUBLIC COST/BENEFIT

Ms. Bishop also has determined that for each year of the first five years the proposed new rules are in effect, the public benefit of Chapter 111 will be a more concise and accurate statement of the administrative rules of TCDRS regarding the process to terminate an Employer's participation in the TCDRS plan.

LOCAL EMPLOYMENT IMPACT STATEMENT

TCDRS has determined that there will be no adverse economic effects on local economies or local employment because of the proposed new rules, which are proposed for clarification of the process to terminate an Employer's participation in the TCDRS plan. Therefore, no local employment impact statement is required under Government Code §2001.022.

ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS

TCDRS has determined that there will be no adverse economic effects on small businesses, micro-businesses, or rural communities because the proposed new rules are proposed for clarification of benefits administration and claims for members of TCDRS and other interested parties. Therefore, neither an economic impact statement nor a regulatory flexibility analysis is required under Government Code §2006.002.

GOVERNMENT GROWTH IMPACT STATEMENT

TCDRS has determined that for each year of the first five years the proposed new rules are in effect, the proposed rules: will not create or eliminate any TCDRS programs; will not require either the creation of or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to TCDRS (TCDRS does not receive any legislative appropriations); will not require an increase or decrease in fees paid to TCDRS; will not create a new regulation (because new Chapter 111 updates and replaces existing Chapter 111); does not expand, limit or repeal an existing regulation (because new Chapter 111 updates and replaces existing Chapter 111); does not increase or decrease the number of individuals subject to the rules' applicability; and, does not affect this state's economy.

TAKINGS IMPACT ASSESSMENT

TCDRS has determined that there are no private real property interests affected by the proposed new rules, therefore a takings impact assessment is not required under Government Code §2007.043.

COSTS TO REGULATED PERSONS

TCDRS has determined that Government Code §2001.0045(b) does not apply to the proposed new rules because they do not impose a cost on regulated persons (including another state agency, a special district, or a local government).

ENVIRONMENTAL RULE ANALYSIS

The proposed new rules are not a "major environmental rule" as defined by Government Code §2001.0225. The proposed rules are not specifically intended to protect the environment or to reduce risks to human health from environmental exposure. Therefore, a regulatory environmental analysis is not required.

COMMENTS

Comments on the proposed rules may be submitted to Ann McGeehan, General Counsel, TCDRS, Barton Oaks Plaza IV, Ste 500, 901 South MoPac Expy, Austin, Texas 78746, or submitted electronically to Written comments must be received by TCDRS no later than 30 days after publication of this notice in the Texas Register.

STATUTORY AUTHORITY

The repeal of existing Chapter 111 is proposed and implements the authority granted under the following provisions of the TCDRS Act: Government Code §845.102, which allows the Board to adopt rules it finds necessary or desirable for the efficient administration of TCDRS. In addition, the rule changes are proposed as a result of TCDRS' rule review, which was conducted pursuant to Government Code §2001.039.

CROSS REFERENCE TO STATUTE

The proposed repeal of Chapter 111 implements §845.102 of the Government Code. No other statute, code or article is affected by the proposed rules.

§ 111.1. Purpose.

§ 111.2. Definitions.

§ 111.3. Notices - Voluntary Termination.

§ 111.4. Notices - Involuntary Termination

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 18, 2025.

TRD-202502976

Ann McGeehan

General Counsel

Texas County and District Retirement System

Earliest possible date of adoption: September 28, 2025

For further information, please call: (512) 328-8889

STATUTORY AUTHORITY

The repeal of existing Chapter 111 is proposed and implements the authority granted under the following provisions of the TCDRS Act: Government Code §845.102, which allows the Board to adopt rules it finds necessary or desirable for the efficient administration of TCDRS. In addition, the rule changes are proposed as a result of TCDRS' rule review, which was conducted pursuant to Government Code §2001.039.

CROSS REFERENCE TO STATUTE

The proposed new rules implement § 845.102 of the Government Code. No other statute, code or article is affected by the proposed rules.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 18, 2025.

TRD-202502977

Ann McGeehan

General Counsel

Texas County and District Retirement System

Earliest possible date of adoption: September 28, 2025

For further information, please call: (512) 328-8889

CHAPTER 113. TEXAS COUNTY AND DISTRICT RETIREMENT SYSTEM QUALIFIED REPLACEMENT BENEFIT ARRANGEMENT

The Board of Trustees ("Board") of the Texas County and District Retirement System ("TCDRS") proposes amendments to Chapter 113 concerning the Texas County and District Retirement System Qualified Replacement Benefit Arrangement. This proposal is part of the administrative rule review conducted by TCDRS in compliance with the Government Code §2001.039.

BACKGROUND AND PURPOSE

As a result of the review, TCDRS proposes amendments to §§113.1 - 113.6. The amendments are non-substantive and include changes to terminology consistent with changes simultaneously proposed to §101.1 concerning definitions. The amendments are discussed below.

SECTION-BY-SECTION SUMMARY

Proposed amendments to §§113.1 - 113.6 are non-substantive changes to update terminology consistent with the definitions proposed in §101.1.

On June 12, 2025, the TCDRS Board approved the publication for comment of the proposed amendments to Chapter 113.

FISCAL NOTE

Amy Bishop, Executive Director of TCDRS, has determined that for the first five-year period the proposed new rules are in effect there will be no foreseeable fiscal implications to state or local governments as a result of enforcing or administering the proposed rules.

PUBLIC COST/BENEFIT

Ms. Bishop also has determined that for each year of the first five years the proposed new rules are in effect, the public benefit of Chapter 113 will be a more concise and accurate statement of the administrative rules of TCDRS regarding the administration of the Qualified Replacement Benefit Arrangement program.

LOCAL EMPLOYMENT IMPACT STATEMENT

TCDRS has determined that there will be no adverse economic effects on local economies or local employment because of the proposed new rules, which are proposed for clarification of the Qualified Replacement Benefit Arrangement program. Therefore, no local employment impact statement is required under Government Code §2001.022.

ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS

TCDRS has determined that there will be no adverse economic effects on small businesses, micro-businesses, or rural communities because the proposed new rules are proposed for clarification of the Qualified Replacement Benefit Arrangement program. Therefore, neither an economic impact statement nor a regulatory flexibility analysis is required under Government Code §2006.002.

GOVERNMENT GROWTH IMPACT STATEMENT

TCDRS has determined that for each year of the first five years the proposed new rules are in effect, the proposed rules: will not create or eliminate any TCDRS programs; will not require either the creation of or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to TCDRS (TCDRS does not receive any legislative appropriations); will not require an increase or decrease in fees paid to TCDRS; will not create a new regulation; does not expand, limit or repeal an existing regulation; does not increase or decrease the number of individuals subject to the rules' applicability; and, does not affect this state's economy.

TAKINGS IMPACT ASSESSMENT

TCDRS has determined that there are no private real property interests affected by the proposed new rules, therefore a takings impact assessment is not required under Government Code §2007.043.

COSTS TO REGULATED PERSONS

TCDRS has determined that Government Code §2001.0045(b) does not apply to the proposed new rules because they do not impose a cost on regulated persons (including another state agency, a special district, or a local government).

ENVIRONMENTAL RULE ANALYSIS

The proposed new rules are not a "major environmental rule" as defined by Government Code §2001.0225. The proposed rules are not specifically intended to protect the environment or to reduce risks to human health from environmental exposure. Therefore, a regulatory environmental analysis is not required.

COMMENTS

Comments on the proposed rules may be submitted to Ann McGeehan, General Counsel, TCDRS, Barton Oaks Plaza IV, Ste 500, 901 South MoPac Expy, Austin, Texas 78746, or submitted electronically to TCDRSRuleComments@tcdrs.org. Written comments must be received by TCDRS no later than 30 days after publication of this notice in the Texas Register.

STATUTORY AUTHORITY

The amendment of existing Chapter 113 is proposed and implements the authority granted under (i) Government Code §845.102, which allows the Board to adopt rules it finds necessary or desirable for the efficient administration of TCDRS, and (ii) Government Code §845.504, which allows the Board to adopt rules to administer the excess benefit program in a manner consistent with federal law. In addition, the rule changes are proposed because of TCDRS' rule review, which was conducted pursuant to Government Code §2001.039.

CROSS REFERNCE TO STATUTE

The proposed new rules implement §§ 845.102 and 845.504 of the Government Code. No other statute, code or article is affected by the proposed rules.

§ 113.1. Purpose.

The Board of TCDRS [Trustees of the Texas County and District Retirement System] hereby establishes a qualified governmental excess benefit program in accordance with Section [§]415(m) of the Internal Revenue Code and as authorized under Section [§]845.504[,] of the Government Code. The program entitled as the "Texas County and District Retirement System Qualified Replacement Benefit Arrangement" is maintained solely for the purpose of providing for the payment of that portion of the annual retirement benefits that had been accrued by and would otherwise be payable with respect to a member of TCDRS [the Texas County and District Retirement System] but for the limitation on the payment of benefits under Section [§]415(b) of the Internal Revenue Code [of 1986, as amended].

§ 113.2. Definitions.

When [The following words and terms, when] used in this chapter the following words [, shall] have the following meanings[, unless the context clearly indicates otherwise].

(1) [(2) "]Arrangement["]--[means] the TCDRS [Texas County and District Retirement System] Qualified Replacement Benefit Arrangement, as set forth herein and as amended from time to time.

(2) [(4) "]Benefit Recipient["]-- [means] any individual who receives a retirement benefit from TCDRS as a Retiree or as a surviving beneficiary of a deceased Member or Retiree. The term may include an alternate payee of a deceased Member or Retiree.

(3) [(5) "]Benefit["]--[means] a retirement benefit accrued under the provisions of the Act.

(4) [(8) "]Effective Date["]--[means] January 1, 2006, the effective date of the Arrangement.

(5) [(9) "]Eligible Member["]-- [means] a Retiree or a deceased Member or Retiree with respect to an Employer, from and after the date the Employer adopts the Arrangement.

(6) [(11) "]Restricted Benefit["] --[means] the maximum Benefit permitted to be paid to a Benefit Recipient under the Retirement Plan of the Employer, as limited by Internal Revenue Code Section [§]415, in accordance with Section [§]844.008 of the Government Code [Act].

(7) [(12) "]Member["]-- [means] any individual who accrues or has accrued a Benefit under the Act.

(8) [(13) "]Participant["] -- [means] any Benefit Recipient with respect to an Employer who is eligible to participate in the Arrangement in accordance with Section [§]113.3 of this chapter.

(9) [(15) "]Retiree["]-- [means] a Member who receives a Benefit under the Act with respect to an Employer.

(10) [(16) "]Unrestricted Benefit["]--[means] the benefit that would be payable to a Benefit Recipient under the Retirement Plan of the Employer if the limits of Section [Code §]415 of the Internal Revenue Code were not applicable in accordance with Section [§]844.008 of the Government Code [Act].

§ 113.3. Eligibility and Payments.

(a) Eligibility to Receive Payments. If, at the time an Eligible Member becomes a Retiree or dies or at any time thereafter, the Unrestricted Benefit of the Benefit Recipient under the Retirement Plan of the Employer exceeds the Restricted Benefit payable to the Benefit Recipient at that time, the Benefit Recipient shall become a Participant and shall be entitled to receive payments under this Arrangement, in accordance with the terms hereof, and may not waive or defer the receipt of such payments. A Benefit Recipient shall in no event become a Participant until the later of:

(1) January 1, 2006, the Effective Date of the Arrangement, or

(2) the effective date of the applicable Employer's adoption of the Arrangement.

(b) Amount of Payments. A Participant shall receive payments under this Arrangement equal to the difference between the Participant's Unrestricted Benefit and his or her Restricted Benefit, provided that the amount of payments so determined shall be subject to change and to such adjustments as TCDRS deems appropriate, from time to time. In no event shall a Participant be entitled to receive a payment under this Arrangement if such payment, when combined with other payments under this Arrangement and under the Retirement Plan of the Employer, would result in the Participant receiving total payments in excess of the Participant's Unrestricted Benefit.

(c) Form and Timing of Payments. Payments under this Arrangement shall be paid by the applicable Employer to each Participant at the time and in the form and manner as TCDRS [the System] may direct. Any election made by an Eligible Member with regard to the distribution of Benefits under TCDRS [the System], including the designation of a named beneficiary, as defined in Section [§]841.001(4) of the Government Code [Act] ,shall be equally applicable to and binding on such Eligible Member and on all persons who at any time have or claim to have any interest in connection with payments under this Arrangement.

(d) Effect on TCDRS. Any Benefit payable under the Retirement Plan of the Employer established under TCDRS shall be paid solely in accordance with the terms and provisions thereof and shall be subject to Section [§]415 of the Internal Revenue Code and other applicable tax limitations; nothing in this Arrangement shall operate or be construed in any way to modify, amend or affect the Benefits payable thereunder.

(e) Tax Withholding. All payments under this Arrangement shall be subject to and reduced by applicable federal, state and local income, payroll and other tax withholding requirements and all other applicable deductions required by this Arrangement or by law.

(f) Participation Determined Annually. Participation in the Arrangement shall be determined annually for each plan year. In any plan year, benefits shall only be paid under the Arrangement to a Participant after the date in the plan year that the benefits paid to such person from TCDRS under the Retirement Plan of the Employer have reached the maximum annual benefit that can be paid by TCDRS under Internal Revenue Code Section [§]415 for that plan year. The date the maximum annual benefit payment from TCDRS is reached is the beginning date of participation by the Participant for that plan year. The beginning date of a Participant's participation in the Arrangement may change from plan year to plan year as the amount payable under this Arrangement is redetermined. An individual's participation in the Arrangement will cease for any plan year or portion of a plan year for which the individual's Benefit is not limited by Internal Revenue Code Section [§]415.

(g) No Election to Defer Compensation. No election shall be provided at any time to a Participant or any other individual, directly or indirectly, to defer compensation under the Arrangement.

§ 113.4. Administration.

(a) Administrator. TCDRS shall be the Administrator of the Arrangement and shall be responsible for the supervision and control of the operation and administration of the Arrangement, except as otherwise provided herein. Subject to the authority of the Board, TCDRS shall have the exclusive right and full discretion to construe and interpret the Arrangement, to establish rules and procedures for its operation and administration, and to decide any and all questions of fact, actuarial valuation, interpretation, definition or administration arising under or in connection with the administration of the Arrangement. The interpretation and construction of any provisions of the Arrangement by the Administrator and its exercise of any discretion granted under the Arrangement shall be binding and conclusive on all persons who at any time have or claim to have any interest whatever under this Arrangement.

(b) Contributions and Payments.

(1) As soon as administratively feasible and before the receipt of Employer contributions, TCDRS shall calculate the portion of the Employer's contributions necessary to make the payments due to Participants of that Employer for the next payment period and for any applicable expenses under this Arrangement. Before depositing its contributions with TCDRS, the Employer shall deduct the calculated amounts and make payments directly to its Participants; and directly to TCDRS for any applicable expenses under the Arrangement. Notwithstanding the foregoing, if TCDRS determines, in its sole discretion, that the allocation of contributions to the Arrangement would jeopardize the actuarial soundness of the Retirement Plan of the Employer, TCDRS shall terminate the Arrangement and shall notify the participating Employer and Participants.

(2) Amounts deducted for payments and expenses under the Arrangement shall be separately accounted for and shall be used exclusively for payments and expenses under the Arrangement.

(3) The Employer from whom the Eligible Member retired or died while a Member with respect to such Employer shall be solely responsible for paying any amounts due to the Participant under the terms of the Arrangement. TCDRS shall have no obligation to pay any amounts due under the terms of the Arrangement.

(4) The Employer shall be responsible for satisfying all tax withholding, payroll tax payments, other applicable tax payments and reporting requirements applicable to the Arrangement, if any, and shall be responsible for administering all payments due under the Arrangement.

(c) Plan Unfunded. This Arrangement shall at all times be entirely unfunded within the meaning of the federal tax laws. Nothing contained herein shall be construed as providing for assets to be held in trust for the Participants. No Participant or any other person shall have any interest in any assets of TCDRS or any Employer by reason of the right to receive a payment under the Arrangement. Nothing contained herein shall be construed as a guarantee by TCDRS, any Employer, or any other entity or person that the assets of the Employer will be sufficient to pay any benefit hereunder.

(d) Appeal Procedure. In the event a dispute arises between the Employer and the Administrator relating to the determination of the Administrator or the interpretation, operation or administration of this Arrangement, the Administrator's decision shall be final, conclusive and binding unless the Employer submits an appeal directly to the Director [Board within 20 days from the date of notice of the decision, for consideration and action] in accordance with Section 101.11 [the administrative review procedures set forth in 34 TAC Sections §§101.19- 101.23. The action of the Board, taken on its own motion or as the result of an appeal, is final, conclusive, and binding].

§ 113.5. Amendment and Termination.

(a) Amendment and Termination of the Arrangement. The Board reserves the right, in its sole discretion, to amend or terminate the Arrangement at any time and from time to time. By way of example, and not limitation, the Arrangement may be amended or terminated to eliminate all payments with respect to any Member or other individual who has not become eligible to participate in the Arrangement as of the date of such amendment or termination by reason of retirement or death in accordance with Section [§]113.3(a) of this chapter. In addition, an amendment or termination may be retroactive to the extent that the Board deems such action necessary, in its sole discretion, to maintain the tax-qualified status of TCDRS [the System] or the status of this Arrangement as a qualified governmental excess benefit arrangement as defined in Internal Revenue Code Section [§]415(m) or to avoid jeopardizing the actuarial soundness of the Retirement Plan of the Employer.

(b) Termination of Employer's Participation.

(1) An Employer may terminate its participation in the Arrangement at any time with the consent of and on terms established by the Administrator.

(2) The Administrator may terminate the participation of an Employer if the Employer fails to comply with the rules established by the Board for the administration of the Arrangement as from time to time amended or modified, or fails to perform in accordance with the adoption agreement. The determination of an Employer's failure to comply and subsequent involuntary termination of participation is within the sole discretion and authority of the Administrator. The Administrator's decision is final, conclusive and binding unless timely appealed directly to the Board in accordance with Section [§]113.4(d) of this chapter.

(c) Participants. If an Employer's participation in the Arrangement is voluntarily or involuntarily terminated, then any person who is a Benefit Recipient with respect to that Employer and who is a Participant in the Arrangement shall immediately cease such participation and shall be entitled to no benefits under this Arrangement and no benefits shall be paid or due to such Participant on or after the date of such termination. On the termination of an Employer in the Arrangement, the Employer shall have sole and complete responsibility and liability for paying any benefits that would otherwise be payable under the Arrangement with respect to its Participants, and TCDRS [the System] and all other participating Employers shall have no responsibility or liability for any such benefits.

§ 113.6. General Provisions.

(a) Applicable Law.

(1) All questions pertaining to the validity, construction and administration of the Arrangement shall be determined in conformity with the laws of the State of Texas, except to the extent federal law preempts state law.

(2) If any provision of the Arrangement or the application thereof to any circumstance or person is invalid, the remainder of the Arrangement and the application of such provision to other circumstances or persons shall not be affected thereby.

(b) Indemnification. To the extent allowed by law, an Employer electing to participate in the Arrangement must agree to indemnify, defend, and hold harmless TCDRS [the System], the employees of TCDRS [the System], the Board, and all other Employers participating in the Arrangement from and against any and all direct or indirect liabilities, demands, claims, losses, costs and expenses, including reasonable attorney's fees, arising out of or resulting from the Employer's participation in the Arrangement and/or the Employer's voluntary or involuntary termination of participation in the Arrangement. The agreement of the Employer to indemnify, defend and hold harmless survives the termination of the Employer's participation in the Arrangement and the termination of the Arrangement.

(c) Nonalienation. Benefits under this Arrangement shall not be subject to alienation or legal process, except to the extent permitted under Government Code, Chapter 804.

(d) No Enlargement of Employment Rights. The establishment of the Arrangement shall not confer any legal rights upon any employee or other person for a continuation of employment, nor shall it interfere with the rights of the Employer to discharge any employee and to treat the employee without regard to the effect which that treatment might have upon the employee as a Participant in the Arrangement.

(e) Information Required By Arrangement. Benefit Recipients, other individuals and Employers shall furnish to the Administrator such evidence, data and information as the Administrator considers necessary or desirable for the purpose of administering the Arrangement.

(f) Paying Benefits, Costs and Expenses from TCDRS Assets is Prohibited. No assets of TCDRS [the System] shall be used directly or indirectly to pay benefits under the Arrangement or to pay any costs or expenses of administering the Arrangement. Expenses of administering the Arrangement may include expenses for professional, legal, accounting, and other services, and other necessary or appropriate costs of administration.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 18, 2025.

TRD-202502978

Ann McGeehan

General Counsel

Texas County and District Retirement System

Earliest possible date of adoption: September 28, 2025

For further information, please call: (512) 328-8889