New rules affect how districts handle new flexibility in mid-year contract terminations

When Senate Bill 8, the “deregulation” legislation, passed during the 2011 special legislative session in June 2011, a provision that decreases legal protections for teachers in the case of a mid-year contract termination was tied to the district's ability to declare a financial exigency. Texas Education Commissioner Robert Scott recently released an emergency rule that sets the threshold for the factors that will allow a district to take advantage of this new flexibility allowed in law.

SB 8 provided that certain mid-year contract terminations could be handled more or less like an end-of-year contract nonrenewal, with considerably relaxed legal protections for teachers, if the district had declared a financial exigency. Previously, districts have been able to declare a financial exigency without having to meet any particular criteria, but TCTA supported an addition to the proposed law that would require the commissioner to adopt rules regarding conditions that must be met. The rules allow a district to declare a financial exigency upon meeting any of the following criteria:

• a reduction of more than 20% in the district’s fund balance over the past two years, or a projected reduction of 20% compared to the current year;
• a decline in enrollment over the past five years of more than 10%;
• a reduction of more than 10% in funding per student, or a projected reduction of 10% compared to the current year;
• an unforeseen natural disaster requiring expenditures of more than 15% of the current year budget; or
• an unanticipated major expense, including repairs, litigation expenses or tax increases of more than 15% of the current year budget.

However, “any other circumstance approved in writing by the commissioner of education” would also allow for the financial exigency declaration.

The Texas Association of School Boards has expressed concern in media reports that it will be very difficult to meet these criteria and use the newfound flexibility. TCTA believes that setting a high benchmark is very reasonable, given that teachers will remain bound by their contracts but districts will be able to terminate the contracts much more easily by exercising the new law.

The emergency rule will be filed as a proposed permanent rule and will be subject to public comment and potential revisions before final adoption in 2012. TCTA will be providing input to urge further strengthening of these rules so that districts may use this option only as a last resort.