State Compensatory Education Guidelines, a module of the Texas Education Agency Financial Accountability System Resource Guide (FASRG), Update 14 © 2013

9. Compensatory Education Guidelines, Financial Accounting
Treatment, and an Auditing and Reporting System
Update 14
A MODULE OF THE

TEXAS EDUCATION AGENCY
FINANCIAL ACCOUNTABILITY SYSTEM
RESOURCE GUIDE
Published by
Texas Education Agency
Austin, Texas
January 2010
Note: This document is formatted primarily for use on the Internet. Certain underlined
passages may appear in the paper format representing hyperlinks to sites on the Internet
that are provided for the benefit of individuals reading this document in an electronic
format.

Compensatory Education

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Table of Contents
9.

Compensatory Education Guidelines, Financial Accounting
Treatments, and an Auditing and Reporting System .............................. 1
9.1
Introduction ........................................................................................................ 1
9.1.1
History of Texas State Compensatory Education (1975-2007).............. 1
9.1.2
Summary of Filing Requirements .......................................................... 6
9.2
Guidelines for Compensatory Education Programs ........................................... 9
9.2.1
Compensatory Education Goals ............................................................. 9
9.2.2
Compensatory Education Objectives ..................................................... 9
9.2.3
District/Campus Improvement Plans...................................................... 9
9.2.3.1
State Criteria for Identification of Students at Risk of Dropping Out of
School ................................................................................................... 12
9.2.3.2
Local Criteria for Identification of Students at Risk of Dropping Out of
School ................................................................................................... 14
9.2.4
Funding of Compensatory Education Programs under the Foundation
School Program ................................................................................................... 15
9.2.4.1
Supplement/Not Supplant..................................................................... 16
9.2.4.2
Alternative Method for Receiving the Compensatory Education
Allotment .............................................................................................. 22
9.2.5
State Compensatory Education Planning Cycle ................................... 22
9.2.6
State Compensatory Education Programs and Resources .................... 23
9.2.7
Evaluation of State Compensatory Education Programs ..................... 25
9.2.8
Campus Considerations for Supplement/Supplant Compliance .......... 29
9.2.9
Analysis of Fiscal Data for Supplement/Supplant Compliance ........... 30
9.2.10
Analysis of Student Data for Supplement/Supplant Compliance ........ 30
9.2.11
Analysis of Staff Data for Supplement/Supplant Compliance ............. 31
9.2.12
Example of District Profiles of Supplemental Resources for
Compensatory Education Programs .................................................................... 31
9.2.13
Example of District Profiles of Supplant of Regular Education Program
Resources............................................................................................................. 34
9.2.14
Federal Program Compliance Considerations in Design of State
Compensatory Education Programs .................................................................... 35
9.2.14.1 Considerations Related to Targeted Assistance in Elementary and
Secondary Education Act, as Amended, Title I, Part A ....................... 36
9.2.14.2 Considerations Related to Schoolwide Programs Operated under
Elementary and Secondary Education Act, as Amended, Title I, Part A38
9.2.14.3 Supplement, Not Supplant and Comparability ..................................... 42
9.3
Financial Accounting for FSP Compensatory Education................................. 52
9.3.1
Financial Accounting for FSP Compensatory Education Programs .... 52
9.3.1.1
Fund Codes ........................................................................................... 52
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9.3.1.2
Function Codes ......................................................................................53
9.3.1.3
Object Codes .........................................................................................53
9.3.1.4
Organization Codes ...............................................................................54
9.3.1.5
Program Intent Codes (PICs) ................................................................55
9.3.1.6
Carry Over Amounts .............................................................................55
9.3.2
School District Support for Charges to Compensatory Education ........55
9.3.2.1
District/Campus Improvement Plan ......................................................56
9.3.2.2
Teacher Schedules .................................................................................56
9.3.2.3
Campus Staffing Formulas ....................................................................56
9.3.2.4
Job Descriptions ....................................................................................57
9.3.2.5
Time and Effort .....................................................................................57
9.3.2.6
Student Case Counts..............................................................................58
9.3.2.7
Use of Local Criteria .............................................................................58
9.3.2.8
Statistical Sampling Based Time and Effort Studies ............................59
9.3.2.9
Other Estimating Techniques for Allocation of Costs ..........................59
9.3.3
Cost/Benefit Considerations for School Districts Relating to Detailed
Financial Accounting Procedures.........................................................................59
9.3.4
Allocation Formula of the Texas Education Agency ............................60
9.4
Risk Assessment Processes and Identification of Schools Requiring a Local
Audit ..................................................................................................................61
9.4.1
Role of the Independent Auditor in Testing for Compliance with
Budgeting, Accounting, Operational and Reporting Standards Related to State
Compensatory Education .....................................................................................66
9.4.2
Required Special Report on Applying Agreed-Upon Procedures for
State Compensatory Education ............................................................................72
9.5
Sanctions and District Interventions .................................................................76
Appendix 1 - Definitions ..................................................................................................77
Appendix 2 – Sample Forms ............................................................................................83
List of Acronyms ..............................................................................................................86
Bibliography .....................................................................................................................88
Index
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List of Exhibits
Exhibit 1. Example Logic Model for Understanding the Impacts of Supplemental Local,
State or Federal Programs for Students at Risk of Dropping Out of School ............... 27
Exhibit 2. Four Types of Program Evaluation .................................................................. 28
Exhibit 3. Examples of Proportional Allocations of FSP Compensatory Education
Resources According to the Percentage of Student at Risk of Dropping Out of School32
Exhibit 4. Examples of Bilingual Education Setting Showing Proportional Allocation of
FSP Compensatory Education Resources According to the Percentage of Student at
Risk of Dropping Out of School .................................................................................. 33
Exhibit 5. Examples of Disproportional Allocation of FSP Compensatory Education
Resources to Campuses................................................................................................ 34
Exhibit 6. Examples of FSP Compensatory Education Resource Allocations that Suggest
Supplant of the Regular Program ................................................................................. 35
Exhibit 7. Risk Indicators for Electronic Auditing System of School Districts and Charter
Schools ......................................................................................................................... 62

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9. Compensatory Education
Guidelines, Financial
Accounting Treatments, and
an Auditing and Reporting
System

9.1 Introduction
Over the last two decades, state compensatory education has experienced many changes
that have affected the delivery of educational programs to educationally disadvantaged
students. An objective of this volume of the Financial Accountability System Resource
Guide is to provide detailed information that will assist local school officials’
understanding of the numerous options for use of the state compensatory education
allotment. Foremost, the intent of this volume of the Resource Guide is to explain various
components of the state compensatory education auditing and reporting system required by
Section 42.152(q), Texas Education Code (TEC).
All rules in this guide pertain to all local educational agencies (LEAs), including
school districts, charter schools and any other public authority that receives State
Compensatory Education funds.

9.1.1

History of Texas State Compensatory Education
(1975-2007)

In Texas, state compensatory education began with the passage of House Bill 1126 in 1975.
This bill provided a state compensatory education allotment titled “Support for
Educationally Disadvantaged Pupils.” Districts were required to be eligible for federal
Title I monies in order to receive state compensatory education funds. In the 1976-77
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school year, school districts were required to submit a coordinated plan to the Texas
Education Agency on their use of federal and state compensatory education dollars. The
use of state compensatory education monies paralleled federal requirements, such that state
compensatory education funds were defined as supplemental to other state and local
monies and were mandated to be spent on identified students. Districts were required to
apply for state compensatory education funds through a consolidated application that
included the federal Title I, Part A, and Title I, Part C (Migrant) programs. Accountability
measures for use of state and federal compensatory education funds were identical.
In 1977, the Texas Legislature repealed the law linking federal and state compensatory
education funds, but retained the requirement that state compensatory education dollars be
allocated based on the number of Title I students in a district. Additionally, State Board of
Education rules were passed which allowed greater local flexibility in the use of state
compensatory education monies. The goal of the state compensatory education program
was defined as bringing students at risk of dropping out of school up to grade level with
respect to basic academic skills.
In 1979, the Texas Legislature redirected the focus of the state compensatory education
program. This redirection included the following changes: (1) funding was to be based on
the best six months’ enrollment from the preceding school year (October – September) of
students participating in the federal free and reduced-price lunch program; (2) a statewide
basic skills assessment program was implemented in order to measure student academic
achievement; (3) districts were required to use student performance data from the statemandated basic skills tests to design and implement compensatory education services and
programs; and (4) districts were to be held accountable for local use of state compensatory
education monies. These changes provided a clear linkage in state law between state
compensatory education funding and services.
Between 1979 and 1983, several major changes occurred in the state compensatory
education program. The funding allotment was raised and continued to be based on the
best six months’ enrollment from the preceding school year (October – September) of
students participating in the federal free and reduced-price lunch program. Additionally,
the Texas Legislature required that student performance data be used in designing and
implementing local compensatory education programs. The State Board of Education rules
on compensatory education were revised to eliminate ties to federal compensatory
education funds. The application requirement was removed and replaced by a mandate that
districts file a statement of intent. Allowable expenditures were redefined to include
instructionally related activities. Non instructional and administrative expenditures were
prohibited. Use of compensatory funds for construction and equipment was also limited.
House Bill 72, Texas’ 1984 education reform legislation, included additional changes to the
state compensatory education program. The compensatory education allotment was
significantly increased, from approximately $50 million to more than $300 million per
year. The distribution of funds continued to be based on the number of students in the

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federal free-and reduced-price lunch program. House Bill 72 provided additional
flexibility in local use of compensatory education dollars. Tutorial, early childhood, and
basic instruction programs were targeted as top priorities. Funds were designated to be
used for direct instructional costs, with a maximum of 35 percent to be used for program
administration. The indirect cost percentage was reduced to 15 percent by the State Board
of Education in 1985.
Under House Bill 72 (TEC §21.557), school districts were to use results from the state
testing program and achievement tests administered by the LEA to design and implement
appropriate compensatory or remedial instructional services for secondary students who
had not performed satisfactorily on each section of the state assessment instrument and
students at all grade levels whose achievement test scores fell below a standard set by the
State Board of Education. School districts were required to submit an annual report to the
commissioner of education that described compensatory instructional services on each
campus.
In 1987, the legislature adopted House Bill 1010, the state’s first comprehensive dropout
reduction bill. The new law required school districts to provide compensatory programs
for students at risk of dropping out of school and to designate one or more at risk
coordinators. School districts were required to provide remedial and support programs for
any student whose achievement test score fell below a standard established by the State
Board of Education or who was at risk of dropping out of school. Criteria for identifying
students at risk of dropping out of school in grades 7-12 were defined in the statute.
Remedial and support programs were mandated to include an evaluative mechanism that
documented the effectiveness of each school district’s education program in reducing the
dropout rate and increasing student achievement.
In 1990, a special called session of the Texas Legislature added the term “supplemental” to
the existing state law which required school district compensatory education programs and
services.
The State Board of Education then recommended to the Texas Legislature that the term
“supplemental” be deleted from the law. The concern was that requiring that state funds be
used for supplemental programs and services would preclude complementary use of state
compensatory education and federal Title I, Part A funds.
The 1990-91 school year was used as a transition year prior to implementation of the new
legislation. School districts were required to adopt policies for remedial and compensatory
education programs which specified eligibility requirements, the programs and services to
be provided, and a plan for coordinating federal, state, and local funds.

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House Bill 2885, as passed by the Texas Legislature in 1991, amended the Texas Education
Code. The law removed the term "supplemental” from state compensatory education and
required that state compensatory education funds be used to improve and enhance
programs and services funded under the regular education program.
As a result of these legislative changes, in July 1991, the State Board of Education adopted
additional criteria to assist districts in identifying students at risk of academic failure. The
additional criteria allowed districts to use environmental, familial, economic, social,
developmental, and other psycho-social factors that may contribute to the student’s ability
to progress academically.
In 1995, the Texas Legislature passed Senate Bill 1, which was a complete rewrite of the
state education code. Senate Bill 1 required the State Board of Education to repeal all
board rules adopted before May 30, 1995, including existing rules on state compensatory
education.
In 1997, Senate Bill 1873 amended Section 42.152 of the Texas Education Code and
placed new restrictions on compensatory education. The bill required the design and
implementation of reporting and auditing systems that ensure monitoring of school districts
for appropriate use of compensatory education allotment funds. Appropriate use of
compensatory education allotment funds has been defined as instructional programs that
improve or enhance the regular educational program and costs that are supplementary to
the regular education program. Additionally, the Texas Education Agency received an
interpretation of legislative intent concerning Senate Bill 1873, stating that alternative
education programs are supplemental per se in relation to the regular education program.
According to the statute, the State Board of Education is to be assisted by the State
Auditor’s Office and Comptroller’s Office in the design and implementation of this
reporting and auditing system. The reporting and auditing system must be developed by
August 1, 1998. This document describes the reporting and auditing system required by
Senate Bill 1873.
In 2001, Senate Bill 702 amended the Sections of the Texas Education Code that govern
the State Compensatory Education Program, enacting significant changes to statutory
provisions that applied to accelerated, intensive and compensatory instructional programs.
The bill amended the state criteria for identifying students that are at risk of dropping out of
school, adding significant flexibility in the use of the allotment because a larger population
of students would be identified as “at risk of dropping out of school,” under Texas
Education Code Section 29.081. The bill also enacted a 10% ceiling for use of the state
compensatory education allotment to serve students under local criteria adopted by the
local board of trustees (10% of the number of students who met the State criteria for at risk
of dropping out of school that were served in the prior school year). The bill enacted an
18% ceiling for use of the allotment to fund basic costs of disciplinary alternative education
programs, and prohibited use of the allotment to fund the basic costs of non disciplinary
alternative education programs. Also, all school districts and charter schools were required

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to enter into an agreed-upon procedures engagement with an independent auditor for the
purpose of testing compliance with statutory requirements for state compensatory
education during school year 2001-2002.
In 2003, House Bill 3459 amended the Sections of the Texas Education Code that govern
the State Compensatory Education Program, enacting additional flexibility, and rescinded
the annual requirement to submit an agreed-upon procedures report to the Texas Education
Agency (the annual report was not required for school year 2002-2003 and subsequent
school years, although certain school districts and charter schools will be specifically
directed to obtain a local audit, in accordance with the requirements of the risk assessment
process in the Financial Accountability System Resource Guide). HB 3459 retroactively
amended the Texas Education Code by adding subsection 42.152(c)(3), which allows use
of the compensatory education allotment to fund costs that are attributed to programs that
are specifically designed to serve students at risk of dropping out of school, as defined by
Texas Education Code Section 29.081. Thus, the addition of Subsection 42.152(c)(3)
provides flexibility in use of the state compensatory education allotment for funding the
basic costs of programs that are specifically designed to service students at risk of dropping
out of school, as described in district improvement plans and campus improvement plans,
and charter school instructional plans. The bill also lowered the required threshold
percentage for low income students on a campus to 40% (or greater), which will permit
expanded use of the state compensatory education allotment to supplement schoolwide
components of federal No Child Left Behind projects. The bill also enacted provisions for
an electronic reporting and auditing system, which will be used by the TEA to assess risk
factors for noncompliance and/or reporting deficiencies. The assessment of risk factors by
the TEA will be the basis for directing certain school districts or charter schools to have a
local audit of state compensatory education programs, in accordance with the provisions in
the Financial Accountability System Resource Guide.
House Bill 1691 of the 78th Legislature also amended Section 42.152 of the Texas
Education Code to allow charges to the state compensatory education allotment (in
proportion to the percentage of students that meet the criteria in Section 29.081(d) or (g))
for programs that serve students that are enrolled in accelerated reading program under
Section 28.006(g) or that are enrolled in a program for treatment of students who have
dyslexia or a related disorder as required by Section 38.003.
Senate Bill 16 of the 78th Legislature also amended Subchapter C, Chapter 29, of the Texas
Education Code, by adding Section 29.089, relating to mentoring services. According to
Section 29.089, programs that provide mentoring services to students at risk of dropping
out of school, as defined by Section 29.081, are also eligible to be charged to the state
compensatory education allotment.
The electronic reporting and auditing system implemented in Update 11 of the Financial
Accountability System Resource Guide assesses the risk that schools did not use the state
compensatory education allotment “to fund supplemental programs and services designed
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to eliminate any disparity in performance on assessment instruments administered under
Subchapter B, Chapter 39, or disparity in the rates of high school completion between
students at risk of dropping out of school, as defined by Section 29.081, and all other
students (see Texas Education Code Section 42.152(c).” One primary purpose of the risk
assessment activities by TEA staff (see Exhibit 7) is to test whether the school district or
charter school complied with this general requirement for the expenditure of the
supplement funds from the SCE allotment. In most all instances, schools will not be
burdened in the future with the cost of obtaining a separate audit of state compensatory
education, if only effective strategies, programs and activities are supported by the SCE
allotment.
In 2009, House Bill 2703 of the 81st Legislature added a provision to §29.081 (added
Subsection (d-1) to §29.081, Education Code) that changed the compensatory education
definition of “student at risk of dropping out of school” by excluding a student who did not
advance from prekindergarten or kindergarten to the next grade level only as the result of
the request of the student’s parents. Previously the law under §29.081(d)(1) included in the
compensatory education definition of “student at risk of dropping out of school” any
student who was not advanced from one grade level to the next.
In House Bill 3646, Section 52 of the bill amended Section 42.152(c), Education Code.
This section amended the indirect cost allotment for the compensatory education allotment
from 15 to 45 percent. In Section 53 of the bill, a new category of compensatory
education, funding for the military dependent allotment was established. Section 53 of the
bill amends Section 42.152, Education Code, by adding Subsections (s), (s-1), (s-2), and (s3) to provide a compensatory education allotment of $650 per ADA for students who have
a parent or guardian on active duty in a combat zone and for students who have a parent or
guardian on active duty who have transferred to a school district as a result of a change
related to an action taken under the Defense Base Closure and Realignment Act of 1990.
Districts would be permitted to use this funding only to serve eligible students. Funding
may be provided only if funds are specifically appropriated for that purpose or the
commissioner determines that a surplus exists in the appropriation for the Foundation
School Program (FSP). The amount appropriated for this purpose may not exceed $9.9
million. If the total amount of allotments exceeds the available appropriation, the
commissioner is required to reduce each district’s allotment proportionately.

9.1.2

Summary of Filing Requirements

What
Regarding the electronic reporting requirements in this section, a school district or charter
school will submit through a Texas Education Agency Secure Environment (TEASE)
AUDIT account:

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1. the district improvement plan, and
2. two campus improvement plans (instructional plans from charter schools) for the
campuses that had the highest percentages of students at risk of dropping out of school
•

Of the two campus improvement plans to be submitted, at least one campus
improvement plan is to be submitted for a non-Title I schoolwide campus, if any,
that had the highest percentage of students at risk of dropping out of school).

•

Campus improvement plans must also be submitted electronically for all campuses
that received low performing academic accountability ratings for the previous
school year; therefore, it is possible that a district may file more than 2 plans.

3. the local evaluation of state compensatory education strategies, activities and programs
is required for a school district or a charter school that:
•

had any low performing campuses or

•

reported more than 59% at risk students for the previous school year

The electronic submission of any of these documents will only apply to school districts and
charter schools whose state compensatory education allotment (as reported under the
District Planning Estimate (DPE) or Legislative Planning Estimate (LPE) column on the
Summary of Finances) was $500,000 or more for the previous fiscal year. NOTE: Ensure
all plans include required information as regulated in state law, TEC Sections, 11.251-253.

When
The district improvement plan, campus improvement plan(s) (for school districts) or
instructional plan (for charter schools) and the local evaluations (for both school districts
and charter schools) are to be submitted not later than the 150th day after the last day
permissible to send data for the PEIMS data FINAL Midyear resubmission 2. Typically,
the last day for the PEIMS data FINAL Midyear resubmission 2 occurs in the latter part of
February; therefore, the 150th day falls in late July.
How
The plan(s) and evaluation are to be submitted in Adobe Acrobat® pdf file through a Texas
Education Agency Secure Environment (TEASE) AUDIT account. File naming and
submission instructions are outlined in the Electronic Reports Submission Standards which
can be found on the School Financial Audits web page on the Texas Education Agency
web site.
Example Timeline:
February 19, 2009 – last date for resubmitting midyear data for school year 2007-08

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July 19, 2009 – 150 days after PEIMS resubmission; due date for electronic reports for
school year 2007-2008

As noted above, the 150th day falls in late February; the due date for the submission for
plans and evaluations will thus fall in late July. The agency would therefore accept plans
through the last Friday of the month of July.


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9.2

Guidelines for Compensatory Education
Programs

Under Section 29.081 of the Texas Education Code (TEC), compensatory education is
defined in law as programs and/or services designed to supplement the regular education
program for students identified as at risk of dropping out of school. The purpose is to
increase the academic achievement and reduce the dropout rate of these students.

9.2.1 Compensatory Education Goals
The goal of state compensatory education is to reduce any disparity in performance on
assessment instruments administered under Subchapter B, Chapter 39 TEC, or disparity in
the rates of high school completion between students at risk of dropping out of school and
all other LEA students (TEC Section 29.081).

9.2.2 Compensatory Education Objectives
State compensatory education funds were authorized by the legislature to provide financial
support for programs and/or services designed by LEAs to increase the achievement of
students at risk of dropping out of school. State law, Section 29.081, TEC, requires LEAs
to use student performance data from the state’s legislatively-mandated assessment
instrument known as the Texas Assessment of Knowledge and Skills (TAKS) tests and
any other achievement tests administered under Subchapter B, Chapter 39, of the Texas
Education Code, including norm-referenced tests approved by the State Board of Education
to provide accelerated intensive instruction to students who have not performed
satisfactorily or who are at risk of dropping out of school.

9.2.3 District/Campus Improvement Plans
Since school year 1992-93, TEC Section 11.251 has required each LEA to have a district
and campus improvement plan or charter instructional plan, as appropriate. The state
compensatory education program must be described in the campus improvement plan if the
program is implemented at the campus level or be described in the district improvement
plan if the state compensatory education program is implemented district wide.

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Additionally, TEC Section 11.251 also requires that the board of trustees ensure that the
LEA and all campus plans be developed, reviewed and revised annually for the purpose of
improving the performance of all students. Annual board approval must ensure that the
district and campus plans are mutually supportive to accomplish the identified objectives
and support the state goals and objectives listed in TEC Chapter 4.
State law requires the district/campus improvement plan; it is the primary record
supporting expenditures attributed to the state compensatory education program.
The LEA must design the state compensatory education program based on the identified
needs of students at risk of dropping out of school. In determining the appropriate
accelerated, intensive compensatory programs and/or services, LEAs must use student
performance data from the TAKS and other appropriate assessment instruments and
achievement tests administered under Subchapter B, Chapter 39 of the Texas Education
Code. In addition, the LEA must annually evaluate the outcomes and the plan’s
implementation to determine whether the academic achievement of all at risk students
improved; whether the goals and objectives contained in the plan were achieved; and if the
plan is still appropriate as written.
In addressing the needs of students at risk of dropping out of school, the state
compensatory education program must be addressed in the comprehensive needs
assessment and be described in the campus improvement plan if the program is
implemented at the campus level or be described in the district improvement plan if the
state compensatory education program is implemented district wide. The district/campus
improvement plan or charter instructional plan,, as appropriate, must also include the
following:
•

Comprehensive needs assessment - conducted to identify the strengths and
weaknesses of existing programs, practices, procedures, and activities; and ensures
the use of resources is carefully planned, supplemental and cost effective

•

Total amount of state compensatory education funds allocated for resources and
staff

•

Identified strategies – specific strategies aligned with the comprehensive needs
assessment

•

Supplemental financial resources for state compensatory education - indication of
the approximate dollar amounts for activities and/or strategies

•

Supplemental FTEs for state compensatory education - shown for SCE activities
involving personnel at both the district and campus level

•

Measurable performance objectives - based on needs assessment data and stated in
terms of what the student is expected to do, and stated in terms of measurable


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and/or observable behavior to ensure that the plan is resulting in academic
improvement
•

Timelines for monitoring strategies and reaching goals – specific schedule for data
collection during the school year. This should be written in incremental units such
as every three weeks, every month, (not August though May or “ongoing”), each
semester, etc.

•

Formative and summative evaluation criteria - Formative evaluation includes
periodic measures that are utilized during the actual implementation of the
interventions or strategies. The summative evaluation occurs at the end of the
implementation period, to provide the overall project and process evaluation.

The plans for evaluating and monitoring improvement efforts are a critical component of
the district comprehensive needs assessment. Inferences about the effectiveness of
strategies and interventions can only be accurately made if it has been determined with a
reasonable degree of certainty that strategies have been implemented as designed.
State compensatory education resources must be redirected when evaluations indicate that
programs and/or services are unsuccessful in producing desired results for students at risk
of dropping out of school.
LEAs are required to have local policies and procedures to identify:

1. Students who are at risk of dropping out of school under the criteria in Section
29.081(d), TEC;

2. Students who are at risk of dropping out of school under local criteria and document
compliance with the 10% cap in Section 29.081(g), TEC;

3. How students are entered into the SCE program;

4. How students are exited from the SCE program;

5. The methodologies involving calculation of 110% satisfactory performance on all
assessment instruments, in accordance with Section 29.081(d)(3), TEC; and
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6. The cost of the regular education program in relation to budget allocations per student
and/or instructional staff per student ratio.

LEAs must maintain current records to accurately document numbers of students at
risk of dropping out of school.
Many LEAs utilize their regional education service centers (ESCs) to assist in the
development of their district/campus improvement plans and charter school instructional
plans. ESCs provide technical assistance to school districts and charter schools and can
provide a wealth of information on best practices and model programs.

9.2.3.1

State Criteria for Identification of Students at Risk of
Dropping Out of School

TEC Section 29.081 defines the State criteria used to identify students at risk of dropping
out of school.

A student at risk of dropping out of school includes each student who is under 21 years of
age and who:

1. Is in prekindergarten, kindergarten or grade 1, 2, or 3, and did not perform
satisfactorily on a readiness test or assessment instrument administered during the
current school year;

2. Is in grade 7, 8, 9, 10, 11, or 12, and did not maintain an average equivalent to 70
on a scale of 100 in two or more subjects in the foundation curriculum during a
semester in the preceding or current school year or is not maintaining such an
average in two or more subjects in the foundation curriculum in the current
semester;

3. Was not advanced from one grade level to the next for one or more school years;
Note: prekindergarten or kindergarten students who did not advance to the next
grade level only as the result of the request of the student’s parents are excluded
from this identification; effective school year 2009-2010.

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4. Did not perform satisfactorily on an assessment instrument administered to the
student under Subchapter B, Chapter 39, and who has not in the previous or
current school year subsequently performed on that instrument or another
appropriate instrument at a level equal to at least 110 percent of the level of
satisfactory performance on that instrument;

5. Is pregnant or is a parent;

6. Has been placed in an alternative education program in accordance with Section
37.006 during the preceding or current school year;

7. Has been expelled in accordance with Section 37.007 during the preceding or
current school year.

8. Is currently on parole, probation, deferred prosecution, or other conditional
release;

9. Was previously reported through the Public Education Information Management
System (PEIMS) to have dropped out of school;

10. Is a student of limited English proficiency, as defined by Section 29.052;

11. Is in the custody or care of the Department of Protective and Regulatory Services
or has, during the current school year, been referred to the department by a school
official, officer of the juvenile court, or law enforcement official;

12. Is homeless, as defined by 42 U.S.C. Section 11302, and its subsequent
amendments; or

13. Resided in the preceding school year or resides in the current school year in a
residential placement facility in the LEA, including a detention facility, substance

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abuse treatment facility, emergency shelter, psychiatric hospital, halfway house,
or foster group home.

The SCE program may also supplement the dyslexia program. TEC Section 42.152 allows
charges to the state compensatory education allotment (in proportion to the percentage of
students that meet the criteria in Section 29.081(d) or (g)) for programs that serve students
that are enrolled in an accelerated reading program under Section 28.006(g) or that are
enrolled in a program for treatment of students who have dyslexia or a related disorder as
required by Section 38.003. Thus, only the portion of SCE funds used to supplement the
dyslexia program for identified at risk students may be charged to SCE. Any other funds
used to supplement this program for students who meet neither state or local criteria would
have to come out of local funds or another fund source.

9.2.3.2

Local Criteria for Identification of Students at Risk
of Dropping Out of School

Because the SCE funds cannot be used to serve students who are not identified as at risk of
dropping out of school, “incidental inclusion” does not apply to the use of this grant;
therefore, if the district wants to serve additional students who do not meet State criteria,
the district may establish local criteria to serve the additional students.
In addition to serving students at risk of dropping out of school defined by state criteria, the
LEA may serve students who meet local eligibility criteria if the local criteria have been
adopted by the board of trustees of the LEA. The adopted criteria must be clearly defined
in the district improvement plan for districts or the instructional plan for charter schools.
However, the number of students receiving services under this subsection during a school
year may not exceed 10 percent of the number of students who met the State criteria under
Section 29.081 who received services from the LEA during the preceding school year.
The LEA must maintain current auditable documentation regarding the locally identified at
risk students. Furthermore, the documentation indicating the compliance with the 10
percent cap must be maintained at the LEA level and addressed in the district/charter
improvement plan. This is auditable data.
The LEA must also be able to explain that children identified under local criteria were
added to a listing of children that were identified under TEC Section 29.081. This means
that the state compensatory education allotment may not be used to serve students on a
particular campus, if the LEA has not identified any students on the same campus that meet
any of the state criteria specified in TEC Section 29.081(d).
Students at risk of dropping out of school reported through PEIMS must meet the
state criteria; students identified using local criteria are not reported through PEIMS.


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9.2.4

Funding of Compensatory Education Programs
under the Foundation School Program

Funding allocated for state compensatory education programs and/or services is based on
the number of educationally disadvantaged students in the LEA. The number of
educationally disadvantaged students is determined by averaging the best six months’
student enrollment that qualifies in the national school lunch program for free- or reducedprice lunches in October of the preceding school year through September of the current
school year. Districts are entitled to receive an additional annual allotment equal to the
adjusted basic allotment multiplied by 0.2 for each student who is educationally
disadvantaged. Districts are also entitled to receive an annual allotment equal to the
adjusted basic allotment multiplied by 2.41 for each full-time equivalent student in a
remedial and support program under TEC Section 29.081 because the student is pregnant
or a parent.
House Bill 3646, Section 52, 81st Texas State Legislature, Regular Session, amended
Section 42.152(c), Education Code. This section amended the indirect cost allotment for
the compensatory education allotment from 15 to 45 percent. Under Title 19 Texas
Administrative Code (TAC) §105.11, no more than 45 percent of the allotment may be
spent on indirect costs related to state compensatory education. Indirect costs may be
attributed in the General Fund to the following expenditure function codes: 34- Student
Transportation; 41- General Administration; 81- Facilities Acquisition and Construction;
and the Function 90 series of the General Fund, as defined in the Texas Education Agency
Financial Accountability System Resource Guide. The remaining 55 percent of the state
compensatory education allotment must be spent on the LEA’s identified state
compensatory education programs and/or services.
School districts and open-enrollment charter schools that receive compensatory education
program funding pursuant to this section are responsible for obtaining the appropriate data
from families of potentially eligible students, verifying that information, and retaining
records.
House Bill 2879 and Senate Bill 702, 77th Regular Legislative Session, amended the
Education Code to provide an alternative state compensatory education allotment funding
count for school districts and open-enrollment charter schools that do not participate in the
national school lunch or breakfast programs (see TEC §42.152(b) as amended). The law
allows the commissioner to adopt a counting method and rules for this alternative. The
rules for the program can be found on the TEA School Finance web site at Compensatory
Education Allotment – Alternative Funding Procedures.
To assist districts and charter schools with gathering the proper income eligibility
information for families, the following documents have been posted to the TEA web site at
Compensatory Education Allotment – Alternative Funding Procedures.

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Districts and open-enrollment charter schools that receive the alternative compensatory
education allotment are responsible for obtaining the appropriate data from the families of
potentially eligible students, verifying the information, and retaining records. The agency
will conduct an audit of the data submitted by districts and charter schools. As a result,
records should be retained for a minimum of five years after the end of each school year.

9.2.4.1Supplement/Not Supplant
SCE funds, other than the indirect cost allotment that may not exceed 45 percent, may be
used only to meet the costs of providing
(1) a supplemental compensatory, intensive, or accelerated instruction program under
Section 29.081; or
(2) an alternative education program established under Section 37.008; or
(3) support to a program eligible under Title I of the Elementary and Secondary Education
Act of 1965, as provided by Public Law 103-382 and its subsequent amendments, and by
federal regulations implementing that Act, at a campus at which at least 40 percent of the
students are educationally disadvantaged; or
(4) a program specifically designed to serve students at risk of dropping out of school, as
defined by Texas Education Code Section 29.081.

Supplemental Program under Section 29.081
SCE costs may supplement the costs of the regular education program and may be used for
costs of programs and/or services that are supplemental to the regular education program
and are designed for students at risk of dropping out of school. LEAs are prohibited from
using FSP compensatory education resource allocations for students at risk of dropping out
of school to supplant resource allocations for the regular education program.
The term regular education program applies to basic instructional services to which all
eligible students are entitled. At a minimum, the Regular Education Program consists of
the following required curriculum for each LEA that serves grades K-12:
A foundation curriculum that includes
• English language arts;
• Mathematics;
• Science; and
• Social studies, consisting of Texas, United States, and world history,
government, and geography
Where regular education program allocations at certain campuses within the LEA are
deficient compared to other campuses serving similar grade levels, the allocation of
compensatory education budgetary resources to those campuses may be interpreted to have

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supplanted necessary regular education services. TEA will rely upon data reported by
districts through PEIMS to determine compliance with requirements in the Texas
Education Code and State Board of Education rules contained in this Resource Guide.
TEA may request additional data as necessary in order to clarify questions related to
PEIMS data. Additionally, on-site visits will be conducted in some LEAs to further assess
qualitative and quantitative questions about SCE Programs. If TEA determines that the
LEA supplanted the regular education program, then financial penalties may apply to the
LEA.
A majority of FSP compensatory education program expenditures are accounted for in the
General Fund, under function code 11, Instruction. Other function codes account for
additional instructional and non instructional-related activities. Transactions accounted for
under various function codes are those transactions representing supplemental costs to the
regular education program. Because all students are entitled to receive instructional
services under a regular education program setting, instructional strategies that involve
modification of the regular education program do not represent supplemental direct costs,
unless incremental costs to the regular education program are demonstrated. Supplemental
direct costs represent incremental costs, meaning that additional costs are involved above
costs necessary to provide the regular education program. Standard staff and fiscal
resource allocations must be documented for different grade levels for regular education,
which are necessary to substantiate the attribution of supplemental resources for
incremental staff and fiscal costs benefiting students at risk of dropping out of education
that are documented in campus improvement plans.
All direct costs attributed to “a program specifically designed to serve students at risk of
dropping out of school, as defined by Texas Education Code Section 29.081” are eligible to
be charged to the state compensatory education allotment. “A program specifically
designed to serve students at risk of dropping out of school, as defined by Texas Education
Code Section 29.081,” represents a temporary special program placement or setting, such
as a non disciplinary alternative education program, that provides special instruction or
services for the period of time that the student is classified as at risk of dropping out of
school. The district/campus improvement plans and the charter school instructional plans
are to include a complete description and evaluation of the program and describe how
students are entered and exited from the temporary special program placements or settings.
Accordingly, the direct costs attributed to these placements or settings are eligible to be
charged to the state compensatory education allotment.
Supplemental includes such costs as costs for program and student evaluation, including
evaluations to assess the impacts or effectiveness of programs specifically designed to
benefit students at risk of dropping out of school, supplemental instructional materials and
equipment and other supplies required for quality intensive instruction, supplemental staff
expenses, salary for teachers of students at risk of dropping out of school, individualized
instruction, and reducing class size. Such costs must be reasonable and necessary for the
success of the program.
House Bill 1691 of the 78th Legislature also amended Section 42.152 of the Texas
Education Code to allow charges to the state compensatory education allotment (in
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proportion to the percentage of students that meet the criteria in Section 29.081(d) or (g))
for programs that serve students that are enrolled in accelerated reading program under
Section 28.006(g) or that are enrolled in a program for treatment of students who have
dyslexia or a related disorder as required by Section 38.003.
Senate Bill 16 of the 78th Legislature also amended Subchapter C, Chapter 29, of the Texas
Education Code by adding Section 29.089, relating to mentoring services. According to
Section 29.089, programs that provide mentoring services to students at risk of dropping
out of school, as defined by Section 29.081, are also eligible to be charged to the state
compensatory education allotment. Before the LEA provides a mentoring program,
adequate planning and research must be conducted to determine what types of programs
are capable of achieving the many goals, including improved academic performance and
attendance in mentored youth. The LEAs should view the improvement of academic
performance as a primary outcome of their efforts and it is imperative that programs
implement proven, research-based best practices if they are to achieve their desired
outcome. Furthermore, the mentoring program should align with the program intent of the
State Compensatory Education program, with the objective of providing accelerated,
intensive and compensatory instructional programs to students who are at risk of dropping
out of school. As with all other services provided for students at risk of dropping out of
school, a needs assessment must be conducted to aid in the development of the programs’
scope of services. The analysis of the results of the assessment should provide the
foundation that is critical in designing a program that can be integrated into raising the
academic success of students at risk of dropping out of school.
Activities offered by the mentoring programs may include homework completion and
assistance, supplemental academic classes, academic games and activities, computerassisted instruction and educational games, educational board games, one-on-one tutoring,
and reading, writing, and vocabulary activities. The What Works Clearinghouse (WWC)
releases new intervention reports, topic reports, practice guides and quick reviews
throughout the year. Use the What’s New archive to browse releases from the past year.
http://ies.ed.gov/ncee/wwc/whatsnew/index.asp?Date=6/1/2009
If the state compensatory education allotment is used to fund strategies in the campus
improvement plan to reduce class size, the percentage of students (who do not meet the
state eligibility criteria) that may benefit from this strategy under local eligibility criteria is
limited to 10% of the number of students who met the state eligibility criteria and were
served in the SCE Program in the preceding year.
Example: Grade four on Campus A meets the state mandated 22:1 class size requirement;
however, based on the campus needs assessment, the campus determines that the class size
in grade four on Campus A needs to be further reduced. Statistically, 50% of the students
in grade four meet the state eligibility criteria for students at risk of dropping out of school
and 2% meet the local eligibility criteria. Therefore, it is allowable for SCE to pay 52% of
the supplemental salary and benefit costs for reducing class size in grade four on Campus
A. (The compensatory education allotment shall not be used to achieve the
Foundation School Program student to teacher ratio requirement of 22:1) This rule


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also applies when these funds are used to upgrade the educational program on a Title
I, Part A schoolwide campuses.)

Special Financial Accounting Rule for School Districts or
Charter Schools with an Enrollment of Less Than 500 Students
The comprehensive needs assessment for small enrollment school districts and charter
schools may often establish class size reduction as a primary strategy for state
compensatory education program and reflect this strategy in the campus improvement
plans (for school districts) or the campus instructional plans (for charter schools). Often,
class sizes for all grade levels are significantly smaller than an average of 22 students per
teacher for regular education). This characteristic of many small enrollment school
districts and charter schools is the result of maintaining separate classrooms for all grade
levels for academic programs (not including physical education). If a school district or
charter school had less than 500 students enrolled during the entire school year, then the
fiscal transactions for regular education (for regular education campus settings) may be
allocated between Program Intent Codes 11 and 24, based upon the percentage of students
at risk of dropping out of school on each campus to the total enrollment for each campus.
A calculation of supplemental FTEs or fiscal resources in reference to a documented
standard for regular education is not required in all school districts and charter schools
covered by this special provision. Supplemental FTEs and fiscal resource amounts
attributed to use of the SCE allotment will be disclosed in the district improvement plan,
corresponding campus improvement plan, or the charter school instructional plan
consistent with the methodology described above for allocating costs between Program
Intent Codes 11 and 24.
Example: A small enrollment school district stated in its district and campus improvement
plans that small class size is the primary strategy for state compensatory education. On one
campus, the school district classified 25% of the students as risk of dropping out of school
under the criteria in Texas Education Code Section 29.081 and local criteria adopted by the
board of trustees (in accordance with the 10% limit in Section 29.081). Regular education
program costs under Function Code 11, Instruction, for the campus were $1,000,000.
Costs allocated to Program Intent Code, 11 were $750,000, and costs allocated to Program
Intent Code 24, were $250,000, in proportion to the percentage of students at risk of
dropping out of school.

Alternative Education Programs
Under TEC §42.152 (c)(3) a program specifically designed to serve students at risk of
dropping out of school, as defined by TEC 29.081, is considered to be a program
supplemental to the regular education program and a district may use its SCE allotment for
such a program. Therefore, the costs of a non disciplinary alternative education program,
thoroughly established and described in the comprehensive needs assessment and in the
campus improvement plan, as a program specifically designed to serve students at risk of

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dropping out of school (directly targeting students meeting state and local criteria in TEC
Section 29.081 are eligible to be charged to the SCE allotment.
However, TEC §42.152 (c)(1) states that in order to ensure that a sufficient amount of the
SCE funds allotted to a district are available to supplement instructional programs and
services, no more than 18 percent of the SCE funds allotted to a district may be used to
fund a disciplinary alternative education program (DAEP) established under TEC Section
37.008. Expenditures in excess of 18 percent require a state waiver, must be supplemental,
and may only fund programs directly targeting students meeting state and local criteria in
TEC Section 29.081 The DAEP base line program and the supplemental program/services
must be described in the campus/district improvement plan, as appropriate and must be
submitted with the waiver for TEA review.
An approved annual state waiver is required prior to the use of more than 18 percent for
supplemental compensatory education funds on disciplinary alternative education programs
under TEC Section 37.008. Upon an annual petition by a district’s board and a district’s
site-based decision-making committee, presenting the reason for the need to spend
supplemental compensatory education funds on disciplinary alternative education programs
under TEC Section 37.008, the commissioner may waive the 18 percent limitation. The
LEA shall in its petition report the number of students in each grade level, by demographic
subgroup, not making satisfactory progress under the state’s assessment system. The
DAEP base line program and the supplemental program/services must be described in the
campus/district improvement plan, as appropriate and must be submitted with the waiver
for TEA review.
Example: If a district’s total SCE allotment is $500,000, 45% of the allotment, which is
$225,000, may be used for indirect costs; 18% of the total allotment, which is $90,000,
may be used for providing DAEP base line services. The remainder of the LEA’s 55%
allotment ($185,000) for direct services must be used to provide supplemental programs
and services to students identified as being at risk of dropping out of school. These
supplemental services must be supplemental to the regular education program.
Some school districts may contract with the county to operate a DAEP, which may be
located in the same facility as the local juvenile justice alternative education programs
(JJAEP). If the LEA’s DAEP is contracted with the county, the LEA district may use the
allowable 18% to provide the base level program of the DAEP under TEC Section 37.008.
SCE funds may not provide funding for expelled students in a JJAEP operated under
Section 37.011.
Additionally, SCE funds are not allowed to fund an In-School Suspension Program (ISS)
because this is a disciplinary strategy used by a district or campus and does not meet the
DAEP requirements stated in TEC Chapter 37. An In-School Suspension Program (ISS)
also does not meet the intent and purpose of the SCE program in that SCE expenditures
should directly relate supplemental instructional services that assist in improving the
student’s ability to learn the curriculum in order to perform at grade level.


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Support of a Title I, Part A Program
The No Child Left Behind Act of 2001 mandates that schools receiving Title I funds must
“use effective methods and instructional strategies that are based on scientifically based
research that strengthen the core academic program in the school; increase the amount and
quality of learning time, such as providing an extended school year before-and after school,
summer programs and opportunities, and help in providing an enriched and accelerated
curriculum; and include strategies for meeting the educational needs of historically
underserved populations.
Schoolwide program schools use Title I funds to meet the needs of all students in the
school, as determined through a comprehensive needs assessment. Individual students are
not identified as eligible to participate. All school staff is expected to direct their efforts
toward upgrading the entire educational program and improving the achievement of all
students, particularly those who are low achieving.
State law provides flexibility with the use of SCE funds on Title I, Part A campuses at
which at least 40 percent of the students are educationally disadvantaged. SCE funds used
to support a Title I, Part A program must be part of the campus budget and all SCE
expenditures must be tracked back to the SCE fund code, and all generally accepted
accounting principles must be followed. As with Title I funds, SCE funds used to upgrade
the educational program must also meet the same guidelines required of NCLB in that SCE
funds may only be used to incorporate instructional strategies that scientifically-based
research has shown are effective with teaching low-achieving students.
SCE funds may be used on a Title I, Part A Schoolwide campus to upgrade the educational
program where the actual poverty percentage of the campus is 40% or greater as long as the
SCE funds allocated to the campus are supplemental to the costs of the regular education
program. To determine a campus’ poverty percentage, school districts will use the same
auditable poverty data it uses for Title I, Part A for identifying Title I campuses in the
NCLB Consolidated Application for Federal Funding, located on the Title I Campus
Selection Schedule. The use of these funds must be described and evaluated in the
schoolwide campus improvement plan.
Although activities conducted with SCE funds may be used to support the educational
program of a Title I school, the campus must continue to receive its fair share of state and
local funds for conducting the regular education program, and the intent and purpose of the
SCE Program must still be met.
Furthermore, satisfactory justification must be provided to document that the expenses
requested are reasonable in cost and are necessary to accomplish the objectives of the
project. “Necessary to accomplish the objectives of the project” is interpreted as meaning
that the project will not be successful without the expenditure of funds for certain
items/purposes/activities.
The flexibility described above does not apply to Title I, Part A Schoolwide campuses that
use the Title I, Part A feeder pattern to meet the 40% poverty threshold or the Title I, Part
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A regulation which allows a campus that has operated as a schoolwide campus the previous
year with a 40% poverty threshold to continue to operate as a schoolwide campus. In
addition, this flexibility does not apply to Title I, Part A Schoolwide campuses that are
schoolwide because of an Ed-Flex Waiver.
SCE funds may be used to support a Title I, Part A identified program on a Targeted
Assistance campus where the poverty percentage is 40% or greater. Students served in a
Title I, Part A Program must meet the Title I eligibility criteria, as specified in the campus
improvement plan, but are not required to meet the SCE eligibility criteria to use SCE
funds to support the Title I, Part A Program.
On Title I, Part A Targeted Assistance campuses or Schoolwide campuses where the
poverty percentage is below 40%, the flexibility offered to the Title I campuses above 40%
or greater does not apply. On these campuses, SCE funds must be used to implement a
supplemental SCE program. SCE funds may be used in conjunction with Title I funds, if
appropriate. For example, on a Title I campus below 40% poverty, a teacher may be split
funded between Title I and SCE if the students served meet both the Title I eligibility
criteria and the SCE eligibility criteria.
Flexibility with SCE funds does not extend to Title I, Part A, district wide program
activities funded through the central office, regardless of whether all campuses in a district
are Title I, Part A schoolwide.

9.2.4.2Alternative Method for Receiving the Compensatory
Education Allotment
Effective December 2, 2001, school districts and open-enrollment charter schools that do
not participate in the national school lunch program may derive an eligible student count by
an alternative method for the purpose of receiving the compensatory education allotment.
Schools receiving SCE funds via the alternative method are responsible for obtaining the
data from families, verifying the information, and retaining records. TEA will conduct an
audit of data submitted every five years. See 19 TAC 61.1027 for additional information.

9.2.5 State Compensatory Education Planning Cycle
The planning cycle for students at risk of dropping out of school involves a complex
analysis of short- and long-term indicators used to identify students and many
considerations regarding service options. Section 29.081(d), TEC, defines State criteria for
identifying students at risk of dropping out of school. A student’s identification as “at risk”
may change during the school year. In some instances, such as in large districts, campuses
where student mobility is high, multi-track school calendars and/or year-around schools,
some of the tasks involving assessment, evaluation and modification of state compensatory
education programs may be conducted at other times during the year. Additionally, a

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student may fit the criteria for at risk over several years, such as the criteria relating to
below satisfactory performance on an assessment instrument. Furthermore, districts
attempt to ensure early identification, because factors that cause the child to be identified as
at risk of dropping out of school may become more complex over the long-term.
The school district or charter school will maintain a record of students that were served in
intensive instructional programs in order to attribute supplemental costs appropriately in
proportion to the population of students that were at risk of dropping out of school and
local criteria approved by the board of trustees, in accordance with Section 29.081.
The LEA must maintain current student records verifying the at-risk classification.
Records must include the reason(s) the student was identified, when the student was
identified, the supplemental services provided, and the date and documentation
substantiating the reason for exiting the program. Additionally, the at-risk classification
records must indicate periodic review and verification. Refer to Appendix 2 of this module
for sample documentation records.

9.2.6

State Compensatory Education Programs and
Resources

As LEAs design state compensatory education programs and/or services, they must ensure
that the district/campus improvement plans and charter school instructional plans identify
the resources that will be used to implement the program. Resources may include
specialized supplemental materials for reading or mathematics, specialized software,
additional staff, and equipment. In addition to the state compensatory education allotment,
LEAs may also identify other state or local funds to help support the designated state
compensatory education programs and/or services. Some examples of supplemental state
compensatory education programs and/or services developed by LEAs include but are not
limited to:
•

tutorials;

•

class size reduction; (Note: SCE funds cannot be used to meet State or Federally
mandated rules);

•

computer-assisted instruction

•

specialized staff development to train personnel who are working with students at risk
of dropping out of school* ;

•

specialized reading and mathematics programs;

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•

TAKS remediation;

•

individualized instruction;

•

extended day (instructional) sessions for prekindergarten;

•

accelerated instruction; and

•

extended day, week, or year instructional services

* Additional notes on training:
Training and training expense must be reasonable and necessary and training MUST be
related and beneficial to the at-risk program. Therefore, training must be aligned with the
needs of at-risk students as indicated in the district/campus needs assessment. The district
should ensure that training is not a “one time” event. Documentation must be maintained
that training was evaluated for effectiveness. Has the district established thoroughly
written policies regarding attendance of staff development?
State compensatory education (SCE) funds must be used to provide support programs
and/or services that supplement the regular education program so that students at risk of
dropping out of school can succeed in school. Therefore, all direct instructional costs must
relate specifically to the SCE program and must be adequately documented. Furthermore,
the district/charter school must be able to demonstrate the SCE programs were cost
efficient and program effective.
The LEA should maintain the following information to substantiate the cost of all
supplemental state compensatory education programs and/or services.
1. State the name of program.
2. State the purpose, goal, and objective.
3. State the amount that will be expended to support this program and the source of
funds for the amounts expended.
4. Indicate the number of students that will be served.
5. Indicate the number of staff members involved.
6. Specify how the program supplements the regular education program. What
documentation will the district/campus maintain to verify that this training is
supplemental to the at-risk program and not the campus’ entire educational
program? TEC §42.152(c) and (q)
7. Specify how the program will reduce the dropout rate.


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8. Specify how the program will increase the achievement of students identified as
being at risk of dropping out of school. TEC §29.081(d)
9. Specify how evaluations will be conducted to measure the impact of the program on
student performance. In this specific case, specify how this training will be
periodically evaluated for effectiveness. TEC §11.252(a)(8) and §11.253(d)(7)
10. Indicate the research used to support the effectiveness of the staff development.
Basically, describe the settings and populations that have shown improved
performance after using this program and summarize the evidence showing that this
training improves student achievement.
11. What data will the campus use to evaluate the success of the new program as it
relates to increased student achievement in the areas in need of improvement?
(results of evaluation) TEC §29.081(c)
12. How will the campus monitor the implementation of the training into classrooms?
Who will be responsible for mentoring and monitoring the implementation? What
is the timeline for implementation? Please provide specific dates and times.
13. Indicate how the cost of the training is reasonable and necessary.
14. Identify the page number(s) of the district improvement plan/campus improvement
plan (D/CIP) that describes the planned strategies, activities, services and/or
functions that will be implemented in support of this program.
15. Is the proposed use of SCE and federal funds disclosed in the applicable CIP? Does
this disclosure relate to the applicable line item in the approved budget?
When faced with the question of whether certain positions, programs, strategies or
activities may possibly be funded with SCE dollars, the LEA must keep in mind that
purpose of the SCE program is to improve student performance through direct instructional
services to students at risk of dropping out of school. The more removed services are from
the student, the more the resources are diluted and the more difficult it becomes for the
school district to defend the use of the SCE funds and justify the effectiveness of the
program in improving student performance.

9.2.7

Evaluation of State Compensatory Education
Programs

LEAs are required to evaluate the effectiveness of their designated state compensatory
education program and include the results of this evaluation in the district improvement
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plan or the charter school instructional plan. The analysis allows the LEA to focus
resources on the strategies and goals that will most likely impact the achievement of
students at risk of dropping out of school.
The state compensatory education program must be evaluated and documented by showing
the effectiveness in reducing any disparity in:
1. Performance on assessment instruments between “students at risk of dropping out
of school” and all other district students; and
2. Rates of high school completion between “students at risk of dropping out of
school” and all other district students.
The TEC does not specify the minimum standard or design for an evaluative process.
Some examples of recognized standards for the design of evaluative processes are
described in various reports that may be accessed on the Internet. The U. S. Department of
Education report, When Schools Stay Open Late: The National Evaluation of the 21stCentury Learning Centers Program, First Year Findings (2003) describes a comprehensive
evaluative process (see Exhibit 1), and provides an example for a conceptual design for an
evaluation of supplemental programs. The 21st Century Learning Centers Program report
provides an illustration of a best practice for evaluative processes.
Appropriate modifications in the design of evaluative processes should be made in the
context of different grade levels and subpopulations of students, and for campuses that
have varying percentages of students at risk of dropping out of school enrolled.
Substantive and meaningful evaluations of the uses of the SCE allotment are essential in
order to ensure an optimum allocation of scarce resources and timely modifications of
accelerated, intensive and compensatory programs.
The U. S. Department of Education’s evaluation of learning centers placed an “emphasis
on rigorous estimation of effects and multifaceted data collection that allowed the
evaluation to explore many questions about program operation and implementation in
addition to its impacts on children and youths.” School district and charter school
decisions about the process design for an evaluation should represent a reasonable
cost/benefit balance. More rigorous evaluations of strategies, programs and services, and
assessments of the programmatic impacts to academic success factors are needed in certain
school districts and charter schools.
The U. S. Department of Education’s evaluation of learning centers included use of
propensity score matching (PSM), involving selection of a potential comparison group of
students whose characteristics most closely resembled those of participants in the learning
center programs. Techniques for benchmarking student populations may be combined with
various statistical models, including the use of regression analysis, supported by statistical
software packages to estimate the standard errors of the coefficients of various models.
The design process for the evaluation of SCE-related activities may be complex, requiring
the use of outside consultants, in some instances, which would represent an appropriate
charge to the state compensatory education allotment.


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Exhibit 1.

Example Logic Model for Understanding the Impacts of Supplemental Local,
State or Federal Programs for Students at Risk of Dropping Out of School

A. Context
School Characteristics
School, classroom, teacher,
student characteristics
School safety
Academic support structure
Climate, academic
expectations
Community safety
History of school/
community involvement
Student After
-School Time
Location
Companions
Activities

B. Program
Implementation

D. Intermediate
Impacts

Participation

Academic/Cognitive
Improved homework
completion
Improved study skills
More reading, less TV
Improved effort

Recruitment/retention
Dosage
Program Content and
Delivery
Safe environment
Academic activities
Adult activities
Social, cultural, recreational
activities
Links with school day
Program Structure and
Resources
Goals
Organization
Functioning
Staffing/training
Collaborations

E. Long
-Term
Impacts
Academic/Cognitive
Higher grades
Higher test scores
On-time promotion
Return to regular track
High school graduation

Better attendance
Improved classroom behavior
Improved attitude toward
school and reading
Social/Emotional
Increased personal
responsibility

Postsecondary plans
Behavior
Reduced fighting, stealing,
vandalism
Reduced use of alcohol,
tobacco, other drugs
Safety

Better peer interactions

Reduced victimization

Higher aspirations
Better problem
-solving
Increased knowledge/respect
for diversity
Increased feeling of safety

School
Community organizations
Program Sustainability

C. Conditioning
Factors

Individual and family characteristics
Parent child relationship
-

Parent involvement in schools
Community involvement

Source: U. S. Department of Education, When Schools Stay Open Late: The National
Evaluation of the 21st-Century Learning Centers Program, First Year Findings (2003).

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According to the U. S. Department of Education, there are four types of program
evaluation, as explained in Exhibit 2. The four basic types of program evaluations have
different audiences, answer certain questions and involve different methodologies. Certain
aspects of the four types of program evaluations should be considered by school districts
and charter schools in the context of short-term and long-term process design factors for
evaluations of accelerated, intensive, and compensatory instructional strategies, activities
and programs.
Exhibit 2.

Type of
Evaluation

Four Types of Program Evaluation

Audience

Key Questions
How can we
continuously improve
our communication and
guidance in order to
achieve our objectives?

Timeline

Continuous
Improvement

Program Staff

Performance
Data

Which federal programs
are working? Are some
Appropriators/OMB
Annual
programs more effective
than others?

Implementation
Studies

Field Trials

ASAP

Methodologies
Market research
methods like fast
response surveys,
focus groups, etc.
Analysis using
Performance-Based
Data Management
System

Authorizers

How well are programs
being implemented?
Are the policy changes
we made leading to
improved outcomes?

5-7
Years

Passive, descriptive
evaluation studies,
using methods like
self-reported surveys
and case studies

Practitioners

What works? What
specific educational
interventions lead to
increased student
achievement?

Longterm

Random assignment
field trials with
longitudinal data

Source: U. S. Department of Education, New Directions for Program Evaluation at the
U.S. Department of Education (2003).
In addition to school districts’ and charter schools’ local evaluations, the TEA is required
by law to evaluate state compensatory education statewide. The Agency will review TAKS
scores of students identified through PEIMS as being at risk of dropping out of school to
determine if the achievement gap is closing and students at risk of dropping out are
succeeding.


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9.2.8

Campus Considerations for
Supplement/Supplant Compliance

Different variables impact regular education costs for various types of campuses, such as
high school versus middle school. Accordingly, statistical analysis of resource allocations
for the regular education program is restricted to a comparison of campuses offering
similar grade levels, such as comparisons between campuses serving elementary grade
levels within a district. The statistical analysis for determination of a supplant is more
comprehensive in districts that have multiple campuses across several grade levels.
The LEA may also decide to concentrate its FSP compensatory education resources on
only one or a small number of campuses that serve students at risk of dropping out of
school. Decisions to target campuses selectively instead of in proportion to allocations
according to the concentration of students at risk of dropping out of school may give the
appearance that the regular education program was supplanted.

Single Attendance Campuses for Grade Levels
Statistical analysis of LEA resource allocations will be affected by certain characteristics,
like the number of campuses that serve similar grade levels. If the LEA has no more than
one campus for a grade level, then the one statistical analysis for supplant will be resource
allocations to campuses according to the proportion of students at risk of dropping out of
school. Other statistical tests will involve review of regular education resources across
campuses. Accordingly, TEA will determine whether compensatory education program
resource allocations per student at risk of dropping out of school on the elementary campus
are proportional to the percentages of students at risk of dropping out of school at the
middle, junior high and/or high school campuses.

Multiple Attendance Campuses for Grade Levels
Statistical analysis of LEAs that have multiple attendance campuses for a grade level is
more complex. One test for these campuses is whether direct costs for regular education
reflect an equitable distribution of regular education resources across campuses that serve
comparable grade levels. Another test will be whether compensatory education resource
allocations are proportional to the number of students at risk of dropping out of school in
campuses serving similar grade levels. If compensatory education resources are
concentrated on one or a few campuses, then the statistical analysis will also include a
review of resources for regular education.

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9.2.9

Analysis of Fiscal Data for

Fiscal data used in analyzing direct costs per student are expenditures recorded in the
General Fund under object codes 61XX, Payroll Costs, through 6599, Debt Service, under
Program Intent Codes 11, Basic Educational Services; 24, Accelerated Education; 26, Non
disciplinary Alternative Education Programs – AEP Basic Services; 28, Disciplinary
Alternative Education Program – DAEP Basic Services; 29 Disciplinary Alternative
Education Program – DAEP State Compensatory Education Supplemental Costs; and 30,
Title I, Part A Schoolwide Activities Related to State Compensatory Education Costs on
Campuses with 40% or More Educationally Disadvantaged Students.
Consideration of other fiscal data will apply to costs recorded under 66XX, Capital Outlay,
under Program Intent Codes 24, Accelerated Education; 26, Non disciplinary Alternative
Education Programs – AEP Basic Services; 28, Disciplinary Alternative Education
Program – DAEP Basic Services; 29 Disciplinary Alternative Education Program – DAEP
State Compensatory Education Supplemental Costs; and 30, Title I, Part A Schoolwide
Activities Related to State Compensatory Education Costs on Campuses with 40% or More
Educationally Disadvantaged Students. This data is excluded in analyzing direct costs per
student because one-time purchases of equipment may distort an analysis of the correlation
of compensatory education expenditures with the proportion of students at risk of dropping
out of school. Supplemental review of district data will be made when expenditure patterns
indicate a district may have supplanted the regular education program.
The analysis of fiscal data described in this section excludes those functions defined as
indirect costs in State Board of Education rule, under Title 19 Texas Administrative Code
Chapter 105, Subchapter B, Maximum Allowable Indirect Cost. Additionally, if the LEA
is a member of a shared services arrangement for compensatory education, then TEA’s
analysis will also include the LEA’s share of expenditures by the fiscal agent.

9.2.10

Analysis of Student Data for

Student data reported through PEIMS is analyzed to determine the relative proportion of
students at risk of dropping out of school per campus. Statistical analysis of student data
also includes a review of academic performance of students at risk of dropping out of
school as a group and in comparison to other students.


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9.2.11

Analysis of Staff Data for Supplement/Supplant
Compliance

An analysis of instructional staffing patterns is a useful tool. Instructional payroll related
to concentrated staff resources is a primary cost of public education, including FSP
compensatory education programs. Differences in teacher degree status and experience
may complicate the analysis of fiscal resource allocations across campuses in certain
districts.
If school district/campus improvement plans or charter school instructional plans primarily
rely upon smaller class sizes, then staffing patterns may show a correlation between the
number of instructional units, teachers and teacher aides, and the proportion of students at
risk of dropping out of school per campus. An analysis of staffing patterns is necessary
when examining the allocation of resources in most districts, whenever instructional
salaries are recorded under Program Intent Codes 24, Accelerated Education; 26, Non
disciplinary Alternative Education Programs – AEP Basic Services; 28, Disciplinary
Alternative Education Program – DAEP Basic Services; 29 Disciplinary Alternative
Education Program – DAEP State Compensatory Education Supplemental Costs; and 30,
Title I, Part A Schoolwide Activities Related to State Compensatory Education Costs on
Campuses with 40% or More Educationally Disadvantaged Students. Split funded state
compensatory education program teachers’ salaries and an entire salary of a teacher that is
assigned to the state compensatory education program may be recorded to Program Intent
Code 24, Accelerated Education, as applicable.

9.2.12

Example of District Profiles of Supplemental
Resources for Compensatory Education
Programs

LEA profiles, illustrated in Exhibits 3 and 4, reflect the use of FSP compensatory education
resources to supplement the regular education program for intensive instructional programs
serving students at risk of dropping out of school. Exhibit 3 illustrates a simple formula for
allocation of FSP compensatory education resources, reflecting increasingly concentrated
resources in proportion to the percentage of students at risk of dropping out of school at
different campuses. Exhibit 4 illustrates that the FSP compensatory education allotment
may be used to supplement regular education program resources provided to at risk
bilingual students in order to close the gap in academic performance between limited
English proficiency students at risk of dropping out of school and other students. There is
little likelihood that any LEA’s resource allocation patterns would mirror those illustrated
in Exhibits 3-5 because of important considerations that are made for programmatic
reasons, relating to differences in academic performance across campuses if all other
factors were equal.
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Exhibit 5 illustrates another simple example wherein the entire FSP compensatory
education allotment is concentrated at a single campus that has the highest concentration of
students at risk of dropping out of school involving intensive instructional programs for
these students. These exhibits illustrate opposite extremes for potential resource allocation
practices. Actual LEA practices differ in many ways.

Exhibit 3.

Examples of Proportional Allocations of FSP Compensatory Education
Resources According to the Percentage of Student at Risk of Dropping Out of
School


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Exhibit 4.

January 2010

Examples of Bilingual Education Setting Showing Proportional Allocation of
FSP Compensatory Education Resources According to the Percentage of
Student at Risk of Dropping Out of School


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Exhibit 5.

Examples of Disproportional Allocation of FSP Compensatory Education
Resources to Campuses

To reiterate an important point, there is little likelihood that any LEA’s resource allocation
patterns would mirror those illustrated in Exhibits 3-5 because of important considerations
that are made for programmatic reasons, relating to differences in academic performance
across campuses if all other factors were equal. However, the illustrations do serve to
explain the requirement in state law that the basic allotment is to be supplemented in
providing state compensatory education resources to students at risk of dropping out of
school.

9.2.13

Example of District Profiles of Supplant of
Regular Education Program Resources

LEA resource allocation practices that appear to supplant regular education resources are
illustrated in Exhibit 6. Exhibit 6 illustrates a simple formula for allocation of aggregate
regular education and FSP compensatory education resources that are in proportion to
enrollment in different campuses, without any discernible correlation to the percentage of
students at risk of dropping out of school per campus. The exhibit illustrates what appears


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to be an extreme example of the LEA that is supplanting regular education resources with
the FSP compensatory education allotment.
The LEA gives the appearance that it is supplanting the regular education program if the
allocation of compensatory education resources appears independent of the number and/or
proportion of students at risk of dropping out of school across all campuses. Such an
allocation practice contradicts a logical expectation that resources tend to be concentrated
according to increased student needs for additional staff, training, educational services,
specialized curriculum, and specialized instructional equipment.

Exhibit 6.

Examples of FSP Compensatory Education Resource Allocations that Suggest
Supplant of the Regular Program

9.2.14

Federal Program Compliance Considerations in
Design of State Compensatory Education
Programs

Title I, Part A of the Elementary and Secondary Education Act (ESEA), as amended, is
intended to improve the regular education programs operated by local education agencies.
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The two types of programs by Title I, Part A are schoolwide programs and targeted
assistance programs. Both schoolwide and targeted assistance programs must use effective
methods and instructional strategies that are grounded in scientifically based research.
Each of these program types has components that are required by law, and the state
compensatory education requirements affect each program type differently.

9.2.14.1

Considerations Related to Targeted Assistance in
Elementary and Secondary Education Act, as
Amended, Title I, Part A

A campus that is eligible for Title I, Part A services but is either ineligible or chooses not to
participate as a schoolwide program may operate a targeted assistance program.
The intent and purpose of a targeted assistance program operated under Elementary and
Secondary Education Act, as amended, Title I, Part A is to provide supplemental services
only to eligible Title I, Part A students identified as having the greatest need for special
assistance based on multiple, educationally-related, objective criteria. A targeted
assistance program employs staff paid with Title I funds to serve only those students who
have been identified as Title I students.
A supplemental State or local program meets the requirements of a targeted assistance
program if the program –
• Serves only children who are failing, or most at risk of failing, to meet the State’s
challenging student academic achievement standards;
• Provides supplementary services designed to meet the special educational needs of the
children who are participating in the program to support their achievement toward
meeting the State’s student academic achievement standards; and
• Uses the State’s assessment system described in 34 CFR Part 200.2 to review the
effectiveness of the program.
Therefore, the LEA must have established criteria for every grade that receives services
under Title I, Part A targeted assistance programs. Any supplemental identification criteria
established at the campus level must also be described in the Title I, Part A targeted
assistance campus improvement plan.
Students must be identified on the basis of multiple, educationally related, objective criteria
established by the LEA and supplemented by the school. The LEA’s criteria for
identifying students for Title I, Part A services must be clearly defined in the LEA’s
district/campus improvement plans or charter school instructional plan. Any supplemental
criteria established at the campus level must also be described in the corresponding campus
plan. The LEA must have criteria for every grade that receives services under Title I, Part
A targeted assistance programs.


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Children from preschool ages through Grade 2 shall be selected solely on the basis of such
criteria as:
• teacher judgment;
• interviews with parents; and
• developmentally appropriate measures.
A Title I, Part A, targeted assistance program must do the following:
1. implement the Eight Components of a targeted assistance program;
2. include in the CIP the student eligibility criteria used for identifying Title I, Part A,
students—students who are failing or most at risk of failing to meet the state’s student
performance standards;
The campus must use multiple (at least two), educationally related, objective criteria
established by the LEA; and
3. describe in the CIP how Title I, Part A, funds are spent on effective methods and
instructional strategies that are based on scientific research for participating Title I,
Part A, students.
The Title I program incorporates only instructional strategies that scientifically-based
research has shown are effective with teaching low-achieving students. Targeted
assistance programs cannot serve all students in a grade. They can only serve
students identified as in greatest need. Additionally, the number of students served
should be less than 40% of the total enrolled at the campus.
To assist targeted assistance schools and local educational agencies to meet their
responsibility to provide for all their students served under this part the opportunity to meet
the State’s challenging student academic achievement standards, each Title I, Part A
targeted assistance program includes eight required components. Each targeted
assistance program shall —
1) use Title I, Part A resources to help participating children meet the state’s
challenging student academic achievement standards expected for all children;
2) ensure that planning for students served is incorporated into existing school
planning;
3) use effective methods and instructional strategies that are based on scientifically
based research that strengthens the core academic program of the school and that
—
•

January 2010

give primary consideration to providing extended learning time, such as an
extended school year, before- and after-school, and summer programs and
opportunities;


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•

help provide an accelerated, high-quality curriculum, including applied
learning; and

•

minimize removing children from the regular classroom during regular school
hours for Title I, Part A instruction;

4) coordinate with and support the regular education program, which may include
services to assist preschool children in the transition from early childhood programs
such as Head Start, Even Start, Early Reading First or State-run preschool programs
to elementary school programs;
5) provide instruction by highly qualified teachers;
6) provide opportunities for professional development for teachers, principals, and
paraprofessionals, including, if appropriate, pupil services personnel, parents, and
other staff, who work with participating children in targeted assistance programs or
in the regular education program; and
7) provide strategies to increase parental involvement, such as family literacy services;
8) coordinate and integrate Federal, State, and local services and programs, including
programs supported under this Act, violence prevention programs, nutrition
programs, housing programs, Head Start, adult education, vocational and technical
education, and job training.
The LEA must maintain current records to document the number of students from lowincome families, the students who meet the eligibility criteria, and the students identified as
having the greatest need for special assistance.

9.2.14.2

Considerations Related to Schoolwide Programs
Operated under Elementary and Secondary
Education Act, as Amended, Title I, Part A

The intent and purpose of a Title I, Part A schoolwide program is to upgrade the entire
educational program at the participating campus. Title I, Part A funds must be
supplemental. All children enrolled at a schoolwide campus are eligible to participate.
The goal of schoolwide programs is to generate high levels of academic achievement in
core subject areas for all students in a school. Schoolwide programs must also focus on the


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needs of the low-achieving children and those at risk of not meeting state achievement
standards. All staff and resources are part of the overall schoolwide program.
Although a campus has met the 40% threshold, they are not required to serve schoolwide.
See discussion below regarding becoming a schoolwide program.
Title I, Part A schoolwide programs operate according to a plan that contains proven,
research-based strategies designed to facilitate schoolwide reform and improvement,
including professional development activities based on practices proven to be successful in
helping teachers improve the quality of their instruction. Furthermore, Section 1114 of
Title I of the ESEA requires that the plan be developed with the involvement of parents and
other members of the community to be served and individuals who will carry out the plan,
including teachers, principals and administrators, and, if appropriate, pupil services
personnel, technical assistance providers, school staff, and, if the plan relates to a
secondary school, students from such schools. The planning team must remember that any
strategies the school considers should be research-based and likely to produce the desired
results. Therefore, in addition to being grounded in scientifically based research, the
strategies developed must be comprehensive and span all grades and subjects.

Becoming a Schoolwide Program
For a school to operate a schoolwide program, the following must occur:
• Poverty level at the individual school building needs to be 40 percent or above. (Once a
school becomes schoolwide, it may remain a schoolwide even if the poverty level drops
below 40 percent)
• The school, in consultation with its district and its school support team or other
technical assistance provider, decides if it wants to become a schoolwide program in
order to upgrade the school’s total educational program.
• High-quality assistance and support is available to the school from external technical
assistance providers.
• A comprehensive plan must be developed over a one-year period based upon an
extensive needs assessment. The one-year time period may be shortened only if the
school district determines, after consideration of the technical assistance availability,
that less than one year is needed to have a schoolwide plan developed and ready for
implementation.
• The plan is to be developed by a diverse group of appropriate individuals
•
Teachers
•
Principals
•
Pupil services personnel
•
Support Staff
•
Parents
•
Other members of the community to be served.
•
Secondary level students if program is at a high school
•
Administrators from other Title programs

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• Schoolwide plans must describe how other local, state and federal resources will be used
in conjunction with Title I funds. The school also may consider coordinating with other
programs such as: Reading First, Early Reading First, Even Start, Carl D. Perkins
Vocational and Technical Education Act of 1998, and the Head Start Act.
• Plans should describe how the school will provide information about the results of
individual student academic assessments to parents in a language they can understand.
• The plan must describe how the school will implement all of the ten required
components.
• The plan should be reviewed and revised as necessary.

Components of a Schoolwide Program
A schoolwide program must include and address the following 10 components in its plan:
1. A comprehensive needs assessment of the entire school, including the needs of any
migratory children in attendance. This assessment is based on information about the
achievement of children in relation to the Texas state Academic Standards (TAKS). It
should identify gaps between the current status of the school and its vision of where it
wants to be, relative to key indicators or focus areas.
Data obtained from the needs assessment provide the foundation for the goals of the
comprehensive schoolwide plan.
2. Schoolwide reform strategies that provide opportunities for all children to meet the
state’s academic standards, particularly low-achieving children. The plan also should
address how the school will determine if student needs have been met.
3. Instruction by highly qualified teachers (Refer to the NCLB Program Coordination
web page for additional information: http://www.tea.state.tx.us/nclb/.)
4. High quality and ongoing professional development for teachers, principals, and
paraprofessionals, and if appropriate, pupil services personnel, parents, and other staff.
5. Strategies to attract high-quality highly qualified teachers
6. Increased parental involvement activities including family literacy services.
7. Assist preschool children in the transition from early childhood programs, such as
Head Start, Even Start, Early Reading First, or a state-run preschool program, to local
elementary school programs.
8. Include teachers in the decisions regarding the use of academic assessments in
order to provide information on, and to improve, the achievement of individual students
and the overall instructional program.
9. Provide effective, timely additional assistance and activities to students who
experience difficulty mastering the proficient or advanced levels of academic
achievement standards. This shall include measures to ensure that students’ difficulties
are identified on a timely basis and provide sufficient information on which to base
effective assistance.
10. Coordinate and integrate federal, state, and local services and programs. These
may include other programs under the Elementary and Secondary Education Act
(ESEA), and violence prevention, nutrition, housing, Head Start, adult education,
vocational and technical education, and job training programs.

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Other Considerations
• Identification of students is not required, but care must be taken to ensure that the needs
of those farthest from meeting the state’s student academic achievement standards are
met.
• Services to children in schoolwide programs must be supplemental in nature, not
supplanting services.
• Schools with schoolwide programs that consolidate and use funds from different federal
programs are not required to maintain separate fiscal accounting records, by program.
The schoolwide campus must evaluate annually the outcomes and the plan’s
implementation to determine whether the academic achievement of all students, and
particularly of low-achieving students, improved, whether the goals and objectives
contained in the plan were achieved, and if the plan is still appropriate as written.
In summary, a schoolwide campus must retain documentation related to its three core
components: the comprehensive needs assessment, the comprehensive schoolwide plan,
and the evaluation. Documentation relating to the needs assessment should include
significant information about the achievement of students and conditions in the school that
directly affect their academic achievement. Documentation relating to the comprehensive
schoolwide plan must contain specific information about how the program will implement
each of the 10 required components, how resources will be used, the programs consolidated
to support the schoolwide program, and how student assessment results will be
disseminated. Documentation relating to the evaluation should include the method of
evaluation used, and findings that describe the results achieved by the schoolwide program
and its implementation.
Technical assistance on schoolwide program requirements and accounting for funds
combined on schoolwide campuses is available at the regional Education Service Centers
(ESCs).

Resources:
•

Division of NCLB Program Coordination, Texas Education Agency
http://www.tea.state.tx.us/nclb/

•

Designing Schoolwide Programs
http://www.ed.gov/policy/elsec/guid/designingswpguid.doc

•

U.S. Department of Education: http://www.ed.gov

•

ED Pubs:
http://www.ed.gov/about/ordering.jsp
1-877-4-ED-PUBS

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Public Law print of Public Law 107-110 , the No Child Left Behind Act of 2001
http://www.ed.gov/policy/elsec/leg/esea02/index.html

•

Success Stories - From ED News Parents Can Use.
See videos of schools that are improving achievement and helping students succeed.
http://www.ed.gov/nclb/overview/intro/reauth/successstories/index.html

•

This website offers "one-stop-shopping" for links to legislation, Federal Register
Notices, Policy Guidance, and Grant Applications for the No Child Left Behind Act
of 2001. Links to Legislation, Regulations, and Policy Guidance for programs still
being implemented under the Improving America's Schools Act are also on this site.
http://www.ed.gov/about/offices/list/oese/legislation.html

•

National Association of State Title I Directors
http://www.titlei.org/

9.2.14.3

Supplement, Not Supplant and Comparability
Introduction

In general, the term “Supplement, Not Supplant” means that federal funds must be used to
enhance or increase the level of funding which is normally available from state or local
sources; federal funds must not replace state and local funds.
Title I, Part A funds must be used only to supplement the amount of funds that
would, in the absence of Title I, Part A funds, be made available from state and
local sources; Title I, Part A funds may not supplant (take the place of) non-federal
funds.
Any program activity required by state law or State Board of Education rule may
not be funded with federal funds, regardless of whether any funding was provided
in conjunction with the state mandate.
Federal funds may not be used to fund positions, programs, or activities which were
previously funded from state funds. For example, a position which was previously
funded under one federal program may be funded under another federal program.
However, a position may not be funded under a federal program when that position
was previously funded from non-federal (state or local) funds. The only exception

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to this rule is if the position was previously funded from state or local funds to carry
out state-funded activities and the position is no longer needed to carry out such
activities. Then the position could be funded from federal funds to carry out
activities associated with the respective federal program.
Documentation must be maintained which clearly demonstrates the supplementary
nature of federal funds.


Fiscal and program records must show that activities conducted with federal
funds were not previously funded from state or local sources.



In order to demonstrate the supplementary nature of federally funded
activities, grant recipients should maintain a written plan which clearly
outlines what activities are state or locally funded versus which activities are
federally funded, and provide a description of how these activities are
supplementary.

Supplemental state or local funds expended to meet the intent and purpose of Title I, Part A
as described in 34 CFR may be excluded from this requirement.
The purpose of the federal fiscal requirement of supplement, not supplant is to ensure that
the level of state and local support for programs remains at least constant and is not
replaced by federal funds.
Funds for this program must be used to supplement (increase the level of services) and not
supplant (replace) funds from nonfederal sources. Any program activity required by State
law, State Board of Education (SBOE) rules, or local board policy may not be paid with
these funds. State or local funds may not be decreased or diverted for other uses merely
because of the availability of these funds. The LEA must maintain documentation that
clearly demonstrates the supplementary nature of these funds.
An LEA may receive Title I, Part A funds only if it uses state and local funds to provide
services at Title I, Part A campuses that are at least comparable to the services provided at
campuses that are not receiving Title I, Part A funds. Comparability applies only to
multiple attendance areas and campuses with more than 100 students. For determining
comparability, LEAs compare state and local per pupil expenditures, per pupil expenditures
for state and local salaries, or the pupil/non-federal instructional staff ratio. Whichever
method the LEA chooses, the method must be applied consistently throughout the LEA.
For the purpose of determining comparability, the LEA may exclude state and local funds
expended for (1) bilingual education for children with limited English proficiency, (2)
excess costs of providing services to children with disabilities, or (3) supplemental state or
local funds that meet the exclusion requirements under 34 CFR 200.79.
For the purposes of determining compliance with the Title I, Part A fiscal requirement—
supplement, not supplant and comparability—described above under Title I, Part A, the
LEA may exclude supplemental State or local funds expended in any school attendance

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area or school for programs that meet the requirements of Section 1114 (schoolwide
programs) or Section 1115 (targeted assistance programs).

Description of the Schoolwide Program
Schoolwide programs address the educational needs of children living in impoverished
communities with comprehensive strategies for improving the whole school so every
student achieves high levels of academic proficiency. Schoolwide programs have great
latitude to determine how to organize their operations and allocate the multiple funding
sources available to them. They do not have to identify particular children as eligible for
services or separately track Federal dollars. Instead, schoolwide programs can use all
allocated funds to increase the amount and quality of learning time.
A campus participating in a schoolwide program shall use Title I, Part A funds only to
supplement the amount of funds available from non-federal sources for the campus
including funds needed to provide services that are required by law for children with
disabilities and children with limited English proficiency. A schoolwide campus does not
have to demonstrate that activities are supplemental. The school is not required to identify
particular children or to provide supplemental services to identified children. Other funds
may be used on a schoolwide campus in combination with Title I, Part A to upgrade the
entire educational program, but the funds must not be commingled. Such schoolwide
programs are exempt from statutory or regulatory requirements of other federal education
programs, provided that the intent and purposes of each such program are met and the
needs of the intended beneficiaries of the federal fund sources combined are met. The
effectiveness of the program is measured by student performance.

Schoolwide

34 CFR 200.79
Schoolwide: A supplemental State or local program will be considered to meet the
requirements of Section 1114 if the program:
1. Is implemented in a school that meets the schoolwide poverty threshold for eligibility;
2. Is designed to promote schoolwide reform and upgrade the entire educational program
in the school to support students in their achievement toward meeting the State’s
challenging student performance standards that all students are expected to meet;


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3. Is designed to meet the educational needs of all children in the school, particularly the
needs of children who are failing, or most at risk of failing, to meet the State’s
challenging student performance standards; and
4. Uses the State’s system of assessment under Section 34 CFR 200.2 to review the
Note: These criteria apply to all schoolwide campuses, including those that have been
granted an Ed-Flex Waiver to waive the schoolwide poverty threshold.

Fiscal and Program Requirements for All Schoolwide Programs
In summary, the following fiscal and program requirements apply to all schoolwide
programs.
1. The LEA must be able to maintain an audit trail according to budget authority in the
Notice of Grant Award for federal funds expended on a schoolwide campus.
2. The LEA must be able to demonstrate comparability of services and/or maintenance
of effort as required by each federal program.
3. Program activities included on a schoolwide campus must be implemented and
evaluated as required by each federal program.
4. Federal funds on a schoolwide campus must be used to meet the needs identified
through the school’s comprehensive needs assessment and the school reform
activities described in the Campus Improvement Plan. The Campus Improvement
Plan must incorporate the requirements for a Schoolwide Program.
5. Documentation at the local level must be maintained to demonstrate that appropriate
activities were conducted to reasonably address the needs of the intended
beneficiaries of the federal programs included on a schoolwide campus and that the
intent and purposes of each federal program were met.
To ensure that Title I, Part A funds were used to provide services that were in addition to
the regular services normally provided by an LEA for participating children, the LEA must
have met three fiscal requirements related to the expenditure of regular state and local
funds. An LEA must have—
• Maintained state and local effort;
• Provided services in project areas with state and local funds that were at
least comparable to services provided in areas not receiving Title I, Part A
services; and
• Used Title I, Part A funds to supplement, not supplant regular non-federal
funds.
To ensure that required planning was conducted, documentation at the local level must
have been maintained to demonstrate that each schoolwide program plan was:

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•

•
•

•

developed with the involvement of parents and other members of the
community served and individuals who carried out the plan, including
teachers, principals, and administrators, administrators of other Title I
programs, and if appropriate, pupil services personnel, technical assistance
providers, school staff, and, if the plan related to a secondary campus,
students from such campus.
Parental Involvement: Title I, Part A Non-Regulatory Guidance.
April 23, 2004. [See Appendix E for a sample template of a schoolparent compact.
http://www.ed.gov/programs/titleiparta/parentinvguid.doc
in effect during the campus’s participation under Title I, Part A and was
reviewed and revised when necessary by the campus.
made available to the LEA, parents, and the public, and the information
contained in the plan was in an understandable and uniform format and, to
the extent practicable, provided in a language that the parents could
understand.
developed (when appropriate) in coordination with programs under Reading
First, Early Reading First, Even Start, Carl D. Perkins Vocational and
Technical Education Act of 1998, and the Head Start Act.

Targeted Assistance

34 CFR 200.79
Targeted Assistance: A supplemental State or local program will be considered to meet the
requirements of Section 1115 if the program:
1. Serves only children who are failing, or most at risk of failing, to meet the State’s
challenging student performance standards;
2. Provides supplementary services designed to meet the special educational needs of the
children who are participating to support their achievement toward meeting the State’s
student performance standards that all children are expected to meet; and
3. Uses the State’s system of assessment under 34 CFR Part 200.2 to review the


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Title I Programs

Regardless of which types of Title I, Part A, program the LEA operates, it is possible that
some Title I, Part A, administrative, professional development, parental involvement, or
even instructional activities are conducted through the central office. The LEA should be
able to respond appropriately to and maintain documentation for each of the following
questions to determine whether certain expenditures would be allowable:
1. Is the program, activity, or strategy reasonable and necessary to carry out the intent
and purpose of the program?
2. Does the program, activity, or strategy address a need previously identified in the
campus comprehensive needs assessment?
3. Is the program, activity, or strategy to be funded described in the district/campus or
charter improvement plan before the decision of whether to pay the expenditure
from Title I, Part A, funds?
4. How will the program, activity, or strategy be evaluated to measure a positive
impact on student achievement?
5. If for a schoolwide campus, will the program, activity, or strategy upgrade the
entire educational program on the campus?
6. Is the program, activity, or strategy supplemental to other nonfederal programs? On
a schoolwide program, the amount of Title I, Part A, funding on the campus must
be supplemental. On a targeted assistance program, the program, activity, or
strategy must be supplemental.
The Title I, Part A, guidance document at http://www.tea.state.tx.us/nclb/newpolicy/
title1a.pdf describes other general uses of Title I, Part A, funds for items such as salaries,
rent, maintenance, mobile vans, and equipment.

QUESTIONS AND ANSWERS
Question 1: When may nonfederal supplemental funds be excluded for supplement, not
supplant and comparability on a targeted assistance campus?
Answer 1: Nonfederal supplemental funds may be excluded IF:
•

the funds are used to implement a program that meets the requirements of 34 CFR
200.79;

•

funds are not used for implementing the regular mandated foundation
program;

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•

funds are not used to implement an activity required by state law, SBOE rule, or
local board policy;

•

the program uses multiple, educationally related, objective criteria that are
comparable to Title I, Part A for determining eligibility; and

•

the program implements strategies based on scientific research that strengthen the
core academic program, increase the amount and quality of learning time and
include strategies to address the needs of low-achieving students.

Question 2: Must the “same” criteria used to identify Title I students on a targeted
assistance campus also be used by programs conducted with nonfederal funds when these
nonfederal funds will be excluded for supplement, not supplant and comparability?
Answer 2: No. However, the multiple criteria must be objective and educationally related
and must be comparable to that used in Title I, Part A.
Question 3: Who determines if the nonfederal funds meet the criteria of supplemental on a
schoolwide or targeted assistance campus?
Answer 3: The campus may request the exclusion, the LEA reviews and approves the
exclusion, and the State verifies the program meets the intent and purposes of Section 1114
or 1115, as appropriate, through monitoring for exclusion for supplement, not supplant and
through the review and approval of written documentation submitted for exclusion from
comparability.

Examples

Example 1
One year on a Title I targeted assistance campus, a teacher is paid 50% from Title I, Part A
funds and 50% from supplemental local funds for performing 100% Title I services.
May these nonfederal supplemental funds be excluded from the calculation of supplement,
not supplant and comparability? Yes, because the funds meet the requirements for
exclusion, the funds are not used for implementing the regular mandated foundation
program, and multiple, objective, comparable educational criteria were used.


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Example 2
On a Title I, Part A targeted assistance campus, the campus implements a supplemental
program in grades 1-3 for students failing math and reading.
May the campus use Title I, Part A funds for students failing reading and use supplemental
state funds for those failing math? Yes.
Is this a violation of supplement, not supplant? Title I students must have equitable access
to money and services that non-Title I students receive. It would appear in this example
and other examples described in this document that Title I students are not getting their fair
share. However, if nonfederal supplemental funds are used to carry out a “Title I-like
program” which meets the requirements under 34 CFR 200.79, is not part of the regular
mandated foundation program, uses multiple, objective, educationally related criteria, and
is not required by state law or local board policy, the nonfederal funds may be excluded for
determining supplement, not supplant and comparability.
Must these nonfederal supplemental funds be used to serve Title I identified children to
meet the exclusion? No.
Must the school serve those students most in need with Title I funds or may the most in
need be served with the supplemental state compensatory (SCE) funds? Either way is
allowable.
Note: LEAs are required to provide TAKS remediation. Therefore, TAKS remediation
activities funded with federal or supplemental nonfederal funds targeted for exclusion must
be in addition to what is required by state law or local policy and addressed in the campus
improvement plan.

Example 3
An LEA implements a Title I program at grade 1 on a K-3 targeted assistance campus. The
LEA uses supplemental SCE and local funds to implement a similar program in grades 2-3.
May these nonfederal funds at grades 2-3 be excluded for calculating supplement, not
supplant and comparability? Yes, if the requirements in 34 CFR 200.79 are met.

Example 4
Campus A (K-3) is a Title I targeted assistance campus and implements a Title I program at
grades 2-3. Campus B (K-3) is NOT a Title I campus but provides the same supplemental
program for grades 2-3 with supplemental state funds.
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May Campus B exclude these state funds for determining compliance with the supplement,
not supplant and comparability requirements? Yes, if the requirements in 34 CFR 200.79
are met.

Example 5
An LEA uses supplemental state funds to implement an Alternative Education Program
(AEP) for Grades 6-12.
May the LEA exclude these supplemental state funds from the determination of compliance
with supplement, not supplant and comparability requirements? Only the portion of funds
that meets the requirements in 34 CFR 200.79 and is not used to provide the required
Alternative Education Program may be excluded.

Example 6
An LEA offers a supplemental extended-day program with supplemental SCE funds at a
non-Title I campus and offers a Title I, Part A extended-day program at a Title I, Part A
Targeted Assistance campus.
Is this a supplant? No, if the program meets the requirements of 34 CFR 200.79.

Reference Material
For more detail about presumptions concerning whether an LEA has supplanted Title I
funds see the discussion in the Part 4 – Department of Education Cross-cutting section of
the A-133 compliance supplement (March 2009 version) .
The following documents or websites contain additional information to assist with program
requirements and compliance questions. Lengthy guidelines are summarized with links to
full text.
NCLB Policy Guidance:
http://www.tea.state.tx.us/index4.aspx?id=4478
Program-Specific Provisions and Assurances:
http://198.214.97.41:8080/Guidelines/NCLB/NCLBAA09/NCLBAA09CS7000_X.pdf
NCLB Provisions and Assurances:
http://198.214.97.41:8080/Guidelines/Reference%20Materials/705XXXXCS7000_N.pdf


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NCLB Program Appendices: http://www.tea.state.tx.us/index4.aspx?id=4480
Appendix

Title

1

General Guidelines

2

OMB Circulars

3

Cost Principles Payroll

4

PEIMS

5

Encumbrances and Expenditures

6

Indirect Costs

7

Audits

8

Supplement Not Supplant

9

Schoolwide Programs

10

Attendance Area Selection

11

Disposition

12

Ed-Flex

13

REAP

14

Definitions

15

Funding Formulas

16

Highly Qualified

17

Homeless

18

Safe and Drug Free Schools and Communities Risk Factors

19

eGrants

20

Shared Service Arrangements

21

Funding Transferability

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9.3

Financial Accounting for FSP

Standards for school district accounting systems are explained in the Financial
Accountability System Resource Guide, Financial Accounting and Reporting (FAR,
Module 1). Standards for financial accounting were improved to implement new
requirements in Senate Bill 1873, 75th Legislature, Regular Session. Changes to the statute
require that the standard accounting system produce information ensuring that direct costs
of the FSP compensatory education program supplemented expenditures of the regular
education program. Financial accounting standards for FSP compensatory education are
explained below.

9.3.1

Financial Accounting for FSP Compensatory
Education Programs

Financial accounting codes and general guidelines applicable to standard accounting
records and reporting are described in the Resource Guide module Financial Accounting
and Reporting (FAR, Module 1). Expenditures attributable to the FSP compensatory
education program are recorded in financial accounting records under program intent codes
24, Accelerated Education; 26, Non disciplinary Alternative Education Programs – AEP
Basic Services; 28, Disciplinary Alternative Education Program – DAEP Basic Services;
29 Disciplinary Alternative Education Program – DAEP State Compensatory Education
Supplemental Costs; and 30, Title I, Part A Schoolwide Activities Related to State
Compensatory Education Costs on Campuses with 40% or More Educationally
Disadvantaged Students. (See Program Intent Codes section in the FAR, Module 1).
Activities reflected in expenditures attributable to FSP compensatory education are those
activities that supplement the regular education program services provided to students at
risk of dropping out of school. Supplemental expenditures for FSP compensatory
education are incremental costs related to providing concentrated efforts, specialized
contractual services, specialized supplies and materials and/or specialized equipment.

9.3.1.1Fund Codes
School district accounting systems are organized and operated on a fund basis. A fund is
an accounting entity with a self-balancing set of accounts recording financial resources and
liabilities. A school district designates the fund’s financial resources for a distinct purpose.
The fund’s purpose can be established by the state or federal government as well as the
school district.

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The majority of FSP compensatory education program expenditures are accounted for in
the General Fund, under fund code 199. Certain FSP compensatory education program
expenditures are accounted for in the Special Revenue Fund, such as fund code 394,
Pregnancy, Education and Parenting Program. Additionally, services provided through a
shared services arrangement are accounted for under a state/local shared services
arrangement fund code in the Special Revenue Fund (see 1.4.2 Fund Codes in the Financial
Accounting and Reporting module).

9.3.1.2Function Codes
A function represents a general operational area in a school district, and groups related
activities. Most school districts use all of the functions in the process of educating students
or organizing the resources to educate students. For example, in order to provide the
appropriate atmosphere for learning, school districts offer guidance and counseling
services, teach students, provide staff development to teachers, and provide library and
media resources. Each of these activities is a function.
A majority of FSP compensatory education program expenditures are accounted for in the
General Fund, under function code 11, Instruction. Other function codes account for
additional instructional and non instructional-related activities. Transactions accounted for
under various function codes are those transactions representing supplemental costs to the
regular education program. Because all students are entitled to receive instructional
services under a regular education program setting, instructional strategies that involve
modification of the regular education program do not represent supplemental direct costs,
unless incremental costs to the regular education program are demonstrated. Supplemental
direct costs represent incremental costs, meaning that additional costs are involved above
costs necessary to provide the regular education program. Compensatory education
activities are for the purpose of supplementing the regular education program. Certain
expenditure function codes are used exclusively to account for indirect costs. State Board
of Education rules related to indirect costs are found in Title 19 Texas Administrative Code
(TAC) Chapter 105, Subchapter B.

9.3.1.3Object Codes
An expenditure/expense account identifies the nature and object of an account, or a
transaction. The school district’s accounting records are to reflect expenditures/expenses at
the most detailed level, as depicted in the chart of accounts (4 digits) for accounting and
Public Education Information Management System (PEIMS) reporting (actual data)
purposes. For PEIMS budget reporting purposes, expenditures/expenses are reported to the
second digit of detail (6100, 6200, etc.) If a school district needs to use codes in addition
to the mandatory codes for managerial purposes, the optional codes provided for local use
in the code structure should be used.

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The six major categories of expenditure object codes are:
•

Payroll accounted for under the object code series 6100

•

Professional and contracted services accounted for under the object code series 6200

•

Supplies and materials accounted for under the object code series 6300

•

Other operating costs accounted for under the object code series 6400

•

Debt service accounted for under the object code series 6500

•

Capital outlay for land, buildings and equipment accounted for under the object code
series 6600

Direct costs charged to FSP compensatory education program in the General Fund are for
incremental or supplemental costs to the regular education program. A majority of
supplemental costs for compensatory education programs are recorded under the object
codes for payroll, 6100.
Local officials have flexibility in allocating resources to different campuses and in
determining how resources are to be used to benefit students. It should be noted that
supplemental services, supplies and/or equipment charged to the state compensatory
education allotment need to be indicated in the district/charter school improvement plan
and benefit students at risk of dropping out of school served in compensatory education
programs.

9.3.1.4Organization Codes
An organization is a group of employees and/or volunteers who are obligated to complete a
specific responsibility. Usually, an organization has an identifiable leader or an individual
who is accountable for the overall completion of the responsibility. A majority of
supplemental direct costs for compensatory education programs involve instructional and
instructional-related expenditures in campuses providing instruction in grades Pre-K
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9.3.1.5Program Intent Codes (PICs)
These codes are used to account for the cost of instruction and other services that are
directed toward a particular need of a specific set of students. The intent (the student group
toward which the instructional or other service is directed) determines the program intent
code, not the demographic makeup of the students served. In the case of state programs,
state law may determine the intent and permissible use of allotments. In the case of FSP
compensatory education, state law restricts expenditures for direct costs to those costs that
are supplemental to the regular education program. Costs recorded under Program Intent
Codes (PIC) 24, Accelerated Education; 26, Non disciplinary Alternative Education
Programs – AEP Basic Services; 28, Disciplinary Alternative Education Program – DAEP
Basic Services; 29 Disciplinary Alternative Education Program – DAEP State
Compensatory Education Supplemental Costs; and 30, Title I, Part A Schoolwide
Activities Related to State Compensatory Education Costs on Campuses with 40% or More
Educationally Disadvantaged Students need to be aligned with local district/campus
improvement plans or charter school instructional plans.
Please refer to Section 1.4.15.4, Compliance Monitoring – Program Intent Codes, in the
FAR Module for guidance regarding the types of costs to be recorded to each PIC.

9.3.1.6Carry Over Amounts
According to TAC §105.11, at least 55% of the school’s compensatory education allotment
is to be spent on direct costs each year. If a disproportionate amount of the allotment is
received at the end of the year, carry over amounts may result if expenditures are less than
55 percent of the FSP compensatory education allotment for the school year. In this
instance, carry over amounts are to be budgeted in the first or second subsequent fiscal
year. In calculating the carry over amount, the lower of either the preliminary or final
earned allotment amount reflected in the LEA’s summary of finances is compared to the
LEA’s expenditure amount for the respective school/fiscal year.

9.3.2

School District Support for Charges to

Several types of documents may be necessary to document the basis for charges to the FSP
compensatory education allotment, such as allocations of payroll costs to regular and/or
compensatory education. The primary and most important paper trail is provided by the
district/campus improvement plan or the charter school instructional plan. Refer to
Appendix 2 for a sample document to track costs and FTEs related to State Comp Ed.

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9.3.2.1District/Campus Improvement Plan
The comprehensive needs assessment is required by TEC 11.252. The needs assessment is
a comprehensive evaluation plan of a school’s strengths and weaknesses. The concept of
needs assessment is to build on the school’s strengths and improve areas of weakness.
Educators are expected to use data from the needs assessment to write a school
improvement plan that has specific targets and strategies designed by the school
stakeholders to improve the school and student achievement. The process used is almost as
important as the data that are collected.
The district/campus improvement plan or the charter school instructional plan is the
primary record supporting expenditures attributed to the state compensatory education
program. The plan serves to: (a) define purpose; (b) ensure accountability; (c) build
consensus; (d) ensure that the use of resources is carefully planned and cost effective; (e)
make certain that decision making is informed by a conscientious and well planned and
managed evaluation system; (f) keep the mission focused; and, (g) increase productivity for
greater results and success for at risk students. District and campus managers and
leadership, and campus-based committees have broad discretion to design and implement
compensatory education programs that best serve the unique needs of students in each
campus.
http://www.statutes.legis.state.tx.us/Docs/ED/htm/ED.11.htm

9.3.2.2Teacher Schedules
The primary record in the LEA supporting payroll charges to program intent code areas is
the campus teacher schedule. This record describes the assignment of teachers and/or
teacher assistants to instructional areas and other responsibilities during the school day.
Other supporting documentation may be necessary, such as campus staffing formula
policies and records documenting calculations of the supplemental costs of smaller class
sizes.
Teacher schedules may also be used to charge other costs. Non payroll costs may be
attributed to program intent codes according to the relative proportion of payroll costs
charged to different programs or the relative proportion of FTEs assigned to various
programs, as appropriate.

9.3.2.3Campus Staffing Formulas
Campus staffing formulas contained in LEA local policies and/or district/campus
improvement plans provide a benchmark figure that is used to calculate supplemental fulltime equivalent (FTE) staff. The number of excess FTEs resulting from smaller class sizes
is determined from campus staffing formulas. For example, if 10 additional teachers are

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employed at a campus in order to improve instruction for students at risk of dropping out of
school in FSP compensatory education to supplement the 50 teachers employed under
campus staffing formulas, then the salaries and benefits for the 10 supplemental FTEs
would be coded to Program Intent Code 24, Accelerated Education. Alternatively, in the
preceding example, 1/6th or 16 percent of all teachers’ payroll and benefits at the campus
could be coded to Program Intent Code 24, Accelerated Education.
Campus staffing formulas may also be used as a basis to charge other costs. Non payroll
costs may be charged according to the relative proportion of payroll costs charged to
different programs or the relative proportion of FTEs assigned to various programs, as
appropriate.

9.3.2.4Job Descriptions
Other primary records in the LEA supporting payroll charges to program intent code areas
are job descriptions. This record describes the roles and responsibilities of staff in
instructional and/or non instructional areas. Other supporting documentation may be
necessary, such as time and effort records for staff that work in multiple cost objectives or
program areas.
Job descriptions may also be used to charge other costs. Non payroll costs may be charged
according to the relative proportion of payroll costs charged to different programs or the
relative proportion of FTEs assigned to various programs, as appropriate.

9.3.2.5Time and Effort
Time and effort records are the primary records for documenting payroll charges for staff
that work in multiple cost objectives involving federal programs. The record is used to
record the time devoted to different program areas during the work day. Because
consistency in policies may be preferable, districts may implement general policies in
accordance with federal requirements for time and effort records. These records may be
applicable in documenting payroll charges for non instructional staff that work a portion of
their time in FSP compensatory education programs.
Time and effort records may also be used to charge other costs. Non payroll costs may be
charged according to the relative proportion of payroll costs charged to different programs
or the relative proportion of FTEs assigned to various programs, as appropriate.

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9.3.2.6Student Case Counts
Student case counts are other records that may be used to document payroll charges of
staff, such as instructional aides. Calculations of ratios or percentages of students served in
different program areas may be used to document payroll costs for staff that work in
multiple program areas.
Student case counts may also be used to charge other costs. Non payroll costs may be
or the relative proportion of FTEs assigned to various supplemental programs, as
appropriate.

9.3.2.7Use of Local Criteria
In addition to serving students at risk of dropping out of school, as defined in TEC Section
29.081(d), the LEA may serve students who meet local eligibility criteria if the local
criteria have been adopted by the board of trustees. However, the number of students
receiving services pursuant to local criteria during a school year may not exceed 10 percent
of the number of students who received services from the LEA pursuant to TEC Section
29.081(d) during the preceding school year.
In this instance, the LEA may not use its compensatory education allotment to provide
supplemental services or instruction to students identified as at risk pursuant to local
criteria on a campus that did not have any students identified as at risk pursuant to Section
29.081(d). Students at risk of dropping out of school reported through the PEIMS must
meet the criteria set forth in Section 29.081(d); students identified using local criteria are
not reported through the PEIMS.
As with all other aspects of a compensatory education program, the LEA must document
the need for the specific supplemental services or instruction in its comprehensive needs
assessment. Once a need has been identified, the LEA may provide the specific
supplemental services or instruction to students identified at risk of dropping out of school
pursuant to local criteria. In accordance with TEC Section 42.152(c), the LEA must use its
compensatory education allotment to fund supplemental programs and services designed to
eliminate any disparity in performance on assessment instruments administered under
Subchapter B, Chapter 39, of the Texas Education Code or disparity in the rates of high
school completion between students at risk of dropping out of school, as defined by Section
29.081(d), and all other students. The school district may not use its compensatory
education allotment to supplant other funds.
As with all other compensatory, intensive and accelerated instructional services, the LEA
district must support its expenditure of compensatory education funds for the specific
supplemental services and instruction by including an adequate description of said services
in the campus improvement plan(s). Similarly, the LEA must evaluate the effectiveness of


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the services or instruction. Lastly, consistent with TEC Section 42.152(c-1), a school
district may only use its compensatory education allotment to provide the specific
supplemental services or instruction in proportion to the number of at risk students
identified pursuant to local criteria as compared to the number of at risk students identified
pursuant to Section 29.081(d).

9.3.2.8Statistical Sampling Based Time and Effort Studies
A time and effort study that utilizes statistical sampling is another method that may be used
to document payroll charges of staff. Statistical sampling methods applied to time and
effort record keeping may decrease the administrative burden of keeping daily time and
effort records.
Teacher schedules may also be used to charge other costs. Non payroll costs may be
or the relative proportion of FTEs assigned to various programs, as appropriate.

9.3.2.9Other Estimating Techniques for Allocation of Costs
Other procedures may be used in estimating the relative proportions of payroll and other
charges recorded under different program intent codes. Ratios used as a basis for
allocating costs to program areas may be calculated from measurements reflecting the
programmatic intent of services provided to students, and should not be based upon the
demographics of populations served.
Accordingly, direct costs for state compensatory education programs must relate to
substantive programmatic strategies as indicated in the LEA’s school needs assessment,
district/charter school improvement plans, and must be supplemental to direct costs
necessary to provide the regular education program.

9.3.3

Cost/Benefit Considerations for School Districts
Relating to Detailed Financial Accounting
Procedures

The Basic or Enhanced Program Intent Codes are to be charged with costs directly
attributable to the program intent codes according to definitions and examples provided in
the Resource Guide Financial Accounting and Reporting module. In some cases, this may
require the allocation of costs among several program intent codes. However, the
allocation of costs should be performed only when, in the judgment of the LEA
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management, there would be a material effect on the financial records of either an
individual transaction or the total amount of a certain type of transaction. Consideration
should also be given to the effort involved in gathering the information necessary to
perform the allocation compared to the benefit derived from the allocation of costs. In
some instances, the cost of effort to allocate costs among several program intent codes may
exceed the cost of the underlying transaction.
If the LEA elects not to allocate costs to Basic or Enhanced Program Intent Codes or the
Athletics and Related Activities Program Intent Code, the Undistributed Program Intent
Code 99 is to be used.

9.3.4

Allocation Formula of the Texas Education
Agency

TEA provides a formula to allocate costs recorded in Program Intent Code 99,
Undistributed, according to instructional FTEs (on the Fall Snapshot) assigned to Basic and
Enhanced Program Intent Codes. Compliance with direct cost requirements in state law
relating to FSP compensatory education is monitored by TEA using allocated cost
information in PEIMS. This information includes costs assigned to specific program intent
codes. Shared services arrangement cost information which is submitted on a special
PEIMS record will also be included in the compliance monitoring calculations. The total
costs which will be considered for compliance monitoring purposes are represented by the
following formula.

Expenditures
coded by the
school district
to specific
Enhanced
Program Intent
Codes

+

Allocations of
expenditures to
Enhanced
Program Intent
Codes from the
Undistributed
Program Intent
Code (99)
based upon
instructional
full-time
equivalents


+

Expenditures
=
associated with a
school district as a
member of a
shared services
arrangement
which are coded to
specific Enhanced
Program Intent
Codes

Total expenditures
used for
monitoring
purposes such as
maintenance of
effort,
comparability and
compliance with
State Board of
Education rules on
indirect costs

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9.4

Risk Assessment Processes and
Identification of Schools Requiring a
Local Audit

General
The risk assessment system described in this section was developed in accordance with
House Bill 3459, 78th Legislature (2003). The electronic reporting and audit system
primarily uses information and data currently submitted through the Public Education
Information Management System (PEIMS) and other reporting systems. These traditional
data and reporting requirements are supplemented by four types of electronic documents
submitted by electronic filing of PDF documents through a Texas Education Agency
Secure Environment (TEASE) AUDIT account. These four electronic documents which
explain various strategies for state compensatory education programs are:
1) district improvement plans from school districts,
2) campus improvement plans from school districts,
3) instructional plans from charter schools, and
4) local evaluations by school districts and charter schools of state compensatory
education strategies, activities and programs.
The risk assessment system that is described in this section is comprised of multiple
objective indicators and certain compliance indicators. TEA staff will assess the degree of
risk of noncompliance in a school district’s or charter school’s use of the Foundation
School Program (FSP) state compensatory education allotment for the previous fiscal year
and the degree of risk that the school inadequately reported data related to state
compensatory education programs.

Threshold
The risk assessment will be done by TEA staff for all school districts and charter schools
whose FSP state compensatory education allotment for the previous fiscal year was
$500,000 or more.

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Risk Indicators
Exhibit 7.

Risk Indicators for Electronic Auditing System of School Districts and Charter
Schools

Indicator

Threshold
Value

Yes

No

Data Source

Critical Indicators
1. Was School FIRST rating above substandard
achievement? (This indicator shall apply to
charter schools beginning with the 2010-2011
school year)

N/A

2. Were actual expenditures reported in PEIMS
in the General Fund for state compensatory
education-related costs equal to or greater
than 55% of the state compensatory
education allotment, based upon a three-year
average of the LEA’s allotments and actual
expenditures? 1
3.

N/A

Did the school district’s or charter school’s
academic rating exceed Academically
Unacceptable for the most recent school year
that an academic rating was assigned?
4. Was the Annual Financial and Compliance
Report (and the Agreed-Upon Procedures
Report for State Compensatory Education, if
applicable) filed within 30 days after the due
date?
5. Did more than 5 at risk students drop out
annually over a three-year period OR did 1%
or more of the at risk population drop out
annually over a three-year period AND did
the three-year trend in the dropout rate of at
risk students evidence an overall increase in
the dropout rate? 2
6. Did the three-year trend for the at risk
population not evidence an overall decrease
in TAKS performance? 3

N/A

N/A

N/A

N/A

School FIRST
rating for the
school district for
the previous fiscal
year
Summary of
Finances and
PEIMS submission
of actual financial
data for the three
previous fiscal
years
Accountability
Ratings for the
school district or
charter school for
the previous school
year
Annual Financial
and Compliance
Report for the
previous fiscal
year
Fall PEIMS
submission of
student data for
three previous
school years

TAKS
performance data
for three previous

1
For the 2008-209 and previous school years, this analysis is based on direct costs equal to or greater than 85% of the
state compensatory education allotment.
2
The 78th Legislature required the TEA to implement adjustments to the dropout measures. This indicator will be
applicable when adjusted dropout measures are available for three successive school years.
3
This indicator will be effective when TAKS exam results are available for at least three successive school years. With
the conversion to end-of-course exams, this indicator will be adjusted.


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school years
Other Indicators
7. Was the percent of students at risk of
dropping out of school less than the threshold
value (count of at risk students in the school
district or charter school /total students in the
school district or charter school)?
8. Was the percent of low income students less
than the threshold value?

59.0%

80.0%

9 Was the overall student teacher ratio lower
than the threshold value?

16.3:1

10 Was the percent of attendance greater than
the threshold value?

94.5%

11 Was the percent of limited English proficient
. students less than the threshold value?

33.0%

Fall PEIMS
submission of
student data for the
previous school
year
AEIS Report for
the school district
or charter school
for the previous
school year
AEIS Report for
the school district
or charter school
for the previous
school year
AEIS Report for
the school district
or charter school
for the previous
school year
AEIS Report for
the school district
or charter school
for the previous
school year

Totals

A local audit will be obtained (and paid for) by a school district or a charter school, in
accordance with the requirements for an agreed-upon procedures engagement for the
compensatory education program, as follows:
•

If one or more critical indicators in Exhibit 7 (indicators one through six) are answered
“no”;

•

If indicator seven is answered “no” and one or none of the indicators eight through 11
are answered “yes”;

•

If the TEA identifies significant data quality issues relating to staff, students or
financial data submitted through the Public Education Information Management
System;

•

If the TEA identifies noncompliance during the course of audit, investigative or
monitoring activities of other state and/or federal programs (e.g. Title I, Part A);

•

If the most recent agreed-upon procedures engagement submitted to the TEA disclosed
significant deficiencies or noncompliance (or if school district or charter school did not

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submit an agreed-upon procedures report for any subsequent school year in accordance
with TEA requirements to obtain a local audit or submitted the report late);
•

If the school district did not submit district and campus improvement plans or the
charter school did not submit instructional plans for the previous school year, in
accordance with this section; or

•

If the school district or charter school did not submit a local evaluation of state
compensatory education strategies, activities and programs for the previous school
year, in accordance with this section.

Timeline for Risk Assessment
Within 60 days after the due date for submission of the district/campus improvement plans
(instructional plans from charter schools) and local evaluations, a school district or charter
school that evidenced a high degree of risk will be notified in writing concerning the
TEA’s requirement that the school district or charter school obtain a local audit of state
compensatory education; however, evidence of high risk associated with data quality issues
may result in notification at any time that such evidence is disclosed by TEA staff.
Because the risk assessment processes described in this section are relatively simple, a
school district or charter school should be able to anticipate receiving notification from the
TEA to obtain a local audit. Thus, a school district or charter school should appropriately
factor in this requirement during budgetary development processes for the next fiscal year,
as soon as the school district or charter school is able to reasonably anticipate the
probability of this requirement.
Example Timeline:
February 19, 2009 – last date for resubmitting midyear data for school year 2007-08
July 19, 2009 – 150 days after PEIMS resubmission; due date for electronic reports for
school year 2007-2008
September 20, 2009 – 60 days after electronic reporting deadline; preliminary notification
of Agreed-Upon Procedures (AUP) requirement
October 20, 2009 – 30 days after preliminary notification; deadline for appeal of AUP
requirement
December 1, 2009 – final notification of Agreed-Upon Procedures (AUP) requirement
April 30, 2010 – due date for Agreed-Upon Procedures (AUP) report


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Filing Requirement for Agreed-Upon Procedures Report
For those school districts and charter schools that are required to obtain a local audit, the
Agreed Upon Procedures report for State Compensatory Education is to be submitted in
both paper format and electronically (in Adobe Acrobat® pdf format). The electronic
report must be submitted through a Texas Education Agency Secure Environment
(TEASE) AUDIT account. File naming and submission instructions are outlined in the
Electronic Reports Submission Standards which can be found on the School Financial
Audits web page on the Texas Education Agency web site.

Alternate Procedures
If a school district or charter school that has a state compensatory education allotment is
exempted by the TEA from electronic reporting under the provisions of Texas Education
Code Section 42.152(q)-(q-4) for any reason (such as receiving an allotment less than
$500,000), the school district’s or charter school’s annual financial and compliance report
will be reviewed for disclosures of material noncompliance with the requirements for state
compensatory education. Evidence of material noncompliance may cause the TEA to
direct the local school district or charter school to obtain a local audit in accordance with
the requirements for an agreed-upon procedures engagement for the compensatory
education program.

On-site Monitoring
As authorized in Section 42.152(q-2) of the Texas Education Code, the Division of
Financial Audits may conduct on-site monitoring of a school district’s or charter school’s
expenditures of its state compensatory education allotment if the school district or charter
school did not submit an agreed-upon procedures report for any subsequent school year in
accordance with TEA requirements to obtain a local audit or if one or more of the
following criteria are observed for two or more consecutive school years.
• If the TEA identifies noncompliance during correspondence or on-site monitoring
of the school district’s or charter school’s expenditures of its state compensatory
education allotment;
• If the agreed-upon procedures engagements submitted to the TEA disclosed
significant deficiencies or noncompliance and the school district or charter school
failed to adequately address the significant deficiencies or noncompliance;
• If the school district did not submit district and campus improvement plans or the
charter school did not submit instructional plans in accordance with this section; or
• If the school district or charter school did not submit local evaluations of state
compensatory education strategies, activities and programs, in accordance with this
section.

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9.4.1

Role of the Independent Auditor in Testing for
Compliance with Budgeting, Accounting,
Operational and Reporting Standards Related to
State Compensatory Education

This section only applies if the LEA is required to obtain a local audit under Section 42.152
of the Texas Education Code.
The LEA’s independent auditor represents an important check and balance in the public
education financial accountability system in testing for compliance with budgeting,
accounting, operational and reporting standards related to state compensatory education.
The independent auditor applies agreed-upon procedures in evaluating management’s
assertion about the LEA’s compliance with state compensatory education requirements.
Specific aspects of compliance matters that are addressed by the independent auditor are
found in various sections of the Texas Education Code, including Sections 11.251-11.253,
29.081 and 42.152, State Board of Education rule 19, TAC, Section 109.25, and this
module of the Resource Guide. Additional requirements apply to testing compliance with
standards for use of account codes in fiscal data reported through the Public Education
Information Management System (PEIMS).
The independent auditor’s working papers are to document the extent and scope of the
work performed in connection with tests applied to management’s assertions about
compliance with state compensatory education requirements. The working papers are to
document the auditor’s procedures performed and samples selected.
The major areas requiring testing in relation to state compensatory education in the LEA
are identified below along with examples of agreed-upon procedures which may be
performed by the independent auditor. While the list of procedures is comprehensive, it is
not considered all-inclusive. An independent auditor may perform additional procedures as
deemed necessary by professional judgment and by the circumstances. While examples of
agreed-upon procedures are provided in this module, these procedures are not considered
to be all-inclusive. Such procedures are not intended to serve as an agreed-upon
procedure engagement program for the independent auditor.
The independent auditor should review the instructional settings, services or programs that
are provided by the LEA to determine which agreed-upon procedures are applicable to the
agreed-upon procedures engagement for the LEA. All procedures are mandatory (also
required on Title I, Part A schoolwide campuses unless specifically noted), except for those
that are not applicable to the types of instructional settings, services or programs provided
by the LEA. (In connection with charter schools, the General Fund references below refer
to fund codes 199 and 420.)
** If all campuses are exemplary or recognized, the auditor should test the 2 campuses
with the highest percentage of students at-risk (Procedures 1.b, 4.a, 5.a, and 5.b).


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1) Example agreed-upon procedures - Budgetary Process

a) Inquire and confirm that appropriations for state compensatory education (Program
Intent Codes 24, 26, 28, 29 and 30 in the General Fund) were distributed (snapshot
submitted through PEIMS) to budget managers (including campus principals), and
that the appropriations in the aggregate for the LEA were equal to or greater than
55% of the estimated compensatory education allotment, according to planning
estimates for this allotment in the LEA’s Foundation School Program (FSP)
Summary of Finances (the FSP Summary of Finances document for the month of
August for the school year being tested under agreed-upon procedures);
b) For each campus that did not receive an exemplary or recognized academic
rating**, inquire and confirm whether appropriations for state compensatory
education (Program Intent Codes 24, 26, 28, 29, and 30, in the General Fund) in any
budget status document distributed to budget managers (including campus
principals) materially agreed with (within plus or minus 10%) summary totals for
supplemental full-time equivalent staff (FTEs) and supplemental financial resources
(plus basic services for disciplinary alternative education, as applicable, limited to
18% of the State Compensatory Education allotment - in the context of budgetary
plans for compliance with the 55% expenditure rule for state compensatory
education) in district/campus improvement plans or charter school instructional
plans;
c) Obtain a copy and read the LEA’s evaluation of the effectiveness of strategies
involving students at risk of dropping out of school for all campuses that did not
receive an academic rating of exemplary or recognized. Obtain a copy of and read
the LEA’s analysis of the potential benefits that could result from realigning staff
and financial resources, following or in conjunction with the LEA’s local evaluation
of the effectiveness of strategies for the preceding school year.
2) Example agreed-upon procedures - State Compensatory Education Allotment

a) For the federal reporting period October through September for the Child Nutrition
Program, compare the amounts in tables reported to the TEA for the best six
months’ average to the number of the free/reduced price lunch applications
(compare the base year measures used in reports to the TEA by a Provision II
school district to the free/reduced lunch applications on file for the base year).
3) Example agreed-upon procedures – Expenditure Tests
a) Compare the current year’s expenditures to the prior year’s expenditures attributed
to state compensatory education (compare expenditures for Program Intent Codes
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24, 26, and 28-30) in the General Fund, and inquire about factors that the LEA
attributed to significant or unusual variances (greater than plus or minus 10%);
b) Confirm whether actual expenditures recorded in the LEA’s accounting records that
were attributed to state compensatory education (Program Intent Codes 24, 26, 28,
29, and 30, in the General Fund) were equal to or exceeded 55% of the state
compensatory education FSP program allotment in the preliminary or near-final
Summary of Finances;
c) Compare aggregate actual expenditures recorded in the LEA’s accounting records
that were attributed to state compensatory education (Program Intent Codes 24, 26,
28, 29, and 30, in the General Fund) with summary totals for supplemental FTEs
and supplemental financial resources (plus basic services for disciplinary alternative
education, as applicable, limited to 18% of the state compensatory education
allotment - in the context of monitoring by central administration for compliance
with the 55% expenditure requirement for state compensatory education) in
district/campus improvement plans or charter school instructional plans, and inquire
about factors that the LEA attributed to significant or unusual variances (greater
than plus or minus 10%); and
4) Example agreed-upon procedures - District/Campus Improvement Plans
a) For all campuses that received an academic rating other than exemplary or
recognized** for the most recent school year, confirm district/campus improvement
plans or charter school instructional plans contain required components, in
accordance with Sections 11.251 – 11.253, Texas Education Code, including:
i) Comprehensive needs assessment;
ii) Identified strategies;
iii) Supplemental financial resources for state compensatory education (plus basic
services for disciplinary alternative education, as applicable, limited to 18% of
the state compensatory education allotment). The aggregate amount must be
disclosed for each campus in accordance with State Board of Education rule,
Title 19, Texas Administrative Code (TAC), Section 109.25;
iv) Supplemental staff FTEs for state compensatory education (plus basic services
for disciplinary alternative education, as applicable, limited to 18% of the state
compensatory education allotment). The aggregate amount must be disclosed
for each campus in accordance with State Board of Education rule 19, TAC,
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v) Measurable performance objectives;
vi) Timelines for monitoring strategies; and
vii) Formative and summative evaluation criteria.
5) Example agreed-upon procedures - Participation by Eligible Students

a) Sample student records (campus-level samples for all campuses that did not receive
an exemplary or recognized academic rating**) and test the LEA’s procedures
involving the identification of students at risk of dropping out of school, under
Section 29.081, Texas Education Code;
b) For each campus that did not receive an exemplary or recognized rating**, obtain
and read a report (sample of one per campus) that identified students at risk of
dropping out of school, under Section 29.081, Texas Education Code, to classroom
teachers assigned to specific accelerated, intensive and compensatory instructional
settings and strategies that were documented in district/campus improvement plans
or charter school instructional plans;
6) Example agreed-upon procedures – Reporting of Expenditures and Student
Records
a) Select a sample of transactions (LEA-level sample of transactions recorded in the
Fund Code 199, General Fund, and Program Intent Codes 24, 26, 28, 29 and 30)
and review the LEA’s documentation supporting the attribution of costs for state
compensatory education. Procedures applied to fiscal data to be reported in the 032
(actual financial data) and 033 (shared services arrangements reported by fiscal
agent) record types of the Public Education Information Management System Data
Standards are to assess appropriate use of account codes in conjunction with
Program Intent Codes 24, 26, 28, 29 and 30, in accordance with the Financial
Accounting and Reporting Module of the Financial Accountability System
Resource Guide;
i) Obtain a copy and read the LEA’s document(s) that define standards for
resource allocations that support basic services or regular education in relation
to student-staff ratios and financial resources for campuses serving comparable
grade levels. Confirm that for transactions recorded in the General Fund under
Program Intent Code 24 that the LEA applied the standard measures for
resource allocations for basic services in order to attribute costs to Program
Intent Code 24;

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ii) Obtain copies of teacher contracts and teaching schedules for items selected in
the sample and review the support for the attribution of salary and benefit costs
for teacher recorded under Program Intent Codes 24, 26, 28, 29 and 30, in the
General Fund;
iii) Confirm that for programs eligible under Title I of the Elementary and
Secondary Education Act, as provided by Public Law No. 103-382 and its
subsequent amendments, and by federal regulations implementing that Act, the
expenditure of the state compensatory education allotment to support this
federal program only occurred at campuses at which at least 40% of the students
were educationally disadvantaged (see additional information under Title I, Part
A in the Supplement/Not Supplant section). (This procedure only applies if the
LEA used the compensatory education allotment to supplement a federal
schoolwide project under Title I.);

iv) Confirm that for disciplinary alternative education programs established under
Section 37.008, Texas Education Code, the expenditure of the state
compensatory education allotment for direct costs attributed (in the context of
monitoring by central administration for compliance with the 55% expenditure
requirement for state compensatory education) to disciplinary alterative
education did not exceed 18% (without a waiver) of the total compensatory
education allotment amount (see additional information under Alternative
Education Programs in the Supplement/Not Supplant section). Direct costs for
basic services reported in this area count towards the 55% minimum
expenditure requirement under Section 42.152, TEC; however, the amount of
costs for direct basic services that counts towards the 55% compliance rule is
limited to 18% of the state compensatory education allotment. (This procedure
only applies to tests of transactions attributed to a disciplinary alternative
education campus established under Section 37.008, TEC.);

v) Confirm that for disciplinary alternative education programs established under
Section 37.008, Texas Education Code, supplemental costs were recorded in
accounting records according to standards (recorded in accounting records
under Program Intent Code 29) for attribution of costs to this program area (the
LEA is to define standards for resource allocation for basic services in relation
to standard allocations supporting student-staff ratios and financial resources for
campuses serving comparable grade levels as a basis for attributing costs to
basic services versus supplemental costs). (This procedure only applies to tests
of transactions attributed to a disciplinary alternative education campus and
requires an approved waiver from the State.) (See additional information under
Alternative Education Programs in the Supplement/Not Supplant section).; and

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vi) Confirm that for alternative education programs (non disciplinary), the costs
recorded in accounting records under Program Intent Code 26 were attributed to
programs specifically designed to serve students at risk of dropping out of
school, as defined by Texas Education Code Section 29.081. (This procedure
only applies to tests of transactions attributed to a non disciplinary alternative
education campus specifically designed to serve students at risk of dropping out
of school.)
b) Select a sample of student records (LEA-level sample of students) and review the
LEA’s documentation for use of the at-risk indicator code (Element ID E0919) and
Title I, Part A code (Element ID E0894) in student data reported in the “Student
Data – Enrollment” record (Record Type 110) through the Public Education
Information Management System Data Standards.

In performing the agreed upon procedures for the compliance attestation function, the
auditor shall apply a sampling methodology in connection with the application of certain
mandatory agreed-upon procedures. Use of one the methods specified in this section shall
constitute a representative sample, as follows:
1. Sample items shall be selected in such a way as to comprise a simple random
sample of each relevant population; and
2. In connection with the application of certain agreed-upon procedures to items that
require sampling procedures, sample sizes shall be determined using one of the
following options:
Option 1. Determine the sample size using a 10% Margin of Error, a 40%
Estimated Attribute Error Rate, and a 95% Confidence Level.
Option 2. The auditor may use some other form of sample selection and/or some
other method to determine the sample size, provided that the resulting sample
affords equal or better strength of inference and freedom from bias (as
compared with paragraph (2) (a) of this section), and that the auditor
summarizes the substitute methods and clearly demonstrates their equivalence
in the final report on the audit.
The agreed-upon procedures report required under Section 9.3.6 is to include the certificate of
board and an exhibit, as shown below, reporting staff and financial resources relating to state
compensatory education. The exhibit, "Full-time Equivalent Staff and Financial Resources by
Campus for the Compensatory, Intensive, and Accelerated Instruction Program under Section
42.152, Texas Education Code, According to District/Campus Improvement Plans," is to report
amounts in relation to information contained in district/campus improvement plans. To assist
the auditor in completing the agreed-upon procedures, the LEA should prepare an exhibit, as
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shown in Appendix 2, reporting staff and financial resources relating to SCE. The exhibit
(Exhibit F), “Full-time Equivalent Staff and Financial Resources by Campus for the
Compensatory, Intensive, and Accelerated Instruction Program under Section 42.152, Texas
Education Code, According to District/Campus Improvement Plans,” is to report amounts in
relation to information contained in district/campus improvement plans.. The independent
auditor is to test the attribution of amounts accounted for in the General Fund (also any
amounts attributed to services provided by shared services arrangements) that are reported
in connection with supplemental FTEs and supplemental financial resources for State
Compensatory Education (plus gross direct costs for disciplinary alternative education) for
the five program classifications, as provided in Appendix 2 – Full-time Equivalent Staff
and Financial Resources.

Note: Gross direct costs for basic services are reported. Direct costs for basic services
reported in this area count towards the 55% minimum expenditure requirement under
Section 42.152, TEC; however, the amount of costs for direct basic services that count
towards the 55% compliance rule is limited to 18% of the state compensatory education
allotment.

9.4.2

Required Special Report on Applying AgreedUpon Procedures for State Compensatory
Education

House Bill 3459, 78th Legislature (2003) directed the commissioner to develop electronic
audit and reporting systems to identify school districts that are at high risk of having used
compensatory education funds other than in compliance with Subsection 42.152(c), Texas
Education Code, or of having inadequately reported compensatory education expenditures.
Based upon an analysis of risk factors, the commissioner will direct certain school districts
to have a local audit of state compensatory education expenditures. The agreed-upon
procedures report will enumerate procedures that were applied by the independent auditor
and the auditor’s findings for the following areas: (1) Budgetary process; (2) State
Compensatory Education allotment; (3) Allowable expenditures; (4) District/campus
improvement plans; (5) Participation by eligible students; and (6) Reporting; and include
the Full Time Equivalent Staff and Resources form. This special report is separate from the
LEA’s annual financial and compliance report. (This section only applies if a school
district or charter school is required to obtain a local audit under Section 42.152 of the
Texas Education Code.)


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School districts and charter schools that are directed to have a local audit will engage a
certified public accountant to apply the agreed-upon procedures in accordance with
standards for attestation engagements described in Statements on Standards for Attestation
Engagements, of the American Institute of Certified Public Accountants (at the school
district’s or charter school’s cost).
For those school districts and charter schools that are required to obtain a local audit,
the Agreed Upon Procedures report for the State Compensatory Education is to be
submitted in both paper format and the specified electronic file type, (in Adobe
Acrobat® pdf format). The audit will be submitted to the TEA within 150 days after
notification by TEA.
The following is an illustration of an agreed-upon procedures report on management’s
assertion about an entity’s compliance with specified requirements in which the procedures
and findings are enumerated rather than referenced. (AICPA Statements on Standards for
Attestation Engagements)

Independent Accountant’s Report
On Applying Agreed-Upon Procedures
January 15, 2010
Board of Trustees
Anywhere Independent School District
10 Main Street
Anywhere, Texas 79999
Members of the Board of Trustees:

We have performed the procedures enumerated below, which were agreed to by Anywhere
ISD, solely to assist the users in evaluating management’s assertion about Anywhere ISD’s
compliance with state compensatory education requirements during the fiscal year ended
August 31, 2002. Management asserted compliance with the requirements for state
compensatory education in Section 42.152, Texas Education Code and Module Nine,
Compensatory Education Guidelines, Financial Accounting Treatments, and an Auditing
and Reporting System, of the Financial Accountability System Resource Guide. This
agreed-upon procedures engagement was performed in accordance with attestation
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standards established by the American Institute of Certified Public Accountants. The
sufficiency of the procedures is solely the responsibility of the Anywhere ISD.
Consequently, we make no representation regarding the sufficiency of the procedures
described below either for the purpose for which this report has been requested or for any
other purpose.

Procedures Performed:
1.

Budgetary Process
a.
b.
c.

2.

State Compensatory Education Allotment
a.

3.

Allowable Expenditures
a.
b.
c.

4.

District/campus improvement plans
a.

5

Participation by Eligible Students
a.
b.

6.

Reporting of Expenditures and Student Records
a.
b.


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Findings and Questioned Costs:
We found the following non-compliance with the requirements tested:

Finding 02-1
1.

Condition

2.

Criteria

3.

Cause

4

Effect

We were not engaged to, and did not, perform an examination, the objective of which
would be the expression of an opinion on management’s assertion. Accordingly, we do not
express such an opinion. Had we performed additional procedures, other matters might
have come to our attention that would have been reported to you.

[Signature]

[Date]

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9.5 Sanctions and District Interventions
The range of possible Agency sanctions and/or other oversight actions are as follows:

•

Informal monitoring

•

Recommended training

•

Recommended assistance from outside consultants

•

Financial penalties

•

Accreditation actions

A decision by Agency staff to take one or more of the above actions will depend upon the
facts in each situation. The preferred level of action by Agency staff in most situations will
be informal monitoring and, if necessary, recommendation(s) for training and/or obtaining
assistance from outside consultant(s), such as the regional education service center.
Agency staff may determine that accreditation and/or financial penalties may be necessary.
Severe actions such as these may be unavoidable in those instances wherein a district may
not demonstrate the capacity to develop pertinent skills within its organization and/or
obtain those skills from outside consultants.


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Appendix 1 - Definitions
Academic Content Standards: The Texas Essential Knowledge and Skills (TEKS) form
the state’s academic content standards and serve as the basis for its student assessment
program.
Academic Excellence Indicator System (AEIS): Information used to rate and
acknowledge districts and campuses or to provide a comprehensive profile of their
characteristics and performance is compiled into the Academic Excellence Indicator
System (AEIS). This is a comprehensive system: both performance and profile
information is available for all districts and schools.
Three types of performance indicators are used in the system: (1) Base Indicators are
identified in statute and are used to determine accountability ratings; (2) Additional
Indicators are used to acknowledge high performance on other statutorily-defined
indicators; and (3) Report-Only Indicators are reported on annual campus-, district-, and
state-level reports. They may be identified by statute, identified by the commissioner, or
adopted by the State Board of Education.
The AEIS is used for all aspects of the integrated accountability system that has evolved
for the Texas public schools. In addition to being used to determine accountability ratings,
AEIS is utilized to determine additional acknowledgments and campus-level performance
awards as well as to produce a variety of reports.
Accelerated Instruction: Accelerated Instruction is a restructuring model designed to
improve the education of students at risk of dropping out of school by using “acceleration”
techniques. The goal is to speed up the learning of students so they will be able to perform
at grade level. Accelerated Instruction is based on intervention that raises expectations for
students at risk of dropping out of school and moves decision-making about curriculum,
instruction, and organization of schools to the campus level. The focus is on fostering
family involvement in education, staff development, assessment-driven practices, and high
expectations. The model is based on the constructs of Henry Levin’s Accelerated Schools
Model.
Categorical Program: A categorical program is a grant program which may be used for
specific purposes or narrowly defined activities. A categorical program may be contrasted
with a block grant program, in which funds can be used for a variety of activities within a
broad functional area. Four examples of categorical programs in the Elementary and
Secondary Education Act, as amended, are Title I, Part A--Improving Basic Programs
Operated by Local Education Agencies; Title I, Part B--Even Start Family Literacy
Programs; Title I, Part C--Education of Migratory Children; and Title I, Part D--Prevention
and Intervention Programs for Children and Youth Who Are Neglected, Delinquent, or At
Risk of Dropping Out.
Chapter 1: see Title I, Part A.

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Comparability: Federal law [P.L. 103-382, §1120A(c)] contains a provision for
comparability of services, designed to ensure that Title I, Part A campuses are provided
services with state and local funds that are at a minimum comparable to services provided
on non-Title I, Part A campuses. The purpose of this requirement is to ensure that Title I,
Part A campuses receive the same level of services from state and local monies as other
campuses. School districts must develop procedures to ensure compliance with the federal
comparability of services requirement and must implement these procedures annually.
Compensatory Education (State): State Compensatory Education, as defined in TEC
Section 42.152 (c), is a program(s) and/or service(s) designed to supplement the regular
education program for students at risk of dropping out of school. The purpose of state
compensatory education is to increase the achievement and reduce the dropout rate of
identified students. The state criteria for identifying students at risk of academic failure or
dropping out of school are contained in TEC Section 29.081.
Comprehensive Needs Assessment (CNA): A needs assessment is a comprehensive
evaluation plan of a school’s strengths and weaknesses. The concept of needs assessment
is to build on the school’s strengths and improve areas of weakness. Educators are
expected to use data from the needs assessment to develop their campus improvement plan
which includes specific targets and strategies designed by the school stakeholders to
improve the school and student achievement
Discretionary Program: A discretionary program permits the grantor agency to use
discretion in selecting applications for funding and/or determining the use of funds within
the applicable statute. A discretionary grant program may or may not be competitive,
depending on the authorizing language of the grant program and/or the discretion of the
grantor agency’s management priorities.
Division of Program Monitoring and Interventions: The major function of this division
is to support the accomplishment of the state’s goals for public education by reviewing,
monitoring, acknowledging, sanctioning, and intervening in school districts and campuses
to ensure excellence in education for all students. Currently, the major areas of
responsibility are: accountability monitoring and interventions; program monitoring and
interventions, including data validation monitoring and investigation; and administration of
certain court orders and/or consent decrees, including those related to Civil Action 5281
and the residential facilities (RF) Monitoring system.
Educationally Disadvantaged Students: As applicable to federal programs, educationally
disadvantaged students are those students whose educational attainment is below the level
that is appropriate for children of their age. State law (TEC §5.001) defines “educationally
disadvantaged” students as those eligible to participate in the national free or reduced-price
lunch program established under 42 U.S.C. Section 1751 et seq.
Education Flexibility Partnership Demonstration Program (Ed-Flex): Ed-Flex is the
short name for the federal Education Flexibility Partnership Demonstration Program. This
program delegates states the authority to waive various federal regulations if waiving those
regulations will result in improved student performance. This means that Texas educators


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have the freedom to design and implement federal programs in ways that will meet the
needs of their students and communities.
Texas is one of several states that have been approved as an Ed-Flex state. As an Ed-Flex
state, the Commissioner of Education has the authority to waive many provisions of federal
law. Waivers may be requested by districts or for individual campuses within a district.
Statewide waivers may apply to any district or campus in the state that wishes to utilize the
waiver. All proposed waivers are reviewed by the Texas Ed-Flex Committee, and the
committee’s recommendations are forwarded to the commissioner of education. This
committee is composed by Texas educators and other interested citizens.
Elementary and Secondary Education Act (ESEA): The federal Elementary and
Secondary Education Act of 1965 was authorized as part of President Lyndon B. Johnson’s
War on Poverty. The intent of this Act was to strengthen and improve educational quality
and educational opportunities in the nation’s elementary and secondary schools.
Elementary and Secondary Education Act, as amended: The Elementary and
Secondary Education Act of 1965 was amended by the Improving America’s Schools Act
of 1994.
Entitlement Program: An entitlement program is a governmental program specified by
law to provide benefits to members of a specific group based on a formula or specific
requirements in statute.
Formative evaluation – Evaluation conducted while a creative process is under way,
designed and used to promote growth and improvement in a student’s performance or in a
program’s development. Examples include (but are not limited to): pre/post tests,
portfolios, benchmark tests, quizzes, teacher observations.
Improving America’s Schools Act (IASA), Public Law 103-382: The Improving
America’s Schools Act of 1994 reauthorized the Elementary and Secondary Education Act
of 1965 from July 1995 through June 2000. IASA encourages educators to align various
reform efforts and to create comprehensive solutions for schools and districts in order to
meet students’ needs.
Local Educational Agency (LEA): A local educational agency is defined as a public
board of education or other public authority legally constituted within a state for either
administrative control of, direction of, or to perform service functions for public
elementary or secondary schools in a city, county, township, school district, or other
political subdivision of a state.
No Child Left Behind Act of 2001: The federal law that authorizes funding and contains
the current requirements for Title 1 and other federal educational programs. On January 8,
2002, President Bush signed into law the No Child Left Behind Act of 2001. The Act has
been heralded as the most sweeping reform of the Elementary and Secondary Education
Act (ESEA) since ESEA was enacted in 1965. It expands the federal role in K-12
education and was written to help close the achievement gap between disadvantaged and
minority students and their peers. It is based on four basic principles: stronger
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accountability for results, increased flexibility and local control, expanded options for
parents, and an emphasis on teaching methods that have been proven to work.
“Pull-Out” Program: “Pull-out” programs provide services to eligible children in a setting
away from the regular classroom.
Regular Education Program: State law (TEC §28.002) outlines the required curriculum
for each school district that serves grades K-12 as: (1) a foundation curriculum that
includes: (a) English language arts; (b) mathematics; (c) science; and (d) social studies,
consisting of Texas, United States, and world history, government, and geography; and (2)
an enrichment curriculum that includes: (a) to the extent possible, languages other than
English; (b) health with emphasis on the importance of proper nutrition and exercise; (c)
physical education; (d) fine arts; (e) economics, with an emphasis on the free enterprise
system and its benefits; (f) career and technology education; and (g) technology
applications.
Under TEC §28.002 (f), school districts may also offer courses for local credit in addition
to those in the required curriculum. The State Board of Education approves courses for
credit for high school graduation under this subsection.
Schoolwide Program: Under Title I, Part A of the federal Elementary and Secondary
Education Act as amended, a campus that has at least 40 percent of its students from low
income families may use its Title I, Part A allocation to upgrade its entire educational
program. The LEA must be able to show that the Title I, Part A funds allocated to a
schoolwide campus are supplemental to state and local funds.
Scientifically Based Research: No Child Left Behind Act of 2001 defines Scientifically
Based Research as follows:

Research that involves the application of rigorous, systematic, and objective
procedures to obtain reliable and valid knowledge relevant to education activities
and programs; and

Includes research that employs systematic, empirical methods that draw on
observation or experiment;

Relies on measurements or observational methods that provide reliable and valid
data across evaluators and observers, across multiple measurements and
observations, and across studies by the same or different investigators.

Is evaluated using experimental or quasi-experimental designs.

Ensures that experimental studies are presented in sufficient detail and clarity to
allow for replication or, at a minimum, offer the opportunity to build
systematically on their findings; and

Has been accepted by a peer-reviewed journal or approved by a panel of
independent experts through a comparably rigorous, objective, and scientific
review.

Students at Risk of Dropping Out of School: The criteria used to identify students at risk
of dropping out of school are defined in Section 29.081, Texas Education Code. See 9.2.3.1
for specific criteria.

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Summative Evaluation: An evaluation designed to present conclusions about the merit or
worth of a student’s performance. Examples include (but are not limited to): End-of-unit
tests, state assessments, final exams.
Supplant: A supplant occurs when the state or local education agency does not supplement
state or local funds with federal funds or state compensatory education funds to provide
services above and beyond what the state or local education agency is required to offer
with non-federal funds or funds targeted for the regular education program.
Supplement not Supplant: As required by federal statute, a state or local education
agency shall use federal funds only to supplement the amount of funds and services that
would, in the absence of such federal funds, be made available from non-federal sources
for the education of students.
Targeted Assistance Program: Under Title I, Part A of the federal Elementary and
Secondary Education Act, as amended, a campus that is eligible to receive Title I, Part A
funds but does not meet the poverty threshold to qualify as a schoolwide program (or meets
the poverty threshold, but chooses not to operate a schoolwide program) may operate a
Title I, Part A program that targets students who are identified as failing or most at risk of
failing to meet the state’s academic content and performance standards. Title I, Part A
funds on a targeted assistance campus must be supplemental and used to provide
supplemental services only to the students in the greatest need who meet the Title I, Part A
eligibility criteria.
Texas Administrative Code (19 TAC): Title 19 of the Texas Administrative Code
contains the State Board of Education rules.
Texas Assessment of Knowledge and Skills (TAKS): a primary and secondary education
standardized test used in Texas to assess student attainment of math, English, science,
reading, and social science skills required under Texas education standards. It replaced the
previous state test called the Texas Assessment of Academic Skills (TAAS) and assesses
the statewide curriculum, the Texas Essential Knowledge and Skills (TEKS). TAKS is a

standards-based test, which means it measures how well students are mastering
specific skills defined for each grade by the state of Texas.
TAKS–Alt: a state assessment designed for students with significant cognitive disabilities
to meet the federal requirements mandated under the No Child Left Behind Act of 2001.
Texas Education Code (TEC): The Texas Education Code is state law pertaining to
public education, as passed by the Texas Legislature.
Texas Essential Knowledge and Skills (TEKS): The TEKS are Texas’ statewide
curriculum elements. These academic content standards represent an update of the state’s
Essential Elements. The TEKS were adopted by the Texas State Board of Education at its
July 1997 meeting. The TEKS represent the essential knowledge and skills that all
students will need to know and be able to do to succeed in the work force of the 21st
century.

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Title I - Title I is the largest federally funded education program in the nation. Recently
re-authorized by The No Child Left Behind Act of 2001, Title I funding helps local school
systems provide equal educational opportunities for low-performing students with
economic need. The purpose of this title is to ensure that all children have a fair, equal,
and significant opportunity to obtain a high-quality education and reach, at a minimum,
proficiency on challenging state academic achievement standards and state academic
assessments. Any school with 35% or more students on free or reduced lunch is eligible
for Title I funds.
Title I, Part A - Improving Basic Programs Operated by Local Education Agencies (LEA)
provides supplemental funding to state and LEAs for resources to help schools with high
concentrations of students from low-income families provide a high-quality education that
will enable all children to meet the state’s student performance standards. Title I, Part A
supports schools in implementing either a school-wide program or a targeted assistance
program. These programs must use effective methods and instructional strategies that are
grounded in scientifically based research.


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Appendix 2 – Sample Forms

SCE At-Risk Student Profile
This report can be used to maintain student records verifying the at-risk classification.
Records must include the reason(s) the student was identified, when the student was
identified, the supplemental services provided, and the date and documentation
substantiating the reason for exiting the program. Additionally, the at-risk classification
records must indicate periodic review and verification.

Full-time Equivalent Staff and Financial Resources by Campus for the
Compensatory, Intensive, and Accelerated Instruction Program under TEC Section
42.152 According to District/Campus Improvement Plans
(pdf)
This report is used for reporting staff and financial resources relating to SCE in relation to
information contained in district/campus improvement plans. The independent auditor is to
test the attribution of amounts accounted for in the General Fund (also any amounts
attributed to services provided by shared services arrangements) that are reported in
connection with supplemental FTEs and supplemental financial resources for SCE (plus
gross direct costs for disciplinary alternative education) for the five program classifications,
and include the form in the report.

State Compensatory Education PowerPoint presentations

From time to time, PowerPoint presentations related to State Compensatory Education are
posted to the School Financial Audits website under the Other School Financial Audits
Topics heading.

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Certificate of Board
Charter School version
Anywhere Charter Holder
(Federal Employer Identification Number: 12-3456789)
Certificate of Board
We, the undersigned, certify that the attached agreed-upon procedures report of Anywhere Charter Holder
was reviewed and (check one) ______ approved _____ disapproved for the year ended August 31, 20BB,
at a meeting of the governing body of the charter holder on the _____ day of _______________, 20BB.

Signature of Board Secretary

NOTE:

Signature of Board President

If the governing body of the charter holder does not approve the independent auditor’s report,
it must forward a written statement discussing the reason(s) for not approving the report.


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School District version

CERTIFICATE OF BOARD
__________________________

___________________

Name of School District

County

____________
Co.-District Number

We, the undersigned, certify that the attached agreed-upon procedures report of the above-named school
district was reviewed and (check one) ______ approved _____ disapproved for the year ended August 31,
20BB, at a meeting of the Board of Trustees of such school district on the _____ day of
_______________, 20BB.

Signature of Board Secretary

NOTE:

January 2010

Signature of Board President

If the Board of Trustees does not approve the independent auditor’s report, it must forward a
written statement discussing the reason(s) for not approving the report.


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List of Acronyms
AEIS - Academic Excellence Indicator System

D/CIPs – District and campus improvement plans

ESC – Education Service Center

ESL - English as a second language

FAR – Financial Accounting and Reporting (Module 1 of the Financial Accountability
System Resource Guide)

FTE - Full-time equivalent

GAAP - Generally accepted accounting principles

GASB - Governmental Accounting Standards Board

HB - House Bill

LBB - Legislative Budget Board

LEA – Local Educational Agency, also known as a school district or a school system
(includes charter schools).

LEP - Limited English proficient

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NCLB – No Child Left Behind

PEIMS - Public Education Information Management System

SAT - Scholastic Assessment Test

SB - Senate Bill

SBOE - State Board of Education

SAO – State Auditor’s Office

SCE – State Compensatory Education

TAC – Texas Administrative Code

TAKS - Texas Assessment of Knowledge and Skills

TEC – Texas Education Code

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Bibliography
Texas Education Agency. For Teachers, State Compensatory Education. Austin, TX,
1990.
Texas Education Agency. Success Stories: A Case Study of Compensatory Education in
Elementary Schools. Austin, TX, 1990.
Texas Education Agency. AEIS Guidelines and Glossary. Austin, TX, published annually.
Texas Education Agency. The Texas School Law Bulletin, Texas Education Code. Austin,
TX: West Publishing Company, 2006.


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.................

Index
A
Academic Content Standards............................. 77
Academic Excellence Indicator System ............ 77
Academic performance ...................................... 30
Accelerated instruction ...................................... 24
Accelerated Instruction ...................................... 77
Accreditation actions
sanctions ....................................................... 76
AEIS .................................................................. 77
Agreed-upon procedures
independent auditor ...................................... 66
Allocation formula............................................. 60
Alternative Method ............................................ 22
alternative state compensatory education
allotment funding .......................................... 15
Analysis of
correlation between the number of instructional
units.......................................................... 31
correlation instructional units and students at
risk of dropping out of school .................. 31
fiscal data ...................................................... 30
instructional payroll ...................................... 31
staffing patterns ...................................... 31, 34
Assessment
end of course tests ........................................... 9
norm-referenced tests...................................... 9
other assessment tests ..................................... 9
secondary exit-level assessment instrument ... 9
Texas Assessment of Academic Skills ........... 9
At-risk criteria ............................................. 10, 22
grades 7 - 12 ................................................. 22
grades Pk - 6 ................................................. 22
B
Bilingual ............................................................ 31
Budgeting
auditing procedures .................................... 67
C
Campus staffing formula ................................... 56
Campus/district improvement plan .................... 23
Carry over amounts
financial accounting ...................................... 55
Categorical Program .......................................... 77
Chapter 1 ........................................................... 77
Charges to compensatory education
support for............................................... 55–59
Class size
reduction of ............................................. 23, 31
Class sizes.......................................................... 56
Comparability .................................................... 78
January 2010

Compensatory education
definition
state ............................................................ 9
Compensatory Education (State) ....................... 78
Compliance
monitoring with 85% expenditure requirement
.................................................................. 60
Comptroller's Office ............................................ 4
Computer-assisted instruction ............................ 23
Cost/benefit
financial accounting procedures .................... 59
Criteria
idendification of students at risk of dropping
out of school ................................. 10, 12, 22
D
Definition
state compensatory education.......................... 9
supplement/not supplant the regular education
program for students at risk of dropping out
of school ..................................................... 9
Definitions ................................................... 77–82
Direct costs ........................................................ 52
Discretionary Program ....................................... 78
District profiles
supplant ......................................................... 34
supplemental resources ................................. 31
District/campus improvement plan .................... 23
E
Education Flexiblity Partnership Demonstration
Program (Ed-Flex) ........................................ 78
Education service center .................................... 76
Educationally disadvantaged students ......... 15, 78
best six-months' enrollment free- or reducedprice lunches ............................................. 15
Elementary and Secondary Education Act .. 35–52,
79
Elementary and Secondary Education Act, as
amended ........................................................ 79
End of course tests ............................................... 9
Entitlement Program .......................................... 79
ESEA ..................................................... 35–52, 79
Expenditures/expenses
Extension of
instructional day ............................................ 24
instructional week ......................................... 24
instructional year ........................................... 24
F
Facilities Acquisition and Construction

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indirect costs ................................................. 15
Federal program compliance
considerations in design of state compensatory
education programs .................................. 35
time and effort records .................................. 57
Federalprogram compliance
Title I, Part A, of the Elementary and
Secondary Education Act (ESEA), as
amended: ............................................ 35–52
Filing Requirements ............................................. 6
Financial Accountability System Resource Guide
...................................................................... 52
Financial accounting
standards for ............................................ 52–60
Financial accounting procedures
cost/benefit considerations: ........................... 59
Financial penalties
sanctions ........................................................ 76
Fiscal data
analysis of ..................................................... 30
FTEs................................................................... 56
Full-time equivalent (FTE) staff ........................ 56
Function codes
Fund codes
Funding
compensatory education programs ................ 15
G
General Administration
indirect costs ................................................. 15
Goals
state compensatory education.......................... 9
Guidelines for state compensatory education 9–51
H
History ............................................................. 1–9
appropriate use of compensatory education
allotment funds redefined ........................... 4
best six months' enrollment in federal free and
reduced-price lunch program...................... 2
Comptroller's Office ........................................ 4
consolidated application .................................. 2
coordinated plan .............................................. 2
costs supplementary to the regular education
program ...................................................... 4
design and implementation of reporting and
auditing systems ......................................... 4
House Bill 1010 .............................................. 3
House Bill 2885 .............................................. 4
House Bill 72 .................................................. 2
improve and enhance....................................... 4
indirect cost ..................................................... 3
local flexibility ................................................ 2
reporting and auditing systems ........................ 4
Senate Bill 1 .................................................... 4

Senate Bill 1873 ............................................. 4
Senate Bill 702 ............................................4, 5
State Auditor's Office ..................................... 4
State Board of Education ................................ 4
State compensatory education .....................1–9
students at risk of dropping out of school ....... 3
supplement/not supplant ..............................4, 5
supplemental ................................................... 3
supplemental ................................................... 4
Support for Educationally Disadvantaged
Pupils ......................................................... 1
I
Idendification of students at risk of dropping out
of school
additional criteria .....................................14, 59
criteria ......................................................10, 22
Improve and enhance
history ............................................................. 4
Improve or enhance
history ............................................................. 4
Improvement plan
state compensatory education ........................23
Improving America's Schools Act (IASA), Public
Law 103-382..................................................79
Incremental costs
supplemental expenditures ............................52
Independent auditor
role of ............................................................66
Indirect costs
State Board of Education rule ........................30
Individualized instruction ...................................24
Informal monitoring
sanctions ........................................................76
In-School Suspension Program ..........................20
Instructional payroll
analysis of ......................................................31
Intergovernmental Expenditures
indirect costs ..................................................15
J
Job descriptions ..................................................57
L
LEA ....................................................................79
Limited English proficiency students .................31
Local criteria ......................................................58
Local Educational Agency .................................79
M
Mathematics programs .......................................23
Monitoring
compliance .....................................................60
Multiple attendance campuses
statistical analysis ..........................................29
Multi-track school calendars ..............................22

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N
Norm-referenced tests ......................................... 9
O
Object codes
Objectives
increase the achievement of students at risk of
dropping out of school ............................... 9
state compensatory education ......................... 9
Organization codes
P
Paper trail
document ...................................................... 55
PEIMS ..................................14, 30, 53, 59, 60, 66
students not reported in ........................... 14, 59
Pregnant
additional funding of state compensatory
education .................................................. 15
Program intent code
Program Intent Code
accelerated education .................................... 52
Program Intent Code 99
undistributed costs ........................................ 60
Public Education Information Management
System .............................14, 30, 53, 59, 60, 66
Pull-out
program......................................................... 80
Purpose
increase the academic achievement ................ 9
reduce the dropout rate ................................... 9
state compensatory education ......................... 9
R
Reading programs .............................................. 23
Recommended
assistance
sanctions................................................... 76
training
sanctions................................................... 76
Regular Education Program............................... 80
Resource allocations
multiple attendance campuses ...................... 29
single attendance campuses .......................... 29
staffing patterns ............................................ 31
statistical analysis ......................................... 29
Resources .......................................................... 23
Revenues
S
School calendars
multi-track .................................................... 22
January 2010

Schoolwide programs......................................... 80
amended ................................................... 38
Secondary exit-level assessment instrument ........ 9
Senate Bill 1
at-risk criteria .......................................... 10, 22
Senate Bill 1873 ................................................. 52
Shared services arrangement ........................ 30, 60
Single attendance campuses
resource allocations ....................................... 29
staff development ............................................... 23
Staff per student ratio
supplement the regular program .............. 29, 31
Staffing
formulas ........................................................ 56
patterns
analysis of................................................. 31
Standards for
financial accounting ................................ 52–60
State aid
compensatory education programs ................ 15
State Auditor's Office........................................... 4
State Board of Education rule
indirect costs ................................................. 30
State compensatory education
at-risk criteria .......................................... 10, 22
definition ......................................................... 9
history ............................................................. 1
objectives ........................................................ 9
purpose ............................................................ 9
Statistical analysis
multiple attendance campuses ....................... 29
resource allocations ....................................... 29
single attendance campuses ........................... 29
Statistical sampling ............................................ 59
Student case counts ............................................ 58
Student data
academic performance .................................. 30
PEIMS ........................................................... 30
Student mobility ................................................. 22
Student Transportation
indirect costs ................................................. 15
Supplant ............................................................ 81
Supplement
federal program compliance .................... 35–52
history ............................................................. 4
not supplant ................................................... 81
Supplement/Not Supplant
history ......................................................... 4, 5
Supplemental
history ............................................................. 4
Support for charges to compensatory education
................................................................ 55–59
T
TAAS ................................................................... 9

92

.
.
.
.
.
.


.

remediation.................................................... 24
Targeted assistance
amended ................................................... 36
Targeted Assistance Program............................. 81
Teacher schedule................................................ 56
TEASE ................................................. 6, 7, 61, 65
TEC .................................................................... 81
TEKS ................................................................. 81
Texas Administrative Code (19 TAC) ............... 81
Texas Assessment of Academic Skills ................. 9
assessment ....................................................... 9
Texas Education Code ....................................... 81
Texas Essential Knowledge and Skills .............. 81
Time and effort records ...................................... 57
Title 19 Texas Administrative Code (TAC)
§105.11


indirect costs ..................................................15
Title I, Part A, of the Elementary and Secondary
Education Act (ESEA), as amended
federal program compliance ....................35–52
schoolwide programs .....................................38
targeted assistance programs .........................36
Tutorials .............................................................23
U
Undistributed costs
Program Intent Code 99 .................................60
W
waiver .....................................................20, 70, 79
Y
Year-around schools ...........................................22

January 2010

State Compensatory Education Guidelines, a module of the Texas Education Agency Financial Accountability System Resource Guide (FASRG), Update 14 © 2013

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State Compensatory Education Guidelines, a module of the Texas Education Agency Financial Accountability System Resource Guide (FASRG), Update 14 © 2013