Texas Education Code Section 11.201(e) already prohibited school superintendents from receiving compensation from a business entity that conducts business with the district, but did not prohibit compensation for performing personal services for other districts and ESCs if approved by the board on a case-by-case basis in an open meeting.  HB 3372, expected to be signed by the Governor, would repeal Section 11.201 and significantly limit outside employment by not only superintendents, but all administrators, though vague definitions may pose challenges regarding applicability to other administrators.

Prohibition

The law limits compensation for outside activities of “Administrators” and potentially imposes a civil penalty to the state of $10,000.00 per violation.  “Administrators” are defined broadly as, “a person who has significant administrative duties relating to the operation of a school district, including the operation of a campus, program, or other subdivision of the district.”  The definition excludes board members, classroom teachers and employees without significant administrative oversight.

Now, subject to the exception below, administrators cannot receive compensation or financial benefit for providing personal services to:

·      Business entities doing or seeking business with the administrator’s district,

·      Educational businesses offering curriculum or administrative services, or

·      Other public education entities such as school district, charter schools, or education service centers.

Exception

There is no exception for Board of Managers, superintendents, or assistant superintendents.  However, all other administrators may receive financial benefits from certain education businesses or other districts and ESCs if:

• A written contract detailing the services is submitted to the district’s board of trustees.
• The board approves the contract, confirming it poses no harm, avoids conflicts of interest, and ensures services are performed on the administrator’s personal time.

In addition to the restrictions, any employment contract approved pursuant to this statute is subject to the Texas Public Information Act. While H.B. 3372 is an effort to promote ethics, transparency, and limit potential conflicts of interest among administrators, the bill’s vague definitions, restrictive exemptions and significant penalties for violations may pose interpretational challenges. Districts should always consult with their legal counsel should they have any question regarding the applicability, or the interpretation of the statute arise.

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