(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.
  (1) Annual physical inventory--The annual capitalized and controlled personal property physical inventory count that a state agency must conduct once each fiscal year in accordance with this section.
  (2) Betterment of state property--An improvement of state property that materially increases its serviceability or useful life, or both.
  (3) Capital asset--A possession of the state that has an estimated useful life of more than one year.
  (4) Capital lease--A lease of personal property under which the lessee substantially assumes the risks and benefits of ownership as specified under pronouncements of the Governmental Accounting Standards Board.
  (5) Capitalized asset--A capital asset that has a value equal to or greater than the capitalization threshold established by the comptroller for that asset type.
  (6) Comptroller--The Comptroller of Public Accounts for the State of Texas.
  (7) Controlled asset--An agency asset that the state has determined to be at a high risk for loss; that must be secured and tracked; and that has a value equal to or greater than the cost established by the comptroller. The term does not include a capitalized asset, real property, an improvement to real property, or infrastructure.
  (8) Fiduciary fund--A fund held by a state agency as trustee of the fund. The term includes pension funds and non-expendable trust funds.
  (9) Fiscal year--The accounting period for state government, which begins on September 1 and ends on August 31.
  (10) Include--A term of enlargement and not of limitation or exclusive enumeration. The use of the term does not create a presumption that components not expressed are excluded.
  (11) Institution of higher education--Has the meaning assigned by Education Code, §61.003(8).
  (12) Internal state agency--A state agency that uses the SPA system exclusively as its own property accounting system.
  (13) May not--A prohibition. The term does not mean "might not" or its equivalents.
  (14) Personal property--A capitalized or controlled asset not classified as real property. The term includes trust property.
  (15) Proprietary fund--A self-supporting fund whose resources are generated through user charges. The term includes enterprise and internal service funds.
  (16) Real property--Land including structures or other improvements that are embedded into or permanently affixed to the land.
  (17) Replacement of state property--A replacement of an internal or external part of state property that allows it to complete its normal useful life.
  (18) Reporting state agency--A state agency that reports information from its own property accounting system to the SPA system.
  (19) Salvage personal property--Personal property that no longer serves its original purpose because it is depleted, worn out, damaged, consumed, outdated, or obsolete. The term does not include personal property that has a remaining useful life.
  (20) SPA system--The state property accounting system, which is the fixed asset component of the uniform statewide accounting system.
  (21) State agency--A state governmental entity that manages, administers, or controls state property.
  (22) State property--Property possessed by the state. The term includes real property and personal property.
  (23) Surplus personal property--Personal property in the possession of a state agency that is not currently needed by the agency and is not required for the agency's foreseeable needs. The term does not include salvage personal property.
  (24) Trust property--Property not owned by the state that a state agency temporarily holds on behalf of the owner and is not used in agency operations.
  (25) University system--Has the meaning assigned by Education Code, §61.003(10).
  (26) USAS--The Uniform Statewide Accounting System, which is the integrated financial system of record for the State of Texas financial records.
(b) Exemptions.
  (1) Equipment and supplies purchased through programs, contracts, or grants with the Department of State Health Services.
    (A) An item of equipment or a supply is exempt from the requirements of this section if it is:
      (i) used to promote and maintain public health;
      (ii) purchased by or for a qualified entity; and
      (iii) purchased through a program, contract, or grant with the Department of State Health Services.
    (B) The exemption ends if the item of equipment or supply is returned to the Department of State Health Services upon the termination of the applicable program, contract, or grant. When the exemption ends, the formerly exempt item of equipment or supply must be reported to the SPA system in accordance with the comptroller's requirements.
    (C) A state agency that purchases an exempt item of equipment or a supply shall develop and maintain internal control procedures for keeping a complete and accurate inventory of the items of equipment or supplies exempt under subparagraph (A) of this paragraph.
    (D) In this paragraph, "qualified entity" includes an individual, a corporation, a local unit of government, and a state agency.
  (2) Items provided to an individual with a disability.
    (A) A material, tool, book, or other necessary apparatus provided to an individual with a disability by the Health and Human Services Commission or the Texas Workforce Commission for use in providing rehabilitation services to the individual is exempt from the requirements of this section.
    (B) The Health and Human Services Commission and the Texas Workforce Commission shall each develop and maintain internal control procedures for keeping a complete and accurate inventory of the items that are exempt under subparagraph (A) of this paragraph.
    (C) An item that no longer qualifies for an exemption under subparagraph (A) of this paragraph must be reported to the SPA system in accordance with the comptroller's requirements.
  (3) Items provided to clients of state agencies.
    (A) The comptroller may exempt from the reporting requirements of this section a material, tool, book, or other necessary apparatus if the item is provided to a client by a qualifying state agency.
    (B) The appropriate state agency shall develop and maintain internal control procedures for keeping a complete and accurate inventory of the items that are exempt under subparagraph (A) of this paragraph.
    (C) An item that no longer qualifies for an exemption under subparagraph (A) of this paragraph must be reported to the SPA system in accordance with the comptroller's requirements.
  (4) University system or institution of higher education.
    (A) Except as provided in this subsection and subsection (l) of this section, a university system or institution of higher education is exempt from the requirements of this section.
    (B) A university system or institution of higher education shall account for all personal property possessed by the system or institution. At all times, the property records of a university system or institution of higher education must accurately reflect the personal property possessed by the system or institution.
  (5) Items of state property otherwise exempt by law. An item of state property is exempt from the requirements of this section if it is otherwise exempt by law from the requirements of the SPA system.
(c) General responsibilities.
  (1) Designation, supervision and training of property manager.
    (A) The head of a state agency shall:
      (i) designate a property manager for the agency;
      (ii) inform the comptroller of the designation not later than the 15th day after making the designation by properly completing and submitting the form required by the comptroller;
      (iii) ensure that the property manager receives training about this section and the SPA system; and
      (iv) ensure that the property manager properly carries out the property manager's duties as required by this section and applicable law.
    (B) The property manager may be the head of the state agency or another official or employee of the state agency.
Cont'd...