Relating to the establishment of an education savings account program.

89(R) SB 2 - Enrolled version - Bill Text

S.B. No. 2

AN ACT

relating to the establishment of an education savings account

program.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. The purpose of this Act is to:

(1) provide additional educational options to assist

families in this state in exercising the right to direct the

educational needs of their children; and

(2) achieve a general diffusion of knowledge.

SECTION 2. Chapter 29, Education Code, is amended by adding

Subchapter J to read as follows:

SUBCHAPTER J. EDUCATION SAVINGS ACCOUNT PROGRAM

Sec. 29.351. DEFINITIONS. In this subchapter:

(1)

"Account" means an education savings account

established under the program.

(2)

"Certified educational assistance organization"

means an organization certified under Section 29.354 to support the

administration of the program.

(3)

"Child with a disability" means a child who is

eligible to participate in a school district's special education

program under Section 29.003.

(4)

"Higher education provider" means an institution

of higher education or a private or independent institution of

higher education, as those terms are defined by Section 61.003.

(5)

"Parent" means a resident of this state who is a

natural or adoptive parent, managing or possessory conservator,

legal guardian, custodian, or other person with legal authority to

act on behalf of a child.

(6)

"Participating child" means a child enrolled in

the program.

(7)

"Participating parent" means a parent of a

participating child.

(8)

"Program" means the program established under this

subchapter.

(9)

"Program participant" means a participating child

or a participating parent.

Sec.

29.352.

ESTABLISHMENT OF PROGRAM. (a)

The

comptroller shall establish and administer a program to provide

funding for approved education-related expenses of children

participating in the program and has the authority to:

(1)

execute contracts, agreements, and other

instruments for goods and services;

(2)

engage the services of private consultants,

actuaries, trustees, records administrators, managers, and legal

counsel for administrative and technical assistance; and

(3)

perform any duty assigned to a certified

educational assistance organization under this subchapter.

(b)

The program confers a state benefit to program

participants in addition to a free public education.

Sec.

29.3521.

AMOUNT OF APPROPRIATION; LIMITATION ON

EXPENDITURES. (a)

In the comptroller's legislative appropriations

request for each state fiscal biennium, the comptroller shall state

the amount of money necessary for the biennium to provide the amount

specified under Section 29.361 for each:

(1) participating child;

(2)

child on the waiting list maintained by the

comptroller under Section 29.356(f) on the January 1 preceding the

biennium; and

(3)

child who is a sibling of a participating child and

is eligible for the program under Section 29.355 for the first time

during that biennium.

(b)

For purposes of Subsection (a), the comptroller shall

specify the amount described by that subsection for the first state

fiscal year of the biennium and estimate the amount required for the

second state fiscal year of the biennium.

(c)

Notwithstanding the amount stated in the comptroller's

legislative appropriations request under Subsection (a), the

amount appropriated for purposes of the program for a state fiscal

biennium must be established by the legislature by appropriation

for that biennium.

(c-1)

Notwithstanding any other law, for the state fiscal

biennium beginning September 1, 2025, the amount spent for purposes

of the program may not exceed $1 billion.

This subsection expires

September 1, 2027.

(d)

Notwithstanding any other provision of this subchapter,

for each school year, the total amount of money spent for purposes

of participation in the program by children described by Section

29.356(b)(2)(D) may not exceed 20 percent of the amount of money

appropriated from the program fund for that school year.

In

allocating money under the program in accordance with this

subsection, the comptroller shall ensure children who were enrolled

in a school district or open-enrollment charter school for at least

90 percent of the preceding school year are prioritized.

Sec.

29.353.

PROGRAM FUND. (a) The program fund is an

account in the general revenue fund to be administered by the

comptroller.

(b) The fund is composed of:

(1) general revenue transferred to the fund;

(2) money appropriated to the fund;

(3)

interest and other earnings attributable to the

investment of money in the fund;

(4)

gifts, grants, and donations received under

Section 29.370; and

(5)

any other money available for purposes of the

program.

(c)

Money in the fund may be used only for the purposes

specified by this subchapter.

Sec.

29.3535.

PROMOTION OF PROGRAM.

Notwithstanding any

other law, the comptroller or the comptroller's designee may enter

into contracts or agreements and engage in marketing, advertising,

and other activities to promote, market, and advertise the

development and use of the program.

The comptroller may use money

from the program fund to pay for activities authorized under this

section.

Sec.

29.354.

SELECTION OF CERTIFIED EDUCATIONAL ASSISTANCE

ORGANIZATIONS. (a) An organization may apply to the comptroller

for certification as a certified educational assistance

organization during an application period established by the

comptroller.

(b) To be eligible for certification, an organization must:

(1)

have the ability to perform one or more of the

duties and functions required of a certified educational assistance

organization under this subchapter;

(2) be registered to do business in this state; and

(3)

be able to assist the comptroller in administering

the program wholly or partly, including the ability to:

(A)

accept, process, and track applications for

the program;

(B)

assist prospective applicants, applicants,

and program participants with finding preapproved education

service providers and vendors of educational products;

(C)

accept and process payments for approved

education-related expenses;

(D)

verify that program funding is used only for

approved education-related expenses;

(E)

verify that a program participant is eligible

to participate in the program;

(F)

accept, track, review, and resolve inquiries

and complaints received regarding the program; and

(G)

establish and maintain a

comptroller-approved Internet website for the program.

(c)

The comptroller shall establish cybersecurity

requirements for certified educational assistance organizations,

including the implementation of best practices developed under

Section 2054.5181, Government Code.

(d)

The comptroller may certify not more than five

educational assistance organizations to support the administration

of the program, including by:

(1) administering wholly or partly:

(A)

the application process under Section

29.356; and

(B)

the program expenditures process under

Section 29.360; and

(2)

assisting prospective applicants, applicants, and

program participants with understanding approved education-related

expenses and finding preapproved education service providers and

vendors of educational products.

(e)

A certified educational assistance organization

designated to perform duties described by Subsection (d)(2) shall:

(1)

communicate with parents interested in

participating in the program and program participants through

synchronous and asynchronous communication, prioritizing

synchronous communication, regarding:

(A)

the educational options available in this

state;

(B)

how and when to apply to the program and

preapproved education service providers;

(C)

how to manage an account, including

requesting payments;

(D) program requirements; and

(E)

any other information necessary to fulfill

the organization's responsibilities under this subchapter; and

(2)

raise awareness regarding the availability of the

program.

(f)

The comptroller may designate a certified educational

assistance organization to establish and maintain a

comptroller-approved Internet website for the program.

Sec.

29.355.

ELIGIBLE CHILD. (a) A child is eligible to

participate in the program and may, subject to available funding,

enroll in the program for the semester following the semester in

which the child's application is submitted under Section 29.356 if:

(1)

the child's parent establishes that the child is a

citizen or national of the United States or was lawfully admitted

into the United States; and

(2) the child is eligible to:

(A)

attend a school district or open-enrollment

charter school under Section 25.001, including if the child is a

child of a parent who is an active duty member of the United States

armed forces; or

(B)

enroll in a school district's or

open-enrollment charter school's prekindergarten program under

Section 29.153.

(a-1)

A child's parent may establish proof of the child's

residency in this state for purposes of verifying the child's

eligibility to participate in the program under Subsection (a)(2)

by submitting any of the following documents in the parent's name:

(1) a utility bill;

(2) a lease agreement or mortgage statement;

(3) a driver's license or state ID;

(4) a voter registration certificate;

(5) a letter from a government agency; or

(6) a notarized affidavit of residency.

(b)

A child who establishes eligibility under this section

may, subject to available funding and the requirements of this

subchapter, participate in the program until the earliest of the

date on which:

(1) the child graduates from high school;

(2)

the child is no longer eligible to either attend a

school district or open-enrollment charter school under Section

25.001 or enroll in a school district's or open-enrollment charter

school's prekindergarten program under Section 29.153, as

applicable;

(3)

the child enrolls in a school district or

open-enrollment charter school in a manner in which the child will

be counted toward the district's or school's average daily

attendance for purposes of the allocation of funding under the

Foundation School Program; or

(4)

the child is declared ineligible for the program

by the comptroller under this subchapter.

Sec.

29.356.

APPLICATION TO PROGRAM. (a) A parent of an

eligible child may apply to a certified educational assistance

organization designated by the comptroller to enroll the child in

the program for the following semester, term, or school year, as

determined by the comptroller. The comptroller shall establish

deadlines by which an applicant must complete and submit an

application form to participate in the program.

(b)

On receipt of more acceptable applications during an

application period for admission under this section than available

positions in the program due to insufficient funding, a certified

educational assistance organization shall, at the direction of the

comptroller, fill the available positions by lottery of applicants,

approving applicants:

(1) in the following order:

(A) siblings of participating children;

(B)

children to whom Paragraph (C) does not

apply; and

(C)

children who previously ceased participation

in the program due to enrollment in a school district or

open-enrollment charter school; and

(2)

within each of the groups described by Subdivision

(1), in the following order, as applicable:

(A)

children with a disability who are members of

a household with a total annual income that is at or below 500

percent of the federal poverty guidelines;

(B)

children who are members of a household with

a total annual income that is at or below 200 percent of the federal

poverty guidelines;

(C)

children who are members of a household with

a total annual income that is above 200 percent of the federal

poverty guidelines and below 500 percent of the federal poverty

guidelines; and

(D)

children who are members of a household with

a total annual income that is at or above 500 percent of the federal

poverty guidelines.

(c)

For purposes of Subsection (b), a certified educational

assistance organization that receives an application from an

eligible child and the child's eligible sibling during the same

application cycle and approves the child's application shall

approve the sibling's application at the same time.

(d)

The comptroller shall adopt rules necessary to

administer Subsection (b). The comptroller shall provide for

posting on the Internet website established and maintained for the

program any rule adopted under this subsection.

(e)

The comptroller shall create an application form for the

program and make the application form readily available through

various sources, including the Internet website established and

maintained for the program. The application form must state the

application deadlines established by the comptroller under

Subsection (a). Each certified educational assistance

organization shall ensure that the organization is capable of

receiving the application form, including any required supporting

document, electronically.

(f)

The comptroller shall create and maintain a waiting list

based on the priority categories described by Subsection (b) for

applicants if, during an application period, there are more

acceptable applications for admission than there are available

positions.

(g)

Each certified educational assistance organization

designated under Subsection (a) shall provide for posting on the

Internet website established and maintained for the program a

comptroller-approved applicant and participant handbook with a

description of the program, including:

(1)

expenses allowed under the program under Section

29.359;

(2)

a list of preapproved education service providers

and vendors of educational products under Section 29.358;

(3)

a description of the application process under

this section and the program expenditures process under Section

29.360; and

(4)

a description of the responsibilities of program

participants.

(h)

Each certified educational assistance organization

designated under Subsection (a) shall annually provide to each

participating parent served by the organization the information

described by Subsection (g). The organization may provide the

information electronically.

(i)

The comptroller or a certified educational assistance

organization designated under Subsection (a):

(1)

may require the participating parent to submit

annual notice regarding the parent's intent for the child to

continue participating in the program for the next school year; and

(2)

may not require a program participant in good

standing to annually resubmit an application for continued

participation in the program.

(j)

The agency shall provide to the comptroller the

information necessary to make the determinations required under

Subsection (b).

Sec.

29.357.

PARTICIPATION IN PROGRAM. (a) To receive

funding under the program, a participating parent must agree to:

(1)

request that program money be spent only for

expenses allowed under Section 29.359;

(2)

share or authorize the administrator of an

assessment instrument to share with the program participant's

certified educational assistance organization the results of any

assessment instrument required to be administered to the child

under Section 29.358(b)(2)(B) or other law;

(3)

refrain from selling an item purchased with

program money; and

(4)

notify the program participant's certified

educational assistance organization not later than 30 business days

after the date on which the child:

(A)

enrolls in a school district or

open-enrollment charter school;

(B) graduates from high school; or

(C) is no longer eligible to either:

(i)

enroll in a school district or

open-enrollment charter school under Section 25.001; or

(ii)

enroll in a school district's or

open-enrollment charter school's prekindergarten program under

Section 29.153.

(b)

The administrator of an assessment instrument required

to be administered under Section 29.358(b)(2)(B) or other law shall

share with a parent the participating child's results on the

assessment instrument, including, if available, the participating

child's percentile rank. A child's results and rank on an

assessment instrument administered under this section are

confidential, are not subject to disclosure under Chapter 552,

Government Code, and may only be shared as necessary to fulfill the

requirements of this subchapter. In providing the results and rank

for an assessment instrument, the administrator shall ensure

compliance with state and federal law regarding the confidentiality

of student educational information, including the Family

Educational Rights and Privacy Act of 1974 (20 U.S.C. Section

1232g).

Sec.

29.358.

PREAPPROVED PROVIDERS AND VENDORS.

(a)

The

comptroller shall by rule establish a process for the preapproval

of education service providers and vendors of educational products

for participation in the program.

The comptroller shall allow for

the submission of applications on a rolling basis.

(b)

The comptroller shall approve an education service

provider or vendor of educational products for participation in the

program if the provider or vendor:

(1)

has previously been approved by the agency to

provide supplemental special education services under Subchapter

A-1 and remains in good standing with the agency;

(2) for a private school, demonstrates:

(A)

accreditation by an organization recognized

by:

(i)

the Texas Private School Accreditation

Commission; or

(ii) the agency;

(B)

annual administration for students in grades

3 through 12 of a nationally norm-referenced assessment instrument

or the appropriate assessment instrument required under Subchapter

B, Chapter 39; and

(C)

the school has continuously operated a campus

for at least two school years preceding the date the school seeks

approval under this section;

(3)

for a school district or open-enrollment charter

school, demonstrates:

(A) accreditation by the agency; and

(B)

the ability to provide services or products

to participating children in a manner in which the children are not

counted toward the district's or school's average daily attendance;

(4)

for a private tutor, therapist, or teaching

service, demonstrates that:

(A)

the tutor or therapist or each employee of

the teaching service who intends to provide educational services to

a participating child:

(i)

is an educator employed by or a retired

educator formerly employed by a school accredited by the agency, an

organization recognized by the agency, or an organization

recognized by the Texas Private School Accreditation Commission;

(ii)

holds a relevant license or

accreditation issued by a state, regional, or national

certification or accreditation organization; or

(iii)

is employed in or retired from a

teaching or tutoring capacity at a higher education provider;

(B)

the tutor or therapist or each employee of

the teaching service who intends to provide educational services to

a participating child provides to the comptroller a national

criminal history record information review completed for the tutor,

therapist, or employee, as applicable, within a period established

by comptroller rule or authorizes the comptroller or the

comptroller's

designee to conduct a national criminal history

record information review of the tutor, therapist, or employee as

prescribed by comptroller rule; and

(C)

the tutor or therapist or each employee of

the teaching service who intends to provide educational services to

a participating child is not:

(i)

required to be discharged or refused to

be hired by a school district under Section 22.085; or

(ii)

included in the registry under Section

22.092;

(5)

for a higher education provider, demonstrates

nationally recognized postsecondary accreditation; or

(6)

notwithstanding Subdivision (2), for a private

provider serving children in prekindergarten or kindergarten,

demonstrates that the provider meets the requirements to be an

eligible private provider under Section 29.171.

(b-1)

The comptroller may approve a vendor of educational

products that provides products or services described by Section

29.359(a)(1)(C), (2), (4), (6), (8), or (9) for participation in

the program in accordance with comptroller rule.

(c)

The comptroller may approve only an education service

provider located in this state or vendor of educational products

registered to do business in this state.

(d)

An education service provider or vendor of educational

products shall provide information requested by the comptroller to

verify the provider's or vendor's eligibility for preapproval under

this section. The comptroller may not approve a provider or vendor

if the comptroller cannot verify the provider's or vendor's

eligibility for preapproval.

(e)

Each applicant for approval under this section shall

submit to the comptroller documentation demonstrating that each

person employed by the applicant or provider who will interact with

a participating child is not identified as having engaged in

misconduct described by Section 22.093(c)(1)(A) or (B) using the

interagency reportable conduct search engine established under

Chapter 810, Health and Safety Code.

(f)

The comptroller or the comptroller's designee shall

review the documentation for each person described by Subsection

(e).

Each applicant for approval under this section must provide

the comptroller or the comptroller's designee with any information

requested by the comptroller or designee to enable the comptroller

or designee to complete the review.

(g)

An education service provider or vendor of educational

products must agree to:

(1)

abide by the disbursement schedule under Section

29.360(c) and all other requirements of this subchapter;

(2)

accept money from the program only for

education-related expenses approved under Section 29.359;

(3)

notify the comptroller not later than the 30th day

after the date that the provider or vendor no longer meets the

requirements of this section; and

(4)

return any money received, including any interest

or other additions received related to the money, in violation of

this subchapter or other relevant law to the comptroller for

deposit into the program fund.

(h)

An education service provider or vendor of educational

products that receives approval under this section may participate

in the program until the earliest of the date on which the provider

or vendor:

(1)

no longer meets the requirements under this

section; or

(2) violates this subchapter or other relevant law.

Sec.

29.3585.

PROVIDER AND VENDOR SUSPENSION AND REMOVAL.

(a) The comptroller shall immediately suspend a preapproved

education service provider or vendor of educational products on

finding that the provider or vendor:

(1)

is ineligible under this subchapter for

participation in the program; or

(2)

has failed to remain in good standing by complying

with a program requirement under this subchapter or other

applicable law.

(b)

A payment may not be made from a program participant's

account to a suspended provider or vendor.

(c)

On suspension under this section, the comptroller shall

immediately send notice of the suspension to the suspended provider

or vendor and each certified educational assistance organization by

first class mail and e-mail.

The notice must include a statement

that:

(1)

specifies the grounds for suspending the provider

or vendor;

(2)

no additional payments may be made to the provider

or vendor from a program participant's account during the

provider's or vendor's suspension; and

(3)

the provider or vendor has 30 days to respond and

take any corrective action required to comply with program

requirements and applicable law.

(d)

Not later than the 30th day after the date the

comptroller provides notice of suspension under Subsection (c), the

comptroller shall:

(1) remove the provider or vendor from the program;

(2)

conditionally reinstate the provider or vendor and

require the provider or vendor to perform a specified action; or

(3) unconditionally reinstate the provider or vendor.

(e)

On removing a provider or vendor from the program, the

comptroller shall notify the provider or vendor and each certified

educational assistance organization of the removal.

Sec.

29.359.

APPROVED EDUCATION-RELATED EXPENSES. (a)

Subject to Subsection (b), a participating parent may request that

program money be spent only for the following education-related

expenses incurred by a participating child at a preapproved

education service provider or vendor of educational products:

(1) tuition and fees for:

(A) a private school;

(B) a higher education provider;

(C) an online educational course or program; or

(D)

a program that provides training for an

industry-based credential approved by the agency;

(2)

the purchase of textbooks or other instructional

materials or uniforms required by a private school, higher

education provider, or course in which the child is enrolled,

including purchases made through a third-party vendor of

educational products;

(3)

fees for classes or other educational services

provided by a school district or open-enrollment charter school if

the classes or services do not qualify the child to be included in

the school's average daily attendance;

(4) costs related to academic assessments;

(5)

fees for services provided by a private tutor or

teaching service;

(6)

fees for transportation provided by a

fee-for-service transportation provider for the child to travel to

and from a preapproved education service provider or vendor of

educational products;

(7)

fees for educational therapies or services

provided by a practitioner or provider, only for fees that are not

covered by any federal, state, or local government benefits such as

Medicaid or the Children's Health Insurance Program (CHIP) or by

any private insurance that the child is enrolled in at the time of

receiving the therapies or services;

(8)

costs of computer hardware or software and other

technological devices required by an education service provider or

vendor of educational products or prescribed by a physician to

facilitate a child's education, not to exceed in any year 10 percent

of the total amount transferred to the participating child's

account that year; and

(9)

costs of breakfast or lunch provided to a child

during the school day by a private school.

(b)

Money transferred under the program to a participating

child's account may not be used to pay any person who is related to

the program participant within the third degree by consanguinity or

affinity, as determined under Chapter 573, Government Code.

(c)

A finding that a program participant requested that

program money be spent to pay for an expense not allowed under

Subsection (a) does not affect the validity of any payment

requested by the participant for an approved education-related

expense that is allowed under that subsection.

Sec.

29.360.

PROGRAM EXPENDITURES. (a) The comptroller

shall disburse from the program fund to each certified educational

assistance organization the amount specified under Section

29.361(a) for each participating child served by the organization.

(b)

To initiate payment to an education service provider or

vendor of educational products for an education-related expense

approved under Section 29.359, the participating parent must submit

a request in a form prescribed by comptroller rule to the certified

educational assistance organization that serves the child.

(c)

Subject to Subsection (d) and Sections 29.362(f) and

29.364, on receiving a request under Subsection (b), a certified

educational assistance organization shall verify that the request

is for an expense approved under Section 29.359 and, not later than

the 10th business day after the date the organization verifies the

request, send payment to the education service provider or vendor

of educational products.

(d)

A disbursement under this section may not exceed the

applicable participating child's account balance.

(e)

A certified educational assistance organization shall

provide participating parents with electronic access to:

(1)

view the participating child's current account

balance;

(2)

initiate the payment request process under

Subsection (b); and

(3)

view a summary of past account activity, including

payments from the account to education service providers and

vendors of educational products.

(f)

A payment system established by a certified educational

assistance organization may not allow a program participant to:

(1)

withdraw cash or remove funds from a participating

child's account; or

(2)

receive payment or reimbursement directly from the

program.

(g)

A certified educational assistance organization may not

require a program participant to pay a fee to the organization or an

affiliate of the organization related to the use of a participating

child's account, including a transaction fee.

Sec.

29.361.

AMOUNT OF TRANSFER TO PARTICIPANT ACCOUNT;

FINANCING. (a) Regardless of the deadline by which the

participating parent applies for enrollment in the program under

Section 29.356(a) and except as provided by Subsections (b), (b-1),

and (d) of this section, a certified educational assistance

organization shall transfer in accordance with Section 29.362 each

school year that a participating child participates in the program

money distributed to the organization from money available under

Section 29.353 to the child's account to be held in trust for the

benefit of the child in an amount equal to:

(1)

85 percent of the estimated statewide average

amount of state and local funding per student in average daily

attendance for the most recent school year for which that

information is available, as provided by the agency; or

(2)

for a child with a disability, subject to

Subsection (b), the sum of the amount described by Subdivision (1)

and the amount the school district in which the child would

otherwise be enrolled would be entitled to receive for the child

calculated based on the child's individualized education program,

as determined in accordance with Section 29.3615, and the

provisions of Chapter 48 that provide funding based on a child's

participation in a school district's special education program

under Subchapter A applicable for the school year preceding the

school year in which the child initially enrolls in the program.

(b)

The amount transferred to the account of a child with a

disability for a school year under Subsection (a)(2) may not exceed

$30,000.

(b-1)

Notwithstanding Subsection (a), a participating child

who is a home-schooled student, as defined by Section 29.916(a)(1),

may not receive transfers under the program to the child's account

under Subsection (a) in an amount that exceeds $2,000 for a school

year.

(c)

In determining the estimated statewide average amount

of state and local funding per student in average daily attendance

for a school year under Subsection (a), the commissioner shall:

(1)

make the determination not later than January 15

preceding the school year; and

(2)

include projected state and local funding under

Chapters 48 and 49 and the amount the state is required to

contribute to the Teacher Retirement System of Texas under Section

825.404, Government Code, for the school year.

(d)

If a child enrolls in the program after the beginning of

a school year, the comptroller shall prorate the amount transferred

to the participating child's account under Subsection (a) based on

the date the child enrolls in the program.

(e)

Any money remaining in a participating child's account

at the end of a fiscal year is carried forward to the next fiscal

year unless another provision of this subchapter mandates the

closure of the account.

(f)

A participating parent may make payments for the

expenses of educational programs, services, and products not

covered by money in the account of the parent's child.

(g)

A transfer under Subsection (a) may not be funded using

federal money or money from the available school fund or the state

instructional materials and technology fund.

(h)

Transfers to a participating child's account under this

subchapter do not constitute taxable income to a participating

parent, unless otherwise provided by federal or another state's

law.

(i)

On dates consistent with satisfying the application

deadlines established under Section 29.356(a), the agency shall

calculate and report to the comptroller the amount specified under

Subsection (a) for each participating child.

Sec.

29.3611.

ENROLLMENT IN PUBLIC SCHOOL. If a child

ceases participation in the program during a school year due to the

child's enrollment in a school district or open-enrollment charter

school:

(1)

the district or school is entitled to receive, in

addition to other funding to which the district or school is

entitled to receive for the child, an allotment in an amount equal

to the basic allotment multiplied by 0.1 for the child's average

daily attendance at the district or school for that school year; and

(2)

the child may not be considered in evaluating the

performance of a school district or open-enrollment charter school

under the public school accountability system as prescribed by

Chapters 39 and 39A for the first school year after the child ceases

participation in the program.

Sec.

29.3615.

INDIVIDUALIZED EDUCATION PROGRAMS;

EVALUATIONS. (a) The parent of a child who is not enrolled in a

school district or open-enrollment charter school may request that

a school district conduct a full individual and initial evaluation

of the child for purposes of determining the child's eligibility

for:

(1) special education services under Subchapter A; and

(2)

participation in the program as a child with a

disability.

(b)

A school district that receives a request under this

section shall follow procedures, including for timely completion,

for a full individual and initial evaluation in accordance with 20

U.S.C. Sections 1412(a)(10)(A)(ii) and 1414 and Section 29.004 of

this code not later than the 45th school day after the date the

district receives parental consent to conduct the evaluation.

(c)

If a school district determines based on an evaluation

conducted under Subsection (b) that a child is eligible for special

education services, the district shall develop an individualized

education program for the child for purposes of establishing the

child's eligibility to participate in the program as a child with a

disability.

(d)

At the agency's request, a school district or

open-enrollment charter school shall provide to the agency a

child's individualized education program developed under Section

29.005 or Subsection (c) of this section, as applicable.

(e)

The agency may adopt rules as necessary to implement

this section, including rules regarding an appeal of a

determination of eligibility for special education services and

services to be provided as described in an individualized education

program developed in accordance with this section.

Sec.

29.362.

ADMINISTRATION OF ACCOUNTS. (a)

On receipt

of money distributed by the comptroller for purposes of making

transfers to the accounts of participating children, a certified

educational assistance organization shall hold that money in trust

for the benefit of children participating in the program and make

transfers to the account of each participating child served by the

organization as follows:

(1)

not later than July 1, at least one-quarter of the

total annual amount;

(2)

not later than October 1, one-half of the total

annual amount; and

(3)

not later than April 1, the total remaining amount

after the transfers under Subdivisions (1) and (2).

(b)

Each year, the comptroller may deduct from the total

amount of money appropriated for purposes of this subchapter an

amount, not to exceed three percent of that total amount, to cover

the comptroller's cost of administering the program.

(c)

The comptroller may disburse each state fiscal year a

total amount, not to exceed five percent of the amount of money

appropriated for purposes of the program for that state fiscal

year, to the certified educational assistance organizations for the

cost of providing services under this subchapter.

(d)

On or before the first day of October and February, a

certified educational assistance organization shall:

(1)

verify with the agency that each participating

child is not enrolled in a school district or open-enrollment

charter school in a manner in which the child is counted toward the

district's or school's average daily attendance for purposes of the

allocation of state funding under the Foundation School Program;

and

(2)

notify the comptroller if the organization

determines that a participating child is:

(A)

enrolled in a school district or

open-enrollment charter school in a manner in which the child is

counted toward the district's or school's average daily attendance

for purposes of the allocation of state funding under the

Foundation School Program; or

(B) not enrolled in a preapproved private school.

(e)

The comptroller by rule shall establish a process by

which a participating parent may authorize the comptroller or a

certified educational assistance organization to make a payment

directly from the participant's account to a preapproved education

service provider or vendor of educational products for an expense

allowed under Section 29.359.

(f)

On the date on which a child who participated in the

program is no longer eligible to participate in the program under

Section 29.355 and payments for any education-related expenses

allowed under Section 29.359 from the child's account have been

completed, the participating child's account shall be closed and

any remaining money returned to the comptroller for deposit in the

program fund.

(g)

Each quarter, any interest or other earnings

attributable to money held by a certified educational assistance

organization for purposes of the program shall be remitted to the

comptroller for deposit in the program fund.

Sec.

29.363.

AUDITING. (a) The comptroller shall contract

with a private entity to audit accounts and program participant

eligibility data not less than once per year to ensure compliance

with applicable law and program requirements.

The audit must

include a review of:

(1)

each certified educational assistance

organization's internal controls over program transactions; and

(2) compliance by:

(A)

certified educational assistance

organizations with Section 29.354 and other program requirements;

(B)

program participants with Section 29.357(a)

and other program requirements; and

(C)

education service providers and vendors of

educational products with Section 29.358 and other program

requirements.

(b)

In conducting an audit, the private entity may require a

program participant, education service provider or vendor of

educational products, or certified educational assistance

organization to provide information and documentation regarding

any transaction occurring under the program.

(c)

The private entity shall report to the comptroller any

violation of this subchapter or other relevant law and any

transactions the entity determines to be unusual or suspicious

found by the entity during an audit conducted under this section.

The comptroller shall report the violation or transaction to:

(1)

the applicable certified educational assistance

organization;

(2)

the education service provider or vendor of

educational products, as applicable; and

(3)

each participating parent who is affected by the

violation or transaction.

(d)

The state auditor shall audit each certified

educational assistance organization's compliance with the

organization's duties to verify a child's eligibility to

participate in the program under Section 29.355 and verify that a

request for payment is for an approved expense under Section

29.360(c). Each organization shall submit to the state auditor

documentation of:

(1)

each item of residency documentation described by

Section 29.355(a-1) reviewed by the organization;

(2)

each preapproved education-related expense

category reviewed by the organization under Section 29.360(c);

(3)

the number of transactions approved by the

organization; and

(4)

the number of transactions denied by the

organization.

(e)

The state auditor may review and analyze individual

transactions approved by a certified educational assistance

organization.

(f)

The state auditor shall randomly select 10 percent of

program applications on which to perform an eligibility

verification audit.

(g)

Each education service provider shall provide to the

state auditor proof of a third-party audit or financial review

consistent with the provider's accreditation commission standards.

Sec.

29.364.

SUSPENSION OF ACCOUNT. (a) The comptroller

shall suspend the account of a participating child who fails to

remain in good standing by complying with applicable law or a

requirement of the program.

(b)

On suspension of an account under Subsection (a), the

comptroller shall notify the participating parent in writing that

the account has been suspended and that no additional payments may

be made from the account. The notification must specify the grounds

for the suspension and state that the participating parent has 30

days to respond and take any corrective action required by the

comptroller.

(c)

On the expiration of the 30-day period under Subsection

(b), the comptroller shall:

(1) order closure of the suspended account;

(2)

order temporary reinstatement of the account,

conditioned on the performance of a specified action by the

participating parent; or

(3) order full reinstatement of the account.

(d)

The comptroller may recover money distributed under the

program that was used for expenses not allowed under Section

29.359, for a child who was not eligible to participate in the

program at the time of the expenditure, or from an education service

provider or vendor of educational products that was not approved at

the time of the expenditure. The money and any interest or other

additions received related to the money may be recovered from the

participating parent or the education service provider or vendor of

educational products that received the money in accordance with

applicable law if the participating child's account is suspended or

closed under this section.

The comptroller shall deposit money

recovered under this subsection into the program fund.

Sec.

29.365.

TUITION AND FEES; REFUND PROHIBITED. (a) An

education service provider or vendor of educational products may

not charge a participating child an amount greater than the

standard amount charged for that service or product by the provider

or vendor.

(b)

An education service provider or vendor of educational

products receiving money distributed under the program may not in

any manner rebate, refund, or credit to or share with a program

participant, or any person on behalf of a participant, any program

money paid or owed by the participant to the provider or vendor.

Sec.

29.366.

REFERRAL TO DISTRICT ATTORNEY. If the

comptroller obtains evidence of fraudulent use of an account or

money distributed under the program or any other violation of law by

a certified educational assistance organization, education service

provider or vendor of educational products, or program participant,

the comptroller shall notify the appropriate local county or

district attorney with jurisdiction over, as applicable:

(1)

the principal place of business of the

organization or provider or vendor; or

(2) the residence of the program participant.

Sec.

29.367.

SPECIAL EDUCATION NOTICE. (a) A certified

educational assistance organization shall post on the Internet

website established and maintained for the program and provide to

each parent who submits an application for the program a notice

that:

(1)

states that a private school is not subject to

federal and state laws regarding the provision of educational

services to a child with a disability in the same manner as a school

district or open-enrollment charter school; and

(2)

provides information regarding rights to which a

child with a disability is entitled under federal and state law if

the child attends a school district or open-enrollment charter

school, including:

(A)

rights provided under the Individuals with

Disabilities Education Act (20 U.S.C. Section 1400 et seq.); and

(B) rights provided under Subchapter A.

(b)

A private school in which a child with a disability who

is a participating child enrolls shall provide to the participating

parent a copy of the notice required under Subsection (a).

Sec.

29.368.

PROGRAM PARTICIPANT, PROVIDER, AND VENDOR

AUTONOMY. (a) An education service provider or vendor of

educational products that receives money distributed under the

program is not a recipient of federal financial assistance and may

not be considered to be a state actor on the basis of receiving that

money.

(b)

A state agency or state official may not adopt a rule or

take other governmental action related to the program and a

certified educational assistance organization may not take action

that:

(1)

limits or imposes requirements that are contrary

to the religious or institutional values or practices of an

education service provider, vendor of educational products, or

program participant; or

(2)

limits an education service provider, vendor of

educational products, or program participant from freely:

(A)

determining the methods or curriculum to

educate students;

(B)

determining admissions and enrollment

practices, policies, and standards;

(C)

modifying or refusing to modify the

provider's, vendor's, or participant's religious or institutional

values or practices, operations, conduct, policies, standards,

assessments, or employment practices based on the provider's,

vendor's, or participant's religious values or practices; or

(D)

exercising the provider's, vendor's, or

participant's religious or institutional practices as the

provider, vendor, or participant determines.

Sec.

29.369.

STUDENT RECORDS AND INFORMATION. (a) On

request by the participating parent or parent of a child seeking to

participate in the program, the school district or open-enrollment

charter school that the child would otherwise attend shall provide

a copy of the child's school records possessed by the district or

school, if any, to the child's parent or, if applicable, the private

school the child attends.

(b)

As necessary to verify a child's eligibility for the

program, the agency, a school district, or an open-enrollment

charter school shall provide to a certified educational assistance

organization any information available to the agency, district, or

school requested by the organization regarding a child who

participates or seeks to participate in the program, including

information regarding the child's school district or

open-enrollment charter school enrollment status and whether the

child can be counted toward a school district's or open-enrollment

charter school's average daily attendance for purposes of the

allocation of funding under the Foundation School Program. The

organization may not retain information provided under this

subsection beyond the period necessary to determine a child's

eligibility to participate in the program.

(c)

A certified educational assistance organization or an

education service provider or vendor of educational products that

obtains information regarding a participating child:

(1)

shall comply with state and federal law regarding

the confidentiality of student educational information; and

(2) may not:

(A)

sell information regarding a participating

child; or

(B)

distribute information regarding a

participating child in a manner not described by Paragraph (A)

without the program participant's consent.

(d)

A student record held by the comptroller or a certified

educational assistance organization is confidential and not

subject to disclosure under Chapter 552, Government Code. The

comptroller or a certified educational assistance organization may

redact information that constitutes student records from any

information the governmental body discloses under Section 552.021,

Government Code, without the necessity of requesting a decision

from the attorney general under Subchapter G, Chapter 552,

Government Code.

Sec.

29.370.

GIFTS, GRANTS, AND DONATIONS. The comptroller

may solicit and accept gifts, grants, and donations from any public

or private source for any expenses related to the administration of

the program, including establishing the program and contracting for

the report required under Section 29.371.

Sec.

29.371.

ANNUAL REPORT. (a)

The comptroller, in

collaboration with the agency and the certified educational

assistance organizations, shall compile program data and produce an

annual longitudinal report regarding:

(1)

the number of program applications received,

accepted, and wait-listed, disaggregated by age;

(2) program participant satisfaction;

(3)

the results of assessment instruments shared in

accordance with Section 29.357(a)(2);

(4)

the effect of the program on public and private

school capacity and availability;

(5)

the amount of cost savings accruing to the state as

a result of the program;

(6)

in a report submitted in an even-numbered year

only, an estimate of the total amount of funding required for the

program for the next state fiscal biennium;

(7)

the amount of gifts, grants, and donations

received under Section 29.370;

(8)

based on surveys of former program participants or

other sources available to an organization, the number and

percentage of children participating in the program who, within one

year after graduating from high school, are:

(A)

college ready, as indicated by earning a

minimum of 12 non-remedial semester credit hours or the equivalent

or an associate degree from a postsecondary educational

institution;

(B) career ready, as indicated by:

(i)

earning a credential of value included

in a library of credentials established under Section 2308A.007,

Government Code; or

(ii)

employment at or above the median wage

in the child's region; or

(C)

military ready, as indicated by achieving a

passing score set by the applicable military branch on the Armed

Services Vocational Aptitude Battery and enlisting in the armed

forces of the United States or the Texas National Guard; and

(9)

the dropout rate, expulsion rate, and graduation

rate of participating children who are children with a disability,

both aggregated and disaggregated by the child's:

(A) grade level;

(B) age;

(C) sex;

(D) race or ethnicity; and

(E) category under Section 29.356(b).

(b) In producing the report, the comptroller shall:

(1)

use appropriate analytical and behavioral science

methodologies to ensure public confidence in the report; and

(2)

comply with the requirements regarding the

confidentiality of student educational information under the

Family Educational Rights and Privacy Act of 1974 (20 U.S.C.

Section 1232g).

(c)

The report must cover a period of not less than five

years and include, subject to Subsection (b)(2), the data analyzed

and methodology used.

(d)

The comptroller shall provide the report for posting on

the Internet website established and maintained for the program.

(e)

The comptroller shall provide the report, including

assessment data, to the commissioner.

(f)

The state auditor shall review and verify the validity

of the contents of the comptroller's annual report required under

this section. If the state auditor finds any discrepancies in the

report, the state auditor may collect the data necessary to verify

and audit the data from the comptroller, the applicable certified

educational assistance organizations, and the applicable education

service providers and vendors of educational products.

Sec.

29.3715.

COLLECTION AND REPORTING OF DEMOGRAPHIC

INFORMATION.

(a) The comptroller, in collaboration with the

agency and the certified educational assistance organizations,

shall collect and report demographic information regarding each

participating child.

The report must include the following

demographic information:

(1) the child's grade;

(2) the child's age;

(3) the child's sex;

(4) the child's race or ethnicity;

(5) the school district in which the child resides;

(6)

the district campus that the child would otherwise

attend;

(7) the child's zip code;

(8) the child's date of enrollment in the program;

(9) the child's category under Section 29.356(b); and

(10) whether the child has a disability.

(b)

Not later than August 1 of each year, the comptroller

shall submit a written report to the legislature summarizing the

demographic information collected under this section.

Sec.

29.372.

RULES; PROCEDURES. The comptroller shall

adopt rules and procedures as necessary to implement, administer,

and enforce this subchapter.

Sec.

29.373.

APPEAL; FINALITY OF DECISIONS. (a) A program

participant may appeal to the comptroller an administrative

decision made by the comptroller or a certified educational

assistance organization under this subchapter, including a

decision regarding eligibility, allowable expenses, or the

participant's removal from the program.

(b)

An appeal under this subchapter does not constitute a

contested case for any purpose.

(c)

This subchapter may not be construed to confer a

property right on a certified educational assistance organization,

education service provider, vendor of educational products, or

program participant.

(d)

A decision of the comptroller made under this subchapter

is final and not subject to appeal.

Sec.

29.374.

RIGHT TO INTERVENE IN CIVIL ACTION. (a) A

program participant, eligible child, education service provider,

or vendor of educational products may intervene in any civil action

challenging the constitutionality of the program.

(b)

A court in which a civil action described by Subsection

(a) is filed may require that all program participants, eligible

children, education service providers, and vendors of educational

products wishing to intervene in the action file a joint brief. A

program participant, eligible child, education service provider,

or vendor of educational products may not be required to join a

brief filed on behalf of the state or a state agency.

SECTION 3. Section 22.092(d), Education Code, is amended to

read as follows:

(d) The agency shall provide equivalent access to the

registry maintained under this section to:

(1) private schools;

(2) public schools; [
and
]

(3) nonprofit teacher organizations approved by the

commissioner for the purpose of participating in the tutoring

program established under Section 33.913
; and

(4)

the comptroller for the purpose of preapproving

education service providers and vendors of educational products

under Section 29.358 for participation in the program established

under Subchapter J, Chapter 29
.

SECTION 4. Section 411.109, Government Code, is amended by

adding Subsection (b-1) and amending Subsection (c) to read as

follows:

(b-1)

The comptroller is entitled to obtain criminal

history record information as provided by Subsection (c) about a

person who is an employee of an education service provider or vendor

of educational products who intends to provide educational services

to a child participating in the program established under

Subchapter J, Chapter 29, Education Code, and is seeking approval

to receive money distributed under that program.

(c) Subject to Section 411.087 and consistent with the

public policy of this state, the comptroller is entitled to:

(1) obtain through the Federal Bureau of Investigation

criminal history record information maintained or indexed by that

bureau that pertains to a person described by Subsection (a)
,
[
or
]

(b)
, or (b-1)
; and

(2) obtain from the department or any other criminal

justice agency in this state criminal history record information

maintained by the department or that criminal justice agency that

relates to a person described by Subsection (a)
,
[
or
] (b)
, or (b-1)
.

SECTION 5. Section 810.002, Health and Safety Code, is

amended to read as follows:

Sec. 810.002. APPLICABILITY. This chapter applies to the

following state agencies:

(1) the Department of Family and Protective Services;

(2) the Health and Human Services Commission;

(3) the Texas Education Agency; [
and
]

(4) the Texas Juvenile Justice Department
; and

(5) the comptroller of public accounts
.

SECTION 6. (a) Except as provided by Subsection (b) of this

section, Subchapter J, Chapter 29, Education Code, as added by this

Act, applies beginning with the 2026-2027 school year.

(b) Section 29.3521(c), Education Code, as added by this

Act, applies beginning with the state fiscal biennium beginning

September 1, 2027.

SECTION 7. (a) Not later than May 15, 2026, the comptroller

of public accounts shall adopt rules as provided by Sections

29.356(d) and 29.372, Education Code, as added by this Act.

(b) The comptroller of public accounts may identify rules

required by the passage of Subchapter J, Chapter 29, Education

Code, as added by this Act, that must be adopted on an emergency

basis for purposes of the 2026-2027 school year and may use the

procedures established under Section 2001.034, Government Code,

for adopting those rules. The comptroller of public accounts is not

required to make the finding described by Section 2001.034(a),

Government Code, to adopt emergency rules under this subsection.

SECTION 8. (a) The constitutionality and other validity

under the state or federal constitution of all or any part of

Subchapter J, Chapter 29, Education Code, as added by this Act, may

be determined in an action for declaratory judgment under Chapter

37, Civil Practice and Remedies Code, in a district court in the

county in which the violation is alleged to have occurred or where

the plaintiff resides or has its principal place of business.

(b) An order, however characterized, of a trial court

granting or denying a temporary or otherwise interlocutory

injunction or a permanent injunction on the grounds of the

constitutionality or unconstitutionality, or other validity or

invalidity, under the state or federal constitution of all or any

part of Subchapter J, Chapter 29, Education Code, as added by this

Act, may be reviewed only by direct appeal to the Texas Supreme

Court filed not later than the 15th business day after the date on

which the order was entered. The Texas Supreme Court shall give

precedence to appeals under this section over other matters.

(c) The direct appeal is an accelerated appeal.

(d) This section exercises the authority granted by Section

3-b, Article V, Texas Constitution.

(e) The filing of a direct appeal under this section will

automatically stay any temporary or otherwise interlocutory

injunction or permanent injunction granted in accordance with this

section pending final determination by the Texas Supreme Court,

unless the supreme court makes specific findings that the applicant

seeking such injunctive relief has pleaded and proved that:

(1) the applicant has a probable right to the relief it

seeks on final hearing;

(2) the applicant will suffer a probable injury that

is imminent and irreparable, and that the applicant has no other

adequate legal remedy; and

(3) maintaining the injunction is in the public

interest.

(f) An appeal under this section, including an

interlocutory, accelerated, or direct appeal, is governed, as

applicable, by the Texas Rules of Appellate Procedure, including

Rules 25.1(d)(6), 28.1, 32.1, 37.3(a)(1), 38.6(a) and (b), 40.1(b),

and 49.4.

(g) This section does not authorize an award of attorney's

fees against this state, and Section 37.009, Civil Practice and

Remedies Code, does not apply to an action filed under this section.

(h) The attorney general shall represent the state in any

legal action brought that challenges the constitutionality or

validity of all or any part of Subchapter J, Chapter 29, Education

Code, as added by this Act.

SECTION 9. It is the intent of the legislature that every

provision, section, subsection, sentence, clause, phrase, or word

in this Act, and every application of the provisions in this Act to

each person or entity, is severable from each other. If any

application of any provision in this Act to any person, group of

persons, or circumstances is found by a court to be invalid for any

reason:

(1) the remaining applications of that provision to

all other persons and circumstances shall be severed and may not be

affected; and

(2) the court must allow continued operation of the

program without regard for the severed provision rather than

restrict program operation or participation.

SECTION 10. This Act takes effect immediately if it

receives a vote of two-thirds of all the members elected to each

house, as provided by Section 39, Article III, Texas Constitution.

If this Act does not receive the vote necessary for immediate

effect, this Act takes effect September 1, 2025.

______________________________

______________________________

President of the Senate

Speaker of the House

I hereby certify that S.B. No. 2 passed the Senate on

February 5, 2025, by the following vote: Yeas 19, Nays 12; and

that the Senate concurred in House amendments on April 24, 2025, by

the following vote: Yeas 19, Nays 12.

______________________________

Secretary of the Senate

I hereby certify that S.B. No. 2 passed the House, with

amendments, on April 17, 2025, by the following vote: Yeas 86,

Nays 61.

______________________________

Chief Clerk of the House

Approved:

______________________________

Date

______________________________

Governor