| 1 | 1 | | 84R12102 MK-F |
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| 2 | 2 | | By: Bohac H.B. No. 3375 |
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| 3 | 3 | | |
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| 4 | 4 | | |
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| 5 | 5 | | A BILL TO BE ENTITLED |
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| 6 | 6 | | AN ACT |
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| 7 | 7 | | relating to ownership and control of property acquired with state |
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| 8 | 8 | | funds by the charter holder of an open-enrollment charter school. |
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| 9 | 9 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 10 | 10 | | SECTION 1. Section 12.128, Education Code, is amended by |
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| 11 | 11 | | adding Subsections (f), (g), (h), (i), (j), and (k) to read as |
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| 12 | 12 | | follows: |
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| 13 | 13 | | (f) Notwithstanding Subsection (a), real or personal |
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| 14 | 14 | | property acquired, improved, or maintained using state funds is |
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| 15 | 15 | | considered to be public property only to the extent state funds were |
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| 16 | 16 | | used to pay for the acquisition, improvement, or maintenance. The |
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| 17 | 17 | | use of state funds for acquisition, improvement, or maintenance of |
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| 18 | 18 | | property must be detailed in the accounting and property records of |
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| 19 | 19 | | the charter holder and the charter school. If the property is |
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| 20 | 20 | | acquired with federal funds, this subsection may be preempted |
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| 21 | 21 | | wholly or partly by federal law. |
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| 22 | 22 | | (g) The property of an open-enrollment charter school used |
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| 23 | 23 | | for a purpose authorized by Subsection (a)(3) is considered to be |
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| 24 | 24 | | owned by the charter holder, regardless of the source of funds used |
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| 25 | 25 | | to acquire the property. The charter holder retains title to the |
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| 26 | 26 | | property, exercises complete control over the property, and is |
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| 27 | 27 | | entitled to all use and benefit from the property. Property |
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| 28 | 28 | | acquired, improved, or maintained using both state funds and other |
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| 29 | 29 | | funds is considered mixed public and private property, and is |
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| 30 | 30 | | subject to all requirements for public property under this section. |
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| 31 | 31 | | (h) A charter holder shall include an exhibit identifying |
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| 32 | 32 | | the capitalized assets of the charter holder and the ownership |
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| 33 | 33 | | interest of all parties for all capitalized real and personal |
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| 34 | 34 | | property held by the charter holder or acquired, improved, or |
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| 35 | 35 | | maintained by the charter holder during the term of the charter in |
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| 36 | 36 | | the annual audit report of the charter holder. |
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| 37 | 37 | | (i) The governing body and officers of the charter holder |
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| 38 | 38 | | shall ensure that: |
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| 39 | 39 | | (1) public property is properly and accurately |
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| 40 | 40 | | documented in the accounting and property records of the charter |
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| 41 | 41 | | holder and the open-enrollment charter school; and |
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| 42 | 42 | | (2) the accounting and property records of the charter |
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| 43 | 43 | | holder separately disclose the cost basis and accumulated |
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| 44 | 44 | | depreciation of all public property as determined by the |
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| 45 | 45 | | commissioner or designee, and all other property held, acquired, |
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| 46 | 46 | | improved, or maintained by the charter holder. |
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| 47 | 47 | | (j) If, after a due diligence review of the exhibits and |
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| 48 | 48 | | other disclosures in the annual audit report filed by the charter |
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| 49 | 49 | | holder, the commissioner determines that the exhibit identifying |
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| 50 | 50 | | capitalized assets contains errors, the commissioner may require a |
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| 51 | 51 | | charter holder to engage, at the charter holder's expense, an |
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| 52 | 52 | | independent audit firm for purposes of reviewing and confirming the |
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| 53 | 53 | | classification of real and personal property consistent with |
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| 54 | 54 | | applicable authoritative standards. |
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| 55 | 55 | | (k) Subject to the rights of any secured creditor or valid |
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| 56 | 56 | | lien holder and in accordance with Subsection (e), on revocation, |
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| 57 | 57 | | expiration, or surrender of the charter, dissolution of the charter |
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| 58 | 58 | | holder, or final loss of exempt status under Section 501(c)(3), |
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| 59 | 59 | | Internal Revenue Code of 1986, the charter holder shall: |
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| 60 | 60 | | (1) reimburse the state in a manner prescribed by the |
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| 61 | 61 | | commissioner for the current value of the public's ownership |
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| 62 | 62 | | interest in the capitalized assets disclosed in the exhibit |
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| 63 | 63 | | prepared under Subsection (h); |
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| 64 | 64 | | (2) transfer title to the state in a manner prescribed |
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| 65 | 65 | | by the commissioner and in accordance with the rules of the Internal |
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| 66 | 66 | | Revenue Service; or |
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| 67 | 67 | | (3) transfer title to another charter holder subject |
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| 68 | 68 | | to the consent and approval of the commissioner. |
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| 69 | 69 | | SECTION 2. This Act takes effect immediately if it receives |
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| 70 | 70 | | a vote of two-thirds of all the members elected to each house, as |
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| 71 | 71 | | provided by Section 39, Article III, Texas Constitution. If this |
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| 72 | 72 | | Act does not receive the vote necessary for immediate effect, this |
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| 73 | 73 | | Act takes effect September 1, 2015. |
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