Texas 2023 - 88th Regular

Texas House Bill HB531 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New	Differences
1	1	88R681 MLH-F
2	2	By: Bailes H.B. No. 531
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the management and operation of open-enrollment charter
8	8	schools, including certain contracts involving management and
9	9	operation.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. Section 12.1012, Education Code, is amended by
12	12	adding Subdivision (5-a) to read as follows:
13	13	(5-a) "Nonresident management company" means a
14	14	management company whose:
15	15	(A) principal place of business is in another
16	16	state; or
17	17	(B) parent company, governing entity, or
18	18	majority owner has its principal place of business in another
19	19	state.
20	20	SECTION 2. Section 12.1053(b), Education Code, is amended
21	21	to read as follows:
22	22	(b) An open-enrollment charter school is considered to be:
23	23	(1) a governmental entity for purposes of:
24	24	(A) Subchapters A and [Subchapter] D, Chapter
25	25	2252, Government Code; and
26	26	(B) Subchapter B, Chapter 271, Local Government
27	27	Code;
28	28	(2) a political subdivision for purposes of Subchapter
29	29	A, Chapter 2254, Government Code; and
30	30	(3) a local government for purposes of Sections
31	31	2256.009-2256.016, Government Code.
32	32	SECTION 3. Section 12.107, Education Code, is amended to
33	33	read as follows:
34	34	Sec. 12.107. STATUS AND USE OF FUNDS; DEPOSITORY. (a)
35	35	Funds received under Section 12.106 after September 1, 2001, by a
36	36	charter holder:
37	37	(1) are considered to be public funds for all purposes
38	38	under state law;
39	39	(2) are held in trust by the charter holder for the
40	40	benefit of the students of the open-enrollment charter school;
41	41	(3) may be used only for a purpose for which a school
42	42	may use local funds under Section 45.105(c);
43	43	(4) pending their use, must be deposited into the
44	44	charter holder's depository, selected under Subsection (a-1) [a
45	45	bank, as defined by Section 45.201, with which the charter holder
46	46	has entered into a depository contract]; and
47	47	(5) may not:
48	48	(A) be pledged or used to secure loans or bonds
49	49	for any other organization, including a non-charter operation or
50	50	out-of-state operation conducted by the charter holder or a related
51	51	party, as defined by commissioner rule adopted under Section
52	52	12.1166; or
53	53	(B) be used to support an operation or activity
54	54	not related to the educational activities of the charter holder.
55	55	(a-1) A charter holder may select as the charter holder's
56	56	depository for the deposit of state funds received under Section
57	57	12.106 only a bank, as defined by Section 45.201, that is located in
58	58	this state.
59	59	(b) A charter holder shall deliver to the agency a copy of
60	60	the depository contract between the charter holder and the
61	61	depository selected under Subsection (a-1) [any bank] into which
62	62	state funds are to be deposited.
63	63	SECTION 4. Section 12.1168(b), Education Code, is amended
64	64	to read as follows:
65	65	(b) A financial report filed under Section 44.008 by an
66	66	open-enrollment charter school must separately disclose:
67	67	(1) all financial transactions between the
68	68	open-enrollment charter school and any related party, as defined by
69	69	commissioner rule adopted under Section 12.1166, separately
70	70	stating the principal, interest, and lease payments; [and]
71	71	(2) the total compensation and benefits provided by
72	72	the school and any related party, as defined by commissioner rule
73	73	adopted under Section 12.1166, for each member of the governing
74	74	body and each officer and administrator of the school and the
75	75	related party;
76	76	(3) the total amount of financial transactions:
77	77	(A) between the school and a management company;
78	78	and
79	79	(B) between the school and any related party of a
80	80	management company, as defined by commissioner rule adopted under
81	81	Section 12.1169; and
82	82	(4) the total compensation and benefits provided by
83	83	the school or a related party of a management company described by
84	84	Subdivision (3)(B) for each nonresident person who provides
85	85	management services through a management company under a contract
86	86	with the school.
87	87	SECTION 5. Subchapter D, Chapter 12, Education Code, is
88	88	amended by adding Section 12.1169 to read as follows:
89	89	Sec. 12.1169. TRANSACTIONS INVOLVING RELATED PARTY OF A
90	90	MANAGEMENT COMPANY. (a) The commissioner shall adopt a rule
91	91	defining "related party of a management company" for purposes of
92	92	this subchapter. The definition of "related party of a management
93	93	company" must include:
94	94	(1) a party with a current or former board member,
95	95	administrator, or officer who is:
96	96	(A) a board member, administrator, or officer of
97	97	a management company that provides management services for an
98	98	open-enrollment charter school; or
99	99	(B) related within the third degree of
100	100	consanguinity or affinity, as determined under Chapter 573,
101	101	Government Code, to a board member, administrator, or officer of a
102	102	management company that provides management services for an
103	103	open-enrollment charter school;
104	104	(2) any organizations, joint ventures, and jointly
105	105	governed organizations related to a management company that
106	106	provides management services for an open-enrollment charter
107	107	school;
108	108	(3) any board members, administrators, or officers of
109	109	a management company that provides services for an open-enrollment
110	110	charter school, including a person related to a board member,
111	111	administrator, or officer of the management company within the
112	112	third degree of consanguinity or affinity, as determined under
113	113	Chapter 573, Government Code; and
114	114	(4) any other disqualified person, as that term is
115	115	defined by 26 U.S.C. Section 4958(f).
116	116	(b) For purposes of Subsection (a)(1), a person is a former
117	117	board member, administrator, or officer if the person served in
118	118	that capacity within one year of the date on which a financial
119	119	transaction between a management company and a related party of a
120	120	management company occurred.
121	121	SECTION 6. Sections 12.120(a) and (b), Education Code, are
122	122	amended to read as follows:
123	123	(a) A person may not serve as a member of the governing body
124	124	of a charter holder, as a member of the governing body of an
125	125	open-enrollment charter school, or as an officer or employee of an
126	126	open-enrollment charter school if the person:
127	127	(1) has been convicted of:
128	128	(A) a felony; or
129	129	(B) a misdemeanor involving moral turpitude;
130	130	(2) has been convicted of:
131	131	(A) an offense listed in Section 37.007(a) or[;
132	132	[(3) has been convicted of an offense listed] in
133	133	Article 62.001(5), Code of Criminal Procedure; or
134	134	(B) an offense under the laws of another state or
135	135	federal law that contains elements that are substantially similar
136	136	to the elements of an offense listed in Section 37.007(a) or in
137	137	Article 62.001(5), Code of Criminal Procedure; or
138	138	(3) [(4)] has a substantial interest in a management
139	139	company.
140	140	(b) For purposes of Subsection (a)(3) [(a)(4)], a person has
141	141	a substantial interest in a management company if the person:
142	142	(1) has a controlling interest in the management
143	143	company;
144	144	(2) owns more than 10 percent of the voting interest in
145	145	the management company;
146	146	(3) owns more than $25,000 of the fair market value of
147	147	the management company;
148	148	(4) has a direct or indirect participating interest by
149	149	shares, stock, or otherwise, regardless of whether voting rights
150	150	are included, in more than 10 percent of the profits, proceeds, or
151	151	capital gains of the management company;
152	152	(5) is a member of the board of directors or other
153	153	governing body of the management company;
154	154	(6) serves as an [elected] officer of the management
155	155	company; [or]
156	156	(7) is an employee of the management company;
157	157	(8) is an officer or employee of a contractor of the
158	158	management company; or
159	159	(9) is an officer or employee of a related party of a
160	160	management company, as defined by commissioner rule adopted under
161	161	Section 12.1169.
162	162	SECTION 7. Section 12.1202, Education Code, is amended to
163	163	read as follows:
164	164	Sec. 12.1202. REQUIREMENT FOR [MAJORITY OF] MEMBERS OF
165	165	GOVERNING BODY. (a) In this section, "qualified voter" has the
166	166	meaning assigned by Section 11.002, Election Code.
167	167	(b) A person must be a qualified voter to serve as a member
168	168	[majority of the members] of the governing body of an
169	169	open-enrollment charter school or the governing body of a charter
170	170	holder [must be qualified voters].
171	171	SECTION 8. Section 12.125, Education Code, is amended to
172	172	read as follows:
173	173	Sec. 12.125. CONTRACT FOR MANAGEMENT SERVICES; PUBLIC
174	174	INFORMATION. (a) Any contract, including a contract renewal,
175	175	between an open-enrollment charter school and a management company
176	176	proposing to provide management services to the school must require
177	177	the management company to maintain all records related to the
178	178	management services separately from any other records of the
179	179	management company.
180	180	(b) A contract for management services is public
181	181	information under Chapter 552, Government Code, and may not be
182	182	excepted from required disclosure under Subchapter C of that
183	183	chapter.
184	184	SECTION 9. Subchapter D, Chapter 12, Education Code, is
185	185	amended by adding Section 12.1251 to read as follows:
186	186	Sec. 12.1251. REQUIRED REPORTING ON CONTRACTS FOR
187	187	MANAGEMENT SERVICES WITH NONRESIDENT MANAGEMENT COMPANIES. (a) An
188	188	open-enrollment charter school that contracts with a nonresident
189	189	management company for management services in an amount that
190	190	exceeds the lesser of $1 million per year or five percent of the
191	191	school's entitlement under Section 12.106 shall, not later than
192	192	October 1 of each year, post on the school's Internet website and
193	193	submit to the agency and the Legislative Budget Board:
194	194	(1) the total amount the school spent during the
195	195	preceding year for management services provided by a nonresident
196	196	management company;
197	197	(2) a copy of each contract for management services
198	198	provided by a nonresident management company and information
199	199	regarding any amendment, modification, renewal, or extension of
200	200	that contract; and
201	201	(3) any contract between the school and a nonresident
202	202	related party of a management company, as defined by commissioner
203	203	rule adopted under Section 12.1169, that provides management
204	204	services to the school.
205	205	(b) Not later than December 1 of each year, the agency shall
206	206	submit to the legislature a report on the total amount of state
207	207	money spent by an open-enrollment charter school on:
208	208	(1) management services provided by a nonresident
209	209	management company; and
210	210	(2) any services provided by a nonresident related
211	211	party of a management company, as defined by commissioner rule
212	212	adopted under Section 12.1169, that provides management services to
213	213	the school.
214	214	SECTION 10. Section 12.1168(a), Education Code, is
215	215	repealed.
216	216	SECTION 11. (a) Except as provided by Subsection (b) of
217	217	this section, this Act applies beginning with the 2023-2024 school
218	218	year.
219	219	(b) Sections 12.1053 and 12.107, Education Code, as amended
220	220	by this Act, apply only to a contract entered into or renewed on or
221	221	after September 1, 2023.
222	222	SECTION 12. This Act takes effect immediately if it
223	223	receives a vote of two-thirds of all the members elected to each
224	224	house, as provided by Section 39, Article III, Texas Constitution.
225	225	If this Act does not receive the vote necessary for immediate
226	226	effect, this Act takes effect September 1, 2023.