88R1913 CJD-D
By: Shaheen H.B. No. 619
A BILL TO BE ENTITLED
AN ACT
relating to an insurance premium tax credit for contributions made
to certain educational assistance organizations.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle B, Title 3, Insurance Code, is amended
by adding Chapter 230 to read as follows:
CHAPTER 230. CREDIT AGAINST PREMIUM TAXES FOR CONTRIBUTIONS TO
CERTAIN EDUCATIONAL ASSISTANCE ORGANIZATIONS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 230.001. DEFINITIONS. In this chapter:
(1) "Designated contribution" means a contribution
for which an entity provides notice under Section 230.152(c).
(2) "Educational assistance organization" means an
organization that:
(A) has the ability according to the
organization's charter to award scholarships to or pay educational
expenses for eligible students in:
(i) public elementary or secondary schools
located in this state; or
(ii) nonpublic elementary or secondary
schools located in this state:
(a) that meet the requirements of
Section 230.101;
(b) at which a student may fulfill
this state's compulsory attendance requirements; and
(c) that are not in violation of the
federal Civil Rights Act of 1964 (42 U.S.C. Section 2000a et seq.);
and
(B) uses part of its annual revenue for the
purpose provided by Paragraph (A).
(3) "Eligible nonpublic school" means a school that
meets the requirements of Section 230.101.
(4) "Net savings" means any positive difference in a
state fiscal year between:
(A) the amount by which state spending on public
education for that year is reduced as a result of students receiving
scholarships and educational expense assistance from the certified
educational assistance organization under this chapter; and
(B) the amount by which state revenue derived
from Chapters 221 through 226 is reduced as a result of credits
under this chapter.
(5) "State premium tax liability" means any liability
incurred by an entity under Chapters 221 through 226.
Sec. 230.002. TREATMENT OF CERTAIN CONTRIBUTIONS AS PROGRAM
FUNDS. (a) In this chapter, "program funds" means money
contributed to the certified educational assistance organization
in a state fiscal year for which entities are granted credits under
Subchapter D.
(b) Except as provided by Subsection (d), the certified
educational assistance organization shall treat a designated
contribution as program funds until the date the comptroller
notifies the certified educational assistance organization that
the entity that made the designated contribution:
(1) failed to apply for a credit under Section 230.155
on or with the tax report covering the period in which the
designated contribution was made; or
(2) was denied a credit under Subchapter D for the
designated contribution.
(c) The comptroller shall promptly notify the certified
educational assistance organization of a condition described by
Subsection (b).
(d) If the comptroller expects that, for a state fiscal
year, the amount of designated contributions will exceed the amount
of credits available under this chapter, the comptroller may
establish a reserve amount for the state fiscal year equal to the
estimated amount of designated contributions that will qualify as
program funds. If the comptroller establishes a reserve amount for
a state fiscal year, the certified educational assistance
organization is only required to treat as program funds an amount of
designated contributions received in the state fiscal year equal to
the reserve amount for that year.
(e) The certified educational assistance organization shall
use designated contributions treated as program funds under this
section for any purpose authorized by Subchapter C for the
expenditure of program funds.
Sec. 230.003. RULES; PROCEDURES. (a) The comptroller
shall adopt rules and procedures to implement, administer, and
enforce this chapter.
(b) A rule adopted under Subsection (a) is binding on an
organization that bids for a contract to serve as the certified
educational assistance organization, an entity that applies for a
credit, and a state or local governmental entity, including a
political subdivision, as necessary to implement, administer, and
enforce this chapter.
SUBCHAPTER B. CERTIFIED EDUCATIONAL ASSISTANCE ORGANIZATION
Sec. 230.051. CERTIFIED EDUCATIONAL ASSISTANCE
ORGANIZATION; AWARD OF CONTRACT. (a) An organization may submit a
bid to the comptroller for a contract to serve as the certified
educational assistance organization during a bidding period
established by the comptroller.
(b) To be eligible for a contract awarded under this
section, an organization:
(1) must:
(A) be exempt from federal tax under Section
501(a) of the Internal Revenue Code of 1986 by being listed as an
exempt organization in Section 501(c)(3) of that code;
(B) be in good standing with the state;
(C) be located in the state;
(D) agree to allocate at least 90 percent of
program funds in the manner provided by Section 230.106;
(E) agree to award scholarships and assistance
for qualifying educational expenses to eligible students who
demonstrate the greatest financial and academic need;
(F) agree to provide each donor a receipt for
money contributed to the organization that includes the name of the
donor, the amount of the contribution, the information required by
Section 230.152(c), and any other information required by the
comptroller;
(G) demonstrate experience and technical
expertise in:
(i) accepting, processing, and tracking
applications for scholarships or educational expense assistance;
and
(ii) awarding scholarships to students in
primary or secondary schools;
(H) agree to be independently audited on an
annual basis and file the audit with the comptroller; and
(I) agree to disburse program funds within two
academic years of receipt; and
(2) may not:
(A) establish eligibility requirements, other
than the requirements under Section 230.102, for scholarships or
educational expense assistance paid from program funds;
(B) provide to a student a scholarship in an
annual amount that exceeds the amount provided under Section
230.104(a) or (b) unless the money used to provide the portion of
the scholarship in excess of that amount is not program funds; or
(C) provide to a student educational expense
assistance in excess of the amount provided under Section
230.104(c), unless the money used to provide the portion of the
assistance in excess of that amount is not program funds.
(c) The comptroller may contract with only one certified
educational assistance organization at any time. The comptroller
shall select a successful bidder from among the organizations that
submit a bid under Subsection (a) and meet the requirements of
Subsection (b) and shall award to that bidder a contract to serve as
the certified educational assistance organization. The
comptroller has broad discretion in awarding the certified
educational assistance organization contract.
(d) The comptroller shall notify all organizations that
submit a bid under Subsection (a) of the comptroller's selection
under Subsection (c).
(e) The comptroller shall attempt to maintain one certified
educational assistance organization at all times. The comptroller
shall establish a bidding period under Subsection (a) as soon as
practicable after the comptroller learns there is, or is likely to
be, a vacancy for the certified educational assistance
organization.
(f) The comptroller's selection under Subsection (c) is
final and is not appealable.
Sec. 230.052. TERMINATION OF CONTRACT. (a) A contract
between the comptroller and a certified educational assistance
organization entered into under Section 230.051 must include
provisions regarding termination of the contract that are
consistent with the requirements of this section.
(b) The comptroller shall terminate a contract under
Section 230.051 if the comptroller finds that the certified
educational assistance organization:
(1) is no longer eligible under Section 230.051; or
(2) intentionally and substantially violates this
chapter.
(c) The comptroller has broad discretion in determining
whether to terminate a contract under Subsection (b).
(d) The comptroller shall notify the certified educational
assistance organization in writing of the comptroller's decision to
terminate the organization's contract. The comptroller shall
include in the notice of termination the reasons for the proposed
termination.
(e) If the comptroller notifies the certified educational
assistance organization of the proposed termination of the
organization's contract, the organization may request in writing a
reconsideration of the proposed termination not later than the 10th
day after the date the notice under Subsection (d) is received. If
the organization does not request a reconsideration of the proposed
termination on or before that date, the termination is final.
(f) An organization that requests a reconsideration under
Subsection (e) may submit to the comptroller, not later than the
30th day after the date the request for reconsideration is
submitted, additional information and documents to support the
organization's request for reconsideration.
(g) The comptroller's reconsideration of a proposed
termination under this section is not a contested case under
Chapter 2001, Government Code. The comptroller's decision on a
request for reconsideration of a proposed termination is final and
is not appealable.
(h) Termination of a contract under this section does not
affect the validity of a credit relating to a designated
contribution made before the date of termination.
SUBCHAPTER C. SCHOLARSHIP AND EDUCATIONAL EXPENSE ASSISTANCE
PROGRAM
Sec. 230.101. ELIGIBILITY OF NONPUBLIC SCHOOLS. The
certified educational assistance organization may award
scholarships to or pay educational expenses for eligible students
enrolled in a nonpublic school if the nonpublic school executes a
notarized affidavit, with supporting documents, concerning the
school's qualification for scholarships and educational expense
assistance for eligible students who receive assistance from the
certified educational assistance organization, including evidence
of:
(1) accreditation by the Texas Education Agency or by
an organization recognized by the Texas Private School
Accreditation Commission;
(2) annual administration of a nationally
norm-referenced assessment instrument or the appropriate
assessment instrument required under Section 39.023, Education
Code;
(3) valid certificate of occupancy; and
(4) policy statements regarding:
(A) admissions;
(B) curriculum;
(C) safety;
(D) food service inspection; and
(E) student to teacher ratios.
Sec. 230.102. ELIGIBILITY OF STUDENTS. (a) A student is
eligible to apply to the certified educational assistance
organization for a scholarship or educational expense assistance
paid from program funds if the student was enrolled in a public
school during the entire preceding school year or is enrolling in
school in this state for the first time and the student:
(1) is in foster care;
(2) is in institutional care;
(3) has a parent who is on active duty in the military;
(4) resides in a household with income not greater
than 200 percent of the income guidelines necessary to qualify for
the national free or reduced-price lunch program established under
42 U.S.C. Section 1751 et seq.;
(5) is the sibling of a child who is eligible to apply
under this section;
(6) previously qualified to apply under this section;
or
(7) is in kindergarten through grade 12, is eligible
under Section 29.003, Education Code, to participate in a school
district's special education program, and has an individualized
education program under Section 29.005, Education Code.
(b) A student who establishes eligibility under Subsection
(a)(7) may continue to receive assistance under this chapter until
the earlier of the date the student graduates from high school or
the student's 22nd birthday.
(c) The certified educational assistance organization shall
award scholarships and educational expense assistance to eligible
students who apply in accordance with this chapter.
Sec. 230.103. NOTICE TO CERTAIN PARENTS. A school district
shall provide written notice of the availability of assistance
under this chapter to the parent of a student who is eligible to
apply for assistance under Section 230.102(a)(7). The notice must
inform the parent:
(1) that an eligible nonpublic school is not subject
to laws regarding the provision of education services in the same
manner as a public school;
(2) that a student with a disability attending an
eligible nonpublic school may not receive the services a student
with a disability attending a public school is entitled to receive
under federal and state law;
(3) of the rights provided under the Individuals with
Disabilities Education Act (20 U.S.C. Section 1400 et seq.),
including:
(A) an individualized education program;
(B) education services provided in the least
restrictive environment;
(C) instruction from certified teachers;
(D) due process hearings to ensure proper and
full implementation of an individualized education program;
(E) transition and planning services; and
(F) supplementary aids and services;
(4) of the rights provided under Subchapter A, Chapter
29, Education Code; and
(5) of any other rights provided under federal or
state law to a student with a disability who attends a public
school.
Sec. 230.104. LIMIT ON AMOUNT OF SCHOLARSHIP OR EDUCATIONAL
EXPENSE ASSISTANCE. (a) Except as provided by Subsection (b), the
maximum scholarship amount the certified educational assistance
organization may award to a student under this chapter paid from
program funds may not exceed 75 percent of the state average
maintenance and operations expenditures per student in average
daily attendance for the preceding state fiscal year.
(b) The maximum scholarship amount under Subsection (a) may
not exceed 50 percent of the state average maintenance and
operations expenditures per student in average daily attendance for
the preceding state fiscal year if the student receiving the
scholarship resides in a household with income greater than 175
percent of the income guidelines necessary to qualify for the
national free or reduced-price lunch program established under 42
U.S.C. Section 1751 et seq. This subsection does not apply to a
student who is eligible for assistance under Section 230.102(a)(7)
or (b).
(c) The maximum educational expense assistance the
certified educational assistance organization may award to a
student under this chapter paid from program funds may not exceed
$750 for the 2024 state fiscal year, increased by five percent each
subsequent year.
Sec. 230.105. QUALIFIED EDUCATIONAL EXPENSES. (a) Except
as provided by Subsection (c), the scholarship amount described by
Section 230.104(a) or (b) may be used only to pay for the following
qualified educational expenses incurred by the student awarded the
scholarship who attends an eligible nonpublic school:
(1) tuition;
(2) transportation;
(3) textbooks;
(4) tutoring;
(5) academic after-school programs;
(6) instructional supplies required by the school;
(7) school or lab fees;
(8) before-school or after-school child care; and
(9) uniforms.
(b) Except as provided by Subsection (c), the educational
expense assistance amount described by Section 230.104(c) may be
used only to pay for the following qualified educational expenses
incurred by the student awarded the educational expense assistance:
(1) facility fees;
(2) transportation expenses, including the cost to
transfer from one public school to another;
(3) textbooks;
(4) tutoring;
(5) academic after-school programs;
(6) instructional supplies required by the school;
(7) school or lab fees; and
(8) before-school or after-school child care.
(c) In addition to the expenses described by Subsections (a)
and (b), the scholarship or educational expense assistance amount
awarded to a student eligible under Section 230.102(a)(7) or (b)
may be used to pay for the following qualified educational
expenses:
(1) educational therapies from a licensed or
accredited practitioner or provider;
(2) a licensed or accredited paraprofessional or
educational aide;
(3) tuition for vocational and life skills education;
and
(4) associated services that include educational and
psychological evaluations, assistive technology rentals, and
translation services.
Sec. 230.106. ALLOCATION OF PROGRAM FUNDS. Of the program
funds required to be allocated as provided by Section
230.051(b)(1)(D), the certified educational assistance
organization shall use:
(1) at least 80 percent to award scholarships
described by Sections 230.104(a) and (b); and
(2) not more than 20 percent to award educational
expense assistance as described by Section 230.104(c).
Sec. 230.107. REPORT OF NET SAVINGS TO PUBLIC EDUCATION.
Not later than December 31 of each even-numbered year, the
comptroller shall determine the amount of net savings for the
previous state fiscal biennium and make available to the public a
report of that amount of savings.
SUBCHAPTER D. CREDIT
Sec. 230.151. CREDIT. An entity may apply for a credit
against the entity's state premium tax liability in the amount and
under the conditions provided by this chapter. The comptroller
shall award credits as provided by Section 230.155.
Sec. 230.152. CONTRIBUTIONS ELIGIBLE FOR CREDIT. (a) An
entity may apply for a credit under this chapter only for designated
contributions made by the entity.
(b) An entity may not apply for a credit under this chapter
for a designated contribution made to the certified educational
assistance organization if:
(1) the entity requires that the contribution benefit
a particular person or school; or
(2) the contribution is directed to provide a
scholarship or educational expense assistance for an entity
employee or for a spouse or dependent of an entity employee.
(c) An entity shall provide written notice to the certified
educational assistance organization when the entity makes a
contribution if the entity may apply for a credit under this chapter
for the contribution. An entity may not apply for a credit for the
contribution unless the entity provides the notice at the time the
contribution is made. The certified educational assistance
organization shall indicate on the receipt provided under Section
230.051(b)(1)(F) that the entity provided notice under this
subsection.
Sec. 230.153. AMOUNTS; LIMITATION ON TOTAL CREDITS. (a)
Subject to Subsections (b) and (c), the amount of an entity's credit
is equal to the lesser of:
(1) the amount of designated contributions made to the
certified educational assistance organization during the period
covered by the tax report; or
(2) 50 percent of the entity's state premium tax
liability for the report.
(b) For the 2024 state fiscal year, the total amount of
credits that may be awarded under this chapter may not exceed $100
million. For each subsequent state fiscal year, the total amount of
credits that may be awarded is an amount equal to 110 percent of the
total amount of credits that may be awarded in the previous state
fiscal year.
(c) The comptroller by rule shall prescribe procedures by
which the comptroller may allocate credits under this chapter. The
procedures must provide that:
(1) credits are allocated first to entities that
received preliminary approval under Section 230.154 and that apply
under Section 230.155; and
(2) any credits remaining after the allocation under
Subdivision (1) are allocated to entities that apply under Section
230.155 on a first-come, first-served basis, based on the date the
designated contribution was initially made.
(d) The comptroller may require an entity to notify the
comptroller of the amount the entity intends or expects to apply for
under this chapter before the beginning of a state fiscal year or at
any other time required by the comptroller.
Sec. 230.154. PRELIMINARY APPROVAL FOR CREDIT. (a) Before
making a contribution to the certified educational assistance
organization, an entity may apply to the comptroller for
preliminary approval for a credit under this chapter for the
contribution.
(b) An entity must apply for preliminary approval on a form
provided by the comptroller that includes the amount the entity
expects to contribute and any other information the comptroller
requires.
(c) The comptroller shall grant preliminary approval for
credits under this chapter on a first-come, first-served basis,
based on the date the comptroller receives the application for
preliminary approval.
(d) The comptroller shall grant preliminary approval for a
credit under this chapter for a state fiscal year if the sum of the
amount of the credit and the total amount of all other credits
preliminarily approved for that state fiscal year does not exceed
the amount provided by Section 230.153(b).
(e) Final award of a credit preliminarily approved under
this section remains subject to the limitations under Section
230.153 and all other requirements of this chapter.
Sec. 230.155. APPLICATION FOR CREDIT. (a) An entity must
apply for a credit under this chapter on or with the tax report
covering the period in which the designated contribution was made.
(b) The comptroller shall adopt a form for the application
for the credit. An entity must use this form in applying for the
credit and must include with the application form each receipt
provided under Section 230.051(b)(1)(F) that includes the
information required by Section 230.152(c).
(c) Subject to Section 230.153(c), the comptroller may
award a credit to an entity that applies for the credit under
Subsection (a) if the entity is eligible for the credit and the
credit is available under Section 230.153(b). The comptroller has
broad discretion in determining whether to grant or deny an
application for a credit.
(d) The comptroller shall notify an entity in writing of the
comptroller's decision to grant or deny the application under
Subsection (a). If the comptroller denies an entity's application,
the comptroller shall include in the notice of denial the reasons
for the comptroller's decision.
(e) If the comptroller denies an entity's application under
Subsection (a), the entity may request in writing a reconsideration
of the application not later than the 10th day after the date the
notice under Subsection (d) is received. If the entity does not
request a reconsideration of the application on or before that
date, the comptroller's decision is final.
(f) An entity that requests a reconsideration under
Subsection (e) may submit to the comptroller, not later than the
30th day after the date the request for reconsideration is
submitted, additional information and documents to support the
entity's request for reconsideration.
(g) The comptroller's reconsideration of an application
under this section is not a contested case under Chapter 2001,
Government Code. The comptroller's decision on a request for
reconsideration of an application is final and is not appealable.
(h) This section does not create a cause of action to
contest a decision of the comptroller to deny an application for a
credit under this chapter.
Sec. 230.156. ASSIGNMENT PROHIBITED; EXCEPTION. An entity
may not convey, assign, or transfer the credit allowed under this
chapter to another entity unless all of the assets of the entity are
conveyed, assigned, or transferred in the same transaction.
Sec. 230.157. NOTICE OF AVAILABILITY OF CREDIT. The
comptroller shall provide notice of the availability of the credit
under this chapter on the comptroller's Internet website, in the
instructions for insurance premium tax report forms, and in any
notice sent to an entity concerning the requirement to file an
insurance premium tax report.
SECTION 2. (a) The constitutionality and other validity
under the state or federal constitution of all or any part of
Chapter 230, Insurance Code, as added by this Act, may be determined
in an action for declaratory judgment in a district court in Travis
County under Chapter 37, Civil Practice and Remedies Code, except
that 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. This
section does not authorize a taxpayer suit to contest the denial of
a credit by the comptroller of public accounts.
(b) An appeal of a declaratory judgment or order, however
characterized, of a district court, including an appeal of the
judgment of an appellate court, holding or otherwise determining
that all or any part of Chapter 230, Insurance Code, as added by
this Act, is constitutional or unconstitutional, or otherwise valid
or invalid, under the state or federal constitution is an
accelerated appeal.
(c) If the judgment or order is interlocutory, an
interlocutory appeal may be taken from the judgment or order and is
an accelerated appeal.
(d) A district court in Travis County may grant or deny 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 Chapter 230,
Insurance Code, as added by this Act.
(e) There is a direct appeal to the Texas Supreme Court from
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 Chapter 230,
Insurance Code, as added by this Act.
(f) The direct appeal is an accelerated appeal.
(g) This section exercises the authority granted by Section
3-b, Article V, Texas Constitution.
(h) 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; and
(2) the applicant will suffer a probable injury that
is imminent and irreparable, and that the applicant has no other
adequate legal remedy.
(i) 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), 26.1(b), 28.1, 28.3, 32.1(g), 37.3(a)(1),
38.6(a) and (b), 40.1(b), and 49.4.
SECTION 3. An entity may apply for a credit under Chapter
230, Insurance Code, as added by this Act, only for an expenditure
made on or after the effective date of this Act.
SECTION 4. Not later than February 15, 2024, the
comptroller of public accounts shall adopt rules as provided by
Section 230.003(a), Insurance Code, as added by this Act.
SECTION 5. The comptroller of public accounts shall make
the initial determination of net savings and report regarding that
savings as required by Section 230.107, Insurance Code, as added by
this Act, not later than December 31, 2026, based on the state
fiscal biennium ending August 31, 2025.
SECTION 6. This Act applies only to a report originally due
on or after the effective date of this Act.
SECTION 7. This Act takes effect January 1, 2024.