Texas 2025 - 89th Regular

Texas House Bill HB1697 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	89R6047 BCH-F
2	2	By: Canales H.B. No. 1697
3	3
4	4
5	5
6	6
7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to the management, operation, and contract authority of
10	10	open-enrollment charter schools.
11	11	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
12	12	SECTION 1. Section 12.1054(a), Education Code, is amended
13	13	to read as follows:
14	14	(a) A member of the governing body of a charter holder, a
15	15	member of the governing body of an open-enrollment charter school,
16	16	or an officer of an open-enrollment charter school is considered to
17	17	be a local public official for purposes of Chapter 171, Local
18	18	Government Code. For purposes of that chapter,[:
19	19	[(1)] a member of the governing body of a charter
20	20	holder or a member of the governing body or officer of an
21	21	open-enrollment charter school is considered to have a substantial
22	22	interest in a business entity if a person related to the member or
23	23	officer in the third degree by consanguinity or affinity, as
24	24	determined under Chapter 573, Government Code, has a substantial
25	25	interest in the business entity under Section 171.002, Local
26	26	Government Code[;
27	27	[(2) notwithstanding any provision of Section
28	28	12.1054(1), an employee of an open-enrollment charter school rated
29	29	acceptable or higher under Section 39.054 for at least two of the
30	30	preceding three school years may serve as a member of the governing
31	31	body of the charter holder of the governing body of the school if
32	32	the employees do not constitute a quorum of the governing body or
33	33	any committee of the governing body; however, all members shall
34	34	comply with the requirements of Sections 171.003-171.007, Local
35	35	Government Code].
36	36	SECTION 2. Subchapter D, Chapter 12, Education Code, is
37	37	amended by adding Section 12.1169 to read as follows:
38	38	Sec. 12.1169. TRANSACTIONS INVOLVING RELATED PARTY OF
39	39	MANAGEMENT COMPANY. (a) The commissioner shall adopt a rule
40	40	defining "related party of a management company" for purposes of
41	41	this subchapter. The definition of "related party of a management
42	42	company" must include:
43	43	(1) a party with a current or former board member,
44	44	administrator, or officer who is:
45	45	(A) a board member, administrator, or officer of
46	46	a management company that provides management services for an
47	47	open-enrollment charter school; or
48	48	(B) related within the third degree of
49	49	consanguinity or affinity, as determined under Chapter 573,
50	50	Government Code, to a board member, administrator, or officer of a
51	51	management company that provides management services for an
52	52	open-enrollment charter school;
53	53	(2) any organizations, joint ventures, and jointly
54	54	governed organizations related to a management company that
55	55	provides management services for an open-enrollment charter
56	56	school;
57	57	(3) any board members, administrators, or officers of
58	58	a management company that provides services for an open-enrollment
59	59	charter school, including a person related to a board member,
60	60	administrator, or officer of the management company within the
61	61	third degree of consanguinity or affinity, as determined under
62	62	Chapter 573, Government Code; and
63	63	(4) any other disqualified person, as that term is
64	64	defined by 26 U.S.C. Section 4958(f).
65	65	(b) For purposes of Subsection (a)(1), a person is a former
66	66	board member, administrator, or officer if the person served in
67	67	that capacity within one year of the date on which a financial
68	68	transaction between a management company and a related party of a
69	69	management company occurred.
70	70	SECTION 3. Sections 12.120(a) and (b), Education Code, are
71	71	amended to read as follows:
72	72	(a) A person may not serve as a member of the governing body
73	73	of a charter holder, as a member of the governing body of an
74	74	open-enrollment charter school, or as an officer or employee of an
75	75	open-enrollment charter school if the person:
76	76	(1) has been convicted of:
77	77	(A) a felony; or
78	78	(B) a misdemeanor involving moral turpitude;
79	79	(2) has been convicted of:
80	80	(A) an offense listed in Section 37.007(a) or[;
81	81	[(3) has been convicted of an offense listed] in
82	82	Article 62.001(5), Code of Criminal Procedure; or
83	83	(B) an offense under the laws of another state or
84	84	federal law that contains elements that are substantially similar
85	85	to the elements of an offense listed in Section 37.007(a) or in
86	86	Article 62.001(5), Code of Criminal Procedure; or
87	87	(3) is being paid directly or indirectly by or [(4)]
88	88	has a substantial interest in a management company.
89	89	(b) For purposes of Subsection (a)(3) [(a)(4)], a person has
90	90	a substantial interest in a management company if the person:
91	91	(1) has a controlling interest in the management
92	92	company;
93	93	(2) owns more than 10 percent of the voting interest in
94	94	the management company;
95	95	(3) owns more than $25,000 of the fair market value of
96	96	the management company;
97	97	(4) has a direct or indirect participating interest by
98	98	shares, stock, or otherwise, regardless of whether voting rights
99	99	are included, in more than 10 percent of the profits, proceeds, or
100	100	capital gains of the management company;
101	101	(5) is a member of the board of directors or other
102	102	governing body of the management company;
103	103	(6) serves as an [elected] officer of the management
104	104	company; [or]
105	105	(7) is an employee of the management company;
106	106	(8) is an officer or employee of a contractor of the
107	107	management company; or
108	108	(9) is an officer or employee of a related party of a
109	109	management company, as defined by commissioner rule adopted under
110	110	Section 12.1169.
111	111	SECTION 4. Section 12.1202, Education Code, is amended to
112	112	read as follows:
113	113	Sec. 12.1202. REQUIREMENT FOR [MAJORITY OF] MEMBERS OF
114	114	GOVERNING BODY. (a) In this section, "qualified voter" has the
115	115	meaning assigned by Section 11.002, Election Code.
116	116	(b) A person must be a qualified voter to serve as a member
117	117	[majority of the members] of the governing body of an
118	118	open-enrollment charter school or the governing body of a charter
119	119	holder [must be qualified voters].
120	120	SECTION 5. Section 12.125, Education Code, is amended to
121	121	read as follows:
122	122	Sec. 12.125. CONTRACT FOR MANAGEMENT SERVICES; PUBLIC
123	123	INFORMATION. (a) Any contract, including a contract renewal,
124	124	between an open-enrollment charter school and a management company
125	125	proposing to provide management services to the school must require
126	126	the management company to maintain all records related to the
127	127	management services separately from any other records of the
128	128	management company.
129	129	(b) A contract or proposed contract for management services
130	130	and any record related to the management services is public
131	131	information under Chapter 552, Government Code, and may not be
132	132	excepted from required disclosure under Subchapter C of that
133	133	chapter.
134	134	(c) A member of the governing body of a charter holder, a
135	135	member of the governing body of an open-enrollment charter school,
136	136	or an officer or employee of an open-enrollment charter school may
137	137	not accept a direct or indirect payment from a management company
138	138	under any contract or arrangement.
139	139	(d) A contract for management services must include a
140	140	provision affirming that the management company is not making any
141	141	direct or indirect payments to a member of the governing body of the
142	142	charter holder, a member of the governing body of the
143	143	open-enrollment charter school, or an officer or employee of the
144	144	open-enrollment charter school.
145	145	(e) A contract entered into or an arrangement made in
146	146	violation of Subsection (c) is void as against public policy and
147	147	subject to applicable commissioner action under Section 12.126, and
148	148	no fees may be paid to any person under the contract or under any
149	149	theory of recovery for work performed in connection with a void
150	150	contract.
151	151	SECTION 6. Subchapter D, Chapter 12, Education Code, is
152	152	amended by adding Section 12.1251 to read as follows:
153	153	Sec. 12.1251. FINANCIAL BENEFIT FROM MANAGEMENT COMPANY
154	154	PROHIBITED. A superintendent or administrator serving as
155	155	educational leader or chief executive officer of an open-enrollment
156	156	charter school may not receive any financial benefit for personal
157	157	services performed by the superintendent or administrator serving
158	158	as educational leader or chief executive officer for a management
159	159	company or business entity that conducts or solicits business with
160	160	the school. For purposes of this section, the receipt of
161	161	reimbursement for a reasonable expense is not considered a
162	162	financial benefit.
163	163	SECTION 7. Section 2252.908(a)(2), Government Code, is
164	164	amended to read as follows:
165	165	(2) "Governmental entity" means a municipality,
166	166	county, public school district, open-enrollment charter school
167	167	established under Subchapter D, Chapter 12, Education Code, or
168	168	special-purpose district or authority.
169	169	SECTION 8. (a) Except as provided by Subsection (b) of this
170	170	section, this Act applies beginning with the 2025-2026 school year.
171	171	(b) Section 2252.908, Government Code, as amended by this
172	172	Act, applies only to a contract subject to that section that is
173	173	entered into, amended, or renewed on or after the effective date of
174	174	this Act.
175	175	SECTION 9. This Act takes effect immediately if it receives
176	176	a vote of two-thirds of all the members elected to each house, as
177	177	provided by Section 39, Article III, Texas Constitution. If this
178	178	Act does not receive the vote necessary for immediate effect, this
179	179	Act takes effect September 1, 2025.