89R4056 KJE-F
By: Shaheen H.B. No. 612
A BILL TO BE ENTITLED
AN ACT
relating to the establishment of an education savings account
program, an insurance premium tax credit for contributions made for
purposes of that program, and the award of attorney's fees in
actions challenging certain educational choice laws.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The legislature finds that:
(1) parents should be empowered to direct their
children's education;
(2) there is not one best educational option for all
children in this state;
(3) children belong to their parents, not to the
government;
(4) the best education for children in this state is
one directed by their parents, with all educational options made
available and accessible through a program in which money follows
each child to the educational option that best meets the child's
unique educational needs; and
(5) in Espinoza v. Montana Department of Revenue, 591
U.S. 464 (2020), and Carson v. Makin, 596 U.S. 767 (2022), the
United States Supreme Court held that state prohibitions on the use
of generally available state tuition assistance programs for
children to attend religious schools violate the Free Exercise
Clause of the First Amendment to the United States Constitution.
SECTION 2. Chapter 30, Civil Practice and Remedies Code, is
amended by adding Section 30.024 to read as follows:
Sec. 30.024. AWARD OF ATTORNEY'S FEES IN ACTIONS
CHALLENGING CERTAIN EDUCATIONAL CHOICE LAWS. (a) Notwithstanding
any other law, any person, including an entity, attorney, or law
firm, who seeks declaratory or injunctive relief to prevent this
state or a political subdivision, governmental entity, public
official, or other person in this state from enforcing any statute,
ordinance, rule, regulation, or other type of law that empowers
parents to direct their children's education, including an
educational choice program in which money follows a child to an
educational option selected by the child's parent or an insurance
premium tax credit program used in whole or in part to pay for such
an educational choice program, in any state or federal court, or
that represents any litigant seeking such relief in any state or
federal court, is jointly and severally liable to pay the costs and
attorney's fees of the prevailing party.
(b) For purposes of this section, a party is considered a
prevailing party if a state or federal court:
(1) dismisses any claim or cause of action brought
against the party that seeks the declaratory or injunctive relief
described by Subsection (a), regardless of the reason for the
dismissal; or
(2) enters judgment in the party's favor on any such
claim or cause of action.
(c) Regardless of whether a prevailing party sought to
recover costs or attorney's fees in the underlying action, a
prevailing party under this section may bring a civil action to
recover costs and attorney's fees against a person, including an
entity, attorney, or law firm, that sought declaratory or
injunctive relief described by Subsection (a) not later than the
third anniversary of the date on which, as applicable:
(1) the dismissal or judgment described by Subsection
(b) becomes final on the conclusion of appellate review; or
(2) the time for seeking appellate review expires.
(d) It is not a defense to an action brought under
Subsection (c) that:
(1) a prevailing party under this section failed to
seek recovery of costs or attorney's fees in the underlying action;
(2) the court in the underlying action declined to
recognize or enforce the requirements of this section; or
(3) the court in the underlying action held that any
provisions of this section are invalid, unconstitutional, or
preempted by federal law, notwithstanding the doctrines of issue or
claim preclusion.
SECTION 3. 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 the educational assistance organization certified under
Section 29.355 to administer 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) "Fund" means the education savings account program
fund.
(5) "Institution of higher education" and "private or
independent institution of higher education" have the meanings
assigned by Section 61.003.
(6) "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.
(7) "Program" means the education savings account
program established under this subchapter.
(8) "Program participant" means a child and a parent
of a child enrolled in the program.
Sec. 29.352. PURPOSES. The purposes of the education
savings account program are to provide school-aged children with
additional educational options in order to achieve a general
diffusion of knowledge and to empower parents to direct their
children's education.
Sec. 29.353. ESTABLISHMENT OF PROGRAM. The comptroller
shall establish the education savings account program to provide
funding for approved education-related expenses of eligible
children admitted into the program.
Sec. 29.354. EDUCATION SAVINGS ACCOUNT PROGRAM FUND. (a)
The education savings account 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) gifts, grants, and donations received under
Section 29.371;
(4) contributions to the fund for which an entity
receives a credit against the entity's state premium tax liability
under Chapter 230, Insurance Code; and
(5) any other money available for purposes of the
program.
(c) Money in the fund may be appropriated only to the
comptroller for purposes of making payments to program participants
and administering the program under this subchapter.
Sec. 29.355. 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 the duties and
functions required of a certified educational assistance
organization under this subchapter as provided by the
organization's charter;
(2) be exempt from federal taxation 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;
(3) be in good standing with the state; and
(4) be able to administer the program, including the
ability to:
(A) accept, process, and track applications for
the program; and
(B) verify that program funding is used only for
approved education-related expenses.
(c) The comptroller shall certify at least one but not more
than three educational assistance organizations to assist in
administering the program, including by verifying:
(1) a child's eligibility for the program; and
(2) the use of funds in a program participant's account
only for purposes approved under Section 29.360.
Sec. 29.356. ELIGIBLE CHILD. (a) A child is eligible to
participate in the program if the child is eligible to attend a
public school under Section 25.001 and:
(1) attended a public school during the entire
preceding school year;
(2) is entering kindergarten for the first time; or
(3) participated in the program during the preceding
school year.
(b) Notwithstanding Subsection (a), a child who is eligible
to attend a public school under Section 25.001 is eligible to
participate in the program if the comptroller determines that
sufficient funding is available for the first year of the child's
participation in the program from money in the fund.
(c) A child who establishes eligibility under this section
may participate in the program until the earliest of the following
dates:
(1) the date on which the child graduates from high
school or obtains a high school equivalency certificate;
(2) the date on which the child is no longer eligible
to attend a public school under Section 25.001;
(3) the date on which the child enrolls in a public
school, including an open-enrollment charter school; or
(4) the date on which the child is declared ineligible
for the program by the comptroller under this subchapter.
Sec. 29.357. APPLICATION TO PROGRAM. (a) A parent of an
eligible child may apply to a certified educational assistance
organization to enroll the child in the program for the following
school year. The parent must provide any information requested by
the organization for purposes of verifying the child's eligibility
for the program.
(b) Each certified educational assistance organization
shall create an application form for the program and make the
application form readily available to interested parents through
various sources, including the organization's Internet website.
The organization shall ensure that the application form is capable
of being submitted to the organization electronically.
(c) Each certified educational assistance organization
shall post on the organization's Internet website and provide to
each parent who submits an application form to the organization a
publication that describes the operation of the program, including:
(1) expenses allowed under the program under Section
29.360;
(2) the organization's expense reporting
requirements; and
(3) a description of the responsibilities of program
participants and the duties of the organization under this
subchapter.
(d) Subject to the availability of funding, each certified
educational assistance organization shall admit into the program
each child for whom the organization received an application under
this section if the organization verifies that the child is
eligible to participate in the program. If available funding is
insufficient to admit each eligible child into the program, the
organization shall prioritize admitting children in the following
order:
(1) children who participated in the program during
the preceding school year;
(2) siblings of children who participated in the
program during the preceding school year; and
(3) children with a disability.
Sec. 29.358. PARTICIPATION IN PROGRAM. (a) To receive
funding under the program, a parent of an eligible child must agree
to:
(1) spend money received through the program only for
expenses allowed under Section 29.360; and
(2) notify the parent's certified educational
assistance organization not later than 30 days after the date on
which the child:
(A) enrolls in a public school, including an
open-enrollment charter school;
(B) graduates from high school or obtains a high
school equivalency certificate; or
(C) is no longer eligible to enroll in a public
school under Section 25.001.
(b) The parent of a child participating in the program is
the trustee of the child's account.
(c) Each certified educational assistance organization
shall provide annually to each program participant admitted by the
organization the publication provided under Section 29.357(c). The
publication may be provided electronically.
Sec. 29.359. APPROVED PROVIDERS; PARENTAL REVIEW
COMMITTEE. (a) The comptroller shall by rule establish a parental
review committee to review and approve applications for preapproval
of education service providers and vendors of educational products.
The comptroller shall post on the comptroller's Internet website
and provide to each certified educational assistance organization
the list of preapproved providers and vendors.
(b) The parental review committee consists of nine parents
of school-aged children, appointed as follows:
(1) three members appointed by the governor as
follows:
(A) one parent of a child enrolled in a public
school;
(B) one parent of a child enrolled in a private
school other than a home school; and
(C) one parent of a child being homeschooled;
(2) three members appointed by the lieutenant governor
as follows:
(A) one parent of a child enrolled in a public
school;
(B) one parent of a child enrolled in a private
school other than a home school; and
(C) one parent of a child being homeschooled; and
(3) three members appointed by the speaker of the
house of representatives as follows:
(A) one parent of a child enrolled in a public
school;
(B) one parent of a child enrolled in a private
school other than a home school; and
(C) one parent of a child being homeschooled.
(c) A person may not serve as a member of the parental review
committee if the person is:
(1) required to register as a lobbyist under Chapter
305, Government Code, for the purpose of lobbying a member of the
legislature; or
(2) employed by a nonprofit state association or
organization that primarily represents political subdivisions and
hires or contracts with a person required to register as a lobbyist
under Chapter 305, Government Code.
(d) The parental review committee shall create a process for
program participants to request the preapproval of education
service providers and vendors of educational products.
(e) The parental review committee shall approve an
education service provider or vendor of educational products for
participation in the program not later than the 30th day after the
date the committee receives the provider's or vendor's application
if the provider or vendor:
(1) for a private school, executes a notarized
affidavit, with supporting documents, concerning the school's
qualification to serve program participants, including evidence
of:
(A) the annual administration of a nationally
standardized norm-referenced assessment instrument;
(B) a valid certificate of occupancy;
(C) policy statements regarding:
(i) admissions;
(ii) curriculum;
(iii) safety;
(iv) student to teacher ratios; and
(v) assessments;
(D) the school's agreement that program
participants are eligible to apply for scholarships offered by the
school to the same extent as other children; and
(E) accreditation by an organization recognized
by the agency or the Texas Private School Accreditation Commission;
(2) for a private tutor, therapist, or teaching
service:
(A) executes a notarized affidavit, with
supporting documents, concerning the tutor's, therapist's, or
service's qualification to serve program participants, including
evidence that the tutor or therapist or each employee of the service
who intends to provide services to a program participant:
(i) is certified under Subchapter B,
Chapter 21;
(ii) holds a relevant license or
accreditation issued by a state, regional, or national licensing or
accreditation organization; or
(iii) is employed in a teaching or tutoring
capacity at an institution of higher education or private or
independent institution of higher education; and
(B) the tutor or therapist or each employee of
the teaching service who intends to provide educational services to
a program participant either:
(i) completes a national criminal history
record information review; or
(ii) provides to the comptroller
documentation indicating that the tutor, therapist, or employee, as
applicable, has completed a national criminal history record
information review within a period established by comptroller rule;
(3) for an online educational course or program
provider, executes a notarized affidavit, with supporting
documents, concerning the provider's qualification to serve
program participants; or
(4) for any provider or vendor not described by
Subdivision (1), (2), or (3), presents any necessary supporting
documents concerning the provider's or vendor's qualification to
serve program participants.
(f) The comptroller shall review the national criminal
history record information or documentation for each private tutor,
therapist, or teaching service who submits an application. The
tutor, therapist, or service must provide the comptroller with any
information requested by the comptroller to enable the comptroller
to complete the review. The comptroller shall report the
comptroller's findings from the review to the parental review
committee.
(g) Each certified educational assistance organization
shall post on the organization's Internet website the list of
preapproved education service providers and vendors of educational
products provided under Subsection (a).
Sec. 29.360. APPROVED EDUCATION-RELATED EXPENSES. (a)
Subject to Subsection (b), money received under the program may be
used only for the following expenses incurred by a program
participant at a preapproved education service provider or vendor:
(1) tuition and fees:
(A) at a private school;
(B) at an institution of higher education or a
private or independent institution of higher education;
(C) for an online educational course or program;
or
(D) at another education service provider;
(2) the purchase of textbooks or other instructional
materials or uniforms required by a school, institution, course, or
program described by Subdivision (1) in which the child is
enrolled;
(3) payments for the purchase of a curriculum;
(4) fees for classes or other educational services or
extracurricular programs provided by a public school;
(5) fees for services provided by a private tutor or
teaching service;
(6) fees for educational therapies or services
provided by a practitioner or provider, only for fees or portions of
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;
(7) costs of computer hardware and other technological
devices that are primarily used for educational purposes, including
a calculator, personal computer, laptop, tablet, microscope,
telescope, or printer, not to exceed in any year 10 percent of the
total amount deposited in the program participant's account that
year;
(8) fees for a nationally standardized
norm-referenced achievement test, an advanced placement test or
similar examination, or any examination related to college or
university admission; and
(9) fees for transportation services provided by a
fee-for-service transportation provider for the child to travel to
and from an education service provider, not to exceed $1,000 per
school year.
(b) Money received under the program may not be used to pay
any person who is:
(1) related to the program participant within the
third degree of consanguinity or affinity, as determined under
Chapter 573, Government Code; or
(2) a member of the program participant's household.
(c) A finding that a program participant used money
distributed under the program to pay for an expense not allowed
under Subsection (a) does not affect the validity of any payment
made by the participant for an expense that is allowed under that
subsection.
Sec. 29.361. AMOUNT OF PAYMENT; FINANCING. (a) A parent of
an eligible child shall receive each year that the child
participates in the program a payment from the state to the child's
account in an amount equal to the state average maintenance and
operations expenditures per student in average daily attendance for
the preceding state fiscal year.
(b) Any money remaining in a 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.
(c) The parent of a child participating in the program may
make payments for the expenses of educational programs, services,
and products not covered by money in the child's account.
(d) A payment under Subsection (a) may not be financed using
federal money.
(e) Not later than November 1 of each even-numbered year,
the comptroller shall submit to the legislature an estimate of the
total amount of funding required for the program for the following
state fiscal biennium.
Sec. 29.362. ADMINISTRATION OF ACCOUNTS. (a) The
comptroller shall establish and maintain an account for each child
participating in the program.
(b) The comptroller shall make payments to each program
participant's account on a schedule set by comptroller rule.
(c) The comptroller may use money available for the program
to cover the comptroller's cost of administering the program. The
comptroller may not reduce any payment to a program participant's
account for purposes of this subsection.
(d) The comptroller shall disburse to each certified
educational assistance organization an amount from the total amount
of money appropriated for purposes of this subchapter to cover the
organization's cost of administering the program. The total amount
disbursed under this subsection for a state fiscal year may not
exceed five percent of the amount appropriated for purposes of this
subchapter for that fiscal year.
(e) Before each payment is made under Subsection (b), each
certified educational assistance organization shall:
(1) compare the list of program participants admitted
by the organization with public school enrollment lists maintained
by the agency; and
(2) notify the comptroller if the organization
determines that a program participant is enrolled in a public
school, including an open-enrollment charter school.
(f) Except as provided by Section 29.363, on the date on
which a child who participated in the program is no longer eligible
to participate in the program under Section 29.356(c), the child's
account is closed and any remaining money is returned to the state
for deposit in the fund.
Sec. 29.363. ACCOUNT EXTENSION. (a) A program participant
may apply to the participant's certified educational assistance
organization for an extension to allow for:
(1) the child's account to remain open after the date
on which the child's account would otherwise be closed under
Section 29.362(f) for a reason described by Section 29.356(c)(1);
and
(2) the money remaining in the account to be used for
expenses described by Subsection (e).
(b) Each certified educational assistance organization
shall create an application form for the extension of a child's
account under Subsection (a) and make the application form readily
available to program participants through various sources,
including the organization's Internet website.
(c) A certified educational assistance organization shall
approve an application for the extension of a child's account
submitted under this section if the program participant:
(1) submits the application form not later than the
30th day before the date on which the child is anticipated to
graduate from high school or obtain a high school equivalency
certificate; and
(2) includes with the application form documentation
regarding the intended use of the money remaining in the account for
expenses described by Subsection (e).
(d) Not later than the 30th day after receipt of an
application under this section, a certified educational assistance
organization shall:
(1) approve or deny the application; and
(2) notify in writing:
(A) the program participant regarding the
organization's decision on the application and, if the application
is denied, the grounds for denial; and
(B) the comptroller regarding the approval of an
application.
(e) Money remaining in a child's account extended under this
section on the date on which the account would otherwise be closed
under Section 29.362(f) may be used only for the following expenses
incurred by the child:
(1) tuition and fees:
(A) for courses that lead to occupational
licensing or certification; or
(B) at an institution of higher education, a
private or independent institution of higher education, or a career
school or college, as that term is defined by Section 132.001;
(2) the purchase of textbooks or other instructional
materials or uniforms required by a course or institution described
by Subdivision (1) in which the child is enrolled; and
(3) fees to obtain an occupational license or
certification, including fees for an examination necessary to
obtain the license or certification.
(f) Section 29.361(a) does not apply to a program
participant whose account is extended under this section.
Sec. 29.364. RANDOM AUDITING. (a) The comptroller may
contract with a private entity to randomly audit accounts and
certified educational assistance organizations as necessary to
ensure compliance with applicable law and the requirements of the
program.
(b) In conducting an audit, the comptroller or private
entity may require that a program participant or certified
educational assistance organization provide additional information
and documentation regarding any payment made under the program.
(c) The private entity shall report to the comptroller any
violation of this subchapter or other relevant law found by the
entity during an audit conducted under this section.
Sec. 29.365. SUSPENSION OF ACCOUNT. (a) The comptroller
shall suspend the account of a program participant who fails to
comply with applicable law or a requirement of the program.
(b) On suspension of an account under Subsection (a), the
comptroller shall notify the program participant 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 participant has 10 business
days to respond and take any corrective action required by the
comptroller.
(c) On the expiration of the 10-day period under Subsection
(b), the comptroller shall:
(1) order permanent closure of the suspended account
and declare the program participant ineligible for the program;
(2) order temporary reinstatement of the account,
conditioned on the performance of a specified action by the
participant; 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 29.360
from the program participant or the entity that received the money
if the participant's account is suspended or closed under this
section.
Sec. 29.366. TUITION AND FEES; REFUND PROHIBITED. (a) An
education service provider may not charge a child participating in
the program an amount greater than the standard amount charged for
that service by the provider.
(b) An education service provider or a 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. 29.367. REFERRAL TO ATTORNEY GENERAL. (a) If the
comptroller or a certified educational assistance organization
obtains evidence of fraudulent use of an account, the comptroller
or organization may refer the case to the attorney general for
investigation.
(b) With the consent of the appropriate local county or
district attorney, the attorney general has concurrent
jurisdiction with the consenting local prosecutor to prosecute an
offense referred to the attorney general under Subsection (a).
Sec. 29.368. SPECIAL EDUCATION NOTICE. (a) Each certified
educational assistance organization shall post on the
organization's Internet website and provide to each parent who
submits to the organization an application for the program on
behalf of a child with a disability a notice that:
(1) states that a private school is not subject to laws
regarding the provision of educational services in the same manner
as a public school, and a child with a disability attending a
private school may not receive the services a child with a
disability attending a public school is entitled to receive under
federal and state law; 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 public school, including:
(A) rights provided under the Individuals with
Disabilities Education Act (20 U.S.C. Section 1400 et seq.),
including:
(i) an individualized education program;
(ii) educational services provided in the
least restrictive environment;
(iii) instruction from certified teachers;
(iv) due process hearings to ensure proper
and full implementation of an individualized education program;
(v) transition and planning services; and
(vi) supplementary aids and services;
(B) rights provided under Subchapter A; and
(C) other rights provided under federal or state
law.
(b) A private school in which a child with a disability who
is participating in the program enrolls shall provide to the
child's parent a copy of the notice required under Subsection (a).
Sec. 29.369. PROGRAM PARTICIPANT, PROVIDER, AND VENDOR
AUTONOMY. (a) A rule adopted or action taken related to the
program by an individual, governmental entity, court of law, or
program administrator may not:
(1) consider the actions of an education service
provider, vendor of educational products, or program participant to
be the actions of an agent of state government;
(2) limit:
(A) an education service provider's ability to
determine the methods used to educate the provider's students or to
exercise the provider's religious or institutional values; or
(B) a program participant's ability to determine
the participant's educational content or to exercise the
participant's religious values;
(3) obligate an education service provider or program
participant to act contrary to the provider's or participant's
religious or institutional values, as applicable;
(4) impose any regulation on an education service
provider, vendor of educational products, or program participant
beyond those regulations necessary to enforce the requirements of
the program; or
(5) require as a condition of receiving money
distributed under the program:
(A) an education service provider to modify the
provider's creed, practices, admissions policies, curriculum,
performance standards, employment policies, or assessments; or
(B) a program participant to modify the
participant's creed, practices, curriculum, performance standards,
or assessments.
(b) In a proceeding challenging a rule adopted by a state
agency or officer under this subchapter, the agency or officer has
the burden of proof to establish by clear and convincing evidence
that the rule:
(1) is necessary to implement or enforce the program
as provided by this subchapter; and
(2) does not impose an undue burden on a program
participant or an education service provider or vendor of
educational products that receives or seeks to receive money
distributed under the program.
Sec. 29.370. STUDENT RECORDS AND INFORMATION. (a) On
request by the parent of a child participating or 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) The agency shall provide to each certified educational
assistance organization any information available to the agency
requested by the organization regarding a child who participates or
seeks to participate in the 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.
Sec. 29.371. 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 the initial implementation of the program.
Sec. 29.372. RULES; PROCEDURES. (a) The comptroller shall
adopt rules and procedures only as necessary to implement,
administer, and enforce this subchapter.
(b) A rule adopted under Subsection (a) is binding on an
organization that applies for certification as an educational
assistance organization and a state or local governmental entity,
including a political subdivision, as necessary to implement,
administer, and enforce this subchapter.
Sec. 29.373. RIGHT TO INTERVENE IN CIVIL ACTION. (a) A
program participant may intervene in any civil action challenging
the constitutionality of the program or the insurance premium tax
credit under Chapter 230, Insurance Code.
(b) A court in which a civil action described by Subsection
(a) is filed may require that all program participants wishing to
intervene in the action file a joint brief. A program participant
may not be required to join a brief filed on behalf of the state or a
state agency.
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 a private tutor, a therapist, or an employee of a
teaching service or school 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. 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
EDUCATION SAVINGS ACCOUNT PROGRAM
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 230.001. DEFINITIONS. In this chapter:
(1) "Fund" means the education savings account program
fund under Section 29.354, Education Code.
(2) "State premium tax liability" means any liability
incurred by an entity under Chapters 221 through 226.
SUBCHAPTER B. CREDIT
Sec. 230.051. 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 230.054.
Sec. 230.052. 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 the amount contributed to the fund during
the period covered by the tax report or the amount of the entity's
state premium tax liability for the report.
(b) For the 2026 state fiscal year, the total amount of
credits that may be awarded under this chapter may not exceed $200
million. For each subsequent state fiscal year, the total amount of
credits that may be awarded is:
(1) the same total amount of credits available under
this subsection for the previous state fiscal year, if Subdivision
(2) does not apply; or
(2) 125 percent of the total amount of credits
available under this subsection for the previous state fiscal year,
if the total amount of credits awarded in the previous state fiscal
year was at least 90 percent of the total amount of credits
available under this subsection for that 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 credits are allocated first to
entities that received preliminary approval for a credit under
Section 230.053 and that apply under Section 230.054. The
procedures must provide that any remaining credits are allocated to
entities that apply under Section 230.054 on a first-come,
first-served basis, based on the date the 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. 230.053. PRELIMINARY APPROVAL FOR CREDIT. (a) Before
making a contribution to the fund, an entity may apply to the
comptroller for preliminary approval of 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 under this chapter does not exceed the
amount provided by Section 230.052(b).
(e) Final award of a credit preliminarily approved under
this section remains subject to the limitations under Section
230.052(a) and all other requirements of this chapter.
Sec. 230.054. 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 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.
(c) Subject to Section 230.052(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 230.052(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. 230.055. RULES; PROCEDURES. The comptroller shall
adopt rules and procedures to implement, administer, and enforce
this chapter.
Sec. 230.056. 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. 230.057. 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 6. Subchapter J, Chapter 29, Education Code, as
added by this Act, applies beginning with the 2026-2027 school
year.
SECTION 7. An entity may apply for a credit under Chapter
230, Insurance Code, as added by this Act, only for a contribution
made on or after the effective date of this Act.
SECTION 8. Not later than February 15, 2026, the
comptroller of public accounts shall adopt rules as provided by
Section 230.055, Insurance Code, as added by this Act.
SECTION 9. Chapter 230, Insurance Code, as added by this
Act, applies only to a tax report originally due on or after the
effective date of this Act.
SECTION 10. (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, or
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 tax 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 Subchapter J, Chapter 29, Education Code, as
added by this Act, or 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 Subchapter J,
Chapter 29, Education Code, as added by this Act, or 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 Subchapter J,
Chapter 29, Education Code, as added by this Act, or 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, 37.3(a)(1), 38.6(a) and (b),
40.1(b), and 49.4.
SECTION 11. If any provision of this Act or its application
to any person or circumstance is held invalid, the invalidity does
not affect other provisions or applications of this Act that can be
given effect without the invalid provision or application, and to
this end the provisions of this Act are declared severable.
SECTION 12. This Act takes effect January 1, 2026.