Texas 2025 - 89th Regular

Texas Senate Bill SB2164 Compare Versions

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Old	New	Differences
1	1	89R8667 MM-F
2	2	By: Parker S.B. No. 2164
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5	5
6	6
7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to employer incentive payments for child care for
10	10	employees, including creating an employer child-care contribution
11	11	partnership program and a franchise tax credit for taxable entities
12	12	that make certain employer child-care contributions; authorizing a
13	13	civil penalty.
14	14	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
15	15	ARTICLE 1. EMPLOYER CHILD-CARE CONTRIBUTION PARTNERSHIP PROGRAM
16	16	SECTION 1.01. Subtitle B, Title 4, Labor Code, is amended by
17	17	adding Chapter 318 to read as follows:
18	18	CHAPTER 318. EMPLOYER CHILD-CARE CONTRIBUTION PARTNERSHIP PROGRAM
19	19	Sec. 318.001. DEFINITION. In this chapter, "program" means
20	20	the employer child-care contribution partnership program
21	21	established under this chapter.
22	22	Sec. 318.002. ESTABLISHMENT. The commission shall
23	23	establish and administer the employer child-care contribution
24	24	partnership program to support families in this state in accessing
25	25	high-quality child care by incentivizing eligible employers to
26	26	contribute to eligible employee child-care costs and providing a
27	27	state match for funds contributed by eligible employers.
28	28	Sec. 318.003. ADMINISTRATION. (a) The commission shall:
29	29	(1) adopt rules and establish procedures necessary to
30	30	administer the program, including:
31	31	(A) standardized agreements for use by
32	32	employers, employees, and child-care providers to apply for and
33	33	enroll in the program;
34	34	(B) eligibility and income verification
35	35	procedures for employees;
36	36	(C) eligibility criteria for child-care
37	37	providers, including quality standards;
38	38	(D) procedures for notifying each relevant party
39	39	of:
40	40	(i) the results of an eligibility
41	41	determination; and
42	42	(ii) the party's enrollment in the program
43	43	as soon as practicable after receiving and processing an agreement
44	44	and determining each party's eligibility;
45	45	(E) procedures for determining the amount of the
46	46	state match in accordance with Section 318.009(b) and notifying the
47	47	employee and the child-care provider regarding the amount;
48	48	(F) procedures for prioritizing and approving
49	49	agreements, including maintaining a waitlist;
50	50	(G) procedures for notifying the commission and
51	51	the parties to an agreement regarding termination of the agreement
52	52	by any party;
53	53	(H) procedures for notifying the commission and
54	54	the parties to an agreement regarding nonpayment by any party;
55	55	(I) procedures for recouping state match money or
56	56	a portion of state match money if there is an overpayment to a
57	57	participating child-care provider;
58	58	(J) criteria for disqualifying participants from
59	59	the program;
60	60	(K) procedures for hearing appeals from program
61	61	participants;
62	62	(L) procedures for issuing and logging payments
63	63	to a participating child-care provider; and
64	64	(M) criteria and procedures for modifying or
65	65	terminating an agreement, including:
66	66	(i) if the relationship between the
67	67	employee and employer is severed;
68	68	(ii) if an employer fails to make a
69	69	contribution in accordance with the terms of an agreement; and
70	70	(iii) if a child-care provider ceases
71	71	participation or otherwise becomes ineligible to participate in the
72	72	program;
73	73	(2) select an administration assistance organization
74	74	described by Subsection (c);
75	75	(3) ensure confidentiality protocols to safeguard the
76	76	personal information of participating employers, employees, and
77	77	child-care providers, including ensuring that an employee's
78	78	personal information is not disclosed without the employee's
79	79	written consent;
80	80	(4) maintain records regarding the balance of the
81	81	program fund for each fiscal year and all payments made from the
82	82	fund;
83	83	(5) develop and distribute to employers, employees,
84	84	and child-care providers informational material regarding:
85	85	(A) the program's objectives, benefits, and
86	86	eligibility requirements; and
87	87	(B) any other child-care assistance programs or
88	88	benefits that may be available to an employee; and
89	89	(6) maintain a waitlist if the money in the program
90	90	fund is insufficient to approve all agreements received and provide
91	91	a state match in accordance with Section 318.009(b).
92	92	(a-1) The commission shall convene a work group to assist
93	93	the commission in developing the rules under Subsection (a). The
94	94	work group must include:
95	95	(1) child-care providers;
96	96	(2) community stakeholders, including stakeholders
97	97	with knowledge of or expertise in child care;
98	98	(3) employers or members of associations representing
99	99	employers; and
100	100	(4) at least one parent of a child who receives care
101	101	from a child-care provider.
102	102	(a-2) Subsection (a-1) and this subsection expire September
103	103	1, 2027.
104	104	(b) The commission may:
105	105	(1) delegate an administrative duty under the program
106	106	to a division of the commission or the administration assistance
107	107	organization described by Subsection (c);
108	108	(2) coordinate and share information with other state
109	109	agencies; and
110	110	(3) procure grants or contracts, in accordance with
111	111	other law, with third parties to administer the program or parts of
112	112	the program, including an administration assistance organization
113	113	described by Subsection (c).
114	114	(c) To be eligible for selection as an administration
115	115	assistance organization, an organization must:
116	116	(1) be exempt from federal taxation under Section
117	117	501(a) of the Internal Revenue Code of 1986 by being listed as an
118	118	exempt organization in Section 501(c)(3) of that code;
119	119	(2) be in good standing with the state; and
120	120	(3) be able to administer elements of the program as
121	121	determined by the comptroller, including the ability to process
122	122	employer contribution payments made under Section 318.004.
123	123	(d) The commission shall implement the program and issue a
124	124	state match under Section 318.009(b) in a state fiscal year only if
125	125	the legislature specifically appropriates money to the commission
126	126	for that fiscal year for that purpose. The commission may implement
127	127	the program and issue a state match using other money available to
128	128	the commission for that purpose.
129	129	Sec. 318.004. EMPLOYER DUTIES. An employer who provides
130	130	child-care assistance to an employee as a benefit of employment may
131	131	participate in the program by entering into an agreement described
132	132	by Section 318.007. The employer shall:
133	133	(1) provide at least $1,200 per year to or on behalf of
134	134	an eligible employee for each child the employee has enrolled with a
135	135	provider eligible under Section 318.006 for the employee's
136	136	child-care costs as the employer contribution;
137	137	(2) enter into a standardized agreement under Section
138	138	318.007;
139	139	(3) submit the agreement to the commission for
140	140	verification of eligibility and approval;
141	141	(4) submit any additional information the commission
142	142	considers necessary; and
143	143	(5) on verification and approval of the agreement by
144	144	the commission, make contributions to the employee's eligible
145	145	child-care costs in accordance with commission guidelines.
146	146	Sec. 318.005. EMPLOYEE DUTIES. (a) An employee shall
147	147	complete an agreement described by Section 318.007 and provide any
148	148	additional information the commission considers necessary.
149	149	(b) An employee shall immediately notify the commission if a
150	150	child for whom the employee receives a benefit under this chapter
151	151	receives subsidized child care under the commission's subsidized
152	152	child-care program.
153	153	(c) The employee shall pay the child-care provider the cost
154	154	of child-care services not covered by the employer's contribution
155	155	and the state match.
156	156	Sec. 318.006. PROVIDER ELIGIBILITY. (a) To be eligible to
157	157	receive money under the program, a child-care provider must:
158	158	(1) be a child-care facility or family home licensed
159	159	under Chapter 42, Human Resources Code, including a facility
160	160	operated by the employer;
161	161	(2) be a high-quality program as determined by the
162	162	commission; and
163	163	(3) comply with an agreement and provide information
164	164	the commission considers necessary.
165	165	(b) The commission may waive or modify the eligibility
166	166	requirements under this section.
167	167	Sec. 318.007. PROGRAM AGREEMENTS. (a) The commission
168	168	shall create a standardized agreement for use by employers and
169	169	employees participating in the program, to be completed and agreed
170	170	to by each party.
171	171	(b) The commission may create a standardized agreement for
172	172	use by child-care providers participating in the program.
173	173	Sec. 318.008. PROGRAM FUND. (a) The program fund is a
174	174	dedicated account in the general revenue fund administered by the
175	175	commission.
176	176	(b) The program fund consists of:
177	177	(1) money appropriated by the legislature for deposit
178	178	to the credit of the fund for the purposes of this chapter;
179	179	(2) interest earned on the investment of money in the
180	180	fund;
181	181	(3) the proceeds of civil penalties collected under
182	182	Section 318.011; and
183	183	(4) gifts, grants, and donations received by the
184	184	commission for the purposes of this chapter.
185	185	(c) Money in the fund may be appropriated only to the
186	186	commission for purposes authorized by this chapter.
187	187	(d) In each state fiscal year and to the greatest extent
188	188	practicable, at least 25 percent of the total amount appropriated
189	189	from the fund for that year must be distributed under agreements
190	190	with employers with fewer than 50 full-time employees. For an
191	191	employer that operates multiple locations or has common ownership
192	192	or affiliates, each location is considered a separate employer for
193	193	the purposes of calculating the number of full-time employees under
194	194	this subsection.
195	195	(d-1) If in a state fiscal year there is money available
196	196	from the allocation of money described by Subsection (d) after
197	197	distributing money in the manner described by that subsection, the
198	198	commission may distribute the money under agreements with any other
199	199	eligible employers.
200	200	(e) During the state fiscal year ending August 31, 2026, not
201	201	more than 10 percent of the total amount deposited to the credit of
202	202	the fund in that fiscal year must be appropriated to the commission
203	203	to establish the program. In each subsequent state fiscal year,
204	204	money in the fund may be appropriated to the commission to
205	205	administer the program as follows:
206	206	(1) if the total amount of money available for
207	207	appropriation from the fund in that state fiscal year is more than
208	208	$50 million, not more than five percent of that amount may be used
209	209	to administer the program;
210	210	(2) if the total annual amount of money available for
211	211	appropriation from the fund in that state fiscal year is more than
212	212	$10 million but not more than $50 million, not more than 10 percent
213	213	of that amount may be used to administer the program; and
214	214	(3) if the total annual amount of money available for
215	215	appropriation from the fund in that state fiscal year is not more
216	216	than $10 million, not more than 15 percent of that amount may be
217	217	used to administer the program.
218	218	Sec. 318.009. STATE MATCH. (a) On verifying the
219	219	eligibility of an employer, employee, and child-care provider and
220	220	receiving any required agreements, the commission shall issue a
221	221	state match in accordance with this section from the program fund to
222	222	a child-care provider in accordance with the terms of the
223	223	agreement. The commission may distribute the state match money
224	224	directly or through a third-party vendor, as applicable.
225	225	(b) The commission may approve an agreement and issue a
226	226	state match only if there is sufficient money in the program fund to
227	227	pay the costs under the agreement and the money has been
228	228	appropriated to the commission for that purpose.
229	229	(c) Subject to Subsections (b) and (e), the commission shall
230	230	provide a state match equal to:
231	231	(1) 100 percent of the contribution made by the
232	232	employee's employer if the employee has a median household income
233	233	that is less than or equal to 100 percent of the median state
234	234	household income;
235	235	(2) 75 percent of the contribution made by the
236	236	employee's employer if the employee has a median household income
237	237	that is greater than 100 percent and less than or equal to 200
238	238	percent of the median state household income; or
239	239	(3) 50 percent of the contribution made by the
240	240	employee's employer if the employee has a median household income
241	241	that is greater than 200 percent and less than or equal to 300
242	242	percent of the median state household income.
243	243	(d) A state match and an employer contribution issued under
244	244	the program and administered by the commission may not be
245	245	considered compensation for an employee's service.
246	246	(e) The amount of the state match issued under Subsection
247	247	(c) may not exceed $3,600 per child for each employee.
248	248	(f) The total amount of the state match issued under the
249	249	program may not exceed $25 million in a state fiscal biennium.
250	250	Sec. 318.010. REPORTS. (a) The commission shall publish
251	251	and submit to the legislature a report detailing the efficacy of the
252	252	program not later than December 15 of each even-numbered year. The
253	253	report must include the following information about the program:
254	254	(1) the amount appropriated to the program fund during
255	255	the preceding state fiscal year;
256	256	(2) the total number of standardized agreements
257	257	submitted by employers;
258	258	(3) the total amount of state matches paid out of the
259	259	program fund, disaggregated by county;
260	260	(4) information regarding the size, geographical
261	261	location, and industry type of employers who participated in the
262	262	program;
263	263	(5) the number, license type, quality rating level,
264	264	and geographical distribution of participating child-care
265	265	providers;
266	266	(6) average cost for services charged by child-care
267	267	providers participating in the program and information regarding
268	268	the amount by which those costs have increased or decreased during
269	269	the most recent reporting period compared with previous reporting
270	270	periods;
271	271	(7) the number and total dollar value of agreements
272	272	not approved by the commission; and
273	273	(8) demographic information regarding employees
274	274	participating in the program.
275	275	(b) Not later than January 1, 2026, the commission shall
276	276	publish and submit to the legislature a report detailing the
277	277	commission's plan for implementing the program. This subsection
278	278	expires September 1, 2026.
279	279	Sec. 318.011. FALSE INFORMATION; CIVIL PENALTY. A person
280	280	who intentionally provides false information to the commission for
281	281	purposes of receiving the benefits of the program shall be subject
282	282	to a civil penalty of not more than $500 per violation. All money
283	283	collected as a result of penalties assessed under this section
284	284	shall be paid into the state treasury and credited to the program
285	285	fund.
286	286	ARTICLE 2. FRANCHISE TAX CREDIT FOR CHILD-CARE CONTRIBUTION
287	287	SECTION 2.01. Chapter 171, Tax Code, is amended by adding
288	288	Subchapter N-1 to read as follows:
289	289	SUBCHAPTER N-1. TAX CREDIT FOR CHILD-CARE CONTRIBUTION
290	290	Sec. 171.721. DEFINITION. In this subchapter, "child-care
291	291	contribution" means the dollar amount of a contribution made by a
292	292	taxable entity to an employee of the entity for use by the employee
293	293	to secure child care at a child-care facility or family home
294	294	licensed under Chapter 42, Human Resources Code, including a
295	295	licensed child-care facility operated by the entity. The term does
296	296	not include wages paid by the taxable entity to the employee or a
297	297	payment to the employee that is considered compensation for the
298	298	employee's service.
299	299	Sec. 171.722. ENTITLEMENT TO CREDIT. A taxable entity is
300	300	entitled to a credit in the amount and under the conditions provided
301	301	by this subchapter against the tax imposed under this chapter.
302	302	Sec. 171.723. AMOUNT OF CREDIT; LIMITATION. (a) Subject to
303	303	Subsections (b) and (c), the amount of the credit a taxable entity
304	304	may claim on a report is equal to the total amount of child-care
305	305	contributions paid by the entity during the period on which the
306	306	report is based. For purposes of computing the total amount of
307	307	child-care contributions paid by the taxable entity, a child-care
308	308	contribution in an amount that exceeds $3,600 for a child is
309	309	considered to be a child-care contribution in the amount of $3,600
310	310	for that child.
311	311	(b) The total credit claimed on a report, including the
312	312	amount of any carryforward under Section 171.724, may not exceed
313	313	the amount of franchise tax due for the report after applying all
314	314	other applicable credits.
315	315	(c) The total amount of credits that may be awarded under
316	316	Subsection (a) in a state fiscal year may not exceed $25 million.
317	317	(d) The comptroller by rule shall prescribe procedures by
318	318	which the comptroller will allocate the amount of credits available
319	319	under Subsection (c). The procedures must provide that credits are
320	320	allocated to taxable entities that applied for the credit on a pro
321	321	rata basis.
322	322	Sec. 171.724. CARRYFORWARD. (a) If a taxable entity is
323	323	eligible for a credit that exceeds the limitation under Section
324	324	171.723(b), the entity may carry the unused credit forward for not
325	325	more than five consecutive reports.
326	326	(b) A carryforward is considered the remaining portion of a
327	327	credit that cannot be claimed on a report because of the limitation
328	328	under Section 171.723(b).
329	329	(c) Credits, including a carryforward, are considered to be
330	330	used in the following order:
331	331	(1) a carryforward under this section; and
332	332	(2) a credit for the period on which the report is
333	333	based.
334	334	Sec. 171.725. APPLICATION FOR CREDIT. (a) A taxable entity
335	335	must apply for a credit under this subchapter on or with the report
336	336	for the period for which the credit is claimed.
337	337	(b) A taxable entity must apply for the credit in the manner
338	338	prescribed by the comptroller and include with the application any
339	339	information requested by the comptroller to determine whether the
340	340	entity is eligible for the credit under this subchapter.
341	341	(c) The comptroller may award a credit to a taxable entity
342	342	that applies for the credit under Subsection (a) of this section if
343	343	the taxable entity is eligible for the credit and the credit is
344	344	available under Section 171.723(c). The comptroller has discretion
345	345	in determining whether to grant or deny an application for a credit.
346	346	(d) The comptroller shall notify a taxable entity in writing
347	347	of the comptroller's decision to grant or deny the application
348	348	submitted under Subsection (a). If the comptroller denies a
349	349	taxable entity's application, the comptroller shall include in the
350	350	notice of denial the reasons for the comptroller's decision.
351	351	Sec. 171.726. SALE OR ASSIGNMENT OF CREDIT. (a) A taxable
352	352	entity that makes a child-care contribution may sell or assign all
353	353	or part of the credit that may be claimed for that contribution to
354	354	one or more taxable entities, and any taxable entity to which all or
355	355	part of the credit is sold or assigned may sell or assign all or part
356	356	of the credit to another taxable entity. There is no limit on the
357	357	total number of transactions for the sale or assignment of all or
358	358	part of the total credit authorized under this subchapter.
359	359	(b) A taxable entity that sells or assigns a credit under
360	360	this section and the taxable entity to which the credit is sold or
361	361	assigned shall jointly submit written notice of the sale or
362	362	assignment to the comptroller not later than the 30th day after the
363	363	date of the sale or assignment. The notice must include:
364	364	(1) the date on which the credit was originally
365	365	established;
366	366	(2) the date of the sale or assignment;
367	367	(3) the amount of the credit sold or assigned and the
368	368	remaining period during which it may be used;
369	369	(4) the names, addresses, and federal tax
370	370	identification numbers of the taxable entity that sold or assigned
371	371	the credit or part of the credit and the taxable entity to which the
372	372	credit or part of the credit was sold or assigned; and
373	373	(5) the amount of the credit owned by the selling or
374	374	assigning taxable entity before the sale or assignment, and the
375	375	amount the selling or assigning taxable entity retained, if any,
376	376	after the sale or assignment.
377	377	(c) The sale or assignment of a credit in accordance with
378	378	this section does not extend the period for which a credit may be
379	379	carried forward.
380	380	(d) After a taxable entity claims a credit for a child-care
381	381	contribution under this subchapter, another entity may not use the
382	382	same expenditure as the basis for another credit.
383	383	Sec. 171.727. RULES. The comptroller shall adopt rules
384	384	necessary to implement and administer this subchapter.
385	385	ARTICLE 3. TRANSITION AND EFFECTIVE DATE
386	386	SECTION 3.01. Subchapter N-1, Chapter 171, Tax Code, as
387	387	added by this Act, applies only to a report originally due on or
388	388	after January 1, 2026.
389	389	SECTION 3.02. (a) Except as provided by Subsection (b) of
390	390	this section, this Act takes effect September 1, 2025.
391	391	(b) Subchapter N-1, Chapter 171, Tax Code, as added by this
392	392	Act, takes effect January 1, 2026.