89R4088 KJE-F

By: Cunningham H.B. No. 1657

A BILL TO BE ENTITLED

AN ACT

relating to the establishment of an education savings account program for certain children.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. 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) "Child with a disability" means a child who is:

(A) eligible to participate in a school district's special education program under Section 29.003; or

(B) covered by Section 504, Rehabilitation Act of 1973 (29 U.S.C. Section 794).

(3) "Financial institution" means a bank, credit union, savings bank, or savings and loan association organized under the laws of this state, the laws of another state, or federal law that has its main office or a branch office in this state. The term does not include any institution the deposits of which are not insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration.

(4) "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.

(5) "Program" means the education savings account program established under this subchapter.

(6) "Program participant" means a child and a parent of a child enrolled in the program.

Sec. 29.352. ESTABLISHMENT OF PROGRAM. The comptroller shall establish and administer an education savings account program to provide funding for certain education-related expenses of eligible children.

Sec. 29.353. ELIGIBLE CHILD. (a) A child is eligible to participate in the program if the child:

(1) is eligible to attend a public school under Section 25.001;

(2) either:

(A) attended a public school during the preceding school year; or

(B) is entering kindergarten or first grade; and

(3) meets one or more of the following criteria:

(A) failed to perform satisfactorily on an assessment instrument administered under Section 39.023(a) or an end-of-course assessment instrument administered under Section 39.023(c) during the school year preceding the school year for which the child applies to enroll in the program;

(B) is a child with a disability; or

(C) is educationally disadvantaged.

(b) 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 no longer meets the eligibility criteria under Subsection (a)(3);

(2) the date on which the child graduates from high school;

(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. 29.354. APPLICATION FOR PROGRAM. (a) A parent of an eligible child may apply on behalf of the child for participation in the program for the following school year.

(b) The comptroller shall by rule create an application form for the program and make the form readily available to interested parents through various sources, including the comptroller's Internet website.

(c) The comptroller shall provide to each parent who submits an application form a publication that describes the operation of the program, including:

(1) expenses allowed under the program under Section 29.356;

(2) expense reporting requirements; and

(3) a description of the responsibilities of program participants and the duties of the comptroller and the agency under this subchapter.

(d) The agency shall:

(1) review each application to ensure that the child is eligible to participate in the program; and

(2) approve or reject each application.

Sec. 29.355. 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 29.356;

(2) notify the comptroller if the child enrolls in a public school, not later than the 30th day after the date of enrollment; and

(3) inform the comptroller if the child graduates from high school.

(b) The parent of a child participating in the program is the trustee of the child's account.

(c) The comptroller shall provide annually to each program participant the publication provided under Section 29.354(c).

Sec. 29.356. ELIGIBLE EDUCATION-RELATED EXPENSES. (a) Money received under the program may be used only for the following expenses incurred by a program participant:

(1) tuition and fees at a private school accredited by an organization that is recognized by the Texas Private School Accreditation Commission or the agency;

(2) the purchase of textbooks or other instructional materials or uniforms required by a private school, course, or educational program in which the child is enrolled;

(3) costs related to academic assessments;

(4) costs related to an academic activity that adds direct value to classroom instruction and curriculum, including an academic field trip, performance, contest, demonstration, or display;

(5) fees for transportation provided by a fee-for-service transportation provider for the child to travel to and from an education service provider or vendor of educational products; and

(6) fees for educational therapies or services 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.

(b) Money received under the program may not be used to pay any person who is 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 education-related expense that is allowed under that subsection.

Sec. 29.357. AMOUNT OF PAYMENT; FINANCING. (a) A parent of an eligible child shall receive each year that the child participates in the program a payment to the child's account in an amount that is equal to 90 percent of the amount to which the school district in which the child resides would be entitled to receive for the child under Chapter 48 if the child were enrolled in the district.

(b) For each year a child participates in the program, the school district in which the child resides is entitled to receive an amount equal to 10 percent of the amount to which the district would be entitled to receive for the child under Chapter 48 if the child were enrolled in the district.

(c) 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.

(d) A payment under the program may not be financed using federal funds or money appropriated from the available school fund.

Sec. 29.358. ADMINISTRATION OF ACCOUNTS. (a) The comptroller may contract with one or more financial institutions to establish and manage an account for each child participating in the program.

(b) The comptroller shall make quarterly payments to each program participant's account in equal amounts on or before the 15th day of August, November, February, and May.

(c) The comptroller may deduct an amount from each quarterly payment to a program participant's account to cover the comptroller's cost of administering the program. The amount deducted may not exceed three percent of the payment.

(d) Within the first month following the end of each fiscal year, the comptroller shall reconcile payments made to and from all accounts under the program.

(e) On the date on which a child ceases to participate in the program for any reason, the child's account is closed and any remaining money is returned to the state.

Sec. 29.359. PROGRAM PARTICIPANT, PROVIDER, AND VENDOR AUTONOMY. (a) An education service provider or vendor of educational products that receives money distributed under the program is not a recipient of federal financial assistance on the basis of receiving that money.

(b) 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.

(c) 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;

(2) does not violate this section;

(3) does not impose an undue burden on a program participant or an education service provider or vendor of educational products that receives money or seeks to receive money distributed under the program; and

(4) is the least restrictive means of accomplishing the purpose of the program while recognizing the independence of an education service provider to meet the educational needs of students in accordance with the provider's religious or institutional values.

Sec. 29.360. GIFTS, GRANTS, AND DONATIONS. The comptroller may solicit and accept gifts, grants, and donations, other than federal grants, from any public or private source for the program.

Sec. 29.361. RULES. The comptroller shall adopt rules as necessary to implement this subchapter.

SECTION 2. This Act applies beginning with the 2026-2027 school year.

SECTION 3. As soon as practicable after the effective date of this Act, the comptroller of public accounts shall adopt rules necessary to implement the education savings account program under Subchapter J, Chapter 29, Education Code, as added by this Act.

SECTION 4. This Act takes effect September 1, 2025.