2015S0381-1 03/04/15

By: Huffines S.B. No. 1178

A BILL TO BE ENTITLED

AN ACT

relating to establishing an education savings account program.

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 eligible to participate in a school district's special education program under Section 29.003.

(3) "Curriculum" means a complete course of study for a particular content area or grade level.

(4) "Financial institution" means a bank, credit union, savings bank, or savings and loan association organized under the laws of this state or another state or under 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.

(5) "Institution of higher education" means:

(A) an accredited public senior college, university, community college, state college, technical institute, or junior college or the equivalent located in this state;

(B) a private or independent institution of higher education as defined by Section 61.003; or

(C) a career school or college as defined by Section 132.001.

(6) "Instructional material" has the meaning assigned by Section 31.002.

(7) "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.

(8) "Participating private school" means a private school located in this state that has notified the agency of its intention to participate in the program and comply with the program's requirements.

(9) "Program" means the education savings account program created under this subchapter.

(10) "Program participant" means a child accepted into the program and the child's parent.

Sec. 29.352. ESTABLISHMENT OF PROGRAM. (a) The commissioner shall establish and administer the education savings account program to provide funding to pay approved education-related expenses of eligible students. The parent of a child participating in the program may choose an education method that best serves the child's needs, whether by private school, private tutor, homeschooling, or another approved option.

(b) The annual number of new participants in the program is limited to one-half of one percent of the total number of students in average daily attendance in grades 1 through 12 in the state during the previous school year. In the event that applicants exceed available spots in any given year, the agency shall give preference to any applicant who is a child with a disability or who is educationally disadvantaged.

(c) The agency shall make information about the program readily available to the public through various sources, including the agency's Internet website. The agency shall make special efforts to ensure that parents of a child with a disability or a child who is educationally disadvantaged are made aware of the program.

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

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

(2) was enrolled in a public school district during the preceding school year or is enrolling in first grade for the first time.

(b) After a child establishes eligibility under Subsection (a) and begins participating in the program, the child is eligible to continue in the program, regardless of whether the child continues to meet the requirements of Subsection (a), until the earlier of the date on which the child graduates from high school or the child's 21st birthday, unless the child:

(1) enrolls in a public school district or open-enrollment charter school;

(2) changes residences and is no longer entitled under Section 25.001 to attend school in the school district under which the child's eligibility was established; or

(3) is declared ineligible for the program by order of the commissioner.

Sec. 29.354. AGREEMENT REQUIRED. Before an eligible child may receive funding under this subchapter, a parent of the child must agree in writing:

(1) to provide an education for the child that includes, at a minimum, the subjects of reading, grammar, mathematics, social studies, and science;

(2) to spend program funding only on qualified education expenses described by Section 29.356;

(3) to ensure that the child is annually administered the appropriate assessment instruments under Section 29.358;

(4) to immediately notify the agency if the child enrolls in a public school district or open-enrollment charter school; and

(5) to inform the agency of the child's graduation from high school.

Sec. 29.355. AMOUNT OF PAYMENT; FINANCING. (a) A child participating in the program shall receive annual funding equal to 80 percent of the total average per student funding amount in the school district the child would otherwise attend, based on that district's funding during the preceding school year.

(b) Notwithstanding Subsection (a), a child participating in the program who is a child with a disability or who is educationally disadvantaged shall receive annual funding equal to 100 percent of the total average per student funding amount in the school district the child would otherwise attend, based on that district's funding during the preceding school year.

(c) The agency shall contract with an independent third party for the purpose of determining if a child participating in the program is a child with a disability or is educationally disadvantaged.

(d) A child who participates in the program is included in determining the average daily attendance under Section 42.005 of the school district the child would otherwise attend. The amount of program funding received by the child shall be subtracted from the state funding payable to the school district.

Sec. 29.356. QUALIFIED EDUCATION EXPENSES; AGENCY APPROVAL. (a) Program funding may only be used to pay the following qualified education expenses incurred by a program participant:

(1) tuition and fees at a participating private school;

(2) the purchase of textbooks required by a participating private school;

(3) the purchase of a curriculum;

(4) the purchase of instructional material;

(5) tuition or fees for an online educational course or program;

(6) professional fees of a private tutor or teaching service;

(7) for a child with a disability, professional fees of a practitioner or provider of educational therapies or services;

(8) fees for a nationally standardized norm-referenced achievement test or examination, an advanced placement examination or similar examination, or any examination related to college or university admission;

(9) tuition and fees at an institution of higher education;

(10) the purchase of textbooks required by an institution of higher education;

(11) contributions to a qualified tuition program established for the child that meets the requirements of Section 529, Internal Revenue Code of 1986; and

(12) professional fees of a financial institution that manages the participant's account.

(b) Education-related expenses that do not qualify under Subsection (a) and that may not be paid with program funding include:

(1) computer hardware or other technological devices;

(2) transportation;

(3) consumable educational supplies including paper, pens, pencils, folders, and notebooks;

(4) food; and

(5) before-school or after-school child care and child care during school holidays and vacations.

(c) All expense payments made from an account established under this subchapter must be approved by the agency and may be made only to a participating private school, institution of higher education, private tutor, vendor, or other provider of education services that has been approved by the agency.

(d) A participating private school, institution of higher education, private tutor, vendor, or other provider of education services under this subchapter must provide program participants with a receipt for each qualifying education expense charged by the school, institution, tutor, vendor, or provider.

(e) Nothing in this subchapter shall be construed to prohibit or limit the ability of a program participant to pay, with nonprogram funding, the costs of educational courses, materials, supplies, or services not covered by the program.

Sec. 29.357. APPLICATION FOR PROGRAM. (a) From May 1 to July 1 of each year, a parent may apply for participation in the program on behalf of the parent's child for the following school year.

(b) The agency shall use a standardized application form to determine a child's eligibility for the program. The agency shall make the application form readily available to interested parents through various sources, including the agency's Internet website.

(c) The agency shall provide to each applicant, and annually to each program participant, a publication that describes the operation of the program, including the type of expenses covered by the program, expense reporting requirements, a list of private schools participating in the program, and a description of the responsibilities of program participants and the agency.

Sec. 29.358. ACHIEVEMENT TESTING. (a) Each child participating in the program shall be annually administered the appropriate grade-level state assessment instruments, or nationally standardized norm-referenced achievement tests, in math and language arts. However, a child with a disability for whom standardized testing is not appropriate is not subject to this subsection.

(b) The results of all assessment instruments or tests administered under this section shall be reported to the agency in the manner required by the agency. The agency shall ensure that results may be efficiently reported in a manner that complies with student privacy laws and that allows aggregation of data by grade level, gender, race, family income level, and number of years of participation in the program.

(c) The agency shall publish the achievement test results, associated learning gains, and program graduation rates on the agency's Internet website.

(d) A student's failure to demonstrate satisfactory academic progress, as determined under commissioner rule, may constitute grounds for the commissioner to declare the student ineligible for the program.

Sec. 29.359. ACCREDITATION. (a) A participating private school must be accredited by a private organization recognized by the commissioner before it may accept students under the program.

(b) A private tutor or teaching service, or a practitioner or provider of educational therapies or services for a child with a disability, must be licensed or accredited by a regional or national accrediting organization recognized by the commissioner before it may accept students under the program.

Sec. 29.360. ADMINISTRATION OF ACCOUNTS. (a) The agency shall contract with a financial institution to establish and manage accounts under the program. The institution shall establish an account for each child participating in the program. Program participants may access their account by using a debit card or online payment service.

(b) Funding under the program shall be transferred to each participant's account in quarterly installments of equal amount to be made on or before the 25th day of August, November, February, and May.

(c) The agency may deduct from each installment of funds an amount, not to exceed three percent, to cover the agency's cost of overseeing accounts and administering the program.

(d) The agency shall establish, based on market rates, reasonable fees that may be charged by a financial institution that manages accounts under the program.

Sec. 29.361. EXPENSE REPORTING. (a) On or before quarterly deadlines established by the agency, program participants must submit an expense report to the agency detailing all transactions made on the participant's account during the reporting quarter. Only expenses incurred during the reporting quarter may be approved by the agency.

(b) An expense report must include:

(1) receipts and invoices documenting all transactions made on the account; and

(2) a quarterly statement of account provided to the participant by the financial institution that manages the account.

(c) The agency shall disallow any expense that is not a qualified education expense under Section 29.356 or for which documentation is incomplete. For each disallowed transaction, the agency shall request repayment in full from the program participant. Pending repayment, no additional program funding may be transferred to the participant's account. If repayment is not made on or before the 30th day after the request for repayment is made, the commissioner shall close the account.

(d) A program participant may request agency approval of an expense that was not preapproved by the agency. An approval request under this subsection is only effective if:

(1) made in writing using the proper form provided by the agency; and

(2) submitted to the agency before or concurrently with the submission of the relevant expense report.

(e) Repeated violations of expense reporting requirements by a program participant, whether intentional or unintentional, may constitute grounds for the commissioner to declare the participant ineligible for the program.

Sec. 29.362. AUDITING OF ACCOUNT. The agency shall audit accounts as needed to ensure compliance with applicable law and the requirements of the program. At a minimum, the agency shall conduct one random audit of each account annually. In auditing an account, the agency may require that a program participant provide further information and documentation regarding any transaction on the participant's account.

Sec. 29.363. SUSPENSION OF ACCOUNT. The commissioner shall suspend the account of any program participant who fails to comply with applicable law or a requirement of the program, including the terms of an agreement under Section 29.354, or who commits a substantial misuse of program funds. The commissioner shall notify the participant in writing that the account has been suspended and that no further transactions will be allowed on or disbursements 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 ordered by the commissioner. Following the expiration of the 10-day period, the commissioner shall:

(1) order permanent closure of the suspended account and declare the participant ineligible for the program;

(2) order temporary reinstatement of the account, conditioned on the performance of specified action by the participant; or

(3) order full reinstatement of the account.

Sec. 29.364. TUITION AND FEES; REFUND PROHIBITED. (a) A participating private school may not:

(1) charge a child participating in the program that attends the school a tuition amount greater than the standard tuition rate at the school; or

(2) assess any additional charge, other than a fee that the board of trustees of a school district is authorized to charge under Section 11.158, for providing an educational program or service to the child.

(b) A participating private school, institution of higher education, private tutor, vendor, or other provider of education services under this subchapter may not in any manner refund to, credit to, share with, or rebate to a program participant, or any person on behalf of a participant, any program funds paid or owed by the participant to the school, institution, tutor, vendor, or provider.

Sec. 29.365. REFERRAL TO THE ATTORNEY GENERAL. If the agency obtains evidence of fraudulent use of an account, the commissioner may refer the case to the attorney general for investigation and prosecution.

Sec. 29.366. SCHOOL ADMISSIONS. (a) A participating private school may not refuse to enroll a child participating in the program on the basis of the child's residence, race, national origin, ethnic background, religion, disability, or academic achievement.

(b) A participating private school may refuse to enroll a child participating in the program if the child:

(1) has been expelled from a public or private school at any time; or

(2) has a criminal record.

(c) A participating private school may not consider the athletic ability of a child participating in the program in any admissions process relating to the child.

(d) A participating private school may give admissions preference to a currently enrolled child participating in the program to achieve continuity and to siblings of a currently enrolled child or children residing in the same household as a currently enrolled child for the convenience of the parents of those children.

Sec. 29.367. PROVIDER ACCOUNTABILITY. (a) A participating private school must:

(1) comply with all applicable state or federal health and safety laws;

(2) hold a valid occupancy permit, if required by the political subdivision in which the school is located; and

(3) certify to the agency that the school has complied with the conditions imposed by Section 29.366 and this section.

(b) A participating private school must conduct a criminal background check on each school employee or prospective employee. The school shall terminate or exclude from employment any person:

(1) ineligible under state law to work at the school; and

(2) who, in the judgment of the school's management, may pose a threat to the safety of students at the school.

(c) The agency may declare a participating private school, institution of higher education, private tutor, vendor, or other provider of education services ineligible for the program if, after notice and hearing, the agency finds that the school, institution, tutor, vendor, or provider has:

(1) failed to comply with applicable law or the requirements of the program; or

(2) failed to provide a child participating in the program with promised educational services.

(d) If the agency makes a declaration of ineligibility under Subsection (c), it shall:

(1) immediately notify program participants of the declaration of ineligibility; and

(2) disapprove any account expenditure made to the school, institution, tutor, vendor, or provider after the date of the declaration of ineligibility.

(e) Establishment of the program does not expand the regulatory authority of the agency or any school district to impose additional regulation on a private school, private tutor, or other provider of private education services under the program beyond what is necessary to enforce the requirements of the program. Neither the agency nor any school district may in any way regulate the educational program of a private school, private tutor, or other provider of private education services under the program.

Sec. 29.368. BOND REQUIRED. (a) Except as provided by Subsection (c), prior to the start of each school year, a participating private school that anticipates receiving $50,000 or more in tuition and fees from students participating in the program during the school year must file a corporate surety bond with the commissioner in an amount equal to the total amount of the anticipated tuition and fees.

(b) A bond issued under Subsection (a) must be:

(1) issued in a form approved by the commissioner;

(2) issued by a company authorized to do business in this state;

(3) payable to the state to be used only for repayment of any funds received by the school under the program;

(4) conditioned on the compliance of the school and its officers, agents, and employees with this subchapter and rules adopted under this subchapter; and

(5) issued for a period corresponding to the school year.

(c) The commissioner may waive the bond filing requirement under Subsection (a) for any participating private school that provides to the agency financial information demonstrating, to the commissioner's satisfaction, that the school has the ability to repay the total amount of tuition and fees the school anticipates receiving from students participating in the program during the school year.

Sec. 29.369. STUDENT RECORDS. The school district that a child participating in the program would otherwise attend shall provide to the child's parent or, if applicable, to a participating private school the child attends, a complete copy of the child's school records. This subsection does not require or authorize the release of information except in conformity with the Family Educational Rights and Privacy Act of 1974 (20 U.S.C. Section 1232g).

Sec. 29.370. ANNUAL SURVEY. The agency shall annually request that a parent of each child participating in the program complete a written survey that solicits the parent's:

(1) overall level of satisfaction with the program; and

(2) opinion on specified topics and issues relevant to the effectiveness of the program.

SECTION 2. This Act applies beginning with the 2015-2016 school year.

SECTION 3. Not later than 45 days after the effective date of this Act, the commissioner of education, the State Board of Education, the commissioner of higher education, and the comptroller of public accounts shall adopt rules, procedures, and forms necessary to implement the education savings account program under Subchapter J, Chapter 29, Education Code, as added by this Act, and to:

(1) calculate annually the savings to the state from the implementation of the program; and

(2) prevent fraud in financial transactions under the program, including measures to permit anonymous fraud reporting by telephone hotline or online communication.

SECTION 4. (a) Except as provided by Subsection (b) of this section:

(1) this Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution; and

(2) if this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2015.

(b) Section 29.358(c), Education Code, as added by this Act, takes effect September 1, 2018.