88R10956 KJE-F

By: Schatzline H.B. No. 5112

A BILL TO BE ENTITLED

AN ACT

relating to the establishment of 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, 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.

(5) "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.

(6) "Postsecondary educational institution" means:

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

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

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

(8) "Program participant" means a child and a parent of a child who has been accepted into the program.

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

(b) The agency may contract with a private organization to administer the program.

Sec. 29.353. 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.

(b) A child who establishes eligibility under this section may continue participating in the program until the earliest of the following dates:

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

(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 commissioner under this subchapter.

(c) Notwithstanding Subsection (b), the agency shall establish procedures for, in the least disruptive manner possible:

(1) a child participating in the program to cease participation and enroll in a public school, including an open-enrollment charter school; and

(2) a child who previously participated in the program and subsequently enrolled in a public school, including an open-enrollment charter school, to resume participation in the program.

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. The agency shall allow for the submission of applications on a rolling basis.

(b) The agency shall by rule create an application form for the program and 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 a publication that describes the operation of the program, including:

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

(2) a description of the responsibilities of program participants and the duties of the agency under this subchapter; and

(3) a statement regarding the rights afforded to a child with a disability who is parentally placed in a private school under the Individuals with Disabilities Education Act (20 U.S.C. Section 1400 et seq.).

Sec. 29.355. PARTICIPATION IN PROGRAM. (a) To receive funding under the program, a parent of an eligible child must agree in writing to:

(1) ensure that the student will receive an education that includes, at a minimum, the subjects of reading, language, mathematics, social studies, and science;

(2) spend funds received through the program only for expenses allowed under Section 29.356;

(3) notify the agency as soon as practicable if the child enrolls in a public school, including an open-enrollment charter school; and

(4) inform the agency if the child graduates from high school.

(b) The agency shall provide annually to each program participant the publication provided to applicants under Section 29.354.

Sec. 29.356. APPROVED PROVIDERS AND EDUCATION-RELATED EXPENSES. (a) The commissioner shall by rule establish a process for the preapproval of education service providers and vendors of educational products for participation in the program. The commissioner shall make the list of preapproved providers and vendors readily available to applicants for the program and to program participants.

(b) A payment from an account may be made only to a preapproved education service provider or vendor of educational products.

(c) Funds 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 or postsecondary educational institution or for a nonpublic online educational course or program;

(2) the purchase of textbooks or other instructional materials;

(3) payments for the purchase of a curriculum;

(4) fees for services provided by a private tutor or teaching service;

(5) for a child with a disability, fees for educational therapies or services provided by a practitioner, provider, paraprofessional, or educational aide;

(6) computer hardware and software and other technological devices primarily used for educational purposes;

(7) fees for a nationally norm-referenced achievement test or examination, an advanced placement test or similar examination, or any examination related to college or university admission and a preparatory course for such a test or examination;

(8) services provided by a public school, including an open-enrollment charter school, in a manner in which the child is not counted toward the school's average daily attendance;

(9) uniforms required by a school or institution described by Subdivision (1) in which the child is enrolled;

(10) tuition and fees for a summer education program or specialized after-school education program;

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

(12) any other expense approved by the agency.

(d) Any funds remaining in a program participant's account on the child's graduation from high school may be used by the child for tuition, fees, textbooks, and other instructional materials to attend or take courses from a postsecondary educational institution.

Sec. 29.357. AMOUNT OF PAYMENT; FINANCING. (a) A child participating in the program is entitled to receive annual funding from the Foundation School Program equal to the state and local maintenance and operations revenue to which the school district the child would otherwise attend would be entitled to receive for the child under Chapter 48 if the child were enrolled in the district.

(b) The parent of a child participating in the program may make payments for the expenses of educational programs, services, and products not covered by funds in the child's account.

(c) A payment under the program may not be financed using money appropriated from the available school fund.

Sec. 29.358. ADMINISTRATION OF ACCOUNTS. (a) The agency shall contract with a financial institution to establish and manage an account for each child participating in the program. A program participant must be able to access the participant's account by using an online payment service.

(b) The commissioner shall make quarterly payments to each program participant's account in equal amounts on or before dates established by commissioner rule.

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

(d) A child's account is closed and any remaining funds are returned to the state on the earliest of the following dates:

(1) the date on which the child graduates from a baccalaureate degree program at a postsecondary educational institution;

(2) the child's 26th birthday; or

(3) if the child has not enrolled in a postsecondary educational institution within the four-year period following the child's graduation from high school, the fourth anniversary of the date on which the child graduates from high school.

Sec. 29.359. AUDITING OF ACCOUNT. (a) The agency shall audit or contract with a private entity to audit accounts as necessary to ensure compliance with applicable law and the requirements of the program. At a minimum, the agency shall provide for an annual random audit of a specified number of accounts determined by the commissioner.

(b) In auditing an account, the agency or private entity with which the agency contracts under Subsection (a) may require that a program participant provide further information and documentation regarding any payment from the participant's account.

Sec. 29.360. SUSPENSION OF ACCOUNT. (a) The commissioner by rule shall adopt procedures for the suspension and closure of an account on a finding that a program participant has failed to comply with applicable law or a requirement of the program or has substantially misused funds received under the program.

(b) The procedures must allow for:

(1) a program participant to be declared ineligible to participate in the program on a finding of intentional misconduct; and

(2) an appeal to the commissioner of a finding under Subdivision (1).

Sec. 29.361. REFUND PROHIBITED. An education service provider or a vendor of educational products receiving funds 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 funds paid or owed by the participant to the provider or vendor.

Sec. 29.362. REFERRAL TO THE ATTORNEY GENERAL. (a) If the agency obtains evidence of fraudulent use of an account, the commissioner 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. 29.363. EDUCATION SERVICE PROVIDER AND VENDOR ACCOUNTABILITY. (a) The agency may declare an education service provider or a vendor of educational products ineligible to participate in the program if, after notice and hearing, the agency finds that the provider or vendor 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 or products.

(b) An education service provider or vendor of educational products may appeal to the commissioner a finding under Subsection (a).

(c) If an education service provider or vendor of educational products is declared ineligible to participate in the program under this section, the agency shall:

(1) notify program participants of the declaration as soon as practicable; and

(2) reject any account expenditure made to the education service provider or vendor of educational products after the date of the declaration.

Sec. 29.364. EDUCATION SERVICE PROVIDER AND VENDOR AUTONOMY. (a) An education service provider or vendor of educational products that receives funds distributed under the program is not an agent of the state or federal government.

(b) The program does not expand the regulatory authority of the state or any school district to impose any additional regulation on an education service provider or vendor of educational products except those reasonably necessary to enforce the program as provided by this subchapter.

(c) An education service provider or vendor of educational products may not be required to modify the provider's or vendor's creed, practices, admissions policies, or curriculum, as applicable, to receive money distributed under the program.

(d) In any 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 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. 29.365. STUDENT RECORDS AND INFORMATION. On request by the parent of a child participating 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.

Sec. 29.366. PARENT REVIEW COMMITTEE. (a) A parent review committee is established to assist the commissioner in:

(1) determining whether certain expenses are allowed under Section 29.356;

(2) reviewing an appeal of the agency's decision to declare an education service provider or vendor of educational products ineligible to participate in the program under Section 29.363; and

(3) implementing and administering the program.

(b) The committee consists of seven members appointed by the commissioner. Each member must be a parent of a child participating in the program. In making appointments to the committee, the commissioner shall ensure that parents from at least four counties are included.

(c) A member of the committee serves a one-year term at the pleasure of the commissioner and may be reappointed.

(d) The commissioner or the commissioner's designee is the nonvoting chair of the committee.

Sec. 29.367. GIFTS, GRANTS, AND DONATIONS. The commissioner may solicit and accept gifts, grants, and donations from any public or private source for the program.

Sec. 29.368. RIGHT TO INTERVENE IN CIVIL ACTION. (a) A program participant may intervene in any civil action challenging the constitutionality of the program.

(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.

Sec. 29.369. RULES. The commissioner shall adopt rules as necessary to implement this subchapter. The rules may include:

(1) establishing a telephonic or online anonymous fraud reporting service;

(2) requiring a surety bond from an education service provider or vendor of educational products that receives more than $100,000 per year from funds distributed under the program; or

(3) providing for an education service provider or vendor of educational products to refund to a program participant's account payments made from that account.

SECTION 2. This Act applies beginning with the 2023-2024 school year.

SECTION 3. Not later than 90 days after the effective date of this Act, the commissioner of education 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 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. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2023.