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.