Bill Text: TX SB1906 | 2019-2020 | 86th Legislature | Introduced

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Bill Title: Relating to an insurance premium tax credit for contributions made to certain educational assistance organizations.

Sponsorship: Partisan Bill (Republican 1)

Status: (Introduced - Dead) 2019-03-19 - Referred to Education [SB1906 Detail]

Download: Texas-2019-SB1906-Introduced.html

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86R3377 BEF-F
By: Campbell S.B. No. 1906

A BILL TO BE ENTITLED
AN ACT
relating to an insurance premium tax credit for contributions made
to certain educational assistance organizations.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. 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
CERTAIN EDUCATIONAL ASSISTANCE ORGANIZATIONS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 230.001. DEFINITIONS. In this chapter:
(1) "Educational assistance organization" means an
organization that:
(A) has the ability according to the
organization's charter to award scholarships to or pay educational
expenses for eligible students in:
(i) public elementary or secondary schools
located in this state; or
(ii) nonpublic elementary or secondary
schools located in this state:
(a) that meet the requirements of
Section 230.052;
(b) at which a student may fulfill
this state's compulsory attendance requirements; and
(c) that are not in violation of the
federal Civil Rights Act of 1964 (42 U.S.C. Section 2000a et seq.);
and
(B) uses part of its annual revenue to award
scholarships to or pay educational expenses for primary and
secondary school students.
(2) "State premium tax liability" means any liability
incurred by an entity under Chapters 221 through 226.
(3) "Student with a disability" means a child who:
(A) has a diagnosis for a disability listed in
Section 29.003(b), Education Code; or
(B) is covered by Section 504, Rehabilitation Act
of 1973 (29 U.S.C. Section 794).
Sec. 230.002. RULES; PROCEDURES. (a) The comptroller
shall adopt rules and procedures to implement, administer, and
enforce this chapter.
(b) A rule adopted under Subsection (a) is binding on an
organization that applies for certification as an educational
assistance organization, an entity that applies for a credit, and a
state or local governmental entity, including a political
subdivision, as necessary to implement, administer, and enforce
this chapter.
SUBCHAPTER B. SCHOLARSHIP AND EDUCATIONAL EXPENSE ASSISTANCE
PROGRAM
Sec. 230.051. ELIGIBILITY REQUIREMENTS FOR CERTIFICATION
OF EDUCATIONAL ASSISTANCE ORGANIZATION. (a) An organization may
apply to the comptroller for certification as a certified
educational assistance organization.
(b) To be eligible for certification, the organization:
(1) must:
(A) be exempt from federal tax 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;
(B) be in good standing with the state;
(C) be located in the state;
(D) allocate at least 90 percent of its annual
revenue from contributions that are designated for scholarships or
educational expense assistance for eligible students under this
chapter for student scholarships and assistance for educational
expenses, including tuition, transportation, textbooks, and other
supplies, and for other related educational expense assistance as
described by this section;
(E) award scholarships and assistance for
qualifying educational expenses to eligible students who
demonstrate the greatest financial and academic need;
(F) agree to give each donor a receipt for money
contributed to the organization that includes the name of the
organization, the name of the donor, the amount of the
contribution, the information required by Section 230.054(c), and
any other information required by the comptroller;
(G) demonstrate experience and technical
expertise in:
(i) accepting, processing, and tracking
applications for scholarships or educational expense assistance;
and
(ii) awarding scholarships to students in
primary or secondary schools;
(H) agree to be independently audited on an
annual basis and file the audit with the comptroller; and
(I) disburse within two academic years of receipt
contributions received from and designated by entities for
scholarships or educational expense assistance under this chapter;
and
(2) may not:
(A) award all scholarships under this chapter to
students who attend a particular school or pay educational expenses
incurred only at a particular school;
(B) provide to a student a scholarship in an
annual amount that exceeds the amount provided under Section
230.055(a) unless the money used to provide the portion of the
scholarship in excess of that amount was contributed by a person
other than an entity that notifies the organization under Section
230.054(c) that the entity may apply for a tax credit for the
contribution; and
(C) provide to a student educational expense
assistance in excess of the amount provided under Section
230.055(b) per academic year, unless the money used to provide the
portion of the assistance in excess of that amount was contributed
by a person other than an entity that notifies the organization
under Section 230.054(c) that the entity may apply for a tax credit
for the contribution, including assistance for:
(i) facility fees;
(ii) textbooks;
(iii) school supplies;
(iv) tutoring;
(v) academic after-school programs;
(vi) school or lab fees;
(vii) before-school or after-school child
care; and
(viii) transportation expenses, including
the cost to transfer from one public school to another.
(c) The comptroller may certify not more than 25 certified
educational assistance organizations. The comptroller may certify
as a certified educational assistance organization an organization
that applies under Subsection (a) if the organization meets the
requirements of Subsection (b). The comptroller has broad
discretion in determining whether to grant or deny an application
for certification.
(d) The comptroller shall notify an organization in writing
of the comptroller's decision to grant or deny the application
under Subsection (a). If the comptroller denies an organization's
application, the comptroller shall include in the notice of denial
the reasons for the comptroller's decision.
(e) If the comptroller denies an organization's application
under Subsection (a), the organization may request in writing a
reconsideration of the application not later than the 10th day
after the date of the notice under Subsection (d). If the
organization does not request a reconsideration of the application
on or before that date, the comptroller's decision is final. An
organization may not request reconsideration of an application if
the comptroller denied the application because 25 organizations
were already certified as certified educational assistance
organizations.
(f) An organization 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 organization'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
certification as a certified educational assistance organization.
Sec. 230.0515. ALLOCATION OF MONEY DESIGNATED FOR
SCHOLARSHIPS OR EDUCATIONAL EXPENSE ASSISTANCE. Of the amount
required to be allocated as provided by Section 230.051(b)(1)(D), a
certified educational assistance organization shall use:
(1) at least 80 percent to award scholarships as
described by Sections 230.055(a); and
(2) not more than 20 percent to award educational
expense assistance as described by Section 230.055(b).
Sec. 230.052. NONPUBLIC SCHOOL REQUIREMENTS. A certified
educational assistance organization may not award scholarships to
or pay educational expenses for eligible students enrolled in a
nonpublic school unless the nonpublic school executes a notarized
affidavit, with supporting documents, concerning the school's
qualification for scholarships and educational expense assistance
for eligible students who receive assistance from a certified
educational assistance organization, including evidence of:
(1) accreditation or of actively being in the process
of accreditation by the Texas Education Agency or by an
organization recognized by the Texas Private School Accreditation
Commission;
(2) annual administration of a nationally
norm-referenced assessment instrument or the appropriate
assessment instrument required under Section 39.023, Education
Code;
(3) valid certificate of occupancy; and
(4) policy statements regarding:
(A) admissions;
(B) curriculum;
(C) safety;
(D) food service inspection; and
(E) student to teacher ratios.
Sec. 230.053. ELIGIBILITY OF STUDENTS; NOTICE TO CERTAIN
PARENTS. (a) To be eligible to apply for assistance from a
certified educational assistance organization under this chapter:
(1) a student:
(A) must:
(i) be a student with a disability; or
(ii) have a household income not greater
than 100 percent of the income guidelines necessary to qualify for
the national free or reduced-price lunch program established under
42 U.S.C. Section 1751 et seq.; and
(B) must:
(i) have been enrolled in a public school
during the preceding school year;
(ii) be starting school in the state for the
first time;
(iii) be the sibling of a student who is
eligible; or
(iv) if the person attends a nonpublic
school, qualify as a student who is not counted toward a public
school's average daily attendance during the year in which the
student receives the scholarship or educational expense assistance
to attend the school; or
(2) the student must have previously qualified under
Subdivision (1).
(b) In addition to the students eligible under Subsection
(a), a student is eligible to apply for assistance from a certified
educational assistance organization under this chapter if:
(1) the student is in kindergarten through grade 12
and eligible under Section 29.003, Education Code, to participate
in a school district's special education program; and
(2) an individualized education program has been
developed for the student under Section 29.005, Education Code.
(c) A school district shall provide written notice of the
availability of assistance under this chapter to the parent of a
student who is eligible to apply for assistance under Subsection
(b). The notice under this subsection must inform the parent that a
qualifying school is not subject to laws regarding the provision of
education services in the same manner as a public school, and a
student with disabilities attending a qualifying school may not
receive the services a student with disabilities attending a public
school is entitled to receive under federal and state law. The
notice must provide information regarding rights to which a student
with disabilities is entitled under federal and state law if the
student attends a public school, including:
(1) rights provided under the Individuals with
Disabilities Education Act (20 U.S.C. Section 1400 et seq.),
including:
(A) an individualized education program;
(B) education services provided in the least
restrictive environment;
(C) instruction from certified teachers;
(D) due process hearings to ensure proper and
full implementation of an individualized education program;
(E) transition and planning services; and
(F) supplementary aids and services;
(2) rights provided under Subchapter A, Chapter 29,
Education Code; and
(3) other rights provided under federal or state law.
(d) A student who establishes eligibility under Subsection
(b) may continue to receive assistance under this chapter until the
earlier of the date the student graduates from high school or the
student's 22nd birthday.
(e) A certified educational assistance organization shall
award scholarships and educational expense assistance to eligible
students who apply in accordance with this chapter.
Sec. 230.054. CREDIT FOR CONTRIBUTIONS. (a) An entity may
apply for a credit under this chapter only for money contributed to
a certified educational assistance organization and designated for
scholarships or educational expense assistance for eligible
students.
(b) An entity may not apply for a credit under this chapter
for a contribution made to a certified educational assistance
organization if:
(1) the entity requires that the contribution benefit
a particular person or school; or
(2) the contribution is designated to provide a
scholarship or educational expense assistance for an entity
employee or for a spouse or dependent of an entity employee.
(c) An entity shall notify a certified educational
assistance organization in writing when the entity makes a
contribution if the entity may apply for a tax credit under this
chapter for the contribution. An entity may not apply for a credit
for the contribution unless the entity provides the notification at
the time the contribution is made. The certified educational
assistance organization shall indicate on the receipt provided
under Section 230.051(b)(1)(F) that the entity made the
notification under this subsection.
Sec. 230.055. LIMIT ON AMOUNT OF SCHOLARSHIP OR EDUCATIONAL
EXPENSE ASSISTANCE. (a) The maximum scholarship amount a
certified educational assistance organization may award to a
student under this chapter using money contributed by an entity
that notifies the organization under Section 230.054(c) that the
entity may apply for a tax credit for the contribution may not
exceed 75 percent of the amount of funding equal to the statewide
average amount to which a school district would be entitled under
the Foundation School Program under Chapter 42, Education Code, for
a student in average daily attendance.
(b) The maximum educational expense assistance a certified
educational assistance organization may award to a student under
this chapter using money contributed by an entity that notifies the
organization under Section 230.054(c) that the entity may apply for
a tax credit for the contribution may not exceed $500 for the 2020
state fiscal year, increased by five percent each subsequent year.
Sec. 230.056. REVOCATION. (a) The comptroller shall
revoke a certification provided under Section 230.051 if the
comptroller finds that a certified educational assistance
organization:
(1) is no longer eligible under Section 230.051; or
(2) intentionally and substantially violates this
chapter.
(b) The comptroller has broad discretion in determining
whether to revoke a certification under Subsection (a).
(c) The comptroller shall notify a certified educational
assistance organization in writing of the comptroller's decision to
revoke the organization's certification. If the comptroller
revokes an organization's certification, the comptroller shall
include in the notice of revocation the reasons for the revocation.
(d) If the comptroller revokes a certified educational
assistance organization's certification under Subsection (a), the
organization may request in writing a reconsideration of the
revocation not later than the 10th day after the date of the notice
under Subsection (c) or the revocation is final.
(e) An organization that requests a reconsideration under
Subsection (d) 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 organization's
request for reconsideration.
(f) The comptroller's reconsideration of a revocation under
this section is not a contested case under Chapter 2001, Government
Code. The comptroller's decision on a request for reconsideration
of a revocation is final and is not appealable.
(g) This section does not create a cause of action to
contest a decision of the comptroller to revoke a certified
educational assistance organization's certification under this
chapter.
(h) Revocation of a certification under this section does
not affect the validity of a tax credit relating to a contribution
made before the date of revocation.
Sec. 230.057. REPORT OF NET SAVINGS TO PUBLIC EDUCATION.
(a) In this section, "net savings" means any positive difference in
a state fiscal year between:
(1) the amount by which state spending on public
education for that year is reduced as a result of students receiving
scholarships and educational expense assistance from certified
educational assistance organizations under this chapter; and
(2) the amount by which state revenue derived from
Chapters 221 through 226 is reduced as a result of tax credits under
this chapter.
(b) Not later than December 31 of each even-numbered year,
the comptroller shall determine the amount of net savings for the
previous state fiscal biennium and make available to the public a
report of that amount of savings.
SUBCHAPTER C. CREDIT
Sec. 230.101. CREDIT. An entity may apply for a credit
against the entity's state premium tax liability in the amount and
under the conditions and limitations provided by this chapter. The
comptroller shall award credits as provided by Section 230.103.
Sec. 230.102. 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 of the qualifying contributions
made to a certified educational assistance organization or 50
percent of the entity's state premium tax liability.
(b) For the 2020 state fiscal year, the total amount of tax
credits that may be awarded under this chapter may not exceed $100
million. For each subsequent state fiscal year, the total amount of
tax credits that may be awarded is an amount equal to 110 percent of
the total amount of tax credits that may be applied for in the
previous state 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 first allocated to
entities that were granted preliminary approval for a credit under
Section 230.1025 in the amount that was preliminarily approved. The
procedures must provide that any remaining credits are allocated 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. 230.1025. PRELIMINARY APPROVAL FOR CREDIT. (a) Before
making a contribution to a certified educational assistance
organization, 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 of a
credit on a form provided by the comptroller that includes the
amount the entity expects to contribute and any other information
required by the comptroller.
(c) The comptroller shall grant preliminary approval for
credits under this chapter on a first-come, first-served basis,
based on the date the application for preliminary approval is
received by the comptroller.
(d) The comptroller shall grant preliminary approval for a
credit under this chapter if the total amount of credits
preliminarily approved under this chapter does not exceed the
amount provided by Section 230.102(b).
(e) A credit for which the comptroller grants preliminary
approval remains subject to the limitation under Section 230.102(a)
and any other limitations prescribed by this chapter.
Sec. 230.103. APPLICATION FOR CREDIT. (a) An entity must
apply for a credit under this chapter on or with the tax return for
the taxable year and submit with the application each receipt
issued under Section 230.051(b)(1)(F) that includes the
information required by Section 230.054(c).
(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) 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
230.102(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 of the
notice under Subsection (d). 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. 230.104. 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. 230.105. 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 2. (a) The constitutionality and other validity
under the state or federal constitution of all or any part of
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 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 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 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, 32.1(g), 37.3(a)(1),
38.6(a) and (b), 40.1(b), and 49.4.
SECTION 3. An entity may apply for a credit under Chapter
230, Insurance Code, as added by this Act, only for an expenditure
made on or after the effective date of this Act.
SECTION 4. Not later than February 15, 2020, the
comptroller of public accounts shall adopt rules as provided by
Section 230.002(a), Insurance Code, as added by this Act.
SECTION 5. The comptroller of public accounts shall make
the initial determination of net savings and report regarding that
savings as required by Section 230.057, Insurance Code, as added by
this Act, not later than December 31, 2022, based on the state
fiscal biennium ending August 31, 2021.
SECTION 6. This Act applies only to a report originally due
on or after the effective date of this Act.
SECTION 7. This Act takes effect January 1, 2020.