Bill Text: TX SB2 | 2025-2026 | 89th Legislature | Enrolled

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Bill Title: Relating to the establishment of an education savings account program.

Sponsorship: Broadly Bipartisan Bill

Status: (Passed) 2025-05-03 - Effective on 9/1/25 [SB2 Detail]

Download: Texas-2025-SB2-Enrolled.html

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S.B. No. 2

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. The purpose of this Act is to:
(1) provide additional educational options to assist
families in this state in exercising the right to direct the
educational needs of their children; and
(2) achieve a general diffusion of knowledge.
SECTION 2. 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 an organization certified under Section 29.354 to support the
administration of 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) "Higher education provider" means an institution
of higher education or a private or independent institution of
higher education, as those terms are defined by Section 61.003.
(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) "Participating child" means a child enrolled in
the program.
(7) "Participating parent" means a parent of a
participating child.
(8) "Program" means the program established under this
subchapter.
(9) "Program participant" means a participating child
or a participating parent.
Sec. 29.352. ESTABLISHMENT OF PROGRAM. (a) The
comptroller shall establish and administer a program to provide
funding for approved education-related expenses of children
participating in the program and has the authority to:
(1) execute contracts, agreements, and other
instruments for goods and services;
(2) engage the services of private consultants,
actuaries, trustees, records administrators, managers, and legal
counsel for administrative and technical assistance; and
(3) perform any duty assigned to a certified
educational assistance organization under this subchapter.
(b) The program confers a state benefit to program
participants in addition to a free public education.
Sec. 29.3521. AMOUNT OF APPROPRIATION; LIMITATION ON
EXPENDITURES. (a) In the comptroller's legislative appropriations
request for each state fiscal biennium, the comptroller shall state
the amount of money necessary for the biennium to provide the amount
specified under Section 29.361 for each:
(1) participating child;
(2) child on the waiting list maintained by the
comptroller under Section 29.356(f) on the January 1 preceding the
biennium; and
(3) child who is a sibling of a participating child and
is eligible for the program under Section 29.355 for the first time
during that biennium.
(b) For purposes of Subsection (a), the comptroller shall
specify the amount described by that subsection for the first state
fiscal year of the biennium and estimate the amount required for the
second state fiscal year of the biennium.
(c) Notwithstanding the amount stated in the comptroller's
legislative appropriations request under Subsection (a), the
amount appropriated for purposes of the program for a state fiscal
biennium must be established by the legislature by appropriation
for that biennium.
(c-1) Notwithstanding any other law, for the state fiscal
biennium beginning September 1, 2025, the amount spent for purposes
of the program may not exceed $1 billion. This subsection expires
September 1, 2027.
(d) Notwithstanding any other provision of this subchapter,
for each school year, the total amount of money spent for purposes
of participation in the program by children described by Section
29.356(b)(2)(D) may not exceed 20 percent of the amount of money
appropriated from the program fund for that school year. In
allocating money under the program in accordance with this
subsection, the comptroller shall ensure children who were enrolled
in a school district or open-enrollment charter school for at least
90 percent of the preceding school year are prioritized.
Sec. 29.353. PROGRAM FUND. (a) The 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) interest and other earnings attributable to the
investment of money in the fund;
(4) gifts, grants, and donations received under
Section 29.370; and
(5) any other money available for purposes of the
program.
(c) Money in the fund may be used only for the purposes
specified by this subchapter.
Sec. 29.3535. PROMOTION OF PROGRAM. Notwithstanding any
other law, the comptroller or the comptroller's designee may enter
into contracts or agreements and engage in marketing, advertising,
and other activities to promote, market, and advertise the
development and use of the program. The comptroller may use money
from the program fund to pay for activities authorized under this
section.
Sec. 29.354. 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 one or more of the
duties and functions required of a certified educational assistance
organization under this subchapter;
(2) be registered to do business in this state; and
(3) be able to assist the comptroller in administering
the program wholly or partly, including the ability to:
(A) accept, process, and track applications for
the program;
(B) assist prospective applicants, applicants,
and program participants with finding preapproved education
service providers and vendors of educational products;
(C) accept and process payments for approved
education-related expenses;
(D) verify that program funding is used only for
approved education-related expenses;
(E) verify that a program participant is eligible
to participate in the program;
(F) accept, track, review, and resolve inquiries
and complaints received regarding the program; and
(G) establish and maintain a
comptroller-approved Internet website for the program.
(c) The comptroller shall establish cybersecurity
requirements for certified educational assistance organizations,
including the implementation of best practices developed under
Section 2054.5181, Government Code.
(d) The comptroller may certify not more than five
educational assistance organizations to support the administration
of the program, including by:
(1) administering wholly or partly:
(A) the application process under Section
29.356; and
(B) the program expenditures process under
Section 29.360; and
(2) assisting prospective applicants, applicants, and
program participants with understanding approved education-related
expenses and finding preapproved education service providers and
vendors of educational products.
(e) A certified educational assistance organization
designated to perform duties described by Subsection (d)(2) shall:
(1) communicate with parents interested in
participating in the program and program participants through
synchronous and asynchronous communication, prioritizing
synchronous communication, regarding:
(A) the educational options available in this
state;
(B) how and when to apply to the program and
preapproved education service providers;
(C) how to manage an account, including
requesting payments;
(D) program requirements; and
(E) any other information necessary to fulfill
the organization's responsibilities under this subchapter; and
(2) raise awareness regarding the availability of the
program.
(f) The comptroller may designate a certified educational
assistance organization to establish and maintain a
comptroller-approved Internet website for the program.
Sec. 29.355. ELIGIBLE CHILD. (a) A child is eligible to
participate in the program and may, subject to available funding,
enroll in the program for the semester following the semester in
which the child's application is submitted under Section 29.356 if:
(1) the child's parent establishes that the child is a
citizen or national of the United States or was lawfully admitted
into the United States; and
(2) the child is eligible to:
(A) attend a school district or open-enrollment
charter school under Section 25.001, including if the child is a
child of a parent who is an active duty member of the United States
armed forces; or
(B) enroll in a school district's or
open-enrollment charter school's prekindergarten program under
Section 29.153.
(a-1) A child's parent may establish proof of the child's
residency in this state for purposes of verifying the child's
eligibility to participate in the program under Subsection (a)(2)
by submitting any of the following documents in the parent's name:
(1) a utility bill;
(2) a lease agreement or mortgage statement;
(3) a driver's license or state ID;
(4) a voter registration certificate;
(5) a letter from a government agency; or
(6) a notarized affidavit of residency.
(b) A child who establishes eligibility under this section
may, subject to available funding and the requirements of this
subchapter, participate in the program until the earliest of the
date on which:
(1) the child graduates from high school;
(2) the child is no longer eligible to either attend a
school district or open-enrollment charter school under Section
25.001 or enroll in a school district's or open-enrollment charter
school's prekindergarten program under Section 29.153, as
applicable;
(3) the child enrolls in a school district or
open-enrollment charter school in a manner in which the child will
be counted toward the district's or school's average daily
attendance for purposes of the allocation of funding under the
Foundation School Program; or
(4) the child is declared ineligible for the program
by the comptroller under this subchapter.
Sec. 29.356. APPLICATION TO PROGRAM. (a) A parent of an
eligible child may apply to a certified educational assistance
organization designated by the comptroller to enroll the child in
the program for the following semester, term, or school year, as
determined by the comptroller. The comptroller shall establish
deadlines by which an applicant must complete and submit an
application form to participate in the program.
(b) On receipt of more acceptable applications during an
application period for admission under this section than available
positions in the program due to insufficient funding, a certified
educational assistance organization shall, at the direction of the
comptroller, fill the available positions by lottery of applicants,
approving applicants:
(1) in the following order:
(A) siblings of participating children;
(B) children to whom Paragraph (C) does not
apply; and
(C) children who previously ceased participation
in the program due to enrollment in a school district or
open-enrollment charter school; and
(2) within each of the groups described by Subdivision
(1), in the following order, as applicable:
(A) children with a disability who are members of
a household with a total annual income that is at or below 500
percent of the federal poverty guidelines;
(B) children who are members of a household with
a total annual income that is at or below 200 percent of the federal
poverty guidelines;
(C) children who are members of a household with
a total annual income that is above 200 percent of the federal
poverty guidelines and below 500 percent of the federal poverty
guidelines; and
(D) children who are members of a household with
a total annual income that is at or above 500 percent of the federal
poverty guidelines.
(c) For purposes of Subsection (b), a certified educational
assistance organization that receives an application from an
eligible child and the child's eligible sibling during the same
application cycle and approves the child's application shall
approve the sibling's application at the same time.
(d) The comptroller shall adopt rules necessary to
administer Subsection (b). The comptroller shall provide for
posting on the Internet website established and maintained for the
program any rule adopted under this subsection.
(e) The comptroller shall create an application form for the
program and make the application form readily available through
various sources, including the Internet website established and
maintained for the program. The application form must state the
application deadlines established by the comptroller under
Subsection (a). Each certified educational assistance
organization shall ensure that the organization is capable of
receiving the application form, including any required supporting
document, electronically.
(f) The comptroller shall create and maintain a waiting list
based on the priority categories described by Subsection (b) for
applicants if, during an application period, there are more
acceptable applications for admission than there are available
positions.
(g) Each certified educational assistance organization
designated under Subsection (a) shall provide for posting on the
Internet website established and maintained for the program a
comptroller-approved applicant and participant handbook with a
description of the program, including:
(1) expenses allowed under the program under Section
29.359;
(2) a list of preapproved education service providers
and vendors of educational products under Section 29.358;
(3) a description of the application process under
this section and the program expenditures process under Section
29.360; and
(4) a description of the responsibilities of program
participants.
(h) Each certified educational assistance organization
designated under Subsection (a) shall annually provide to each
participating parent served by the organization the information
described by Subsection (g). The organization may provide the
information electronically.
(i) The comptroller or a certified educational assistance
organization designated under Subsection (a):
(1) may require the participating parent to submit
annual notice regarding the parent's intent for the child to
continue participating in the program for the next school year; and
(2) may not require a program participant in good
standing to annually resubmit an application for continued
participation in the program.
(j) The agency shall provide to the comptroller the
information necessary to make the determinations required under
Subsection (b).
Sec. 29.357. PARTICIPATION IN PROGRAM. (a) To receive
funding under the program, a participating parent must agree to:
(1) request that program money be spent only for
expenses allowed under Section 29.359;
(2) share or authorize the administrator of an
assessment instrument to share with the program participant's
certified educational assistance organization the results of any
assessment instrument required to be administered to the child
under Section 29.358(b)(2)(B) or other law;
(3) refrain from selling an item purchased with
program money; and
(4) notify the program participant's certified
educational assistance organization not later than 30 business days
after the date on which the child:
(A) enrolls in a school district or
open-enrollment charter school;
(B) graduates from high school; or
(C) is no longer eligible to either:
(i) enroll in a school district or
open-enrollment charter school under Section 25.001; or
(ii) enroll in a school district's or
open-enrollment charter school's prekindergarten program under
Section 29.153.
(b) The administrator of an assessment instrument required
to be administered under Section 29.358(b)(2)(B) or other law shall
share with a parent the participating child's results on the
assessment instrument, including, if available, the participating
child's percentile rank. A child's results and rank on an
assessment instrument administered under this section are
confidential, are not subject to disclosure under Chapter 552,
Government Code, and may only be shared as necessary to fulfill the
requirements of this subchapter. In providing the results and rank
for an assessment instrument, the administrator shall ensure
compliance with state and federal law regarding the confidentiality
of student educational information, including the Family
Educational Rights and Privacy Act of 1974 (20 U.S.C. Section
1232g).
Sec. 29.358. PREAPPROVED PROVIDERS AND VENDORS. (a) The
comptroller shall by rule establish a process for the preapproval
of education service providers and vendors of educational products
for participation in the program. The comptroller shall allow for
the submission of applications on a rolling basis.
(b) The comptroller shall approve an education service
provider or vendor of educational products for participation in the
program if the provider or vendor:
(1) has previously been approved by the agency to
provide supplemental special education services under Subchapter
A-1 and remains in good standing with the agency;
(2) for a private school, demonstrates:
(A) accreditation by an organization recognized
by:
(i) the Texas Private School Accreditation
Commission; or
(ii) the agency;
(B) annual administration for students in grades
3 through 12 of a nationally norm-referenced assessment instrument
or the appropriate assessment instrument required under Subchapter
B, Chapter 39; and
(C) the school has continuously operated a campus
for at least two school years preceding the date the school seeks
approval under this section;
(3) for a school district or open-enrollment charter
school, demonstrates:
(A) accreditation by the agency; and
(B) the ability to provide services or products
to participating children in a manner in which the children are not
counted toward the district's or school's average daily attendance;
(4) for a private tutor, therapist, or teaching
service, demonstrates that:
(A) the tutor or therapist or each employee of
the teaching service who intends to provide educational services to
a participating child:
(i) is an educator employed by or a retired
educator formerly employed by a school accredited by the agency, an
organization recognized by the agency, or an organization
recognized by the Texas Private School Accreditation Commission;
(ii) holds a relevant license or
accreditation issued by a state, regional, or national
certification or accreditation organization; or
(iii) is employed in or retired from a
teaching or tutoring capacity at a higher education provider;
(B) the tutor or therapist or each employee of
the teaching service who intends to provide educational services to
a participating child provides to the comptroller a national
criminal history record information review completed for the tutor,
therapist, or employee, as applicable, within a period established
by comptroller rule or authorizes the comptroller or the
comptroller's designee to conduct a national criminal history
record information review of the tutor, therapist, or employee as
prescribed by comptroller rule; and
(C) the tutor or therapist or each employee of
the teaching service who intends to provide educational services to
a participating child is not:
(i) required to be discharged or refused to
be hired by a school district under Section 22.085; or
(ii) included in the registry under Section
22.092;
(5) for a higher education provider, demonstrates
nationally recognized postsecondary accreditation; or
(6) notwithstanding Subdivision (2), for a private
provider serving children in prekindergarten or kindergarten,
demonstrates that the provider meets the requirements to be an
eligible private provider under Section 29.171.
(b-1) The comptroller may approve a vendor of educational
products that provides products or services described by Section
29.359(a)(1)(C), (2), (4), (6), (8), or (9) for participation in
the program in accordance with comptroller rule.
(c) The comptroller may approve only an education service
provider located in this state or vendor of educational products
registered to do business in this state.
(d) An education service provider or vendor of educational
products shall provide information requested by the comptroller to
verify the provider's or vendor's eligibility for preapproval under
this section. The comptroller may not approve a provider or vendor
if the comptroller cannot verify the provider's or vendor's
eligibility for preapproval.
(e) Each applicant for approval under this section shall
submit to the comptroller documentation demonstrating that each
person employed by the applicant or provider who will interact with
a participating child is not identified as having engaged in
misconduct described by Section 22.093(c)(1)(A) or (B) using the
interagency reportable conduct search engine established under
Chapter 810, Health and Safety Code.
(f) The comptroller or the comptroller's designee shall
review the documentation for each person described by Subsection
(e). Each applicant for approval under this section must provide
the comptroller or the comptroller's designee with any information
requested by the comptroller or designee to enable the comptroller
or designee to complete the review.
(g) An education service provider or vendor of educational
products must agree to:
(1) abide by the disbursement schedule under Section
29.360(c) and all other requirements of this subchapter;
(2) accept money from the program only for
education-related expenses approved under Section 29.359;
(3) notify the comptroller not later than the 30th day
after the date that the provider or vendor no longer meets the
requirements of this section; and
(4) return any money received, including any interest
or other additions received related to the money, in violation of
this subchapter or other relevant law to the comptroller for
deposit into the program fund.
(h) An education service provider or vendor of educational
products that receives approval under this section may participate
in the program until the earliest of the date on which the provider
or vendor:
(1) no longer meets the requirements under this
section; or
(2) violates this subchapter or other relevant law.
Sec. 29.3585. PROVIDER AND VENDOR SUSPENSION AND REMOVAL.
(a) The comptroller shall immediately suspend a preapproved
education service provider or vendor of educational products on
finding that the provider or vendor:
(1) is ineligible under this subchapter for
participation in the program; or
(2) has failed to remain in good standing by complying
with a program requirement under this subchapter or other
applicable law.
(b) A payment may not be made from a program participant's
account to a suspended provider or vendor.
(c) On suspension under this section, the comptroller shall
immediately send notice of the suspension to the suspended provider
or vendor and each certified educational assistance organization by
first class mail and e-mail. The notice must include a statement
that:
(1) specifies the grounds for suspending the provider
or vendor;
(2) no additional payments may be made to the provider
or vendor from a program participant's account during the
provider's or vendor's suspension; and
(3) the provider or vendor has 30 days to respond and
take any corrective action required to comply with program
requirements and applicable law.
(d) Not later than the 30th day after the date the
comptroller provides notice of suspension under Subsection (c), the
comptroller shall:
(1) remove the provider or vendor from the program;
(2) conditionally reinstate the provider or vendor and
require the provider or vendor to perform a specified action; or
(3) unconditionally reinstate the provider or vendor.
(e) On removing a provider or vendor from the program, the
comptroller shall notify the provider or vendor and each certified
educational assistance organization of the removal.
Sec. 29.359. APPROVED EDUCATION-RELATED EXPENSES. (a)
Subject to Subsection (b), a participating parent may request that
program money be spent only for the following education-related
expenses incurred by a participating child at a preapproved
education service provider or vendor of educational products:
(1) tuition and fees for:
(A) a private school;
(B) a higher education provider;
(C) an online educational course or program; or
(D) a program that provides training for an
industry-based credential approved by the agency;
(2) the purchase of textbooks or other instructional
materials or uniforms required by a private school, higher
education provider, or course in which the child is enrolled,
including purchases made through a third-party vendor of
educational products;
(3) fees for classes or other educational services
provided by a school district or open-enrollment charter school if
the classes or services do not qualify the child to be included in
the school's average daily attendance;
(4) costs related to academic assessments;
(5) fees for services provided by a private tutor or
teaching service;
(6) 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;
(7) fees for educational therapies or services
provided by a practitioner or provider, only for 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;
(8) costs of computer hardware or software and other
technological devices required by an education service provider or
vendor of educational products or prescribed by a physician to
facilitate a child's education, not to exceed in any year 10 percent
of the total amount transferred to the participating child's
account that year; and
(9) costs of breakfast or lunch provided to a child
during the school day by a private school.
(b) Money transferred under the program to a participating
child's account may not be used to pay any person who is related to
the program participant within the third degree by consanguinity or
affinity, as determined under Chapter 573, Government Code.
(c) A finding that a program participant requested that
program money be spent to pay for an expense not allowed under
Subsection (a) does not affect the validity of any payment
requested by the participant for an approved education-related
expense that is allowed under that subsection.
Sec. 29.360. PROGRAM EXPENDITURES. (a) The comptroller
shall disburse from the program fund to each certified educational
assistance organization the amount specified under Section
29.361(a) for each participating child served by the organization.
(b) To initiate payment to an education service provider or
vendor of educational products for an education-related expense
approved under Section 29.359, the participating parent must submit
a request in a form prescribed by comptroller rule to the certified
educational assistance organization that serves the child.
(c) Subject to Subsection (d) and Sections 29.362(f) and
29.364, on receiving a request under Subsection (b), a certified
educational assistance organization shall verify that the request
is for an expense approved under Section 29.359 and, not later than
the 10th business day after the date the organization verifies the
request, send payment to the education service provider or vendor
of educational products.
(d) A disbursement under this section may not exceed the
applicable participating child's account balance.
(e) A certified educational assistance organization shall
provide participating parents with electronic access to:
(1) view the participating child's current account
balance;
(2) initiate the payment request process under
Subsection (b); and
(3) view a summary of past account activity, including
payments from the account to education service providers and
vendors of educational products.
(f) A payment system established by a certified educational
assistance organization may not allow a program participant to:
(1) withdraw cash or remove funds from a participating
child's account; or
(2) receive payment or reimbursement directly from the
program.
(g) A certified educational assistance organization may not
require a program participant to pay a fee to the organization or an
affiliate of the organization related to the use of a participating
child's account, including a transaction fee.
Sec. 29.361. AMOUNT OF TRANSFER TO PARTICIPANT ACCOUNT;
FINANCING. (a) Regardless of the deadline by which the
participating parent applies for enrollment in the program under
Section 29.356(a) and except as provided by Subsections (b), (b-1),
and (d) of this section, a certified educational assistance
organization shall transfer in accordance with Section 29.362 each
school year that a participating child participates in the program
money distributed to the organization from money available under
Section 29.353 to the child's account to be held in trust for the
benefit of the child in an amount equal to:
(1) 85 percent of the estimated statewide average
amount of state and local funding per student in average daily
attendance for the most recent school year for which that
information is available, as provided by the agency; or
(2) for a child with a disability, subject to
Subsection (b), the sum of the amount described by Subdivision (1)
and the amount the school district in which the child would
otherwise be enrolled would be entitled to receive for the child
calculated based on the child's individualized education program,
as determined in accordance with Section 29.3615, and the
provisions of Chapter 48 that provide funding based on a child's
participation in a school district's special education program
under Subchapter A applicable for the school year preceding the
school year in which the child initially enrolls in the program.
(b) The amount transferred to the account of a child with a
disability for a school year under Subsection (a)(2) may not exceed
$30,000.
(b-1) Notwithstanding Subsection (a), a participating child
who is a home-schooled student, as defined by Section 29.916(a)(1),
may not receive transfers under the program to the child's account
under Subsection (a) in an amount that exceeds $2,000 for a school
year.
(c) In determining the estimated statewide average amount
of state and local funding per student in average daily attendance
for a school year under Subsection (a), the commissioner shall:
(1) make the determination not later than January 15
preceding the school year; and
(2) include projected state and local funding under
Chapters 48 and 49 and the amount the state is required to
contribute to the Teacher Retirement System of Texas under Section
825.404, Government Code, for the school year.
(d) If a child enrolls in the program after the beginning of
a school year, the comptroller shall prorate the amount transferred
to the participating child's account under Subsection (a) based on
the date the child enrolls in the program.
(e) Any money remaining in a participating 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.
(f) A participating parent may make payments for the
expenses of educational programs, services, and products not
covered by money in the account of the parent's child.
(g) A transfer under Subsection (a) may not be funded using
federal money or money from the available school fund or the state
instructional materials and technology fund.
(h) Transfers to a participating child's account under this
subchapter do not constitute taxable income to a participating
parent, unless otherwise provided by federal or another state's
law.
(i) On dates consistent with satisfying the application
deadlines established under Section 29.356(a), the agency shall
calculate and report to the comptroller the amount specified under
Subsection (a) for each participating child.
Sec. 29.3611. ENROLLMENT IN PUBLIC SCHOOL. If a child
ceases participation in the program during a school year due to the
child's enrollment in a school district or open-enrollment charter
school:
(1) the district or school is entitled to receive, in
addition to other funding to which the district or school is
entitled to receive for the child, an allotment in an amount equal
to the basic allotment multiplied by 0.1 for the child's average
daily attendance at the district or school for that school year; and
(2) the child may not be considered in evaluating the
performance of a school district or open-enrollment charter school
under the public school accountability system as prescribed by
Chapters 39 and 39A for the first school year after the child ceases
participation in the program.
Sec. 29.3615. INDIVIDUALIZED EDUCATION PROGRAMS;
EVALUATIONS. (a) The parent of a child who is not enrolled in a
school district or open-enrollment charter school may request that
a school district conduct a full individual and initial evaluation
of the child for purposes of determining the child's eligibility
for:
(1) special education services under Subchapter A; and
(2) participation in the program as a child with a
disability.
(b) A school district that receives a request under this
section shall follow procedures, including for timely completion,
for a full individual and initial evaluation in accordance with 20
U.S.C. Sections 1412(a)(10)(A)(ii) and 1414 and Section 29.004 of
this code not later than the 45th school day after the date the
district receives parental consent to conduct the evaluation.
(c) If a school district determines based on an evaluation
conducted under Subsection (b) that a child is eligible for special
education services, the district shall develop an individualized
education program for the child for purposes of establishing the
child's eligibility to participate in the program as a child with a
disability.
(d) At the agency's request, a school district or
open-enrollment charter school shall provide to the agency a
child's individualized education program developed under Section
29.005 or Subsection (c) of this section, as applicable.
(e) The agency may adopt rules as necessary to implement
this section, including rules regarding an appeal of a
determination of eligibility for special education services and
services to be provided as described in an individualized education
program developed in accordance with this section.
Sec. 29.362. ADMINISTRATION OF ACCOUNTS. (a) On receipt
of money distributed by the comptroller for purposes of making
transfers to the accounts of participating children, a certified
educational assistance organization shall hold that money in trust
for the benefit of children participating in the program and make
transfers to the account of each participating child served by the
organization as follows:
(1) not later than July 1, at least one-quarter of the
total annual amount;
(2) not later than October 1, one-half of the total
annual amount; and
(3) not later than April 1, the total remaining amount
after the transfers under Subdivisions (1) and (2).
(b) Each year, the comptroller may deduct from the total
amount of money appropriated for purposes of this subchapter an
amount, not to exceed three percent of that total amount, to cover
the comptroller's cost of administering the program.
(c) The comptroller may disburse each state fiscal year a
total amount, not to exceed five percent of the amount of money
appropriated for purposes of the program for that state fiscal
year, to the certified educational assistance organizations for the
cost of providing services under this subchapter.
(d) On or before the first day of October and February, a
certified educational assistance organization shall:
(1) verify with the agency that each participating
child is not enrolled in a school district or open-enrollment
charter school in a manner in which the child is counted toward the
district's or school's average daily attendance for purposes of the
allocation of state funding under the Foundation School Program;
and
(2) notify the comptroller if the organization
determines that a participating child is:
(A) enrolled in a school district or
open-enrollment charter school in a manner in which the child is
counted toward the district's or school's average daily attendance
for purposes of the allocation of state funding under the
Foundation School Program; or
(B) not enrolled in a preapproved private school.
(e) The comptroller by rule shall establish a process by
which a participating parent may authorize the comptroller or a
certified educational assistance organization to make a payment
directly from the participant's account to a preapproved education
service provider or vendor of educational products for an expense
allowed under Section 29.359.
(f) On the date on which a child who participated in the
program is no longer eligible to participate in the program under
Section 29.355 and payments for any education-related expenses
allowed under Section 29.359 from the child's account have been
completed, the participating child's account shall be closed and
any remaining money returned to the comptroller for deposit in the
program fund.
(g) Each quarter, any interest or other earnings
attributable to money held by a certified educational assistance
organization for purposes of the program shall be remitted to the
comptroller for deposit in the program fund.
Sec. 29.363. AUDITING. (a) The comptroller shall contract
with a private entity to audit accounts and program participant
eligibility data not less than once per year to ensure compliance
with applicable law and program requirements. The audit must
include a review of:
(1) each certified educational assistance
organization's internal controls over program transactions; and
(2) compliance by:
(A) certified educational assistance
organizations with Section 29.354 and other program requirements;
(B) program participants with Section 29.357(a)
and other program requirements; and
(C) education service providers and vendors of
educational products with Section 29.358 and other program
requirements.
(b) In conducting an audit, the private entity may require a
program participant, education service provider or vendor of
educational products, or certified educational assistance
organization to provide information and documentation regarding
any transaction occurring under the program.
(c) The private entity shall report to the comptroller any
violation of this subchapter or other relevant law and any
transactions the entity determines to be unusual or suspicious
found by the entity during an audit conducted under this section.
The comptroller shall report the violation or transaction to:
(1) the applicable certified educational assistance
organization;
(2) the education service provider or vendor of
educational products, as applicable; and
(3) each participating parent who is affected by the
violation or transaction.
(d) The state auditor shall audit each certified
educational assistance organization's compliance with the
organization's duties to verify a child's eligibility to
participate in the program under Section 29.355 and verify that a
request for payment is for an approved expense under Section
29.360(c). Each organization shall submit to the state auditor
documentation of:
(1) each item of residency documentation described by
Section 29.355(a-1) reviewed by the organization;
(2) each preapproved education-related expense
category reviewed by the organization under Section 29.360(c);
(3) the number of transactions approved by the
organization; and
(4) the number of transactions denied by the
organization.
(e) The state auditor may review and analyze individual
transactions approved by a certified educational assistance
organization.
(f) The state auditor shall randomly select 10 percent of
program applications on which to perform an eligibility
verification audit.
(g) Each education service provider shall provide to the
state auditor proof of a third-party audit or financial review
consistent with the provider's accreditation commission standards.
Sec. 29.364. SUSPENSION OF ACCOUNT. (a) The comptroller
shall suspend the account of a participating child who fails to
remain in good standing by complying with applicable law or a
requirement of the program.
(b) On suspension of an account under Subsection (a), the
comptroller shall notify the participating parent 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 participating parent has 30
days to respond and take any corrective action required by the
comptroller.
(c) On the expiration of the 30-day period under Subsection
(b), the comptroller shall:
(1) order closure of the suspended account;
(2) order temporary reinstatement of the account,
conditioned on the performance of a specified action by the
participating parent; 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
29.359, for a child who was not eligible to participate in the
program at the time of the expenditure, or from an education service
provider or vendor of educational products that was not approved at
the time of the expenditure. The money and any interest or other
additions received related to the money may be recovered from the
participating parent or the education service provider or vendor of
educational products that received the money in accordance with
applicable law if the participating child's account is suspended or
closed under this section. The comptroller shall deposit money
recovered under this subsection into the program fund.
Sec. 29.365. TUITION AND FEES; REFUND PROHIBITED. (a) An
education service provider or vendor of educational products may
not charge a participating child an amount greater than the
standard amount charged for that service or product by the provider
or vendor.
(b) An education service provider or 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. 29.366. REFERRAL TO DISTRICT ATTORNEY. If the
comptroller obtains evidence of fraudulent use of an account or
money distributed under the program or any other violation of law by
a certified educational assistance organization, education service
provider or vendor of educational products, or program participant,
the comptroller shall notify the appropriate local county or
district attorney with jurisdiction over, as applicable:
(1) the principal place of business of the
organization or provider or vendor; or
(2) the residence of the program participant.
Sec. 29.367. SPECIAL EDUCATION NOTICE. (a) A certified
educational assistance organization shall post on the Internet
website established and maintained for the program and provide to
each parent who submits an application for the program a notice
that:
(1) states that a private school is not subject to
federal and state laws regarding the provision of educational
services to a child with a disability in the same manner as a school
district or open-enrollment charter school; 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 school district or open-enrollment charter
school, including:
(A) rights provided under the Individuals with
Disabilities Education Act (20 U.S.C. Section 1400 et seq.); and
(B) rights provided under Subchapter A.
(b) A private school in which a child with a disability who
is a participating child enrolls shall provide to the participating
parent a copy of the notice required under Subsection (a).
Sec. 29.368. PROGRAM PARTICIPANT, PROVIDER, AND VENDOR
AUTONOMY. (a) An education service provider or vendor of
educational products that receives money distributed under the
program is not a recipient of federal financial assistance and may
not be considered to be a state actor on the basis of receiving that
money.
(b) A state agency or state official may not adopt a rule or
take other governmental action related to the program and a
certified educational assistance organization may not take action
that:
(1) limits or imposes requirements that are contrary
to the religious or institutional values or practices of an
education service provider, vendor of educational products, or
program participant; or
(2) limits an education service provider, vendor of
educational products, or program participant from freely:
(A) determining the methods or curriculum to
educate students;
(B) determining admissions and enrollment
practices, policies, and standards;
(C) modifying or refusing to modify the
provider's, vendor's, or participant's religious or institutional
values or practices, operations, conduct, policies, standards,
assessments, or employment practices based on the provider's,
vendor's, or participant's religious values or practices; or
(D) exercising the provider's, vendor's, or
participant's religious or institutional practices as the
provider, vendor, or participant determines.
Sec. 29.369. STUDENT RECORDS AND INFORMATION. (a) On
request by the participating parent or parent of a child 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) As necessary to verify a child's eligibility for the
program, the agency, a school district, or an open-enrollment
charter school shall provide to a certified educational assistance
organization any information available to the agency, district, or
school requested by the organization regarding a child who
participates or seeks to participate in the program, including
information regarding the child's school district or
open-enrollment charter school enrollment status and whether the
child can be counted toward a school district's or open-enrollment
charter school's average daily attendance for purposes of the
allocation of funding under the Foundation School 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.
(c) A certified educational assistance organization or an
education service provider or vendor of educational products that
obtains information regarding a participating child:
(1) shall comply with state and federal law regarding
the confidentiality of student educational information; and
(2) may not:
(A) sell information regarding a participating
child; or
(B) distribute information regarding a
participating child in a manner not described by Paragraph (A)
without the program participant's consent.
(d) A student record held by the comptroller or a certified
educational assistance organization is confidential and not
subject to disclosure under Chapter 552, Government Code. The
comptroller or a certified educational assistance organization may
redact information that constitutes student records from any
information the governmental body discloses under Section 552.021,
Government Code, without the necessity of requesting a decision
from the attorney general under Subchapter G, Chapter 552,
Government Code.
Sec. 29.370. 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 establishing the program and contracting for
the report required under Section 29.371.
Sec. 29.371. ANNUAL REPORT. (a) The comptroller, in
collaboration with the agency and the certified educational
assistance organizations, shall compile program data and produce an
annual longitudinal report regarding:
(1) the number of program applications received,
accepted, and wait-listed, disaggregated by age;
(2) program participant satisfaction;
(3) the results of assessment instruments shared in
accordance with Section 29.357(a)(2);
(4) the effect of the program on public and private
school capacity and availability;
(5) the amount of cost savings accruing to the state as
a result of the program;
(6) in a report submitted in an even-numbered year
only, an estimate of the total amount of funding required for the
program for the next state fiscal biennium;
(7) the amount of gifts, grants, and donations
received under Section 29.370;
(8) based on surveys of former program participants or
other sources available to an organization, the number and
percentage of children participating in the program who, within one
year after graduating from high school, are:
(A) college ready, as indicated by earning a
minimum of 12 non-remedial semester credit hours or the equivalent
or an associate degree from a postsecondary educational
institution;
(B) career ready, as indicated by:
(i) earning a credential of value included
in a library of credentials established under Section 2308A.007,
Government Code; or
(ii) employment at or above the median wage
in the child's region; or
(C) military ready, as indicated by achieving a
passing score set by the applicable military branch on the Armed
Services Vocational Aptitude Battery and enlisting in the armed
forces of the United States or the Texas National Guard; and
(9) the dropout rate, expulsion rate, and graduation
rate of participating children who are children with a disability,
both aggregated and disaggregated by the child's:
(A) grade level;
(B) age;
(C) sex;
(D) race or ethnicity; and
(E) category under Section 29.356(b).
(b) In producing the report, the comptroller shall:
(1) use appropriate analytical and behavioral science
methodologies to ensure public confidence in the report; and
(2) comply with the requirements regarding the
confidentiality of student educational information under the
Family Educational Rights and Privacy Act of 1974 (20 U.S.C.
Section 1232g).
(c) The report must cover a period of not less than five
years and include, subject to Subsection (b)(2), the data analyzed
and methodology used.
(d) The comptroller shall provide the report for posting on
the Internet website established and maintained for the program.
(e) The comptroller shall provide the report, including
assessment data, to the commissioner.
(f) The state auditor shall review and verify the validity
of the contents of the comptroller's annual report required under
this section. If the state auditor finds any discrepancies in the
report, the state auditor may collect the data necessary to verify
and audit the data from the comptroller, the applicable certified
educational assistance organizations, and the applicable education
service providers and vendors of educational products.
Sec. 29.3715. COLLECTION AND REPORTING OF DEMOGRAPHIC
INFORMATION. (a) The comptroller, in collaboration with the
agency and the certified educational assistance organizations,
shall collect and report demographic information regarding each
participating child. The report must include the following
demographic information:
(1) the child's grade;
(2) the child's age;
(3) the child's sex;
(4) the child's race or ethnicity;
(5) the school district in which the child resides;
(6) the district campus that the child would otherwise
attend;
(7) the child's zip code;
(8) the child's date of enrollment in the program;
(9) the child's category under Section 29.356(b); and
(10) whether the child has a disability.
(b) Not later than August 1 of each year, the comptroller
shall submit a written report to the legislature summarizing the
demographic information collected under this section.
Sec. 29.372. RULES; PROCEDURES. The comptroller shall
adopt rules and procedures as necessary to implement, administer,
and enforce this subchapter.
Sec. 29.373. APPEAL; FINALITY OF DECISIONS. (a) A program
participant may appeal to the comptroller an administrative
decision made by the comptroller or a certified educational
assistance organization under this subchapter, including a
decision regarding eligibility, allowable expenses, or the
participant's removal from the program.
(b) An appeal under this subchapter does not constitute a
contested case for any purpose.
(c) This subchapter may not be construed to confer a
property right on a certified educational assistance organization,
education service provider, vendor of educational products, or
program participant.
(d) A decision of the comptroller made under this subchapter
is final and not subject to appeal.
Sec. 29.374. RIGHT TO INTERVENE IN CIVIL ACTION. (a) A
program participant, eligible child, education service provider,
or vendor of educational products 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, eligible
children, education service providers, and vendors of educational
products wishing to intervene in the action file a joint brief. A
program participant, eligible child, education service provider,
or vendor of educational products may not be required to join a
brief filed on behalf of the state or a state agency.
SECTION 3. Section 22.092(d), Education Code, is amended to
read as follows:
(d) The agency shall provide equivalent access to the
registry maintained under this section to:
(1) private schools;
(2) public schools; [and]
(3) nonprofit teacher organizations approved by the
commissioner for the purpose of participating in the tutoring
program established under Section 33.913; and
(4) the comptroller for the purpose of preapproving
education service providers and vendors of educational products
under Section 29.358 for participation in the program established
under Subchapter J, Chapter 29.
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 an employee of an education service provider or vendor
of educational products 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. Section 810.002, Health and Safety Code, is
amended to read as follows:
Sec. 810.002. APPLICABILITY. This chapter applies to the
following state agencies:
(1) the Department of Family and Protective Services;
(2) the Health and Human Services Commission;
(3) the Texas Education Agency; [and]
(4) the Texas Juvenile Justice Department; and
(5) the comptroller of public accounts.
SECTION 6. (a) Except as provided by Subsection (b) of this
section, Subchapter J, Chapter 29, Education Code, as added by this
Act, applies beginning with the 2026-2027 school year.
(b) Section 29.3521(c), Education Code, as added by this
Act, applies beginning with the state fiscal biennium beginning
September 1, 2027.
SECTION 7. (a) Not later than May 15, 2026, the comptroller
of public accounts shall adopt rules as provided by Sections
29.356(d) and 29.372, Education Code, as added by this Act.
(b) The comptroller of public accounts may identify rules
required by the passage of Subchapter J, Chapter 29, Education
Code, as added by this Act, that must be adopted on an emergency
basis for purposes of the 2026-2027 school year and may use the
procedures established under Section 2001.034, Government Code,
for adopting those rules. The comptroller of public accounts is not
required to make the finding described by Section 2001.034(a),
Government Code, to adopt emergency rules under this subsection.
SECTION 8. (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, may
be determined in an action for declaratory judgment under Chapter
37, Civil Practice and Remedies Code, in a district court in the
county in which the violation is alleged to have occurred or where
the plaintiff resides or has its principal place of business.
(b) 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, may be reviewed only by direct appeal to the Texas Supreme
Court filed not later than the 15th business day after the date on
which the order was entered. The Texas Supreme Court shall give
precedence to appeals under this section over other matters.
(c) The direct appeal is an accelerated appeal.
(d) This section exercises the authority granted by Section
3-b, Article V, Texas Constitution.
(e) 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;
(2) the applicant will suffer a probable injury that
is imminent and irreparable, and that the applicant has no other
adequate legal remedy; and
(3) maintaining the injunction is in the public
interest.
(f) 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), 28.1, 32.1, 37.3(a)(1), 38.6(a) and (b), 40.1(b),
and 49.4.
(g) 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.
(h) The attorney general shall represent the state in any
legal action brought that challenges the constitutionality or
validity of all or any part of Subchapter J, Chapter 29, Education
Code, as added by this Act.
SECTION 9. It is the intent of the legislature that every
provision, section, subsection, sentence, clause, phrase, or word
in this Act, and every application of the provisions in this Act to
each person or entity, is severable from each other. If any
application of any provision in this Act to any person, group of
persons, or circumstances is found by a court to be invalid for any
reason:
(1) the remaining applications of that provision to
all other persons and circumstances shall be severed and may not be
affected; and
(2) the court must allow continued operation of the
program without regard for the severed provision rather than
restrict program operation or participation.
SECTION 10. 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, 2025.
______________________________ ______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 2 passed the Senate on
February 5, 2025, by the following vote: Yeas 19, Nays 12; and
that the Senate concurred in House amendments on April 24, 2025, by
the following vote: Yeas 19, Nays 12.
______________________________
Secretary of the Senate
I hereby certify that S.B. No. 2 passed the House, with
amendments, on April 17, 2025, by the following vote: Yeas 86,
Nays 61.
______________________________
Chief Clerk of the House
Approved:
______________________________
Date
______________________________
Governor