85R4586 BEF-D     By: Bohac H.B. No. 1184       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)  "Designated contribution" means a contribution   for which an entity provides notice under Section 230.152(c).                (2)  "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 230.101;                                  (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 for the   purpose provided by Paragraph (A).                (3)  "Eligible nonpublic school" means a school that   meets the requirements of Section 230.101.                (4)  "Net savings" means any positive difference in a   state fiscal year between:                      (A)  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 the certified   educational assistance organization under this chapter; and                      (B)  the amount by which state revenue derived   from Chapters 221 through 226 is reduced as a result of tax credits   under this chapter.                (5)  "State premium tax liability" means any liability   incurred by an entity under Chapters 221 through 226.          Sec. 230.002.  TREATMENT OF CERTAIN CONTRIBUTIONS AS PROGRAM   FUNDS. (a) In this chapter, "program funds" means money   contributed to the certified educational assistance organization   in a state fiscal year for which entities are granted tax credits   under Subchapter D.          (b)  Except as provided by Subsection (d), the certified   educational assistance organization shall treat a designated   contribution as program funds until the date the comptroller   notifies the certified educational assistance organization that   the entity that made the designated contribution:                (1)  failed to apply for a credit under Section 230.155   on or with the tax report covering the period in which the   designated contribution was made; or                (2)  was denied a credit under Subchapter D for the   designated contribution.          (c)  The comptroller shall promptly notify the certified   educational assistance organization of a condition described by   Subsection (b).          (d)  If the comptroller expects that, for a state fiscal   year, the amount of designated contributions will exceed the amount   of credits available under this chapter, the comptroller may   establish a reserve amount for the state fiscal year equal to the   estimated amount of designated contributions that will qualify as   program funds. If the comptroller establishes a reserve amount for   a state fiscal year, the certified educational assistance   organization is only required to treat as program funds an amount of   designated contributions received in the state fiscal year equal to   the reserve amount for that year.          (e)  The certified educational assistance organization shall   use designated contributions treated as program funds under this   section for any purpose authorized by Subchapter C for the   expenditure of program funds.          Sec. 230.003.  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 bids for a contract to serve as the certified   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.  CERTIFIED EDUCATIONAL ASSISTANCE ORGANIZATION          Sec. 230.051.  CERTIFIED EDUCATIONAL ASSISTANCE   ORGANIZATION; AWARD OF CONTRACT. (a)  An organization may submit a   bid to the comptroller for a contract to serve as the certified   educational assistance organization during a bidding period   provided by the comptroller.          (b)  To be eligible for a contract awarded under this   section, an 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)  agree to allocate at least 90 percent of   program funds in the manner provided by Section 230.106;                      (E)  agree to 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   donor, the amount of the contribution, the information required by   Section 230.152(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)  agree to disburse program funds within two   academic years of receipt; and                (2)  may not:                      (A)  establish eligibility requirements, other   than the requirements under Section 230.102, for scholarships or   educational expense assistance paid from program funds;                      (B)  provide to a student a scholarship in an   annual amount that exceeds the amount provided under Section   230.104(a) or (b) unless the money used to provide the portion of   the scholarship in excess of that amount is not program funds; or                      (C)  provide to a student educational expense   assistance in excess of the amount provided under Section   230.104(c), unless the money used to provide the portion of the   assistance in excess of that amount is not program funds.          (c)  The comptroller may contract with only one certified   educational assistance organization at any time.  The comptroller   shall select a successful bidder from among the organizations that   submit a bid under Subsection (a) and meet the requirements of   Subsection (b) and award to that bidder a contract to serve as the   certified educational assistance organization. The comptroller   has broad discretion in awarding the certified educational   assistance organization contract.          (d)  The comptroller shall notify all organizations that   submit a bid under Subsection (a) of the comptroller's selection   under Subsection (c).          (e)  The comptroller shall attempt to maintain one certified   educational assistance organization at all times.  The comptroller   shall provide a bidding period under Subsection (a) as soon as   practicable after the comptroller learns there is, or is likely to   be, a vacancy for the certified educational assistance   organization.          (f)  The comptroller's selection under Subsection (c) is   final and is not appealable.          Sec. 230.052.  TERMINATION OF CONTRACT. (a) A contract   between the comptroller and a certified educational assistance   organization entered into under Section 230.051 must include   provisions regarding termination of the contract that are   consistent with the requirements of this section.          (b)  The comptroller shall terminate a contract under   Section 230.051 if the comptroller finds that the certified   educational assistance organization:                (1)  is no longer eligible under Section 230.051; or                (2)  intentionally and substantially violates this   chapter.          (c)  The comptroller has broad discretion in determining   whether to terminate a contract under Subsection (b).          (d)  The comptroller shall notify the certified educational   assistance organization in writing of the comptroller's decision to   terminate the organization's contract. The comptroller shall   include in the notice of termination the reasons for the proposed   termination.          (e)  If the comptroller notifies the certified educational   assistance organization of the proposed termination of the   organization's contract, the organization may request in writing a   reconsideration of the proposed termination not later than the 10th   day after the date the notice under Subsection (d) is received.  If   the organization does not request a reconsideration of the proposed   termination on or before that date, the termination is final.          (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 a proposed   termination under this section is not a contested case under   Chapter 2001, Government Code. The comptroller's decision on a   request for reconsideration of a proposed termination is final and   is not appealable.          (h)  Termination of a contract under this section does not   affect the validity of a tax credit relating to a designated   contribution made before the date of termination.   SUBCHAPTER C.  SCHOLARSHIP AND EDUCATIONAL EXPENSE ASSISTANCE   PROGRAM          Sec. 230.101.  ELIGIBILITY OF NONPUBLIC SCHOOLS. The   certified educational assistance organization may award   scholarships to or pay educational expenses for eligible students   enrolled in a nonpublic school if 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 the   certified educational assistance organization, including evidence   of:                (1)  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. 230.102.  ELIGIBILITY OF STUDENTS.  (a)  A student is   eligible to apply to the certified educational assistance   organization for a scholarship or educational expense assistance   paid from program funds if the student was enrolled in a public   school during the entire preceding school year or is enrolling in   school in this state for the first time and the student:                (1)  is in foster care;                (2)  is in institutional care;                (3)  has a parent who is on active duty in the military;                (4)  resides in a household with income not greater   than 200 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.;                (5)  is the sibling of a child who is eligible to apply   under this section;                (6)  previously qualified to apply under this section;   or                (7)  is in kindergarten through grade 12, is eligible   under Section 29.003, Education Code, to participate in a school   district's special education program, and has an individualized   education program under Section 29.005, Education Code.          (b)  A student who establishes eligibility under Subsection   (a)(7) 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.          (c)  The certified educational assistance organization shall   award scholarships and educational expense assistance to eligible   students who apply in accordance with this chapter.          Sec. 230.103.  NOTICE TO CERTAIN PARENTS.  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 Section 230.102(a)(7).  The notice must   inform the parent:                (1)  that an eligible nonpublic school is not subject   to laws regarding the provision of education services in the same   manner as a public school;                (2)  that a student with a disability attending an   eligible nonpublic school may not receive the services a student   with a disability attending a public school is entitled to receive   under federal and state law;                (3)  of the 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;                (4)  of the rights provided under Subchapter A, Chapter   29, Education Code; and                (5)  of any other rights provided under federal or   state law to a student with a disability who attends a public   school.          Sec. 230.104.  LIMIT ON AMOUNT OF SCHOLARSHIP OR EDUCATIONAL   EXPENSE ASSISTANCE. (a) Except as provided by Subsection (b), the   maximum scholarship amount the certified educational assistance   organization may award to a student under this chapter paid from   program funds may not exceed 75 percent of the state average   maintenance and operations expenditures per student in average   daily attendance for the preceding state fiscal year.          (b)  The maximum scholarship amount under Subsection (a) may   not exceed 50 percent of the state average maintenance and   operations expenditures per student in average daily attendance for   the preceding state fiscal year if the student receiving the   scholarship resides in a household with income greater than 175   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.  This subsection does not apply to a   student who is eligible for assistance under Section 230.102(a)(7)   or (b).          (c)  The maximum educational expense assistance the   certified educational assistance organization may award to a   student under this chapter paid from program funds may not exceed   $750 for the 2018 state fiscal year, increased by five percent each   subsequent year.          Sec. 230.105.  QUALIFIED EDUCATIONAL EXPENSES. (a) Except   as provided by Subsection (c), the scholarship amount described by   Section 230.104(a) or (b) may be used only to pay for the following   qualified educational expenses incurred by the student awarded the   scholarship who attends an eligible nonpublic school:                (1)  tuition;                (2)  transportation;                (3)  textbooks;                (4)  tutoring;                (5)  academic after-school programs;                (6)  instructional supplies required by the school;                (7)  school or lab fees;                (8)  before-school or after-school child care; and                (9)  uniforms.          (b)  Except as provided by Subsection (c), the educational   expense assistance amount described by Section 230.104(c) may be   used only to pay for the following qualified educational expenses   incurred by the student awarded the educational expense assistance:                (1)  facility fees;                (2)  transportation expenses, including the cost to   transfer from one public school to another;                (3)  textbooks;                (4)  tutoring;                (5)  academic after-school programs;                (6)  instructional supplies required by the school;                (7)  school or lab fees; and                (8)  before-school or after-school child care.          (c)  In addition to the expenses described by Subsections (a)   and (b), the scholarship or educational expense assistance amount   awarded to a student eligible under Section 230.102(a)(7) or (b)   may be used to pay for the following qualified educational   expenses:                (1)  educational therapies from a licensed or   accredited practitioner or provider;                (2)  a licensed or accredited paraprofessional or   educational aide;                (3)  tuition for vocational and life skills education;   and                (4)  associated services that include educational and   psychological evaluations, assistive technology rentals, and   translation services.          Sec. 230.106.  ALLOCATION OF PROGRAM FUNDS. Of the program   funds required to be allocated as provided by Section   230.051(b)(1)(D), the certified educational assistance   organization shall use:                (1)  at least 80 percent to award scholarships   described by Sections 230.104(a) and (b); and                (2)  not more than 20 percent to award educational   expense assistance as described by Section 230.104(c).          Sec. 230.107.  REPORT OF NET SAVINGS TO PUBLIC EDUCATION.     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 D.  CREDIT          Sec. 230.151.  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 230.155.          Sec. 230.152.  CONTRIBUTIONS ELIGIBLE FOR CREDIT.  (a) An   entity may apply for a credit under this chapter only for designated   contributions made by the entity.          (b)  An entity may not apply for a credit under this chapter   for a designated contribution made to the certified educational   assistance organization if:                (1)  the entity requires that the contribution benefit   a particular person or school; or                (2)  the contribution is directed 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 provide written notice to the certified   educational assistance organization 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 notice 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 provided notice   under this subsection.          Sec. 230.153.  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:                (1)  the amount of designated contributions made to the   certified educational assistance organization during the period   covered by the tax report; or                (2)  50 percent of the entity's state premium tax   liability for the report.          (b)  For the 2018 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 awarded 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:                (1)  credits are allocated first to entities that   received preliminary approval under Section 230.154 and that apply   under Section 230.155; and                (2)  any credits remaining after the allocation under   Subdivision (1) are allocated to entities that apply under Section   230.155 on a first-come, first-served basis, based on the date the   designated 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. 230.154.  PRELIMINARY APPROVAL FOR CREDIT. (a) Before   making a contribution to the certified educational assistance   organization, an entity may apply to the comptroller for   preliminary approval for 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 for that state fiscal year does not exceed   the amount provided by Section 230.153(b).          (e)  Final award of a credit preliminarily approved under   this section remains subject to the limitations under Section   230.153 and all other requirements of this chapter.          Sec. 230.155.  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 designated 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 and must include with the application form each receipt   issued under Section 230.051(b)(1)(F) that includes the   information required by Section 230.152(c).          (c)  Subject to Section 230.153(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 230.153(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. 230.156.  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. 230.157.  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, 2018, the   comptroller of public accounts shall adopt rules as provided by   Section 230.003(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 230.107, Insurance Code, as added by   this Act, not later than December 31, 2020, based on the state   fiscal biennium ending August 31, 2019.          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, 2018.