Bill Text: TX HB1697 | 2025-2026 | 89th Legislature | Introduced
Bill Title: Relating to the management, operation, and contract authority of open-enrollment charter schools.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced) 2024-12-20 - Filed [HB1697 Detail]
Download: Texas-2025-HB1697-Introduced.html
89R6047 BCH-F | ||
By: Canales | H.B. No. 1697 |
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relating to the management, operation, and contract authority of | ||
open-enrollment charter schools. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 12.1054(a), Education Code, is amended | ||
to read as follows: | ||
(a) A member of the governing body of a charter holder, a | ||
member of the governing body of an open-enrollment charter school, | ||
or an officer of an open-enrollment charter school is considered to | ||
be a local public official for purposes of Chapter 171, Local | ||
Government Code. For purposes of that chapter,[ |
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holder or a member of the governing body or officer of an | ||
open-enrollment charter school is considered to have a substantial | ||
interest in a business entity if a person related to the member or | ||
officer in the third degree by consanguinity or affinity, as | ||
determined under Chapter 573, Government Code, has a substantial | ||
interest in the business entity under Section 171.002, Local | ||
Government Code[ |
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SECTION 2. Subchapter D, Chapter 12, Education Code, is | ||
amended by adding Section 12.1169 to read as follows: | ||
Sec. 12.1169. TRANSACTIONS INVOLVING RELATED PARTY OF | ||
MANAGEMENT COMPANY. (a) The commissioner shall adopt a rule | ||
defining "related party of a management company" for purposes of | ||
this subchapter. The definition of "related party of a management | ||
company" must include: | ||
(1) a party with a current or former board member, | ||
administrator, or officer who is: | ||
(A) a board member, administrator, or officer of | ||
a management company that provides management services for an | ||
open-enrollment charter school; or | ||
(B) related within the third degree of | ||
consanguinity or affinity, as determined under Chapter 573, | ||
Government Code, to a board member, administrator, or officer of a | ||
management company that provides management services for an | ||
open-enrollment charter school; | ||
(2) any organizations, joint ventures, and jointly | ||
governed organizations related to a management company that | ||
provides management services for an open-enrollment charter | ||
school; | ||
(3) any board members, administrators, or officers of | ||
a management company that provides services for an open-enrollment | ||
charter school, including a person related to a board member, | ||
administrator, or officer of the management company within the | ||
third degree of consanguinity or affinity, as determined under | ||
Chapter 573, Government Code; and | ||
(4) any other disqualified person, as that term is | ||
defined by 26 U.S.C. Section 4958(f). | ||
(b) For purposes of Subsection (a)(1), a person is a former | ||
board member, administrator, or officer if the person served in | ||
that capacity within one year of the date on which a financial | ||
transaction between a management company and a related party of a | ||
management company occurred. | ||
SECTION 3. Sections 12.120(a) and (b), Education Code, are | ||
amended to read as follows: | ||
(a) A person may not serve as a member of the governing body | ||
of a charter holder, as a member of the governing body of an | ||
open-enrollment charter school, or as an officer or employee of an | ||
open-enrollment charter school if the person: | ||
(1) has been convicted of: | ||
(A) a felony; or | ||
(B) a misdemeanor involving moral turpitude; | ||
(2) has been convicted of: | ||
(A) an offense listed in Section 37.007(a) or[ |
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Article 62.001(5), Code of Criminal Procedure; or | ||
(B) an offense under the laws of another state or | ||
federal law that contains elements that are substantially similar | ||
to the elements of an offense listed in Section 37.007(a) or in | ||
Article 62.001(5), Code of Criminal Procedure; or | ||
(3) is being paid directly or indirectly by or [ |
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has a substantial interest in a management company. | ||
(b) For purposes of Subsection (a)(3) [ |
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a substantial interest in a management company if the person: | ||
(1) has a controlling interest in the management | ||
company; | ||
(2) owns more than 10 percent of the voting interest in | ||
the management company; | ||
(3) owns more than $25,000 of the fair market value of | ||
the management company; | ||
(4) has a direct or indirect participating interest by | ||
shares, stock, or otherwise, regardless of whether voting rights | ||
are included, in more than 10 percent of the profits, proceeds, or | ||
capital gains of the management company; | ||
(5) is a member of the board of directors or other | ||
governing body of the management company; | ||
(6) serves as an [ |
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company; [ |
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(7) is an employee of the management company; | ||
(8) is an officer or employee of a contractor of the | ||
management company; or | ||
(9) is an officer or employee of a related party of a | ||
management company, as defined by commissioner rule adopted under | ||
Section 12.1169. | ||
SECTION 4. Section 12.1202, Education Code, is amended to | ||
read as follows: | ||
Sec. 12.1202. REQUIREMENT FOR [ |
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GOVERNING BODY. (a) In this section, "qualified voter" has the | ||
meaning assigned by Section 11.002, Election Code. | ||
(b) A person must be a qualified voter to serve as a member | ||
[ |
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open-enrollment charter school or the governing body of a charter | ||
holder [ |
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SECTION 5. Section 12.125, Education Code, is amended to | ||
read as follows: | ||
Sec. 12.125. CONTRACT FOR MANAGEMENT SERVICES; PUBLIC | ||
INFORMATION. (a) Any contract, including a contract renewal, | ||
between an open-enrollment charter school and a management company | ||
proposing to provide management services to the school must require | ||
the management company to maintain all records related to the | ||
management services separately from any other records of the | ||
management company. | ||
(b) A contract or proposed contract for management services | ||
and any record related to the management services is public | ||
information under Chapter 552, Government Code, and may not be | ||
excepted from required disclosure under Subchapter C of that | ||
chapter. | ||
(c) A member of the governing body of a charter holder, a | ||
member of the governing body of an open-enrollment charter school, | ||
or an officer or employee of an open-enrollment charter school may | ||
not accept a direct or indirect payment from a management company | ||
under any contract or arrangement. | ||
(d) A contract for management services must include a | ||
provision affirming that the management company is not making any | ||
direct or indirect payments to a member of the governing body of the | ||
charter holder, a member of the governing body of the | ||
open-enrollment charter school, or an officer or employee of the | ||
open-enrollment charter school. | ||
(e) A contract entered into or an arrangement made in | ||
violation of Subsection (c) is void as against public policy and | ||
subject to applicable commissioner action under Section 12.126, and | ||
no fees may be paid to any person under the contract or under any | ||
theory of recovery for work performed in connection with a void | ||
contract. | ||
SECTION 6. Subchapter D, Chapter 12, Education Code, is | ||
amended by adding Section 12.1251 to read as follows: | ||
Sec. 12.1251. FINANCIAL BENEFIT FROM MANAGEMENT COMPANY | ||
PROHIBITED. A superintendent or administrator serving as | ||
educational leader or chief executive officer of an open-enrollment | ||
charter school may not receive any financial benefit for personal | ||
services performed by the superintendent or administrator serving | ||
as educational leader or chief executive officer for a management | ||
company or business entity that conducts or solicits business with | ||
the school. For purposes of this section, the receipt of | ||
reimbursement for a reasonable expense is not considered a | ||
financial benefit. | ||
SECTION 7. Section 2252.908(a)(2), Government Code, is | ||
amended to read as follows: | ||
(2) "Governmental entity" means a municipality, | ||
county, public school district, open-enrollment charter school | ||
established under Subchapter D, Chapter 12, Education Code, or | ||
special-purpose district or authority. | ||
SECTION 8. (a) Except as provided by Subsection (b) of this | ||
section, this Act applies beginning with the 2025-2026 school year. | ||
(b) Section 2252.908, Government Code, as amended by this | ||
Act, applies only to a contract subject to that section that is | ||
entered into, amended, or renewed on or after the effective date of | ||
this Act. | ||
SECTION 9. 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. |