HB 1657

relating to the establishment of an education savings account
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1.  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
(2)  "Child with a disability" means a child who is:
(A)  eligible to participate in a school
district's special education program under Section 29.003; or
(B)  covered by Section 504, Rehabilitation Act of
(3)  "Financial institution" means a bank, credit
union, savings bank, or savings and loan association organized
under the laws of this state, the laws of another state, or federal
law that has its main office or a branch office in this state.  The
term does not include any institution the deposits of which are not
insured by the Federal Deposit Insurance Corporation or the
National Credit Union Administration.
(4)  "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
(5)  "Program" means the education savings account
program established under this subchapter.
(6)  "Program participant" means a child and a parent
of a child enrolled in the program.
Sec. 29.352.  ESTABLISHMENT OF PROGRAM.  The comptroller
shall establish and administer an education savings account program
to provide funding for certain education-related expenses of
Sec. 29.353.  ELIGIBLE CHILD.  (a)  A child is eligible to
participate in the program if the child:
(1)  is eligible to attend a public school under
(A)  attended a public school during the preceding
(B)  is entering kindergarten or first grade; and
(3)  meets one or more of the following criteria:
(A)  failed to perform satisfactorily on an
assessment instrument administered under Section 39.023(a) or an
end-of-course assessment instrument administered under Section
39.023(c) during the school year preceding the school year for
which the child applies to enroll in the program;
(B)  is a child with a disability; or
(C)  is educationally disadvantaged.
(b)  A child who establishes eligibility under this section
may participate in the program until the earliest of the following
(1)  the date on which the child no longer meets the
eligibility criteria under Subsection (a)(3);
(2)  the date on which the child graduates from high
(3)  the date on which the child enrolls in a public
school, including an open-enrollment charter school; or
(4)  the date on which the child is declared ineligible
for the program by the comptroller under this subchapter.
Sec. 29.354.  APPLICATION FOR PROGRAM.  (a)  A parent of an
eligible child may apply on behalf of the child for participation in
the program for the following school year.
(b)  The comptroller shall by rule create an application form
for the program and make the form readily available to interested
parents through various sources, including the comptroller's
(c)  The comptroller shall provide to each parent who submits
an application form a publication that describes the operation of
(1)  expenses allowed under the program under Section
(2)  expense reporting requirements; and
(3)  a description of the responsibilities of program
participants and the duties of the comptroller and the agency under
(1)  review each application to ensure that the child
is eligible to participate in the program; and
(2)  approve or reject each application.
Sec. 29.355.  PARTICIPATION IN PROGRAM.  (a)  To receive
funding under the program, a parent of an eligible child must agree
(1)  spend money received through the program only for
expenses allowed under Section 29.356;
(2)  notify the comptroller if the child enrolls in a
public school, not later than the 30th day after the date of
(3)  inform the comptroller if the child graduates from
(b)  The parent of a child participating in the program is
the trustee of the child's account.
(c)  The comptroller shall provide annually to each program
participant the publication provided under Section 29.354(c).
Sec. 29.356.  ELIGIBLE EDUCATION-RELATED EXPENSES.  (a)
Money received under the program may be used only for the following
expenses incurred by a program participant:
(1)  tuition and fees at a private school accredited by
an organization that is recognized by the Texas Private School
Accreditation Commission or the agency;
(2)  the purchase of textbooks or other instructional
materials or uniforms required by a private school, course, or
educational program in which the child is enrolled;
(3)  costs related to academic assessments;
(4)  costs related to an academic activity that adds
direct value to classroom instruction and curriculum, including an
academic field trip, performance, contest, demonstration, or
(5)  fees for transportation provided by a
fee-for-service transportation provider for the child to travel to
and from an education service provider or vendor of educational
(6)  fees for educational therapies or services 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.
(b)  Money received under the program may not be used to pay
any person who is a member of the program participant's household.
(c)  A finding that a program participant used money
distributed under the program to pay for an expense not allowed
under Subsection (a) does not affect the validity of any payment
made by the participant for an education-related expense that is
Sec. 29.357.  AMOUNT OF PAYMENT; FINANCING.  (a)  A parent of
an eligible child shall receive each year that the child
participates in the program a payment to the child's account in an
amount that is equal to 90 percent of the amount to which the school
district in which the child resides would be entitled to receive for
the child under Chapter 48 if the child were enrolled in the
(b)  For each year a child participates in the program, the
school district in which the child resides is entitled to receive an
amount equal to 10 percent of the amount to which the district would
be entitled to receive for the child under Chapter 48 if the child
(c)  Any money remaining in a child's account at the end of a
fiscal year is carried forward to the next fiscal year unless
another provision of this subchapter mandates the closure of the
(d)  A payment under the program may not be financed using
federal funds or money appropriated from the available school fund.
Sec. 29.358.  ADMINISTRATION OF ACCOUNTS.  (a)  The
comptroller may contract with one or more financial institutions to
establish and manage an account for each child participating in the
(b)  The comptroller shall make quarterly payments to each
program participant's account in equal amounts on or before the
15th day of August, November, February, and May.
(c)  The comptroller may deduct an amount from each quarterly
payment to a program participant's account to cover the
comptroller's cost of administering the program.  The amount
deducted may not exceed three percent of the payment.
(d)  Within the first month following the end of each fiscal
year, the comptroller shall reconcile payments made to and from all
(e)  On the date on which a child ceases to participate in the
program for any reason, the child's account is closed and any
remaining money is returned to the state.
Sec. 29.359.  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 on the
(b)  A rule adopted or action taken related to the program by
an individual, governmental entity, court of law, or program
(1)  consider the actions of an education service
provider, vendor of educational products, or program participant to
be the actions of an agent of state government;
(A)  an education service provider's ability to
determine the methods used to educate the provider's students or to
exercise the provider's religious or institutional values; or
(B)  a program participant's ability to determine
the participant's educational content or to exercise the
participant's religious values;
(3)  obligate an education service provider or program
participant to act contrary to the provider's or participant's
religious or institutional values, as applicable;
(4)  impose any regulation on an education service
provider, vendor of educational products, or program participant
beyond those regulations necessary to enforce the requirements of
(5)  require as a condition of receiving money
(A)  an education service provider to modify the
provider's creed, practices, admissions policies, curriculum,
performance standards, employment policies, or assessments; or
(B)  a program participant to modify the
participant's creed, practices, curriculum, performance standards,
(c)  In a proceeding challenging a rule adopted by a state
agency or officer under this subchapter, the agency or officer has
the burden of proof to establish by clear and convincing evidence
(1)  is necessary to implement or enforce the program
as provided by this subchapter;
(2)  does not violate this section;
(3)  does not impose an undue burden on a program
participant or an education service provider or vendor of
educational products that receives money or seeks to receive money
distributed under the program; and
(4)  is the least restrictive means of accomplishing
the purpose of the program while recognizing the independence of an
education service provider to meet the educational needs of
students in accordance with the provider's religious or
Sec. 29.360.  GIFTS, GRANTS, AND DONATIONS.  The comptroller
may solicit and accept gifts, grants, and donations, other than
federal grants, from any public or private source for the program.
Sec. 29.361.  RULES.  The comptroller shall adopt rules as
necessary to implement this subchapter.
SECTION 2.  This Act applies beginning with the 2026-2027
SECTION 3.  As soon as practicable after the effective date
of this Act, the comptroller of public accounts shall adopt rules
necessary to implement the education savings account program under
Subchapter J, Chapter 29, Education Code, as added by this Act.
SECTION 4.  This Act takes effect September 1, 2025.