HB 3191

relating to strategies to increase the availability of and access
to child care, including the creation of an employer child-care
contribution partnership program, a child-care innovation pilot
program, and a franchise tax credit for taxable entities that make
certain employer child-care contributions; authorizing a civil
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1.  Subchapter A, Chapter 302, Labor Code, is
amended by adding Section 302.0064 to read as follows:
Sec. 302.0064.  CHILD-CARE RESOURCES FOR EMPLOYERS.  (a)
The commission shall maintain in a prominent location on its
Internet website a link to a web page consisting of comprehensive
and current information to help employers assist employees who are
parents with accessing child care, including information on:
(2)  best practices for assisting employees who are
(3)  any available state and federal tax credits;
(4)  dependent care savings accounts;
(5)  any available free tools or templates;
(6)  policies and benefits an employer may adopt to
assist employees in accessing child care; and
(7)  other resources related to child care that the
(b)  The web page described by Subsection (a) must include an
(1)  the commission does not and may not provide legal
(2)  an employer is not required to implement any
employment policy or benefit included on the web page unless
SECTION 2.  Subtitle B, Title 4, Labor Code, is amended by
adding Chapters 318 and 320 to read as follows:
CHAPTER 318.  EMPLOYER CHILD-CARE CONTRIBUTION PARTNERSHIP PROGRAM
Sec. 318.001.  DEFINITION.  In this chapter, "program" means
the employer child-care contribution partnership program
established under this chapter.
Sec. 318.002.  ESTABLISHMENT.  The commission shall
establish and administer the employer child-care contribution
partnership program to support families in this state in accessing
high-quality child care by incentivizing eligible employers to
contribute to eligible employee child-care costs and providing a
state match for funds contributed by eligible employers.
Sec. 318.003.  ADMINISTRATION.  (a)  The commission shall:
(1)  adopt rules and establish procedures necessary to
administer the program, including:
(A)  standardized agreements for use by
employers, employees, and child-care providers to apply for and
(B)  eligibility and income verification
(C)  eligibility criteria for child-care
providers, including quality standards;
(D)  procedures for notifying each relevant party
(i)  the results of an eligibility
(ii)  the party's enrollment in the program
as soon as practicable after receiving and processing an agreement
and determining each party's eligibility;
(E)  procedures for determining the amount of the
state match in accordance with Section 318.009(b) and notifying the
employee and the child-care provider regarding the amount;
(F)  procedures for prioritizing and approving
agreements, including maintaining a waitlist;
(G)  procedures for notifying the commission and
the parties to an agreement regarding termination of the agreement
(H)  procedures for notifying the commission and
the parties to an agreement regarding nonpayment by any party;
(I)  procedures for recouping state match money or
a portion of state match money if there is an overpayment to a
participating child-care provider;
(J)  criteria for disqualifying participants from
(K)  procedures for hearing appeals from program
(L)  procedures for issuing and logging payments
to a participating child-care provider; and
(M)  criteria and procedures for modifying or
terminating an agreement, including:
(i)  if the relationship between the
employee and employer is severed;
(ii)  if an employer fails to make a
contribution in accordance with the terms of an agreement; and
(iii)  if a child-care provider ceases
participation or otherwise becomes ineligible to participate in the
(2)  select an administration assistance organization
(3)  ensure confidentiality protocols to safeguard the
personal information of participating employers, employees, and
child-care providers, including ensuring that an employee's
personal information is not disclosed without the employee's
(4)  maintain records regarding the balance of the
program fund for each fiscal year and all payments made from the
(5)  develop and distribute to employers, employees,
and child-care providers informational material regarding:
(A)  the program's objectives, benefits, and
(B)  any other child-care assistance programs or
benefits that may be available to an employee; and
(6)  maintain a waitlist if the money in the program
fund is insufficient to approve all agreements received and provide
a state match in accordance with Section 318.009(b).
(a-1)  The commission shall convene a work group to assist
the commission in developing the rules under Subsection (a).  The
(2)  community stakeholders, including stakeholders
with knowledge of or expertise in child care;
(3)  employers or members of associations representing
(4)  at least one parent of a child who receives care
(a-2)  Subsection (a-1) and this subsection expire September
(1)  delegate an administrative duty under the program
to a division of the commission or the administration assistance
organization described by Subsection (c);
(2)  coordinate and share information with other state
(3)  procure grants or contracts, in accordance with
other law, with third parties to administer the program or parts of
the program, including an administration assistance organization
(c)  To be eligible for selection as an administration
assistance organization, an organization must:
(1)  be exempt from federal taxation 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;
(2)  be in good standing with the state; and
(3)  be able to administer elements of the program as
determined by the comptroller, including the ability to process
employer contribution payments made under Section 318.004.
(d)  The commission shall implement the program and issue a
state match under Section 318.009(b) in a state fiscal year only if
the legislature specifically appropriates money to the commission
for that fiscal year for that purpose.  The commission may implement
the program and issue a state match using other money available to
the commission for that purpose.
Sec. 318.004.  EMPLOYER DUTIES.  An employer who provides
child-care assistance to an employee as a benefit of employment may
participate in the program by entering into an agreement described
by Section 318.007.  The employer shall:
(1)  provide at least $1,200 per year to or on behalf of
an eligible employee for each child the employee has enrolled with a
provider eligible under Section 318.006 for the employee's
child-care costs as the employer contribution;
(2)  enter into a standardized agreement under Section
(3)  submit the agreement to the commission for
verification of eligibility and approval;
(4)  submit any additional information the commission
(5)  on verification and approval of the agreement by
the commission, make contributions to the employee's eligible
child-care costs in accordance with commission guidelines.
Sec. 318.005.  EMPLOYEE DUTIES.  (a)  An employee shall
complete an agreement described by Section 318.007 and provide any
additional information the commission considers necessary.
(b)  An employee shall immediately notify the commission if a
child for whom the employee receives a benefit under this chapter
receives subsidized child care under the commission's subsidized
(c)  The employee shall pay the child-care provider the cost
of child-care services not covered by the employer's contribution
Sec. 318.006.  PROVIDER ELIGIBILITY.  (a)  To be eligible to
receive money under the program, a child-care provider must:
(1)  be a child-care facility or family home licensed
under Chapter 42, Human Resources Code, including a facility
(2)  be a high-quality program as determined by the
(3)  comply with an agreement and provide information
the commission considers necessary.
(b)  The commission may waive or modify the eligibility
requirements under this section.
Sec. 318.007.  PROGRAM AGREEMENTS.  (a)  The commission
shall create a standardized agreement for use by employers and
employees participating in the program, to be completed and agreed
(b)  The commission may create a standardized agreement for
use by child-care providers participating in the program.
Sec. 318.008.  PROGRAM FUND.  (a)  The program fund is a
dedicated account in the general revenue fund administered by the
(b)  The program fund consists of:
(1)  money appropriated by the legislature for deposit
to the credit of the fund for the purposes of this chapter;
(2)  interest earned on the investment of money in the
(3)  the proceeds of civil penalties collected under
(4)  gifts, grants, and donations received by the
commission for the purposes of this chapter.
(c)  Money in the fund may be appropriated only to the
commission for purposes authorized by this chapter.
(d)  In each state fiscal year and to the greatest extent
practicable, at least 25 percent of the total amount appropriated
from the fund for that year must be distributed under agreements
with employers with fewer than 50 full-time employees.  For an
employer that operates multiple locations or has common ownership
or affiliates, each location is considered a separate employer for
the purposes of calculating the number of full-time employees under
(d-1)  If in a state fiscal year there is money available
from the allocation of money described by Subsection (d) after
distributing money in the manner described by that subsection, the
commission may distribute the money under agreements with any other
(e)  During the state fiscal year ending August 31, 2026, not
more than 10 percent of the total amount deposited to the credit of
the fund in that fiscal year must be appropriated to the commission
to establish the program.  In each subsequent state fiscal year,
money in the fund may be appropriated to the commission to
administer the program as follows:
(1)  if the total amount of money available for
appropriation from the fund in that state fiscal year is more than
$50 million, not more than five percent of that amount may be used
(2)  if the total annual amount of money available for
appropriation from the fund in that state fiscal year is more than
$10 million but not more than $50 million, not more than 10 percent
of that amount may be used to administer the program; and
(3)  if the total annual amount of money available for
appropriation from the fund in that state fiscal year is not more
than $10 million, not more than 15 percent of that amount may be
used to administer the program.
Sec. 318.009.  STATE MATCH.  (a)  On verifying the
eligibility of an employer, employee, and child-care provider and
receiving any required agreements, the commission shall issue a
state match in accordance with this section from the program fund to
a child-care provider in accordance with the terms of the
agreement.  The commission may distribute the state match money
directly or through a third-party vendor, as applicable.
(b)  The commission may approve an agreement and issue a
state match only if there is sufficient money in the program fund to
pay the costs under the agreement and the money has been
appropriated to the commission for that purpose.
(c)  Subject to Subsections (b) and (e), the commission shall
provide a state match equal to:
(1)  100 percent of the contribution made by the
employee's employer if the employee has a median household income
that is less than or equal to 100 percent of the median state
(2)  75 percent of the contribution made by the
employee's employer if the employee has a median household income
that is greater than 100 percent and less than or equal to 200
percent of the median state household income; or
(3)  50 percent of the contribution made by the
employee's employer if the employee has a median household income
that is greater than 200 percent and less than or equal to 300
percent of the median state household income.
(d)  A state match and an employer contribution issued under
the program and administered by the commission may not be
considered compensation for an employee's service.
(e)  The amount of the state match issued under Subsection
(c) may not exceed $3,600 per child for each employee.
(f)  The total amount of the state match issued under the
program may not exceed $25 million in a state fiscal biennium.
Sec. 318.010.  REPORTS.  (a)  The commission shall publish
and submit to the legislature a report detailing the efficacy of the
program not later than December 15 of each even-numbered year.  The
report must include the following information about the program:
(1)  the amount appropriated to the program fund during
the preceding state fiscal year;
(2)  the total number of standardized agreements
(3)  the total amount of state matches paid out of the
program fund, disaggregated by county;
(4)  information regarding the size, geographical
location, and industry type of employers who participated in the
(5)  the number, license type, quality rating level,
and geographical distribution of participating child-care
(6)  average cost for services charged by child-care
providers participating in the program and information regarding
the amount by which those costs have increased or decreased during
the most recent reporting period compared with previous reporting
(7)  the number and total dollar value of agreements
not approved by the commission; and
(8)  demographic information regarding employees
(b)  Not later than January 1, 2026, the commission shall
publish and submit to the legislature a report detailing the
commission's plan for implementing the program.  This subsection
Sec. 318.011.  FALSE INFORMATION; CIVIL PENALTY.  A person
who intentionally provides false information to the commission for
purposes of receiving the benefits of the program shall be subject
to a civil penalty of not more than $500 per violation.  All money
collected as a result of penalties assessed under this section
shall be paid into the state treasury and credited to the program
CHAPTER 320.  CHILD-CARE INNOVATION PILOT PROGRAM
Sec. 320.001.  DEFINITIONS.  In this chapter:
(1)  "Board" means a local workforce development board
created under Subchapter F, Chapter 2308, Government Code.
(2)  "Program" means the child-care innovation pilot
program established under this chapter.
(3)  "Provider" means a child-care provider who is
engaging with the program established under this chapter.
Sec. 320.002.  ESTABLISHMENT.  (a)  The commission shall
establish and administer the child-care innovation pilot program to
address strategic workforce needs of designated pilot regions
across the state by increasing the supply of quality, affordable
child care and encouraging child-care partnerships with employers.
(b)  The program shall enable boards designated by the
commission to partner with local employers and high-quality
providers to provide grants that will fund innovative child-care
expansion projects and employer partnerships that directly impact
strategic local workforce needs.
Sec. 320.003.  ADMINISTRATION.  The commission shall by rule
adopt a process for selecting each pilot region in which the program
will be administered by the local board, including a competitive
Sec. 320.004.  APPLICATION; STRATEGIC PLAN.  (a)  A board
applying to participate in the program shall submit:
(1)  a strategic plan proposing:
(A)  measurable performance goals and progress
measures related to increasing the supply and accessibility of
quality, affordable child-care services;
(B)  plans for engaging regional stakeholders,
including local employers, business associations, and
organizations that provide services to children and families, to
develop and meet regional performance goals that are based on
(C)  the number of providers to whom the board
(D)  staffing structures to support the effective
implementation of the program, including technical assistance for
(E)  plans to maximize the results of the program
and support the future sustainability of child-care providers
participating in the program if state funding is not continued; and
(2)  the total amount of money requested to implement
(b)  A board may apply for the program under more than one
population category described by Section 320.005(a) but may only be
approved for participation based on one category.
Sec. 320.005.  SELECTION; CRITERIA.  (a)  The commission
shall select not more than six boards to participate in the program
and ensure that the program is implemented in communities that
represent at least one of each of the following population sizes:
(1)  a region with a population of more than 50,000;
(2)  a region with a population of more than 10,000 and
(3)  a region with a population of less than 10,000.
(b)  In selecting the boards to participate in the program,
(1)  the board's ability to demonstrate an unmet, local
(A)  child-care services in specific geographic
(B)  child-care services for specific
populations, including infant care, toddler care, nontraditional
hours care, or care for children with disabilities; or
(C)  child-care services described by Paragraphs
(2)  whether the board has broad regional support from
diverse stakeholders, including private sector employers,
child-care providers, local governments, and parents to
(3)  the board's ability to leverage local funding or
partnerships to supplement state resources; and
(4)  the strength of the board's proposed strategic
plan, as described by Section 320.004.
Sec. 320.006.  AGREEMENTS WITH PARTICIPATING BOARDS.  The
commission shall develop and enter into a performance agreement
with each board selected to participate in the program. Each board
shall comply with the terms of the performance agreement during its
participation in the program. The performance agreement must:
(1)  include measurable performance goals and progress
(A)  related to increasing the supply and
accessibility of quality, affordable child-care services in the
(B)  aligned to the board's strategic plan; and
(2)  allocate responsibilities for accessing and
reporting progress and outcome information.
Sec. 320.007.  ALLOCATION OF FUNDS.  From the funds
appropriated to the commission for the program, the commission
shall award an amount of money to each board participating in the
program. In determining the allocation of money, the commission
(1)  the size and population of the pilot region;
(2)  the unmet child-care needs in the region and the
proposed funding required to address the needs;
(3)  the proposed number of eligible providers in each
region to whom the board intends to award grants;
(4)  the budget requested in the board's proposed
strategic plan under Section 320.004(a)(2); and
(5)  other factors determined by the commission.
Sec. 320.008.  GRANTS.  (a)  From funds awarded to a board
participating in the program, the board, after conducting a
competitive selection process, shall award grants to eligible
providers that enter into a grant contract with the board to expand
quality, affordable child-care services in accordance with the
region's strategic workforce needs and the board's approved
(b)  In awarding a grant under the program, a board shall
give preference to an eligible provider that demonstrates capacity
(1)  provide high-demand child-care services
(2)  partner with one or more local employers.
Sec. 320.009.  PROVIDER ELIGIBILITY.  (a)  To be eligible to
receive a grant under the program, a child-care provider must:
(1)  be a Texas Rising Star Program provider with a
(2)  be accredited by the National Association for the
(3)  have an accreditation from a Montessori
(4)  meet an alternative quality criterion or waiver
(b)  In consultation with local employers and other regional
stakeholders, the board shall develop a competitive application and
scoring process for eligible providers to apply for a grant under
the program to meet the goals in the board's approved strategic plan
(c)  A board shall develop and enter into a grant contract
with each eligible provider awarded a grant under the program. Each
eligible provider awarded a grant shall comply with the terms of the
grant contract. At a minimum, grant contracts must require eligible
(1)  maintain the ability to enroll the required number
of children within each designated service area outlined in the
(2)  ensure all educators employed by the provider earn
a minimum wage that is equal to or above the self-sufficient wage
required by Section 2308A.012, Government Code, in the county in
(3)  maintain participation in the child-care services
program administered by the commission and accept participating
children as openings become available;
(4)  maintain tuition rates at the provider's posted
rate or at a rate lower than the posted rate for families who do not
receive subsidized child-care services;
(5)  maintain all eligibility requirements of the
(6)  provide regular reports demonstrating compliance
with the board's grant contract; and
(7)  provide any additional data requested by the
Sec. 320.010.  SUBCONTRACTING.  (a)  In accordance with
Section 2308.264(e), Government Code, a board may subcontract with
a coordinating entity to administer the program.
(b)  The commission may adopt rules establishing
requirements for a coordinating entity with which a board
subcontracts under this section.
Sec. 320.011.  USE OF FUNDS.  (a)  From money appropriated by
the legislature to implement the program, the commission may use
(1)  15 percent of the total amount appropriated to pay
costs related to administering the program, including technical
assistance provided to providers under the program; and
(2)  2 percent of the total amount appropriated to pay
costs related to research and evaluation of the program.
(b)  The commission shall use at least 83 percent of the
total amount appropriated for grants administered under the
(c)  The commission shall adopt rules relating to the award
of grants under the program that are designed to maximize the impact
of the program and ensure the funding is sufficient to execute on
the terms of the grant contract.
(d)  In awarding a grant under the program, the commission or
boards may adjust reimbursement rates as necessary to account for
the costs of providing care to specialized populations, including
children with disabilities, infants, toddlers, and children
(e)  Each board participating in the program shall ensure
that all grant money has been allocated not later than December 31,
(f)  In addition to funds appropriated by the legislature, to
administer and expand the impact of the program, the commission or
(1)  seek and apply for any available federal or local
(2)  solicit and accept gifts, grants, and donations
from any other public or private source.
Sec. 320.012.  QUARTERLY REPORT TO THE COMMISSION.  (a)  Each
board participating in the program shall submit a quarterly report
to the commission, detailing the use of grant money received under
the program and related outcomes, including:
(1)  a list of providers receiving grant money and the
provider's monthly grant awards;
(2)  each provider's compliance with performance goals
outlined in the provider's grant contract with the board; and
(3)  the board's progress toward outcomes identified in
the approved strategic plan under Section 320.004.
(b)  A board shall submit the first report required by this
section not later than the 120th day after the date the board awards
its first grant under the program and submit subsequent reports
Sec. 320.013.  REPORT.  Not later than December 1, 2028, the
commission shall review the effectiveness of the program and submit
to the governor, the lieutenant governor, the speaker of the house
of representatives, and the members of each legislative standing
committee with primary jurisdiction over economic development a
written report regarding the outcomes, challenges, and
Sec. 320.014.  RULES.  The commission shall adopt rules
necessary to implement this chapter.
Sec. 320.015.  EXPIRATION.  This chapter expires September
SECTION 3.  Chapter 171, Tax Code, is amended by adding
Subchapter N-1 to read as follows:
SUBCHAPTER N-1. TAX CREDIT FOR CHILD-CARE CONTRIBUTION
Sec. 171.721.  DEFINITION.  In this subchapter, "child-care
contribution" means the dollar amount of a contribution made by a
taxable entity to an employee of the entity for use by the employee
to secure child care at a child-care facility or family home
licensed under Chapter 42, Human Resources Code, including a
licensed child-care facility operated by the entity. The term does
not include wages paid by the taxable entity to the employee or a
payment to the employee that is considered compensation for the
Sec. 171.722.  ENTITLEMENT TO CREDIT.  A taxable entity is
entitled to a credit in the amount and under the conditions provided
by this subchapter against the tax imposed under this chapter.
Sec. 171.723.  AMOUNT OF CREDIT; LIMITATION.  (a)  Subject to
Subsections (b) and (c), the amount of the credit a taxable entity
may claim on a report is equal to the total amount of child-care
contributions paid by the entity during the period on which the
report is based.  For purposes of computing the total amount of
child-care contributions paid by the taxable entity, a child-care
contribution in an amount that exceeds $3,600 for a child is
considered to be a child-care contribution in the amount of $3,600
(b)  The total credit claimed on a report, including the
amount of any carryforward under Section 171.724, may not exceed
the amount of franchise tax due for the report after applying all
(c)  The total amount of credits that may be awarded under
Subsection (a) in a state fiscal year may not exceed $25 million.
(d)  The comptroller by rule shall prescribe procedures by
which the comptroller will allocate the amount of credits available
under Subsection (c). The procedures must provide that credits are
allocated to taxable entities that applied for the credit on a pro
Sec. 171.724.  CARRYFORWARD.  (a)  If a taxable entity is
eligible for a credit that exceeds the limitation under Section
171.723(b), the entity may carry the unused credit forward for not
more than five consecutive reports.
(b)  A carryforward is considered the remaining portion of a
credit that cannot be claimed on a report because of the limitation
(c)  Credits, including a carryforward, are considered to be
(1)  a carryforward under this section; and
(2)  a credit for the period on which the report is
Sec. 171.725.  APPLICATION FOR CREDIT.  (a)  A taxable entity
must apply for a credit under this subchapter on or with the report
for the period for which the credit is claimed.
(b)  A taxable entity must apply for the credit in the manner
prescribed by the comptroller and include with the application any
information requested by the comptroller to determine whether the
entity is eligible for the credit under this subchapter.
(c)  The comptroller may award a credit to a taxable entity
that applies for the credit under Subsection (a) of this section if
the taxable entity is eligible for the credit and the credit is
available under Section 171.723(c).  The comptroller has discretion
in determining whether to grant or deny an application for a credit.
(d)  The comptroller shall notify a taxable entity in writing
of the comptroller's decision to grant or deny the application
submitted under Subsection (a).  If the comptroller denies a
taxable entity's application, the comptroller shall include in the
notice of denial the reasons for the comptroller's decision.
Sec. 171.726.  SALE OR ASSIGNMENT OF CREDIT.  (a)  A taxable
entity that makes a child-care contribution may sell or assign all
or part of the credit that may be claimed for that contribution to
one or more taxable entities, and any taxable entity to which all or
part of the credit is sold or assigned may sell or assign all or part
of the credit to another taxable entity.  There is no limit on the
total number of transactions for the sale or assignment of all or
part of the total credit authorized under this subchapter.
(b)  A taxable entity that sells or assigns a credit under
this section and the taxable entity to which the credit is sold or
assigned shall jointly submit written notice of the sale or
assignment to the comptroller not later than the 30th day after the
date of the sale or assignment. The notice must include:
(1)  the date on which the credit was originally
(2)  the date of the sale or assignment;
(3)  the amount of the credit sold or assigned and the
remaining period during which it may be used;
(4)  the names, addresses, and federal tax
identification numbers of the taxable entity that sold or assigned
the credit or part of the credit and the taxable entity to which the
credit or part of the credit was sold or assigned;  and
(5)  the amount of the credit owned by the selling or
assigning taxable entity before the sale or assignment, and the
amount the selling or assigning taxable entity retained, if any,
(c)  The sale or assignment of a credit in accordance with
this section does not extend the period for which a credit may be
(d)  After a taxable entity claims a credit for a child-care
contribution under this subchapter, another entity may not use the
same expenditure as the basis for another credit.
Sec. 171.727.  RULES.  The comptroller shall adopt rules
necessary to implement and administer this subchapter.
SECTION 4.  Not later than February 1, 2026, the Texas
Workforce Commission shall post on its Internet website the
information required by Section 302.0064, Labor Code, as added by
SECTION 5.  Subchapter N-1, Chapter 171, Tax Code, as added
by this Act, applies only to a report originally due on or after
SECTION 6.  (a)  Except as provided by Subsection (b) of this
section, this Act takes effect September 1, 2025.
(b)  Subchapter N-1, Chapter 171, Tax Code, as added by this
Act, takes effect January 1, 2026.