The bill, H.B. No. 1878, introduces new regulations regarding the financial management of open-enrollment charter schools in Texas, specifically prohibiting the use of funds received for these schools to support out-of-state educational institutions. Under the newly added Section 12.1075, charter holders are explicitly barred from spending these funds for out-of-state schools, with an exception for expenditures related to contracts for goods or services directly benefiting the charter school. If a charter holder is found to have violated this provision, the commissioner of education is mandated to withhold an amount equal to three times the violation from the charter holder's funding for the relevant school year, with potential adjustments for future years to recover any remaining owed amounts.

Additionally, the bill amends Section 12.115(c) of the Education Code to include a new criterion for revoking a charter. Specifically, if a charter holder spends at least $100,000 in violation of the new Section 12.1075, this will be grounds for revocation alongside existing performance rating criteria. The bill is set to take effect on September 1, 2025.

Statutes affected:
Introduced: Education Code 12.115 (Education Code 12)