87R5895 BDP-F     By: Canales H.B. No. 2451       A BILL TO BE ENTITLED   AN ACT   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,[:                [(1)]  a member of the governing body of a charter   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[;                [(2)  notwithstanding any provision of Section   12.1054(1), an employee of an open-enrollment charter school rated   acceptable or higher under Section 39.054 for at least two of the   preceding three school years may serve as a member of the governing   body of the charter holder of the governing body of the school if   the employees do not constitute a quorum of the governing body or   any committee of the governing body; however, all members shall   comply with the requirements of Sections 171.003-171.007, Local   Government Code].          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[;                [(3)  has been convicted of an offense listed] in   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 [(4)]   has a substantial interest in a management company.          (b)  For purposes of Subsection (a)(3) [(a)(4)], a person has   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 [elected] officer of the management   company; [or]                (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 [MAJORITY OF] MEMBERS OF   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   [majority of the members] of the governing body of an   open-enrollment charter school or the governing body of a charter   holder [must be qualified voters].          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-enrolment 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 12.1252 to read as follows:          Sec. 12.1252.  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 2021-2022 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, 2021.