Current through Reg. 50, No. 13; March 28, 2025
(a) Status and use of state funds.
(1) State funds received by a charter holder
are public funds for all purposes under state law and may be used only for a
purpose for which a school district may use local funds under Texas Education
Code (TEC), §45.105(c). Any other use or application of such funds
constitutes misuse and misapplication of public funds and is subject to the
civil and criminal laws governing misuse or misapplication of Texas public
funds.
(2) State funds received by
a charter holder are held by the charter holder in trust for the benefit of the
students of the charter school. In their use of public funds, the governing
body of a charter holder, and the governing body and officers of a charter
school, shall be held to the standard of care and fiduciary duties that a
trustee owes a beneficiary under Texas law.
(3) A charter school shall accept tuition for
students holding certain student visas as described in TEC, §
25.0031(a).
(b) Depository contract. Pending their use,
state funds received by a charter holder must be deposited into a bank with
which the charter holder has entered into a depository contract. Each year
within the period prescribed by §
100.1111 of this title (relating
to Annual Report on Open-Enrollment Charter Governance) for filing articles of
incorporation, the charter holder must file a copy of the depository contract
with the Texas Education Agency division responsible for school financial
audits; however, if there has been no change since the last filing, the charter
holder may file a statement to this effect in lieu of a copy of the depository
contract.
(1) State funds received by a
charter holder must be deposited into an account owned and controlled
exclusively by the charter holder pending their use. Once properly deposited,
the charter holder may immediately use the funds for any purpose described in
subsection (a)(1) of this section, subject to the standard of care and
fiduciary duties described in subsection (a)(2) of this section.
(2) A "bank" is defined by TEC, §
45.201. Although the
term excludes a bank the deposits of which are not insured by the Federal
Deposit Insurance Corporation (FDIC), deposits exceeding FDIC-insured amounts
need not be collateralized for the institution to constitute a "bank" under
this subsection.
(3)
Notwithstanding this subsection, if required by a contract executed prior to
September 1, 2001, state funds may be deposited into an account managed by a
bond trustee acting on behalf of a charter holder for the sole purpose of
complying with debt service obligations of the charter holder on a bond issued
under TEC, Chapter 53.
