1. (a) Each program year, the comptroller shall calculate the amount available to fund accounts of participating children based on amounts appropriated and other available program funds.
2. (b) Each school year that a child participates in the program, as directed by Education Code, §29.361(a)(1), a total amount shall be transferred to the child's program account equal to 85% of the estimated statewide average amount of state and local funding per student in average daily attendance for the most recent school year for which that information is available. Subject to the $30,000 limitation under Education Code, §29.361(b), an additional amount shall be transferred to the account of a child with a disability equal to the amount a school district in which the child would otherwise be enrolled would be entitled to receive for the child calculated based on the child's individualized education program and the provisions of Education Code, Chapter 48, that provide funding based on a child's participation in a school district's special education program under Education Code, Chapter 29, Subchapter A, applicable for the school year preceding the school year in which the child initially enrolls in the program. The amount transferred to the account of a participating child who is not enrolled in a private school or a private provider of a prekindergarten or kindergarten program that is an approved education service provider may not exceed the $2,000 limitation specified under Education Code, §29.361(b-1). Any award of additional program funds based on changes in participant status during a school year is subject to the availability of program funds.
3. (c) No later than July 1 of each program year or as soon thereafter as appropriated funds become available, the comptroller shall make payments to a certified educational assistance organization for each participating child served by the organization equal to at least one-quarter of the total annual amount calculated under subsection (b) of this section for that child. Subject to subsection (f) of this section, the organization shall immediately deposit the amount received for each child under this subsection into the account established for that child.
4. (d) No later than October 1 of each program year or as soon thereafter as appropriated funds become available, the comptroller shall make additional payments to a certified educational assistance organization for each participating child served by the organization to the extent necessary to ensure payments for that program year equal at least one-half of the total annual amount calculated under subsection (b) of this section for that child. The organization shall immediately deposit the amount received for each child under this subsection into the account established for that child.
5. (e) No later than April 1 of each program year or as soon thereafter as appropriated funds become available, the comptroller shall make additional payments to a certified educational assistance organization for each participating child served by the organization to the extent necessary to ensure payments for that program year equal the total annual amount calculated under subsection (b) of this section for that child. The organization shall immediately deposit the amount received for each child under this subsection into the account established for that child.

6. (f) A certified educational assistance organization shall not make any amount available to a child's program account prior to:

   1. (1) verifying that the child remains eligible for the program under Education Code, §29.355; and
   2. (2) confirming enrollment at an approved education service provider that is a private school or a private provider of a prekindergarten or kindergarten program, if applicable.
7. (g) Program participants shall purchase approved education-related expenses for a participating child using a comptroller-approved payment system accessible through the program's Internet website. To the extent a purchase request is verified to be for an approved education-related expense from a provider in good standing for a participating child in good standing and the total amount of the purchase does not exceed the child's account balance, the certified educational assistance organization serving the child shall approve the purchase and deduct the total amount of the purchase from the child's account.
8. (h) An approved education service provider or vendor of educational products or services shall refund to the certified educational assistance organization any payment received for services that are not provided in full or for products that are returned for a refund. Any refund received by the program from a provider or vendor shall be deposited into the account of the participating child to be available for future purchases of approved education-related expenses.

9. (i) Money remaining in a participating child's account at the end of a program year shall be carried forward to the next program year, provided:

   1. (1) the child remains eligible for the program under Education Code, §29.355;
   2. (2) the participating parent has provided notice under Education Code, §29.356(i)(1), that the child will continue participation in the program for the next program year; and
   3. (3) the program participant has not been declared ineligible for participation in the program under Education Code, §29.364.
10. (j) On the date a participating child is no longer eligible to participate in the program and any pending payments for approved education-related expenses have been completed, the certified educational assistance organization responsible for the participating child's account shall close the account and any money remaining in the account shall be returned to the comptroller for deposit into the program fund for purposes of the program.

Source Note:The provisions of this §16.407 adopted to be effective December 15, 2025, 50 TexReg 8046.