Tex. Codes » Education Code · TITLE 2. PUBLIC EDUCATION · SUBTITLE C. LOCAL ORGANIZATION AND GOVERNANCE · CHAPTER 12. CHARTERS
Texas Codes

Tex. Educ. Code § 12.107 (2026)

Status And Use Of Funds

✓ current as of May 2026
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Sec. 12.107. STATUS AND USE OF FUNDS. (a) Funds received under Section 12.106 after September 1, 2001, by a charter holder:

(1) are considered to be public funds for all purposes under state law;

(2) are held in trust by the charter holder for the benefit of the students of the open-enrollment charter school;

(3) may be used only for a purpose for which a school may use local funds under Section 45.105(c);

(4) pending their use, must be deposited into a bank, as defined by Section 45.201, with which the charter holder has entered into a depository contract; and

(5) may not:

(A) be pledged or used to secure loans or bonds for any other organization, including a non-charter operation or out-of-state operation conducted by the charter holder or a related party, as defined by commissioner rule adopted under Section 12.1166; or

(B) be used to support an operation or activity not related to the educational activities of the charter holder.

(b) A charter holder shall deliver to the agency a copy of the depository contract between the charter holder and any bank into which state funds are deposited.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30, 1995. Amended by Acts 2001, 77th Leg., ch. 1504, Sec. 7, eff. Sept. 1, 2001.

Amended by:

Acts 2019, 86th Leg., R.S., Ch. 631 (S.B. 1454), Sec. 4, eff. June 10, 2019.

Notes of Decisions
Cited in 8 cases (5 in the last 5 years), 2015–2025 · leading case: Transformative Learning Sys. D/B/A Transformative Charter Academy v. Texas Educ. Agency & Michael Williams in His Off. Capacity as the Comm'r of Educ., 572 S.W.3d 281 (Tex. App. 2018).
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Transformative Learning Sys. D/B/A Transformative Charter Academy v. Texas Educ. Agency & Michael Williams in His Off. Capacity as the Comm'r of Educ., 572 S.W.3d 281 (Tex. App. 2018). “for the benefit of the students of the open-enrollment charter school,” Tex. Educ. Code § 12.107(a)(2), and that property purchased with section 12.”
Premier Learning Academy, Inc. v. Texas Educ. Agency, 521 S.W.3d 439 (Tex. App. 2017). “Although the Education Code provides that FSP funds “are held in trust by the charter holder for the benefit of the students of the open-enrollment charter school,” see Tex. Educ. Code § 12.107(a)(2), we do not read the Education Code to implicitly incorporate the entirety of…”
Texas Educ. Agency v. Excellence 2000 INC. & Sherwin Allen (Tex. App. 2025). · cites it 3× “0012-0032 Tab 4 Tex. Educ. Code §12.107 Appx. 0033-0035 Tab 5 Tex.”
the Texas Educ. Agency & Mike Morath, Comm'r of Educ., in His Off. Capacity v. Academy of Careers & Tech., Inc. D/B/A Academy of Careers & Tech. Charter Sch. (Tex. App. 2015). · cites it 2× “34 TEX. EDUC. CODE §12.107 .................”
Hopkins v. Wayside Schs. (5th Cir. 2024). “” See Tex. Educ. Code § 12.107. In Springboards, this court held that the receipt of earmarked funds, which “come[] with state- imposed restrictions on how the funds may be spent,” weighs against immunity.”
Williams v. Tekoa Charter Sch., Inc. (E.D. Tex. 2024). “Tex. Educ. Code Ann. § 12.107 (a) (emphasis added); see Perez, 307 F.”
Redding-Guidry v. Harmony Pub. Scools (S.D. Tex. 2023). “An open-enrollment charter school receives state funds under Texas Education Code § 12.106, and those state public funds may be used only for public-school purposes as authorized under Texas Education Code § 12.”
Hopkins v. Wayside Schs. (W.D. Tex. 2022). “An open-enrollment charter school receives state funds under Texas Education Code § 12.106, and those state public funds may be used only for public-school purposes as authorized under Texas Education Code § 12.”
— Tex. Educ. Code § 12.107(a)(1) — 1 case
Texas Educ. Agency v. Excellence 2000 INC. & Sherwin Allen (Tex. App. 2025). “0012-0032 Tab 4 Tex. Educ. Code §12.107 Appx. 0033-0035 Tab 5 Tex.”
— Tex. Educ. Code § 12.107(a)(2) — 2 cases
Transformative Learning Sys. D/B/A Transformative Charter Academy v. Texas Educ. Agency & Michael Williams in His Off. Capacity as the Comm'r of Educ., 572 S.W.3d 281 (Tex. App. 2018). “for the benefit of the students of the open-enrollment charter school,” Tex. Educ. Code § 12.107(a)(2), and that property purchased with section 12.”
Premier Learning Academy, Inc. v. Texas Educ. Agency, 521 S.W.3d 439 (Tex. App. 2017). “Although the Education Code provides that FSP funds “are held in trust by the charter holder for the benefit of the students of the open-enrollment charter school,” see Tex. Educ. Code § 12.107(a)(2), we do not read the Education Code to implicitly incorporate the entirety of…”
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