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.