(a) The permanent fund for children and public health is a dedicated account in the general revenue fund. The fund is composed of:
(1) money transferred to the fund at the direction of the legislature;
(2) gifts and grants contributed to the fund; and
(3) the available earnings of the fund determined in accordance with § 403.1068.
(b) Except as provided by Subsections (b-1), (c), (e), (f), and (h), money in the fund may not be appropriated for any purpose.

(b-1) Notwithstanding the limitations and requirements of § 403.1068, the legislature may appropriate money in the fund, including the corpus and available earnings of the fund determined under § 403.1068, to pay the principal of or interest on a bond issued for the purposes of § 67, Article III, Texas Constitution. This subsection does not authorize the appropriation under this subsection of money subject to a limitation or requirement as described by Subsection (e) that is not consistent with the use of the money in accordance with this subsection.
(c) The available earnings of the fund may be appropriated to:
(1) the Texas Department of Health for the purpose of:
(A) developing and demonstrating cost-effective prevention and intervention strategies for improving health outcomes for children and the public;
(B) providing grants to local communities to address specific public health priorities, including sickle cell anemia, diabetes, high blood pressure, cancer, heart attack, stroke, keloid tissue and scarring, and respiratory disease;
(C) providing grants to local communities for essential public health services as defined in the Health and Safety Code; and
(D) providing grants to schools of public health located in Texas; and
(2) the Interagency Council on Early Childhood Intervention to provide intervention services for children with developmental delay or who have a high probability of developing developmental delay and the families of those children.
(d) The Texas Board of Health may adopt rules governing any grant program established under this section.
(e) The comptroller may solicit and accept gifts and grants to the fund. A gift or grant to the fund may be appropriated in the same manner as available earnings of the fund, subject to any limitation or requirement placed on the gift or grant by the donor or granting entity.
(f) Money in the fund may also be appropriated to pay any amount of money that the federal government determines that the state should repay to the federal government or that the federal government should recoup from the state in the event of national legislation regarding the subject matter of the case styled The State of Texas v. The American Tobacco Co., et al., No. 5-96CV-91, in the United States District Court, Eastern District of Texas.
(g) Sections 403.095 and 404.071 do not apply to the fund.
(h) The department may direct the comptroller to temporarily transfer money appropriated under Subsection (c) to pay an obligation that the department is authorized to incur under and for which money is appropriated under § 403.105(c), 403.106(c), or 403.1066(c) if the department determines that the transfer is necessary for cash management purposes. As soon as possible after the transfer but not later than the 90th day after the date of the transfer, the department shall direct the comptroller to transfer back the transferred amount from amounts appropriated under § 403.105(c), 403.106(c), or 403.1066(c), as applicable, to the appropriation item for Subsection (c).