NHLA Bill Review: Bill Text

Bill Text - HB331 (2023)

Relative to the income threshold for the education freedom account program.

Revision: Jan. 9, 2023, 3:08 p.m.

HB 331-FN-LOCAL - AS INTRODUCED

2023 SESSION

23-0203

10/05

HOUSE BILL 331-FN-LOCAL

AN ACT relative to the income threshold for the education freedom account program.

SPONSORS: Rep. A. Lekas, Hills. 38; Rep. Aron, Sull. 4; Rep. Ankarberg, Straf. 7; Rep. Cushman, Hills. 28; Sen. Murphy, Dist 16

COMMITTEE: Education

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ANALYSIS

This bill removes the household income criteria from eligibility requirements for the education freedom account program.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

23-0203

10/05

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Twenty Three

AN ACT relative to the income threshold for the education freedom account program.

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 Education Freedom Accounts Program; Eligibility; Income Removed. Amend RSA 194-F:1, VI to read as follows:

VI. "Eligible student" means a resident of this state who is eligible to enroll in a public elementary or secondary school [and whose annual household income at the time the student applies for the program is less than or equal to 300 percent of the federal poverty guidelines as updated annually in the Federal Register by the United States Department of Health and Human Services under 42 U.S.C. section 9902(2). No income threshold need be met in subsequent years, provided the student otherwise qualifies]. Students in the special school district within the department of corrections established in RSA 194:60 shall not be eligible students.

2 Effective Date. This act shall take effect 60 days after its passage.

LBA

23-0203

1/6/23

HB 331-FN-LOCAL- FISCAL NOTE

AS INTRODUCED

AN ACT relative to the income threshold for the education freedom account program.

FISCAL IMPACT: [ X ] State [ ] County [ X ] Local [ ] None


	Estimated Increase / (Decrease)
STATE:	FY 2023	FY 2024	FY 2025	FY 2026
Appropriation	$0	$0	$0	$0
Revenue	$0	$0	$0	$0
Expenditures	$0	Indeterminable	Indeterminable	Indeterminable
Funding Source:	[ ] General [ X ] Education [ ] Highway [ ] Other

LOCAL:
Revenue	$0	$0	Indeterminable	Indeterminable
Expenditures	$0	Indeterminable	Indeterminable	Indeterminable

METHODOLOGY:

This bill, presumed to be effective in FY 2024, removes the income eligibility requirements to access the Education Freedom Account (EFA) program. Currently, the EFA program requires an eligible student’s household income to be less than 300 percent of the federal poverty guideline to access this program. As of November 2022, 3,110 students were in the EFA program with an annualized cost estimated at $15.2 million with the typically grant averaging to be $4,900 per student. The average grant for the EFA program is higher than the traditional district cost of an adequate education grant of $4,740, because the EFA program has income limits and participants are more likely to experience poverty that is documented.

The Department of Education states eliminating the income requirement will result in an indeterminable number of new students accessing the program. The Department has provided the following information relative to the different situations in which a student may access the EFA program:

Students accessing the program by going from the non-public or home education systems and entering the EFA program would likely result in a grant of $4,740 for each student. The average grant size for these students would likely match the average grant provided to a district student. This would result in a net cost to the state as these students accessed the program through proposed removal of income requirements. These costs could first be incurred beginning in FY 2024.

Students leaving a charter public school would have a net cost savings to the state of $2,753 to the state; $7,493 (current average charter school rate) – $4,740 (average EFA) = $2,753. These savings could first be incurred beginning in FY 2024.

Student leaving a traditional district system would have a net cost to the state if the student left a community that had a statewide education property tax (SWEPT) grant in excess of the calculated cost of adequate education. This net cost would be around $4,740 per student. The impact on state EFA payments could first be incurred beginning FY 2024, however impacts to adequacy payments to districts would not be first incurred until FY 2025 (as adequacy payments are made on previous year student counts).

Students leaving a non-excess SWEPT community, which makes up approximately 95 percent of students in NH, would see the adequacy grant go the EFA program for educating the student instead of the school district. This would result in a net neutral cost to the state in adequacy grants and a decrease in local revenues. However, this would also result in a net cost to the state due to the EFA phase-out grant being paid. The EFA phase-out grant compensates districts at a rate of 75 cents on the dollar for any student leaving the district and going to the EFA program. Therefore, this grant would cost on average $3,555 for each student leaving a district (75 percent of $4,740). The impact on state EFA payments could first be incurred beginning FY 2024, however impacts to adequacy payments to districts would not be first incurred until FY 2025 (as adequacy payments are made on previous year student counts).

As students potentially leave traditional district schools and join the EFA program, districts may feel pressure to reduce their local expenditures to better fit the reduced population served. It is unknown the impact this would have on local expenditures, but this could potentially result in an indeterminable decrease.

AGENCIES CONTACTED:

Department of Education