Bill Text - SB525 (2024)

Relative to administration of the education freedom accounts program.


Revision: Dec. 20, 2023, 3:21 p.m.

SB 525-FN - AS INTRODUCED

 

 

2024 SESSION

24-3095

12/02

 

SENATE BILL 525-FN

 

AN ACT relative to administration of the education freedom accounts program.

 

SPONSORS: Sen. Altschiller, Dist 24; Sen. D'Allesandro, Dist 20; Sen. Soucy, Dist 18; Sen. Fenton, Dist 10; Rep. Bradley, Hills. 41

 

COMMITTEE: Education

 

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ANALYSIS

 

This bill changes income eligibility and reporting requirements for the education freedom account program and modifies the program's administration and oversight.

 

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

24-3095

12/02

 

STATE OF NEW HAMPSHIRE

 

In the Year of Our Lord Two Thousand Twenty Four

 

AN ACT relative to administration of the education freedom accounts program.

 

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

 

1  Education Freedom Accounts; Definition; Eligible Student.  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, and for each school year during the student's participation, matches the state mandated income threshold, is less than or equal to 350 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  Education Freedom Account; Roll Over of Program Funds.  Amend RSA 194-F:2, VII to read as follows:

VII.  An EFA shall remain in force, and any unused funds shall roll over from quarter-to-quarter [and from year-to-year] until the parent withdraws the EFA student from the EFA program, the student becomes ineligible, or until the EFA student graduates from high school, unless the EFA is closed because of a substantial misuse of funds.  Any unused funds shall revert to the education trust fund established in RSA 198:39 [and be allocated to fund other EFAs].

3  New Paragraph; Education Freedom Account Program; Department of Education; Reporting.  Amend RSA 194-F:2 by inserting after paragraph IX the following new paragraph:

X.  The department shall report annually by July 1 to the legislative oversight committee established in RSA 194-F:12, and to the chairpersons of the education committees of the house of representatives and senate, on the number of students in each town with community populations of more than 500 residents that are participating in the EFA program.  The legislative budget assistant audit division shall conduct randomized annual EFA income verification auditing of 33 percent of the participating families.

4  Effective Date.  This act shall take effect July 1, 2024.

 

LBA

24-3095

Revised 12/20/23

 

SB 525-FN- FISCAL NOTE

AS INTRODUCED

 

AN ACT relative to administration of the education freedom accounts program.

 

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

 

 

Estimated State Impact - Increase / (Decrease)

 

FY 2024

FY 2025

FY 2026

FY 2027

Revenue

$0

$0

$0

$0

Revenue Fund(s)

None

Expenditures

$0

Indeterminable

Funding Source(s)

Education Trust Fund

Appropriations

$0

$0

$0

$0

Funding Source(s)

None

Does this bill provide sufficient funding to cover estimated expenditures? [X] N/A

Does this bill authorize new positions to implement this bill? [X] N/A

 

Estimated Political Subdivision Impact - Increase / (Decrease)

 

FY 2024

FY 2025

FY 2026

FY 2027

Local Revenue

$0

Indeterminable

Local Expenditures

$0

Indeterminable

 

METHODOLOGY:

The Legislative Budget Assistant (LBA) states section 3 of this bill requires the Audit Division to conduct randomized annual EFA income verification auditing of 33 percent of participating families.  For the purposes of this fiscal note, it is assumed the term audit is used loosely and the intent of the bill is to require income verifications, not individual audit reports on each participating family.  The LBA Audit Division has the authority to obtain and review State records, but not those of private citizens. For an income verification to be performed, the necessary records and documentation would need to be in the possession of the Department of Education or, if allowed by the contract terms, the program administrator which is currently the Children’s Scholarship Fund New Hampshire. Based on current DOE estimates, approximately 4,211 students will participate in the EFA program during the current 2023-2024 school year.  It is unknown how many families this represents, but it can be reasonably assumed that this would require several hundred income verifications to be performed annually by the Audit Division. Current LBA Audit Division practices and standards require sample sizes to be determined based on a risk assessment of the program.  This approach is favored over a statutory mandated number which may be higher or lower than the risk assessment determines.  In any event, the additional responsibility on the Division would have a direct impact on the number of financial audits the Division would be able to issue annually, and the timeliness of the release of Statewide audits such as the Annual Comprehensive Financial Report (ACFR) and Single Audit of Financial Assistance Programs.  Although the LBA would absorb any costs within its existing FY 2024-2025 budget, additional appropriation support may be required in future budgets depending on EFA participation growth, and the time required to complete each income verification.

 

This bill further requires income eligibility for the Education Freedom Account (EFA) program be verified annually. Under current law, income is verified in program participation year one only. As of November 2023, 4,552 students were in the EFA program with an annualized cost estimated at $23.8 million with the typically grant averaging to be $5,235 per student. The current average education grant to public district schools is $6,217, which includes cost for an adequate education and extraordinary needs grant.

 

The Department of Education states this bill could result in a decrease of EFA program participation. The following is information relative to the different situations in which a student may access the EFA program:

 

  • Students exiting the EFA program and choosing non-public or home education systems would likely result in a decrease of $5,235 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 savings to the state.

 

  • Students leaving the program for a charter public school would have a net cost to the state of $4,365 to the state; $9,600 (current average charter school rate) – $5,235 (average EFA) = $4,365.

 

  • Student exiting the program for a traditional district system would have a net savings 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 savings would be $5,235 per student.

 

  • Students leaving the program and entering a public district school in a non-excess SWEPT community would result in an increase to the adequacy grant for their resident district, rather than the funds going to an EFA. This would result an approximate increase of $982 ($6,217 - $5,235) in state adequacy grants, and an increase in local revenues per student. This would also result in a net savings to the state due to the EFA phase-out grant being paid. The EFA phase-out grant compensates districts at a rate of 50 cents on the dollar in year one and 25 cents in year two, for the cost of an adequate education grant portion only ($5,248) for any student leaving the district and going to the EFA program. Therefore, this savings could be, on average, $2,624 for each student leaving a district (50 percent of $5,248) in year one.

 

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

 

AGENCIES CONTACTED:

Office of Legislative Budget Assistant and Department of Education