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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.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