NHLA Bill Review: Bill Text

Bill Text - HB115 (2025)

Relative to universal eligibility for the education freedom account program.

Revision: Jan. 4, 2025, 9:55 p.m.

HB 115-FN - AS INTRODUCED

2025 SESSION

25-0061

07/02

HOUSE BILL 115-FN

AN ACT relative to universal eligibility for the education freedom account program.

SPONSORS: Rep. McDonnell, Rock. 25; Rep. Ladd, Graf. 5; Rep. Noble, Hills. 2; Rep. Soti, Rock. 35; Rep. Verville, Rock. 2; Rep. Cordelli, Carr. 7; Rep. Sweeney, Rock. 25; Rep. Seidel, Hills. 29; Rep. Alexander Jr., Hills. 29; Rep. Weyler, Rock. 14; Sen. Murphy, Dist 16; Sen. Ward, Dist 8; Sen. Sullivan, Dist 18; Sen. Innis, Dist 7

COMMITTEE: Education Funding

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

25-0061

07/02

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Twenty Five

AN ACT relative to universal eligibility for the education freedom account program.

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

1 Education Freedom Accounts; Definitions; 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 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 Effective Date. This act shall take effect 60 days after its passage.

LBA

25-0061

12/9/24

HB 115-FN- FISCAL NOTE

AS INTRODUCED

AN ACT relative to universal eligibility for the education freedom account program.

FISCAL IMPACT:


Estimated State Impact
	FY 2025	FY 2026	FY 2027	FY 2028
Revenue	$0	$0	$0	$0
Revenue Fund(s)	None
Expenditures*	$0	Indeterminable
Funding Source(s)	Education Trust Fund
Appropriations*	$0	Statutory Appropriation Under RSA 194-F:11 for Any Amount Necessary to Fund Program
Funding Source(s)	Education Trust Fund
Expenditure = Cost of bill Appropriation = Authorized funding to cover cost of bill

Estimated Political Subdivision Impact
	FY 2025	FY 2026	FY 2027	FY 2028
Local Revenue	$0	Indeterminable
Local Expenditures	$0	Indeterminable

METHODOLOGY:

This bill eliminates the income requirement for eligibility for the education freedom account (EFA) program. As of September 2024, 5,321 students were in the EFA program with an annualized cost estimated at $27.7 million with the grant averaging $5,204 per student. The average adequacy education grant (FY 2026 preliminary estimates as of November 15, 2024) to public district schools is $7,108, which includes cost of an opportunity for an adequate education, and extraordinary needs and hold harmless grants. Students entering the program under this bill would likely receive a grant less than the current average, since the newly eligible population would not be eligible for free or reduced-priced meal (F&R) differentiated aid. It is estimated that the average EFA grant for the newly eligible population under this bill would be approximately $4,419 (assuming 7% are eligible for special education differentiated aid).

The Department of Education states this bill will result in an indeterminable number of new students accessing the program. The following is information relative to the different situations in which a student may access the EFA program:

Students accessing the program attending non-public schools or home education settings would likely receive an estimated average grant of $4,419. This would be an increased cost to the state as these students currently do not receive any state support.

Students leaving a charter public school would have a net cost savings to the state of $5,098; approximately $9,517 (current charter school per pupil rate based on 7% special education differentiated aid eligibility) – $4,419 (average new EFA) = $5,098.

Students leaving a traditional district system would have a net cost to the state if the student left a community that has statewide education property tax (SWEPT) collections in excess of its calculated cost of an opportunity for an adequate education (“excess SWEPT”). The cost would be the average new EFA grant of $4,419 per student.

Students leaving a non-excess SWEPT community would see the adequacy grant go to the EFA program for educating the student instead of the school district. This should result in a net neutral cost to the state, as there would be cost for the EFA grant ($4,419) and a decrease in local school district aid for the student ($4,419). However, there would be a cost 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 for any student leaving the district and going to the EFA program. Therefore, this grant would cost on average $2,209.50 for each student leaving a district (50 percent of $4,419) in year one. Under current law, phase-out grants will terminate for new EFA students receiving an EFA effective July 1, 2026 (FY 2027).

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.

It should be noted, that under current law, EFA and charter school grants are paid based on current year enrollments, while district adequacy grants are paid based on the previous school year enrollments (one year lag).

AGENCIES CONTACTED:

Department of Education