NHLA Bill Review: SB295 (2025) Detail

SB295 (2025) Detail

(New Title) relative to education freedom accounts.

SB 295-FN - AS AMENDED BY THE HOUSE

03/13/2025 0793s

8May2025... 1857h

2025 SESSION

25-0955

07/02

SENATE BILL 295-FN

AN ACT relative to education freedom accounts.

SPONSORS: Sen. Sullivan, Dist 18; Sen. Gannon, Dist 23; Sen. Murphy, Dist 16; Sen. Innis, Dist 7; Sen. Avard, Dist 12; Sen. Pearl, Dist 17; Sen. Gray, Dist 6; Rep. McDonnell, Rock. 25; Rep. Noble, Hills. 2; Rep. Rice, Hills. 38; Rep. Notter, Hills. 12

COMMITTEE: Education Finance

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AMENDED ANALYSIS

This bill:

I. Increases the number of students eligible for education freedom accounts by removing household income thresholds.

II. Removes certain conditions tied to education freedom account funds.

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

03/13/2025 0793s

8May2025... 1857h 25-0955

07/02

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Twenty Five

AN ACT relative to education freedom accounts.

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

1 Education; Education Freedom Accounts; Definitions. 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 New Paragraphs; Education; Education Freedom Accounts; Application for an Education Freedom Account. Amend RSA 194-F:3 by inserting after paragraph I the following new paragraphs:

I-a. For the 2025-2026 fiscal year, and each fiscal year thereafter, total enrollment for the education freedom account program shall be capped at 10,000. However, in any fiscal year when student applications for the education freedom account program are equal to or greater than 90 percent of the total enrollment cap applicable to that fiscal year, the total enrollment cap shall increase by 25 percent. The department shall publish on its website information identifying the total enrollment cap when it is increased pursuant to this paragraph.

I-b. In the event that applications for the education freedom account program exceed 90 percent of the annual enrollment cap in a given fiscal year, as established in paragraph I-a, priority for the program shall be determined in the following order:

(a) A student currently enrolled in the EFA program;

(b) A sibling of a student currently enrolled in the EFA program;

(d) A student whose family income is less than or equal to 350 percent of the federal poverty guidelines as updated annually by the United States Department of Health and Human Services under 42 U.S.C. section 9902 (2).

I-c. In any fiscal year, for students applying after June 30 during the fall application window, only students who meet the priority categories as defined by RSA 194-F:3, I-b(b)-(d) are eligible for pro-rated accounts. The scholarship organization shall prioritize current EFA students for renewal in the spring by reserving space for them under that year’s enrollment cap before awarding new EFA accounts for fall applicants.

3 Education; Education Freedom Accounts; Application for an Education Freedom Account. Amend RSA 194-F:3, III(b) to read as follows:

(b) The student on whose behalf the parent is applying is an eligible student and meets the priority guidelines when applications exceed the enrollment cap.

4 New Paragraph; Education; Education Freedom Accounts; Authority and Responsibilities of the Scholarship Organization. Amend RSA 194-F:4 by inserting after paragraph IV the following new paragraph:

IV-a. The scholarship organization shall establish and publicize no less than 2 deadlines by which application forms must be submitted.

5 Education Freedom Accounts; Application Acceptance Directive. Amend RSA 194-F:3, I to read as follows:

I. A parent may apply to the scholarship organization to establish an EFA for an eligible student. The scholarship organization shall accept and approve applications on a rolling basis for the fall and spring semesters each year and shall establish procedures for approving applications in an expeditious manner.

6 Education; Education Freedom Accounts; Authority and Responsibilities of the Scholarship Organization RSA 194-F:3, III(b) is repealed and reenacted to read as follows:

(b) The student on whose behalf the parent is applying is an eligible student.

7 Repeal. The following are repealed:

I. RSA 194-F:3, I-a, I-b, and I-c, relative to education freedom account eligibility.

II. RSA 194-F:4, IV-a, relative to scholarship organization deadlines.

8 Contingency. Sections 5 through 7 of this act shall take effect on the date the department of education certifies to the secretary of state and the director of the office of legislative services that student applications for the education freedom account program have not exceeded 90 percent of the total enrollment cap for 2 consecutive fiscal years.

9 Effective Dates.

I. Sections 5 through 7 of this act shall take effect as provided in section 8 of this act.

II. The remainder of this act shall take effect 60 days after its passage.

LBA

25-0955

1/7/25

SB 295-FN- FISCAL NOTE

AS INTRODUCED

AN ACT expanding the number of students eligible for education freedom accounts.

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

Amendments

Date	Amendment
March 5, 2025	2025-0691s
March 6, 2025	2025-0793s
March 12, 2025	2025-0887s
March 12, 2025	2025-0886s
March 12, 2025	2025-0963s
May 1, 2025	2025-1857h
May 6, 2025	2025-1952h
May 7, 2025	2025-1979h
May 7, 2025	2025-1978h

Action Dates Show/hide past dates

Date	Body	Type
Feb. 12, 2025	Senate	Hearing
	Senate	Floor Vote
March 13, 2025	Senate	Floor Vote
March 27, 2025	Senate	Floor Vote
April 15, 2025	House	Hearing
May 2, 2025	House	Exec Session
May 1, 2025	House	Exec Session
May 1, 2025	House	Floor Vote
May 28, 2025	House	Exec Session

Bill Text Revisions

Docket

May 20, 2025: Executive Session: 05/28/2025 10:00 am LOB 210-211

May 19, 2025: Division II Work Session: 05/23/2025 10:00 am LOB 209

May 8, 2025: Referred to Finance 05/08/2025 HJ 14

May 8, 2025: Ought to Pass with Amendment 2025-1857h: MA RC 188-176 05/08/2025 HJ 14

May 8, 2025: FLAM # 2025-1979h (Rep. Luneau): AF RC 165-199 05/08/2025 HJ 14

May 8, 2025: Previous Question MA DV 195-166 05/08/2025 HJ 14

May 8, 2025: Amendment # 2025-1857h: AA DV 185-155 05/08/2025 HJ 14

May 1, 2025: Minority Committee Report: Inexpedient to Legislate

May 1, 2025: Majority Committee Report: Ought to Pass with Amendment # 2025-1857h 05/01/2025 (Vote 10-8; RC) HC 23 P. 13

May 1, 2025: Executive Session: 05/01/2025 01:00 pm LOB 205-207

April 23, 2025: ==CANCELLED== Executive Session: 05/02/2025 09:30 am LOB 205-207

March 31, 2025: Public Hearing: 04/15/2025 01:45 pm LOB 205-207

March 28, 2025: Introduced (in recess of) 03/27/2025 and referred to Education Funding HJ 11 P. 113

March 27, 2025: Ought to Pass: RC 16Y-8N, MA; OT3rdg; 03/27/2025; SJ 9

March 18, 2025: Committee Report: Ought to Pass, 03/27/2025, Vote 5-2; SC 14

March 13, 2025: Ought to Pass with Amendment #2025-0793s, RC 16Y-8N, MA; Refer to Finance Rule 4-5; 03/13/2025; SJ 7

March 13, 2025: Sen. Prentiss Floor Amendment # 2025-0886s, RC 8Y-16N, AF; 03/13/2025; SJ 7

March 13, 2025: Sen. Altschiller Floor Amendment # 2025-0887s, RC 8Y-16N, AF; 03/13/2025; SJ 7

March 13, 2025: Sen. Perkins Kwoka Floor Amendment # 2025-0963s, RC 8Y-16N, AF; 03/13/2025; SJ 7

March 13, 2025: Committee Amendment # 2025-0793s, AA, VV; 03/13/2025; SJ 7

March 7, 2025: Committee Report: Ought to Pass with Amendment # 2025-0793s, 03/13/2025, Vote 3-2; SC 12

March 5, 2025: Committee Report: Ought to Pass with Amendment # 2025-0691s, Vote 3-2 SC 12

Feb. 6, 2025: Hearing: 02/12/2025, Room 100, SH, 03:20 pm; SC 9