HB 1774-FN - AS AMENDED BY THE HOUSE

 

11Mar2026... 0915h

2026 SESSION

26-2849

07/09

 

HOUSE BILL 1774-FN

 

AN ACT relative to qualifying scholarship granting organizations and federal workforce Pell grants.

 

SPONSORS: Rep. Kofalt, Hills. 32; Rep. Morse, Merr. 3; Rep. Osborne, Rock. 2; Rep. Sweeney, Rock. 25; Rep. Miles, Hills. 12; Rep. Noble, Hills. 2; Rep. P. Brown, Rock. 14; Rep. Mattson, Ches. 18; Rep. Packard, Rock. 16; Rep. McDonnell, Rock. 25; Sen. Innis, Dist 7; Sen. Avard, Dist 12

 

COMMITTEE: Education Policy and Administration

 

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AMENDED ANALYSIS

 

This bill:

 

I.  Directs the department of revenue administration to participate in the federal income tax credit for contributions of individuals to qualified scholarship granting organizations.

 

II.  Directs the department of education to create a qualifying scholarship granting organizations list.

 

III.  Directs the governor to approve workforce training programs for federal Workforce Pell Grants.

 

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

11Mar2026... 0915h 26-2849

07/09

 

STATE OF NEW HAMPSHIRE

 

In the Year of Our Lord Two Thousand Twenty-Six

 

AN ACT relative to qualifying scholarship granting organizations and federal workforce Pell grants.

 

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

 

1  New Paragraphs; The State and Its Government; General Provisions; Definitions.  Amend RSA 21-I:1-a by inserting after paragraph V the following new paragraphs:  

VI.  “Qualified scholarship granting organization” means a nonprofit organization that meets the requirements of 26 U.S.C. section 25F.  

VII.  “Eligible workforce training programs” means programs that meet the requirements in 20 U.S.C. section 1088(b)(3)(A) and related federal rules.  

2  Department of Revenue Administration; Income Tax Credit Contribution Program.  The department of revenue administration shall participate in the federal income tax credit for contributions of individuals to qualified scholarship granting organizations, beginning in taxable years ending after December 31, 2026.  The department shall automatically renew its participation each subsequent taxable year.

3  Department of Education; Qualifying Scholarship Granting Organizations List.  The department of education shall create a qualified scholarship granting organizations list and shall work with the department of revenue administration to ensure the organizations are added to the list pursuant to the department of education's internal procedures.  

4  Department of Education; Publication List.  The department of education shall:  

I.  Annually submit a list of qualified scholarship granting organizations to the Secretary of the Treasury of the United States;

II.  Publish a list of qualified scholarship granting organizations on its website; and

III.  Certify its authority to submit the list required under paragraph I to the Secretary of the Treasury of the United States.  

5  State Workforce Innovation Board; Workforce Training Program Approval.  The governor shall, in coordination with the state workforce innovation board, approve all workforce training programs for federal Workforce Pell Grants, if such programs satisfy the requirements of 20 U.S.C. section 1070a and related federal rules.

6  State Workforce Innovation Board; Approval of Funds.  The state workforce innovation board shall adopt an internal procedure, according to applicable federal rules, to determine that a program meets the requirements to be an eligible workforce training program.  

7  Rulemaking Prohibition.  No division or department of state government shall have the authority to adopt or promulgate any rule to implement sections 1-6 of this act.   

8  Effective Date.  This act shall take effect July 1, 2026.  

 

LBA

26-2849

12/16/25

 

HB 1774-FN- FISCAL NOTE

AS INTRODUCED

 

AN ACT relative to qualifying scholarship granting organizations and programs of low-earning outcomes.

 

FISCAL IMPACT:   

Estimated State Impact
		FY 2026	FY 2027		FY 2028	FY 2029
Revenue		$0	Indeterminable
Revenue Fund(s)		General Fund, Education Trust Fund, USNH Revenue, CCSNH Revenue
Expenditures*		$0	Indeterminable
Funding Source(s)		General Fund
Appropriations*		$0	$0		$0	$0
Funding Source(s)		None
*Expenditure = Cost of bill                *Appropriation = Authorized funding to cover cost of bill

 

The Office of Legislative Budget Assistant is unable to provide a complete fiscal note for this bill as it is awaiting information from the Department of Education.  The Department was initially contacted on 11/19/25 for a fiscal note worksheet, with follow-up contact made on 12/05/25.  When completed, the fiscal note will be forwarded to the House Clerk's Office.

 

METHODOLOGY:

This bill would add definitions to RSA Chapter 21-I, which is applicable to the Department of Administrative Services.  It would also require the Department of Education, the Department of Revenue Administration (DRA), the Governor, the State Workforce Innovation Board, and the University System of New Hampshire to undertake various activities designed to take advantage of federal programs and funding for education and workforce development.

 

Department of Revenue Administration (DRA)

Section 2 of this bill provides that DRA shall “to the extent possible. . .participate in the federal income tax credit for contributions of individuals to qualified scholarship granting organizations beginning in taxable years ending after December 31, 2026.”  DRA assumes this reference is intended to apply to years ending on or after December 31, 2026, i.e. tax year 2026.  DRA is further required to automatically renew its participation each subsequent taxable year, and to adopt rules related to its participation.  DRA understands these requirements to refer to Section 70411 of P.L. 119-21, a/k/a the One, Big, Beautiful Bill Act (OBBBA) which has been codified as 26 U.S.C. Section 25F.  The Department of Treasury and the Internal Revenue Service (IRS) have recently announced their intent to issue regulations to implement this new individual tax credit provision and have requested public comments by December 26, 2025.  At this time, and until implementation regulations are issued, DRA is unsure whether and to what extent it might be possible for it to participate as directed or advisable for the state to do so.

 

To the extent DRA (or the Governor) makes a voluntary election to participate, it is DRA’s understanding that the tax credit for “qualified contributions” of up to $1,700 per tax year would be available to be claimed by individuals on their federal tax returns, and would be reduced by the amount “allowed as a credit on any State tax return of the taxpayer.”   It is possible that this could apply to New Hampshire business tax returns filed by individual proprietors, where there is currently available an education tax credit under RSA 77-G of up to $510,000 per year, available to be carried forward for five additional years.  The qualifying conditions with respect to scholarship organizations for both programs are similar enough that donations made in New Hampshire would likely qualify under either program.

 

It is not clear to DRA whether, for the state credit to be considered “allowed” for federal reduction purposes, the credit must be claimed and/or utilized by the taxpayer.  Depending upon the relative federal and state tax liabilities of individual taxpayers, it is possible that taxpayers might benefit by not claiming state credit and claiming federal credit (or vice versa) in a given year, and this might vary from year to year.  It is also unclear how carryforward provisions would work under these scenarios.

 

It is possible, but too early to tell whether participation in the federal tax credit would complicate administration of the State credit, due to the need to reconcile availability and utilization in the event a donation was to qualify under both programs.

 

DRA states, for now, this bill would not result in any additional administrative costs that could not be absorbed in the DRA operating budget. The fiscal impact of the proposed legislation would be a possible indeterminable increase to the general and education trust funds in the form of increased business tax revenues due to credits being claimed at the federal rather than state level.  DRA is unable to quantify the impact due to a lack of understanding about the federal program and how it would interact with the state program, and how taxpayer behavior might change.

 

Department of Business and Economic Affairs (DBEA)

This bill affects DBEA, specifically the Office of Workforce Opportunity (“OWO”) and its state workforce innovation board (“SWIB”) in the following ways:

• SWIB would consult with the Governor to approve workforce training programs for federal Workforce Pell Grants.
• SWIB may adopt rules for approving workforce training programs.
• SWIB shall adopt rules, based on the Workforce Innovation and Opportunity Act, to establish a transparent process for the approval and appeal of denials of funds under its control.
• SWIB, working with OWO, shall create data reports based upon information from eligible workforce training programs.

 

OWO anticipates an indeterminate expenditure to the state but believes the range will be between $500,000 and $1,000,000 in FY 2027, and between $100,000 and $500,000 in FY 2028 and beyond. This is based on the following assumptions from OWO and SWIB to implement the requirements of the proposed bill effectively and to ensure compliance:

 

• Staffing Capacity – Administration of this program will require at least one (1) new full-time position to manage ongoing operations, coordinate with education and training providers, oversee eligibility and reporting, and ensure alignment with existing federal and state requirements. The position needed would be a Miscellaneous Business Operations Specialist (SOC:13-1190), Level 5, Pay Band 6, which begins at $28.74/hour. This does not factor in benefits. This would be a full-time position.

 

• Office Space and Infrastructure – Adding staff will likely require additional office space and related infrastructure to support program operations. There would also be initial start-up costs such as a laptop, supplies, and other costs.

 

• Third-Party Implementation Support: OWO anticipates needing a third-party vendor to assist with initial program setup, workflow design, and system integration. However, the cost of this support is indeterminable at this time, as it will depend on final program requirements, system specifications, and the scope of work established. If allowed, a competitive RFP process would be utilized to find a qualified vendor. It is expected this expense will be contained within FY 2027.

 

• Job Management System Integration – New Hampshire currently uses the NH Job Match System (JMS), developed and maintained by Geographic Solutions, to support workforce programs including WIOA Title I (Adult, Dislocated Worker, Youth) and Title III Wagner-Peyser. JMS allows individuals to self-register for career services, access case management, explore training opportunities via the Eligible Training Provider List (ETPL), and enables businesses to post job openings. JMS is a Modifiable Off-The-Shelf (MOTS) solution, designed for flexibility to meet state-specific requirements. Enhancements to accommodate Workforce Pell requirements would leverage the existing system, making this the most cost-effective and programmatically efficient approach. Staff, particularly within OWO, are already familiar with JMS, reducing training needs and supporting seamless implementation. The existing Job Match System (JMS) contract will require expansion to accommodate new data elements, reporting requirements, and system functionality associated with Workforce Pell. This will result in increased contract costs. The cost determination is indeterminable, but could be in the range of a one-time purchase of between $150,000 and $250,000, and possibly an annual fee. It is possible this purchase would need to go through the Governor and Executive Council process.

 

University System of New Hampshire (USNH)

Specific to the sections of this bill impacting USNH, it has provided the following assumptions:

 

• The designation of “low-earning outcome program” status would be made by the U.S Department of Education (or other authorized federal agency) according to 20 U.S.C. section 1087d(c), whereby the median earnings of a program’s bachelor’s degree completers must exceed the median earnings of adults in the state aged 25-34 whose highest education is a high school diploma. Graduate student earnings would likewise be measured against median bachelor’s degree earnings. According to the federal law, failure to meet the earnings premium standard would result in a “low-earning” program designation, triggering a disclosure requirement and potential loss of program federal student loan eligibility. According to the state law, USNH would be prohibited from using any form of state funding to support such programs or the students enrolled therein.  

 

• The ambiguity in the bill’s language regarding state aid received “directly or indirectly” would need to be defined in the rulemaking process and could include prohibiting the use of all state-funded facilities by students enrolled in “low-earning” programs. The definition could be a major driver of the impact on USNH enrollment and operating revenue.

 

• With adults aged 25-34 in NH having the highest median annual earnings in the U.S. ($37,850) according to the Federal Register, there is strong possibility that certain programs may fail to meet the earnings premium standard, in particular those in the arts and humanities, education, hospitality, allied health, and social services. (https://www.federalregister.gov/documents/2024/12/31/2024-31271/financial-value-transparency-and-gainful-employment-earnings-thresholds-for-calculation-year-2024)

 

• Because the state’s general appropriation is used to subsidize in-state tuition for all NH residents, an increased program differential rate would be instituted for designated “low-earning” programs, comparable to the rate charged to out-of-state students (e.g., the UNH 2025-26 undergrad resident tuition rate is $15,908; nonresident tuition is $37,070.) This would significantly suppress the enrollment of NH residents and reduce tuition revenue.  

 

• Presuming that such designated programs would be further adversely impacted by federal disclosure requirements and/or loan ineligibility, there is a high probability that USNH institutions would consider discontinuing programs that may serve critical, albeit lower-paying, workforce needs, compelling students to enroll in other institutions that offer their program of choice.

 

USNH states the fiscal impact of the legislation is expected to produce an indeterminable and significant reduction in operating revenue for the University System beginning in FY 2027 and ongoing resulting from decreased enrollment. It is not possible to narrowly estimate a range of impact given the unknown parameters that would influence the impact, including the specific rules to be determined and the occupational supply and demand that drive median wages at a given point in time. USNH anticipates a potential broad range of reduced operating revenue, from $500,000 to more than $2.5 million, depending on the definitions and parameters determined through the rule-making process. Decreased revenue resulting from compliance with the state law would necessitate increases in USNH tuition and/or mandatory fee rates and/or a reduction in financial aid from institutional resources for all students – not only those enrolling in a designated “low-earning” degree program.

 

Community College System of New Hampshire (CCSNH)

Specific to the sections of this bill impacting CCSNH, it has provided the following assumptions and potential impacts:

• This bill authorizes the Governor and State Workforce Innovation Board (SWIB) to approve workforce training programs as eligible for federal Workforce Pell grants, and require institutions to provide certain data to the SWIB.
  • Federal law establishing Workforce Pell grants authorizes the Governor, in conjunction with state workforce boards to determine program eligibility for grant funds.  This bill states specifically that in New Hampshire this will be the responsibility of the Governor in conjunction with the SWIB and involve the creation of administrative rules.  CCSNH foresees a timing issue that would have a fiscal impact: Workforce Pell grants are effective July 1, 2026. It is unclear how long the rules process will take after this bill is enacted.  CCSNH plans to have programs ready to enroll participants immediately upon the effective date of the federal program and to seek approval from the Governor to launch programs in alignment with that date.  The rulemaking process set forth in the bill is likely to significantly delay CCSNH’s ability to enroll students in short-term workforce training programs under this grant program.  This would result in a loss of revenue.
• This bill prohibits state funds from supporting programs with low-earning outcomes as defined/referenced in the bill, require the NH Higher Education Commission (HEC) and the University System of New Hampshire (USNH) Board of Trustees to develop Administrative Rules to establish procedures to ensure compliance, and require a report on such program disqualifications. CCSNH is unsure whether any rules established by the HEC and USNH Board would apply to CCSNH programs.  CCSNH would need clarification of this since it would impact its statement of fiscal impact.  

 

CCSNH seeks clarification of the definition of “eligible workforce training programs” (EWTP).  In the bill, the definition of EWTP includes programs that “are identified in state, regional, or local workforce development or labor market projections as growing, emerging, or having projected shortages or hiring demand.”  However, later in the bill, this labor market need inclusion seems to be absent, which if intentional would preclude high-need but low-wage programs such as Early Childhood Education and other programs with entry-level wages that do not meet the threshold but that position graduates for future advancement. CCSNH’s response, relative to fiscal impact associated with this section, is pending clarification of questions raised.  If CCSNH would be required to stop offering programs deemed “low-learning outcome” programs, CCSNH would face a fiscal impact including loss of revenue and costs of closing programs.  

 

AGENCIES CONTACTED:

Department of Education, Department of Revenue Administration, Department of Business and Economic Affairs, University System of New Hampshire, and Community College System of New Hampshire

 

 

 

Amendments

Date	Amendment
March 4, 2026	2026-0915h

• HB1774 at GenCourtMobile
• Compare Changes

Date	Body	Type
Jan. 28, 2026	House	Hearing
March 2, 2026	House	Exec Session
March 2, 2026	House	Floor Vote

Bill Text Revisions

HB1774 Revision: 51135 Date: March 12, 2026, 10:47 a.m.
HB1774 Revision: 50920 Date: March 4, 2026, 11:59 a.m.
HB1774 Revision: 50224 Date: Dec. 17, 2025, 8:50 a.m.

Docket

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March 11, 2026: Ought to Pass with Amendment 2026-0915h: MA VV 03/11/2026 HJ 7

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March 11, 2026: Amendment # 2026-0915h: AA VV 03/11/2026 HJ 7

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March 4, 2026: Committee Report: Ought to Pass with Amendment # 2026-0915h (NT) 03/02/2026 (Vote 17-1; CC)

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Feb. 27, 2026: Executive Session: 03/02/2026 09:30 am GP 232

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Jan. 21, 2026: Public Hearing: 01/28/2026 11:15 am GP 232

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Dec. 17, 2025: Introduced 01/07/2026 and referred to Education Policy and Administration HJ 1

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