HB 1665-FN - AS AMENDED BY THE SENATE

05/22/2024   1809s

2024 SESSION

24-2646

02/10

HOUSE BILL 1665-FN

AN ACT relative to student eligibility for education freedom accounts and the scholarship organization's costs of administering the program, extending phase-out grants for education freedom accounts, and revising the definitions of average daily membership in attendance and average daily membership in residence.

SPONSORS: Rep. Cordelli, Carr. 7; Rep. Ladd, Graf. 5; Rep. Pitre, Straf. 1; Rep. Noble, Hills. 2; Rep. Soti, Rock. 35; Rep. Verville, Rock. 2; Rep. Brouillard, Rock. 1; Rep. A. Lekas, Hills. 38; Sen. Murphy, Dist 16

COMMITTEE: Education

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AMENDED ANALYSIS

This bill:

I.  Raises the annual household income threshold for eligible students and reduces the amount that the scholarship organization may retain to cover administrative costs.

II.  Extends the phase-out grants provided under the education freedom account (EFA) program and directs the department of education to submit an annual report regarding EFA funding and costs.

III.  Revises the definitions of average daily membership in attendance (ADMA) and average daily membership in residence (ADMR) for school funding from the education trust fund for the purpose of home educated pupils and pupils participating in the EFA 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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

05/22/2024   1809s 24-2646

02/10

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Twenty Four

AN ACT relative to student eligibility for education freedom accounts and the scholarship organization's costs of administering the program, extending phase-out grants for education freedom accounts, and revising the definitions of average daily membership in attendance and average daily membership in residence.

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

1  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] 400 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 Accounts; Authority and Responsibilities of the Scholarship Organization.  Amend RSA 194-F:4, V to read as follows:

V.  The scholarship organization may withhold from deposits or deduct from EFAs an amount to cover the costs of administering the EFA program, up to a maximum of [10] 8 percent annually.

3  Extension of Phase-Out of Grants to 2029.  Amend RSA 194-F:10, II to read as follows:

II.  The phase-out grants will terminate for new EFA students receiving an EFA effective July 1, [2026] 2029.

4  New Section; Education Freedom Accounts; Reporting Requirement.  Amend RSA 194-F by inserting after section 12 the following new section:

194-F:12-a  Department Reporting Requirement.  On or before November 1, 2024, and each November 1 thereafter, the department shall submit a report to the governor and council and the legislative oversight commission established in RSA 194-F:12 regarding:

I.  The amount of education adequacy aid provided to each school district attributed to students in the first year of the education freedom account program; and

II.  Phase-out grants provided to each school district attributed to students in the second and third year of the education freedom account program.

5  School Funding; ADMA and ADMR; Home Educated Pupils and Pupils Participating in the EFA program.  Amend RSA 198:38, I and I-a to read as follows:

I.(a)  "Average daily membership in attendance" or "ADMA" means the average daily membership in attendance, as defined in RSA 189:1-d, III, of pupils in kindergarten through grade 12, in the determination year.  ADMA shall only include pupils who are legal residents of New Hampshire pursuant to RSA 193:12 and educated at school district expense which may include public academies or out-of-district placements.  For the purpose of calculating funding for municipalities, the ADMA shall not include pupils attending chartered public schools, but shall include pupils attending a charter conversion school approved by the school district in which the pupil resides.

(b)  For the purpose of calculating ADMA, each pupil who is home educated in compliance with RSA 193-A, or who is participating in an education freedom account in compliance with RSA 194-F, and who is enrolled in a school board approved public [high] school academic course in grades 7 through 12 shall count as an additional 0.15 pupil for each such academic course taken in a public [high] school.  [The department of education shall only make grant payments for such pupils to the extent of available appropriations.]  In this subparagraph, "public [high] school" shall have the same meaning as "[high] standard school" as defined in RSA [194:23] 189:24.

I-a.(a)  "Average daily membership in residence" or "ADMR" means the average daily membership in residence, as defined in RSA 189:1-d, IV, of pupils in kindergarten through grade 12, in the determination year.  ADMR shall only include pupils who are legal residents of New Hampshire pursuant to RSA 193:12 and educated at school district expense which may include public academies or out-of-district placements.  For the purpose of calculating funding for municipalities, the ADMR shall not include pupils attending chartered public schools, but shall include pupils attending a charter conversion school approved by the school district in which the pupil resides.

(b)  For the purpose of calculating ADMR, each pupil who is home educated in compliance with RSA 193-A, or who is participating in an education freedom account in compliance with RSA 194-F, and who is enrolled in a school board approved public [high] school academic course in grades 7 through 12 shall count as an additional 0.15 pupil for each such academic course taken in a public [high] school.  [The department of education shall only make grant payments for such pupils to the extent of available appropriations.]  In this subparagraph, "public [high] school" shall have the same meaning as "[high] standard school" as defined in RSA [194:23] 189:24.

6  Effective Date.  This act shall take effect 60 days after its passage.

LBA

24-2646

Revised 12/20/23

HB 1665-FN- FISCAL NOTE

AS INTRODUCED

AN ACT relative to student eligibility for the education freedom accounts program.

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

METHODOLOGY:

This bill increases the income eligibility threshold for the Education Freedom Account (EFA) program from 350 percent of the federal poverty guidelines to 500 percent. 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 will result in an indeterminable number of new students accessing the program. Based on assumptions, it is estimated that an approximate 9.887% of New Hampshire households fall within 350 and 500 percent if evenly distributed.  Based on this estimate, and the current number of students enrolled in the EFA program, this bill could potentially increase enrollment by approximately 450 students.  Based on the typical grant averaging $5,235, this would be approximately $2,355,750 in additional EFA spending per year.  These estimated costs could first be incurred beginning in FY 2025.  

The following is information relative to the different situations in which a student may access the EFA program:

• Students accessing the program by going from the non-public or home education systems and entering the EFA program would likely result in a grant 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 cost to the state as these students accessed the program through proposed removal of income requirements.
• Students leaving a charter public school would have a net cost savings to the state of $4,365 to the state; $9,600 (current average charter school per pupil cost) – $5,235 (average EFA) = $4,365.
• Student leaving a traditional district system would have a net cost 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 cost would be $5,235 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 would result an approximate decrease of $982 ($6,217 - $5,235) in state adequacy grants, and a decrease in local revenues per student. This would also result in a net 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 ($5,248) for any student leaving the district and going to the EFA program. Therefore, this grant would cost on average $2,624 for each student leaving a district (50 percent of $5,248) in year one.

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.

AGENCIES CONTACTED:

Department of Education