HB0292

HOUSE BILL 292

55th legislature - STATE OF NEW MEXICO - first session, 2021

INTRODUCED BY

Zachary J. Cook and Rebecca Dow

AN ACT

RELATING TO EDUCATION; ENACTING THE EDUCATION FREEDOM ACCOUNT ACT; PROVIDING FOR EDUCATION FREEDOM ACCOUNTS; ESTABLISHING PERMITTED USES; PROVIDING PROCEDURES AND APPLICATION REQUIREMENTS; DECLARING AN EMERGENCY.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1. A new section of the Public School Code is enacted to read:

"[NEW MATERIAL] SHORT TITLE.--This act may be cited as the "Education Freedom Account Act"."

SECTION 2. A new section of the Public School Code is enacted to read:

"[NEW MATERIAL] DEFINITIONS.--As used in the Education Freedom Account Act:

A. "curriculum" means a complete course of study for a particular content area or grade level;

B. "education freedom account" means the account to which funds are allocated by the department to the parent of a participating student in order to pay for qualifying education expenses to educate the participating student pursuant to the requirements and conditions of the Education Freedom Account Act;

C. "education service provider" means a person or organization that receives payments from education freedom accounts to provide educational goods and services to a participating student;

D. "eligible student" means a school-aged person who is eligible for the education freedom account program; and

E. "participating student" means an eligible student who is participating in the education freedom account program."

SECTION 3. A new section of the Public School Code is enacted to read:

"[NEW MATERIAL] EDUCATION FREEDOM ACCOUNT PROGRAM-- CREATION--FUNDING USES.--

A. The department shall create an "education freedom account program". The program shall consist of the department maintaining and funding education freedom accounts for participating students. Money in an education freedom account shall be administered by the parent of the participating student subject to the provisions of the Education Freedom Account Act. For each education freedom account, the department shall make deposits into the account, in quarterly installments, in the amount determined by the department to be equal to the average amount spent by the state and school districts on public school students. If a participating student has a disability or is an English language learner, a homeless student, a low-income student, an at-risk student or a special education student, the amount deposited to that student's education freedom account shall include any weighted funding that would have been provided to a public school for a similar public school student.

B. The parent of a participating student shall agree to use the funds deposited in that student's education freedom account only for the following qualifying expenses to educate the participating student:

(1) tuition or fees at a private school;

(2) tuition or fees for nonpublic online learning programs;

(3) tutoring services provided by an individual or a tutoring facility;

(4) services contracted for and provided by a public school or magnet school, including individual classes and extracurricular activities and programs;

(5) textbooks, curricula or other instructional materials, including any supplemental materials or associated online instruction required by either a curriculum or an education service provider;

(6) computer hardware or other technological devices that are primarily used to help meet a participating student's educational needs;

(7) educational software and applications;

(8) school uniforms;

(9) fees for nationally standardized assessments, advanced placement examination fees, examination fees related to college or university admission or tuition or fees for preparatory courses for any of the examinations provided in this paragraph;

(10) tuition or fees for summer education programs and specialized after-school education programs; provided that the tuition or fees are not used for after-school child care;

(11) tuition, fees, instructional materials and examination fees at a career or technical school;

(12) educational services and therapies, including occupational, behavioral, physical, speech-language and audiology therapies;

(13) tuition and fees at an institution of higher education;

(14) fees for transportation paid to a fee-for-service transportation provider for the student to travel to and from an education service provider; or

(15) any other educational expense approved by the department.

C. The funds in an education freedom account shall only be used for educational purposes in accordance with Subsection B of this section and shall not be refunded, rebated or shared with a parent or participating student in any manner. Any refund or rebate for goods or services purchased with education freedom account funds shall be credited directly to the student's education freedom account. If an education service provider requires partial payment of tuition or fees prior to the start of the academic year to reserve space for a participating student admitted to the education service provider, such partial payment may be paid by the department prior to the start of the school year in which the education freedom account is awarded and deducted in an equitable manner from subsequent quarterly education freedom account deposits to ensure that adequate funds remain available throughout the school year; provided that if the participating student does not attend the education service provider to which partial payment was made, the partial payment shall be returned to the department by the education service provider and credited to the student's education freedom account.

D. Parents may make personal payments for the costs of educational goods and services not covered by the education freedom account funds; however, personal deposits into an education freedom account shall not be permitted.

E. Funds deposited in an education freedom account shall not constitute taxable income of the parent or the participating student.

F. Any unused funds in an education freedom account shall remain in the account until one of the following occurs, at which time the department shall close the account and any unused funds shall revert to the department:

(1) the parent withdraws the participating student from the education freedom account program;

(2) the student:

(a) graduates from college with a bachelor's degree;

(b) has not enrolled in a post-secondary institution within four years after graduating from high school; or

(3) the education freedom account is closed by the department because of a substantial misuse of funds as determined by the department.

G. Nothing in the Education Freedom Account Act shall be construed to require that a participating student be enrolled, full time or part time, in either a private school or nonpublic online school."

SECTION 4. A new section of the Public School Code is enacted to read:

"[NEW MATERIAL] EDUCATION FREEDOM ACCOUNT--APPLICATION PROCESS--RENEWAL--SUSPENSION.--

A. A parent may apply to the department to establish an education freedom account for an eligible student.

B. The department shall accept and approve applications year-round and shall establish procedures and rules for approving applications in an expeditious manner.

C. The department shall create a standard form that parents can submit to establish a student's eligibility for the education freedom account program and shall ensure that the application is publicly available and may be submitted through various sources, including the internet.

D. The department shall approve an application for an education freedom account if:

(1) the parent submits an application for an education freedom account in accordance with the application procedures established by the department;

(2) the student, on whose behalf the parent is applying, is an eligible student;

(3) funds are available for the education freedom account; and

(4) the parent signs, under oath, an agreement with the department agreeing:

(a) to provide an education for the student in the subjects of reading, language, mathematics, science and social studies;

(b) not to enroll the student as a full-time student in a public school while participating in the education freedom account program;

(c) to use the funds in the education freedom account only for qualifying expenses to educate the student as established by the education freedom account program; and

(d) to comply with the rules and requirements of the education freedom account program.

E. The signed agreement between the parent and the department shall satisfy the school attendance requirements of Section 22-12A-4 NMSA 1978.

F. The department shall annually renew a student's education freedom account if funds are available.

G. Upon notice to the department, a participating student may choose to stop receiving education freedom account funding and enroll full time in a public school.

H. Enrolling as a full-time student in a public school shall result in the immediate suspension of payment of additional funds into the student's education freedom account; provided that, for education freedom accounts that have been open for at least one full school year, the education freedom account shall remain open and active for the parent to make qualifying expenditures to educate the student from funds remaining in the education freedom account. When no funds remain in the student's education freedom account, the department may close the education freedom account.

I. If an eligible student decides to return to the education freedom account program, payments into the student's existing education freedom account may resume if the education freedom account is still open and active. A new education freedom account may be established if the student's education freedom account is closed.

J. The department may adopt rules and policies to provide the least disruptive process for a participating student who desires to stop receiving education freedom account payments and enroll full time in a public school."

SECTION 5. A new section of the Public School Code is enacted to read:

"[NEW MATERIAL] AUTHORITY AND RESPONSIBILITIES.--In addition to the department's duties, obligations and authority provided in the Education Freedom Account Act, the department shall have the following additional duties, obligations and authority:

A. the department shall:

(1) maintain an updated list of education service providers and ensure that the list is publicly available through various sources, including the internet;

(2) provide parents with a written explanation of the permitted uses of education freedom account funds, the responsibilities of parents, the duties of the department and the role of any private financial management firms or other private organizations that the department may contract with to administer the education freedom account program or any aspect of the education freedom account program;

(3) ensure that parents of students with disabilities receive notice that participation in the education freedom account program is a parental placement pursuant to the federal Individuals with Disabilities Education Act, along with an explanation of the rights that parentally placed students may possess under federal law and any applicable state laws and rules;

(4) implement a commercially viable, cost-effective and user-friendly system for processing payments for services from an education freedom account to an education service provider by electronic or online funds transfer; provided that the department:

(a) shall not adopt a system that relies exclusively on requiring parents to be reimbursed for out-of- pocket expenses, but rather shall provide maximum flexibility to parents by facilitating direct payments to education service providers as well as requests for preapproval of and reimbursements for qualifying expenses; and

(b) may contract with private institutions to develop the payment system;

(5) implement, as soon as practicable, a commercially viable, cost-effective and user-friendly system, as part of the same system that facilitates the electronic or online funds transfers, for parents to publicly rate, review and share information about education service providers;

(6) continue making deposits into a student's education freedom account until the:

(a) department determines that the student is no longer an eligible student;

(b) department determines that there was substantial misuse of the funds in the education freedom account;

(d) student enrolls full time in a public school; or

(e) student graduates from high school;

(7) have the authority to:

(a) conduct or contract for the auditing of individual education freedom accounts;

(b) make any parent or student ineligible for the education freedom account program in the event of intentional and substantial misuse of education freedom account funds; provided that if a parent is determined to be ineligible for the education freedom account program and the participating student is free from personal misconduct, that student shall be eligible for an education freedom account if placed with a new guardian or other person with the legal authority to act on behalf of the student; and

(c) refer suspected cases of intentional and substantial misuse of education freedom account funds to the office of the attorney general for investigation if evidence of fraudulent use of education freedom account funds exists; provided that a parent or participating student may appeal the department's decision to make a parent or student ineligible for the education freedom account program;

(8) create procedures to ensure that a fair process exists to determine whether an intentional and substantial misuse of education freedom account funds has occurred; and

(9) create procedures to ensure that a fair process exists to determine whether an education service provider may be barred from receiving payments from education freedom accounts; provided that an education service provider may appeal the department's decision to bar the education service provider from receiving payments from education freedom accounts; and provided further that if the department bars an education service provider from receiving payments from education freedom accounts, the department shall notify parents and participating students of the department's decision; and

B. the department may:

(1) contract with private organizations to administer the education freedom account program or specific functions of the education freedom account program, including contracting with private financial management firms to manage education freedom accounts;

(2) withhold from deposits or deduct from an education freedom account an amount to cover the costs of administering the education freedom account program, in an amount up to a maximum of five percent annually in the first two years of the education freedom account program and up to a maximum of three percent annually thereafter;

(3) bar an education service provider from accepting payments from education freedom accounts if the department determines that the education service provider has:

(a) intentionally and substantially misrepresented information or failed to refund any overpayments in a timely manner; or

(b) routinely failed to provide students with sufficient educational goods or services;

(4) accept gifts and grants from any source to cover administrative costs, to inform the public about the education freedom account program or to fund additional education freedom accounts; and

(5) adopt rules, policies or procedures that are consistent with the Education Freedom Account Act and that are necessary for the administration of that act, including rules, policies or procedures:

(a) establishing or contracting for the establishment of an online anonymous fraud reporting service;

(b) establishing an anonymous telephone hotline for fraud reporting;

(c) requiring a surety bond for education service providers receiving more than one hundred thousand dollars ($100,000) in education freedom account funds; or

(d) for refunding payments from education service providers to education freedom accounts."

SECTION 6. A new section of the Public School Code is enacted to read:

"[NEW MATERIAL] PARENT REVIEW COMMISSION.--

A. The department shall create the "parent review commission" to assist the department in determining what expenditures meet the requirements to be considered qualifying expenses to educate a participating student pursuant to Subsection B of Section 3 of the Education Freedom Account Act and to provide recommendations to the department on how to implement, administer and improve the education freedom account program.

B. The commission shall consist of seven voting members who shall be parents of participating students and represent no fewer than four counties of the state.

C. The voting members shall be appointed by the secretary and shall serve at the pleasure of the secretary for one calendar year, starting from the date of appointment; provided that a member may be reappointed.

D. The secretary, or the secretary's designee, shall serve as the nonvoting chair of the commission.

E. The department may request that the commission meet, in person or through a virtual or telephonic platform, to:

(1) determine whether an expenditure of education freedom account funds is or was a qualifying expense to educate a participating student pursuant to Subsection B of Section 3 of the Education Freedom Account Act; or

(2) review appeals of education service provider denials pursuant to Section 5 of the Education Freedom Account Act.

F. When requested pursuant to Subsection E of this section, the commission shall, by majority vote, recommend to the department whether:

(1) a particular use of funds constitutes a qualifying expense pursuant to Subsection B of Section 3 of the Education Freedom Account Act; or

(2) an education service provider should be allowed to receive, or continue receiving, payments from education freedom accounts."

SECTION 7. EMERGENCY.--It is necessary for the public peace, health and safety that this act take effect immediately.

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