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North Dakota House Bill HB1540

North Dakota 2025-2026 Regular Session

North Dakota House Bill HB1540 Compare Versions

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1-Sixty-ninth Legislative Assembly of North Dakota
2-In Regular Session Commencing Tuesday, January 7, 2025
3-HOUSE BILL NO. 1540
4-(Representatives Koppelman, Hauck, J. Johnson, Marschall, Morton, Rohr, Steiner)
5-(Senators Clemens, Cory, Gerhardt, Wobbema, Boehm)
6-AN ACT to create and enact a new chapter to title 15.1 of the North Dakota Century Code, relating to an
7-education savings account program for students who are not enrolled in public school or a
8-homeschool program; to provide an appropriation; and to provide an effective date.
1+25.1055.07000
2+Sixty-ninth
3+Legislative Assembly
4+of North Dakota
5+Introduced by
6+Representatives Koppelman, Hauck, J. Johnson, Marschall, Morton, Rohr, Steiner
7+Senators Clemens, Cory, Gerhardt, Wobbema, Boehm
8+A BILL for an Act to create and enact a new chapter to title 15.1 of the North Dakota Century
9+Code, relating to an education savings account program for students who are not enrolled in
10+public school or a homeschool program; to provide an appropriation; and to provide an effective
11+date.
912 BE IT ENACTED BY THE LEGISLATIVE ASSEMBLY OF NORTH DAKOTA:
10-SECTION 1. A new chapter to title 15.1 of the North Dakota Century Code is created and enacted
11-as follows:
13+SECTION 1. A new chapter to title 15.1 of the North Dakota Century Code is created and
14+enacted as follows:
1215 Definitions.
1316 As used in this chapter:
1417 1."Administrator" means the Bank of North Dakota .
1518 2."Department" means the department of public instruction.
16-3."Education service provider" means an individual or organization approved to provide qualified
17-education services. The term does not include a participating school.
18-4."Eligible postsecondary institution" means a community college, an accredited university, or an
19-accredited private postsecondary institution.
19+3."Education service provider" means an individual or organization approved to provide
20+qualified education services. The term does not include a participating school.
21+4."Eligible postsecondary institution" means a community college, an accredited
22+university, or an accredited private postsecondary institution.
2023 5."Eligible student" means:
21-a.An elementary or secondary student who is a resident of this state and is eligible to
22-attend a public school; or
23-b.A student who has received a scholarship under the education savings account program
24-until the student graduates high school or reaches twenty-one years of age, regardless of
25-household income.
26-6."Parent" means a resident of this state who is a parent, guardian, custodian, or other person
27-with the authority to act on behalf of the eligible student.
24+a.An elementary or secondary student who is a resident of this state and is eligible
25+to attend a public school; or
26+b.A student who has received a scholarship under the education savings account
27+program until the student graduates high school or reaches twenty-one years of
28+age, regardless of household income.
29+Page No. 1 25.1055.07000
30+REENGROSSED HOUSE BILL NO. 1540
31+SECOND ENGROSSMENT
32+with Senate Amendments
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55+6."Parent" means a resident of this state who is a parent, guardian, custodian, or other
56+person with the authority to act on behalf of the eligible student.
2857 7."Participating school" means any nonpublic school providing education to elementary
29-students, secondary students, or both, which charges tuition and has notified the administrator
30-of the school's intention to participate in the education savings account program and comply
31-with the education savings account program requirements under this chapter and related
32-administrative rules.
33-8."Private tutoring" means professional tutoring services approved by the program manager to
34-receive payment under this chapter.
35-9."Program manager" means an organization registered by the secretary of state to do business
36-in North Dakota and designated by the Bank of North Dakota to assist in the implementation of
37-this chapter. H. B. NO. 1540 - PAGE 2
58+students, secondary students, or both , which charges tuition and has notified the
59+administrator of the school's intention to participate in the education savings account
60+program and comply with the education savings account program requirements under
61+this chapter and related administrative rules.
62+8."Private tutoring" means professional tutoring services approved by the program
63+manager to receive payment under this chapter.
64+9."Program manager" means an organization registered by the secretary of state to do
65+business in North Dakota and designated by the Bank of North Dakota to assist in the
66+implementation of this chapter.
3867 Parent agreement - Qualified expenses .
39-1.A parent of an eligible student qualifies for an education savings account for the student if the
40-parent signs an agreement with the department promising:
68+1.A parent of an eligible student qualifies for an education savings account for the
69+student if the parent signs an agreement with the department promising:
4170 a.To provide an education for the eligible student in at least the subjects of English
4271 language arts, mathematics, social studies, and science;
43-b.Not to enroll the parent's eligible student in a public school or supervise home education
44-under chapter 15.1 - 23 for the eligible student;
45-c.To use education savings account program funds solely for qualified expenses under this
46-chapter;
47-d.To comply with the requirements outlined in this chapter and any related rules adopted by
48-the Bank of North Dakota; and
49-e.If the participating student is a child with a disability, the parent has received information
50-from the department and understands participation in the education savings account
51-program qualifies as a parental placement of the parent's child under the Individuals with
52-Disabilities Education Act [Pub. L. 108 - 446; 20 U.S.C. 1412(a)(10)(A)].
53-2.A parent participating in the education savings account program may use the funds deposited
54-in the eligible student's account for any of the following qualifying expenses to educate the
55-eligible student:
72+b.Not to enroll the parent's eligible student in a public school or supervise home
73+education under chapter 15.1 - 23 for the eligible student;
74+c.To use education savings account program funds solely for qualified expenses
75+under this chapter;
76+d.To comply with the requirements outlined in this chapter and any related rules
77+adopted by the Bank of North Dakota; and
78+e.If the participating student is a child with a disability, the parent has received
79+information from the department and understands participation in the education
80+savings account program qualifies as a parental placement of the parent's child
81+under the Individuals with Disabilities Education Act [Pub. L. 108 - 446; 20 U.S.C.
82+1412(a)(10)(A)] .
83+2.A parent participating in the education savings account program may use the funds
84+deposited in the eligible student's account for any of the following qualifying expenses
85+to educate the eligible student:
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56119 a.Tuition and fees at a participating school;
57120 b.A textbook required by a participating school;
58121 c.Payment for private tutoring or to another educational service provider;
59122 d.Payment for purchase of curriculum;
60123 e.Tuition or fees for a nonpublic online learning program;
61-f.Fees for advanced placement examinations or similar courses, and any examinations
62-related to college or university admission;
63-g.Computer hardware, software, or other technological device that is used solely for a
64-student's educational needs and approved by the administrator, provided hardware
65-purchased with education savings account funds may not be resold within three years of
66-purchase;
67-h.Reasonable fees for transportation paid to a fee - for - service transportation provider for
68-the student to travel to and from an education service provider;
124+f.Fees for advanced placement examinations or similar courses, and any
125+examinations related to college or university admission;
126+g.Computer hardware, software, or other technological device that is used solely
127+for a student's educational needs and approved by the administrator, provided
128+hardware purchased with education savings account funds may not be resold
129+within three years of purchase;
130+h.Reasonable fees for transportation paid to a fee - for - service transportation
131+provider for the student to travel to and from an education service provider;
69132 i.Tuition and fees at an eligible postsecondary institution; and
70133 j.A textbook required for college or university courses.
71-3.A participating school, private tutor, eligible postsecondary institution, or other education
72-service provider may not refund, rebate, or share a student's grant with a parent or student in
73-any manner. Any refund must be provided to the administrator who shall deposit the funds into
74-the appropriate student's education savings account.
75-4.A parent may make a payment for the cost of educational programs and services not covered
76-by the funds in the child's account. H. B. NO. 1540 - PAGE 3
134+3.A participating school, private tutor, eligible postsecondary institution, or other
135+education service provider may not refund, rebate, or share a student's grant with a
136+parent or student in any manner. Any refund must be provided to the administrator
137+who shall deposit the funds into the appropriate student's education savings account.
138+4.A parent may make a payment for the cost of educational programs and services not
139+covered by the funds in the child's account.
77140 Bank of North Dakota - State treasurer - Duties - Transfer.
78141 1.The administrator shall:
79-a.Beginning with the 2026 - 27 school year, annually deposit into each education savings
80-account:
81-(1)Thirty-five percent of the state per-pupil payment amount distributed per student
82-under subsection 3 of section 15.1 - 27 - 04.1, if the eligible student's household has
83-an annual income less than or equal to two hundred percent of the most recently
84-revised poverty income guidelines published by the United States department of
85-health and human services.
86-(2)Twenty percent of the state per-pupil payment amount distributed per student under
87-subsection 3 of section 15.1 - 27 - 04.1, if the eligible student's household has an
88-annual income greater than two hundred percent but less than or equal to four
89-hundred percent of the most recently revised poverty income guidelines published
90-by the United States department of health and human services.
91-(3)Ten percent of the state per-pupil payment amount distributed per student under
92-subsection 3 of section 15.1 - 27 - 04.1, if the eligible student's household has an
93-annual income greater than four hundred percent of the most recently revised
94-poverty income guidelines published by the United States department of health and
142+a.Beginning with the 2026 - 27 school year, annually deposit into each education
143+savings account:
144+(1)Thirty-five percent of the state per-pupil payment amount distributed per
145+student under subsection 3 of section 15.1 - 27 - 04.1, if the eligible student's
146+household has an annual income less than or equal to two hundred percent
147+of the most recently revised poverty income guidelines published by the
148+United States department of health and human services.
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181+(2)Twenty percent of the state per-pupil payment amount distributed per
182+student under subsection 3 of section 15.1 - 27 - 04.1, if the eligible student's
183+household has an annual income greater than two hundred percent but less
184+than or equal to four hundred percent of the most recently revised poverty
185+income guidelines published by the United States department of health and
95186 human services.
96-b.Qualify a program manager to manage and administer education savings accounts.
187+(3)Ten percent of the state per-pupil payment amount distributed per student
188+under subsection 3 of section 15.1 - 27 - 04.1, if the eligible student's
189+household has an annual income greater than four hundred percent of the
190+most recently revised poverty income guidelines published by the United
191+States department of health and human services.
192+b.Qualify a program manager to manage and administer education savings
193+accounts.
97194 c.Establish the role and responsibilities of a program manager.
98-d.Conduct or contract for the auditing of accounts and, at a minimum, conduct random
99-audits of accounts on an annual basis. A program manager may conduct the audits. The
100-administrator may determine a parent of an eligible student is ineligible for the education
101-savings account program if the parent substantially misuses the funds in the account.
195+d.Conduct or contract for the auditing of accounts and, at a minimum, conduct
196+random audits of accounts on an annual basis. A program manager may conduct
197+the audits. The administrator may determine a parent of an eligible student is
198+ineligible for the education savings account program if the parent substantially
199+misuses the funds in the account.
102200 e.Refer cases of substantial misuse of funds to law enforcement for investigation, if
103201 evidence of fraudulent use of an account is obtained.
104-f.Make deposits into eligible students' education savings accounts on a quarterly basis.
105-g.Adopt rules and procedures under chapter 28 - 32 for the administration of the education
106-savings account program, as necessary.
107-h.Upon a participating student's graduation from high school or termination of participation
108-in the education savings account program, close the participating student's account and
109-transfer any remaining money in the account to the general fund in the state treasury.
110-2.The administrator may bar a participating school or education service provider from the
111-education savings account program if the administrator determines the participating school or
112-education service provider has:
113-a.Routinely failed to comply with the accountability standards established under this
114-chapter; or
115-b.Failed to provide a participating student with the educational services funded by the
116-education savings account.
117-3.If the administrator bars a participating school or education provider from the education
118-savings account program, the program manager shall notify eligible students and parents of H. B. NO. 1540 - PAGE 4
119-the decision as quickly as possible. A parent may appeal a decision of the administrator under
120-chapter 28 - 32.
121-4.The state treasurer annually shall transfer the funds required for education savings accounts
122-from the general fund to the Bank of North Dakota for quarterly deposit in each education
123-savings account.
124-5.Funds, not to exceed twenty-five percent of the amount under subsection 1, not expended
125-over the course of a school year may be carried forward for use in the following school year
126-for a child who remains in the education savings account program. If a parent removes a child
127-from the education savings account program before the end of the school year, any remaining
128-funds from that school year must be returned to the state and be allocated to fund other
129-accounts. A student may transfer to another nonpublic school and retain the funds in the
130-education savings account.
131-6.Funds deposited in an education savings account do not constitute taxable income to the
132-parent or the education savings account student.
133-7.The superintendent of public instruction may apply to a federal agency for additional funds to
134-support this program. These funds must provide an additional benefit to each participating
135-student's education savings account. If necessary to become eligible for the receipt of federal
136-funds, the Bank of North Dakota, with consideration of advice provided by the superintendent
137-of public instruction, shall adopt rules that supersede any conflicting law under this chapter.
202+f.Make deposits into eligible students' education savings accounts on a quarterly
203+basis.
204+g.Adopt rules and procedures under chapter 28 - 32 for the administration of the
205+education savings account program, as necessary.
206+h.Upon a participating student's graduation from high school or termination of
207+participation in the education savings account program, close the participating
208+student's account and transfer any remaining money in the account to the
209+general fund in the state treasury.
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241+2.The administrator may bar a participating school or education service provider from
242+the education savings account program if the administrator determines the
243+participating school or education service provider has:
244+a.Routinely failed to comply with the accountability standards established under
245+this chapter; or
246+b.Failed to provide a participating student with the educational services funded by
247+the education savings account.
248+3.If the administrator bars a participating school or education provider from the
249+education savings account program, the program manager shall notify eligible
250+students and parents of the decision as quickly as possible. A parent may appeal a
251+decision of the administrator under chapter 28 - 32.
252+4.The state treasurer annually shall transfer the funds required for education savings
253+accounts from the general fund to the Bank of North Dakota for quarterly deposit in
254+each education savings account.
255+5.Funds, not to exceed twenty-five percent of the amount under subsection 1, not
256+expended over the course of a school year may be carried forward for use in the
257+following school year for a child who remains in the education savings account
258+program. If a parent removes a child from the education savings account program
259+before the end of the school year, any remaining funds from that school year must be
260+returned to the state and be allocated to fund other accounts. A student may transfer
261+to another nonpublic school and retain the funds in the education savings account.
262+6.Funds deposited in an education savings account do not constitute taxable income to
263+the parent or the education savings account student.
264+7.The superintendent of public instruction may apply to a federal agency for additional
265+funds to support this program. These funds must provide an additional benefit to each
266+participating student's education savings account. If necessary to become eligible for
267+the receipt of federal funds, the Bank of North Dakota, with consideration of advice
268+provided by the superintendent of public instruction, shall adopt rules that supersede
269+any conflicting law under this chapter.
138270 Participating schools - Department - Accountability standards.
139271 1.A participating school shall:
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140305 a.Comply with all health and safety laws or codes that apply to nonpublic schools .
141306 b.Obtain certification of approval under section 15.1 - 06 - 06.1 .
142307 c.Hold a valid occupancy permit if required by the school's municipality .
143-d.Certify the school complies with the nondiscrimination policies under 42 U.S.C. 1981.
308+d.Certify the school complies with the nondiscrimination policies under [42 U.S.C.
309+1981].
144310 e.Provide a parent with a receipt for all qualifying expenses at the school.
145-f.Refund any payment for which a good or service was not provided to the student due to
146-a participating student terminating participation in the education savings account
147-program . A tuition payment must be refunded pro rata determined by the school days
148-remaining in the term for which the tuition was paid. A refund must be paid to the
149-administrator who shall deposit the funds into the appropriate student's education
150-savings account.
151-g.Ensure the eligible student takes the state assessments, or other nationally norm-
152-referenced tests, which measure learning gains in mathematics and English language
153-arts, and provide for value-added assessment. If a parent selects the state assessment,
154-the department shall pay associated costs and materials.
311+f.Refund any payment for which a good or service was not provided to the student
312+due to a participating student terminating participation in the education savings
313+account program . A tuition payment must be refunded pro rata determined by the
314+school days remaining in the term for which the tuition was paid. A refund must
315+be paid to the administrator who shall deposit the funds into the appropriate
316+student's education savings account.
317+g.Ensure the eligible student takes the state assessments, or other nationally
318+norm-referenced tests, which measure learning gains in mathematics and
319+English language arts, and provide for value-added assessment. If a parent
320+selects the state assessment, the department shall pay associated costs and
321+materials.
155322 h.Ensure the results of the tests are provided to the department .
156323 2.The department, or an organization chosen by the department, shall:
157324 a.Ensure compliance with all student privacy laws.
158-b.Collect all test results. H. B. NO. 1540 - PAGE 5
159-c.Provide the test results, associated learning gains, and graduation rates to the public on
160-the department's website after the third year of test and graduation-related data
161-collection. The findings must be aggregated by the student's grade level, gender, family
162-income level, number of years of participation in the education savings account program ,
163-and race. Data aggregation related to assessments may be limited to the state
164-assessment, as determined necessary by the department.
165-d.Provide rates for high school graduation for participating students to the public on the
166-department's website after the third year of test and test-related data collection.
167-3.A participating nonpublic school or other education service provider is autonomous and not an
168-agent of the state or federal government and, except as provided under this chapter and in
169-related rules, the:
170-a.Department may not regulate the educational program of a participating nonpublic school
171-or education service provider that accepts funds from an education savings account;
172-b.Creation of the education savings account program does not expand the regulatory
173-authority of the state, its officers, or a school district to impose an additional regulation of
174-nonpublic schools or education service providers beyond the regulations necessary to
175-enforce the requirements of the education savings account program; and
176-c.Participating nonpublic schools and education service providers must have the freedom
177-to provide for the educational needs of the school's students without governmental
178-control.
325+b.Collect all test results.
326+c.Provide the test results, associated learning gains, and graduation rates to the
327+public on the department's website after the third year of test and graduation-
328+related data collection. The findings must be aggregated by the student's grade
329+level, gender, family income level, number of years of participation in the
330+education savings account program , and race. Data aggregation related to
331+assessments may be limited to the state assessment, as determined necessary
332+by the department.
333+d.Provide rates for high school graduation for participating students to the public on
334+the department's website after the third year of test and test-related data
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369+3.A participating nonpublic school or other education service provider is autonomous
370+and not an agent of the state or federal government and, except as provided under
371+this chapter and in related rules, the:
372+a.Department may not regulate the educational program of a participating
373+nonpublic school or education service provider that accepts funds from an
374+education savings account ;
375+b.Creation of the education savings account program does not expand the
376+regulatory authority of the state, its officers, or a school district to impose an
377+additional regulation of nonpublic schools or education service providers beyond
378+the regulations necessary to enforce the requirements of the education savings
379+account program; and
380+c.Participating nonpublic schools and education service providers must have the
381+freedom to provide for the educational needs of the school's students without
382+governmental control.
179383 Program manager - Duties.
180384 The program manager shall:
181385 1.Ensure eligible students and parents are informed annually of the schools that will be
182386 participating in the education savings account program.
183-2.Create a standard form a parent of an eligible student may submit to establish a student's
184-eligibility for the education savings account program. The program manager shall ensure the
185-application is readily available to interested families through various sources, including the
186-department's website.
187-3.Accept applications on a year-round basis and shall approve applications in a reasonable time
188-frame.
189-4.Execute a multimedia marketing program targeting eligible families, especially those below the
190-state's median household income, informing the families about the education savings account
191-program and how to apply.
192-5.Establish a web and phone-based support system providing parents with education savings
193-account program application support and ongoing account maintenance support.
194-6.Provide to the parent of a participating student a written explanation of the allowable uses of
195-education savings accounts, the responsibilities of the parent, and the duties of the program
196-manager.
197-7.Ensure the department is informed of a participating student's graduation from high school or
198-a participating student's termination of participation in the education savings account program.
387+2.Create a standard form a parent of an eligible student may submit to establish a
388+student's eligibility for the education savings account program. The program manager
389+shall ensure the application is readily available to interested families through various
390+sources, including the department's website.
391+3.Accept applications on a year-round basis and shall approve applications in a
392+reasonable time frame.
393+4.Execute a multimedia marketing program targeting eligible families, especially those
394+below the state's median household income, informing the families about the
395+education savings account program and how to apply.
396+5.Establish a web and phone-based support system providing parents with education
397+savings account program application support and ongoing account maintenance
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431+6.Provide to the parent of a participating student a written explanation of the allowable
432+uses of education savings accounts, the responsibilities of the parent, and the duties
433+of the program manager.
434+7.Ensure the department is informed of a participating student's graduation from high
435+school or a participating student's termination of participation in the education savings
436+account program.
199437 8.Coordinate with the administrator to develop procedures to implement the program in
200438 accordance with this chapter and related rules.
201-9.Upon request, determine whether an expense is allowable. H. B. NO. 1540 - PAGE 6
202-10.Establish a procedure for a participating school to provide data to the department as required
203-under this chapter.
439+9.Upon request, determine whether an expense is allowable.
440+10.Establish a procedure for a participating school to provide data to the department as
441+required under this chapter.
204442 11.Administer an annual parental satisfaction survey requesting each parent of a student
205-receiving an education savings account program grant indicate the number of years the child
206-has participated in the education savings account program and express the parent's:
443+receiving an education savings account program grant indicate the number of years
444+the child has participated in the education savings account program and express the
445+parent's:
207446 a.Satisfaction with the education savings account program; and
208-b.Opinions on other topics, items, or issues that may indicate the effectiveness of the
209-education savings account program.
447+b.Opinions on other topics, items, or issues that may indicate the effectiveness of
448+the education savings account program.
210449 School districts of residence - Duties.
211450 The school district of residence :
212-1.Shall provide a participating school or education service provider that has admitted an eligible
213-student under this chapter with a complete copy of the student's school records, while
214-complying with the Family Educational Rights and Privacy Act of 1974 [20 U.S.C. Section
215-1232(g)].
216-2.May provide transportation for an eligible student to and from the participating school or
217-education service provider under the same conditions as the school district of residence is
218-required to provide transportation for other resident students to nonpublic schools. The school
219-district of residence qualifies for state transportation aid for each student transported.
451+1.Shall provide a participating school or education service provider that has admitted an
452+eligible student under this chapter with a complete copy of the student's school
453+records, while complying with the Family Educational Rights and Privacy Act of 1974
454+[20 U.S.C. Section 1232(g)].
455+2.May provide transportation for an eligible student to and from the participating school
456+or education service provider under the same conditions as the school district of
457+residence is required to provide transportation for other resident students to nonpublic
458+schools. The school district of residence qualifies for state transportation aid for each
459+student transported.
220460 SECTION 2. APPROPRIATION - BANK OF NORTH DAKOTA - EDUCATION SAVINGS
221-ACCOUNT PROGRAM. There is appropriated out of any moneys in the general fund in the state
222-treasury, not otherwise appropriated, the sum of $21,700,000, or so much of the sum as may be
223-necessary, to the Bank of North Dakota for the purpose of implementing the education savings account
224-program and funding education savings accounts beginning in the 2026-27 school year, for the
225-biennium beginning July 1, 2025, and ending June 30, 2027.
226-SECTION 3. EFFECTIVE DATE. Section 1 of this Act becomes effective on July 1, 2026. H. B. NO. 1540 - PAGE 7
227-____________________________ ____________________________
228-Speaker of the House President of the Senate
229-____________________________ ____________________________
230-Chief Clerk of the House Secretary of the Senate
231-This certifies that the within bill originated in the House of Representatives of the Sixty-ninth Legislative
232-Assembly of North Dakota and is known on the records of that body as House Bill No. 1540.
233-House Vote: Yeas 49 Nays 43 Absent 2
234-Senate Vote:Yeas 27 Nays 20 Absent 0
235-____________________________
236-Chief Clerk of the House
237-Received by the Governor at ________M. on _____________________________________, 2025.
238-Approved at ________M. on __________________________________________________, 2025.
239-____________________________
240-Governor
241-Filed in this office this ___________day of _______________________________________, 2025,
242-at ________ o’clock ________M.
243-____________________________
244-Secretary of State
461+ACCOUNT PROGRAM. There is appropriated out of any moneys in the general fund in the
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493+31 Sixty-ninth
494+Legislative Assembly
495+state treasury, not otherwise appropriated, the sum of $21,700,000, or so much of the sum as
496+may be necessary, to the Bank of North Dakota for the purpose of implementing the education
497+savings account program and funding education savings accounts beginning in the school year
498+2026-27, for the biennium beginning July 1, 2025, and ending June 30, 2027.
499+SECTION 3. EFFECTIVE DATE. Section 1 of this Act becomes effective on July 1, 2026.
500+Page No. 9 25.1055.07000
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