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HOUSE BILL 387
57
TH LEGISLATURE
-
STATE
OF
NEW
MEXICO
-
FIRST SESSION
,
2025
INTRODUCED BY
Rebecca Dow and Luis M. Terrazas and Jimmy G. Mason
and Rod Montoya
AN ACT
RELATING TO EDUCATION; ENACTING THE EDUCATION OPPORTUNITY
ACCOUNT ACT; PROVIDING POWERS AND DUTIES; PROVIDING FOR
EDUCATION OPPORTUNITY ACCOUNTS; PROVIDING ALLOWABLE USES;
PROVIDING PROCEDURES AND APPLICATION REQUIREMENTS FOR PARENTS
AND EDUCATION SERVICE PROVIDERS; CREATING A REVIEW COMMISSION;
MAKING APPROPRIATIONS.
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 Opportunity Account Act"."
SECTION 2. A new section of the Public School Code is
enacted to read:
"[NEW MATERIAL] DEFINITIONS.--As used in the Education
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Opportunity Account Act:
A. "curriculum" means a complete course of study
for a particular primary or secondary content area or grade
level;
B. "education" means a primary or secondary
education;
C. "education opportunity account" means the
account into which money is deposited by the department to pay
for qualifying education expenses of a participating student;
D. "education service provider" means a private
school located in New Mexico that is qualified to provide
educational goods and services to participating students and
that receives payments from education opportunity accounts;
provided that "education service provider" does not mean an
online school;
E. "eligible student" means a school-age person who
is a resident of New Mexico, who has not received a high school
diploma or a high school equivalency credential and who is
eligible for enrollment or re-enrollment in a public school;
F. "participating student" means a student who is
participating in the program; and
G. "program" means the education opportunity
account program."
SECTION 3. A new section of the Public School Code is
enacted to read:
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"[NEW MATERIAL] EDUCATION OPPORTUNITY ACCOUNT PROGRAM--
CREATED--FUNDING USES.--
A. The "education opportunity account program" is
created in the department to allow the department, in contract
with parents of participating students, to pay for private
school and other eligible expenses through "education
opportunity accounts". The department:
(1) shall establish education opportunity
accounts for students who qualify for the program;
(2) shall determine the amount each
participating student is eligible to receive, which amount is
equal to the average amount spent by school districts and
charter schools on public school students in the same grade,
weighted by special education and at-risk program units, if
applicable; provided that a participating student shall not
receive more than the student's qualifying educational
expenses;
(3) shall make monthly deposits into each
education opportunity account; and
(4) may contract for financial management
services for education opportunity accounts.
B. Money in a participating student's education
opportunity account shall be used by the department, in
contract with parents of participating students, only in
accordance with the provisions of the Education Opportunity
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Account Act and only for the following qualifying education
expenses:
(1) tuition and fees at a private elementary
or secondary school that teaches, among other courses, reading,
language arts, mathematics, science and social studies
appropriate for the grade level of the participating student;
(2) tutoring services provided by a qualified
person;
(3) textbooks and other instructional
materials, including computer hardware and software, required
by the education service provider to deliver education to the
participating student;
(4) fees for nationally standardized
assessments, advanced placement examination fees and other
assessments required by the education service provider;
(5) tuition or fees for summer and after-
school elementary or secondary programs;
(6) public transportation to and from school;
and
(7) other educational charges approved by the
department.
C. The department and the parent of a participating
student shall enter into an annual contract that specifies what
qualifying education expenses will be purchased each semester
or other term, the cost of the educational services to be
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provided and by whom the educational services will be provided.
The department shall not deposit into an education opportunity
account more than the combined cost of educational services
provided to the participating student in that year. A parent
shall not pay more for educational services than the parent of
a similarly situated school-age person pays. Money in an
education opportunity account shall not be refunded, rebated or
shared with a parent or participating student in any manner. A
refund or rebate for educational services purchased through an
education opportunity account shall be credited directly to
that account. A parent may make payments for the cost of
educational services not covered by an education opportunity
account, but in no case shall a parent deposit personal funds
into a participating student's account.
D. Money in a participating student's education
opportunity account shall be issued at the direction of the
participating student's parent to an education service
provider, in the name of the student.
E. 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 opportunity account is
awarded and deducted in an equitable manner from subsequent
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monthly 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 for credit to the account.
F. Funds deposited in an education opportunity
account shall not constitute taxable income for state tax
purposes of the parent or the participating student.
G. Except as provided in Subsection H of this
section, any unexpended or unencumbered balance in an education
opportunity account may remain in the account until one of the
following occurs, at which time the department shall close the
account and the unexpended or unencumbered balance shall revert
to the general fund:
(1) the parent withdraws the participating
student from the program;
(2) the student graduates from high school; or
(3) the account is closed by the department
because of misuse of funds as determined by the department.
H. The department shall revert unexpended or
unencumbered balances every two years unless it waives the
reversion of a specific education opportunity account for
extenuating circumstances.
I. Nothing in the Education Opportunity Account Act
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shall be construed to require a participating student to be
enrolled only in a private school, but the participating
student must be in compliance with the Attendance for Success
Act."
SECTION 4. A new section of the Public School Code is
enacted to read:
"[NEW MATERIAL] EDUCATION OPPORTUNITY ACCOUNT--APPLICATION
PROCESS--RENEWAL--SUSPENSION.--
A. A parent may apply to the department to
establish an education opportunity 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 shall submit to establish a student's eligibility for
the 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 opportunity account if:
(1) the parent submits an application for an
education opportunity account in accordance with the
application procedures established by the department;
(2) the student, on whose behalf the parent is
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applying, is an eligible student;
(3) funds are available for the program or the
education opportunity account; and
(4) the parent signs a contract with the
department agreeing:
(a) to provide an education for the
participating student in at least the subjects of reading,
language arts, mathematics, science and social studies;
(b) not to enroll the student as a
full-time student in a public school while participating in the
program;
(c) to use the funds in the education
opportunity account only for qualifying education expenses to
educate the student; and
(d) to comply with the rules and
requirements of the program.
E. The department shall annually renew a student's
education opportunity account if funds are available.
F. Upon notice to the department, a participating
student may choose to stop receiving education opportunity
account funding and enroll full time in a public school.
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 opportunity account;
provided that, for education opportunity accounts that have
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been open for at least one full school year, the department may
allow an education opportunity account to remain open and
active for the parent to pay qualifying education expenses to
educate the student from money remaining in the account. The
department shall revert unexpended or unencumbered balances in
a student's education opportunity account and close the
education opportunity account at the beginning of the next
school year if the student is enrolled in a public school.
G. If an eligible student decides to return to the
program, payments into the student's education opportunity
account may resume if the education opportunity account is
still open and active. A new education opportunity account may
be established if the student's education opportunity account
is closed.
H. The department may adopt rules to provide the
least disruptive process for a student who chooses to stop
participating in the program and enroll full time in a public
school."
SECTION 5. A new section of the Public School Code is
enacted to read:
"[NEW MATERIAL] ADDITIONAL POWERS AND DUTIES--ALLOWABLE
USES OF FUNDS--EDUCATION SERVICE PROVIDERS.--
A. The department shall:
(1) maintain an updated list of qualified
education service providers and ensure that the list is
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publicly available through various sources, including the
internet;
(2) provide parents with a written explanation
of the allowable uses of education opportunity account funds,
the responsibilities of parents in ensuring the education of
their children, 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 program or any aspect of the program;
(3) ensure that parents of students with
disabilities receive notice that participation in the 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 opportunity account to an education
service provider by electronic or online funds transfer;
provided that the department:
(a) provides flexibility to parents by
facilitating direct payments to education service providers as
well as requests for preapproval of and reimbursements for
qualifying education expenses; and
(b) may contract with private
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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 opportunity account until the:
(a) department has been notified or
determines that the student is no longer a participating
student;
(b) department determines that there was
misuse of the funds in the education opportunity account;
(c) student withdraws from the program;
(d) student enrolls full time in a
public school; or
(e) student graduates from high school;
(7) audit individual education opportunity
accounts;
(8) make a parent or participating student
ineligible for the program in the event of misuse of education
opportunity account funds; provided that if a parent is
determined to be ineligible for the program and the
participating student is free from personal misconduct, that
student may be eligible for an education opportunity account if
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placed with a new guardian or other person with the legal
authority to act on behalf of the student;
(9) refer suspected cases of misuse of
education opportunity account funds to law enforcement if
evidence of fraudulent use of education opportunity account
funds exists;
(10) create procedures to ensure that a fair
process exists to determine whether a misuse of education
opportunity account funds has occurred; and
(11) create procedures to ensure that a fair
process exists to determine whether an education service
provider may be barred from receiving payments from education
opportunity accounts; provided that an education service
provider may appeal the department's decision to bar the
education service provider from receiving payments from
education opportunity accounts; and provided further that if
the department bars an education service provider from
receiving payments, the department shall notify parents of
participating students of the department's decision.
B. The department may:
(1) contract with private organizations to
administer the program or specific functions of the program,
including contracting with private financial management firms
to manage education opportunity accounts;
(2) withhold from deposits or deduct from an
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education opportunity account an amount to cover the costs of
administering the program, in an amount up to a maximum of five
percent annually in the first two years of the program and up
to a maximum of three percent annually thereafter;
(3) bar an education service provider from
accepting payments from education opportunity accounts if the
department determines that the education service provider has:
(a) substantially misrepresented
information or failed to refund any overpayments in a timely
manner; or
(b) failed to provide participating
students with sufficient educational goods or services;
(4) accept gifts, grants and donations from
any source to cover administrative costs, to inform the public
about the program or to fund additional education opportunity
accounts; and
(5) adopt rules in accordance with the State
Rules Act that are consistent with the Education Opportunity
Account Act and necessary for the administration of that act,
including rules:
(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
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education service providers receiving more than one hundred
thousand dollars ($100,000) in education opportunity account
funds; or
(d) for refunding payments from
education service providers to education opportunity accounts."
SECTION 6. A new section of the Public School Code is
enacted to read:
"[NEW MATERIAL] EDUCATION SERVICE PROVIDERS--
APPLICATIONS--AUTONOMY--NOT ACTING FOR THE STATE.--
A. The department by rule shall provide the
application process and procedures for prospective education
service providers to apply for listing as an eligible education
service provider. An application form signed by a prospective
education service provider warrants that the education service
provider:
(1) will not refund, rebate or share money
from education opportunity accounts with parents or
participating students and shall return refunds to the
department; and
(2) will provide the education services
contained in the agreement entered into with a parent.
B. An education service provider is not an agent of
the state or federal government, a local school board or school
district or governing authority or charter school. No action
of an education service provider shall be construed as an
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action by the state or any of its departments, institutions or
political subdivisions.
C. An education service provider shall not be
required to alter its creed, practices, admissions policy or
curriculum to accept payments pursuant to the Education
Opportunity Account Act except as provided in that act."
SECTION 7. A new section of the Public School Code is
enacted to read:
"[NEW MATERIAL] STUDENT RECORDS.--Upon being notified that
a participating student is enrolled with an education service
provider, a public school that previously enrolled the
participating student shall provide the education service
provider with the student's school records. The public school
and the education service provider shall comply with the
provisions of the federal Family Educational Rights and Privacy
Act of 1974 when sharing student records."
SECTION 8. A new section of the Public School Code is
enacted to read:
"[NEW MATERIAL] EDUCATION OPPORTUNITY REVIEW COMMISSION.--
A. The department shall create the "education
opportunity review commission" to assist the department in
determining what expenditures meet the requirements to be
considered qualifying education expenses to educate a
participating student and to provide recommendations to the
department on how to implement, administer and improve the
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program.
B. The education opportunity review commission
shall consist of nine voting members who shall be:
(1) five parents of participating students and
represent no fewer than four counties of the state; and
(2) four New Mexico licensed educators.
C. The voting members shall be appointed by the
secretary and shall serve at the pleasure of the secretary.
The secretary, or the secretary's designee, shall serve as the
nonvoting chair of the education opportunity review commission.
D. The department may request that the education
opportunity review commission meet, in person or through a
virtual or telephonic platform, to:
(1) determine whether an expenditure from an
education opportunity account is or was a qualifying expense;
and
(2) review appeals of denials of an education
service provider and make a recommendation to the secretary.
E. When requested, the education opportunity review
commission shall, by majority vote, recommend to the
department:
(1) if a particular use of funds constitutes a
qualifying expense; and
(2) if an education service provider should be
allowed to receive, or continue receiving, payments from
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education opportunity accounts."
SECTION 9. A new section of the Public School Code is
enacted to read:
"[NEW MATERIAL] REPORT TO LEGISLATURE AND GOVERNOR.--The
department shall report to the legislature and the governor by
December 1 of each year on the program and its participants.
The report shall include the number, grades and ages of
participating students and where they attend school or receive
other educational services; the geographic distribution of
participating students by county; other demographic and
economic data about participating students and parents; the
number and locations of education service providers, the
services they provide and the number of students they serve;
the total amount of deposits into education opportunity
accounts and the cost of financial management contracts; the
total expenditures for education service providers and the
average cost of educational services being provided to
participating students, by type of service and geographic
region; and other information requested by the legislature or
governor and considered reportable by the department."
SECTION 10. A new section of the Public School Code is
enacted to read:
"[NEW MATERIAL] EDUCATION OPPORTUNITY ACCOUNT FUND--
CREATED.--
A. The "education opportunity account fund" is
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created in the state treasury. The fund consists of money
appropriated by the legislature, federal money granted to the
state for the purposes of the fund, income from investment of
the fund and money otherwise accruing to the fund. Money in
the fund shall not revert to any other fund at the end of a
fiscal year. The department shall administer the fund, and
money in the fund is appropriated to the department to carry
out the purposes of the Education Opportunity Account Act.
B. Money in the fund shall be disbursed on warrants
signed by the secretary of the department pursuant to vouchers
signed by the secretary or the secretary's authorized
representative."
SECTION 11. APPROPRIATIONS.--
A. The following amounts are appropriated from the
general fund to the education opportunity account fund for
expenditure in fiscal year 2025 and subsequent fiscal years for
the following purposes:
(1) five hundred eighty thousand dollars
($580,000) for the public education department to administer
the education opportunity account program; and
(2) one hundred million dollars ($100,000,000)
to carry out the purposes of the Education Opportunity Account
Act.
B. Any unexpended or unencumbered balance remaining
at the end of a fiscal year shall not revert to the general
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fund.
SECTION 12. SEVERABILITY.--If any part or application of
the Education Opportunity Account Act is held invalid, the
remainder or its application to other situations or persons
shall not be affected.
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