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HOUSE BILL 388
57
TH LEGISLATURE
-
STATE
OF
NEW
MEXICO
-
FIRST SESSION
,
2025
INTRODUCED BY
Rebecca Dow and Rod Montoya and Jonathan A. Henry
and Harlan Vincent
AN ACT
RELATING TO EDUCATION; ENACTING THE LOW-INCOME EDUCATION
OPPORTUNITY ACCOUNT ACT; PROVIDING POWERS AND DUTIES; PROVIDING
FOR LOW-INCOME EDUCATION OPPORTUNITY ACCOUNTS; PROVIDING INCOME
ELIGIBILITY REQUIREMENTS; 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
"Low-Income Education Opportunity Account Act"."
SECTION 2. A new section of the Public School Code is
enacted to read:
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"[NEW MATERIAL] DEFINITIONS.--As used in the Low-Income
Education 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 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 low-income education opportunity
accounts; provided that "education service provider" does not
mean an online school;
D. "eligible student" means a school-age person:
(1) who is a resident of New Mexico;
(2) who has not received a high school diploma
or a high school equivalency credential;
(3) who is eligible for enrollment or re-
enrollment in a public school; and
(4) whose household income is less than two
hundred percent of the federal poverty level;
E. "low-income education opportunity account" means
the account into which money is deposited by the department to
pay for qualifying education expenses of a participating
student;
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F. "participating student" means a student who is
participating in the program; and
G. "program" means the low-income education
opportunity account program."
SECTION 3. A new section of the Public School Code is
enacted to read:
"[NEW MATERIAL] LOW-INCOME EDUCATION OPPORTUNITY ACCOUNT
PROGRAM--CREATED--FUNDING USES.--
A. The "low-income 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 "low-income
education opportunity accounts". The department:
(1) shall establish low-income 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 low-
income education opportunity account; and
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(4) may contract for financial management
services for low-income education opportunity accounts.
B. Money in a participating student's low-income
education opportunity account shall be used by the department,
in contract with parents of participating students, only in
accordance with the provisions of the Low-Income Education
Opportunity 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
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(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
provided and by whom the educational services will be provided.
The department shall not deposit into a low-income 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 a low-income 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 a low-income education opportunity
account shall be credited directly to that account. A parent
may make payments for the cost of educational services not
covered by a low-income 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 low-income
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.
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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 low-income education opportunity
account is awarded and deducted in an equitable manner from
subsequent 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 a low-income 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 a low-income
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
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(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 low-income education opportunity
account for extenuating circumstances.
I. Nothing in the Low-Income Education Opportunity
Account Act shall be construed to require a participating
student to be enrolled only in a private school, but the
participating student shall 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] LOW-INCOME EDUCATION OPPORTUNITY
ACCOUNT--APPLICATION PROCESS--RENEWAL--SUSPENSION.--
A. A parent may apply to the department to
establish a low-income 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,
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including the internet.
D. The department shall approve an application for
a low-income education opportunity account if:
(1) the parent submits an application for a
low-income education opportunity 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 program or the
low-income 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 low-income
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
low-income education opportunity account if funds are
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available.
F. Upon notice to the department, a participating
student may choose to stop receiving low-income 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 low-income education
opportunity account; provided that, for low-income education
opportunity accounts that have been open for at least one full
school year, the department may allow a low-income 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 low-income
education opportunity account and close the low-income
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 low-income education
opportunity account may resume if the low-income education
opportunity account is still open and active. A new low-income
education opportunity account may be established if the
student's low-income education opportunity account is closed.
H. The department may adopt rules to provide the
least disruptive process for a student who chooses to stop
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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
publicly available through various sources, including the
internet;
(2) provide parents with a written explanation
of the allowable uses of low-income 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-
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effective and user-friendly system for processing payments for
services from a low-income 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
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
low-income 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 low-income education opportunity
account;
(c) student withdraws from the program;
(d) student enrolls full time in a
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public school; or
(e) student graduates from high school;
(7) audit individual low-income education
opportunity accounts;
(8) make a parent or participating student
ineligible for the program in the event of misuse of low-income
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 a low-income education opportunity
account if 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 low-
income education opportunity account funds to law enforcement
if evidence of fraudulent use of low-income education
opportunity account funds exists;
(10) create procedures to ensure that a fair
process exists to determine whether a misuse of low-income
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 low-income
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
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low-income 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 low-income education opportunity accounts;
(2) withhold from deposits or deduct from a
low-income 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 low-income 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
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any source to cover administrative costs, to inform the public
about the program or to fund additional low-income education
opportunity accounts; and
(5) adopt rules in accordance with the State
Rules Act that are consistent with the Low-Income 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
education service providers receiving more than one hundred
thousand dollars ($100,000) in low-income education opportunity
account funds; or
(d) for refunding payments from
education service providers to low-income 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
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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 low-income education opportunity accounts with parents or
participating students and shall return refunds to the
department; and
(2) will provide the educational 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
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 Low-Income
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
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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] LOW-INCOME EDUCATION OPPORTUNITY REVIEW
COMMISSION.--
A. The department shall create the "low-income
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 program.
B. The low-income 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 low-income education opportunity review
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commission.
D. The department may request that the low-income
education opportunity review commission meet, in person or
through a virtual or telephonic platform, to:
(1) determine whether an expenditure from a
low-income 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 low-income 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 low-
income 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
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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 low-income 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] LOW-INCOME EDUCATION OPPORTUNITY ACCOUNT
FUND--CREATED.--
A. The "low-income education opportunity account
fund" is 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 Low-Income Education Opportunity
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Account Act.
B. Money in the fund shall be disbursed on warrants
signed by the secretary 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 low-income education opportunity account
fund for expenditure in fiscal year 2026 and subsequent fiscal
years for the following purposes:
(1) five hundred eighty thousand dollars
($580,000) for the public education department to administer
the low-income education opportunity account program; and
(2) one hundred million dollars ($100,000,000)
to carry out the purposes of the Low-Income Education
Opportunity Account Act.
B. Any unexpended or unencumbered balance remaining
at the end of a fiscal year shall not revert to the general
fund.
SECTION 12. SEVERABILITY.--If any part or application of
the Low-Income 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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