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SENATE BILL 286
57
TH LEGISLATURE
-
STATE
OF
NEW
MEXICO
-
FIRST SESSION
,
2025
INTRODUCED BY
Craig W. Brandt and James G. Townsend and William E. Sharer
and Larry R. Scott and Steve D. Lanier
AN ACT
RELATING TO EDUCATION; ENACTING THE EDUCATION FREEDOM ACCOUNT
ACT; PROVIDING POWERS AND DUTIES; PROVIDING FOR EDUCATION
FREEDOM 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 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
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Freedom 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 freedom account" means the account
into which money is deposited by the department to pay for
qualifying educational 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 freedom 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, who is
eligible for enrollment or re-enrollment in a public school and
whose family's income is at or below two hundred percent of the
federal poverty level;
F. "participating student" means a student who is
participating in the program;
G. "program" means the education freedom account
program; and
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H. "qualifying educational expenses" means
authorized expenditures from a participating student's
education freedom account and includes those expenses
enumerated in Paragraphs (1) through (7) of Subsection B of
Section 3 of the Education Freedom Account Act."
SECTION 3. A new section of the Public School Code is
enacted to read:
"[NEW MATERIAL] EDUCATION FREEDOM ACCOUNT PROGRAM--
CREATED--FUNDING USES.--
A. The "education freedom 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 qualifying educational expenses through
"education freedom accounts". The department:
(1) shall establish education freedom 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
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education freedom account; and
(4) may contract for financial management
services for education freedom accounts.
B. Money in a participating student's education
freedom account shall be used by the department, in contract
with parents of participating students, only in accordance with
the provisions of the Education Freedom Account Act and only
for the following qualifying educational expenses:
(1) tuition and fees at a private primary 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 examinations and other
assessments required by the education service provider;
(5) tuition or fees for summer and after-
school primary 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 educational 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 an education freedom
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 freedom 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 freedom account shall be credited directly to that
account. A parent may make payments for the cost of
educational services not covered by an education freedom
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
freedom 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
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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 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 freedom 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
freedom 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
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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 freedom account for
extenuating circumstances.
I. Nothing in the Education Freedom Account Act
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 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 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
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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 program or the
education freedom 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
freedom account only for qualifying educational 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 freedom account if funds are available.
F. Upon notice to the department, a participating
student may choose to stop receiving education freedom account
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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 freedom account; provided that, for
education freedom accounts that have been open for at least one
full school year, the department may allow an education freedom
account to remain open and active for the parent to pay
qualifying educational expenses to educate the student from
money remaining in the account. The department shall revert
unexpended or unencumbered balances in a student's education
freedom account and close the education freedom 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 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.
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
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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 education freedom 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 freedom account to an education
service provider by electronic or online funds transfer;
provided that the department:
(a) provides flexibility to parents by
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facilitating direct payments to education service providers as
well as requests for preapproval of and reimbursements for
qualifying educational 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 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 freedom 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 freedom
accounts;
(8) make a parent or participating student
ineligible for the program in the event of misuse of education
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freedom 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 freedom 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
education freedom account funds to law enforcement if evidence
of fraudulent use of education freedom account funds exists;
(10) create procedures to ensure that a fair
process exists to determine whether a misuse of education
freedom 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
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, 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,
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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 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 freedom 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 freedom
accounts; and
(5) adopt rules in accordance with the State
Rules Act that are consistent with the Education Freedom
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;
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(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] 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) shall not refund, rebate or share money
from education freedom accounts with parents or participating
students and shall return refunds to the department; and
(2) shall 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
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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 Education Freedom
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 FREEDOM REVIEW COMMISSION.--
A. The department shall create the "education
freedom review commission" to assist the department in
determining what expenditures meet the requirements to be
considered qualifying educational expenses to educate a
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participating student and to provide recommendations to the
department on how to implement, administer and improve the
program.
B. The education freedom 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 freedom review commission.
D. The department may request that the education
freedom review commission meet, in person or through a virtual
or telephonic platform, to:
(1) determine whether an expenditure from an
education freedom account is or was a qualifying educational
expense; and
(2) review appeals of denials of an education
service provider and make a recommendation to the secretary.
E. When requested, the education freedom review
commission shall, by majority vote, recommend to the
department:
(1) if a particular use of funds constitutes a
qualifying educational expense; and
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(2) if an education service provider should be
allowed to receive, or continue receiving, payments from
education freedom 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 freedom 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 FREEDOM ACCOUNT FUND--CREATED.--
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A. The "education freedom 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
Education Freedom 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 education freedom 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 education freedom account program; and
(2) one hundred million dollars ($100,000,000)
to carry out the purposes of the Education Freedom Account Act.
B. Any unexpended or unencumbered balance remaining
at the end of a fiscal year shall not revert to the general
fund.
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SECTION 12. SEVERABILITY.--If any part or application of
the Education Freedom Account Act is held invalid, the
remainder or its application to other situations or persons
shall not be affected.
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