HB84 By Representative Johnson (K) RFD Education Policy Rd 1 02-FEB-16

SYNOPSIS: This bill would create the Education Savings Account program which would allow parents to use the funds in the account which would have been allocated to their child at their resident school district for an education program of the parents' choosing.

A BILL TO BE ENTITLED AN ACT

Relating to education; to create the Education Savings Account program which would allow parents to use the funds in the account which would have been allocated to their child at their resident school district for an education program of the parents' choosing.

BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:

Section 1. This act shall be known and may be cited as the Education Savings Account Act.

Section 2. As used in this act, the following words shall have the following meanings:

(1) DEPARTMENT. The Alabama Department of Education or an organization chosen by the state.

(2) ELIGIBLE POSTSECONDARY INSTITUTION. A community college, accredited university, or an accredited private postsecondary institution.

(3) ELIGIBLE STUDENT. A student who is:

a.1. The subject of an individual education plan or 504 accommodation that has been issued according to Section 504 of the Rehabilitation Act of 1973. This includes, but is not limited to, a student who has an intellectual disability, speech or language impaired, deaf, or hard of hearing, visually impaired, dual sensory impaired, physically impaired, emotionally handicapped, specific learning disabled, autistic, or hospitalized or homebound because of illness or disability.

2. The child of a parent who is a member of the Armed Forces of the United States and who is on active duty or was killed in the line of duty. A child who meets the requirements of this subparagraph is not subject to the requirement of paragraph b. of this subdivision.

3. A foster child who has achieved permanency through adoption or guardianship.

4. Is the sibling of a current program participant.

b. Except as provided in subparagraph 2., attended a primary or secondary school in this state during the prior school year.

(4) ORGANIZATION. An organization that administers or is approved to administer an education savings account for an eligible student.

(5) PARENT. A resident of this state who is a parent, guardian, custodian, or other person with the authority to act on behalf of the child.

(6) PARTICIPATING SCHOOL. A private school that provides education to elementary or secondary students or both and has notified the Department of Education of its intention to participate in the program and comply with the requirements of the program.

(7) PRIVATE TUTORING. Tutoring services provided by tutors certified in Alabama or tutors accredited by a regional or national accrediting organization.

(8) RESIDENT SCHOOL DISTRICT. The public school district in which the student resides.

Section 3. (a) A parent of an eligible student shall qualify for the state to make a grant to his or her child's education savings account if the parents sign an agreement to do all of the following:

(1) To provide an education for the eligible student in at least the subjects of reading, grammar, mathematics, social studies, and science.

(2) Not to enroll the eligible student in a charter school.

(b) Each parent participating in the Education Savings Account program shall agree to use the funds deposited in his or her eligible student's accounts for the following qualifying expenses to educate the eligible student:

(1) Tuition and fees at a participating school.

(2) Textbooks required by a participating school.

(3) Payment to a licensed or accredited tutor.

(4) Payment for purchase of curriculum or instructional material.

(5) Tuition and fees for an approved nonpublic online learning program.

(6) Fees for national norm-referenced examinations, advanced placement examinations or similar courses, fees associated with state-recognized industry examinations and any examinations related to college or university admission.

(7) Contribution of not more than two thousand dollars ($2,000) per academic year to a Coverdell education savings account established pursuant to 26 U.S.C. Section 530 or a qualified tuition program established pursuant to Section 11 U.S.C. Section 529 for the benefit of the eligible student, except that money used for elementary or secondary education expenses shall be used for expenses otherwise allowed under this section.

(8) Educational services for pupils with disabilities from a licensed or accredited practitioner or provider.

(9) Tuition and fees at an eligible postsecondary institution.

(10) Textbooks required for college or university courses.

(11) Contracted services from a public school district, including individual classes.

(c) The amount the state shall deposit into an education savings account for a participating eligible student shall be equivalent to 90 percent of the calculated amount the eligible student would have received in the district school to which he or she would have been assigned. This equals the base student allocation in the state funding formula multiplied by the appropriate weights provided for the eligible students.

(d) A participating school, private tutor, eligible postsecondary institution, or other educational provider may not refund, rebate, or share a student's grant with a parent or the student in any manner. The funds in an education savings account may only be used for educational purposes.

(e) Parents shall be allowed to make payments for the costs of educational programs and services not covered by the funds in their accounts.

(f) A participating student shall be counted in the enrollment figures for his or her resident school district for the purposes of calculating state aid to the resident school district. The funds needed for a grant to an education savings account shall be subtracted from the state school aid payable to the student's resident school district.

(g) The program created in this act shall be limited to participation of 1,000 new eligible students each academic year, beginning with the academic year immediately following the passage of this act. Each application shall be approved on a first come first serve basis.

(h) Funds received pursuant to this section may not be construed as constituting taxable income to the parent.

(i) Eligible students previously enrolled in the programs shall have priority renewal in the following years.

Section 4. (a) An organization wishing to administer the program shall do the following:

(1) Notify the department of its intent to administer education savings accounts for eligible students.

(2) Demonstrate to the department that the organization has been granted exemption from the federal income tax as an organization described in Section 501(c)(3) of the Internal Revenue Code.

(3) Cooperate with the Department of Revenue to conduct criminal background checks on all of its employees and board members and exclude from employment or governance any individual who may reasonably pose a risk to the appropriate use of funds.

(4) Publicly report by September 1 of each calendar year information prepared by a certified public accountant verifying that the organization has been in compliance with all the requirements set forth in this act during the previous academic year.

(b) An organization may establish education savings accounts for eligible students by:

(1) Receiving applications and determining student eligibility in accordance with the requirements of this section. When an application is received, the organization must provide the department with information on the student to enable the department to report the student for funding in accordance with Section 5.

(2) Establishing and maintaining separate accounts for each eligible student.

(3) Verifying qualifying expenditures pursuant to this subsection.

(4) Returning any unused funds to the department when the student is no longer eligible for an education savings account.

(c) The department shall make payments to eligible students' education savings accounts on a quarterly basis.

(d) For purposes of continuity of educational choice, the program payments made under this section shall remain in force until a student participating in the program participates in any of the prohibited activities specified in this subsection, returns to a public school, graduates from high school, or attains 22 years of age, whichever occurs first. A participating student who enrolls in a public school or public school program is considered to have returned to a public school for the purpose of determining the end of the program's term; provided, however, that purchasing contracted services from a public school system in compliance with subdivision (11) of subsection (b) of Section 3 does not signify enrollment.

(e) The department shall provide funds for program administration. These funds shall come from the remaining 10 percent of funds not deposited into an education savings account pursuant to subsection (c) of Section 3, and may be disbursed as follows:

(1) Each organization shall receive an administrative fee based on the number of students participating through such organizations. In the first three years of an organization's participation in the program, the department shall grant an amount equal to six percent of the funds annually deposited into the accounts of eligible students participating in the program through the organization pursuant to subsection (c) of Section 3. In subsequent years, the organization shall be granted an amount equal to four percent of the funds.

(2) The department shall receive an administrative fee totaling one percent of total program funds.

(3) The department shall establish reasonable fees for private financial management firms participating in the program based upon market rates.

Section 5. (a) The department shall ensure that eligible students and their parents are informed annually of which schools will be participating in the Education Savings Account program. Special attention shall be paid to ensuring that lower-income families are made aware of the program and their options.

(b) The department shall create a standard form that parents of eligible students can submit to establish their student's eligibility for the education savings account program. The department shall ensure that the application is readily available to interested families through various sources, including the Internet.

(c) The department shall provide parents of participating students with a written explanation of the allowable uses of education savings accounts, the responsibilities of parents, and the duties of the department.

(d) The department shall maintain a list of approved providers.

(e) The department shall require quarterly reports by a participating organization regarding the number of students participating in the program, the providers of services to students, and other information deemed necessary by the department.

(f) The department shall compare the list of students participating in the program with the public school enrollment lists before each program payment to avoid duplicate payments.

(g) The department may bar a participating school or education provider from the Education Savings Account program if the department establishes that the participating school or education provider has:

(1) Routinely failed to comply with the accountability standards established in this act

(2) Failed to provide the eligible student with the educational services funded by the education savings account.

(h) If the department decides to bar a participating school or education provider from the program, it shall notify eligible students and their parents of this decision as soon as practicable.

(i) The department may conduct or contract for the auditing of accounts, and at a minimum, shall conduct random audits of accounts on an annual basis. The department may make any parent of an eligible student ineligible for the Education Savings Account program in the event of substantial misuse of the funds in the account.

(j) The department may refer cases of substantial misuse of funds to law enforcement agencies for investigation if evidence of fraudulent use of an account is obtained.

(k) The department shall qualify private financial management firms to manage education savings accounts.

(l) The department shall adopt rules as necessary for the administration of the Education Savings Account program.

Section 6. (a) To ensure that each student is treated fairly and kept safe, all participating private schools shall do all of the following:

(1) Comply with all health and safety laws or codes that apply to private schools.

(2) Hold a valid occupancy permit if required by the municipality where the school is located.

(3) Certify that the school complies with the nondiscrimination policies set forth in 42 U.S.C. 1981.

(4) Conduct criminal background checks on employees. The participating school then shall:

a. Exclude from employment any person not permitted by state law to work in a public or private school.

b. Exclude from employment any person that might reasonably pose a threat to the safety of students.

(5) Comply with the Alabama Child Protection Act of 1999, Chapter 22A of Title 16, Code of Alabama 1975.

(b) To ensure that funds are spent appropriately, all participating schools shall do the following:

(1) Provide parents with a receipt for all qualifying expenses at the school.

(2) Demonstrate financial viability by showing that any funds that might be provided from education savings accounts can be repaid, if the school is to receive fifty thousand dollars ($50,000) or more during the school year, by:

a. Filing with the organization prior to the start of the school year a surety bond payable to the state in an amount equal to the aggregate amount of the funds from education savings accounts expected to be paid during the school year from eligible students admitted at the participating school.

b. Filing with the organization prior to the start of the school year financial information that demonstrates the school has the ability to pay an aggregate amount equal to the amount of the funds from education savings accounts expected to be paid during the school year to eligible students admitted to the participating school.

(c) In order to allow parents and taxpayers to measure the achievements of the program, the following shall occur:

(1) Parents shall ensure that:

a. Each year their eligible student takes either the state achievement tests or nationally norm-referenced tests that measure learning gains in math and language arts, and provide for value added assessment. Students with disabilities for whom standardized testing is not appropriate are exempt from this requirement.

b. The results of these tests are provided to the state or an organization chosen by the state on an annual basis, beginning with the first year of testing.

c. The student information is reported in a way that would allow the state to aggregate data by grade level, gender, family income level, and race.

d. The state or an organization chosen by the state shall be informed of the eligible student's graduation from high school.

(2) The state or an organization chosen by the state shall:

a. Ensure compliance with all student privacy laws.

b. Collect test results.

c. Provide the test results, associated learning gains, and graduation rates to the public via a state website after the third year of test and graduation related data collection. The findings shall be aggregated by the students' grade level, gender, family income level, number of years of participation in the program, and race.

d. Provide graduation rates to the public via a sate website after the third year of test and test-related data collection.

e. Administer an annual parental satisfaction survey that shall ask parents of students receiving education savings accounts to express:

1. Their satisfaction with the program.

2. Their opinions on other topics, items, or issues that the state finds would elicit information about the effectiveness of the Education Savings Accounts program and the number of years their child has participated in the program.

(d) A participating private school is autonomous and not an agent of the state or federal government and therefore:

(1) The department or any other state agency may not in any way regulate the educational program of a participating private school or education provider that accepts funds from an education savings account.

(2) The creation of the education savings account program does not expand the regulatory authority of the state, its officers, or any school district to impose any additional regulation of private schools or education providers beyond those necessary to enforce the requirements of the program.

(3) Participating private schools and education providers shall be given the maximum freedom to provide for the educational needs of their students without government control.

Section 7. The resident school district shall provide a participating school or education provider that has admitted an eligible student under this program with a complete copy of the student's school records, while complying with the Family Educational Rights and Privacy Act of 1974, 20 U.S.C. Section 1232 g.

Section 8. The Education Savings Account program will be in effect beginning with the fall semester immediately following its passage and approval by the Governor, or its otherwise becoming law.

Education

Parents

Funds

Schools