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SF 1525

2nd Engrossment - 92nd Legislature (2021 - 2022) Posted on 02/25/2022 10:37am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - 2nd Engrossment

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A bill for an act
relating to education; creating education savings accounts as a learning option for
students; appropriating money; amending Laws 2021, First Special Session chapter
13, article 1, section 10, subdivision 2; article 2, section 4, subdivisions 2, 3, 4,
12, 13; article 3, section 7, subdivision 7; article 7, section 2, subdivision 3; article
8, section 3, subdivisions 2, 3, 4; article 11, section 4, subdivision 2; proposing
coding for new law in Minnesota Statutes, chapter 124D.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [124D.035] EDUCATION SAVINGS ACCOUNTS FOR STUDENTS ACT.
new text end

new text begin Subdivision 1. new text end

new text begin Title. new text end

new text begin This act will be known as the "Education Savings Accounts for
Students Act."
new text end

new text begin Subd. 2. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the following terms have the
meanings given them.
new text end

new text begin (b) "Commissioner" means the commissioner of education.
new text end

new text begin (c) "Department" means the Department of Education.
new text end

new text begin (d) "Educational service provider" means an eligible school, tutor, or other person or
organization that provides education-related services and products to participating students.
The eligible student's parent shall not be an educational service provider for that student.
new text end

new text begin (e) "Eligible school" means a nonpublic school where a student can fulfill compulsory
education requirements and that is recognized by the commissioner or accredited by an
accrediting agency recognized by the Minnesota Nonpublic Education Council under
Minnesota Statutes, section 123B.445, paragraph (a). An eligible school does not include
a home school under Minnesota Statutes, sections 120A.22, subdivision 4, and 120A.24.
new text end

new text begin (f) "Eligible student" means any student who (1) resides in Minnesota, (2) attended a
public school or a public charter school during the semester preceding participation in the
program, and (3) is a member of a household that has a total annual income during the year
prior to initial participation in the program, without consideration of the benefits under this
program, that does not exceed an amount equal to three times the income standard used to
qualify for a reduced-price meal under the National School Lunch Program.
new text end

new text begin (g) "Parent" means a resident of this state who is a parent, legal guardian, custodian, or
other person with the authority to act on behalf of the eligible student.
new text end

new text begin (h) "Postsecondary institution" means a college or university accredited by a state,
regional, or national accrediting organization.
new text end

new text begin (i) "Program" means a program to implement education savings accounts (ESAs).
new text end

new text begin (j) "Tutor" means a person who (1) is certified or licensed by a state, regional, or national
certification or licensing organization to teach, (2) has earned a valid teacher's license, or
(3) has experience teaching at a postsecondary institution.
new text end

new text begin Subd. 3. new text end

new text begin Education savings account (ESA) program. new text end

new text begin (a) An eligible student qualifies
to participate in the program if the student's parent signs an agreement:
new text end

new text begin (1) to arrange for the provision of organized, appropriate educational services with
measurable goals to the participating student in at least the subjects of reading, writing,
mathematics, social studies, and science; and
new text end

new text begin (2) to not enroll the participating student in a public school or a public charter school
for as long as the student is participating in the program.
new text end

new text begin (b) A parent shall use the funds deposited in a participating student's ESA for any of the
following qualifying expenses to educate the student using any of the methods or combination
of methods in this paragraph that meet the requirement in paragraph (a), clause (1):
new text end

new text begin (1) tuition and fees at an eligible school;
new text end

new text begin (2) payment to a tutor;
new text end

new text begin (3) payment for purchase of curriculum, including any textbooks and supplemental
materials required by the curriculum;
new text end

new text begin (4) fees for transportation to and from an educational service provider paid to a
fee-for-service transportation provider;
new text end

new text begin (5) tuition and fees for online learning programs or courses;
new text end

new text begin (6) fees for nationally standardized norm-referenced achievement tests, including alternate
assessments, and fees for advanced placement examinations or similar courses and any
examinations related to college or university admission;
new text end

new text begin (7) educational services or therapies from a licensed or certified practitioner or provider,
including licensed or certified paraprofessionals or educational aides;
new text end

new text begin (8) services provided by a public school, including individual classes and extracurricular
programs;
new text end

new text begin (9) tuition, fees, and textbooks at a postsecondary institution;
new text end

new text begin (10) no more than $300 in annual consumable school supplies necessary for the student's
education; or
new text end

new text begin (11) computer hardware and software and other technological devices if an eligible
school, tutor, educational service provider, or licensed medical professional verifies in
writing that these items are necessary for the student to meet annual, measurable goals.
new text end

new text begin (c) Neither a participating student nor anyone on the student's behalf may receive cash
or cash-equivalent items, such as gift cards or store credit, from refunds or rebates from a
provider of services or products in this program. Refunds or rebates shall be credited directly
to the participating student's ESA. The funds in an ESA may only be used for
education-related purposes. Eligible schools, postsecondary institutions, and educational
service providers that serve participating students shall provide parents with a receipt for
all qualifying expenses.
new text end

new text begin (d) Payment for educational services through an ESA shall not preclude parents from
paying for educational services using non-ESA funds.
new text end

new text begin (e) For purposes of continuity of educational attainment, students who enroll in the
program shall remain eligible to receive monthly ESA payments until the participating
student returns to a public school, graduates from high school, or completes the school year
in which the student reaches the age of 21, whichever occurs first.
new text end

new text begin (f) Any funds remaining in a student's ESA upon graduation from high school may be
used to attend or take courses from a postsecondary institution, with qualifying expenses
subject to the applicable conditions in paragraph (b).
new text end

new text begin (g) Upon the participating student's graduation from a postsecondary institution or after
any period of four consecutive years after graduation from high school that the student is
not enrolled in a postsecondary institution, the participating student's ESA shall be closed
and any remaining funds shall be returned to the state general fund.
new text end

new text begin (h) A participating student shall be allowed to return to the resident school district at
any time after enrolling in the program, according to rules adopted by the commissioner
providing for the least disruptive process for doing so. Upon a participating student's return
to the resident school district, the student's ESA shall be closed and any remaining funds
shall be returned to the state general fund.
new text end

new text begin (i) The commissioner shall begin accepting applications for the program on July 1, 2023.
new text end

new text begin Subd. 4. new text end

new text begin Funding. new text end

new text begin (a) The commissioner shall determine the amount to be deposited in
each student's ESA on a first-come, first-served basis. The ESA amount shall be the statewide
average general education aid per adjusted pupil unit.
new text end

new text begin (b) The commissioner shall allow program participation of up to one percent of public
school average daily membership in fiscal year 2024, 1-1/2 percent of public school average
daily membership in fiscal year 2025, and two percent of public school average daily
membership in fiscal year 2026 and later.
new text end

new text begin Subd. 5. new text end

new text begin District aid adjustment. new text end

new text begin The commissioner shall make a onetime adjustment
to a serving school district's general education aid in the fiscal year following a participating
student's withdrawal from the district. The commissioner shall increase the district's general
education aid for each participating student who withdrew from the district by an amount
equal to ten percent of the statewide average general education revenue per adjusted pupil
unit for the previous fiscal year.
new text end

new text begin Subd. 6. new text end

new text begin Administration. new text end

new text begin (a) The commissioner shall create a standard form that parents
of students may submit to establish the student's eligibility for an ESA. The commissioner
shall ensure that the application is readily available to interested families through various
sources, including the department's website, and a copy of procedural safeguards annually
given to parents.
new text end

new text begin (b) The commissioner shall provide parents of participating students with a written
explanation of the allowable uses of ESAs, the responsibilities of parents, and the duties of
the commissioner. The information shall also be made available on the department's website.
new text end

new text begin (c) The commissioner shall annually notify all students who are eligible to participate
of the existence of the program and shall ensure that low-income families are made aware
of their potential eligibility.
new text end

new text begin (d) The commissioner may deduct up to three percent from appropriations made to fund
ESAs to cover the costs of overseeing and administering the program.
new text end

new text begin (e) The commissioner shall make payments to the ESAs of participating students on a
monthly basis unless there is evidence of misuse of the ESA pursuant to this subdivision.
new text end

new text begin (f) The commissioner shall make a determination of eligibility and shall approve the
application within 45 business days of receiving an application for participation in the
program.
new text end

new text begin Subd. 7. new text end

new text begin ESA establishment. new text end

new text begin (a) To ensure that funds are spent appropriately, the
commissioner shall adopt rules and policies necessary for the administration of the program,
including the auditing of ESAs, and shall conduct or contract for random audits throughout
the year.
new text end

new text begin (b) Beginning with the 2023-2024 school year, the commissioner shall issue ESA cards
to parents making expenditures under this section on behalf of a participating student. ESA
cards shall be issued to parents upon enrollment in the program and shall expire when the
participating student's ESA is closed, except for the periodic expiration and replacement of
cards in the normal course of business. All unexpended amounts shall remain in the student's
ESA and be combined with the following year's allocation of ESA funds, subject to
subdivision 3, paragraphs (f) and (g).
new text end

new text begin (c) The commissioner, taking into consideration requests from the parents of participating
students, shall use merchant category classification (MCC) codes, or a similar system as
practicable and consistent with current technology, to identify categories of providers that
provide services and products consistent with subdivision 3, paragraph (b). The commissioner
shall make a list of blocked and unblocked MCC codes publicly available for purposes of
the program.
new text end

new text begin (d) The commissioner shall adopt a process for removing educational service providers
that defraud parents and for referring cases of fraud to law enforcement.
new text end

new text begin (e) The commissioner shall establish or contract for the establishment of an online,
anonymous fraud-reporting service and an anonymous telephone hotline for fraud reporting.
new text end

new text begin (f) The commissioner shall adopt rules implementing policies on misspending of ESA
funds.
new text end

new text begin (g) Any amount not spent in the allowable categories pursuant to the agreement will
cause the ESA card to be temporarily suspended and the parent contacted within five business
days by United States mail at the parent's home address explaining the suspension, detailing
the violation, and requesting the parent to:
new text end

new text begin (1) provide additional documentation within 15 business days justifying the expenditure;
or
new text end

new text begin (2) repay the misspent amount within 15 business days.
new text end

new text begin (h) If the parent does not provide sufficient documentation and refuses to repay the
amount, the commissioner shall begin the removal process and shall seek to recover the
misspent funds using administrative measures or other appropriate measures, including
referral to collections, seeking a civil judgment, or referral to law enforcement.
new text end

new text begin (i) If the parent repays the amount within the requested time frame, then the offense will
be recorded and held in the parent's file.
new text end

new text begin (j) Three offenses within a consecutive three-year period shall disqualify the student
from participating in the program.
new text end

new text begin (k) If the commissioner determines that a parent has failed to comply with the terms of
the agreement as specified in subdivision 3, the commissioner shall suspend the participating
student's ESA. The commissioner shall notify the parent in writing within five business
days that the ESA has been suspended and that no further transactions will be allowed or
disbursements made. The notification shall specify the reason for the suspension and state
that the parent has 21 business days to respond and take corrective action.
new text end

new text begin (l) If the parent fails to respond to the commissioner, furnish reasonable and necessary
information, or make a report that may be required for reinstatement within the 21-day
period, the commissioner may remove the participating student from the program.
new text end

new text begin (m) The decision of the commissioner under this section is subject to judicial review
under Minnesota Statutes, sections 14.63 to 14.69. The decision of the commissioner is
stayed pending an appeal.
new text end

new text begin (n) The commissioner shall refer cases of substantial misuse of funds to law enforcement
agencies for investigation if evidence of fraudulent intent and use of an ESA is obtained.
new text end

new text begin Subd. 8. new text end

new text begin Scope. new text end

new text begin An eligible nonpublic school is autonomous and not an agent of the
state or federal government, and therefore:
new text end

new text begin (1) the commissioner, department, or any other government agency shall not in any way
regulate the educational program of a nonpublic school or educational service provider that
accepts funds from the parent of a participating student;
new text end

new text begin (2) the creation of the program does not expand the regulatory authority of the state, its
officers, or any school district to impose any additional regulation of nonpublic schools or
educational service providers beyond those necessary to enforce the requirements of the
program; and
new text end

new text begin (3) eligible schools and educational service providers shall be given the maximum
freedom to provide for the educational needs of their students without governmental control.
No eligible school or educational service provider shall be required to alter its creed,
practices, admission policies, or curriculum in order to accept participating students.
new text end

new text begin Subd. 9. new text end

new text begin Severability. new text end

new text begin If any provision of this law or its application is found to be
unconstitutional and void, the remaining provisions or applications of this law that can be
given effect without the invalid provision or application are valid.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

Laws 2021, First Special Session chapter 13, article 1, section 10, subdivision 2,
is amended to read:


Subd. 2.

General education aid.

For general education aid under Minnesota Statutes,
section 126C.13, subdivision 4:

$
deleted text begin 7,569,266,000 deleted text end new text begin
7,487,945,000
new text end
.....
2022
$
deleted text begin 7,804,527,000 deleted text end new text begin
7,683,951,000
new text end
.....
2023

The 2022 appropriation includes $717,326,000 for 2021 and deleted text begin $6,851,940,000deleted text end new text begin
$6,770,619,000
new text end for 2022.

The 2023 appropriation includes deleted text begin $734,520,000deleted text end new text begin $725,349,000new text end for 2022 and
deleted text begin $7,070,007,000deleted text end new text begin $6,958,602,000new text end for 2023.

Sec. 3.

Laws 2021, First Special Session chapter 13, article 2, section 4, subdivision 2, is
amended to read:


Subd. 2.

Achievement and integration aid.

For achievement and integration aid under
Minnesota Statutes, section 124D.862:

$
deleted text begin 84,057,000 deleted text end new text begin
82,369,000
new text end
.....
2022
$
deleted text begin 83,431,000 deleted text end new text begin
81,144,000
new text end
.....
2023

The 2022 appropriation includes $8,868,000 for 2021 and deleted text begin $75,189,000deleted text end new text begin $73,501,000new text end for
2022.

The 2023 appropriation includes deleted text begin $8,353,000deleted text end new text begin $8,167,000new text end for 2022 and deleted text begin $75,078,000deleted text end new text begin
$72,977,000
new text end for 2023.

Sec. 4.

Laws 2021, First Special Session chapter 13, article 2, section 4, subdivision 3, is
amended to read:


Subd. 3.

American Indian education aid.

For American Indian education aid under
Minnesota Statutes, section 124D.81, subdivision 2a:

$
deleted text begin 11,351,000 deleted text end new text begin
11,426,000
new text end
.....
2022
$
deleted text begin 11,775,000 deleted text end new text begin
11,885,000
new text end
.....
2023

The 2022 appropriation includes $1,102,000 for 2021 and deleted text begin $10,249,000deleted text end new text begin $10,324,000new text end for
2022.

The 2023 appropriation includes deleted text begin $1,138,000deleted text end new text begin $1,147,000new text end for 2022 and deleted text begin $10,637,000deleted text end new text begin
$10,738,000
new text end for 2023.

Sec. 5.

Laws 2021, First Special Session chapter 13, article 2, section 4, subdivision 4, is
amended to read:


Subd. 4.

Charter school building lease aid.

For building lease aid under Minnesota
Statutes, section 124E.22:

$
deleted text begin 93,547,000 deleted text end new text begin
90,717,000
new text end
.....
2022
$
deleted text begin 99,819,000 deleted text end new text begin
96,202,000
new text end
.....
2023

The 2022 appropriation includes $8,617,000 for 2021 and deleted text begin $84,930,000deleted text end new text begin $82,100,000new text end for
2022.

The 2023 appropriation includes deleted text begin $9,436,000deleted text end new text begin $9,122,000new text end for 2022 and deleted text begin $90,383,000deleted text end new text begin
$87,080,000
new text end for 2023.

Sec. 6.

Laws 2021, First Special Session chapter 13, article 2, section 4, subdivision 12,
is amended to read:


Subd. 12.

Interdistrict desegregation or integration transportation grants.

For
interdistrict desegregation or integration transportation grants under Minnesota Statutes,
section 124D.87:

$
12,310,000
.....
2022
$
deleted text begin 14,823,000 deleted text end new text begin
14,833,000
new text end
.....
2023

Sec. 7.

Laws 2021, First Special Session chapter 13, article 2, section 4, subdivision 13,
is amended to read:


Subd. 13.

Literacy incentive aid.

For literacy incentive aid under Minnesota Statutes,
section 124D.98:

$
45,075,000
.....
2022
$
deleted text begin 45,968,000 deleted text end new text begin
45,999,000
new text end
.....
2023

The 2022 appropriation includes $4,463,000 for 2021 and $40,612,000 for 2022.

The 2023 appropriation includes $4,512,000 for 2022 and deleted text begin $41,456,000deleted text end new text begin $41,487,000new text end for
2023.

Sec. 8.

Laws 2021, First Special Session chapter 13, article 3, section 7, subdivision 7, is
amended to read:


Subd. 7.

Alternative teacher compensation aid.

(a) For alternative teacher compensation
aid under Minnesota Statutes, section 122A.415, subdivision 4:

$
deleted text begin 88,896,000 deleted text end new text begin
88,600,000
new text end
.....
2022
$
deleted text begin 88,898,000 deleted text end new text begin
88,447,000
new text end
.....
2023

(b) The 2022 appropriation includes $8,877,000 for 2021 and deleted text begin $80,019,000deleted text end new text begin $79,723,000new text end
for 2022.

(c) The 2023 appropriation includes deleted text begin $8,891,000deleted text end new text begin $8,858,000new text end for 2022 and deleted text begin $80,007,000deleted text end new text begin
$79,589,000
new text end for 2023.

Sec. 9.

Laws 2021, First Special Session chapter 13, article 7, section 2, subdivision 3, is
amended to read:


Subd. 3.

Long-term facilities maintenance equalized aid.

For long-term facilities
maintenance equalized aid under Minnesota Statutes, section 123B.595, subdivision 9:

$
deleted text begin 108,582,000 deleted text end new text begin
107,790,000
new text end
.....
2022
$
deleted text begin 111,077,000 deleted text end new text begin
108,965,000
new text end
.....
2023

The 2022 appropriation includes $10,660,000 for 2021 and deleted text begin $97,922,000deleted text end new text begin $97,130,000new text end
for 2022.

The 2023 appropriation includes deleted text begin $10,880,000deleted text end new text begin $10,792,000new text end for 2022 and deleted text begin $100,197,000deleted text end new text begin
$98,173,000
new text end for 2023.

Sec. 10.

Laws 2021, First Special Session chapter 13, article 8, section 3, subdivision 2,
is amended to read:


Subd. 2.

School lunch.

For school lunch aid under Minnesota Statutes, section 124D.111,
and Code of Federal Regulations, title 7, section 210.17:

$
deleted text begin 16,661,000deleted text end
new text begin 14,828,000
new text end
.....
2022
$
deleted text begin 16,954,000deleted text end
new text begin 15,995,000
new text end
.....
2023

Sec. 11.

Laws 2021, First Special Session chapter 13, article 8, section 3, subdivision 3,
is amended to read:


Subd. 3.

School breakfast.

For traditional school breakfast aid under Minnesota Statutes,
section 124D.1158:

$
deleted text begin 11,848,000deleted text end
new text begin 101,000
new text end
.....
2022
$
deleted text begin 12,200,000deleted text end
new text begin 10,527,000
new text end
.....
2023

Sec. 12.

Laws 2021, First Special Session chapter 13, article 8, section 3, subdivision 4,
is amended to read:


Subd. 4.

Kindergarten milk.

For kindergarten milk aid under Minnesota Statutes,
section 124D.118:

$
deleted text begin 656,000 deleted text end new text begin
309,000
new text end
.....
2022
$
deleted text begin 658,000 deleted text end new text begin
660,000
new text end
.....
2023

Sec. 13.

Laws 2021, First Special Session chapter 13, article 11, section 4, subdivision 2,
is amended to read:


Subd. 2.

Department.

(a) For the Department of Education:

$
30,837,000
.....
2022
$
deleted text begin 26,287,000 deleted text end new text begin
28,203,000
new text end
.....
2023

Of these amounts:

(1) $319,000 each year is for the Board of School Administrators;

(2) $1,000,000 each year is for regional centers of excellence under Minnesota Statutes,
section 120B.115;

(3) $250,000 each year is for the School Finance Division to enhance financial data
analysis;

(4) $720,000 each year is for implementing Minnesota's Learning for English Academic
Proficiency and Success Act under Laws 2014, chapter 272, article 1, as amended;

(5) $123,000 each year is for a dyslexia specialist;

(6) $480,000 each year is for the Department of Education's mainframe update;

(7) $4,500,000 in fiscal year 2022 only is for legal fees and costs associated with
litigation; and

(8) $340,000 in fiscal years 2022 and 2023 only are for voluntary prekindergarten
programs.

(b) None of the amounts appropriated under this subdivision may be used for Minnesota's
Washington, D.C., office.

(c) The expenditures of federal grants and aids as shown in the biennial budget document
and its supplements are approved and appropriated and must be spent as indicated.

(d) This appropriation includes funds for information technology project services and
support subject to the provisions of Minnesota Statutes, section 16E.21. Any ongoing
information technology costs will be incorporated into the service level agreement and will
be paid to the Office of MN.IT Services by the Department of Education under the rates
and mechanisms specified in that agreement.

(e) To account for the base adjustments provided in Laws 2018, chapter 211, article 21,
section 1, paragraph (a), and section 3, paragraph (a), the base for fiscal year 2024 deleted text begin and laterdeleted text end
is new text begin $26,238,000 and the base for fiscal year 2025 and later is new text end $25,965,000.