Committee hears House Bill 1540 to create education savings accounts; supporters cite choice, critics warn of cost and accountability

The House Education Committee on Tuesday heard testimony on House Bill 1540, a proposal to create education savings accounts (ESAs) that would direct most state dollars for students not attending public schools into an account for families to use on specified educational expenses.

Representative Ben Koppelman, the bill sponsor, told the committee the measure would deposit 80% of a participating student’s per-pupil payment into an ESA and leave 20% with the student’s resident public school so the district can cover fixed building and staffing costs. “This bill seeks to create a an education savings account for anyone that is not attending a public school,” Koppelman said. He said the funds would be paid from the general fund through the Bank of North Dakota and ‘‘not a dime of this money comes from any educational dollars intended for k 12 public schools.’’

Supporters said the program would broaden choices for families, help rural communities and let nonpublic and homeschooled students buy services they otherwise could not afford. Katrin Wigfahl of American Experiment and other backers cited national analyses of choice programs and told the committee that, at low take-up rates, the program’s biennial cost could be far lower than some fiscal notes project — and that, in their view, the bill could increase funding that ultimately remains available to public districts. Wigfahl noted a sample estimate: “If 2% of eligible students participated in North Dakota’s ESA program in year 1, the cost over the biennium would be $45,800,000,” and urged the committee to consider likely take-up rates rather than the worst-case fiscal scenario.

Opponents focused on the long-term cost to the state, safeguards against misuse and the effect on small and rural districts. Amy Copas, executive director of the North Dakota Council of Educational Leaders, warned the committee that the program’s cost to continue could exceed available resources and said the committee should move ‘‘very, very cautiously.’’ She cited a fiscal-note figure referenced by the sponsor and called the program a ‘‘big step’’ that would be hard to reverse once funded.

Several witnesses raised concerns about accountability and protections for high-needs students. School administrators and teachers told the committee that sending public dollars to nonpublic institutions without the same public-accountability requirements could reduce resources available for students who remain in public schools and could change enrollment mix in ways that challenge staffing and special-education services.

Homeschooling organizations asked the committee to preserve homeschool autonomy. Kevin Bowden of the Homeschool Legal Defense Association urged lawmakers to ensure that families who opt to remain independent of public funding keep that option. Some homeschool witnesses also told the committee they already can access certain public-school classes and resources and said the ESA program would both impose new testing requirements on participating homeschool families and would largely subsidize choices many private-school families already make.

Key bill mechanics described by the sponsor: - An ESA would receive 80% of the per-pupil payment for participating nonpublic or homeschooled students; the resident public district would receive 20% of that amount for fixed overhead costs. - The Bank of North Dakota would deposit ESA funds from the general fund; the bill allows the accounts to be administered by the bank or a third party under Bank of North Dakota rules. - Allowed uses would include tuition, textbooks, private tutoring, dual credit and exam fees, computer hardware and other items listed in the bill; no funds may be “rebated” or shared back to parents for noneducational use. - Unspent ESA balances would be subject to carryover limits: Koppelman said 25% of funds could be carried forward and the remainder returned to the state. - Participating students would be required to take an annual state achievement test or an equivalent assessment and share results with the Department of Public Instruction (DPI) or its designee. - The sponsor proposed phasing in the program across a biennium and multiple years, with both ESA and the 20% district share phased proportionally.

Committee members pressed for specifics on fraud prevention and on how the bill would treat students changing enrollment midyear. Koppelman described layered safeguards — receipts from vendors and participating schools, Bank of North Dakota oversight and program rules — but acknowledged the committee could add stricter monitoring provisions.

Public testimony for the bill included a mix of personal stories and policy research. Marie Franks said the availability of a private Catholic school influenced her family’s decision to move to North Dakota and called ESAs a way to help employers recruit families. Emily Hite, a high-school senior who said she had been educated in homeschool, public and private settings, described ESAs as giving families ‘‘the opportunity to choose the healthiest, best fitting education that will foster their success.’’

After several hours of testimony and questioning, the committee did not take a vote on House Bill 1540. Members signaled ongoing concern about fiscal exposure, accountability, and protections for homeschool families and students with disabilities; at least one committee member urged amendments to narrow or phase the program before any committee recommendation.

The committee asked staff to provide additional fiscal and legal detail and flagged possible amendments covering implementation timing, audit and reporting requirements, and explicit carve-outs for families who want to remain free from state oversight. No formal committee action on HB 1540 was recorded in the transcript.

Looking ahead, the sponsor said he would work with the committee on amendments and phasing options; opponents asked the committee to prioritize protections for public-school funding, rural districts and students with special needs.

Ending: The committee left the bill under advisement and moved on to other agenda items; lawmakers and stakeholders signaled they expect further amendment discussion in committee work sessions before any formal recommendation.