Committee reviews H.687 to exempt ownership transfers of therapeutic independent schools from moratorium

House Education examined H.687 on Jan. 21, a bill introduced to clarify that the moratorium on approving new "approved independent schools" should not block the transfer in ownership or management of an existing therapeutic approved independent school.

Kenny Wazers, identified in the transcript as the sponsor, told the committee the bill's intent is to "clarify the legislative intent of the moratorium on new independent schools." He said stakeholders and a constituent who works at a therapeutic school had reported that when a therapeutic school transfers ownership the agency had sometimes treated that change as a "new" independent school, which would trigger the moratorium and block the transaction: "I could care less who runs it as long as I'm able to get my students what they need," Wazers said.

St. James of the Office of Legislative Council walked the panel through the proposed text and the statutory context, noting the moratorium language currently sits in last session's budget language (cited in the transcript as "act 78 from 2023"). Counsel explained an existing exception adopted last year — for changes in tax status or conversion to nonprofit — and read the H.687 language as introduced: "the moratorium on approval of new approved independent schools shall not apply to changes in ownership of a therapeutic approved independent school, as that term is defined in 16 BSA section 8 28 subsection D." Counsel highlighted that whether an ownership change requires an initial application is largely a question of interpretation by the State Board of Education and the agency.

Committee members pressed for clarity about potential unintended consequences. One lawmaker asked whether an entity could acquire a therapeutic school, then remove the therapeutic programming or otherwise change operations to evade the moratorium. Legislative council and other members said that outcome could be possible depending on what maintained the school's approved status and on any contractual terms attached to a sale, and recommended careful drafting. A committee member warned, "that's my only concern is this is gonna be used as a loophole." The counsel advised the committee to ask the agency and the State Board how they would apply the proposed language.

For now the chair asked legislative council to include H.687 in a broader miscellaneous education bill for further drafting and review. Committee members did not take a vote; the bill was set to be revisited in later committee work once staff and counsel refine statutory language and after the agency and State Board provide implementation guidance.