Rep. Kofalt urges statute change to lock in federal scholarship tax credit and expand Pell eligibility for short-term workforce training

Representative Jim Kofalt introduced House Bill 1774, saying the bill would add two provisions from federal HR1 into state statute: an automatic federal scholarship tax-credit opt-in and an expansion allowing Pell-equivalent grants for short-term workforce training.

"What this does is it opts New Hampshire into a federal scholarship tax credit program automatically each year," Kofalt told the committee, describing a program that lets individuals donate to scholarship-granting organizations and claim a federal income tax credit capped at $1,700 per person. He said the federal rules limit student eligibility to households earning below 300% of area median income and permit scholarship-granting organizations (SGOs) to set eligibility criteria and award scholarships to public or nonpublic providers.

Kofalt also described the bill’s second element: making low- and moderate-income students eligible for PEL grants to attend short-term workforce training programs that lead to certificates. He said federal standards require programs of roughly eight to 15 weeks, that issue industry-recognized certificates, be offered by accredited institutions eligible for federal aid, and meet outcomes thresholds such as 70% completion and job-placement rates.

"There are a number of federal requirements here," Kofalt said, citing examples including NHTI and Manchester Community College and saying early-childhood education, CDL and allied-health certificate programs could benefit.

In questioning, senators pressed the sponsor and agency staff about fiscal details and whether the governor’s existing executive opt-in requires annual renewal. Kofalt said the governor has already opted the state in, but that legislative enactment would provide stability and predictability for scholarship organizations and families. He offered to provide federal draft rules referenced in the fiscal note.

Jennifer Ramsey, tax-policy counsel for the Department of Revenue Administration, said DRRA is the agency the bill tasks with making the opt-in election but questioned whether RSA 21J currently gives the commissioner explicit authority to opt into or out of federal tax credits.

"I am not sure that this legislation would truly give us that authority in the event that a governor decided they did not want to opt us in in a given year," Ramsey told the committee, and she recommended moving statutory definitions into the education chapter and fixing applicability language so it reads "on or after December 31, 2026."

The committee heard the clarifications and technical drafting points but did not take action during the hearing. The hearing record includes discussion of federal rulemaking and the fiscal note, and agencies requested statutory language adjustments to ensure administrative authority and correct tax-year phrasing.

What happens next: the committee will consider the sponsor and agency suggestions for statutory references and drafting before advancing the bill for a possible vote or amendment.