The proposed bill, S.F. No. 1974, titled the Education Savings Accounts for Minnesota Students Act (ESA4MSA), aims to create Education Savings Accounts (ESAs) for eligible students in Minnesota. These accounts allow state funds to be allocated to parents for covering qualifying educational expenses.

Key Provisions of the Bill:

1. Eligibility

   • Students must be Minnesota residents.
     
   • Household income must not exceed four times the eligibility level for reduced-price meals under the National School Lunch Act.
     
   • ESA participation is prioritized for:
     • Kindergarten students.
     • Students who attended public school the previous year.
     • Siblings of ESA participants.
       
   • Home-schooled students are eligible but parents cannot be reimbursed for time spent teaching.

2. Use of Funds

   • ESAs can cover costs such as:
     • Tuition at eligible private or public schools.
     • Fees for tutors, online learning programs, textbooks, standardized tests, and postsecondary tuition.
     • Up to $400 in school supplies and required technological devices.
       
     • Services for students with disabilities and extracurricular public school activities.
       
   • Funds may not be used for non-educational expenses or cash-equivalent items like gift cards.

3. Administration and Oversight

   • The Department of Revenue will manage the program, either directly or through contracted service providers.
     
   • The Commissioner of Revenue will set funding amounts equal to the state's per-pupil formula allowance.
     
   • Up to 5% of the funds may be used for administration in the first two years, decreasing to 3% thereafter.
     
   • Monthly payments will be made electronically, and unspent funds roll over.
     
   • Fraud prevention measures include fraud hotlines, financial tracking, and potential exclusion of providers engaging in fraudulent activity.

4. Special Considerations

   • Students with disabilities enrolled in an ESA program will be classified under the Individuals with Disabilities Education Act (IDEA) as parentally placed students.
     
   • ESAs remain active through high school graduation and can cover postsecondary education.
     
   • ESAs close when a student enrolls in public school again, graduates, or turns 21. Any unused postsecondary funds return to the state after four years of inactivity.
     
   • Parents can appeal denials and decisions regarding ESA participation.

5. Parental Involvement

   • A Parent Review and Advisory Panel will be established by 2028 to advise the Commissioner on program improvements and qualifying expenses.
     
   • Nine members, appointed by state officials, will serve one-year terms.

6. Legal and Regulatory Provisions

   • Nonpublic schools participating in the ESA program retain autonomy over admission, curriculum, and employment practices.
     
   • The state bears the burden of proof if its regulations impose on educational service providers.
     
   • If parts of the bill are deemed unconstitutional, the rest remains in effect.
     

Implementation Timeline

• Applications for the program are expected to open by December 1, 2025, with the first ESA allocations starting in the 2026-2027 school year.

Summary

This bill seeks to establish a state-funded ESA program in Minnesota, allowing eligible families to use public education funds for various education-related expenses outside the public school system. The program includes provisions for oversight, prioritization of applicants, parental involvement, and fraud prevention.