SF3554

Purpose

• Establishes the Minnesota opportunity scholarship program to enhance academic success for all students. The program allows eligible students to attend qualifying nonpublic schools with funding arranged through their school district and the use of 529 accounts or other eligible payments.

Main provisions

• Eligibility and participation
  • Target students: kindergarten through grade 12 students who live in Minneapolis Special School District No. 1 or St. Paul Independent School District No. 625.
  • Participation: students must enroll in their resident school district and notify the district of their intention to participate in the opportunity scholarship program.
  • Eligible schools: qualifying opportunity scholarship schools are nonpublic schools located in Minnesota that agree to participate and enroll scholarship students.
• Funding and reimbursements
  • School districts must annually notify families about the option to participate and continue to count scholarship students as enrolled for revenue purposes.
  • The Department of Education (DOE) calculates the district’s average general education revenue per pupil (the per-pupil amount) and posts it publicly; districts inform participating families of the per-pupil amount each year.
  • The per-pupil amount is the maximum that may be transferred to the family for that school year to cover eligible expenses.
  • Districts must set up a process for families to submit tuition receipts and other eligible expense receipts for reimbursement; reimbursements to families occur within 30 days of receipt.
  • Districts are not required to provide regular (general education) services to scholarship students during the period the student receives the scholarship.
• Eligible expenses and accounts
  • Eligible expenses include tuition from the qualifying nonpublic school and other eligible costs under existing law (with one exception related to personal computers).
  • Personal computers for scholarship students are allowed with no $200 cap per family (the cap does not apply to these purchases under the scholarship program).
  • At year-end, remaining general education funds attributable to the scholarship student may be directed to the student’s 529 college savings plan or other approved options.
• 529 and custodial accounts
  • Districts must contribute remaining general education funds for the student to a 529 plan (qualified tuition plan) or, if not requested, deposit into a custodial Minnesota college savings plan.
  • Families have a deadline to provide documentation confirming 529 contributions; failure to document requires repayment to the district with interest.
  • If families do not request a funds transfer within 90 days after the school year ends, districts must establish a custodial account for the student in the Minnesota college savings plan and deposit remaining funds there.
• Admissions and enrollment rules
  • A student may enroll in a nonpublic qualifying school for the period the scholarship is active; the district continues to count the student as enrolled for ADM purposes and to receive revenue for that student.
• ADM (Average Daily Membership) changes
  • For fiscal year 2027 and later, membership includes students participating in the opportunity scholarship program.
  • If a student is enrolled in more than one district, the ADM is reduced proportionately so no student is counted more than once.
• Appropriation and funding
  • The bill provides an additional state appropriation from the general fund to the Department of Education to support the program and related general education aids, added to existing programs affected by the relevant statute.

Significant changes to existing law

• Adds the opportunity scholarship program (new statutory framework) under section 126C.105, with defined eligibility, eligible schools, and eligible expenses.
• Expands the concept of average daily membership to include students participating in the opportunity scholarship program, starting in fiscal year 2027.
• Creates new processes for districts to reimburse families and to transfer or custodialize remaining general education funds to 529 accounts or custodial accounts, changing how funds are allocated to students on scholarships.
• Establishes new duties for districts regarding annual family notifications, revenue calculations, and administration of reimbursements and contributions to 529 plans or custodial accounts.
• Provides an additional state appropriation to fund the program and related education aids.

Impact on districts, students, and families

• Districts will administer the program, reimburse families for eligible expenses, and manage the transfer or custodial handling of remaining funds.
• Scholarship students will receive funding through districts to attend qualifying nonpublic schools and may have their remaining funds contributed to 529 plans or custodial accounts.
• Regular district provision of general education services may be reduced or redirected for the period a student uses an opportunity scholarship.

Funding and administration overview

• The Department of Education will publish the per-pupil general education revenue amount and districts will inform families of available funding.
• Reimbursements are designed to be timely (within 30 days of receipt).
• Annual financial management requirements (receipts, deadlines, and documentation) govern how funds are allocated and transferred.

Relevant Terms - opportunity scholarship program - qualifying opportunity scholarship school - nonpublic school - Special School District No. 1 Minneapolis - Independent School District No. 625 St. Paul - average daily membership (ADM) - tuition receipts - eligible expenses - 529 account (qualified tuition plan) - custodial account - Minnesota college savings plan (chapter 136G) - general education revenue per pupil/unit - Section 290.0674 (eligible expenses) - 126C.05 subdivision 8 (existing ADM and funding provision) - 126C.105 (new program section) - Department of Education (DOE) - annual revenue notification and reimbursement timeline - absent/written withdrawal rules affecting ADM (15 days absence, 5 days in summer/intersession) - enrollment and revenue continuation for scholarship students - fiscal year 2027 implementation - additional state appropriation for general education aids