EDUCATION OPPORTUNITY ACCOUNT ACT

HB0240

HOUSE BILL 240

57th legislature - STATE OF NEW MEXICO - second session, 2026

INTRODUCED BY

Rod Montoya
and
Gail Armstrong
and
Elaine Sena Cortez

and
John Block
and
Jenifer Jones

AN ACT

RELATING TO EDUCATION; ENACTING THE EDUCATION OPPORTUNITY
ACCOUNT ACT; PROVIDING POWERS AND DUTIES; PROVIDING FOR
EDUCATION OPPORTUNITY ACCOUNTS; PROVIDING ALLOWABLE USES;
PROVIDING PROCEDURES AND APPLICATION REQUIREMENTS FOR PARENTS
AND EDUCATION SERVICE PROVIDERS; CREATING A REVIEW COMMISSION;
MAKING APPROPRIATIONS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1.
A new section of the Public School Code is
enacted to read:

"[
NEW MATERIAL
] SHORT TITLE.--This act may be cited as the
"Education Opportunity Account Act"."

SECTION 2.
A new section of the Public School Code is
enacted to read:

"[
NEW MATERIAL
] DEFINITIONS.--As used in the Education
Opportunity Account Act:

A. "curriculum" means a complete course of study
for a particular elementary or secondary content area or grade
level;

B. "education" means elementary or secondary
education;

C. "education opportunity account" means the
account into which money is deposited by the department to pay
for qualifying education expenses of a participant in the
program;

D. "education service provider" means a private
school located in New Mexico that is qualified to provide
educational goods and services to participants and that
receives payments from education opportunity accounts; provided
that "education service provider" does not mean an online
school;

E. "eligible child" means a school-age person who
is a resident of New Mexico, who has not received a high school
diploma or a high school equivalency credential and who is
eligible for enrollment or re-enrollment in a public school;

F. "participant" means a child who is participating
in the program; and

G. "program" means the education opportunity
account program."

SECTION 3.
A new section of the Public School Code is

enacted to read:

"[
NEW MATERIAL
] EDUCATION OPPORTUNITY ACCOUNT FUND--CREATED.--

A. The "education opportunity account fund" is

created as a nonreverting fund in the state treasury. The fund
consists of money appropriated by the legislature, federal
money granted to the state for the purposes of the fund, income
from investment of the fund and money otherwise accruing to the
fund. The department shall administer the fund, and money in
the fund is appropriated to the department to carry out the
purposes of the Education Opportunity Account Act.

B. Money in the fund shall be disbursed on warrants

signed by the secretary of the department pursuant to vouchers
signed by the secretary or the secretary's authorized
representative."

SECTION 4.
A new section of the Public School Code is
enacted to read:

"[
NEW MATERIAL
] EDUCATION OPPORTUNITY ACCOUNT PROGRAM--
CREATED--FUNDING USES.--

A. The "education opportunity account program" is
created in the department to allow the department, in contract
with a parent of a participant in the program, to pay for that
participant's qualified education expenses as provided in
Subsection B of this section through "education opportunity
accounts". The department:

(1) shall establish an education opportunity
account for a participant of the program;

(2) shall determine the amount each
participant is eligible to receive, which amount is equal to
the average amount spent by school districts and charter
schools on public school students in the same grade, weighted
by special education and at-risk program units, if applicable;
provided that a participant shall not receive more than that
participant's qualifying education expenses;

(3) shall make monthly deposits into each
education opportunity account; and

(4) may contract for financial management
services for education opportunity accounts.

B. Money in a participant's education opportunity
account shall be used by the department, in contract with a
parent of the participant, only in accordance with the
provisions of the Education Opportunity Account Act and only
for the participant's following qualifying education expenses:

(1) tuition and fees at a private elementary
or secondary school that teaches, among other courses, reading,
language arts, mathematics, science and social studies
appropriate for the grade level of the participant;

(2) tutoring services provided by a qualified
person;

(3) textbooks and other instructional
materials, including computer hardware and software, required
by the education service provider to deliver education to the
participant;

(4) fees for nationally standardized
assessments, advanced placement examination fees and other
assessments required by the education service provider;

(5) tuition or fees for summer and after-school elementary or secondary programs;

(6) public transportation to and from school;
and

(7) other educational charges approved by the
department.

C. The department and the parent of a participant
shall enter into an annual contract that specifies what
qualifying education expenses will be purchased each semester
or other term, the cost of the educational services to be
provided and by whom the educational services will be provided.
The department shall not deposit into an education opportunity
account more than the combined cost of educational services
provided to the participant in that year. A parent shall not
pay more for educational services than the parent of a
similarly situated school-age person pays. Money in an
education opportunity account shall not be refunded, rebated or
shared with a parent or participant in any manner. A refund or
rebate for educational services purchased through an education
opportunity account shall be credited directly to that account.
A parent may make payments for the cost of educational services
not covered by an education opportunity account, but in no case
shall a parent deposit personal funds into a participant's
account.

D. Payments from a participant's education
opportunity account shall be issued at the direction of the
participant's parent to an education service provider, in the
name and for the benefit of the participant.

E. If an education service provider requires
partial payment of tuition or fees prior to the start of the
academic year to reserve space for a participant admitted to
the education service provider, such partial payment may be
paid by the department prior to the start of the school year in
which the education opportunity account is awarded and deducted
in an equitable manner from subsequent monthly account deposits
to ensure that adequate funds remain available throughout the
school year; provided that if the participant does not attend
the education service provider to which partial payment was
made, the partial payment shall be returned in full to the
department by the education service provider for credit to the
account.

F. Funds deposited in an education opportunity
account shall not constitute taxable income for state tax
purposes of the parent or the participant.

G. Except as provided in Subsection H of this
section, any unexpended balance in an education opportunity
account may remain in the account until one of the following
occurs, at which time the department shall close the account
and the unexpended balance shall revert to the general fund:

(1) the parent withdraws the participant from
the program;

(2) the participant graduates from high
school; or

(3) the account is closed by the department
because of misuse of funds as determined by the department.

H. The department shall revert unexpended balances
every two years unless it waives the reversion of a specific
education opportunity account for extenuating circumstances.

I. Nothing in the Education Opportunity Account Act
shall be construed to require a participant to be enrolled only
in a private school, but the participant must be in compliance
with the Attendance for Success Act."

SECTION 5.
A new section of the Public School Code is
enacted to read:

"[
NEW MATERIAL
] EDUCATION OPPORTUNITY ACCOUNT--APPLICATION
PROCESS--RENEWAL--SUSPENSION.--

A. A parent may apply to the department to
establish an education opportunity account for an eligible
child.

B. The department shall accept and approve
applications year-round and shall establish procedures and
rules for approving applications in an expeditious manner.

C. The department shall create a standard
application for an education opportunity account and procedures
for submission of the application. A completed application
shall be submitted by a parent to establish a child's
eligibility for participation in the program. The department
shall ensure that the applications and procedures are publicly
available and an application may be submitted through various
sources, including the department's website.

D. The department shall approve an application for
an education opportunity account submitted by a parent if:

(1) the parent submits the application in
accordance with the procedures established by the department;

(2) the child, on whose behalf the parent is
applying, is eligible to participate in the program;

(3) funds are available for the program or the
education opportunity account; and

(4) the parent signs a contract with the
department agreeing:

(a) to provide an education for the
child in at least the subjects of reading, language arts,
mathematics, science and social studies;

(b) not to enroll the child as a
full-time student in a public school while participating in the
program;

(c) to use the funds in the education
opportunity account only for qualifying education expenses to
educate the child; and

(d) to comply with the rules and
requirements of the program.

E. The department shall annually renew a
participant's education opportunity account if funds are
available.

F. Upon notice to the department, a participant may
choose to stop receiving education opportunity account funding
and enroll as a full-time student in a public school. A
participant's enrollment as a full-time student in a public
school shall result in the immediate suspension of payment of
additional funds into the participant's education opportunity
account; provided that, for an education opportunity account
that has been open for at least one full school year, the
department may allow the account to remain open and active for
the parent to pay qualifying education expenses to educate the
participant from money remaining in the account. The
department shall revert unexpended balances in a participant's
education opportunity account and close the account at the
beginning of the next school year if the participant is
enrolled in a public school.

G. If a former participant who is an eligible child
decides to return to the program, payments into the child's
education opportunity account may resume if the account is
still open and active. If the child's previous education
opportunity account is closed, a new account may be
established.

H. The department shall adopt rules to provide the
least disruptive process for a participant who chooses to stop
participating in the program and enroll full time in a public
school."

SECTION 6.
A new section of the Public School Code is
enacted to read:

"[
NEW MATERIAL
] EDUCATION SERVICE PROVIDERS--
APPLICATIONS--AUTONOMY--NOT ACTING FOR THE STATE--DEPARTMENT
POWERS AND DUTIES.--

A. The department by rule shall provide the
application process and procedures for prospective education
service providers to apply for listing as an eligible education
service provider. An application form signed by a prospective
education service provider warrants that the education service
provider:

(1) will not refund, rebate or share money
from education opportunity accounts with parents or
participants and shall return refunds to the department; and

(2) will provide the education services
contained in the agreement entered into with a parent.

B. An education service provider is not an agent of
the state or federal government, a local school board or school
district or governing authority or charter school. No action
of an education service provider shall be construed as an
action by the state or any of its departments, institutions or
political subdivisions.

C. An education service provider shall not be
required to alter its creed, practices, admissions policy or
curriculum to accept payments pursuant to the Education
Opportunity Account Act except as provided in that act.

D. The department may:

(1) contract with private organizations to
administer the program or specific functions of the program,
including contracting with private financial management firms
to manage education opportunity accounts;

(2) withhold from deposits or deduct from an
education opportunity account an amount to cover the costs of
administering the program, in an amount up to a maximum of five
percent annually in the first two years of the program and up
to a maximum of three percent annually thereafter;

(3) bar an education service provider from
accepting payments from education opportunity accounts if the
department determines that the education service provider has:

(a) substantially misrepresented
information or failed to refund any overpayments in a timely
manner; or

(b) failed to provide participants with
sufficient educational goods or services;

(4) accept gifts, grants and donations from
any source to cover administrative costs, to inform the public
about the program or to fund additional education opportunity
accounts; and

(5) adopt rules in accordance with the State
Rules Act that are consistent with the Education Opportunity
Account Act and necessary for the administration of that act,
including rules:

(a) establishing or contracting for the
establishment of an online anonymous fraud reporting service;

(b) establishing an anonymous telephone
hotline for fraud reporting;

(c) requiring a surety bond for
education service providers receiving more than one hundred
thousand dollars ($100,000) in education opportunity account
funds; or

(d) for refunding payments from
education service providers to education opportunity accounts."

SECTION 7.
A new section of the Public School Code is
enacted to read:

"[
NEW MATERIAL
] DEPARTMENT ADDITIONAL POWERS AND DUTIES.--The department shall:

A. maintain an updated list of qualified education
service providers and ensure that the list is publicly
available through various sources, including the department's
website;

B. provide parents with a written explanation of
the allowable uses of education opportunity account funds, the
responsibilities of parents in ensuring the education of their
children, the duties of the department and the role of any
private financial management firms or other private
organizations that the department may contract with to
administer the program or any aspect of the program;

C. ensure that parents of children with
disabilities receive notice that participation in the program
is a parental placement pursuant to the federal Individuals
with Disabilities Education Act, along with an explanation of
the rights that parentally placed children may possess under
federal law and any applicable state laws and rules;

D. implement a commercially available, cost-
effective and user-friendly payment system for processing
payments for services from an education opportunity account to
an education service provider by electronic or online funds
transfer; provided that the department:

(1) provides flexibility to parents by
facilitating direct payments to education service providers or
requests for preapproval of and reimbursements for qualifying
education expenses; and

(2) may contract with private institutions to
develop the payment system;

E. implement, as soon as practicable, a
commercially available, cost-effective and user-friendly system
as part of the same payment system for parents to publicly
rate, review and share information about education service
providers;

F. continue making deposits into a participant's
education opportunity account until the:

(1) department is notified or determines that
the participant is no longer participating in the program;

(2) participant withdraws from the program;

(3) participant enrolls full time in a public
school;

(4) participant graduates from high school; or

(5) department determines that there was
misuse of the funds in the participant's education opportunity
account;

G. audit individual education opportunity accounts;

H. determine a parent or participant ineligible for
the program in the event of misuse of education opportunity
account funds; provided that if a parent is determined to be
ineligible for the program but the participant is free from
personal misconduct, that participant may be eligible for an
education opportunity account if placed with a new guardian or
other person with the legal authority to act on behalf of the
participant;

I. create a fair process to determine whether a
misuse of education opportunity account funds has occurred;

J. refer cases of misuse of education opportunity
account funds to law enforcement when evidence of fraudulent
use of the account funds exists; and

K. create a fair process to determine whether an
education service provider may be barred from receiving
payments from education opportunity accounts; provided that:

(1) an education service provider may appeal
the department's final decision to bar the education service
provider from receiving payments from education opportunity
accounts;

(2) an education service provider aggrieved by
a final decision of the department may appeal the decision to
the district court pursuant to the provisions of Section
39-3-1.1 NMSA 1978; and

(3) if the department bars an education
service provider from receiving payments, the department shall
notify parents of participants of the department's decision."

SECTION 8.
A new section of the Public School Code is
enacted to read:

"[
NEW MATERIAL
] PARTICIPANT RECORDS.--Upon being notified
that a participant is enrolled with an education service
provider, a public school that previously enrolled the
participant as a student shall provide the education service
provider with that previously enrolled student's school
records. The public school and the education service provider
shall comply with the provisions of the federal Family
Educational Rights and Privacy Act of 1974 when sharing student
records."

SECTION 9.
A new section of the Public School Code is
enacted to read:

"[
NEW MATERIAL
] EDUCATION OPPORTUNITY REVIEW COMMISSION.--

A. The department shall create the "education
opportunity review commission" to assist the department in
determining what expenditures meet the requirements to be
considered qualifying education expenses to educate a
participant and to provide recommendations to the department on
how to implement, administer and improve the program.

B. The education opportunity review commission
consists of nine voting members who shall be:

(1) five parents of participants and represent
no fewer than four counties of the state; and

(2) four New-Mexico-licensed educators.

C. The voting members shall be appointed by the
secretary and shall serve at the pleasure of the secretary.
The secretary, or the secretary's designee, shall serve as the
nonvoting chair of the education opportunity review commission.

D. The department may request that the education
opportunity review commission meet, in person or through a
virtual or telephonic platform, to:

(1) determine whether an expenditure from an
education opportunity account is or was a qualifying education
expense; and

(2) review appeals of denials of an education
service provider and make a recommendation to the secretary.

E. When requested, the education opportunity review
commission shall, by majority vote, recommend to the
department:

(1) if a particular use of funds constitutes a
qualifying education expense; and

(2) if an education service provider should be
allowed to receive, or continue receiving, payments from
education opportunity accounts."

SECTION 10.
A new section of the Public School Code is
enacted to read:

"[
NEW MATERIAL
] REPORT TO LEGISLATURE AND GOVERNOR.--The
department shall report to the legislature and the governor by
December 1 of each year on the program and its participants.
The report shall include the number, grades and ages of
participants and where those participants attend school or
receive other educational services; the geographic distribution
of participants by county; other demographic and economic data
about participants and parents; the number and locations of
education service providers, the services they provide and the
number of participants they serve; the total amount of deposits
into education opportunity accounts and the cost of financial
management contracts; the total expenditures for education
service providers and the average cost of educational services
being provided to participants, by type of service and
geographic region; and other information requested by the
legislature or governor and considered reportable by the
department."

SECTION 11.
APPROPRIATIONS.--

A. The following amounts are appropriated from the
general fund to the education opportunity account fund for
expenditure in fiscal year 2027 and subsequent fiscal years for
the following purposes:

(1) five hundred eighty thousand dollars
($580,000) for the public education department to administer
the education opportunity account program; and

(2) one hundred million dollars ($100,000,000)
to carry out the purposes of the Education Opportunity Account
Act.

B. The public education department shall not
retain, assess, charge or expend any portion of the dollars
appropriated in Subsection A of this section for indirect
costs, overhead or any purpose other than administration of the
education opportunity account program, and the amounts
appropriated shall not be transferred to any other program or
fund.

C. Any unexpended balance remaining at the end of a
fiscal year shall not revert to the general fund.

SECTION 12.
SEVERABILITY.--If any part or application of
the Education Opportunity Account Act is held invalid, the
remainder or its application to other situations or persons
shall not be affected.

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