Bills look to expand North Dakota student opportunities through savings accounts

North Dakota lawmakers are weighing several proposals to establish Education Savings Accounts, but the eligibility, method of payment and amount students may receive differs.

Supporters say they want to give families more options but opponents object to using public dollars to pay for private school tuition.

Legislators have already demonstrated support for school choice, approving a bill in 2023 that would have provided $10 million in state funding to offset the cost of private school tuition for students who met income requirements. 

The bill was vetoed by then-Gov. Doug Burgum, who at the time said he supported the concept but didn’t think the bill went far enough to promote competition or expand options in rural areas. He also called for more transparency and accountability.

“I can say confidently today that he (Burgum) was most definitely correct,” said Sen. Michelle Axtman, R-Bismarck, during a hearing last week.

Axtman is the prime sponsor of Senate Bill 2400, which would provide a $1,000 Educational Savings Account for every student, whether they attend public or private school or are homeschooled. 

Students attending private schools could qualify for $2,500 or $4,000 per year if their households meet certain income thresholds.

“This bill isn’t about one educational option over another,” Axtman said. “This bill is about increasing educational opportunities for each and every North Dakota student.”

The savings accounts can cover tuition, fees, textbooks, school meals, educational therapy and tutoring, among other educational items and services. Axtman added North Dakota would be the first state to cover student mental health services through the accounts.

Participating private schools would have to meet accountability requirements. For example, students who pay for school with a voucher would need to participate in statewide tests, with school results presented to a legislative committee. The state superintendent of public instruction would administer and audit the program.

A fiscal note estimating the cost of the program had not been prepared as of last week.

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“Unless this is going to happen for free, the money is going to have to come from somewhere, and those are public dollars,” said Nick Archuleta, president of North Dakota United, a union representing teachers and public sector employees. 

Rick Diegel, superintendent of Kidder County Public Schools, used basic math during his testimony in opposition to Axtman’s bill and said the total for about 120,000 North Dakota students to receive at least $1,000 would bring the cost to about $120 million per school year.

In an interview, Axtman acknowledged $120 million per year would be a conservative estimate. She added she doesn’t expect every North Dakota student will use the entire amount in their savings account every year.

Alexandre Fall, a senior associate with Pew Charitable Trusts who has studied school choice programs, said Education Savings Accounts have increased in popularity since 2020. The costs can be difficult to estimate because budget analysts don’t know how many students will use the programs or transition from public to private education or homeschooling, he said.

“Once these programs become more popular, we’ll have a better understanding of the cost mechanisms and the shifts in enrollment,” Fall said. “But it’s a very new policy and it is surrounded by a lot of uncertainty.”

Archuleta said siphoning of tax dollars to fund something that isn’t for a public purpose, like private school tuition, means less money for public education, roads or anything else providing a public good for the state.

He said future Legislatures would need to continue funding the program, even in years with tight budgets.

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In Gov. Kelly Armstrong’s budget proposal, he calls for a 2% annual increase to the K-12 funding formula, or an additional $60 million, which would bring total K-12 education spending to $3.12 billion for the 2025-27 biennium. 

“We don’t think it’s enough,” Archuleta said. “I think we can do better.” 

Armstrong’s budget also included $44.3 million for Education Savings Accounts.

Supporters of school choice, including Armstrong, have said the initiatives can be funded in addition to the traditional K-12 system.

Page Forrest, a senior associate with Pew Charitable Trusts, said education systems across the country have faced budget crunches, in part due to the expiration of federal pandemic aid.

“If budgets continue to tighten across the country, that means it may feel like public schools and nonpublic alternatives are competing for an increasingly smaller piece of the pie, even if they are being funded as separate entities,” Forrest said.

Competing proposals

A separate proposal from Rep. Pat Heinert, R-Bismarck, takes a different approach. House Bill 1590 would establish what he calls education services accounts that would require matching dollars from families.

Families can deposit up to $2,000 per child and the Bank of North Dakota would provide funds to match 50%.

The dollars could be spent on private school tuition, dual-credit courses, vocational and technical courses, online courses and other approved programs.

Students could use the money in the accounts to pay for school meals, tutoring, mental health counseling and special needs programs, higher education entrance exams, other educational materials and education-related camps.

“Every student in the state of North Dakota is eligible to participate at whatever dollar amount they are comfortable putting into an account,” Heinert said. “The idea of a match is not acceptable to many, but I think it makes the program go farther.”

Legislative Council estimates the program would cost $41.2 million.

Heinert’s bill is a pilot program that would run through the 2026-27 school year.

“We’ve got two years to look at this,” he said. “We’ve never done this before in North Dakota. We’ve tried. We’ve never got it accomplished. It’s time though.”

Two similar proposals would provide state funding to be used toward private school tuition or homeschool expenses.

Senate Bill 2303, sponsored by Sen. Mike Wobbema, R-Valley City, and House Bill 1540, sponsored by Rep. Ben Koppelman, R-West Fargo, would deposit 80% of the amount allocated to public school students, or more than $8,800, into an Education Savings Account. Another 20% would be transferred to the student’s home public school district. The dollars could be used for education-related expenses, but the participating student must be counted in their home school district to provide accurate state aid payments. 

The proposals don’t have any income requirements. The Bank of North Dakota would administer the accounts. 

The estimated cost for each bill is $243 million for 2025-2027 based on the current enrollment of private and homeschooled students. 

House Bill 1607, sponsored by Rep. Matthew Heilman, R-Bismarck, would provide state dollars for private school students. His proposal would provide the full per-pupil state aid payment, or about $11,000, for each student to be used on eligible education expenses. The families would receive the dollars on a debit card. The estimated cost is $179 million for 2025-2027. The proposal does not have income requirements.

In all cases, the actual cost of the school choice programs would depend on how many people participate. 

No action has been taken on the proposals, which had public hearings last week. The Senate and House education committees are expected to discuss education savings accounts this week.