House Bill 1050

AN ACT TO AMEND SECTION 37-181-11, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR THE ISSUANCE OF ESA PROCUREMENT CARDS AND THE REGULATION AND ENFORCEMENT RELATING TO THE USE OF SUCH CARDS BY THE DEPARTMENT OF FINANCE AND ADMINISTRATION, THE STATE DEPARTMENT OF EDUCATION OR QUALIFIED NONPROFIT ADMINISTERING THE PROGRAM; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. Section 37-181-11, Mississippi Code of 1972, is amended as follows:

37-181-11. (1) To ensure that funds are spent appropriately, the State Department of Education shall adopt rules and policies necessary for the administration of the program, including the auditing of Education Scholarship Accounts, and shall conduct or contract for random audits throughout the year.

(2) (a) The department or qualified nonprofit shall develop a system for payment of benefits, including, but not limited to, allowing educational service providers to invoice the department or designated nonprofit for qualified expenses consistent with Section 37-181-5(2), or * * *~~allowing parents to seek reimbursement~~ issuing ESA procurement cards provided by the Department of Finance and Administration for the use of parents making qualified expenses consistent with Section 37-181-5(2). ESA cards may be issued to parents upon entry to the program and shall expire when the participating student's Education Scholarship Account is closed, except for the periodic expiration and replacement of cards in the normal course of business. All unexpended amounts shall remain in the student's ESA, combined with the following year's allocation of ESA funds, except upon the occurrence of an event that will preclude a student's participation in the ESA program as provided under Section 37-181-5(6) and (8), when any remaining funds shall be returned to the state's General Fund.

(b) (i) The department or qualified nonprofit may make payments to educational service providers or reimbursement to parents via check or warrant or electronic funds transfer or any other means of payment deemed to be commercially viable or cost-effective.

(ii) If ESA procurement cards are issued, the Department of Finance and Administration may deduct an amount up to a limit of one percent (1%) from appropriations used to fund Education Scholarship Accounts to cover the cost of providing the procurement cards. The Department of Finance and Administration, taking into consideration requests from the parents of participating students, shall use Merchant Category Classification Codes (MCC Codes), or a similar system as practicable and consistent with current technology, to identify categories of providers that provide services and products consistent with Section 37-181-5(2). The Department of Finance and Administration shall make publicly available a list of blocked and unblocked MCC Codes, for the purposes of the program.

(c) The department may also establish by rule that some payments to educational service providers will be made on a quarterly basis, rather than an annual basis, if the educational services will be rendered over an extended period of time.

(3) The department shall adopt a process for removing educational service providers that defraud parents and for referring cases of fraud to law enforcement.

(4) The department shall establish or contract for the establishment of an online anonymous fraud reporting service.

(5) The department shall establish or contract for the establishment of an anonymous telephone hotline for fraud reporting.

(6) The department or qualified nonprofit shall promulgate regulations implementing policies on misspending of ESA funds with procurement cards. Any amount not spent in the allowable categories pursuant to the agreement will:

(a) Cause the ESA procurement card to be temporarily suspended and the parent contacted through the mail at the home address by a notification explaining the suspension, detailing the violation and requesting the parent to:

(i) Provide additional documentation justifying the expenditure; or

(ii) Repay the misspent amount within fifteen (15) business days.

(b) If the parent does not provide sufficient documentation or refuses to repay the amount, the department or qualified nonprofit shall begin the removal process and shall seek to recover the misspent funds using administrative measures or other appropriate measures, including referral to collections, seeking a civil judgment, or referral to law enforcement.

(c) If the parent repays the amount within the requested timeframe then one (1) offense will be recorded and held in the parent's file.

(d) Three (3) offenses within a consecutive three-year period shall disqualify the parent's student from participating in the program.

(e) If the department or qualified nonprofit determines a parent has failed to comply with the terms of the agreement as specified in Section 37-181-5(1), the department or qualified nonprofit shall suspend the participating student's ESA and shall notify the parent in writing that the Education Scholarship Account has been suspended and that no further transactions will be allowed or disbursements made. The notification shall specify the reason for the suspension and state that the parent has twenty-one (21) business days to respond and take corrective action.

(f) If the parent fails to contact the department or qualified nonprofit, furnish reasonable and necessary information, or make a report that may be required for reinstatement within the twenty-one-day period, the department or qualified nonprofit may remove the parent and their participating student(s) from the program.

(g) A parent may appeal the department or qualified nonprofit's decision to the circuit court in the county in which the participating student resides.

(h) The department or qualified nonprofit shall refer cases of substantial misuse of funds to law enforcement agencies for investigation if evidence of fraudulent intent and use of an ESA is obtained.

SECTION 2. This act shall take effect and be in force from and after July 1, 2017.