Home Local News Column: 529 plans now cover K-12

Column: 529 plans now cover K-12

9 min read

529 plans now cover K-12

During my 21 years in the New Mexico State Senate, education has been a major focus of my service.

As a retired educator, my participation on the Legislative Education Study Committee during the interim and my membership on the Senate Education Committee during the regular session gives me an opportunity to share my experience but at the same time learn how education policies are determined and implemented statewide.

During the recent 2023 legislative session, we continued to seek ways to improve the delivery of education to over 322,000 students across New Mexico. Providing a sufficient education to the children of our state is a constitutional requirement.

We continue to debate what sufficiency means and how we accomplish court mandated requirements as a result of the Martinez versus Yazzie lawsuit.

Funding plays a major role in providing sufficient educational experiences but adopting good policies, in my view, may play an even greater role in improving the outcomes of our student achievement.

We increased funding by 8 percent from the previous year, which included a 5 percent average salary increase for public school employees, but what did we do in the area of improving education through policy changes?

Not much.

We did pass House Bill 126, which made changes to graduation requirements, including lowering the number of credits required to graduate high school to 22, removed algebra II as a required course and eliminated the requirement students take a dual credit, advanced placement or distance learning course.

The governor vetoed HB 126 which caught everyone by surprise.

Though I agreed the flexibility regarding math credits would be helpful for our students on a vocational pathway to graduation, reducing credit requirements was concerning, as I believe many districts would adopt the policy of requiring only 22 credits, leaving our students less prepared for college or work.

I am confident the Hobbs Municipal Schools will continue their policy of requiring 26 credits for graduation.

The Legislature also passed SB 4, which provides school breakfast and lunch to all students for free, regardless of family income.

Our district implemented the policy of providing free breakfast and lunch several years ago following the passage of legislation that disallowed districts from collecting past due charges for lunch. With SB 4 districts will now receive funding for an already existing policy.

The main purpose of this column is to inform about an “under the radar” bill that passed the legislature with little debate and no opposition.

HB 342/a would align provisions of state law with Section 529 of the Internal Revenue Code — which covers qualified tuition programs.

It would allow New Mexico’s 529 college savings plan to be used for any “college, university, vocational school or post-secondary institutions recognized by the United States Department of Education.”

According to the Financial Impact Report provided by the Legislative Finance Committee, New Mexico is one of only four states that does not impose a cap on the amount an individual can contribute to a 529 account, and subsequently claim as deduction from their state income tax liability.

Individuals can contribute to their 529 plan until their account balance reaches $500,000.

Though 529 College Savings Plans have been in place for many years, the expanded qualified education expenses now include tuition up to $10,000 a year for kindergarten through 12th grade.

The inclusion of private education expenses is a component of the amended bill matching the broader federal definition of “qualified expenses.”  Also included are expenses up to $15,000 a year to an ABLE account for individuals with disabilities.

Other allowed expenses currently in place are tuition and fees, books and supplies, room and board for beneficiaries attending on at least a half-time basis, computer technology, equipment, internet access and expenses for educational special needs services.

What is the tax benefit to New Mexico taxpayers? Earnings and withdrawals from a 529 account are exempt from federal taxation if they are used for qualified educational expenses as listed above. 100 percent of a contribution is deductible from their state taxable income in the year they contribute to the account.

Clearly this is an opportunity for parents of K-12 students to have a choice in where they enroll their children for school and receive a tax benefit if choosing private education.

HB/a 342 was introduced by Senate Majority Leader Peter Wirth, D-Santa Fe, and House Minority Leader Ryan Lane, R-San Juan. This bipartisan legislation will be of benefit to those individuals planning to fund the education of their children or grandchildren and at the same time receive a tax benefit on their investment.

Any decision to invest in a 529 College Savings Plan should include consultation with your accountant or financial advisor. Additional information may be found at www.TheEducationPlan.com.

Sen. Gay Kernan, R-Hobbs, represents District 42 in the N.M. Legislature.

Load More Related Articles
Load More By Hobbs News-Sun
Load More In Local News
Comments are closed.

Check Also

Hobbs Library hosting annual Summer Reading Program

Breaking the summer slide Hobbs Library hosting annual Summer Reading Program Andy Brosig …