‘Most documents pertaining’ to Education Freedom Accounts won’t be available during process

By Susan Geier, Granite State News Collaborative

Sometime next spring, the public will get to see a performance audit of the N.H. Department of Education’s oversight of the Education Freedom Account program, which gives millions of tax dollars to eligible families to spend on private, parochial and home school expenses. 

But the audit will be missing “most documents pertaining to the EFA program” due to the “lack of access to primary program data and information,” according to the Office of the Legislative Budget Assistant, which is responsible for conducting the audit.

The scope of the audit was approved with noted limitations at the Aug. 27 meeting of the Joint Legislative Performance Audit and Oversight Committee, which oversees the LBA. What can be included in the audit has been subject to months of meetings and disagreement among the LBA, committee members, the education department, and the N.H. Department of Justice over who owns the Education Freedom Account program information.

House Bill 1135, which was signed into law by Gov. Chris Sununu in July 2022, requires the LBA to complete a performance audit of the N.H. Department of Education’s operation of the program, which a third party runs through a contract signed with the department.

Under the bill, which went into effect in October 2023, the audit is supposed to include a review of the eligibility of participants, expenditures of the program and identification and recovery of possible ineligible reimbursements. Also to be audited would be the “procedures and controls” involved in disbursing the funds to the Children’s Scholarship Fund as well as demographic and geographic data about students taking part in the program in the 2020-21 school year. The New York-based Children’s Scholarship Fund (CSF) is the third-party contractor that administers the EFA.

In its audit scope statement, the LBA wrote, “most documents pertaining to the EFA program are solely in the possession of (the Children’s Scholarship Fund). For example, NHED does not currently possess policies, procedures, internal memoranda, or internal guidance developed by CSF to implement the program … or documents associated with initial EFA applications, documents used for determining eligibility for differentiated aid or annually verifying residency, or specific items purchased by each student with EFA funds.”

The Education Freedom Account has been subject to a partisan divide since a sole-source contract (see PDF attached) to manage the program and distribute the money was awarded to the Children’s Scholarship Fund. Democrats and others say it diverts essential public school funds, while Republicans and program supporters say it gives parents education choice.

Since its inception in 2021, the taxpayer-funded voucher-like program has distributed almost $45 million to families sending their children to private schools and other alternatives to their local public schools.

Debate over access

Education Commissioner Frank Edelblut — backed by Christopher Bond, general counsel for the state Department of Justice — said the state isn’t compelled to ask for those documents, and asking the Children’s Scholarship Fund for the items violates the separation of powers between the legislative and executive branches. Edelblut also admonished the LBA for reaching out directly to the scholarship fund for information.

State Rep. Lucy Weber, D-Walpole, a member of the committee, said the separation of powers argument makes no sense.

“The Legislative Budget Assistant audits executive branch actions. That’s what they do,” she said. “The purpose of the LBA is to ensure the executive branch is carrying out its duties in accordance with statues.”

The education department said chapter laws only give the LBA the authority to audit the department’s oversight of the program, and not the documents and other materials it says are the property of the Children’s Scholarship Fund — not the state.

In its scope statement, the LBA also noted the education department and justice department interpretation of the state’s standard contract — which is required to be used by all state agencies when contracting for services — does not consider data collected or generated by the contractor to be the property of the state.

But Weber and other Democratic committee members remain unconvinced.

State Sen. Cindy Rosenwald (D-Nashua) has criticized the decision to limit auditor access to Education Freedom Account information, saying that, despite Department of Education claims, the program ‘is not unique.’ (Courtesy photo)

The committee’s chair, state Sen. Cindy Rosenwald, D-Nashua, said every state contract with another entity uses the same “boilerplate” property ownership/disclosure language that’s in the Children’s Scholarship Fund contract.

“Look at the Medicaid program,” Rosenwald said at the August meeting. “The state really owns all the data even though most of Medicaid is managed by private entities. This is not unique.”

The property ownership/disclosure provision, for example, is in the sole-source contracts the N.H. Department of Energy has with the five community action agencies, which operate and deliver weatherization services across the state. The program helps low-income households reduce energy costs and is funded through grants from the U.S. Departments of Energy and Health and Human Services.

In its 2023 performance audit of the weatherization program, the LBA interviewed the state program manager, other department management and staff, and community action weatherization representatives.

Additionally, auditors viewed documentation for each of the agencies generated from the five on-site monitoring visits. They looked at a variety of program documents, including monthly expenditure, status and production reports that were submitted by the community action agencies to the state. The status reports, for example, include program highlights, problems, production issues, and deviations from the work plan. The monthly expenditure reports contain year-to-date expenditures, budgeted amounts, and details like job cost sheets.

But state Rep. Kenneth Erf, R-Weare, a committee member, said in an interview that program audits may not always be consistent in how they are handled. In an interview, a fellow committee member, Rep. Kenneth Weyler, R-Kingston, agreed with Erf: “I’ve been reading audits for 30 years. None of these things are straightforward and none of these things are easy to do.”

Rep. Kenneth Weyler (R-Kingston) defended the limited Education Freedom Account audit. ‘I’ve been reading audits for 30 years. None of these things are straightforward and none of these things are easy to do,’ he said. (Screenshot)

Both men, however, said questions about the ownership of documents and the Education Freedom Account program are just more partisan attacks by Democrats trying to kill education choice. Democrats on the committee, such as Weber and Rosenwald, also agreed the situation is political, but they charge the education department is trying to obscure how the program is being run.

A matter of interpretation

At the August meeting, Sen. Howard Pearl, R-Loudon, did ask if the LBA had ever run into this issue before.

“I don’t recall ever running into an issue of this magnitude,” Christine Young, LBA’s director of audits, testified. “This is a little different, with the program being established in the chapter law and directing us to do an audit through the chapter law versus this committee directing us to do an audit.”

Jay Henry, LBA’s audit supervisor, specifically mentioned auditing other contractors, adding it’s possible those contracts have different or stronger language that allow access to program data.

“To me, it's an interpretation of the state contract,” Henry testified. “We're abiding by their interpretation of how the contract and the law is. I think we’re still going to get a good audit out of it. It just won't be as thorough as it normally would have.”

The original contract with the Children’s Scholarship Fund was approved by the Executive Council Aug. 4, 2021. Councilor Cinde Warmington, D-Concord, cast the lone dissenting vote. She expressed concern that taxpayer money would be used to pay for private schools and that families don’t have to prove they meet the income eligibility criteria after the first year.

To qualify for Education Freedom Account money, a family household income may not exceed 300 percent of the poverty level. In 2021, that was $79,500 for a family of four, and now it is $93,600.

Once a family has been means-tested, it doesn't have to prove income while the child is in school up to age 20.

At that 2021 meeting, Gov. Chris Sununu said that it would be disruptive if a family had to change schools because of a change in income and that students in the public education system aren’t means-tested. The focus of the Education Freedom Account, he said, is providing another educational pathway for New Hampshire students.

In an email statement about the EFA audit, Young wrote, “We know in some cases the data and related materials were regularly collected by the state agency and were therefore easily accessed by us for audit purposes,” adding LBA staff have interviewed representatives of contractors to help them understand how a state program is performing.

Bond, the Department of Justice counsel, said at the March 18 committee meeting and reiterated in an email to the Granite State News Collaborative that the chapter law around the Education Freedom Account doesn’t mean the state could never look at the contested information, and there could be other avenues, “including a direct audit of the scholarship organization.”

“The ultimate issue could be the language of the law, which focuses the audit process on the Department of Education but not on the scholarship organization itself,” Bond testified.

He added: "I don't think the program is un-auditable, but we don't think this chapter law gets to the scholarship organization through the vehicle of this vendor contract.”

These articles are being shared by partners in the Granite State News Collaborative. For more information, visitcollaborativenh.org.