Democrats call for deeper audit of New Hampshire Education Freedom Account after initial review
Published: 09-03-2024 10:53 AM |
In five cases, families approved for an Education Freedom Account did not present sufficient documentation that they lived in New Hampshire, according to a Department of Education review.
In two cases, families were found to be above the income limit when factoring in their total gross income — which the program administrators did not do.
Ever since New Hampshire lawmakers passed the program in 2021 — which allows lower-income families to access annual state education funds to use toward private and homeschooling expenses — the state has relied on one organization to administer the program: the Children’s Scholarship Fund.
The New York-based nonprofit is responsible for screening and approving applicants to the program, vetting the eligibility of the private schools, programs and education expenses to receive funds from the program, and managing the funds used by the families who qualify.
But a review of the application process conducted by the Department of Education in 2023 found that CSF staff made a number of errors in the first two years of the program that resulted in some applicants being approved without sufficient documentation. The review of 50 random applications found 12 approvals in which there was not sufficient evidence at the time to have approved it.
The CSF has paid the state back $18,000 for two of the approvals in which participants were found not to be eligible. Ten of the 12 approvals were substantiated by further review. And CSF Director Kate Baker Demers said the organization has updated its guidelines and held training sessions with staff to ensure the problems don’t happen again.
“We appreciated the feedback on our operations and our methodologies, because we’re all working together, us and the (Department of Education) to make the program better every day,” she said.
But New Hampshire Democrats have seized on the report to argue that the EFA program has been spending money irresponsibly and needs further state scrutiny.
Article continues after...
Yesterday's Most Read Articles
“These findings are deeply alarming and warrant an immediate and thorough audit by the state legislature,” said House Democratic Leader Matt Wilhelm, of Manchester, in a statement.
The EFA program allows people making up to 350 percent of the federal poverty level — $109,200 for a family of four — to receive the portion of state adequacy funds that follow their child if they attended public school. That amounts to $4,100 for each student per year, plus an additional $2,300 for students in households making up to 185 percent of the federal poverty level, an extra $2,100 for students receiving special education services, and an additional $800 for English language learners. The funds are held in accounts administered by CSF and may only be used for approved expenses, which can include tuition, technology, uniforms, supplies, and more.
In order to be approved for the funding, families must apply to CSF and provide documentation indicating they are New Hampshire residents, their household makes below the 350 percent income threshold, and any additional documents proving they require special education services or are English language learners, if applicable.
In May 2023, the state Department of Education’s EFA administrator, Brian Voelk, led a review of 50 randomized applications approved by CSF for the 2021-22 and 2022-23 school years.
That review found issues in five areas of the approval process: residency in New Hampshire, overall eligibility for the income cap of the program; eligibility for the 185 percent federal poverty level for additional funds; eligibility for additional funds for English language learners; and the timeliness of approvals.
In three cases, administrators of the program at CSF approved applications using a household’s net income as listed on their pay stubs, a number that excludes taxes, deductions and other expenses. The problem: They should have used gross pay, which includes everything the family received pre-tax. Using gross tax, the higher number, would have led to a rejection of their application for not being eligible.
In seven other cases, the department found that CSF did not gather enough evidence of the applicants’ residency before approving the applications. In addition to accepting P.O. Boxes, CSF also used a family’s eligibility for another scholarship and in one case a birth certificate to help establish residency in lieu of other evidence.
CSF used outdated assessment scores and letters in two cases to demonstrate that the applicants qualified for the English language learner bonus. And they did not include the requirement that parents be informed within 30 days if their application was complete in their guidance to employees, the department found.
In his letter to the organization, Voelk said the department was “requesting CSF to reverify residency, income and, where applicable, differentiated aid eligibility for all participants approved in the Education Freedom Account (EFA) program for school years 2021-2022 and 2022-2023.”
CSF responded to the audit by changing their policies to correct for the mistakes, Baker Demers said in an interview, in addition to refunding the department for excess. The organization also plans to conduct its review of all applications made in the 2021-22 and 2022-23 school years, she added.
Baker Demers the Children’s Scholarship Fund would likely not finish that review until the start of 2025.
Democrats pointed to the 12 applications which were flagged by the department for potential problems, and noted that they came out of the 50 sampled, a 24 percent percent error rate.
“I am pleased that in light of the compliance review, the scholarship organization is being required to reverify residency, income, and differentiated aid eligibility of all participants approved in the 2021-22 and 2022-23 school years,” Wilhelm said in his statement. “The potential for fraud among the 98 percent of applicants that have not been reverified is significant, and New Hampshire taxpayers deserve better.”
Baker Demers countered that the errors are being addressed with new policies that will clarify which types of income to use and what kinds of residency verifications count. She noted that most of the applications pointed to by the department as potentially erroneous were found to be justified after further documentary review.
And she predicted that because the majority of applicants use income tax returns to prove income eligibility and residency, the sweeping review would not turn up many additional cases in which the CSF had improperly accepted applications due to income calculation errors or residency requirements.
“It’s teeny,” she said. “There’s really no way to look at this than these are teeny.”
Wilhelm said the results of the compliance review demonstrated that lawmakers should pass laws to increase transparency, starting with additional audits.
“From the outset, Democrats warned of a potential for massive fraud in the voucher program, which is why we proposed legislation this session to establish common sense guardrails and greater transparency,” he said. “House Republicans killed every one of those efforts, and now Granite Staters are quite literally paying the price.”
To Baker Demers, the results are a case for removing the income limits entirely, an idea that Republican gubernatorial candidates Kelly Ayotte and Chuck Morse have vowed to pursue if elected. Democratic gubernatorial candidates Joyce Craig and Cinde Warmington have both vowed to repeal the program if elected.
“I think the legislature should eliminate the income limits,” Baker Demers said. “I don’t think doing the income limits make sense.”