Requiring a Local Nonprofit to Run School Voucher Programs Gets Controversial

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NH Children's Scholarship Fund executive director Kate Baker Demers opposes a bill Tuesday before the House Education Committee that would require the organization to establish a local affiliate in this screenshot.


CONCORD — A bill to require the Children’s Scholarship Fund to incorporate in New Hampshire to continue administering the Education Tax Credit and Education Freedom Account programs created a firestorm before the House Education Committee Tuesday.

House Bill 1128 would require the New York-based Children Scholarship Fund to have a local non-profit affiliate in New Hampshire as it does with 22 other partner organizations around the country.

The prime sponsor Rep. David Luneau, D-Hopkinton, said that would allow for more transparency and accountability for the tax dollars totaling $45 million that has been administered by the organization.

The bill would not change either the tax credit or EFA programs, Luneau said, nor the amount of money the organization retains for administering the programs.

State statutes allow the organization to retain up to 10 percent of the grants to parents under both programs.

Luneau said the scholarship foundation is one of the largest charities in New Hampshire along with hospitals and colleges yet there is no affiliate organization here.

He said his bill would bring the New Hampshire program in line with those operating in other states by the scholarship foundation, would ensure the 10 percent administrative fee goes to supporting New Hampshire programs, not other states, and would give the Department of Justice’s Charitable Trust Division clearer accounting of how government funds are being used and if they are commingled or incorrectly reported.

“This is one of the largest charities in New Hampshire,” Luneau said, “and as a member of the public we deserve clear reporting on their work.”

However, the long-time New Hampshire executive director of the NH Children’s Scholarship Fund, Kate Baker Demers, said she viewed the bill as a personal attack, and would put the education of 1,300 students on the tax credit program, and 4,700 students on the EFA in jeopardy.

“I am really struggling with this bill. This is a direct attack on me and the New Hampshire Scholarship Fund,” Demers said. “Since the EFA program I have hired eight people in New Hampshire, and their jobs would be eliminated.”

She acknowledged New Hampshire is set up differently than other scholarship foundation programs and they do some of the application processing, she said, but incorporating a separate 501c3 (charity) in New Hampshire would mean a lot of unnecessary paperwork and make the grants smaller.

Luneau interrupted Demers saying his bill was not invective, noting he did not mention her name.

Demers said if the bill passes she would not be able to run the tax credit program she started in 2012 and grew to 1,300 students and with the EFA program, over 5,000 kids will not receive grants.

“This bill is political. It is a political way to eliminate the program,” Demers said, “I understand not everyone is for these programs, but I’m upset, it is very personal. This is a hard one for me.”

She said she tries to make the programs as efficient as possible so that more money goes to the families, noting the EFA administrative costs were 7 percent last year.

Luneau said the program was inefficient because the vast majority of grants go to pay tuition at private and parochial schools which also have a 10 percent administrative fee on top of what the fund takes.

Demers said she went to the Children’s Scholarship Fund for help because at the time it was not taking in enough money to support her as the only employee, and the organization came in and she became its employee.

“They realized how passionate I was to help kids in New Hampshire,” Demers said.

She said the organization is registered with the Attorney General’s Office and the Secretary of State and is in good standing with the Department of Revenue Administration.

The bill is saying the Red Cross could not operate in New Hampshire because it is registered in another state, she noted.

Former Rep. Packy Campbell of Farmington said he and his wife started a small Catholic school and if the bill passes he would be out of business and their 46 students would have to go back into public schools.

“This bill is sneaky, it is inappropriate,” Campbell said. “File a bill if you want to shut it down and close it.”
He said he never had seen a representative interrupt a person testifying and that Luneau owes Demers, the committee and the House an apology.

He noted the state has a history of discriminating against Catholics like him.

“I would like to see (my school) continue,” Campbell said. “This (bill) is an affront to my religious freedom.”
The bill was also opposed by several parents with children in the two programs, saying they had found success outside of public schools and they did not want to see them return.

Wendy Santiago of Concord said the programs empower students to chase their dreams, thrive in their communities and into the future whether they have been bullied, abused or not getting the education they need.

“These programs open the door to student support they would not otherwise have,” she said. “Please do not give this up because of politics.”
But Mary Wilke of Concord, a former public school teacher, said she was confused by the idea that requiring the company to have a New Hampshire 501c3 would put the programs out of business.

She said having a local organization with its own board of directors is not hard to do and would provide greater transparency for the programs like how much is going to salaries or lobbying.

That is information you cannot find if the organization is reporting just on its national operations, she said.

“When you have public money and public donations you need good guardrails,” Wilke said, noting she was not saying there was anything intentional or illegal with NH Children’s Foundation, but people make mistakes when they operate in good faith.

Wilke said she reviewed the organization’s filing with the Department of Revenue Administration, and in the beginning of the tax credit program, it was taking a 10 percent fee on all the money raised, but later changed the assessment to the amount given in grants, which is in line with the statute.

She asked the person who oversees the reports at the DRA about the change, and was told they do not review the reports, just stamp them when they come in, unless there is a random audit.

“Someone beside that organization needs to be watching,” Wilke said, “because the DRA isn’t.”
Rep. Glenn Cordelli, R-Tuftonboro, asked how having a local 501c3 would improve the situation. Wilke said a local board would be looking only at the situation in New Hampshire, and could do an audit, while the board in New York is overseeing the national organization.

Rep. Linda Tanner, D-Sunapee, said she did not view the bill as an attack, or an attempt to remove the scholarship foundation, but to improve the financial reporting with its own local board as all the other affiliates of the Children’s Scholarship Foundation have.

“I don’t see why this is so emotional, or why it would ruin (the programs),” Tanner said, “to simply have a satellite organization in New Hampshire, like having a New Hampshire Red Cross chapter, and a national Red Cross.” Wilke said the programs should easily continue as they are now, and some leeway can be built into the bill to provide the time needed to have a local affiliate approved.

She agreed it would not be a good thing for the kids to bounce back and forth between alternative programs and public schools.

The committee did not make an immediate recommendation on House Bill 1128.

The electronic sign-up system indicated 55 people supported the bill and seven opposed it.

Garry Rayno is InDepthNH,org’s State House bureau chief with 40 years of experience. He may be reached at

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