By GARRY RAYNO, InDepthNH.org

CONCORD — Legislative financial officials may not have access to enough Education Freedom Account data and information to determine if the program is operating under state statutes and administrative rules.

The Joint Legislative Performance Audit and Legislative Oversight Committee was told Monday, after initial meetings with Department of Education officials earlier this year,  The Legislative Budget Assistant’s Office may not have enough information to complete the audit required in the EFA statute approved three years ago in the state’s biennial budget.

Christine Young, Legislative Budget Assistant director of the Audit Division said after meetings with the department there are limitations that “significantly affect our ability to move forward with the audit.”
At issue is who owns the data and information gathered by the administrator of the EFA program, the Children’s Scholarship Fund New Hampshire, a third-party contractor with the department.

DOE Commissioner Frank Edelblut and his legal counsel, along with the Attorney General’s Office believe the information belongs to the scholarship fund and not the state, while the LBA and some members of the committee believe it should belong to the state.

Without that information, it would be nearly impossible to determine if the program is following the statutes and rules developed for the program and to complete the audit called for under the law, Young said.

Committee member Rep. Lucy Weber, D-Walpole, said “The chapter law described how the scholarship program is to be audited. It is an issue of transparency here first and foremost that is on everybody’s  mind.”

The LBA had asked the department to request the information from the scholarship organization, but the department said it would not, and could not under the terms of the contract.

Edelblut was upset the LBA asked the scholarship organization directly for the information, and said they did not ask him and he would have told them it was off limits.

He contends the statute requires the department be audited not the contractor and the contract his agency signed with the scholarship organization clearly states the data and information is owned by the organization not the state.

DOE legal counsel Elizabeth Brown told the committee the intent of the legislation was to set up a bifurcated process that would keep the information on parents’ income for eligibility and confidential student information on programs and locations out of the government’s reach.

“It was done by design so taxpayers and students’ confidential information is not government information,” she said, “and never becomes the property of the state.”

Edelblut and several committee members including chair Cindy Rosenwald, D-Nashua, sparred over the language in the bill and who has access to the information.

Rosenwald said the department must have information and processes in place to determine whether the program was administered properly.

“Doesn’t the department have procedures to audit whether or not to maintain proper oversight of people eligible or controls to determine qualifying expenditures,” she asked. “I would be shocked if the department did not have a policy and system for that. That is basic management oversight of a program that all departments have to have over every state program.”

Rosenwald contends the law does give the state ownership of all the data and information generated under the program.

But Edelblut said it would be absurd for the state to have all the information like emails and letters. 

He called it a separation of power issue, with the legislature seeking information in an executive branch contract that is not owned or in the possession of the state.

“This contradicts common sense and an absurd application,” Edelblut said. “This feels like a fishing expedition.”
He also objected to the LBA auditors saying when they interview staff at the department, they want to have the supervisor present.

“We’re trying to work with the auditors and run an effective program that serves the needs of the students,” he said. “I take offense at that policy.”
Edelblut said the information the department has, the auditors can review and he believes it should allow for an audit as called for in the legislation.

Rosenwald said all the committee members have deep respect for the professionalism of the LBA and wanted to be sure he was not implying anything other than that.

But committee member Sen. Rebecca Whitley, D-Hopkinton, said she believes it was a full scale attack on the LBA.

“Taxpayers are spending millions and millions of dollars that are going to an organization that is a complete black box,” she said. “We need an opportunity to exercise our duty to make sure taxpayers’ dollars are spent appropriately.”

Senior Assistant Attorney General Chris Bond said the statute calls for a separate outside organization to administer the program outside the department.

“The department’s role in administering (the program) is quite limited and more limited than you might imagine,” Bond said.

He said there are contractual issues and if the LBA interprets that differently than the department, that could be an audit finding, but it is inappropriate for the LBA to stand in the agency’s shoes and seek information from the contractor.

The auditors could say the agency has greater authority than it is exercising in one of its findings, he said.

Bond noted the language at issue in the statute is in every third-party contract agencies have and noted there is no mechanism to compel a contractor to supply information.

He said they are talking about a specific audit mandated in statute, and there may be other options for the committee to use to get at the information they seek.

“I am bewildered at the assertion that the state has not purchased this property,” Weber said. “The state is funding the entire program, all funding for everything is coming from the state.”
She asked Bond how the legislature might be able to seek the information needed for the audit, and Bond said he was not prepared at this time to answer that question.

LBA director Michael Kane said it is very early in the process and they would be back before the committee later with a proposed scope of the audit.

The committee was largely split down party lines as Republican members of the committee sided with Edelblut that the audit would be of the department and the information it has on the program before coming back and seeking additional information.

The EFA program has grown from about 1,400 students the first year to about 4,500 this school year and from $8 million the first year to $23 million this school year, and is likely to cost about $50 million next year if a bill that has already passed the House to expand eligibility from 350 percent of the federal poverty level to 500 percent, passes the Senate and is signed by Gov. Chris Sununu as is expected.

Garry Rayno may be reached at garry.rayno@yahoo.com. Garry is InDepthNH.org’s State House bureau chief with 40 years of reporting experience.