By GARRY RAYNO, InDepthNH.org
CONCORD — The Education Freedom Account program would increase about 50 percent in the second year of the next biennium if the parent salary cap is eliminated, according to the person administering the program.
Speaking to Division II of the House Finance Committee Friday, Kate Baker Demers, executive director of the Children’s Scholarship Fund NH, said her projections are the program would grow to 8,000 student in the first year of the next biennium from the current enrollment of 5,884 and then to 12,000 students if the salary cap at 350 percent of federal poverty limit is removed.
She also projected the cost would increase from the current estimate of $30.5 million for this school year, to $40 million and then to over $60 million in the second year of the next biennium.
The original estimate from the Department of Education for this fiscal year’s cost was $27 million, or $3.5 million below the current estimate.
“This is our guess what it would look like if the legislature decides to make it universal,” said Baker Demers. “You wanted us to bring projections.”
Baker Demers and Matt Southerton, director of policy and compliance for the organization, explained how the program in its fourth year is administered and the methods used to regulate both eligibility and program purchases using state tax dollars for the program that was originally sold as a pathway for low-income parents to provide an alternative education environment that best fits their child, if he or she does not do well in the public school system.
However, students who were in private and religious schools or homeschooled and not in public schools when the program began comprise about 75 to 80 percent of the program.
Gov. Kelly Ayotte’s plan for universal access to Education Freedom Accounts would require students to be in a public school for a year before they would be eligible to participate, but eliminate the salary cap in the second year of the next biennium.
Friday several committee members were interested in how the parental accounts were handled and if anyone was earning interest on the money.
Baker Demers said the money from the state goes to the Children’s Scholarship Fund NH and put in a non-interest bearing “for the benefit of the state” account while parents have virtual accounts with Class Wallet. She said that is in the state contract.
When a purchase is approved, the money goes from the organization to Class Wallet to the vendor, she said.
Rep. Eileen Kelly, D-Bradford, asked who is earning interest on the money, and Baker Demers said no one, and Kelly said the state ought to be earning interest.
Kelly was also concerned about a provision that allows a family whose child has been in the program for a year, to leave the program and still have an active account to be used for qualified purchases.
If money has been placed in the account at the first of the school year, but the student leaves to return to public school, the family would still be able to spend the money on educational expenses, she noted.
That is how the law is written, said Southerton, they can keep the money.
Baker Demers noted it often is not a lot of money, and noted it could be used for things like tutoring and the grant money was put in the account for the student to use.
If the student has been in the program less than a year it is “forfeited back to the state,” she said.
Under the law, any money remaining in an account can roll over at the end of the school year as long as the student continues in the program until the student graduates or leaves the program and then it is “swept” and that money is returned to the state.
Last year the “swept money” returned to the state was nearly $1 million that had been awarded but not spent, according to the organization’s 990 filing with the Internal Revenue Service.
Baker Demers said some people were surprised how much money was returned to the state.
Rep. Kate Murray, D-New Castle, said she heard some people are using the accounts like a savings program and wondered if they were saving the money for college.
Baker Demers said some, but not a large number, roll the money over to save until the student is about to enter high school and use it to pay tuition to a private school, but Kelly and Murray questioned whether the money could be used for college tuition as several colleges are approved vendors under the program.
Baker Demers said the program is for K to 12th grade and the college vendors are in the dual enrollment program which allows students to take college courses and receive both high school and college credit.
But she noted that it was a good suggestion they would put in the student handbook that the EFA cannot be used to pay college tuition or expenses.
Murray also wondered how a student attending a music camp in Michigan was allowed under the program or another who attended a sports camp out-of-state.
Baker Demers said students are required to take music courses and physical education classes as they would in district public schools.
There are no restrictions on out-of-state vendors as long as they are certified by the Department of Education where they are located, she said.
She did say the EFA program could not be used for room and board or travel expenses to those camps.
Concerns have been raised about students qualifying for differential aid under the program, and if they were qualifying every year for that additional aid for free and reduced lunch, special education and English language learning students, which they are required to do.
Under the program once the family has qualified under the salary cap, they do not have to qualify financially again as long as the student remains in the program.
Baker Demers said the families do have to qualify annually for the differential aid which is added on top of the basic grant of $4,182 this school year. The aid for a student qualifying for free and reduced lunch is $2,346, for special education services $2,142, and English language learner $816.
If a student qualifies in all three categories, the grant would be $9,486. The average grant this school year is $5,204.
Earlier this week, the House Education Funding Committee voted down party lines to approve House Bill 115, which would raise the salary cap to 400 percent of the federal poverty level for the 2025-2026 school year and then lift the cap for the 2026-2027 school year.
The House will vote on the bill Thursday.
The Education Freedom Accounts are paid from the state Education Trust Fund which also pays for state adequacy grants, per-pupil charter school grants, some special education costs and school building aid.
Several years ago the fund had a $225 million dollar surplus but is projected to be in deficit next fiscal year and will require general fund money to cover the costs of the obligations to be met by the fund.
Garry Rayno may be reached at garry.rayno@yahoo.com.