By GARRY RAYNO, Distant Dome
While lawmakers await a performance audit of the Education Freedom Account program by the Legislative Budget Assistant expected later this year, a Department of Education compliance report done last fall, but released last month found enough issues to require the program’s administrator to reverify all participants’ applications for the 2021-2022 and 2022-2023 school years.
By the administrator’s account, (Children’s Scholarship Fund New Hampshire) there were 1,635 students participating in the program during its first year, 2021-2022, costing $8.1 million, and 3,025 students in its second year, 2022-2023, costing $14.1 million.
The scholarship fund was directed to reverify the 4,660 students’ application in a letter dated July 2 by the Department of Education’s administrator of the EFA program, Brian Voelk, and to reimburse the state for grants to either ineligible families or ones who did not provide the required documentation to qualify.
The investigators found issues in five areas that required the scholarship fund to file corrective action plans within 30 days, which the organization did by filing the five reports on July 30 and reimbursing the state $18,163 of the $103,507 the state found at issue in its compliance review.
While those figures are small compared to the $45 million the state has spent on the program over its first three years, the compliance figures reflect a review of only 50 applications filed for students during the first two school years, 25 from the first year and 25 from the second.
The five areas at issue are qualifications for residency, income, and financial and academic information for additional state aid or differentiated aid in two areas.
The organization was also not meeting its own requirement to inform parents within 30 days if their application is successful or not.
The Children Scholarship Fund’s New York office is responsible for the review and approval of applications based on the New Hampshire criteria established in statute or rules and outlined in the CSFNH Procedural Training Guide, according to the report.
The office accepts applications, uploads them into a centralized data base and communicates with parents to ensure they file the documentation needed to qualify for the program or for additional state education aid.
A family with more than one student in the program only needs to file one application and once a parent qualifies for a EFA grant, they are qualified until their child or children either leave the program or graduate without having to file additional income information.
In the compliance report, verifying New Hampshire residency had the most potential errors covering seven students.
For five of the 50 students or 10 percent of the applications checked, the scholarship fund accepted a post office box with no physical address on a federal income tax return as proof of New Hampshire residency with no additional documentation.
Another application included a tax return and a Veterans Administration Disability statement that had New Jersey and California addresses with no additional documentation.
“CSF indicated that it relied on another scholarship organization eligibility determination to adjudicate eligibility,” the report notes.
And another application used a New Hampshire birth certificate and an Individualized Education Plan with a PO Box and Social Security letter with no physical address, which the report notes are not identified in the CSFNH Procedural Training Guide as appropriate residency documentation.
In the corrective plan, the Executive Director of CSFNH, Kate Baker Demers, said her organization collected additional information for the seven students and they were determined to all be eligible for the EFA program.
She said the information was available for the department’s review and the organization would no longer use PO boxes, or other scholarship organizations or IEPs to determine residency, and make changes in its training manual to reflect that action.
Although the department noted that $65,625 was at issue for residency, reflecting approximately 13 to 14 students, the organization did not reimburse the state saying the seven qualified for the program.
The income qualification, which had a threshold of 300 percent above the federal poverty rate the first year and second year, and increased to 350 percent for the 2023-2024 school year not included in the compliance report.
Under the income threshold, investigators found two students that were qualified for the program that may not be eligible.
In one instance, a photo of a tax return was submitted that did not show all the information, and instead the organization relied on pay stubs submitted used to determine net income to qualify the student.
The compliance report notes that net income is not equivalent to adjusted gross income.
The other student’s application was approved based on unemployment benefits rather than the adjusted gross income on the income tax filing, because CSF said it no longer reflected the family’s financial circumstances due to unemployment.
The report found the unemployment benefits did not indicate who was receiving them or where the person lived, but included Social Security benefits not considered although they are to be included in gross adjusted income.
The report notes one student was awarded $14,582 and the other $19,740 to date.
The corrective plan indicates that the $14,582 was advanced due to “a clerical error,” and would be reimbursed to the state by the end of the month.
Demers said after receiving more information, one of the students was eligible “at the time” for the program, but the other was not due to the “clerical error.”
Going forward CSF will use gross adjusted income from pay stubs not net income, and she noted that change has been made to the training manual.
Under Differentiated Aid for the Free and Reduced Lunch program, two students from the same family who were approved for the additional state money were approved using pay stubs submitted after the family was first denied and appealed the decision. The CSF used the pay stubs to determine net income, which is not what the state or federal government requires to qualify for the program.
The family said income in their 2021 tax return did not reflect the family’s current finances due to a change in circumstances.
The money at issue is $1,136, which will be reimbursed to the state.
Baker said the training manual has been clarified to use gross adjusted income not net income.
The other differentiated aid involved two students from the same family receiving additional state aid because English is not their first language.
They were approved for the additional money using Parental Notification Letters for the English Learning Program from 2014 and 2016.
Demers said the department and the children’s public school district were contacted.
“After thorough review of documentation and communication with the student’s local public school district, it was determined that the situation was unique and failing to qualify the students for ELL could disenfranchise the students in question,” she wrote.
Demers noted the department of Education has granted CSF access to its database for determining if students whose predominant language is not English would qualify for the additional aid.
For the 30-day notification, CSF has refined its manual to indicate the 30-day period will begin once an application is deemed complete, not from the time it is first submitted.
The state noted for 50 families the potential and actual ineligible students could result in the state sending $103,507 to families covering 12 students which is 24 percent of the 50 applications reviewed.
If you take the past year’s enrollment in the program, 4875, the potential money at risk is considerable, or about $2.4 million, which is a worse-case scenario.
But even if it is half that — $1.2 million — concerns should be taken seriously and the folks who do not want any more guidelines or requirements might want to ask their constituents if they are okay with not being able to account for $1.2 million of their tax dollars.
Read in between the lines of the compliance report and it is obvious the CSF finds ways to certify students for the EFA program whether or not their qualifications are determined by guidelines in statute or rules. The corrective action should help going forward, but what about the first three years of the program?
Would the cheerleaders for the EFA program feel the same way about those applying for the state’s welfare program or Temporary Assistance for Needy Families?
Garry Rayno may be reached at garry.rayno@yahoo.com.
Distant Dome by veteran journalist Garry Rayno explores a broader perspective on the State House and state happenings for InDepthNH.org. Over his three-decade career, Rayno covered the NH State House for the New Hampshire Union Leader and Foster’s Daily Democrat. During his career, his coverage spanned the news spectrum, from local planning, school and select boards, to national issues such as electric industry deregulation and Presidential primaries. Rayno lives with his wife Carolyn in New London.
