Department of Education blocks key data in audit of education freedom accounts

By ETHAN DEWITT

New Hampshire Bulletin

Published: 03-20-2024 3:40 PM

As New Hampshire’s education freedom accounts program has grown in scope, some lawmakers have pushed to scrutinize it. In 2022, the Legislature passed a bill requiring an audit of the way the Department of Education is administering the program, and Republican Gov. Chris Sununu signed it. 

But two years after that bill, House Bill 1135, the audit is facing major hurdles.

State employees with the Office of the Legislative Budget Assistant say they are unable to obtain the information they need on the students and families receiving education freedom accounts to complete the audit, citing a disagreement with the Department of Education over access to the data. 

The Department of Education counters that the data is held by a private contractor, not the state, and thus can’t be turned over to be audited. Without access to the data, the LBA says it will not be able to complete most of the audit required by the 2022 law.

“We could complete the audit of this chapter law based on what information we can audit and then issue a report to comply with the chapter law,” said Christine Young, director of audits for the LBA, speaking to lawmakers Monday. “That report would be very limited, because we can’t review much of the information that’s held by the scholarship organization.”

The disagreement caught the attention of lawmakers this week. Democrats on the Joint Legislative Performance Audit and Oversight Committee have pressed the department to obtain the data and share it with auditors to follow the statute. Some Republicans, meanwhile, have argued that the data belongs to a contractor and that it would be inappropriate for legislative branch auditors to seek it. 

The debate is the latest skirmish in an ongoing battle between Democrats and Republicans about the education freedom accounts program, which allows lower-income families to access state funds to help home-school their children or enroll them in private schools. The state is projected to spend $22.1 million toward the program in the 2023-2024 school year, according to department figures from October. 

Democrats have opposed the program since its creation in 2021, arguing that it inappropriately diverts taxpayer money away from public schools. Republicans have championed the program as a means to allow families opportunities to pursue alternative education if they are dissatisfied with their public school.

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The program is overseen by the Department of Education but is operated by a third party: the Children’s Scholarship Fund, a nonprofit organization based in New York. Under a contract with the state, the department transfers money from the state’s Education Trust Fund to the scholarship organization, and the organization then holds it and administers its disbursement to schools and services on behalf of the families. 

Since passage of the program, Democrats have attempted a number of bills to either repeal the program, pare back who is eligible, or introduce more oversight. Most bills have not survived votes in the Republican-led legislatures. But HB 1135 passed in 2022 on voice votes in the House and Senate. 

The bill requires the LBA to conduct a performance audit of the education freedom accounts program under the Department of Education. That audit must review whether participants are eligible; whether there are sufficient controls for how participating families may spend the money; whether the department is identifying and recovering ineligible expenditures; how the department is transferring the funds to the Children’s Scholarship Fund; how the department is administering “phase-out” grants to public schools to help reimburse for departing students; information on student outcomes within the program; and demographic details of the students participating, including their state of residence, grade level, type, and location of their education over the program’s first two years.

According to testimony Monday from multiple departments – including Department of Education Commissioner Frank Edelblut – the conflict arrived almost immediately. 

In January, the Legislative Budget Assistant, a nonpartisan office of the legislative branch that regularly carries out audits of state departments, began reaching out to the Department of Education for initial conversations around the audit, according to Young. But the department quickly told the auditors that much of the data being sought to answer the required questions was not in the department’s possession, Young added. 

After facing the department’s initial denial, the LBA reached out to the Children’s Scholarship Fund itself without consulting the department, Edelblut told lawmakers. The organization said that it could hand over the data, but only with direct permission from the department. In a follow-up letter, the organization said it could not deliver the data.

The audit is still in its earliest stages, according to officials; the office is still assembling a “scope statement” to present to the legislative committee. But without the data, the LBA will not be able to complete much of its chartered task, said Young.

Now, a bipartisan effort to introduce oversight into a growing state program has been caught up in a fight over details.

Sen. Cindy Rosenwald, a Nashua Democrat and the chairwoman of the committee, has argued that the contract between the department and the scholarship organization means that the state owns all data, and can audit it. But lawyers for both the Department of Education and the Department of Justice disagreed Monday, contending that the contract only allows the state control over any data that the contractor purchased or obtained from the state. 

Edelblut noted that HB 1135 never mentioned the Children’s Scholarship Fund in its directive to audit the department. He and the department argue that means the LBA is limited to auditing the department’s practices around the program, not those of the scholarship organization. And he argued that that separation between the department and its contractors is appropriate.

“Imagine the absurd application,” he said. “(The Department of Education has) a contract with Tutor.com. Can I go to Tutor.com and say, ‘I want all of the personal identifiable information of every student and teacher that has ever done tutoring?’ Of course I can’t, right? I didn’t provide that data.”

Democratic lawmakers have expressed exasperation at the result.

“It takes my breath away a little bit that … our taxpayers are spending millions and millions and millions of dollars on a program that’s going to a private organization, and it’s a complete black box,” said Sen. Becky Whitley, a Hopkinton Democrat. “And that you’re telling us that we have absolutely – practically – no opportunity to exercise our duties to make sure that taxpayer dollars are being spent appropriately.” 

Rep. Lucy Weber, a Walpole Democrat, said she disagreed with the department’s interpretation of whether it controls the data and raised the possibility of legal action. 

“It sounds to me like there’s every opportunity here to get a third branch of government involved in deciding who has the authority to say who can do which, and one would fervently hope that that is not necessary,” Weber said Monday.

Edelblut, meanwhile, voiced his own frustration with the LBA, which he argued had inappropriately sidestepped the department by contacting the Children’s Scholarship Fund directly.

“I just am concerned that we are almost – it feels like a little bit of a fishing expedition,” he said. He added that the department carries out its own oversight of the EFA program, answering many of the questions already in the audit. 

Speaking on behalf of the Department of Justice, Senior Assistant Attorney General Christopher Bond argued that the LBA should not have attempted to acquire the EFA data directly from the organization – even if it felt the department was wrong. But Bond said the LBA was free to criticize the department for blocking the data in its final audit report. 

Monday’s meeting ended without a clear resolution; Legislative Budget Assistant Michael Kane said his office would move forward with the process even with the limitations. 

Some Republicans agreed with the result.

“Having read all your audits for more than 20 years, I don’t recall any that ever delved into a contractor,” Rep. Ken Weyler, a Kingston Republican and the chairman of the Joint Legislative Fiscal Committee, said to Young. “And many of our functions, especially in (the Department of Health and Human Services), are done with contractors. And we rely on the agency to monitor the contractors. And so this would be an expansion that I’m not in support of.”