Witnesses press for more transparency in contractor that runs state scholarship and EFA programs

Representative David Luno told the committee HB 483 would change the definition of “scholarship organization” in RSA 77‑G so the nonprofit that administers the Education Tax Credit (ETC) and Education Freedom Account (EFA) programs is a New Hampshire‑incorporated entity and files an independent IRS Form 990 that separates New Hampshire program funds and administrative costs.

The bill’s sponsor said the current administrator operates as the Children’s Scholarship Fund of New York and does business in New Hampshire as a d/b/a; he said that arrangement makes it difficult for New Hampshire to see how taxpayer funds appropriated for the EFA program (about $75 million appropriated through the first four years, the sponsor testified) are used and whether administrative fees are spent in New Hampshire or elsewhere.

Supporters of the bill called for clearer, state‑level financial reporting. Luno said the scholarship organization retains up to 10% for administrative costs and that New Hampshire’s program — unlike the organization’s work in many other states — is almost entirely financed with state appropriations. He said that structure raises transparency concerns because the entity’s nationwide Form 990 aggregates multiple states’ activity.

Opponents, including testifiers who participate in or donate to the program, argued HB 483 would imperil the program by imposing incorporation requirements that could be unconstitutional or impractical. Becky Campbell, a former state representative and donor, said the Children’s Scholarship Fund is registered to do business in New Hampshire and that requiring a separate in‑state nonprofit would disrupt operations and potentially “effectively eliminate the program” unless an in‑state entity was created quickly. She urged the committee to vote ITL (inexpedient to legislate).

Other witnesses defended the current operator’s cost efficiency and said the fund delivers most dollars to students: a tax‑practice witness testified that approximately 92% of program receipts are distributed for scholarships and less than 10% are administrative costs. Several committee members asked for documentary evidence; Representative Luno said he would provide the state nonprofit filings and that committee members may download the Children’s Scholarship Fund’s Form 990 from public records.

Testimony also covered an earlier Department of Education monitoring effort on a sample of EFA accounts. Luno said the monitoring reviewed 50 accounts and that the review identified compliance failures in a portion of those files that the scholarship organization later addressed by returning funds for irregular payments. Committee members pressed for clarity about whether the legislative budget assistant’s (LBA) performance audit had access to full program data; witnesses said the audit scope had been narrowed and that LBA had reported limits on access to primary program documents.

The public hearing generated constitutional arguments about whether the Legislature can require a nonprofit incorporated in another state to reorganize; critics cited interstate commerce and full faith and credit concerns. Proponents framed HB 483 as a transparency measure for taxpayer funds. No formal vote was taken at the public hearing.