Bill would require scholarship organization to be a New Hampshire nonprofit; hearing highlights transparency and constitutional concerns

Rep. David Luno told the Ways and Means Committee that House Bill 483 is intended to improve transparency by requiring the statewide scholarship organization that administers the education tax credit (ETC) and the Education Freedom Account (EFA) programs to be incorporated and file its own IRS forms in New Hampshire.

Nut graf: Testimony split sharply. Supporters said the current administrator, which does business as Children’s Scholarship Fund of New Hampshire but files federal returns as a New York‑based nonprofit, obscures how state tax dollars are used and that a New Hampshire‑incorporated entity would increase transparency. Opponents, including donors and nonprofit advocates, said the proposal could be unconstitutional under the Commerce Clause, would disrupt program administration and efficiencies, and could jeopardize the EFA and ETC programs if no organization were ready to take over immediately.

Luno said the contractor administering EFA and the education tax credit retains up to 10% for administrative costs and that about $75 million in state appropriations has flowed through the contractor in the program’s first four years. He said the contractor operates nationally and files a consolidated IRS Form 990 for a New York parent nonprofit; he argued the state needs clearer, state‑level financial statements for taxpayer accountability and to ensure state funds are not used for other activities.

Witnesses both defended and criticized the current arrangement. Packy Campbell, a retired state representative, and former program participants said the organization provides needed services. Steven Matthew, a tax preparer, and others noted that a shared services model keeps administrative costs low and that Form 990s are public. Opponents including Becky Campbell (former state representative) and business owners said the bill risks constitutional problems — they cited the Commerce Clause and full‑faith‑and‑credit arguments — and could, in their view, eliminate the program if timing or incorporation requirements were not handled carefully.

Representative questions focused on audit access and the Legislative Budget Assistant’s (LBA) limited scope performance audit. Luno told the committee the LBA’s 50‑account monitoring sample found compliance problems in a subset of accounts and that restitution was made in those instances but said the LBA had been denied full access needed for a broader performance audit. Multiple members asked if the bill’s timing or an implementation window could avoid service disruption; witnesses suggested adjusting effective dates to allow a New Hampshire nonprofit to organize.

Ending: The committee closed the hearing after hearing oral testimony and questions. No vote was taken. The record shows a policy tradeoff: stronger state‑level financial reporting for EFA/ETC funds versus potential legal and operational disruption if a national administrator were required to re‑incorporate before program deadlines.