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Committee presses scholarship fund on 10% administrative cap as EFA grows to 10,000+ students
Summary
The Education Freedom Account Oversight Committee asked the Children’s Scholarship Fund to provide historical administrative-fee percentages and a written explanation of how the statutory 10% cap is applied and prorated after year‑end reconciliation as the program expanded past 10,000 students.
Chair Representative Rick Ladd on March 27 led questions about a statutory provision that allows the scholarship organization to withhold up to 10% annually from Education Freedom Account (EFA) deposits to cover administrative costs.
Matt Sotherton of the Children’s Scholarship Fund told the committee the organization is operating below the 10% cap — around 7.9% this fiscal year — and expects to remain under the limit after efficiency gains from the Scolovia platform. “As a nonprofit charity, our goal is to run as efficiently as possible,” Sotherton said.
Ladd and other committee members pressed for more detail because the EFA program has grown from roughly 1,600 students early on to more than 10,000, increasing total program dollars. Chair Ladd noted the statute allows up to 10% and asked whether the board should consider lowering the maximum as revenue scales to return more funds directly to students on wait lists.
Sotherton explained the scholarship board withholds 10% of each disbursement at the start of the year and reconciles annually; any remaining funds after reconciliation are prorated back to students currently enrolled. “At the end of the year, after all of the numbers are reconciled with the Department of Education, that money is prorated and sent back to the students,” he said.
Committee members requested that Sotherton supply historical annual administrative-fee percentages, a written explanation of the hold-and-proration process, and a breakdown of administrative spending. Representative Peggy Balboni said an emailed summary and supporting audit reports would help clarify how EFA and education tax-credit (ETC) funds and applications are separated.
The committee did not take formal action on changing the statutory cap at the meeting; members asked staff to collect the requested documentation for follow-up discussion at a later session.
