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Lawmakers allow ‘education freedom account’ rules to move ahead despite lawyers’ concerns

New Hampshire Bulletin
Published: 8/20/2021 9:28:49 PM
Modified: 8/20/2021 9:28:58 PM

New Hampshire’s “education freedom account” program is on track to roll out across the state this month, after a critical vote Thursday by the state’s Joint Legislative Committee on Administrative Rules (JLCAR).

But the vote — which approved a set of interim rules designed to allow the program to become operational by the start of the school year — came after a series of concerns from lawyers for the committee that the rules needed significant clarification.

In a markup of the rules presented to lawmakers ahead of Thursday’s meeting, committee lawyers said the interim rules failed to lay out clear guidelines over how the education freedom accounts will be monitored, how confidential information will be protected, and how much jurisdiction the state has over the private organization running the program.

The lawyers identified other key questions, including whether the new accounts are allowed to be tax-exempt and whether criminal background checks are required for tutors and educational providers approved under the program.

In response to the markup, lawyers for the Department of Education made a number of changes this week intended to address the concerns. But many of the broader problems identified by the committee attorneys have not yet been addressed.

“It could be, since this is a brand-new program, that there are just going to be practical matters that can’t be hammered out just yet,” said Kim Reeve, the committee’s attorney, who helped write the markup.

New Hampshire’s education freedom account program is designed to allow parents of children who don’t attend public school to access the state money that would have been sent to their local public school and use it toward private school tuition, tutoring, class materials and other expenses.

Republicans and school choice advocates have hailed it as an opportunity for lower-income children and families whose local public school is not a good fit to find other options. Democrats have warned that it would drain resources from public schools and state revenues, and redirect public funds to religious schools.

A statutory outline for the new program passed into law as part of the state budget in June. But lawmakers and members of the State Board of Education are required to pass a set of administrative rules that clarify how the program will operate in order for it to move ahead.

On Thursday, the 10-member administrative rules committee voted, 6-4, to move a series of fast-tracked interim rules forward, with the understanding that the Department of Education would aim to get approval of permanent rules within six months. The vote fell on party lines, with Democrats opposed.

But the interim rules approved Thursday contained a number of provisions that committee lawyers said raise concerns.

Under the EFA program, the state will contract with a private scholarship organization to administer the savings accounts for families and designate the education providers and services to which the parents can apply the money.

Yet the rules do not sketch out clear oversight mechanisms over that organization, the lawyers said.

For instance, the rules require the organization to issue a comprehensive agreement to parents letting them know how the program works and what the expectations are. But there is no requirement that the Department of Education sign off on that agreement, the committee lawyers noted.

There is also confusing language around criminal background checks, the lawyers wrote. While the rules require the scholarship organization to post publicly the process for general employee background checks for the education providers it is approving, there is no statutory authority to allow the private organization to carry out criminal background checks specifically and no direct requirement that they carry them out.

How the money gets spent is not fully fleshed out either, the lawyers said. The rules require that internet and technology purchased with the state funds be “primarily” used to help the student’s education, the lawyers noted. But the rules don’t specify the meaning of “primarily.” And there is no clear approval process for what kinds of “computer devices” are covered under the statute.

The rules are also written to contemplate a single scholarship organization, even though the statute allows for multiple scholarship organizations. “The Board does not have clear authority to have more than one scholarship organization,” the committee attorneys wrote.

The education freedom account interim rules — which did not receive public hearings — are meant to last just six months and were intended to get the program in place for the 2021-22 school year. The Department of Education must now craft permanent rules using the traditional process, which means there must be a public comment period and hearings.

But even if the formal rulemaking process fixes some of the kinks in the initial draft of the rules, lawyers for JLCAR said that there are a number of issues that might take new legislation to fix.

For one, the underlying statute creating the program has presented the savings accounts as nontaxable income for families. “This may conflict with federal tax law,” the lawyers noted.

The statute is silent on what protections must be in place to guard health care information obtained by the scholarship organizations, including for students with disabilities.

And it doesn’t make clear what protections are available for students with disabilities when their families withdraw them from the public school system and they use an EFA.

Then there is the question of whether the private scholarship has been given too much power.

“The statute grants to the scholarship organization authority that is typically given to the executive agency and may represent an impermissible delegation of authority,” the JLCAR lawyers wrote.

Lawyers for the Department of Education dismissed many of those concerns in testimony to the committee, noting that they had removed many of the ambiguous phrases that had been flagged by the committee lawyers earlier in the week.

For one, there isn’t a need for criminal background checks for all of the education service providers that might benefit from the savings accounts, the department lawyers argued.

“I think, for context, it’s important to point out that the concept of an education service provider is very broad,” said Chris Bond, legal counsel for the Department of Education. “… So many of the education service providers will not have direct interaction with children.”

Bond added that the state Department of Education did not have authority over what rights parents of students with disabilities would have if they left the public school system, noting that the Individuals with Disabilities Education Act falls under the jurisdiction of the U.S. Department of Education. But he said that the state department would work to get better answers in the future.

And he noted that the state already has a formal agreement with the Children’s Scholarship Fund — the nonprofit organization chosen to run the program in its first year — that addresses some of the areas that are not touched on in the rules or the statute. That contract was approved by the Executive Council earlier this month.

“We already have a contract with a scholarship organization that will take us through the interim rule period,” Bond added. “So, for example, confidentiality protections are addressed in that contract, so that’s why we felt comfortable not having those in the interim rule.”

One lawyer who testified before the committee objected to the interim rules moving forward. Gerald Zelin, an attorney representing the New Hampshire Association of Special Education Administrators, said that the rules should not go ahead until there were better clarifications over the rights of parents of students with disabilities who participate in EFAs.

“Once a government benefit is bestowed, we all know that it’s difficult to pull it back,” Zelin said. “People justifiably rely on it. And so we need to get these interim rules right the first time, even though they’re just interim rules.”

Democrats on the committee agreed, arguing that more time should be taken to address all of the concerns by the committee attorneys.

Rep. William Hatch, a Gorham Democrat and former chair of the rules committee, noted that the number of concerns raised by the committee staff was unusual.

“Though it’s not uncommon to have concerns of conditional rulemaking to be addressed in regular rulemaking, I’ve never seen quite this many to be addressed in that manner,” he said.

Others said the rules did not provide enough transparency.

“These are public dollars — we’re giving away public money with virtually no oversight over a private entity that won’t be subject to our right-to-know law,” said Sen. Becky Whitley, a Concord Democrat. “Even regardless of your policy position on this program, we can’t violate public trust and allow a deeply flawed program to be hastily implemented without adequate protections, without adequate scrutiny by this committee.”

But Republicans countered that Democrats were overstepping the authority of the committee, which is meant to vet rules and not the statutes that underpin them.

“The objections I’ve heard so far deal exclusively with policy,” said Rep. Terry Roy, a Deerfield Republican. “The Legislature spoke; the governor spoke; the people spoke. These issues of rules can be done in permanent rulemaking.”

Sen. John Reagan, another Deerfield Republican and the chairman of the committee, voiced a similar view.

The interim rules are not quite approved yet; they will head to the State Board of Education for final approval at its meeting on Friday.

But even Reagan acknowledged the process to complete them this week had been a dash.

“This has been a complicated rule in a very short time period,” he said. “It’s been a back-and-forth between the JLCAR staff and the Department of Education, and it’s been a hard go.”




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