AN ACT requiring the department of education to administer the education freedom account program.


SPONSORS: Rep. Ham, Graf. 5; Rep. Deshaies, Carr. 6; Rep. Myler, Merr. 10; Rep. Wolf, Merr. 5


COMMITTEE: Education






This bill changes the administration of the education freedom account program under RSA 194-F from scholarship organizations to the department of education.


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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.






In the Year of Our Lord Two Thousand Twenty Two


AN ACT requiring the department of education to administer the education freedom account program.


Be it Enacted by the Senate and House of Representatives in General Court convened:


1  New Paragraph; Education Freedom Accounts; Definition; Commissioner.  Amend RSA 194-F:1 by inserting after paragraph I the following new paragraph:

I-a.  "Commissioner” means the commissioner of the department of education.

2  Definition; EFA.  Amend RSA 194-F:1, IV to read as follows:

IV.  "Education freedom account” or “EFA” means the account to which funds are allocated by the [scholarship organization] department to the parent of an EFA student in order to pay for qualifying education expenses to educate the EFA student under this chapter.

3  Definition; State Board.  RSA 194-F:1, XII is repealed and reenacted to read as follows:

XII.  "State board” means the state board of education.

4  Program; Funds Transfer.  Amend RSA 194-F:2, I to read as follows:

I.  The commissioner of the department of education shall transfer to the [scholarship organization] student's EFA the per pupil adequate education grant amount under RSA 198:40-a, plus any differentiated aid that would have been provided to a public school for that eligible student.  The transfers shall be made in accordance with the distribution of adequate education grants under RSA 198:42.

5  Qualifying Expenses.  Amend RSA 194-F:2, II(o) to read as follows:

(o)  Any other educational expense approved by the [scholarship organization] state board.

6  Unused Funds.  Amend RSA 194-F:2, VII to read as follows:

VII.  An EFA shall remain in force, and any unused funds shall roll over from quarter-to-quarter and from year-to-year until the parent withdraws the EFA student from the EFA program, the student becomes ineligible, or until the EFA student graduates from high school, unless the EFA is closed because of a substantial misuse of funds.  Any unused funds shall revert to the education trust fund established in RSA 198:39 [and be allocated to fund other EFAs].  Unused funds that roll over from year-to-year may not exceed the amount of one quarterly distribution into the student’s EFA and any excess year-to-year roll over funds shall be returned to the education trust fund.

7  Education Freedom Accounts.  Amend RSA 194-F:3 to read as follows:

194-F:3  Application for an Education Freedom Account.

I.  A parent may apply to the [scholarship organization] department to establish an EFA for an eligible student.  The [scholarship organization] department shall accept and approve applications for the fall and spring semesters each year and shall establish procedures for approving applications in an expeditious manner.

II.  The [scholarship organization] department shall create a standard form that parents can submit to establish their student’s eligibility for the EFA program and shall ensure that the application is publicly available and may be submitted through various sources, including the Internet.

III.  The [scholarship organization] department shall approve an application for an EFA if:

(a)  The parent submits an application for an EFA in accordance with application procedures established by the [scholarship organization] department.

(b)  The student on whose behalf the parent is applying is an eligible student.

(c)  Funds are available for the EFA.

(d)  The parent signs an agreement with the [scholarship organization] department:

(1)  To provide an education for the eligible student in the core knowledge domains that include science, mathematics, language, government, history, health, reading, writing, spelling, the history of the constitutions of New Hampshire and the United States, and an exposure to and appreciation of art and music.

(2)  Not to enroll the eligible student as a full-time student in their resident district public school while participating in the EFA program.

(3)  To provide an annual record to the department of educational attainment by:

(A)  [Having the student take a nationally-standardized, norm-referenced achievement test and to provide the results to the scholarship organization by the end of each school year which the scholarship organization shall make available to the department as aggregate scores; or

(B)]  Having the student take the statewide student assessment test pursuant to RSA 193-C:6; or

[(C)] (B)  Maintaining a portfolio including, but not limited to, a log which designates by title the reading materials used; samples of writings, worksheets, workbooks, or creative materials used or developed by the student.  The parent shall have a certified teacher or a teacher currently teaching in a nonpublic school, who is selected by the parent, evaluate the student's educational progress upon review of a portfolio and discussion with the parent or student.

(4)  To use the funds in the EFA only for qualifying expenses to educate the eligible student as established by the EFA program.

(5)  To comply with the rules and requirements of the EFA program.

IV.  The signed agreement between the parent and the [scholarship organization] department shall satisfy the compulsory school attendance requirements of RSA 193:1.

V.  The [scholarship organization] department shall annually renew a student’s EFA if funds are available.

VI.  Upon notice to the [scholarship organization] department, an EFA student may choose to stop receiving EFA funding and enroll full-time in a public school.

(a)  Enrolling as a full-time student in the resident district public school shall result in the immediate suspension of payment of additional funds into the student’s EFA, termination of the EFA, and the transfer of any remaining funds by the department back to the education trust fund.  [However, an EFA that has been open for at least one full school year shall remain open and active for the parent to make qualifying expenditures to educate the student from funds remaining in the EFA.  When no funds remain in the student’s EFA, the scholarship organization may close the EFA.]

(b)  If an eligible student decides to return to the EFA program, payments into the student’s existing EFA may resume if the EFA is still open and active.  A new EFA may be established if the student’s EFA was closed.

8  Authority and Responsibilities of the Department.  Amend RSA 194-F:4 to read as follows:

194-F:4  Authority and Responsibilities of the [Scholarship Organization] Department.  The [scholarship organization] department shall have the following additional duties, obligations, and authority:

I.  The [scholarship organization] department shall maintain an updated list of education service providers and shall ensure that the list is publicly available through various sources, including the [Internet] department's website.

II.  The [scholarship organization] department shall provide parents with a written explanation of the allowable uses of EFA funds, the responsibilities of parents, the duties of the [scholarship organization] department, and the role of any financial management firms that the [scholarship organization] department may contract with to administer any aspect of the EFA program.

III.  The [scholarship organization] department shall ensure that parents of students with disabilities receive notice that participation in the EFA program is a parental placement under 20 U.S.C. section 1412, Individuals with Disabilities Education Act (IDEA), along with an explanation of the rights that parentally placed students possess under IDEA and any applicable state laws.

IV.  The [scholarship organization] department shall[, in cooperation with the department,] determine eligibility for differentiated aid subject to any applicable state and federal laws.

[V.  The scholarship organization may withhold from deposits or deduct from EFAs an amount to cover the costs of administering the EFA program, up to a maximum of 10 percent annually.]

[VI.] V. The [scholarship organization] department shall implement a commercially viable system for payment of services from EFAs to education service providers by electronic or online funds transfer.

(a)  The [scholarship organization] department shall not adopt a system that relies exclusively on requiring parents to be reimbursed for out-of-pocket expenses, but rather shall provide maximum flexibility to parents by facilitating direct payments to education service providers.  [Scholarship organizations] The department may pre-approve requests for reimbursements for qualifying expenses, including expenses pursuant to RSA 194-F:2, II, but shall not disperse funds to parents without receipt that such pre-approved purchase has been made.

(b)  [A scholarship organization] The department may contract with a private institution or organization to develop the payment system.

[VII.] VI. The [scholarship organization] department may also seek to implement a commercially viable system for parents to publicly rate, review, and share information about education service providers, ideally as part of the same system that facilitates the electronic or online funds transfers.

[VIII.] VII.  If an education service provider requires partial payment of tuition or fees prior to the start of the academic year to reserve space for an EFA student admitted to the education service provider, such partial payment may be paid by the [scholarship organization] department, if funds are available, prior to the start of the school year in which the EFA is awarded and deducted in an equitable manner from subsequent quarterly EFA deposits to ensure adequate funds remain available throughout the school year; but if an EFA student decides not to use the education service provider, the partial reservation payment shall be returned to the [scholarship organization] department by such education service provider and credited to the student’s EFA.

[IX.] VIII.  The [scholarship organization] department shall continue making deposits into a student’s EFA until:

(a)  The [scholarship organization] department determines that the EFA student is no longer an eligible student.

(b)  The [scholarship organization] department determines that there was substantial misuse of the funds in the EFA.

(c)  The parent or EFA student withdraws from the EFA program.

(d)  The EFA student enrolls full-time in the resident district public school.

(e)  The EFA student graduates from high school.

[X.] IX.  The [scholarship organization] department may conduct or contract for the auditing of individual EFAs, and shall at a minimum conduct random audits of EFAs on an annual basis.

[XI.] X. The [scholarship organization] department may make any parent or EFA student ineligible for the EFA program in the event of intentional and substantial misuse of EFA funds.

(a)  The [scholarship organization] department shall create procedures to ensure that a fair process exists to determine whether an intentional and substantial misuse of EFA funds has occurred.

(b)  If an EFA student is free from personal misconduct, that student shall be eligible for an EFA in the future if placed with a new guardian or other person with the legal authority to act on behalf of the student.

(c)  The [scholarship organization] department may refer suspected cases of intentional and substantial misuse of EFA funds to the attorney general for investigation if evidence of fraudulent use of EFA funds is obtained.

(d)  A parent or EFA student may appeal the [scholarship organization’s] department's decision to deny eligibility for the EFA program to the [department] state board.

[XII.] XI.  The [scholarship organization] department may bar an education service provider from accepting payments from EFAs if the [scholarship organization] department

 determines that the education service provider has:

(a)  Intentionally and substantially misrepresented information or failed to refund any overpayments in a timely manner.

(b)  Routinely failed to provide students with promised educational goods or services.

[XIII.] XII.  The [scholarship organization] department shall create procedures to ensure that a fair process exists to determine whether an education service provider may be barred from receiving payments from EFAs.

(a)  If the [scholarship organization] department bars an education service provider from receiving payments from EFAs, it shall notify parents and EFA students of its decision as quickly as possible.

(b)  Education service providers may appeal the [scholarship organization’s] department's decision to bar them from receiving payments from the EFA to the [department] state board.

[XIV.  The scholarship organization may accept gifts and grants from any source to cover administrative costs, to inform the public about the EFA program, or to fund additional EFAs.] [XV.] XIII.  The department shall adopt rules that are necessary for the administration of this chapter.

[XVI.  The scholarship organization shall adopt policies or procedures that are necessary for the administration of this chapter.]  This may include rules for policies or procedures:

(a)  Establishing or contracting for the establishment of an online anonymous fraud reporting service.

(b)  Establishing an anonymous telephone number for fraud reporting.

(c)  Requiring a surety bond for education service providers receiving more than $100,000 in EFA funds.

(d)  Refunding payments from education service providers to EFAs.

(e)  Ensuring appropriate use and rigorous oversight of all funds expended under this program.

[XVII.] XIV.  The [scholarship organization] department shall not exclude, discriminate against, or otherwise disadvantage any education provider with respect to programs or services under this section based in whole or in part on the provider’s religious character or affiliation, including religiously based or mission-based policies or practices.

9  Advisory Commission.  Amend RSA 194-F:5 to read as follows:

194-F:5  Parent and Education Service Provider Advisory Commission.

I.  There is established the parent and education service provider advisory commission to assist the [scholarship organization] department by providing recommendations about implementing, administering, and improving the EFA program.

II.  The commission shall consist of 7 members who shall be parents of EFA students or education service providers and shall represent no fewer than 4 counties in the state.  The members shall be appointed by the [director of the scholarship organization] commissioner and serve at the [director's] commissioner's pleasure for one calendar year after which they may be reappointed.  [The director of the scholarship organization, or designee, shall serve as a non-voting chairperson of the commission.]  The commissioner of the department of education, or designee, shall serve as a non-voting member of the commission.

III.  The [scholarship organization] department may request the commission to meet, in person or virtually, to review appeals of education service provider denials pursuant to RSA 194-F:4, [XI] X and to provide a recommendation to the [scholarship organization] department as to whether an education service provider should be allowed to receive, or continue receiving, payments from EFAs.

10  Education Service Providers.  Amend RSA 194-F:6 to read as follows:

194-F:6  Requirements for Education Service Providers.

I.  The [scholarship organization] department may approve education service providers on its own initiative, at the request of parents, or by notice to the [scholarship organization] department provided by prospective education service providers.

II.  A prospective education service provider that wishes to receive payments from EFAs shall:

(a)  Submit notice to the [scholarship organization] department that it wishes to receive payments from EFAs.

(b)  Agree not to refund, rebate, or share EFA funds with parents or EFA students in any manner, except that funds may be remitted or refunded to an EFA in accordance with procedures established by the [scholarship organization] department.

(c)  Comply with all state and federal anti-discrimination laws.

11  Liability.  Amend RSA 194-F:9, II to read as follows:

II.  No liability shall arise on the part of the [scholarship organization] department or the state or of any public school or school district based on the award of or use of an EFA pursuant to this chapter.

12  Effective Date.  This act shall take effect July 1, 2022.









AN ACT requiring the department of education to administer the education freedom account program.


FISCAL IMPACT:      [ X ] State              [    ] County               [    ] Local              [    ] None




Estimated Increase / (Decrease)


FY 2022

FY 2023

FY 2024

FY 2025
















Funding Source:

  [ X ] General            [ X ] Education            [   ] Highway           [    ] Other



This bill requires the Department of Education rather than an approved Scholarship Organization to administer the Education Freedom Account (EFA) program. The Department states this would involve the establishment of a bureau to administer the program, including related staff. Due to the uncertainty as to how many students might be participating in the program at the time the Department begins this administration, it is unable to determine the cost of such administration. In addition, the Department states it is unclear if the law would require it to build-out a technology system to facilitate the management of the program. The cost of such system is not determinable without a complete RFP process and involvement from the state Department of Information Technology (DoIT). Such system implementation may also require time that may prevent timely implementation of the proposed law. Ultimately, this bill’s impact on state expenditures is indeterminable.  This bill provides neither appropriation nor authority for new personnel.



Department of Education