Opponents of New Hampshire’s Education Freedom Account (EFA) program have always claimed its administration costs were too high. Yet a proposal from EFA critics to fold the program into the Education Department would increase administrative costs and allow them to grow unchecked.
Currently, the state contracts with a non-profit charity, the Children’s Scholarship Fund-New Hampshire (CSF-NH), to run the EFA program. By statute, the vendor is allowed to spend up to 10% of state EFA funds on administrative expenses.
That structure was intentional. Rather than tack 10 percent on top to cover administration, legislators wanted to keep costs down and create an incentive for the vendor to trim expenses. The contract is competitive and nonexclusive. Other vendors can win a portion of the state’s EFA business by finding ways to run the program for less.
House Bill 1820, sponsored by Rep. David Luneau, D-Hopkinton, and six other EFA opponents, would require the state Education Department to run the program, converting it into a part of the state bureaucracy.
Rep. Luneau explained his thinking during a House Education Policy and Administration Committee hearing on Wednesday.
“I think when you take a look at how taxpayer dollars are being used to fund public schools right now, 100% of those taxpayer dollars are going to the funding of those public schools,” he said. “In the case of EFAs, 90% of those state dollars are going to fund EFAs.”
Reserving 10% of program funds for administrative expenses is inefficient, he claimed.
“There’s nothing efficient about this EFA program,” he told the committee.
But state data show that public schools spend a higher percentage of their budgets on administrative costs than the EFA program does.
Public school vs. EFA administration costs
Not every dime that goes to a public school is spent in the classroom, obviously. Schools have administrative costs too. The state tracks those costs along with all other school spending.
The latest report, published on Jan. 8, shows that “general administration and business” expenses are 4.7% of New Hampshire public school spending, while “school administration” expenses are 5.4% and “business services” come to 0.8%.
The first two administration categories alone total 10.1%, slightly more than the legally allowed threshold of 10% for the EFA program. If “business services” are included, the total comes to 10.9%.
But the actual gap between EFA and public school administrative costs is even larger because CSF-NH spends less than 10% on administration.
CSF-NH’s most recent independent audit for 2025 (page 16) shows that it spends 7.8% on administration expenses. That’s down from 7.9% the year before.
HB 1820 would eliminate these savings, then add new costs.
Unconstrained administrative costs
Education Policy and Administration Committee Vice Chairman Rep. Katy Peternel, R-Wolfeboro, asked Rep. Luneau during Wednesday’s hearing to clarify that his bill would increase administrative costs for the EFA program.
“You want all of the adequacy funds to go to the student and then the department would have additional costs to administer the fund,” she asked.
“Yes, I would absolutely agree with you, Representative Peternel, that if this were to become law that EFAs would be funded with 10% more money than they are being funded with today,” Luneau replied.
That would mean higher costs for the state.
As of Jan. 1, the cost of the EFA program was $52.4 million for the current academic year, according to the latest state data. The cost to administer the program at the CSF-NH’s current 7.8% rate would be $4 million. That sum would be subtracted from the $52.4 million, not added to it.
By contrast, Luneau’s bill would require the Education Department to add a layer of administration on top of the $52.4 million. The department would have to hire staff to run the program. Unlike CSF-NH staff, the NHED staff would be state employees whose pay and benefits would be covered by taxpayers. Current law allows CSF-NH, a non-profit charity, to accept donations to help cover some of its costs.
If the state’s administration costs hit 10%, that would be $5.2 million for the current program vs $4 million for CSF-NH. But that’s not a difference of $1.2 million. Because the CSF-NH costs are deducted from the $52.4 million, and the state’s would be added on top, it’s a difference of $5.2 million.
And that’s if the costs did not exceed 10%. No one speaking during the bill’s hearing seemed to notice that HB 1820 eliminates the 10% cap on administrative costs.
The existing cap is in RSA 194-F:4, V. HB 1820 eliminates 194-F:4 entirely and replaces it with new language. Nowhere in the new Paragraph V or in the rest of the bill does it include a 10% cap on administration costs. So there would be no statutory limit on how much taxpayers could pay to run the program.
In sum, HB 1820 would:
- Eliminate the current cost-saving structure that allows administrative costs to be deducted from EFA funds;
- Eliminate the competitive forces that push administrative costs down;
- Require the department to add a layer of administration on top of existing EFA spending;
- Remove the 10% cap on administrative costs, allowing them to grow unchecked.
These changes would reduce program efficiency and increase costs.
As Rep. Peternel noted in the committee hearing, HB 1820 would cause the state to spend more taxpayer money on the EFA program, not less.
The inescapable conclusion is that HB 1820 would add a new layer of bureaucracy on top of the program and impose no constraints on that bureaucracy’s growth. The program’s current structure is significantly more efficient and cost-effective.
