New Hampshire's Education Freedom Account (EFA) program is projected to cost taxpayers $51.6 million this school year, with new data revealing that the overwhelming majority of its 10,510 students did not transfer from public schools. The program is now on track to exceed its biennial budget by nearly $27 million, raising questions about its financial impact on the state's education funding.
Key Takeaways
- The EFA program's cost is projected to be $51.6 million this year and $61.9 million next year, creating a $26.7 million budget shortfall for the biennium.
- Only 343 students, or 3.26% of total enrollment, transferred from public schools to join the program this year.
- The program has a significant student attrition rate, with an average of 18.4% of students leaving over the past three years.
- Funds are distributed by a third-party vendor with ties to a Chinese venture capital firm, raising data security questions.
Financial Strain on State Education Fund
The financial scope of New Hampshire's school choice initiative has expanded significantly, with costs now set to surpass legislative appropriations. The program is expected to cost $113.5 million over the current two-year budget cycle, which is $26.7 million more than was allocated.
This spending draws directly from the state's Education Trust Fund, the primary source of funding for New Hampshire's public schools. The increased expenditure on the EFA program represents a new financial commitment for the state, as the vast majority of participating students were previously educated in private settings without state financial support.
By the Numbers: EFA Program Costs
- $51.6 million: Projected cost for the current school year.
- $61.9 million: Projected cost for the next school year.
- $26.7 million: The amount the program is over budget for the biennium.
Critics argue this diverts money that could otherwise be used to support the public education system. The funding covers grants for students who were already attending religious schools, private academies, or were being homeschooled before the program's expansion.
Analysis of Student Enrollment Data
Recently released data from the New Hampshire Department of Education provides a clearer picture of who is benefiting from the EFA program. After the legislature removed income eligibility caps, enrollment nearly doubled to 10,510 students for the current school year.
However, the data shows that very few of these students are leaving the public school system. For the 2024-2025 school year, only 343 students—just 3.26% of the total—were former public school students. The remaining 96.74% were already in private education settings.
A Shift in Funding, Not Students
The data indicates that between $47.18 million and $49.92 million of this year's EFA funds are being directed to families whose children were not previously funded by the state. This represents a significant new expenditure rather than a simple transfer of existing per-pupil state aid from public to private options.
This finding challenges the argument that the program saves school districts money, as the vast majority of participants do not create an empty seat in a public school classroom. Instead, it subsidizes private education choices for families who were already paying for them.
High Attrition Rates and Unexplained Departures
The program is also experiencing a high rate of student turnover. Over the last three years, an average of 18.4% of enrolled students have left the program annually. This figure is significantly higher than typical public school dropout rates.
For the current school year, a total of 1,139 students departed the program. While 151 graduated and 101 returned to public schools, a large number—887 students—left for reasons the state has categorized as "unexplained."
This trend has been consistent over the past few years:
- 2023-2024: 708 students left (19% of enrollment), with 525 for unexplained reasons.
- 2022-2023: 458 students left (15% of enrollment), with 344 for unexplained reasons.
The consistently high number of unexplained departures raises questions about the program's stability and effectiveness for the families it serves.
Administrative Oversight and Security Concerns
Beyond the financial and enrollment data, questions have emerged regarding the program's administration. The state contracts with the Children’s Scholarship Fund NH to manage the EFAs. This organization, in turn, uses a digital wallet company called ClassWallet to distribute the funds to parents.
ClassWallet has faced scrutiny in other states, including Arizona and Missouri, because one of its early investors was Sinovation Ventures, a venture capital firm co-founded by the former president of Google China. A 2018 Department of Defense report identified the firm as being part of China's strategy to acquire foreign technology.
"How many parents of EFA students would want their education spending data potentially accessed by a foreign country like China?" remarked Garry Rayno, a veteran State House journalist, in a recent analysis of the program.
While ClassWallet does not have a direct contract with the state of New Hampshire, its use by a state contractor has introduced concerns about data privacy and security for the thousands of families participating in the program. This issue adds another layer of complexity to the ongoing debate over the future of the state's expanding school choice initiative.
