What you need to know about NH’s school choice bill

How will it be paid for, why do we need it and is it legal?

A bill that allows some parents to use state funds to defray the costs of sending their child to a nonpublic or alternative school has cleared another hurdle on its way to becoming law.

On Jan. 16, SB 193, titled, “establishing education freedom savings accounts for students,” came before the house finance committee for a public hearing.

“Over the four-and-a-half hour hearing, many people testified, with somewhat less than one-third supporting the bill and somewhat more than two-thirds opposing it,” writes Rep. Neal Kurk, R-Weare, chairman of the House Finance Committee in an email to Parenting NH. He estimated about 75 people spoke at the hearing.

He said public comments were limited to the financial impact on school districts, the state budget, local and state taxpayers, and the like. 

“The policy issues related to the bill — for example, whether educational scholarships/vouchers are appropriate and desirable for this state, whether the proposal is constitutional among others — were decided favorably by the House when it approved the bill and sent it to the Finance Committee for consideration of the cost aspects of the proposal,” he wrote.

This has been a contentious bill for the past year with proponents arguing that it would allow parents the right to choose a better school for their child and opponents arguing that this bill will gut public education.

No matter where you stand on the merits of school choice, the bill itself has left some with lingering questions about how the bill — which includes stabilization grants for districts who lose a certain percentage of students — would be funded.

What is SB 193?

Senate Bill 193, which was introduced in January 2017, is a bill that allows eligible students to get up to 95 percent of what the state currently pays per pupil for public school to use that money to go to a private school. Current estimates put that amount at roughly $3,600 per student on average. The remaining 5 percent would go to cover the costs of the organization that administers the scholarship.

Students with special needs, and those who receive free and reduced lunch, would also get what is called differentiated aid under SB 193. Differentiated aid is money the state provides to school districts to cover expenses associated with these students. State Sen. John Reagan (R-Deerfield), one of the co-sponsors of the bill, said they estimate students who qualify could receive anywhere from $4,500 to a maximum of $7,000.

The way that works, according to the bill, is the scholarship organization would contact the New Hampshire Department of Education to tell them the number of eligible students applying for the scholarship. The department would transfer the money into individual student savings accounts to be spent on tuition, transportation, textbooks, curriculum, online courses, training, tutors, testing and home schooling supplies among other authorized education-related expenditures. This money can go toward any approved private school, including religious schools, or to families who home school.

Reagan said it’s not certain yet if the money would go directly to parents or if the scholarship fund would send it directly to the private school, or in the case of homeschoolers, directly to the families. He said that likely won’t be hammered out until the bill becomes law.

Eligible students, according to the latest version of the bill available at press time, include students ages of 5 to 20 who have not graduated high school  and who are attending a New Hampshire public school, including a chartered public school, for a minimum of one year; or who received an account in the prior year; or who is entering kindergarten or first grade; and whose annual household income is less than or equal to 300 percent of the federal poverty guidelines (For single-parent households with one child that is about $48,720 a year. For an average four-person household, that amount is about $73,800.); or who is assigned to a school that for two consecutive years has been unable to demonstrate that it provides the opportunity for an adequate education; or who has an individualized education program (IEP) or an accommodation plan; or who applied and was not admitted to a chartered public school or whose application for an education tax credit scholarship was not funded.

An education tax credit scholarship is a mechanism by which private donors and businesses donate money to an education fund in return for tax credits. That money is given out to eligible low-income students to use to go to private schools. These funds are administered by the nonprofit NH Children’s Scholarship Fund. According to their website, in 2016-17 they awarded 260 scholarships totaling $560,000.

Homeschooled students, roughly 5,900 students that don’t currently receive state funding, would be eligible for scholarship funds under this bill.

Further, the state would reimburse districts that lose more than one-quarter of one percent of their allocated budget with stabilization grants, paid for by the state, for the fiscal year the district takes the hit, as well as the four fiscal years following.

According to the bill, the Department of Education shall then order the scholarship organization that provided accounts to students from those districts to conduct a survey of the financial effects of students receiving scholarships. The organization will determine the amount of the reduction, if any, and whether the scholarship program has resulted in economic hardship to the school district.  The results are forwarded to the school boards of those districts.

Reagan did not immediately have an idea of how much the state would have to pay out in stabilization grants. When asked via email where the money would come from to pay for the grants, he said he did not have time to do the research on that question.

During an earlier interview with Parenting NH he said, “I don’t know what the projection was on that. If it was $10 million it still puts the program in place and you’re going to get the bonus of you’re going to get improved performance from the public schools.

“Because once the heat’s on and the school sees a couple of kids leave, you know the principal tells the teachers you want to keep your positions you better do things better because now the parents have a choice.”

When asked about the financial impact of this bill, Finance Chairman Kurk said in a brief phone interview, “I don’t have the time to do what you are asking me to do” and declined to schedule an additional interview.

He did say there were financial documents available discussing the impact that included reports and analysis generated by The Josiah Bartlett Center for Public Policy, a New Hampshire-based think tank that, according to its website has, “as its core beliefs individual freedom and responsibility, limited and accountable government, and an appreciation of the role of the free enterprise system”; from Reaching Higher New Hampshire, a think tank who, according to their website, has a mission to, “foster … support for high standards in our public schools, giving all New Hampshire children the opportunity to prepare for college, for immediate careers, and for the challenges and opportunities of life in 21st Century New Hampshire.”; and, from “several other organizations,” which he did not name. These documents did not include estimates or analysis from the New Hampshire Department of Education, Kurk said.

According to the Josiah Bartlett Center’s report, the participation rate nationally among states that have voucher programs is 1 percent of eligible students. They note that this is one percent of eligible students, but not 1 percent of all students.

Based on the criteria laid out in SB 193, the Center estimates that half of New Hampshire public school students would qualify for the program. So, using that 1 percent average on that population, The Bartlett Center determined that it’s likely 835 students statewide would choose a scholarship.

Using $4,500 as an average scholarship payment (which includes 95 percent of the state adequate education funding, plus 100 percent differentiated aid) and a 1 percent participation rate, The Bartlett Center estimates that the ESA would reduce state funds to local districts by $3,757,500, or “0.14 percent of district operating budgets, on average.” 

They also looked at what would happen if 5 percent of eligible students received a scholarship.

“That would be a high first-year participation rate, but a reasonable rate to expect several years down the road, based on the experience in other states,” according to the Center. At 5 percent, if 4,175 students statewide choose a scholarship, state funds to local districts are reduced by $18,787,500, or “0.72 percent of district operating budgets.”

The Center argues this number falls within the range of the number of students public schools lost between 2010 and 2015, which they say is 7 percent. “The expected decline in enrollment would be well within the average range that school districts handle on a yearly basis,” according to its analysis.

As for the stabilization grants, The Bartlett Center looked only at the operating budget, as opposed to total revenue and, “To keep this study simple, we did not include the amount districts might receive in stabilization grant funding. Had we included stabilization grants, the average revenue loss would be even smaller.”

Reaching Higher NH, in its analysis, did look at the stabilization grants. They estimated if 3 percent of students get vouchers in the first year of the program, districts would lose $5.8 million in state funding. They further estimated that the state would spend $2.2 million that year in stabilization grants and $10.1 million over five years. They are also estimating the state would be spending another $2.6 million per year for students currently in private schools who get vouchers. These numbers, according to Reaching Higher are just based on the number of students getting free and reduced lunch.

“As a result, however, the $31 million (total over the next five years) should be considered a conservative, minimum estimate of impact.”

The Department of Education was expected to release its estimation of the financial impact of the bill, but according to an email sent Jan. 17 by department spokeswoman Bianca Garcia, “We will not be able to release any information until the fiscal note is finalized.”

Oversight

The parent of the child receiving the scholarship is responsible and accountable — in consultation with their educational providers — to establish academic growth goals for the student at the outset of each academic year and will regularly measure students’ academic growth throughout the school year. 

According to the bill, “in measuring each student’s progress toward achieving those goals throughout the school year, the provider may use a variety of assessment tools and participating students shall take either the statewide assessment test or a nationally norm-referenced test that measures learning gains.”

This includes homeschooling families who are not required to participate or provide assessments to the state. Some homeschooling families have balked as they won the right in 2012 to not have to do assessments and report to the state. This law would reverse that for those who accept scholarship funds.

Michelle Levell, who heads up School Choice NH, a nonprofit that advocates for school choice, said the scholarship program is optional and if homeschooling parents don’t like this requirement, they do not have to apply.

These tests for homeschooling families, according to the bill, would be paid for by the public school district.

Amy Gall, who heads up the NH Homeschooling Coalition, declined to comment, saying that as a nonprofit they do not take a position on legislative issues.

If a student is not making satisfactory academic growth after two years, the scholarship organization, along with the parents, would come up with an intervention plan that includes a process for monitoring student growth and progress. The organization would also then review the use of education freedom savings account funds to ensure expenses best address the student’s academic growth.

The bill also establishes an Education Freedom Savings Account Commission comprised of two senators, three representatives, the scholarship administrator and a member of the state board of education to, “provide a report on or before Nov. 1 of each year to the general court including findings, recommendations and any corrective or technical improvements that the education freedom savings account program may require.”

There is a sunset provision built in where, unless renewed, the law expires in 2023.

Why do we need a school choice bill?

Sen. Reagan said he introduced this bill because, “We need it to introduce competition in education and for parents and children to seek a different venue for educating their children.”

Despite the availability of charter schools, homeschooling and private schools, he said that competition is not available, “by any stretch of the imagination.”

This bill would allow more children to “seek other venues,” he said. Adding that judging by other states that have adopted school choice programs “when you introduce any type of school choice, all the schools in the area improve because they have to.”

When asked if there were any specific deficiencies in the current public school system that he could use as examples or specific districts that needed improvement, Reagan did not cite any.

“If we do nothing we just continue to poorly educate children,” Reagan said.

Levell with School Choice NH said this law is needed because, “right now wealthy families already have these sorts of options for their children if needed. Even if they’re in a really good district, that doesn’t mean it fits their particular child. Each kid is different. And right now wealthy families can either move to a really high performing district or on their own afford a private school or religious school or homeschooling expenses. Those are often out of reach for the people who need it the most. Whether its low-income families or special needs families.”

Levell said these scholarship accounts put these options within reach.

Private school tuition varies greatly and some schools offer their own financial aid packages to students. The Bartlett Center released an average of the cost of tuition in the 10 most populous areas in the state in 2012. They found tuition for low-income students who qualified for financial aid, the lowest tuition cost for elementary students was $2,200, the highest was $25,700, the median was $5,000 and the average was $6,328 per year.

For high school students, the lowest cost, excluding those who offer free tuition to those who qualify, was $2,405, the highest was $25,700, the median was $7,978 and the average was $9,302.

However, Reaching Higher NH said this bill would unduly harm the hometowns of the low-income students in particular. It said the largest pool of eligible students will likely be those from households who earn less than 300 percent of the Federal Poverty Line.

“This means that about 70 percent of eligible students will come from communities that are extremely vulnerable to fluctuations in state aid and enrollment,” Reaching Higher reports. “These communities depend on dollars raised through local taxes and state funding due to lower-than-average equalized valuation per pupil (lower-than-average property valuations, meaning a lower ability to raise property tax funds). For example, a reduction in state aid in Franklin has a more discernible impact on their local budget than a reduction in state aid in Rye.”

Reagan said this is likely a moot point because this population isn’t likely to take advantage of these scholarships because tuition at the private schools would still be more than they can afford.

“A poor rural district is made up of poor rural people,” he said. “They’re not going to move their kids. How are they going to do it if they’re poor? They don’t have to move far but they still have to pay the tuition? Without special needs that’s limited to $5,000.”

What is it going to cost?

Rep. James Grenier (R-Lempster), a member of the House Education Committee, said no one knows what this bill will cost, and that’s one of his big problems with the bill as it’s written.

(Parenting NH reached out to House Education Committee Chairman Rick Ladd, but he did not return calls or emails seeking comment. Parenting NH also reached out via email to committee members Barbara Shaw and Joseph Pitre — who also co-sponsored the bill — and none of them responded to requests for comment. Linda Tanner responded after the deadline and said she had been busy and apologized.)

Grenier said the state has yet to come up with a way to adequately fund its current obligations such as the NH Special Aid Fund and building aid, so he’s skeptical as to how the state is going to be able to fund an indeterminate amount in stabilization grants.

He said this is particularly worrisome because the state doesn’t already have a pool of money set aside; it will just have to come up with it from somewhere.

Furthermore, he said, local property owners will end up bearing the burden of paying for this law in a few ways.

Though the state pays a per pupil and differentiated aid amount for a special education student, that amount usually falls well short of the actual cost to educate the child which, depending on the need could be as much as $100,000 or $200,000. That shortfall is typically funded by the taxpayers in local districts. That will be the same under the new law. So even if the student goes to a private school, local tax payers will still have to make up the difference.

And taxpayers generally will be paying for the stabilization grants, he said. “These are adding huge costs to our local school districts and towns.”

Grenier said that the open language of the bill may have the state paying for student populations it hasn’t had to pay for up until now such as homeschooled students or any of the 16,266 students already attending private school.

When asked via email whether any current private school students could get a voucher, Reagan did not respond.

Is this legal?

The scholarship funds can go to pay for tuition at religious schools. This is raising questions of constitutionality for some people, while others believe the state will be on solid ground in this regard.

Gilles Bissonnette, legal director for the American Civil Liberties Union of New Hampshire wrote in a position paper, “The New Hampshire Constitution mandates strict separation of church and state, and includes explicit prohibitions on using taxpayer dollars to support religious education.”

Grenier said he too thinks the bill is on shaky ground constitutionally, but for a slightly different reason. Grenier said when the bill was first being discussed he asked why parents couldn’t just apply directly to the state for these funds. This would eliminate the need and expense of a scholarship organization and allow the state to raise and appropriate funds.

Grenier said the New Hampshire Constitution prohibits state and local tax dollars from being spent to educate a student in a religious school.

“By giving the money to a parent through an education savings account, the bill plays a game of beans and presumes the funds do not go to a religious school because the money does not go directly to a religious school, but to the parent,” he said. “This is how the intent of the New Hampshire Constitution is an end run and why the bill cannot be a simple and clean ‘raise and appropriate’ bill.”

Reagan said he is confident that even if there are challenges, this is not new territory and other states have successfully been able to prove that this is, in fact, constitutional.

Gov. Chris Sununu is on record as being an enthusiastic supporter of SB 193. Last June, he signed a school choice bill, much narrower in scope, known as the “Croydon Bill,” which allows some school districts who lack a public school for certain grades to use public money to pay for private school.

As of this writing SB 193 was still in the House Finance Committee and is expected out of committee in March.  

Melanie Plenda is an award-winning freelance journalist based in Keene.

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