Senate bill would redirect money for lower-income scholarship kids to higher-income college grads

A bill before the Senate Ways and Means Committee next Wednesday would cut education scholarships for lower-income children and redirect the money to higher-income college graduates.

The title of Senate Bill 663 offers no hint that it would make this switch. The bill would create a tax credit to fund the Graduate Retention Incentive Partnership (GRIP), established last year. But inserted into the middle is a provision to slash the Education Tax Credit by 60 percent.

SB 663 would fund the GRIP tax credit dollar-for-dollar with money taken from the Education Tax Credit, which finances scholarships for children whose families earn no more than 300 percent of the federal poverty level.

The bill would take $3 million from lower-income families and redistribute it to college graduates, many of whom would make more money than the families of the children who receive tax credit scholarships.

The GRIP tax credit would go directly to employers to cover 25 percent of a $1,000 annual payment employers could give to recent New Hampshire college graduates who work in-state for four years.

The state has placed no income cap on who can receive GRIP incentive payments. Nor are the payments limited to public university graduates. Dartmouth alumni are as eligible as graduates of Plymouth State University.

By contrast, tax filings show that more than 60 percent of students who receive scholarships through the Children’s Scholarship Fund, the larger of two organizations authorized to run the program, are eligible for free or-reduced-priced lunch.

Through the Education Tax Credit scholarship program, businesses and individuals take a credit on certain state taxes for donations made to one of two non-profit education scholarship programs for lower-income families.

Currently, 667 students have scholarships funded through the tax credit. The scholarships total about $1.4 million so far this year.

Existing law caps the total credits at $5.1 million annually. SB 663 would cut the cap to $2.1 million. Given the program’s rate of growth, the cap in SB 663 soon would be hit, wiping out scholarships for more than 1,000 lower-income students.

Kate Baker, executive director of the Children’s Scholarship Fund, said another 93 children have applied to CSF for a scholarship for next year, and the applications just opened on Jan. 1.

If SB 663 becomes law, it would halt the growth of these scholarships. A $3 million reduction in available funds would eliminate scholarship opportunities for about 1,500 students, Baker said.

The hearing for SB 663 is scheduled for 9:20 a.m. Wednesday, Jan. 29, in Room 100 of the State House — in the middle of School Choice Week.