This year’s state budget, up for a vote on Thursday, contains an Education Freedom Account (EFA) program to give families more options for educating their children. Here is a quick summary of who has similar programs and how this one would work.
What is an EFA?
Nationally, these programs are known as Education Savings Accounts (ESAs). New Hampshire being New Hampshire, ours is called an Education Freedom Account. Like other ESAs, it consists of a government-approved savings account that can be used for authorized educational expenses only.
The media routinely refer to the EFA program as a voucher, but it is not. Traditional vouchers pay for school tuition by sending a state payment directly to an education provider. An EFA does not work that way. With an EFA, the state deposits a student’s education grant into an approved savings account that is controlled by the parent. The parent may then choose to spend those funds on a list of approved educational expenses.
These restricted-use savings accounts are similar to a health savings account. Expenditures are limited to a list of legislatively approved uses. Qualified educational expenses include, to name a few, tuition and fees to private schools or other public schools, tuition and fees for non-public online learning programs, tutoring services, textbooks, curricula and other instructional materials, computer hardware, internet connectivity, other tech services, school uniforms, and educational services and therapies.
Where did EFAs come from?
Education Savings Accounts have been around for more than a decade and have been growing in popularity.
In 2020, five states had ESA programs: Arizona, Florida, Mississippi, Tennessee, and North Carolina. Arizona’s program started in 2011. About 4% of eligible students are participating in Arizona’s ESA program.
So far this year, 11 states have already passed at least one new or expanded educational choice bill, and legislation is pending in other states.
Kentucky and Missouri both passed ESA programs funded by donations for which donors erceive tax credits.
Indiana has created a new publicly funded ESA program to assist students with special needs and expanded the state’s tax-credit scholarships (both were passed in the two-year state budget).
West Virginia has passed an ESA program called the Hope Scholarship in which every student entering kindergarten or switching from public school is eligible for 100% of his or state education funds (about $4,600).
What do EFAs look like in New Hampshire?
New Hampshire’s EFA program has an income eligibility cap of 300% of the federal poverty level ($79,500 for a family of four). The Josiah Bartlett Center estimates that just over 30 percent of New Hampshire families of school age children would qualify to apply for the program.
If approved, a family would have its state per-pupil education grant deposited into the EFA instead of sent to the district school. According to state Dept. of Education, the grant would average about $4,600 per student in the 2021-22 school year. As mentioned above, families could then use these funds to pay for a variety of educational expenses.
For the vast majority of students, the state will continue sending the adequate education grant directly to their assigned public school. But for families who choose an EFA, the money goes into the savings account. The Josiah Bartlett Center estimates that fewer than 1,000 students would take an EFA in the first year and around 2,000 in the second year. (You can read our study of the EFA proposal here.)
Our research also shows that Education Freedom Accounts would not raise property taxes or destroy school budgets. State aid to local schools would decline by only 0.024% in the second year of the program. And taxpayers would actually save $6.65 million in the first two years.
EFAs would not be the first educational choice program in New Hampshire. The state already has an education tax credit (ETC) scholarship for low-to-middle income families. Charter schools are independent public schools that exist in some communities. And, towns have long been allowed to tuition students to other schools.
These other choice options are extremely limited and are not available to many Granite State students. The Children’s Scholarship Fund-N.H., for example, manages a tax credit scholarship program that helped 626 students in the 2020-2021 school year. But about 800 students were left on a wait list.
Families of greater means have greater educational options. They can choose private schools or move to another school district. Education Freedom Accounts would offer lower-income families the ability to get the best education for their children too.
Funding public education doesn’t mean funding a school building. It means providing each student with the education that best fits that student’s needs. EFAs offer families a way to match their children with the education that works best for them.