Through a combination of one-time expenditures and increases in baseline formulas, the new state budget produces significant increases in education funding over the next two years. It is no wonder that state officials hailed the compromise as a windfall for public schools.

The budget was built upon an education funding compromise that dramatically reduced the budget’s structural deficit by shifting more than $60 million in recurring education spending to one-time spending.

But the other part of that compromise built into the budget several increases in baseline education spending that will require additional revenues in the future.

As part of the deal, increases in fiscal capacity disparity aid and free-and-reduced-price meal aid expire at the end of the 2021 fiscal year rather than continue indefinitely. Those bumps in aid are financed with $62.5 million in one-time money from the state’s budget surplus.

But other education aid increases are built into the baseline budget.

The budget changes the formula for kindergarten aid to count all kindergarteners as full-day rather than half-day students. That change will cost about $9.5 million a year above what Keno revenues had previously covered, according to the Office of Legislative Budget Assistant.

The budget also eliminates the formula by which stabilization grants were being gradually reduced. Stabilization grants are supplemental funds school districts receive as compensation for student enrollment declines. That is, schools get state funds to “stabilize” their budgets as they lose students (and the state adequacy aid that comes with those students).

The stabilization grants had been scheduled to decline by four percent of the 2012 grant level each fiscal year. The compromise budget restores them to 100 percent, permanently.

That change in state law increases 2020-2021 education spending by $56 million and adds about $6.2 million a year to the state budget going forward, according to the Office of Legislative Budget Assistant.

Finally, the budget increases the base per-pupil adequacy grant from $3,363 to $3,708. This increase was already scheduled under previous law, so it is not a new change. But it does drive state education spending higher.

Figures from the Office of Legislative Budget Assistant show that, including one-time and recurring expenditures, the budget spends $196 million more on education from FY19 through FY21, a 19.9% increase in appropriations over the 2019 budget.

Of that, $41 million is added for FY 2019, and $155 million for fiscal years 2020-21.

The line-item increase in total budgeted state education spending from FY19 to FY21 weighs in at 9.6%.

Adequate education aid accounts for the largest portion of the added spending. It rises by $111.9 million over the FY 2019 numbers approved in the previous budget.

Those are substantial spending increases, celebrated by both the Republican governor and Democratic Legislature. Yet we can’t help but suspect that political attack ads next year will frame things somewhat differently.

New Hampshire’s Education Tax Credit Program is under fire from legislators who want to kill the program or reduce its funding. Unfortunately, much of the rhetoric accompanying these attacks is factually incorrect. Inaccurate and misleading statements have been used in testimony at legislative hearings, in public debate, and on social media in an attempt to discredit the program. This briefing paper corrects many of those misstatements and explains what the program is, who is eligible, and what little financial impact it has. 

Read or download the full report (pdf) here: The Education Tax Credit Program: Fact vs. Fiction.

Serious misunderstandings about the state’s Education Tax Credit Program seem to be driving the effort to eliminate it. At least, they’re driving the narrative behind that effort. Misconceptions are so pervasive that legislators are repeating them in public statements.

Experienced drivers know that it’s dangerous if even a few people wind up going the wrong way. It’s worse if they persuade others to follow. There is too much misinformation circulating about the program to correct all of it here, but for the moment we can offer a quick summary of how it works and how much money is involved.

The Education Tax Credit Program, passed in 2012, allows businesses and individuals to claim a tax credit for donations made to qualifying scholarship organizations. Deductions may be claimed against the business enterprise and business profits taxes as well as the interest and dividends tax. Tax credits are equal to 85 percent of the donation. So a donation of $1,000 earns a tax credit of $850.

Some critics say this credit far exceeds standard practice. It doesn’t. Donors to the Community Development Finance Authority earn a tax credit equal to 75 percent of their donation.

Donations to this Education Tax Credit Program fund scholarships for low-income families to help cover the cost of education purchased outside of the traditional public school system.

In the current program year, donations to scholarship organizations are capped at $6 million, with a maximum available tax credit of $5.1 million. Some legislators, including the sponsor of HB 632, a bill to eliminate the program, have mistaken these legal maximums for an appropriation from the state budget.

“By reversing this unjust carveout, $6 million currently set aside for the education tax credit program would be appropriated fairly, taking into account all Granite Staters’ needs,” Rep. Joelle Martin, D-Milford, said in testimony before the House Ways and Means Committee in February.

Every part of that statement about the program is incorrect. There is no state money set-aside for the program. And the credits do not come close to totaling $6 million.

Here is how it actually works.

Individuals or businesses donate to the scholarship organization. The donors then give their donation receipts to the Department of Revenue Administration (DRA). The DRA then issues them a credit for 85 percent of the amount of the donation.

The credit is like a coupon. It can be redeemed when a donor files his or her taxes. But to claim it, the donor has to have a tax liability against which to apply the credit. Many donors never use the credit because their business or I&D tax liability is too low.

The Department of Revenue Administration’s Tax Expenditure and Potential Liability Report for fiscal year 2018 lists the total tax credits awarded under the Education Tax Credit Program since its start in 2013. The tax credits through FY 2018 have totaled $797,000.

(Note: The Department of Revenue Administration switched from calendar-year to fiscal-year reporting in 2014. It lists no Education Tax Credits claimed in its 2013 report, but notes that the 2014 figure includes the last six months of 2013.)

Education Scholarship Tax Credits Claimed

FY 2014: $20,000

FY 2015: $115,000

FY 2016: $93,000

FY 2017: $188,000

FY 2018: $381,000

The DRA’s latest report on the program shows that tax credits of $1,405,335 have been claimed through February 11 of this year.

So for the life of the program, only $2.2 million in credits has been claimed. That’s a little more than a third of the amount that the sponsor of HB 632 claimed the program cost annually.

There are many additional misperceptions that are coloring the debate about this program. We will address those in future posts. For now, we hope this clears up a few of the biggest misunderstandings.

A report by the Josiah Bartlett Center for Public Policy and EdChoice shows that New Hampshire public school spending and staffing increased much more rapidly from 1992-2014 than student enrollment did, and the staffing increase came overwhelmingly in non-teaching positions.

The study also calculates that of the $16,205 in per-pupil revenue New Hampshire public schools received in 2015, $11,716 (or 72.2 percent of total per pupil expenditures) can be classified as variable rather than fixed costs.

Together, these data show that there is no reason to believe Education Savings Accounts (ESAs) will trigger local property tax increases should families choose ESAs to provide educational alternatives for their children. On the contrary, ESAs can be expected to save school districts money.

School choice opponents always claim that losing a student won’t save a school money because the remaining students must continue to be taught, so the school can’t fire the teacher. These data show that the spending increases of recent decades have been concentrated in non-teaching positions and have far outpaced student enrollment growth. As such, schools have options for finding savings that need not include cutting teachers.

Study highlights:

•     Between the 1992 and 2014 fiscal years, real spending per student in New Hampshire public schools increased by 56 percent, even though student enrollment grew by only 4 percent.  In that same time, teacher salaries rose by only 2 percent.

•     From 1992-20015, the number of full-time-equivalent personnel increased by 56 percent.  These were mostly non-teaching positions. The number of teachers increased by 29 percent, while the number of non-teaching staff positions increased by an eye-opening 89 percent — 22 times the rate needed to accommodate student growth.

•     The student-to-staff ratio in New Hampshire fell from 8.6 students per full-time staff member in 1992 to 5.8 in 2015.  The national average in 2015 was 8 students per full-time staff member.

•    New Hampshire has a lower student-to-staff ratio, student-to-teacher ratio and student-to-non-teaching staff ratio than the national average. Nationwide in 2015, there were 16.1 students for every non-teaching public school staff member. In New Hampshire in 2015, there were 10.8 students per non-teaching public school staff member.

“The claim that Education Savings Accounts will cause property tax increases is just not borne out by the data,” Josiah Bartlett Center for Public Policy President Andrew Cline said. “With an 89 percent increase in non-teaching staff from 1992-2015 and a 56 percent overall increase in spending, there are opportunities to find savings on the non-teaching side of the ledger should schools lose some revenue from families choosing Education Savings Accounts.”

“Furthermore, as a previous Bartlett Center and EdChoice study showed, school districts can expect to keep more than 98 percent of their budgets should ESAs become an option for New Hampshire families. Looking at the numbers, there is no basis for the claim that ESAs will somehow decimate school districts. In fact, studies show that school choice programs tend to improve educational outcomes for students who remain in traditional public schools.”

Find the full policy brief here: Public School Staffing in New Hampshire

 

If the Education Savings Account (ESA) program proposed in Senate Bill 193 becomes law, school district operating budgets can be expected to decline on average by a mere 0.14 percent in the program’s first year, leaving districts with 99.86 percent of their operating budgets intact, based on the performance of school choice programs in other states.

School choice programs nationwide have varying rates of eligibility and participation.  The average participation rate in the first year of a school choice program is approximately 1 percent of eligible students.  It is important to note that this is 1 percent of students who are eligible for the program, not 1 percent of student enrollment.

Based on the eligibility criteria in Senate Bill 193, we estimate that 50% of New Hampshire public school students would qualify for the program.  We then apply the average first-year participation rate of 1% to the eligible population.

A 1% participation rate would see 835 students statewide choose an ESA.  Given the eligibility criteria in the bill, we estimate the average cost of an Education Savings account to be $4,500.  In SB 193, students who choose an ESA would receive an amount equal to 95% of the state adequate education grant of $3,636, plus 100 percent of additional state grant money (called “differentiated aid”) they might receive.  Special-education students and those who are eligible for free-or-reduced-price lunch qualify for differentiated aid, which helps districts cover additional expenses associated with those students.  Differentiated aid for non-proficiency in third-grade reading is not included in SB 193.

With an average ESA cost of $4,500, a 1% participation rate would reduce state appropriations to local school districts by $3,757,500, or 0.14% of district operating budgets, on average.  Again, on average, districts would therefore keep 99.86% of their operating budgets.

We also run the figures for a scenario in which 5% of eligible students choose an ESA.  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.  A 5% participation rate would see 4,175 students statewide choose an ESA.  State appropriations to local school districts would be reduced by $18,787,500, or 0.72% of district operating budgets.  Districts would therefore keep 99.28 percent of their operating budgets, on average.

For perspective, we calculated the percentage of total public school enrollment (called average daily membership) that would be expected to choose an alternative education were the ESA program in SB 193 available.

With 50% of students eligible for the program, a 1% participation rate would equal a reduction of 0.5% in statewide average daily membership.  A 5% participation rate would equal an average daily membership reduction of 2.49 percent.  As we noted in our December study, the average reduction in ADM from 2010-2015 was 7%, so the expected decline in enrollment would be well within the average range that school districts handle on a yearly basis.

SB 193 also includes stabilization grants that are triggered if a district’s total revenue is reduced by 0.25% because of students choosing ESAs.  If a district’s revenue declines by at least 0.25%, the state reimburses the district for any revenue loss that exceeds 0.25%.  Our study looks only at operating budgets, rather than total revenue, to give a more accurate picture of the impact on funding that a district controls from year to year.  Total budgets include costs, such as interest payments and construction, that are less variable and are not included in operating budgets.  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.

Table 1 shows the impact of a 1% ESA participation rate.  Table 2 shows the impact of a 5% ESA participation rate.  As in our previous study, we included every district for which we had data.

See the accompanying PDF to download the complete report with tables.  JBC — Education Savings Accounting

The whole premise of the anti-school-choice movement is that parents cannot be trusted to make sound educational decisions for their children. Still, it is jarring to hear people saying out loud that ESAs will harm special-needs children. These are precisely the children who could benefit most from an ESA.

The federal Individuals with Disabilities Education Act imposes certain procedural mandates on public schools. Among them is the requirement that public schools offer an Individual Education Program (IEP) to students who have special educational needs. Because IEPs are not mandated for private schools, ESA opponents say ESAs will harm special-needs kids. It’s nonsense.

First, New Hampshire public schools are mandated to coordinate with private schools to develop special education plans when a parent moves a special-needs child from a public to a private school.

Second, IEP regulations give parents a seat at the table when a child’s additional educational inputs are designed, but parents have only limited authority. School officials have the final say on IEP any IEP.

Third, the assumption that public (and only public) school officials are always right is only part of the problem. IEPs are necessarily limited. The blending of a traditional public school curriculum with an IEP might be great for most special-needs students, but it is not the best option for every child.

As the U.S. Supreme Court ruled in March, an IEP has to be more than just a minimal effort, but it does not have to be the best available program for a child’s specific needs. It only has to be “reasonably calculated to enable a child to make progress appropriate in light of the child’s circumstances.” If better alternatives are available, parents cannot make a district choose them.

In that Supreme Court case, an autistic child named Endrew F. (that’s spelled correctly) had an IEP, but failed to make the progress his parents knew he was capable of making. As the Supreme Court explained:

“Endrew’s IEPs largely carried over the same basic goals and objectives from one year to the next, indicating that he was failing to make meaningful progress toward his aims. His parents believed that only a thorough overhaul of the school district’s approach to Endrew’s behavioral problems could reverse the trend. But in April 2010, the school district presented Endrew’s parents with a proposed fifth grade IEP that was, in their view, pretty much the same as his past ones. So his parents removed Endrew from public school and enrolled him at Firefly Autism House, a private school that specializes in educating children with autism.

“Endrew did much better at Firefly. The school developed a “behavioral intervention plan” that identified Endrew’s most problematic behaviors and set out particular strategies for addressing them…. Firefly also added heft to Endrew’s academic goals. Within months, Endrew’s behavior improved significantly, permitting him to make a degree of academic progress that had eluded him in public school.”

Endrew’s story is familiar to some families of special-needs students in New Hampshire. A similar story in Newmarket is profiled here.

It’s absurd to say that making better options available to special-needs kids harms the kids. Some are served well by the public school system. Others need alternatives. They are unquestionably harmed by a system that prevents them from accessing those alternatives. That is exactly what opponents of Education Savings Accounts advocate.

Senate Bill 193, which would create ESAs in New Hampshire, will receive a House vote on Thursday. Opponents are using every absurd argument they can think of to defeat it. One talking point is that ESAs will make the opioid crisis worse because parents would steal the money and spend it on drugs. Could they be any more condescending to parents?

It is a good sign that opponents are abandoning rational arguments for absurdities. It means they know their weak arguments aren’t working.

 

Education Savings Accounts (ESAs) will not decimate public school budgets, a report released today by the Josiah Bartlett Center for Public Policy shows. In fact, even using a high average cost for each ESA and a high ESA take up rate of 5 percent, the report shows that every school district in New Hampshire would keep more than 98 percent of its operating budget.

“Education Savings Accounts will not defund traditional public schools,” Josiah Bartlett Center Interim President Andrew Cline said. “Even using opponents’ most dire prediction, in which 5 percent of New Hampshire students take advantage of ESAs to pursue educational opportunities outside of their assigned district, districts hold on to more than 98 percent of their funding.”

The report, “Will Education Savings Accounts Decimate Public Schools? Putting ESA Funding in Context,” used a high average ESA cost that included what is called “differentiated aid,” the extra funding for students that have additional needs, such as having an Individualized Education Program or being eligible for free or reduced-price lunch. Under Senate Bill 193, the ESA bill being considered in the Legislature, ESA funding would consist of 95 percent of a student’s state base adequate education grant plus most differentiated aid, if eligible.

Based on a high average ESA cost, the report calculates the financial impact on school districts if 1 percent or 5 percent of students choose an ESA. The report finds that if 1 percent of students leave statewide, school districts keep 99.7 percent of their operating budgets. If 5 percent of students leave, districts keep 98.7 percent of their budgets. Even under the 5 percent scenario, every district keeps more than 98 percent of its budget. These figures show the financial impact without the stabilization grants that are included in the latest House version of the bill. With those grants, the impact would be even smaller.

The report also considers whether a 1 percent or 5 percent enrollment decline would be unusually large. Looking back at state enrollment data from 2010-2015, the report finds that the average enrollment change over that time was a drop of 7 percent. That average decline is 40 percent larger than the 5 percent decline that some ESA opponents have used to portray ESAs as a massive threat to public school districts.

The report also calculates the amount of stabilization grant money each district would receive under the latest version of Senate Bill 193. The House version of the bill would distribute stabilization grants if a district loses at least 1/4 of 1 percent of its state adequate education grant funding. The grants would replace everything above 1/4 of 1 percent. The report shows how much money each district would receive in stabilization grants if 1 percent or 5 percent of students choose an ESA. If 1 percent of students choose an ESA, the stabilization grant would come to $950 per ESA. If 5 percent of students choose an ESA, the stabilization grant would come to $3,666 per ESA.

For the full report, click here:

ESA District Financial Impact

 

Debunking the Top Five Myths about Senate Bill 193,
 Education Savings Accounts

November 7, 2017

The House Education Committee meets on Wednesday, Nov. 8, to consider Senate Bill 193, a bill to establish Education Savings Accounts (ESAs) in New Hampshire.  This briefing paper dispels several myths about the bill.

SB 193 would establish ESAs that parents could use to purchase qualifying educational products or services.  ESAs work much like Health Savings Accounts (HSAs) do.  Parents could use them for education-specific purposes such as textbooks, tutors, transportation to and from school, or tuition at public or non-public schools.

Some of the myths are conceptual in nature (a failure to understand how the bill fits into the state’s public education framework).  Some are technical in nature.  This paper corrects the five biggest myths.

 

MYTH 1:  SB 193 drains money from public education.

REALITY:  SB 193 expands public education and empowers families.

This is a common misconception caused by the tendency to think of local public schools as the only providers of public education.  In fact, any educational endeavor financed by the public to meet the state’s constitutional obligation under Article 83 constitutes public education.  In New Hampshire (and in many other states, including Maine and Vermont), public education often is provided through tuition contracts with private schools.  Local school boards pay private schools to educate students.  SB 193 simply creates a different type of tuition contract.

The SB 193 model grants parents, rather than school boards or superintendents, more say in where state education grant money is spent, but those dollars continue to be spent exclusively on education.

 

MYTH 2:  Administrative expenses are outrageously high under SB 193.

REALITY:  SB 193 actually cuts administrative expenses almost in half.

Under SB 193, ESAs would be administered by a scholarship organization.  Five percent of a student’s per-pupil adequate education grant would be allotted to the scholarship organization to cover administrative costs.  Opponents say this wastes money that should be devoted to public education.  But that 5 percent fee is about half what the public school system currently spends on administration.

According to state Department of Education data (https://www.education.nh.gov/data/documents/summ_rev15_16.pdf), administration expenses at the public school level come to 5.5 percent (already higher than the 5 percent scholarship organizations receive in SB 193).  In addition, school districts have their own administrative expenses, which come to 4.2 percent of school district budgets.  The separate category of “business services” adds an additional 0.6 percent.

In total, 9.76 percent of public school system spending in New Hampshire is dedicated to administration if “business services” are included, 9.7 percent if “business services” are excluded.  Contrary to opponents’ claims, SB 193 reduces administrative costs and leaves more state grant money to be spent directly on education.

 

MYTH 3:  SB 193 would benefit only the rich because of private school costs.

REALITY:  SB 193 puts educational alternatives within reach of middle-income and low-income families.

The term “private school” conjures images of Harry Potter’s Hogwarts, or of real-life elite boarding schools such as Phillips Exeter Academy in Exeter.  But elite prep schools do not represent the typical private school in New Hampshire.

Private School Review (https://www.privateschoolreview.com/new-hampshire) puts the average private school tuition in New Hampshire at $8,546 for elementary schools and $29,383 for high schools, but the handful of elite institutions skews the high school figure.  To get a more accurate look at costs, a 2012 Josiah Bartlett Center for Public Policy study (https://www.jbartlett.org/wp-content/uploads/2012/03/Choosing-to-Learn.2.pdf) examined the figures for the 10 most populous municipalities in the state (which is where most scholarship activity will take place).  The study also obtained, where possible, the actual tuition paid by low-income families, which is typically much lower than the sticker price.

Not surprisingly, the private school tuition sticker price is higher than what families actually pay.  The study found the average elementary school tuition to be $6,328 and the average high school tuition to be $9,302.  Public school costs much more, state figures show (https://www.education.nh.gov/data/documents/ave_pupil15_16.pdf).  The average per-pupil expense is $15,033 at New Hampshire’s public elementary schools and $15,068 at New Hampshire’s public high schools.

SB 193 lets families spend 95 percent of their per-pupil adequate education grant of $3,636, which comes to $3,454.  That sum would cut the average out-of-pocket cost to $2,874 for elementary school and $5,848 for high school.

SB 193 also lets students use differentiated aid (extra money given to students who are eligible for free or reduced-priced lunch ($1,818) or who qualify for special education aid ($1,956).  A low-income special education student would receive 100 percent of differentiated aid plus 95 percent of his or her adequate education grant, for a total of $7,228.  That sum would cover 100% of the average private elementary school cost and 77 percent of the average private high school cost (all but $2,074).

 

MYTH 4:  Only the best, brightest and most advantaged students will apply.

REALITY:  Evidence from existing choice programs shows that they attract more disadvantaged students.

This myth can be tested by looking at New Hampshire’s existing Children’s Scholarship Fund.  Created in 2012 when legislators passed the Opportunity Scholarship Act, the program allows businesses to receive tax breaks for financing scholarships that families can use to pay for private school tuition.  Families receiving scholarships must have incomes no higher than 300 percent of the federal poverty level.  Although a family of four with an income of up to $73,800 qualifies, more than three-quarters of scholarship recipients come from low-income families.  Of the 260 Children’s Scholarship Fund recipients, 199 (77 percent) come from families that qualify for free or reduced-price lunch, which for a family of four would be $45,510 or less.

A 2017 Florida State University study (http://www.stepupforstudents.org/wp-content/uploads/FTC_Report1516.pdf) of the nation’s largest school choice program, Florida’s Tax Credit Scholarships, found that the program attracted higher proportions of minority and low-income students (about 70 percent of participants), and that applicants had lower test scores on average than eligible non-applicants before entering the program.  The study also found that participants came from lower-performing schools.  Moreover, after receiving a scholarship, these low-income students improved their performance to that of the national average for students from all income brackets.

 

MYTH 5:  SB 193 will produce a mass exodus from the public school system.

REALITY:  ESAs will likely attract a small percentage of public school students.

This allegation is made against every form of school choice program.  It was made against the opportunity scholarship program (see Myth 4) created by the Legislature in 2012, and it turned out to be completely wrong.

In truth, scholarship programs tend to be attractive to families with few economic resources whose children really struggle in a traditional public school setting.  A standard bell curve model would suggest that scholarships would appeal to a small number of families on the lower end of the curve, and that has been the experience with the opportunity scholarship program.  Now four years old, the program serves only 260 students, and more than three-quarters of them qualify for free or reduced-price lunch.

Even the nation’s largest school choice programs typically serve fewer than 5 percent of students, and seldom more than 1 percent in the first year of operation.   Rather than being a giveaway to rich families with involved parents, scholarship programs tend to serve low-income families who are desperate to find educational alternatives for their children.  This is because ESAs provide options for families who otherwise have none.

It is worth noting that Florida’s scholarship program was found last year to increase college attendance by 6 percent (http://sunshinestatenews.com/story/tax-credit-scholarship-program-students-more-likely-attend-college-study-shows).  Given that scholarship recipients are more likely to be low-income, minority students from poor-performing schools, that is a huge achievement, which we should strive to replicate in New Hampshire.

 

The Josiah Bartlett Center for Public Policy is a non-profit, non-partisan, independent  think tank focused on offering free-market solutions to state and local public policy issues.  Published by the Josiah Bartlett Center for Public Policy, P.O. Box 897, Concord, NH, 03302.

 

FOR IMMEDIATE RELEASE: Sept. 6, 2017

CONTACT: Richard Komer, Institute for Justice, 703-682-9320

New study shows how Educational Savings Accounts are constitutional in NH 

CONCORD —A legal review by the Institute for Justice, done in conjunction with the Josiah Bartlett Center for Public Policy, shows that Educational Savings Accounts (ESAs) are constitutional under both the New Hampshire and United States constitutions.

“There is no doubt that an ESA program in New Hampshire would comport with the U.S. Constitution, and in this paper we conclude that the program would also pass muster under the New Hampshire Constitution,” Institute for Justice Senior Attorney and report co-author Richard Komer said.

The paper, “The Constitutionality of Educational Savings Accounts in New Hampshire,” by Komer and Institute for Justice Attorney Timothy Keller, reviews court opinions that have been issued in relation two New Hampshire’s two constitutional provisions written to prohibit direct taxpayer financing of sectarian religious instruction.

“These two provisions, properly interpreted, do not preclude religiously neutral educational assistance programs that aid parents and families rather than private and religious schools per se,” the study concludes.

The study is relevant to the ongoing debate over Educational Savings Accounts in New Hampshire. A bill to establish ESAs, Senate Bill 193, was retained in committee in the Legislature this year and could be brought forward next year.

“Legal questions about the use of public funds to educate our children can be confusing given the complex history and competing public interests involved,” Andrew Cline, interim president of the Josiah Bartlett Center for Public Policy, said. “This paper provides some much-needed clarity to show that there are, in fact, ways that Educational Savings Accounts can meet constitutional muster in New Hampshire.”

Educational Savings Accounts are restricted financial accounts that can be used for a limited array of educational purchases. A family that does not find the local public school satisfactory may have a child’s per-pupil allotment of school funds deposited into the account. That money can then be spent (typically via debit card) to purchase an education not necessarily provided by the local public school.

Copies of the study are available on the Josiah Bartlett Center for Public Policy’s website, www.jbartlett.org (see link below).

 

JBC_IJ_NH ESA Opinion Final

-30-

Charlie Arlinghaus

October 28, 2015

As originally published in the New Hampshire Union Leader

The state is refusing to defend itself and the governor is attacking herself for having bad ideas. Welcome to the world of education funding where lawsuits make everyone weird and no one seems to be able to figure out which way is up.

The City of Dover is suing the state because an education funding law in place for years limits the amount their state education aid increases. To make matters more confused, Dover’s lawsuit stipulates that they do not and will not agree that the underlying system is constitutional only that there is an unconstitutional cap on a system that they don’t have an opinion on.

With much fanfare a few legislatures ago, the state passed a new education aid formula to govern the distribution of state education aid. It was said to be “more constitutional” but from the beginning it made concessions and alterations and had caveats.

About one-third of the $3 billion in school spending comes from state revenue sources. That is distributed through a complicated formula based largely on the number of pupils in a given district in a given year. The formula creates a number but that number is then modified to make sure no town loses too much funding or gains funding rapidly and to make sure there are no net donor towns.

The law was duly passed and reauthorized multiple times. The state’s Attorney General is charged with defending the state of NH and its laws in court. If we pass a law and are sued, they are the state’s attorney. But not this time.

The law was passed by both houses of the legislature. Capping increases has been voted for by Democratic legislatures, Republican legislatures, and divided legislatures. It was signed by Governor Lynch, supported multiple times by Governor Hassan. There is no evidence that the Attorney General or legal counsels for any legislative chamber or governor’s staff protested.

Today is a different story. The Attorney General has decided that it will not defend the law as passed and reaffirmed so many times. The governor who proposed caps in her budget and didn’t support legislative plans to eliminate them has had a change of heart. She announced she agrees with the Attorney General and that she hopes the legislature will “fully fund” what the districts want.

To “fully fund” would require $14 million for Dover alone and another $25 million for the other cities and towns. Presumably the governor’s next press release will include a proposal for just where that money would come from.

Fortunately for taxpayers, the legislative legal counsels have announced they will take up the baton cast aside by the executive branch and defend the law. Senate legal counsel Rick Lehman takes the position “the legislature passed the law, it should be defended.” He and the House legal counsel, Chuck Douglas, will be defending the law. If they are successful, Governor Hassan won’t need to figure out how to find an additional $40 million to pay for her press release.

The lawsuit underscores the serious issues related to education funding that have been ignored for most of the last decade. Our whole approach is and has been contradictory.

When a newly installed legislature passed a new formula in 2008 they trumpeted their constitutional nobility in contrast to the supposed compromisers and slackers of previous legislatures who made political calculations at the supposed expense of the guidelines set out by court opinions. Yet in doing so, they specifically made an exception for towns with excess property tax — the old donor towns.

The law also sought to exempt towns losing students from the law and not do too much right away for towns gaining students. In essence, the legislatures and governors made political decisions about how aid should be distributed as a practical matter — the same kind of decision lawmakers make on every subject under the sun.

The lawsuit seeks not just to abrogate a law but also to have the court appropriate money — a function expressly limited to the legislative branch. It seems like that would have been worth defending.