The New Hampshire Senate has rolled into its budget a bill (Senate Bill 130) to create Education Freedom Accounts (EFAs), which would give lower-income families the option of choosing the school that best fits their child’s needs. Critics say they would defund public schools. But this isn’t true. EFAs would save taxpayers money while giving families more educational options.
In New Hampshire’s current education funding system, the state directs $3,708.78 in “base adequacy aid” to public schools for each student enrolled. This funding is supplemented for students with additional needs. Students who qualify for special education services, free and reduced-priced lunch, or who are English language learners receive additional funds.
The EFA legislation would let parents who earn no more than 300% of the federal poverty level apply for a state-approved Education Freedom Account. Any family approved for EFA would have its state per-pupil funding deposited into the EFA, which is a restricted savings account. Money in the account could be used only for approved educational expenses.
How would this affect public school spending?
The Josiah Bartlett Center for Public Policy analyzed the fiscal impact of the bill this spring, and our report concluded that the cost of the program to the state would be approximately $2.4 million in the 2021-2022 school year and $5.9 million in the 2022-2023 school year.
The state Department of Education has estimated total expenditures in public education will be somewhere around $3.5 billion, and the state portion will be just above $1 billion in each of the next two school years.
The estimated $2.4 million price tag, if you will, for ESAs in 2021-2022 would be just 0.24% of state education spending and a mere 0.07% of the total projected expenditures on public education in New Hampshire when local and federal funds are included.
The $5.9 million cost in 2022-2023 is still only 0.59% of the projected state expenditures.
On the local side, EFAs would result in savings, not increased expenses.
As mentioned above, the state portion of education expenditures is less than 30% of the total education funding in New Hampshire. In the 2019-2020 school year, 62.6% of total education expenditures in New Hampshire were provided by local taxation.
A student whose family chooses an ESA instead of his or her assigned public school would receive an average of $4,578 in state per-pupil funding in 2021-2022 and $4,803 in 2022-2023. This money would leave a district school. But so would the student, and thus, the need to spend additional money raised by local taxation to educate that student.
Our study projects that school districts would save $4.2 million in 2021-2022 and $10.7 million in 2022-2023. Subtracting the cost to the state of $2.4 million and $5.9 million, you get a net taxpayer savings of $1.85 million in the first year and $4.8 million in the second year.
Although saving money is not the primary intent of this policy, EFAs would lead to an estimated $6.65 million in net taxpayer savings in the first two years of the program alone.
The fear mongering claim that EFAs would “defund public schools” just isn’t true. They would save taxpayers money while providing students who don’t succeed in their assigned public school a much-needed option for finding a school that works for them.
EFAs are not an attempt to defund public schools or “privatize education.” The EFA legislation incorporated into the state budget would do neither of those things. It would provide an alternative way to fund public education for lower-income New Hampshire families whose children need educational options that might not be available through their assigned district school.
EFAs would account for less than 1% of projected state education expenditures and save local taxpayers $6.65 million over the next two school years. That would be good deal for both students and taxpayers.