The June 30th U.S. Supreme Court ruling in Espinoza v. Montana Department of Revenue demolishes once and for all the false claim that New Hampshire’s Education Tax Credit Program violates the New Hampshire and U.S. Constitutions. 

Further, the ruling renders inoperative New Hampshire’s anti-Catholic Blaine amendment, added to the state constitution in 1877. 

“While the plain text and history of New Hampshire’s Blaine Amendment should not have been an impediment to enacting robust school choice programs prior to the Supreme Court’s ruling in Espinoza, there is now no question that legislators and policymakers in the Live Free or Die state are free to design and enact programs that will empower parents to choose the educational environment that will best serve their children’s learning needs,” Tim Keller, senior attorney at the Institute for Justice and co-counsel in the Espinoza case, told the Bartlett Center.

The Espinoza case overturned a Montana Supreme Court decision that had blocked that state’s tax-credit-funded educational scholarship program because it allowed parents to use the scholarships at religious schools. 

In 2013, New Hampshire political activist Bill Duncan sued to have New Hampshire’s similar program overturned for the same reason. The New Hampshire Supreme Court did not address the merits of the case, ruling in 2014 that Duncan did not have legal standing to sue.  

In the Espinoza case, the U.S. Supreme Court rejected the Duncan argument. The court ruled that if a state has a scholarship program, it may not discriminate based on religious status. Such discrimination violates the First Amendment’s guarantee that individuals have the right to the “free exercise” of religion.

At issue in the case was Montana’s “Blaine amendment,” an anti-Catholic amendment to the state constitution that prohibited state appropriations from going to “sectarian schools.”  

The New Hampshire Constitution has a similar amendment, added in 1877, which states that “no money raised by taxation shall ever be granted or applied for the use of the schools of institutions of any religious sect or denomination.”

These amendments are often called “no-aid” provisions.

“Montana’s no-aid provision discriminates based on religious status,” the court held.

“Montana’s no-aid provision bars religious schools from public benefits solely because of the religious character of the schools,” the court determined. “The provision also bars parents who wish to send their children to a religious school from those same benefits, again solely because of the religious character of the school.”

“To be eligible for government aid under the Montana Constitution, a school must divorce itself from any religious control or affiliation. Placing such a condition on benefits or privileges ‘inevitably deters or discourages the exercise of First Amendment rights,’” the court concluded.

In sum, education scholarship programs cannot discriminate against schools based on the religious status of those schools. New Hampshire’s Education Tax Credit Program does not bar funds from going to religious schools, so no change needs to be made. The Espinoza ruling clarifies that this practice is constitutional and that changing the program to exclude religious schools would be unconstitutional.

In 2017, the Josiah Bartlett Center for Public Policy and the Institute for Justice published a briefing paper arguing that New Hampshire’s tax credit scholarship program does not violate the state or U.S. constitutions, for reasons similar to those laid out in the Espinoza case. 

The co-authors of that report were Richard Komer and Tim Keller of the Institute for Justice. Komer argued the Espinoza case before the U.S. Supreme Court last year, and Keller was a co-counsel on the case. 

The expansion of Florida’s school choice scholarship program led to significant academic and behavioral improvements for students who remained in the state’s public schools, a new study shows. It is the latest of more than two dozen studies to show academic gains among public school students after the introduction of school choice programs.

The National Bureau of Economic Research paper, from professors at Northwestern University, Emory University and the UC-Davis School of Education, tracked 1.2 million Florida students over 15 years, making it an extremely large study of the effects of scaling up a school choice program.

The Florida Department of Education and Department of Health granted what the authors called “extraordinary” access to student data so they could match birth and family information to students’ educational data (with all identifying information removed).

The researchers were able to track public school students and those who received tax credit scholarships from birth, and track their educational progress in grades 3-8, where most state testing is done.  

Florida’s tax-credit scholarship program allows businesses to claim a tax credit for donations to scholarship programs that help families pay tuition costs at private schools. The program gradually expanded since its creation in 2001, and the authors studied how its growth affected students in public schools. 

“We find evidence that as public schools are more exposed to private school choice, their students experience increasing benefits as the program scales up,” the authors wrote. “In particular, higher levels of private school choice exposure are associated with lower rates of suspensions and absences, and with higher standardized test scores in reading and in math.”

The results showed that the benefits were more pronounced for public school students from lower-income families. 

“Lower socioeconomic status students– measured by free or reduced price lunch designation– see larger effects across all outcomes.”

Eligibility was raised from 185% of the federal poverty level to 260% in the 2016-17 school year. Even with higher-income families ineligible for scholarships, the study found that higher-income public school students also showed some improvements, suggesting that competitive pressures create benefits for all public school students, even those who can’t choose the competitor.

“We find consistent evidence that as the program grows in size, students in public schools that faced higher competitive pressure levels see greater gains from the program expansion than do those in locations with less competitive pressure. Importantly, we find that these positive externalities extend to behavioral outcomes— absenteeism and suspensions—that have not been well-explored in prior literature on school choice from either voucher or charter programs.”

The authors note in their conclusion that the results of their large-scale study are consistent with the findings of previous research on the effects of school choice programs. 

“Our results are also consistent with past work showing modest benefits to the initial introduction of voucher programs (e.g., Hoxby, 2003; Figlio & Hart, 2014; Egalite, 2016; Egalite & Wolf, 2016; Figlio & Karbownik, 2016), while extending upon these findings to show the persistence and growth of these positive effects as the program scaled up.”

Mike McShane, writing in Forbes, notes that this is the 27th paper to examine the competitive effects of school choice programs on public schools, with 25 of them having found benefits to the students who remain in public schools. 

In fact, the research shows a far stronger positive effect on the test scores of public school students than on the scores of students who leave,, McShane points out. 

Benefits for choice students do show up in the research. The Urban Institute found last year, for example, that Florida students who participate in the tax credit scholarship program were more likely to enroll in college and more likely to graduate than their peers who stayed in public schools. 

But the results are more mixed than they are for students in public schools, where dozens of studies have consistently shown significant positive effects from school choice programs.

The overwhelming nature of the evidence ought to buttress support for New Hampshire’s tax credit scholarship program, which is similar to the highly successful Florida program.

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.

For the second year in a row, all undergraduate campuses of the University System of New Hampshire were nationally recognized for their commitment to freedom of speech.

In its just-released “Speech Codes 2020” report, the Foundation for Individual Rights in Education (FIRE) gave the University of New Hampshire, Plymouth State University and Keene state College “green light” ratings. A green light signifies “that the institution does not maintain any written policies that imperil free expression.”

By contrast, the state’s lone Ivy League institution, Dartmouth College, received a “red light” for having “at least one policy that both clearly and substantially restricts freedom of speech.”

Dartmouth received D grades on due process rights for students accused of misconduct, scoring in the mid-single digits on a 20-point scale.

Students at Dartmouth also are encouraged to report each other to the administration for “bias.” The college’s Office of Judicial Affairs tells students: “If you are the target of, witness to, or even simply hear about any form of bias happening to a Dartmouth student, you should submit a Bias Impact Report immediately.”

New Hampshire’s public colleges and universities have no similarly Orwellian instructions for students to act as secret speech police, nor do they have speech codes that violate students’ First Amendment rights.

As recently as 2017, Keene State College received a red light rating and the University of New Hampshire received yellow light from FIRE for having restrictive speech codes.

But in the spring of 2018, UNH revised all of its codes, and Keene State followed suit in the summer.

“Universities should be the first to embrace the free exchange of ideas and speech,” then-UNH President Mark Huddleston said. “The only UNH policy on speech is that it is free and unfettered on our campuses, and we’re pleased that FIRE has recognized our efforts.”

Upon his inauguration as UNH’s new president in 2018, Jim Dean also signaled his support for freedom of speech.

Granite Staters can be proud that their public university system has made its campuses into forums for the free exchange of ideas. And they can be thankful to FIRE for encouraging good behavior by monitoring campus speech policies and publishing these rankings.

(Note: FIRE’s reports do not include Granite State College, the University System of New Hampshire’s adult education college.)

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.