Education entrepreneur spotlight: Nate Fellman and The Harkness House (part I)

,

Editor’s note: Since the COVID-19 pandemic, educational entrepreneurship has boomed nationwide. New Hampshire has experienced significant growth in the number of entrepreneurs and innovators willing to take on the daunting challenge of building a new educational ecosystem. This year, we’ll be highlighting some of the people and organizations that have begun expanding the education marketplace in the Granite State, as well as the obstacles they face in creating nontraditional learning environments.

Our first installment highlights The Harkness House, a middle school in Nashua for families seeking a nontraditional experience that offers small classrooms and student autonomy. 

With an emphasis on smaller class sizes and putting students in charge of their own learning, The Harkness House in Nashua focuses on providing a top-flight education to middle schoolers. Nathan (Nate) Fellman and his founding educators, Stacey Baker and Jean Demers, built it all themselves.

A former eighth-grade language arts teacher and middle-school assistant principal in the Bedford School District, Fellman’s story as an education entrepreneur began with one main catalyst: COVID-19.

Amid all the negative educational consequences brought by the pandemic, Fellman found one silver lining. “We did see during the pandemic one positive thing, and that was…smaller class sizes,” he said. 

In August 2021, Bedford started split sessions at the middle school, dropping class sizes in half to around 13 students each in response to the pandemic. The results were eye-opening for Fellman. 

“When we had those small classes and everything was turned on its head and you really got to know kids…and you really got to understand what they were interested in, you saw kids come alive who would’ve flown under the radar, and really participate.” 

Fellman knew he couldn’t go back to teaching “the same old way.” So he left public education, determined to create an alternative learning environment for families seeking something different.  

Brainstorming what would eventually become The Harkness House, Fellman knew one thing for certain: “The biggest thing for me was a commitment to small class sizes.” 

This commitment to small classes drew homeschool parents like Carrie Hyde to The Harkness House. 

“For our three children, I think they really want to connect with other students their age, and that’s our biggest draw towards [The Harkness House], too, is that they’re only sixth through ninth grade,” Hyde said. “It gives our kids an opportunity to make connections with other students their age.”

Fellman also had a model in mind. The name “Harkness” comes from Philip Exeter Academy’s Harkness model: “Twelve students and one teacher sit around an oval table and discuss the subject at hand.”

This model of instruction—kids engaging in dialogue with each other and the teacher, rather than being lectured—was key to Fellman’s idea.

“This is how adults solve problems,” Fellman said. “They come to a room, they sit around a table, they look each other in the eyes, and they collaborate in this way.”

To make this idea a reality, Fellman had to jump through the necessary regulatory hoops. Although he personally found that the state approval process was not particularly daunting, he gathered that he was the exception.

“We hosted an educational entrepreneurs meeting here with a lot of people trying to start things up, and they were just overwhelmed and daunted because it’s a big application. There are a lot of laws,” he said. “And that I could see being very daunting.”

The minimum requirements for the approval of nonpublic schools are set by statute in the N.H. Code of Administrative Rules. The state Education Department offers guidance and application forms online. 

The most significant cost for Fellman was securing a space, renovating it, and getting it up to code. But because his 8,000-square-foot space had previously housed a school, he didn’t run into the usual zoning nightmare that many aspiring entrepreneurs face. Obtaining approval to operate a school where none existed before can be a serious obstacle. 

“In talking to people in the field and doing what we’re trying to do, there are a lot of zoning issues,” he observed. 

From local ordinances that prohibit people from offering educational services on their property to regulations that were written before the advent of alternative educational methods, a web of rules complicates the task of education innovation.

After securing final approval in August 2022, The Harkness House found its target audience. An education provider focused on making middle-school-aged kids engaged, autonomous, and owners of their learning resonated with one group in particular: the home-education community. 

“We went in there and they were engaged with Nate, the kids each had questions, and the way that he doesn’t talk down to them, he talks directly with them, he wants their input, and that they genuinely want to know what they want to learn,” Hyde observed.

In October 2022, The Harkness House launched by developing courses for home-education families. The school offers a la carte classes, as well as two-day and four-day programs for homeschool students. 

Starting with just one student, the school grew to 16 by the end of the academic year. 

“Every single one of our kids that started with us increased their participation with us,” Fellman said. In fact, eight kids who began as homeschool students are returning to The Harkness House in the upcoming school year on a full-time basis. This will be the school’s first full-time cohort. 

Among them will be Stella Kritikou’s three daughters. Enrolled in public schools prior to the pandemic, Kritikou knows she’s found the best fit for her kids. “Now that they’ve been there for almost a year, it’s actually great for them because having that small class has helped them be able to work with other peers in small settings,” she said.

Fellman’s goal for this fall is to enroll 16 full-time kids and 24 home-education students.

Full-time tuition is $14,900, while two-day and four-day programs are $3,100 and just over $5,000, respectively. “Around 50% of our kids are accessing EFA [Education Freedom Account] or ETC [Education Tax Credit] programs through the Children’s Scholarship Fund, which are so helpful for those families,” Fellman noted. 

Fellman hopes to further reduce his cost of tuition and make The Harkness House self-sustaining “by, in some fashion, using the service of education…to develop a product that then can be sold to a broader market.” His goal is to eventually film some of his classes and sell the tapes to home-education families (with consent, of course).

Long-term, Fellman’s goal is to fill his space with the 100 students it can hold. Class sizes would be capped at 12 kids each, and they would continue developing the curriculum in partnership with parents and students like they’ve always done.

“We’ll be involved a lot. We’ll be asking questions. We want to know what they’re learning,” Hyde said. “And they’re really good because before they go ahead and watch a movie or before they teach them something, they let us know what they’re doing, so they keep us on the same page. We’re not falling between the cracks.”

Keeping kids from falling through the cracks is a primary goal for Fellman. And that involves engaging students directly in their learning.

“Instead of that 100% top-down, [we’re] really saying, ‘What’s the 20% that every kid needs to know, be able to do?’ and giving the kids a voice at the table for that 80% on how we’re going to get there and what they want to engage in beyond that,” Fellman said. 

With that in mind, The Harkness House focuses on language arts, math, social studies, and science, while accepting maximum input from the students to develop their electives. 

“Nate’s very open, like as soon as he sits with the kids he asks them, ‘What do you guys want to do? Is this something you’re interested in?’” Kritikou noted. “He leaves it to them, and that’s great because usually these kids don’t get that kind of opportunity in public school.”

From courses like mythology and exploring media bias to the logic of coding, electives are based on student interest. “It allows us to be much more streamlined and do some things, and the core things, really, really well,” Fellman observed.

In this way, the school puts students in charge of their learning. Whether it’s allowing the students the freedom to choose which texts they read for language arts, taking a “virtual road trip” to learn about miles per gallon, gas prices, and budgeting, or turning one of the classrooms into a greenhouse to teach gardening, The Harkness House tackles the core subjects through this hands-on approach, bringing out the best in their students. 

“I think what [Fellman] does is he sees what the kids like, he knows what they have to learn, and he incorporates that into what it is they like, so they learn without realizing they’re actually learning,” Kritikou’s mother, Sofia Kretikos, added.

Student autonomy like this is made possible because of the small, individualized classes that define a school like The Harkness House, making it easier for educators to meet the different educational needs of each child.

“Why I recommend the school to everyone is they really give the opportunity for the children to learn in their own way,” Kritikou said. “It’s not something that’s forced on them; they get to choose,” adding that “some kids don’t learn with just reading a book.”

Through innovation and ingenuity, Nate Fellman and The Harkness House aim to make education more responsive to families and students by offering a nontraditional, highly adaptable, and individualized option. Harkness parents say it’s working. 

“Watching my 10-year-old granddaughter say, ‘I love to go to school’—she doesn’t want to miss a day—that to me was exciting because I’ve never seen a child that excited to get to school,” Kretikos observed, “and it’s all the way that he’s teaching.”

For evidence of customer satisfaction, Fellman offered an assessment from one of his students: “I feel like I’m learning, but I don’t feel like it’s school.”

The Harkness House, located in Nashua, can be found online at https://www.theharknesshouse.org/.

/by

As rents fall nationwide, they rise in New Hampshire, where construction lags

,

Nationwide, rents have trended downward in the past year. But that relief has missed New Hampshire. 

Here, rents rose in the past year at double the rate of the year before, according to the New Hampshire Housing Finance Authority’s (NHHFA) latest report, further illustrating how desperately underserved New Hampshire’s rental market is.

“The rental market hit a big milestone this month, as national rent growth is finally negative year-over-year,” rent-tracking website apartmentlist.com posted on July 26. “This means that on average across the nation, apartments today are renting for less than they did one year ago.”

A growing supply of apartments is having the predictable negative effect on rents.

“The supply side of the rental market also hit a major milestone this month: our vacancy index has reached 7.3 percent, surpassing the peak vacancy rate measured at the height of the COVID-19 pandemic,” the apartmentlist.com report concluded. “With a record number of multi-family apartment units currently under construction, this vacancy rate will remain elevated in the near future. For the first time since the early stages of the pandemic, property owners will compete for a smaller pool of tenants instead of the other way around.”

That last sentence is key. More apartments = lower rents. 

Data from realtor.com also show rents falling in absolute terms from last year.

Harvard University’s Joint Center for Housing Studies concluded in its 2023 housing report that “rental markets are experiencing sharply reduced rent growth and rising vacancy rates.” 

The study cited lower demand for rental housing after a surge during the pandemic, coupled with a large increase in construction. 

“Multifamily production was extraordinarily strong over the past year, with 342,000 multifamily rental units added in 2022 alone, mostly targeting the high end of the market,” the Harvard study concluded. 

Another industry website, rent.com, concluded in a July report that rents nationally are lower in July 2023 than they were in August of 2022. 

That report pegged New Hampshire as an outlier, with the eighth-highest rent growth in the nation during the past year. 

New Hampshire is bucking the national trend. Not only are rents rising sharply here, but so is the rate of growth. The NHHFA’s 2022 report pegged the average annual increase in gross monthly rent at 5.7%. This year’s report, released last week, pegged the rate at 11.4%, exactly double last year’s.

Heat costs for renters were 58-64% higher than last year, and electricity costs were 62% higher, as measured by NHHFA. Those increases contributed to the surge in expenses for renters. 

But the biggest factor was the continued shortage of rental housing amid strong demand. That shortage is caused primarily by local land use regulations that restrict rental construction.

“Local zoning and planning regulations are probably the largest factor,” NHHFA Executive Director Rob Dapice said in an interview this week. “That’s true of both multi-family and single-family construction, and of course a lot of rental housing is multi-family construction. There are perhaps some obstacles at the state level. We really see more obstacles at the local level.”

The Josiah Bartlett Center’s landmark 2021 study of local land use regulations showed how these constraints on construction limit the supply of new housing in New Hampshire, driving up prices.

With the state’s population projected to grow to 1.5 million by 2050, and the New Hampshire economy booming, demand for new housing is expected to continue rising for years. That leaves the supply side, namely new construction, as the only way to arrest the growth in both rents and single-family home prices, which also hit a new record in May.

NHHFA’s research estimates that New Hampshire needs 60,000 new housing units by 2030 and nearly 90,000 by 2040. Without cooperation from local planning and zoning boards, which regulate land use in New Hampshire, those construction goals will remain out of reach.

/by

Revenues end year half-billion over budget as unemployment hits record low

, , ,

Lost amid all the political and economic news this month was an important bit of data that’s particularly noteworthy as the 2024 governor’s race gets under way. (Yes, already.)

The state’s fiscal year ended in June. When it did, the state posted a General and Education Trust Fund surplus of $538.9 million. 

When revenues exceed budgeted expenses by more than half a billion dollars, that’s notable. Large budget surpluses have so commonplace, though, that they barely prompt a blurb anymore. 

And this is after multiple rounds of business tax cuts that critics said would devastate the state budget and leave New Hampshire with too little revenue to fund basic services.

The surge in business tax revenues (which we documented last year) is one of New Hampshire’s most important economic (and political) stories of the last decade.

It hasn’t stopped. Business tax revenues for the 2022 fiscal year were $323.2 million (or 33.7%) above plan and $68 million (5.6%) above the prior fiscal year.

Looking back to 2012, it’s remarkable how state General and Education Fund revenues have grown. Total revenues for both funds were $3.23 billion in the 2022 fiscal year. In 2012, they were $2.16 billion. 

Inflation (using the national Consumer Price Index) can account for $663 million of that $1.068 billion revenue increase. The rest, about $404 million, is new money.

The other big economic news this month was the achievement of a new record-low unemployment rate of 1.8%. New Hampshire’s economy is churning out jobs and revenue. This isn’t all because of the business tax cuts that have occurred since 2015, but they’ve helped. And the phase out of the Interest & Dividends Tax by 2025 will help more. 

While New Hampshire is enjoying these successes, other states are showing why punishing successful residents with high tax rates is a bad idea.

In Massachusetts, the new 9% income tax rate for millionaires helped to push Celtics star Grant Williams to seek a trade to low-tax Texas.

In April, a new 4% surtax on homes worth more than $5 million took effect in Los Angeles. Movie stars including Mark Wahlberg and Brad Pitt rushed to sell homes before the tax took effect, and since April 1 the supply of homes worth more than $5 million has plunged as owners pulled their listings, according to The Hollywood Reporter. 

California legislators in June had to cover a $32 billion budget shortfall caused by rising spending and falling revenues. Massachusetts is dealing with declining revenues, and current spending proposals for the new fiscal year exceed revenues by about $500 million. 

Keeping taxes and spending low is paying off for New Hampshire’s economy and the state budget. Having the latest state data confirm that fact yet again, as poster-child progressive states spend beyond their means and send rich residents fleeing, is a good starting point for the governor’s race.

/by

From microschools to co-ops, entrepreneurs are creating new educational options in New Hampshire

,

School closures during the COVID-19 pandemic led to a surge in education entrepreneurship across the United States. Large declines in student performance (see here and here) both during and following the pandemic, along with increasingly bitter disputes over school content and policies, are sending still more parents in search of alternatives. 

In New Hampshire, public school enrollment has fallen by more than 10,000 students since 2019. That’s in addition to a decline of 29,946 students from 2001–2019. During that same 2001–2019 period, spending on district public schools in New Hampshire rose by $1.5 billion, or $937 million when adjusted for inflation. 

As public school leaders in New Hampshire and elsewhere work on improving outcomes and making educational systems more responsive to families, some parents continue to seek alternatives for either the short-term or long-term. 

Whether to make up for learning losses, or to find a better fit for their children, many families are searching for something different than traditional schooling. 

In New Hampshire, as around the country, education entrepreneurs are meeting this demand in what is now a growing educational marketplace by creating nontraditional learning environments for students. 

Education entrepreneurship embraces a bottom-up, decentralized approach to schooling. The Live Free or Die state is home to a wide and growing range of educational alternatives offered by scrappy startups, frustrated parents, former public school teachers, and even national businesses.

In addition to private schools, which have to be approved by the state, a mix of new, private-sector alternatives are popping up in New Hampshire. They fall into the following broad categories: microschools, learning pods, homeschool co-ops/learning centers, and hybrid homeschools.

Here is how each of these alternatives differs from the others and from traditional educational offerings.

Microschools

A microschool is the “catch-all” term for learning alternatives offered on a small scale and in a more traditional school style. It describes a full-time or part-time learning environment characterized by small classrooms that enable an individualized approach to education.

Think of a modern version of a one-room schoolhouse, with an emphasis on student-led and project-based learning.

Often seen as a middle ground between homeschooling and traditional schooling, microschools typically include more than two participating families who are not homeschooling. They usually hold 10 to 50 students, but they can be larger or smaller. They are typically led by hired instructors and are often set in commercial spaces or community centers.

If organized as a small private school, a microschool would be subject to state approval and regulation. In 2021, in response to pandemic-created demand, the state Education Department published a primer on how to start a nonpublic school, which lays out the laws and regulations that govern nonpublic schools in the state. 

Not all educational alternatives, though, are organized as schools. 

Learning pods

Learning pods usually consist of a smaller group of students (typically 10 or fewer) gathering together with some form of adult oversight to learn and socialize. 

Pods are often created by families in a neighborhood or in a location that draws families from throughout a community. They are inherently flexible for the students and parents, gathering in convenient locations—often a participating family’s home—on certain days of the week for agreed-upon amounts of time. They can be led by parents or paid educators. 

Like microschools, they often include more than two participating families who are not homeschooling, but they are less closely aligned with a traditional classroom environment than microschools. 

A learning pod might be classified and regulated as a private “school,” depending on how it is organized and how instruction is offered, though these new entities do not easily fit the standard description of a school. Some learning pods involve homeschooled or pre-school-age children.

Homeschool co-ops/learning centers

Homeschool co-ops and learning centers represent a more decentralized type of educational offering. They are typically formed by groups of families meeting together to achieve common educational goals, but they aren’t necessarily organized as “schools.” 

Typically consisting of more than two participating families who have chosen to homeschool, homeschool co-ops and learning centers often function as homeschool resource centers. They allow homeschooled students to meet on a regular basis and participate in classes and activities led by either the parents themselves, in the case of co-ops, or instructors and activity leaders that the group hires, in the case of learning centers.

Homeschool co-ops and learning centers can be set in a variety of environments, such as participating families’ homes, commercial or community centers, or even outdoors. These include tutoring centers, such as Mathnasium and Sylvan learning centers, and unschools, which allow for almost complete self-directed learning by the students.

Hybrid homeschools

Hybrid homeschools share many of the same qualities as homeschool co-ops and learning centers. Like the latter, they usually have paid instructors.

The main differences are that there’s often a curriculum in place, many are faith-based, and they usually have a yearly program with about two days a week in “class” and the rest of the week spent at home.

Summary

These are the primary options education entrepreneurs have been offering as alternatives to traditional schooling since the COVID-19 pandemic. They share many of the same features, and sometimes their offerings overlap. People often use the terms “learning pods” and “microschools” interchangeably, for example, since they can be very similar in style and structure, though they aren’t always. 

Most education providers are self-identified, as rigid legal definitions don’t exist to classify them. Even within one “category,” the educational options in the marketplace vary considerably in their teaching philosophies, structures, and schedules.

Though these are the general categories of new educational offerings spreading quickly in the marketplace right now, it would be a mistake to assume that others won’t come along. Parents and entrepreneurs are constantly searching for new ways to meet children’s needs. There’s no reason to think they won’t invent even more creative options.



/by

Would the Founders consider us free?

,

On July 4th, Americans celebrate not just the formation of our nation, but the inspiring ideals of the second paragraph of the Declaration of Independence. It’s currently fashionable to question whether Americans live up to those ideals, or ever have. But the predominant voices of doubt ask the wrong question.

The foundational question is not whether Americans have failed to achieve equal outcomes. The answer to this will always be no because perfect equality of outcomes is impossible.

The foundational question is this: Against what did the Founders rebel?

Historian Bernard Bailyn, in “The Origins of American Politics,” answered this question. 

“The colonists universally agreed that man was by nature lustful, that he was utterly untrustworthy in power, unable to control his passion for domination. The antinomy of power and liberty was accepted as the central fact of politics, and with it the belief that power was aggressive, liberty passive, and that the duty of free men was to protect the latter and constrain the former.”

The Founders cited “corruption” constantly, and by this they meant the abuse of government power to distribute favors, offices, riches and influence among a small group of connected aristocratic elites. 

New Hampshire’s colonial government worked exactly this way. Colonial Gov. Benning Wentworth “packed the Council with his supporters, intervened successfully in local elections, bought the favor of the representatives he did not select, and filled the local offices—‘judges and justices…the secretary, treasurer, sheriff, register of probate, and the military officers’—with his own men,” Bailyn wrote. 

The Pine Tree Riot in Weare on April 14, 1772, was a reaction against this extraordinary level of elite domination of New Hampshire’s economy. 

Marxist and Progressive historians asserted that the primary antagonists in the American Revolution were the rich vs. poor or the propertied vs. unpropertied. Later historians demonstrated conclusively that this was nonsense. As historian Gordon S. Wood put it, the actual antagonists were courtiers vs. patriots. 

John Adams described courtiers as those who worked to please and flatter great men “to obtain their smiles, esteem, and patronage, and consequently their favors and preferences.” Patriots were the outsiders who owed their station in life to their own striving rather than to crown patronage. 

“Only by understanding the hierarchical structure of monarchical society and taking the patriots’ assault on courtiers seriously can we begin to appreciate the significance of the displacement of the loyalists,” Wood wrote in his Pulitzer-winning “The Radicalism of the American Revolution.”

Progressives get right that there have always been outsiders and insiders in American society, and insiders always seek to use the power of the state to maintain their insider status. What they get wrong is that the solution is to hand more power to the insiders. 

The Founders believed the opposite. They strove to create political, economic and legal systems that limited and constrained the power of insiders, then distributed much of that power to outsiders.

We at the Josiah Bartlett Center for Public Policy obviously take the patriots’ side in this debate. (We named our organization after one of them, after all.) 

When we look at state and local government in New Hampshire today, we try to keep the Spirit of ‘76 alive by asking whether current policies divide Granite Staters into insiders vs. outsiders. Or as the Founders might have understood it, whether they create courtiers. 

When we write about licensing, housing, education, energy, regulation, the budget, taxation, health care, transportation and any other issue, we’re looking for this dichotomy. 

Unfortunately, we find it often. From guild-inspired occupational licensing laws to green energy subsidies to local land use regulations that price homes out of the reach of middle-and lower-income families, New Hampshire has too many laws, ordinances and regulations designed to turn patriots into courtiers. 

The purpose of the American project was to replace a system of courts and courtiers with a system of decentralized powers wielded disinterestedly by free and independent citizens. 

The independence is the point. That doesn’t mean every American is an island. Families, friends, communities, organizations—Burke’s little platoons—connect us and support us in critical ways. Independence means independence from government control or coercion. 

Free markets empower individuals (and the social networks they create voluntarily) to live as they desire—to pursue happiness, in other words. They strengthen our independence and weaken the state’s power to coerce (to convert patriots into courtiers).

The Founders likely would be amazed at the social and political equality Americans have created, and at the levels of freedom we have achieved. But they’d also recognize too many remnants of their aristocratic age (as well as our tax rates). If we want to live up to the Revolution’s ideals, it’s our task to tear down those remaining fragments. When we replace mandates with markets, we convert courtiers into patriots. That should be every American’s goal.  

/by

N.H. becomes first New England state to grant universal license recognition

,

Two weeks after New Hampshire posted a record-low unemployment rate of 1.9%, Gov. Chris Sununu signed two bills to make it easier for licensed professionals from other states to work here. 

New Hampshire requires state-issued licenses for dozens of occupations, from barbers and cosmetologists to doctors, landscape architects, and even foresters. For decades, anyone who held an out-of-state license to practice in one of these fields had to first get a separate New Hampshire license before being allowed to practice here. 

House Bill 594 ends that regulatory nightmare and grants universal recognition for occupational licenses that are “substantially similar” to New Hampshire licenses. 

The adoption of HB 594 makes New Hampshire the only state in New England with broad universal license recognition. (Vermont recognizes out-of-state licenses for some but not all occupations). 

Research on licensing recognition suggests that this should produce a noticeable increase in in-migration by licensed professionals who live in other states.

A study published in May by the Archbridge Institute found that universal license recognition produces an almost full percentage-point increase in employment in covered occupations and a 50% increase in immigration into recognition states among people who hold licenses that aren’t easily portable because the regulations vary a lot from state to state.

HB 594 allows the state Office of Professional Licensure (OPLC) to issue professional licenses to out-of-state applicants who hold a license in another state, provided that the other state’s licensing requirements are “substantially similar” to New Hampshire’s.

The “substantially similar” language is not ideal, as it often serves as a pretext for state licensing boards to reject license applications from out-of-state competitors. But HB 594 and a companion bill, House Bill 655, shift more authority from individual boards to the OPLC, which is expected to limit those anti-competitive board interventions.

HB 594 streamlines what was otherwise a tedious regulatory process for out-of-state professionals looking to work in New Hampshire. Not only did license holders have to obtain a separate New Hampshire license, but they often had to wait weeks or even months for their industry’s particular regulatory board to meet, consider their application, and vote on it. 

Now, anyone with an active license in good standing from another jurisdiction can apply directly to the OPLC and obtain permission to work in New Hampshire almost immediately. 

Once limited to only a few fields, such as medicine and hair care, occupational licensing “affects nearly 1 in 5 American workers,” research by the Institute for Justice shows.

By establishing a procedure to recognize most out-of-state licenses automatically, New Hampshire becomes a more attractive option for skilled individuals seeking to bring their talents to a new state. 

For fields in New Hampshire with critical labor shortages, such as nursing, the change could provide a desperately needed supply of new workers.

The greatest beneficiaries of universal licensure might be New Hampshire’s small businesses. Among the many trades affected by licensing in the state are tattoo artists, massage therapists, architects, barbers and cosmetologists, chiropractors, foresters, psychologists and other mental health professionals, real estate agents, occupational and physical therapists, and electricians.

An increase in skilled labor will benefit consumers too. Occupational licensing has been shown in academic studies to limit the supply of service providers and increase costs. Universal recognition won’t necessarily lower costs across the board, but it could stabilize prices in fields with serious labor shortages. And by attracting more providers to the state, it can reduce wait times and increase access to services.

The governor’s approval of the two bills was immediately noticed by policy leaders in other New England states that don’t have universal license recognition. Responding to the news, the Maine Policy Institute tweeted, “File this in the big folder of things that NH does far better than Maine.”

Massachusetts, which ranks fifth in the country for residents leaving the state, according to USPS change-of-address data from Forbes, might want to keep a particularly close eye on the number of licensed professionals who disappear from state registries in the next few years.

Nationally, New Hampshire joins only 14 other states (Arizona, Arkansas, Colorado, Idaho, Iowa, Kansas, Mississippi, Missouri, Montana, Ohio, Pennsylvania, Utah, Virginia, and Wyoming) with broad universal recognition laws, according to recent studies by the Archbridge Institute and Goldwater Institute.

Four of those states (Colorado, Montana, Pennsylvania, and Wyoming) require out-of-state licenses to be “substantially similar” to their own, like New Hampshire. But unlike five of those states (Arizona, Arkansas, Iowa, Kansas, and Mississippi), New Hampshire doesn’t require residency to receive a license to practice. This means that barbers or nurses in Massachusetts could quickly be licensed to work in New Hampshire without having to move over the border (where housing is extremely hard to find).

The companion bill, HB 655, consolidates and simplifies licensure authority within the OPLC, moving its authority to a separate location in state law and authorizing the OPLC to act with more speed and independence than in the past.

Taken together, these bills, now law, promote greater efficiency in state licensing and reduce bureaucratic barriers that never should have been erected in the first place.

/by

New Hampshire to be income-tax-free in 2025

,

On January 1, 2025, New Hampshire will ring in the new year as the only Northeastern state without an income tax. 

On that day, New Hampshire will join seven other states—Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, and Wyoming—as the only U.S. states that don’t tax personal income. (Washington state passed a capital gains tax in 2021 that its Supreme Court upheld this spring, erasing its status as an income-tax-free state.)

You might have thought New Hampshire already appeared on that list, given our reputation for having no sales or income tax. It doesn’t. 

While the state doesn’t tax individual earned income, it has taxed passive personal income since 1923. It does so through the Interest & Dividends Tax. From 1977 to 2022, the I&D Tax rate was 5%. 

The 2022–23 state budget included a provision to phase out the I&D Tax by 1 percentage point a year until its elimination in 2027. The tax this year is set at 4%.

The 2024–25 state budget adopted this month moves the repeal date to New Year’s Day 2025. 

Who pays the I&D Tax (and thus an income tax) in New Hampshire? Every New Hampshire resident and fiduciary whose gross interest and dividends income from all sources is more than $2,400 annually (or $4,800 for joint filers) is subject to the tax. 

Limited liability companies, partnerships, and associations with non-transferable shares whose gross interest and dividends income from all sources is more than $2,400 a year also pay it.

How much money does the I&D Tax extract from the economy annually? It yielded $126.0 million in fiscal year 2020, $120.7 million in FY 2021, and a record $157.5 million in FY 2022. 

Opponents of phasing out the I&D Tax have said the state could ill afford to lose that much revenue. But thanks to a growing economy, state revenues have exceeded budget targets in every fiscal year but one during the last decade. 

In the General and Education Trust Funds, revenues were $435.5 million above budget in FY 2022, $323.7 million above budget in FY 2021, and $173 million above budget in FY 2019. In the current fiscal year, revenues are already $487 million above budget. Revenues from the I&D Tax are $130 million so far this year but only $11.6 million above budget.

In the 2022–23 fiscal years, surplus business tax revenue alone has far exceeded I&D Tax revenues. If there’s ever been a good time to phase out the I&D Tax, it’s now.

The reason to do so is two-fold. 

One, it aligns New Hampshire’s tax system with its reputation and aspirations. If we’re going to promote ourselves as income-tax-free, we should be income-tax-free. 

“While New Hampshire does not levy a tax on wage income, its 4% tax on interest and dividends has been holding the state back from claiming its rightful place as a true no-income-tax state,” Dennis Hull of Americans for Tax Reform wrote. 

Two, it makes New Hampshire more economically attractive to individuals and businesses in an increasingly competitive environment.

In addition to the eight states without an income tax, nine states have a flat income tax rate. Since 2021, 22 states have cut individual income taxes. These states are all competing for residents who will contribute to GDP growth, particularly higher-wealth individuals who are able to invest in their communities and start new businesses.

With the I&D Tax on the books, New Hampshire looks less attractive to entrepreneurs, investors, and retirees, especially with East Coast states like Florida and Tennessee presenting increasingly economically attractive options.

While New Hampshire sat at 16th in the Tax Foundation’s 2022 state-local tax burden rankings, Florida was 11th and Tennessee was 3rd. In the Tax Foundation’s 2023 state business tax climate index, New Hampshire ranked 6th while Florida was 4th. 

Repealing the I&D Tax allows New Hampshire to better compete with the likes of fast-growing Florida and Tennessee.

In fact, when the I&D Tax is fully repealed New Hampshire will join Alaska as one of only two U.S. states with no income or sales tax. (Unless another state joins that elite club first.)

Having no income or sales tax of any kind will set New Hampshire apart from every other state between Maine and Alaska. It will be a particularly potent attraction here in the Northeast, where our neighbors impose both, and where Massachusetts last year raised income taxes by 80 percent for residents who earn $1 million or more. 

Accelerating the repeal of the I&D Tax by two years might seem like a small thing. But as states compete more aggressively for residents and businesses, being truly income-tax-free will do a lot to protect and enhance the New Hampshire Advantage.

/by

As NH public school district enrollment fell by 30,000 students in 19 years, spending rose by nearly $1 billion

,

From 2001-2019, New Hampshire public school districts lost 29,946 students, but increased spending by an inflation-adjusted $937 million, a new Josiah Bartlett Center for Public Policy study has found.

In percentage terms, inflation-adjusted spending rose by 40% while enrollment fell by 14%.

The increase in spending is even more dramatic when capital and debt spending are removed. Current spending (operational spending that excludes capital projects and debt service) increased by 74% from 2001-2019.

On a per-pupil basis, New Hampshire public school spending increased by 66.8%, adjusted for inflation. In nominal dollars, New Hampshire spent $8,245 per student in 2001. That figure reached $18,905 in 2019, representing a 129% increase before accounting for cost of living increases. Adjusting for inflation, the increase was a stunning 66.8%.

The increase was so large that New Hampshire went from being 4% below the national average in per-pupil expenditures in 2001 to 25.7% above the national average in 2019.

A large portion of this increased spending went to hire new staff. While the number of students in New Hampshire district public schools fell by 14%, staffing increased by 15%. (Teacher pay rose by 12%, indicating that the emphasis was on hiring, not raising pay.)

Parents might assume that nearly $1 billion in additional spending above the rate of inflation bought improvements in performance on national metrics. That did not happen. As current spending rose by 74% and staffing levels rose by 15%, New Hampshire’s National Assessment of Educational Progress Reading and Math scores fell by 4 points. Nationally, scores rose by 15 points, which means that New Hampshire fell behind relative to other states despite a massive increase in spending.

The big picture is that during the first two decades of this century New Hampshire spent 40% more to educate 14% fewer students, and those students wound up doing slightly worse in reading and math.  

The massive increase in resources devoted to K-12 public schools was not repeated in other areas of state and local government. From 2001-2019, employment in New Hampshire public schools increased by 3,359 FTE (Full Time Equivalent) employees.  Employment in public colleges and universities increased by 478 FTE employees. All other state and local government added just 332 FTE employees. 

While total spending on district public schools rose by 40% from 2001-2019, the percentages varied by level of government—local, state, and federal.  And inflation was an important factor. 

Total state taxpayer funding to district public schools increased in nominal dollars from about $878 million in 2001 to approximately $1 billion in 2019. However, much of that increase was consumed by inflation. When adjusted for inflation, total state appropriations to district public schools shrank from an inflation-adjusted $1.2 billion in 2001 to $1 billion in 2019—a decline of 17 percent. Most of this decline, 83.9%, is due to declining student enrollments. The remaining 16.1 percent was due to actual increases in state appropriations coming close to, but not quite keeping up with, inflation.

Total local appropriations, adjusted for inflation, doubled, going from $1.09 billion in 2001 to $2.19 billion in 2019. That’s a 101% increase in spending as the number of students served fell by 14%.

Local and federal spending increases per pupil were also large, even when adjusted for inflation. Inflation-adjusted federal spending per student increased by 84%, going from $500 in 2001 to $920 in 2019, and local spending per student increased by 135%, going from $5,223 in 2001 to $12,279 in 2019.

State spending per student, however, was fairly flat during this period, when adjusted for inflation. Inflation-adjusted state spending per student was 3 percent lower in 2019 relative to 2001, a decline from $5,791 to $5,604 by 2019.

The full report, executive summary, and tables can be downloaded below. The tables contain detailed spending numbers for individual school districts. 

Executive Summary: 01-19EdFundingReportExecSummary

Full Report: EducationSpending01-19Report

Appendix Tables: Ed Spending Report District Tables

 

 

/by

Why no one knows what an adequate education should cost

,

The New Hampshire Legislature, in its wisdom, has decreed how much an adequate education costs. It’s right there in statute, RSA 198:40-a. 

Legislators wrote in three concise paragraphs that the cost of an adequate education totals precisely $3,561.27 in 2015 dollars, plus an additional $1,780.63 for students eligible for a free or reduced price meal, $697.77 extra for English language learners, $1,915.86 extra for special education students, and $697.77 extra for third graders who score below proficient in reading. (The statute requires those figures to be adjusted for inflation, which they have been.)

Four school districts, led by Contoocook Valley, have sued the state, claiming that an adequate education actually costs much more than the state provides. Fourteen additional districts have joined the lawsuit. 

When the state Supreme Court trial began on April 10, the attorney for the districts said “there’s no place in the state where an adequate education can be provided for less than $4,000 per student.”

In New Hampshire, public school districts spend, on average, more than $23,000 per student in local, state and federal funds on all expenses, including transportation, construction and interest. On average, 60% of that funding comes from local property taxes and 27% from state adequate education aid, state figures show. 

The large gap between actual spending and the state’s decree forms the basis of this lawsuit.

The state says the cost of a adequate education is whatever the Legislature says it is.

The districts say the cost is determined by how much the districts spend.

Economically, they’re both wrong.

Or more precisely, they’re both using the wrong measure. No one can know the true cost of an adequate education because no market exists to find it. 

There is no functioning K-12 education market in New Hampshire. By law, students are assigned to public schools based on where they live. Spending levels are set by government formulas, not by parents making choices among competing options.

Without a market in which competition spurs innovation and creates efficiencies, there’s no way to know how much an adequate education should cost.  

The districts’ spending levels are a poor measure because each district is its own regional monopoly. The small amount of competition from chartered public schools isn’t enough to trigger the sort of large-scale efficiency gains that drive prices down and productivity up. 

The state’s method of determining costs—legislative debate—also relies on what districts spend in the absence of a competitive market. Legislators looked at what was spent and calculated costs based on that. 

So we have a debate between government entities, each of which thinks it can set prices accurately on its own. Nowhere along the way have consumers been empowered to do what consumers do: improve quality and lower prices. (Case study: Wisconsin.)  

Imagine if grocery stores were provided by government in the same way public schools are. Each community got a government-determined number of stores, and people were assigned to shop at the store closest to their home. The government sent your grocery money directly to the store, not to you. If you wanted to buy from a different store, you could, but the government-provided store got to keep your government-allocated grocery money. What would happen to prices?

At the state Supreme Court, each of these two sides will argue that it has the authoritative method for determining the true cost of an adequate education. But what’s missing is the voice of the consumer.

The truth is that the only authoritative method for discovering the cost of an adequate eduction is the creation of an open and competitive educational marketplace. Government formulas are no substitute for individuals empowered to make their own choices. 

/by

Join us for a beer & a conversation about licensing on April 11

,

Granite Staters entering the job market often face government-imposed barriers to entry. State-required licenses can come with onerous fees, arduous training requirements and a lack of reciprocity for individuals already licensed by another state in their field of practice.

Gov. Chris Sununu has proposed a major overhaul of New Hampshire’s occupational licensing bureaucracy. The governor’s proposal would establish universal license reciprocity, streamline the license approval process, consolidate licensing boards and eliminate 11 of them, and eliminate 23 permanent and 11 temporary licenses.

How would changing the state’s licensing bureaucracy and eliminating nearly two dozen licenses affect New Hampshire consumers?

Join us at Stark Brewing in Manchester on Tuesday, April 11, for a drink and a discussion to learn how unnecessary licensing regulations make it harder for Granite Staters to achieve the American Dream and how New Hampshire can work to break down these barriers.

Panelists are:

Drew Cline, Josiah Barlett Center for Public Policy

Ross Connolly, Americans for Prosperity

Jessica Poitras, Institute for Justice

 

Time & Location: 6-8 pm, Stark Brewery, Manchester, N.H.

 

AFP-NH is generously providing one drink ticket per attendee

Dinner will be provided.

RSVP Required (REGISTER HERE)

/by