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Legislative Apathy is Biggest Threat to Charter Schools

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Charlie Arlinghaus

March 11, 2014

As originally published in the New Hampshire Union Leader

Over the last twelve years charter schools have become a small but critically important part of New Hampshire’s education infrastructure. Today, they are under threat by a legislative apathy that threatens to starve them to death. Some opponents are content to ignore any problems hoping no one will notice as the schools fight a struggle for survival. Soft supporters are equally guilty of destruction through apathy – one can’t claim to support something and then ignore it to the point of destruction.

From our founding, my organization, the Josiah Bartlett Center, has cajoled and prodded the powers that to be to enact and support charter schools. They are a reform which has done so much good for so many children across the country – bringing alternatives to children whose economic circumstances often leave them with no real choices.

In the end the weak laws of the 1990s were reformed and then-Gov. Benson signed a state charter school law in 2003 which led to the creation of strongly desired and needed schools.

From the beginning, the reform was fought. I was very critical in 2005 when then-Gov. Lynch sat idly by and allow a local school board to maliciously withhold money designated for the state’s first charter school and gleefully watch it collapse, starved of its funding.

That pathetic episode led to structural changes designed to make sure the funding went where it was legally required to go. Nonetheless, time and apathy have led to schools on the precipice.

After one funding jigger in 2008, charter school payments have remained dead flat at $5450. There have been no adjustments for inflation, no study of costs, no help. Charter Schools are public schools and like all public schools may not charge tuition. They have to manage their budget on that $5450.

In contrast, traditional public schools have always been much better funded and have seen their revenue skyrocket. Seven years ago, per pupil spending was $12,766, almost two-and-a-half times the charter school payment. Their revenue has not been flat. Spending has gone up to $16,199 per pupil in 2014 (according to the state department of education).

Bit by bit, charter school funding has declined in relative terms until they now receive just 33% of the amount traditional public schools get. Everyone expects charter schools to be more efficient but to believe they can survive on just one-third of the funding is either dishonest or silly.

The legislature has traditionally eschewed automatic spending escalators. That’s fine but it requires you to make routine adjustments to the payment you expect the school to run on. Keep in mind this isn’t supplemental aid to pay for one or two things. These payments are expected to pay for virtually all of the capital and operating costs of the school.

This pathetic example of apathy suggests a planning problem with state government. For the last five or so years budget writers have known they were ignoring charter schools. Many of them expressed a willingness to address the problem “next time.” But next time never comes. It’s easier just to ignore the problem and figure some else will fix it but not on your watch. Decisions are always easier if left to be made by someone else.

A bill in the House would start to address the problem but in a kind of half-hearted way. It adds $36 to the payment for next year. That’s not a typo. Rather it’s an attempt to pretend to be doing something. In the second year of the budget, the bill would increase the payment by $1000. So at the end of two years, funding would climb to almost $6500 — which will likely be about 36% of what traditional public schools will receive that year.

After a Herculean effort by some House members to try and find a way to pretend they care, they will drag funding from 33% to 36%. It will still be the lowest spending percentage in the country but someone’s conscience somewhere will be salved.

On the other hand, charter schools struggling to survive and parents desperate the keep their kids in the school they love can shrug their shoulders and say “it’s better than a poke in the eye with a sharp stick.”

Charter school opponents can smile to themselves and say “that won’t keep the wolves at bay for very long.” And more apathetic charter school supporters can say “well, we tried to help a little” and then try not to think about it too much.

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School Choice Debate About Opportunity Not the Supreme Court

Charlie Arlinghaus

September 3, 2014

As originally published in the New Hampshire Union Leader

Last week’s Supreme Court decision moved the focus of the state’s nascent School Choice Scholarship Program from lawsuits and politics squarely back to children and opportunity. Ultimately, the court’s decision to leave this in the hands of the legislature focuses the debate on opportunity — parents and children seeking the best educational opportunity for their best future.

School choice has become such a political football and the arguments so arcane that it can be easy to forget what the debate is about – children and their education. For one segment of our population, school choice is not a potential program but is reality. Wealthy Granite Staters enjoy a plethora of choices and routinely consider what might be the best educational option for each individual child. One of their children may go to one school while his brother or sister attends a different one tailored to his or her needs, interests, and specialties. The wealth of these families creates opportunities.

The debate over school choice has never been primarily about lawsuits. As I wrote in a paper for the Josiah Bartlett Center more than ten years ago, “In the end, however, the debate over school choice is not about constitutional criteria or religious intolerance. It’s about opportunity. Everyone admits that the choices enjoyed by those who can afford them lead to better outcomes for their children. The only debate is whether or not those same choices will be extended to parents and children of lesser means.”

Rich people have school choice. Poor people do not. Few people doubt that the ability to consider multiple educational options and match them more appropriately to the unique needs of an individual student leads to better outcomes for those students. The state’s school choice scholarship program is designed for the students without those same opportunities.

It’s easy to get bogged down in the politics of the situation. Interest groups and ideological warriors on both sides of the question will get caught up in debates and arguing bits of history (it is only just conceivable that I may be guilty of this myself). For a bit of grounding in practicality, we must turn to that infrequent source of common sense, The Washington Post.

The Washington Post is a reliably liberal newspaper but school choice sometimes has the power to blur lines. Witnessing the need for greater opportunity and hope in the District of Columbia led them to toss aside ideological arguments and remind us that “What shouldn’t get forgotten in this seemingly endless fight are the people with the most at stake: parents who simply want what’s best for their children.”

Instead of discussing whether the law is good or bad for children, provides or doesn’t provide greater opportunity, opponents are reduced to talking budgets. The governor frets that the program diverts millions of dollars (actually $128,568 last school year) and decimates the budgets of existing schools. This echoes the ACLU argument that the program will inflict large fiscal losses on municipalities. If you listened to either of these ill-informed critics you wouldn’t know that the law actually limits the loss of aid in any district to a miniscule one-quarter of 1% of the prior budget.

Their financial misdirection is not nearly as egregious as their oversight of opportunity. No one would seriously disagree that increasing the number of options to consider is good for students and their parents. Instead, opponents are reduced to claiming that while options are all well and good, some options ought not be allowed – notably anything that contains a whiff of religion. Some more cynical actors are sometimes heard to say that some parents don’t know what’s best for their kids and can’t be allowed to make those decisions themselves.

As with any good policy, the primary argument for school choice is individualist rather than ideological. No one school, whether the traditional school, the public charter school, or an independent school is the right choice for each and every student in a particular zip code. Each student is an individual with different needs and different interests. One choice is not enough to address those needs.

In New Hampshire, the school choice program will always be relatively small. But every student should have a choice between smaller and larger schools; private, public, or public charter schools; traditional, Montessori, or Waldorf schools; specialized or more general schools. The goal I identified ten years ago stands today: providing students for whom their only current option isn’t working the means to find another choice that suits their individual needs – in plain and simple terms, greater opportunity.

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The Washington Post is Right and the ACLU is Wrong

Charlie Arlinghaus

April 23, 2014

As originally published in the New Hampshire Union Leader

Bobby Jindal and the ACLU are having a fight in these opinion pages. Guess whose side I’m going to take? I agree with Gov. Jindal and we both agree with the Washington Post which said “What shouldn’t get forgotten in this seemingly endless fight are the people with the most at stake: parents who simply want what’s best for their children.” The issue which unites me and the Washington Post is the lawsuit over the state’s much admired school choice scholarship program.

The state crafted legislation in 2012 which created an education tax credit for businesses who chose to donate to a scholarship organizations which then awards scholarships to lower income students who may choose any public or private school in the state. The goal of the program, as with most school choice programs, is to give students of modest means more choices and therefore more educational opportunity.

The ACLU immediately sued the state to overturn the law. A lower court let the program proceed but ruled out any religious schools. The lower court explained in its ruling that the issue would ultimately be settled by the state Supreme Court which heard the case last week.

The Washington Post has not weighed in our own program here but is a supporter of a broader program called the “D.C. Opportunity Scholarship Program.” They point out that children of the privileged in Washington have a variety of educational options and are never limited to the one school assigned by their zip code.

In New Hampshire as in the District of Columbia, rich people have school choice. Poor people don’t. The wealthy can choose among many options to find the best educational fit for each child – quite often different schools in the same family. Poorer students don’t have those options.

Critics contended that the New Hampshire scholarship program would not help the poor but be utilized only by wealthier families. The facts are different. Former state rep. (and former Josiah Bartlett Center policy fellow) Jason Bedrick, now a researcher for the Cato Institute, found that 91% of scholarship recipients qualify for free or reduced lunch.

Bedrick’s study (for another state think tank) are posted on our website and encourage other states to consider replicating the success of New Hampshire’s program.

The ACLU has argued oddly that the program will “inflict large fiscal losses on municipalities.” Perhaps they didn’t notice the provision in the law that limits the impact to any school district to one-quarter of one percent of their prior budget. Hardly a large fiscal loss.

Opponents of the program contend that schools with any religious affiliation should be excluded. Some choices, they suggest, parents should not be permitted to make. They contend that a tax credit is the same thing as a government grant. History, experience, and the state Supreme Court have suggested the opposite.

To begin with, there has long been a distinction between tax credits or exemptions and direct grants from the state treasury. Consider that every church is granted a complete exemption from taxation, not just a credit, under state law. This is not a school or an ancillary facility but the actual house of worship. That’s okay because it isn’t an actual tax payment just an exemption or credit. It falls into an entirely different category from the collection and direct granting of money.

Because the court has never ruled directly on school choice, we undertook an examination of the existing “opinions of the justices,” advisory opinions without the same standing as ruling because they are not the result of both sides making an argument and marshaling their cases.

It is likely the court ruling would agree with the 1955 court that allowed a nursing education program at religious institutions because “members of the public are not prohibited from receiving public benefits because of their religious beliefs or because they happen to be attending a parochial school.” In short, it is important not that programs discriminate but that they don’t discriminate.

In contrast, opponents are in the position of saying the scholarship organization must actively discriminate against schools that happen to also teach religion. The law, in their opinion, must under no circumstance be neutral.

The better choice is to try and do what’s best for children. As Bobby Jindal said “parents are the first and best educators and should be allowed to make the best decisions for their children. Every child learns differently; that is why choice and competition are so important in education.”

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Live Free and Learn: A Case Study of NH’s Scholarship Tax Credit Program

By Jason Bedrick

In 2012, the New Hampshire Legislature passed the Opportunity Scholarship Act (OSA), the first scholarship tax credit program to allow scholarships to cover certain homeschooling expenses. Section III details the OSA’s program design and outlines the legislative and legal challenges to the program.

The OSA’s first-year implementation is discussed in Section IV, including the results of a survey of the parents of scholarship recipients. Since the OSA went into effect, the Network for Educational Opportunity, New Hampshire’s first and so far only active scholarship organization, distributed $128,340 in scholarships to 103 students for the 2013-14 school year. Ninety-one percent of those recipients are from families with income low enough to qualify for the federal “National School Lunch” program.

The survey found that 97 percent of parents of scholarship recipients are satisfied with their chosen private or home schools, 68 percent noticed measurable academic improvement since receiving the scholarship, and 74 percent of private school parents reported that they would have been unable to afford tuition without the scholarship. These findings are consistent with previous research and demonstrate once again the promise of educational choice programs.

Click here to read the full report, published by the Show Me Institute

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Educational Opportunity Under Attack on Many Fronts

Charlie Arlinghaus

January 30, 2013

As originally published in the New Hampshire Union Leader

Educational opportunity is something we all want for our children but is under threat in New Hampshire in 2013. While the wealthy can choose among many options to find the best fit for their children, two small programs that increase options for poor people in New Hampshire are both under attack. If opponents succeed in killing the state’s modest charter school program and the school choice scholarship program, educational opportunity will still be a reality for rich people but not for poorer members of the Granite State.

For the wealthy, options abound. If you have the means, you can afford to choose among many different choices for your children. While New Hampshire’s has better schools than most states, no one seriously believes that one school is the best possible choice for every student in a particular zip code without exception. More opportunity, more choices lead to better outcomes.

Education reformers passed a public charter school law in 2003. The idea was to create innovative alternative schools that allowed students, particularly those who can’t afford existing alternatives, another public choice in education.

Similarly, last year the legislature passed a modest program of school choice scholarships allowing tax credits for businesses that donate to organizations that give scholarships to students of lower levels of income. The program is just starting but promises to give poorer children another choice.

From the beginning, both opportunity programs have been under attack. The charter school program endured the apathy of lawmakers and the governor who merely shrugged their shoulders when a school district strangled the first charter school by neglecting to pass on the funding appropriated for the school. Enforcing that law was a bridge too far.

Future legislatures and funding formulas changed the law to eliminate the opportunity for criminal mischief but opponents aren’t done. The state board of education has been guided by the odd advice of one state lawyer claiming that the board is no longer permitted to authorize charter schools because the next budget hasn’t been passed so they have no idea if there is going to be funding. Logically, then, they can’t grant any school a five year charter because we only have a two year budget.

This contorted logic, by the way, would also suggest the closure of every other charter school (after all, the next legislature could theoretically not fund them either) and most public schools (the legislature could suddenly decide we’ll only have 14 really big schools and no one else gets money). That’s ridiculous of course, but so is the back door moratorium.

If there is ambiguity (and I don’t honestly believe there is nor did the legislature which passed the law the lawyer claims frustrates the board), it can be cleared up. Funding is the province of the legislature. Approval of schools by the board includes a financial component but the board was never meant to try and prognosticate future funding decisions of the legislature. Any cap or retreat from the policy of opportunity should be decided by the legislature not by administrative fiat or a legal opinion that has not been written down or presented for public discussion. Law is currently being determined by a private, unpublished, oral opinion.

The second attempt to limit opportunity is being conducted openly in the legislature. Opponents are trying to repeal last year’s school choice law. The law limits scholarships to students in the lower half of incomes in the state but would allow tax credits for a group that would let parents use the scholarship at any approved school in the state. This law, like the charter school law, is about opportunity for people who have limited educational opportunities today.

Scholarships will average $2500 but that small amount can make a radical difference in the life of an individual child. Today, every non-public school has some students who pay no tuition and some who pay a small amount based on need. The modest scholarship will allow every school to accept more students who pay zero and more who pay little.

It’s easy to lose sight of the goal of educational opportunity in all the ideological banter. When the liberal Washington Post editorialized in favor of a D.C. opportunity program reminded us all what this debate is about. Their editorial titled “The Right Answer” concluded: “What shouldn’t get forgotten in this seemingly endless fight are the people with the most at stake: parents who simply want what’s best for their children.”

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The State Board Should Act Immediately to Show Good Faith on Charters

Charlie Arlinghaus

October 3, 2012

As originally published in the New Hampshire Union Leader

Two weeks ago, the state board of education denied every charter school application before them citing a financial problem that didn’t exist. Further their action circumvented legislation and calls into question whether they should be permitted to continue in their role as the state authorizing agency for charter schools. Their bad actions can be fixed and they should do so immediately as a gesture of good faith to both the legislature itself and the charter school community in New Hampshire.

On September 19, the state board of education considered an agenda item listed as “update on charter schools.” In just three minutes the board voted to deny all pending charter school applications. Rather than an open discussion, the pre-planned moratorium came complete with a pre-drafted statement despite a claim by a board member that the vote was spurred by information “we’ve just received.” Usually show trials are better choreographed.

The ostensible reason cited by the department and its board was a supposed uncertainty about state appropriations. Yet there is no uncertainty about state negotiations. Everyone in Concord knows and has known for more than a year precisely where we are on charter school funding. Further, the schools that have been denied would have had no impact on the budget whatsoever. They don’t start operating until the budget cycle is over.

Charter school funding, like a number of state aid programs, is an eligibility program. Rather than a cap, it is a budgeted amount based on qualified recipients (a number of grant programs operate this way) The state budgets an amount based on projections of probable enrollment but it is an estimate rather than a fixed cap. During the state budget, legislators were made aware that the department’s projections of enrollment were well off the mark. To compensate, clear language was inserted into the budget that made it crystal clear that the money was available, would be made available easily, and what the procedure would be to follow.

In the budget law, the department was given carte blanche to spend amounts that were 110% of the estimate in the budget. The budget added “In the event that chartered public school tuition payments exceed budgeted amounts by over 10 percent, the department of education may expend funds in excess of said amounts, with the approval of the fiscal committee of the general court and governor and council.”

This isn’t a little known provision in the law. In fact, the department and the chairman of the fiscal committee Ken Weyler were well aware of the provision, have been in regular communication on it, and have already acted on it once. For the previous fiscal year, an additional $330,000 was approved by the fiscal committee in June and the Governor and Council in July.

Rep. Weyler has said he was well aware that the amount for the current fiscal year would be $5 million and was waiting for it to come before the fiscal committee which he expects to approve it.

Let’s be clear: the law presumed the money would be approved. The fiscal committee and Executive Council have both been very supportive of charter schools. Yet the Board of Education claimed to have just received information which everyone in Concord seems to have known except, they claim, them.

They claim that the $5 million which the legislature expects and has known about for a year and has told them in the law they may spend so long as they get approval somehow requires them to veto a group of charter schools which regardless have no impact at all on the current budget.

This ridiculous action – and there is no other word for it but ridiculous — is easily amended. The board could easily have said to charter schools “we don’t want to act on your application pending guidance from the legislature after we tell them how much this will impact the next budget.” Instead they denied application prospective schools have spent months on.

As an act of their good faith – of which many people have reason to be skeptical – at its October 17 meeting the board should rescind its blanket denial of charters. It may be reasonable to wait until the fiscal committee acts before formally approving any charters but there is no reason to wait to admit their mistake, apologize to school organizers, and rescind their incorrect action.

Supporters of the charter school movement and legislators in particular have every reason to be skeptical of the good intentions of the current state board of education. A gesture of good faith would go a long to convincing people that they can still be trusted to oversee charter schools.

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Why Lynch is wrong and The Washington Post right

 

 Charlie Arlinghaus

June 27, 2012

As originally published in the New Hampshire Union Leader

In what can only be a sign of the coming of the apocalypse, the single best piece written on school choice over the last year was a Thursday editorial in the normally quite liberal Washington Post. On Veto Day in New Hampshire, legislators ought to ignore the hand-wringing of our current governor and instead read the Post’s article extolling the importance of the D.C. Opportunity Scholarship Program.

The importance of educational opportunity was summed up by the reliably liberal Post: “the opportunity to send their children to better schools — a choice taken for granted by many Americans, including some who are in Congress and the White House — is something beyond measure.”

This one sentence explains why a liberal newspaper would wax poetic about school choice and why many of us in New Hampshire are pushing for a School Choice Scholarship Program. In New Hampshire, rich people have choices, poor people do not. The Post points out that the privileged in Washington — the children of most senators in both parties for example — have a variety of options and rarely are sent to the school assigned by their zip code.

New Hampshire has better public schools than Washington has. Yet no one seriously argues that every school is the best choice for every child in its zip code. Those who have the means are able to make choices. Sometimes they choose the local school, sometimes an alternative school. Families of lesser means are left out.

In their criticism of a very modest school choice program, Gov. John Lynch and his fellow naysayers argue that this is some sort of attempt to “weaken our public school system.” The Post faced similar arguments to the D.C. scholarship program. It points out that “studies have shown its success in boosting graduation rates of its participants, and contrary to the fiction of its critics, it doesn’t drain resources from public education. Giving parents a choice and improving public schools are not mutually exclusive.”

New Hampshire’s program remains a very mild experiment from the standpoint of school budgets. No school district sees any reduction in state aid unless it has fewer students. Even then, its loss is fractional. To alleviate any concern an individual district might have, the total amount of money reduced as a result of this program is capped at a minute 1/4 of 1 percent of its budget. In a state where 5 percent swings in enrollment are commonplace, no one can be expected to believe that 99.75 percent of funding plus the increases every district sees normally is somehow catastrophic.

Opponents also disingenuously claim the scholarships won’t actually help anyone who needs one. The bills are limited to lower-income students. As the governor pointed out last week, “these bills do limit eligibility to students from families at 300 percent of the federal poverty level.” Opponents admit that aid is targeted but claim the scholarship amount — required to average $2,500 — isn’t enough to help with tuition. What they don’t tell you, although surely they know, is that virtually no one pays sticker price for tuition. Every school in New Hampshire has some kids who pay zero and some who pay a small amount. Scholarships of $2,500 will allow more kids to attend for free and more kids to attend for nominal amounts.

The Washington Post wrote that a deal on the D.C. scholarship program “will allow more D.C. families to attend better schools.” The same is true in New Hampshire. More students will have more choices in a modest step forward in educational opportunity.

As modest as the program is for the overall budget, we can’t lose sight of those for whom the program is not modest in the least: students who will have new opportunities. The Post concluded the editorial it titled “The Right Answer” with a call for budget writers to remember what’s important: “What shouldn’t get forgotten in this seemingly endless fight are the people with the most at stake: parents who simply want what’s best for their children.”

In New Hampshire, what will be a modest step for the state and localities and have a negligible impact on what they do and how they do it can have a profound impact on the lives of individual students and the opportunities they don’t currently have.

Today, legislators have a rare opportunity to make an enormous difference in the future of individual students.

 

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Choosing to Learn: Scholarship Tax Credit Programs in the United States and their Implications for New Hampshire

By Jason Bedrick

March 2012

(Click here to read the full report)

EXECUTIVE SUMMARY

Access to educational opportunities in New Hampshire is primarily determined by zip code and accident of birth. Though New Hampshire has some of the highest-performing public schools in the nation, performance across school districts is uneven. Public school students in wealthier towns like Windham and Bedford perform highly on standardized tests while their low-income peers in Claremont and Stratford lag behind. Moreover, even New Hampshire’s best public schools are not best for every child. Not all children thrive in the traditional classroom environment. Some students need extra support academically, socially or emotionally. Our public schools may work well for most children, but there is no school that is right for all children.

Unfortunately, tens of thousands of New Hampshire students have only one choice of school. While wealthier families can meet their children’s individual needs by moving to communities with higher-performing public schools or paying tuition at an independent school, most low-income families lack the financial capacity to do either.

In recent decades, legislators and policymakers have implemented several innovative policies to expand educational options, including vouchers, charter schools, education savings accounts, and more.  In the last decade, scholarship tax credit (STC) programs have expanded educational opportunities for hundreds of thousands of students in eight states, particularly those from low-income families. In just the last two years, two states have adopted new STC programs while five others expanded their existing STC programs.

Section I: Scholarship Tax Credits

Nationwide, eight states currently operate corporate scholarship tax credit programs. Program design, levels of funding and student participation vary. STC programs are constitutionally sound and receive strong support from parents and the general public.

  • Scholarship tax credit programs are on firm constitutional ground. STC programs have withstood every single legal challenge to date at both the state and federal levels.
  • Parental satisfaction in STC programs is exceptionally high. More than 95 percent of families participating in Florida’s STC program reported that their schools were good or excellent.
  • Nationwide, support for STC programs is more than double the opposition. Support among parents nationwide is even higher at four-to-one in favor.

Section II: Fiscal Impact

The proposed School Choice Scholarship Act (HB 1607) creates a scholarship tax credit program that is designed to save money by reducing state spending more than it reduces tax revenue. Under even the most conservative assumptions, the proposed STC program will affect approximately one tenth of one percent of the current state and local spending on public education. STC programs in several other states have reduced state government expenditures while expanding choices for families.

Section III: Impact on Performance

  • Studies show that school choice program participants perform as well as or better than their public school peers.
  • Participants in school choice programs graduate from high school at higher rates than their public school peers.
  • School choice programs are associated with a positive impact on public school students’ academic performance.

Section IV: Program Design

While broadly similar, STC programs across the country vary significantly in program design, such as means-testing, disbursement requirements, and corporate credits. These differences affect how well the STC programs are able to effectively and efficiently meet the needs of scholarship recipients. Some of the main findings include:

Means-Testing:

  • Means-testing can help target funds to the truly needy, though evidence suggests that SOs target low-income families even without a means-testing requirement.
  • Income caps that are too low reduce the flexibility of SOs to address the needs of families with exigent circumstances (special needs, serious illness, job loss, etc.).

Disbursement Requirement:

  • Scholarship organizations require some level of allowance for administrative costs, especially when starting up. Over time, most spend less than 10 percent on administrative costs.
  • A more liberal administrative cost allowance allows for the creation of more scholarship organizations. Policymakers should consider greater administrative cost allowances (15 to 20 percent) for new scholarship organizations.

Corporate Credits:

  • Most scholarship organizations reported having little to no trouble soliciting donations from businesses when the tax credits were worth 90 percent of the donations.
  • Policymakers should be able to reduce the tax credit percentage somewhat below 90 percent without a significantly negative impact on fundraising. However, it is not clear at what point there would be a negative effect.

When designed and implemented properly, a scholarship tax credit programs is a constitutional, popular and fiscally sound method to increase educational options for low-income families. STC programs can even improve the academic performance of all students, whether they participate in the program or not. Most importantly, a scholarship tax credit program will move New Hampshire from an educational system where access is primarily determined by a student’s zip code and accident of birth toward a system tailored to meet the individual needs of every child.

(Full Report)

(Appendix)

(Sources)

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A Modest Step For Greater Educational Opportunity

Charlie Arlinghaus

March 28, 2012

As originally publish in the New Hampshire Union Leader

The School Choice Scholarship Act being considered in both the New Hampshire House and Senate is a modest step toward providing children of lesser means with the greater educational opportunity long afforded students from high income families.

It is a truism in education that rich people have school choice and poor people don’t. Statistically in New Hampshire, 30% of children from upper income families go to non-public school. At the lower ends of the income spectrum, only 5% do. In addition, higher-income families have greater economic mobility and are more likely to be able to pick a public school district by moving. Those families who can move more easily, who can afford more choices, have more opportunity and often better outcomes because of those choices.

New Hampshire’s public schools, in the aggregate, are among the best in the country. But one single choice assigned on the basis of zip code not educational requirements can not possibly work well for everyone even if it works well for most. Every student is better off if ha or she has more than one choice.

The goal of the school choice movement in New Hampshire is to give more choices to more people. In 2012 the focus of that effort is a means tested, education tax credit based scholarship bill.

First and foremost, the bill is a good idea because it provides scholarships, funded entirely by tax credits and private donations, to students from lower income families that can be used at any approved school, public or non-public, in New Hampshire.

The local school will be a terrific option for many children but not for every child. Now more children will have more opportunity to explore more choices. That’s a good thing.

While opponents have raised some technical concerns, opposition essentially come down to philosophy. Some opponents don’t believe greater educational opportunity should come at nonpublic schools. But I think we presume that the one assigned school isn’t always going to be the right choice, we ought not object to a different provider.

Financially, the bill benefits the state budget. The scholarship amount, and the tax credit for that scholarship, is smaller than the state per pupil aid so each child who moves saves the state budget money. Our calculation at the Josiah Bartlett Center is that the state budget would save between $1.5 and $2.5 million each year.

Local school districts would see less money in total only if they had fewer students. Just as today, if a school has fewer students, its per pupil aid declines. Under this program, a district would have fewer dollars and fewer students but more money per student because the amount lost is less than a third of New Hampshire’s $15,000 per pupil spending.

There are always constitutional questions about school choice. A study my organization did in 2004 found that even a voucher program properly constructed should be constitutional. Nonetheless, what we think a court should do and what they might do aren’t the same thing.

However, a tax credit program is a step removed. Based on jurisprudence across the country dealing with very similar language, tax credit programs will be found constitutional although some opponents think they shouldn’t be.

At the end of the day, this is a modest attempt to provide some children with scholarships. The total size of the program amounts to less than one-quarter of one percent of the $2.7 billion spent in New Hampshire on K-12 education.

The average scholarship is small but critical to opportunity. While $2500 is not full tuition, the sticker price is not what almost any student pays. Every non-public school has some children who pay zero and some children who pay very little based on need.  This program will allow a school to educate more students.

So much of what we talk about in public policy is based on spreadsheets and politics. This program is perhaps the most important proposal the legislature will consider this year. It may not change the dynamic of education in the aggregate but it will make an enormous difference in the lives of thousands of individual students.

A School Choice Scholarship Program is a modest step for the state government to make. But modest steps can be huge leaps for individual students.

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School Choice Scholarship Program Saves $8 million over next two state budgets

Charles M. Arlinghaus

 March 2012

A proposed School Choice Scholarship Act under its proposed configuration would not start during the current budget cycle but would save the state budget $8 million over the next two budgets. This is not the primary consideration in any debate over school choice or a motivating factor for most supporters. But the budgetary impact of any bill is one of the technical considerations in any current debate.

The precise savings to be realized for the state budget of any school choice scholarship program depend on the exact scholarship amounts, take up rates, tax credits, and aggregate amounts available. This analysis takes as its starting point the details put forth by Sen. Jim Forsythe and Sen. Chuck Morse in the amended version of Forsythe’s proposed Senate Bill 327 in the 2012 session. The House version is quite similar but there are slight differences.

At its base, the School Choice Scholarship Act would allow businesses to make deductions to an approved scholarship organization and receive a credit against their BET or BPT obligation[1]. Scholarships would then be given to students in needy families (below 300% of the poverty level) to use at any approved non-public school or at another public school. Scholarships could also be used for some approved home school expenses (textbooks, for example).

The idea behind the proposal is to allow students greater opportunity by giving them more choices. Upper income students generally have multiple educational choices. This bill would extend those opportunities to lower income students.

Because the scholarship amount per student is less than the state aid cost per student, the state would save money for each student. The state budget would save more money if a student elected homeschooling because of the smaller scholarship available. The exception to budget savings would be students moving from one non-public school to another – which is why that group is limited in current proposals[2].

Consider three students and the budgetary impact of each: (1)a student moving from a public school to a nonpublic school, (2)a student moving from a public school to a home school, and (3)a nonpublic school student. For each of the first two categories, the state would save money previously spent on per pupil student aid. The state saves more money for the homeschool student because that scholarship is more limited. For the third category, the state wouldn’t save money because it wasn’t paying aid to begin with.

 

  Public to Nonpublic Public to Home School Nonpublic to Nonpublic
Avg. Scholarship[3] $2500 $725 $2500
Tax Credit Cost[4] $2125 $616 $2125
Budget reduction[5] $4312 $4312 $0
Saving per student $2187 $3696 ($2125)

With at least 70% of students mandated to be in the first two categories and no more than 30% in the third, you can easily see how the state budget saves money.

To estimate the aggregate amount saved, we have to make some assumptions. Of students who currently don’t go to public school, 22% of them opt for homeschooling and 78% go to a nonpublic school. So for a statewide aggregate, I’ve used a more conservative 80/20 split to estimate an average scholarship of $2145.

Finding the total cost and savings each year is a matter of doing the calculations above and applying the different caps on types of students (switching from public school v. already in private school) and size of program. In addition, I’ve added administrative costs both for the state and scholarship organization to the costs as well as a small secondary impact the credit structure causes on the BPT[6].

My calculation and its assumptions are attached for each of the four years of the next two budgets. I haven’t carried out calculations beyond four years because before too long you get into esoteric arguments about whether or not someone is counted as a “switcher” once they’ve been in the program for five or six years. In addition, the percentages and caps are certain to be tweaked once the state has a few years’ experience under its belt.

 

Projected Savings in Current Budget: ZERO (program not yet in effect)

 

Projected Savings in Budget for FY2014-FY2015: $3.96 million

 

Projected Savings in Budget for FY2016-FY2017: $4.33 million

 

Total Four Year Budget Savings: $8.3 million

 

Click here to view the companion spreadsheet

 

Click here to read the full report

 

[1] Both SB 327 and HB 1607 (the similar House version) give business a credit worth 85% of their donation to the scholarship organization

[2] The proposal in SB327 would require 70% of recipients to be coming from a public school. Currently 89% of students attend public school, 9% nonpublic school, and 2% are homeschooled.

[3] Scholarships granted by approved scholarship organizations will average $2500 across non-homeschooling students. Homeschool students are calculated separately and can receive up to $725 for approved expenses.

[4] Although the scholarship is drawn from donated funds, the donor receives a credit for only 85% of the amount donated. So the cost to the state budget of each scholarship is 85% of the average amount.

[5] State per pupil aid for each student includes a number of categories. Because only students at 300% FPL or below are eligible, I’ve included the base amount of $3450 for all students and the additional aid for free and reduced lunch eligible students of $1725 for 50% of students but nothing else.

[6] Because of the format of our tax reporting, the credit will also reduce the size of taxable income for some filers paying the Business Profits Tax. In the spreadsheet analysis, I estimate these filers as about 2/3 of the total credits (in practice it will likely be a smaller number) and calculate the additional lost BPT revenue.

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