CONCORD, NH – The House Finance Committee is continuing to work on SB 193, the Education Savings Account (ESA) bill. It is scheduled to meet again on Friday, March 9 at 1 p.m.
A February 23 amendment specifies that for each student who leaves a public school and takes an ESA, the state will pay the school district a one-time $1,500 “stabilization grant” in the year after the student leaves. As previously written, the bill would have provided five years of state payments to the school district for any impact over one-quarter percent of the district’s budget.
“The state will spend much less, which means that the full impact will have to be borne by the local school district,” said Rep. Marjorie Smith (D-Durham) in an interview.
The amendment caps participation at 3 percent of the number of students who qualify for free and reduced meals, for Manchester and most other school districts. For Manchester, the annual cap would be over 200 students. It also tightens eligibility requirements, criteria for education service providers, and accountability; improves reporting; and clarifies special education language.
State budget agency projects losses of students, aid
An analysis by Legislative Budget Assistant, a state agency, was given to the House Finance Committee February 28, stating the state’s three largest cities could each lose 2.5 percent of its eligible students per year to nearby private schools.
According to the model, by the 11th year of the program, about 6.3 percent of the state’s eligible families (about 2,000 students) will utilize ESAs, a cumulative total. For all school districts, the loss of state funding (“adjustment grants”), not counting public charter schools, would rise from $2.17 million in the first year of the program, to $11.8 million by the 11th year, due to the cumulative effect.
Analysts forecast millions lost for Manchester
According to an analysis by Reaching Higher NH, an education policy organization, Manchester would experience first year losses in state aid from $601,008 to $854,064 with SB 193. The 11 year cumulative loss would be $35,885,557 to $48,422,615.
Reaching Higher projects two scenarios:
- Scenario 1 is a conservative model with annual participation rates (of eligible students) ranging from 0.5 percent to 2.5 percent. For Manchester, it would bring a Year 1 net loss in state aid of $601,008.
- Scenario 2 is the maximum case model, where every district experiences maximum participation allowable each year. For Manchester, it would bring a year 1 net loss in state aid to $854,064.
“The stabilization fund is gone and, with it, the State’s commitment to pay any material share of the cost of the voucher program SB 193 would create. The school districts themselves would pay for the vouchers by raising taxes to replace the adequacy payments who leave with vouchers,“ according to the website Advancing New Hampshire Public Education (ANHPE), created by former Board of Education member and public school advocate Bill Duncan.
“Manchester could lose about $5,454 in adequacy revenue for each student leaving with a voucher. As a result, even after the proposed $1,500/student rebate from the State, Manchester would lose $921,301 in adequacy revenue. And the same thing could happen year after year, amounting to over $4.5 million over 5 years,” the ANHPE states. (ANHPE and Reaching Higher use different accounting methods to derive their estimates.)
ESAs and property taxes
The bill, approved last year by the Senate, allows students to use an ESA for private school tuition or for costs of parent-directed education. The bill would divert money to the ESA from the state “adequacy grant” to the public school district where the student lives.
About two-thirds of the adequacy grant comes from the state’s general fund. The other third comes from the Statewide Education Property Tax (SWEPT). That is the tax on local property characterized as state revenue, but normally left in place locally as part of the adequacy grant per child. Manchester currently raises over $20 million via SWEPT. Therefore, for students who opt for an ESA, local taxpayers would be funding private education.
A private “education scholarship organization” would gain a 5 percent fee for managing the ESAs.
Mayor and city officials oppose the bill
“Both my husband and I attended Manchester public schools, as did our three children. Our district has some of the best and most dedicated teachers and administration, and I am proud of the work they do every single day,” Mayor Joyce Craig said.
“At a time when we are trying to bring new energy, ideas and programs to our district to help our students prepare for their future, we cannot afford the funding shortfalls associated with SB 193. The uncertainty of revenue loss and the potential for the Manchester school district to lose hundreds of thousands of dollars would be devastating. Decisions like textbooks, bus routes, staffing levels and course offerings would be up in the air at a time when we need to compete to attract students not only from Manchester, but from surrounding towns,” Craig said.
“Every child is different and every parent wants what’s best for their child. I believe in choice when it comes to education, but I do not believe that funding from public schools should be used to support anything other than a public school education,” Craig said.
Craig appeared before the committee on January 16 to testify against the bill. The Board of Aldermen and the School Board sent a letter that day asking legislators to oppose it. Schools Superintendent Dr. Bolgen Vargas also expressed opposition to it.
Critics cite a list of concerns with the ESA plan including a lack of evidence for student improvement with similar programs, lost protections for students with disabilities, the encouragement of discrimination, removing the separation of school and state, and detraction from needed improvements for public schools, lack of accountability, and outsourced financial management.
Bill supporters want expanded eligibility, cite public support
In a March 5 blog entry, Drew Cline of the Josiah Bartlett Center for Public Policy, criticized the House Finance Committee amendment because it “dramatically reduces eligibility to 185 percent of the federal poverty level for new entrants and 300 percent once a student receives a scholarship, strips kindergarteners and first graders, and reduces the stabilization grants districts would receive from the state.”
Cline was appointed to the NH Board of Education by Gov. Sununu last year and currently serves as Board chairman.
“Apparently to compensate for the reduced stabilization grant, the amendment adds a per-district cap (rather than a statewide cap) on the number of children who can leave a dissatisfactory educational situation via a scholarship. The amendment further prohibits scholarship recipients from also qualifying for the separate tax-credit scholarship program,” Cline wrote. He also criticizes the amendment for restricting eligibility.
Jason Bedrick, Director of Policy for Ed Choice, wrote in a guest article on School Choice for NH”: “Although most Granite Staters are unfamiliar with the education savings accounts (ESAs), a clear majority of those who have an opinion about ESAs are in favor of them, according to a new poll by the University of New Hampshire.”
Bedrick also cites a 2017 EdChoice poll that found support for ESAs.
“What both polls make clear is that voters who are informed about ESAs are much more likely to support them — especially when ESAs are open to all. It’s incumbent upon advocates and policymakers to make sure that all Granite Staters are aware of the potential that ESAs have to expand educational opportunity,” he wrote.
Bill must be readied for crossover day, March 22
Because March 22 is crossover day, the last day the House can act on all House bills, the bill must be released by the Finance Committee and get a House floor before that.
A public hearing on the bill’s new amendment has been scheduled by the committee for 1 p.m. March 9, and a second hearing on March 14.