SB 193: School Choice Bill stirs controversy

Mayor-elect Joyce Craig: 'If this bill passes, Manchester's school district could potentially lose millions of dollars.'

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CONCORD, NH – A controversial school choice (“voucher”) bill, SB 193, passed the House Education Committee with a 10-9 vote on November 14. It heads to the full House in January.

Each student who takes advantage of an “Education Freedom Savings Account” would receive $3,510 from the state’s per-pupil grant to be spent on costs for schooling outside the public school district.

Impact on City Unknown

For each student who uses the program, the state’s per-pupil grant to the school district would be reduced by $3,510. However, the number of participating students and the bill’s potential impact on city taxes is hard to predict. The Manchester School District already has the state’s lowest annual cost per pupil, at $11,390, putting it at high risk from any losses in state aid.

NH State Rep. Barbara Shaw, who also represents Ward 9 on the Manchester Board of Aldermen, stated, “I do not believe it will be a major impact that will affect taxpayers.” She was the only Education Committee Democrat who voted for the bill.

NH State Rep. Barbara Shaw

Shaw predicts that only one percent of the school population would be eligible to apply, pointing out the program’s stringent requirements, including parental income level, failure of the school system to meet a student’s needs over a two-year period, and the need to re-apply yearly.

State Rep.Connie Van Houten (D-Manchester) representing Ward 1,  said “It could well result in increased property taxes in Manchester.”

Van Houten explained that if all such students came from one class, it would be easy to simply eliminate the class. However, students would come from scattered schools and classes, so the school district would be unable to reduce overhead costs for buildings, salaries, and transportation. If 100 students used the program, that would take away $351,025 from the district. Property taxes would have to make up for the loss.

Mayor-elect Joyce Craig said, “I do not support SB 193, which will divert state tax money from our public schools into private and charter schools. If this bill passes, Manchester’s school district could potentially lose millions of dollars.  We must find ways to strengthen our school district at this critical time and I believe SB 193 would harm our ability to provide quality education to every student.”

Bill protects school districts from losses, but would state pay up?

Reaching Higher NH, an education policy organization, advocated and won a “hold harmless” provision to help protect public schools from losses in state funding. It mandates the state to compensate districts for any loss in revenues above one quarter of one percent. The organization stated that this provision won over Rep. Dan Wolf (R-Newbury), who had spent years on the Kearsarge Regional school board.

But, Executive Councilor Andru Volinsky of Concord said, “My fear is that this provision is illusory. The state currently fails to meet its responsibility to fund the programs it has on the books.” Among these programs, he cites special education (“Catastrophic Aid”), Building Aid, Stabilization Aid for the poorest districts, and phased-out state contributions to pension costs.

Support for school choice bill based on individualization

After the bill passed the Education Committee vote, Gov. Chris Sununu said, “I applaud the House Education Committee for reaching a bipartisan compromise that puts New Hampshire families first.” He had aggressively promoted the bill, stating it gives parents and children “the ability to choose the education path that is best suited for them.”  He made school choice a major plank in his gubernatorial campaign.

Shaw, who had been a Manchester school teacher and administrator, sees the bill as a response to students whose needs are not met in the public schools, such as those who need smaller class sizes, smaller schools, or hands-on instruction. It could include gifted children who are not adequately challenged.

“This is an added educational opportunity for kids. Change can be good,” Shaw said.

A long road to travel before becoming law

SB 193 has a long road to travel before becoming law. If it passes the House, it must clear the House Finance Committee. Then the House and Senate must agree on a final version before sending it to the governor for his signature.

Finally, it would then face a court challenge. Rep. Mel Myler (D-Hopkinton) said, “The issue is whether tax money should, in essence, go to religious schools.” 

A brief history of NH tax education scholarships and CSF

SB 193 specifies that the program would be managed by a “scholarship organization.” The term is mentioned 18 times in the proposed bill. The organization would be paid an amount equivalent to five percent of the money it manages.

Bill Duncan, a member of the New Hampshire State Board of Education, wrote in the Concord Monitor describing SB 193 as, “a new voucher program written by and for a national organization, the Children’s Scholarship Fund.” Duncan writes about state education policy in Advancing New Hampshire Public Education.

The Children’s Scholarship Fund is a national organization which provides scholarships for children to attend private schools. It has actively promoted the bill in New Hampshire, where it has been granting scholarships since 2013.

Kate Baker, Executive Director of Children’s Scholarship Fund NH.

According to The Children’s Scholarship Fund NH site, tax credits for donations from businesses to scholarship organizations were set up under the Opportunity Scholarship Act of 2012 to allow low- and moderate-income families to “choose the schools that best fit their children’s needs.” Education Tax Credit scholarships can be used by children attending private schools, out-of-district public schools, and homeschools.

On January 1, 2013, the Network for Educational Opportunity (NEO) became the first scholarship organization eligible to administer Education Tax Credit scholarships. During the 2013-14 school year, NEO received more than 1,000 applications and awarded scholarships worth $128,000 to 103 New Hampshire students. In its first three years of managing Education Tax Credit scholarships, NEO has helped 205 New Hampshire children using scholarships worth more than $300,000.

On January 1, 2016, the Children’s Scholarship Fund national (CSF) took over administration of the Education Tax Credit scholarships formerly managed by NEO. Kate Baker and Kathy Lauer Rago, NEO’s Executive Director and Program Manager, became employees of CSF, and are based locally in Concord. Advisory Board members include Greg Legier of Franklin Savings Bank, Ovide Lamontagne of Bernstein Shur, and Jean Mathieu, Legacy Financial Solutions. – from CSFNH site

Backed by Wal-Mart heirs, hedge fund execs, and investment bankers

The national Children’s Scholarship Fund was founded in 1988 by John T. Walton, an heir to the Wal-Mart fortune, and investment banker Ted Forstmann. Both are now deceased.

Christy Walton, another Wal-Mart heir, is a board member emeritus.

Stephen Fraidin of Pershing Square Capital Management, L.P. is the organization’s vice chairman. Pershing Square is a New York hedge fund management company where Fraidin is vice chairman. The company recently lost a proxy battle with ADP (Automatic Data Processing).

According to the Children’s Scholarship Fund website, Board members include Michael Gerstner of MSD Partners, L.P., the private investment firm for Michael S. Dell and his family; Kevin Short of Clayton Capital Partners, an investment banking firm specializing in merger and acquisition advisement; and Remy W. Trafelet, a hedge fund specialist of Trafelet Brokaw, LLC, a New York-based private investment management firm.