Potential cost of New Hampshire school voucher bill raises questions about Ed Department’s data

Accuracy of projections about participation at heart of debate

School FundingWhile House Bill 20, establishing what would be the most expansive school voucher program in the country, stalled until next year in the House, the long-running debate over school choice will continue in the Senate, where Republican leadership has filed Senate Bill 130, an identical measure.

The proposed program would entitle parents to open “Education Freedom Accounts” (EFAs) for students opting to leave the public school system for private or home schooling. EFAs would be funded with a share of the state aid, both the base adequacy grant and any differential aid, distributed to school districts, draining money from the public school system while exposing the state to significantly increased expenditures.

EFAs would range in value between $3,786 and $8,458, varying with the characteristics of students, and average $4,603. The funds could be used to defray costs of enrolling students in private schools or teaching them at home. In short, the state money would follow the student, just as state aid follows students moving between school districts.

The notion of applying tax dollars, especially dollars appropriated for what many consider an insufficiently and inappropriately funded public school system, to finance private education and home schooling has sparked opposition to voucher proposals since they debuted in 1990s. When the House Education Committee held a hearing on HB 20, opponents outnumbered advocates by 5-1.

New money involved

At the Feb. 2 public hearing, Education Commissioner Frank Edelblut touted the bill as providing “pathways and opportunities” for closing the gap between the academic performance of the most and least economically advantaged students.

Rep. David Luneau, the Hopkinson Democrat who chaired the School Funding Commission, asked what the bill would do for the 13,000 students in the Manchester school system, where levels of per-pupil funding and academic proficiency are among the lowest and the number of students living in poverty and learning English are the highest in the state.

“It’s not a school district problem,” Edelblut replied, saying that economically disadvantaged students struggled in wealthy and poor districts alike. “They will struggle with the educational system we have,” he said.

HB 20, he declared would provide these students “opportunity.”

The program, however, is not targeted to economically disadvantaged students, instead it would be open to anyone in the state entitled to enroll in a public school. That number includes more than 22,000 students currently enrolled in private schools and taught at home and could use EFAs to pay tuition and costs their parents are already bearing.

Sponsors of HB 20 offered an amendment restricting eligibility to households with income of not more than 375% of federal poverty guidelines, but it would expire in 2026, when all students — privately and home schooled — would again become eligible for EFAs.

And the bill would place no limit on either the number of EFAs that could be awarded or the total cost of the program to the state.

EFAs for students leaving public schools would be funded with the portion of state aid for which they qualify. But, since the state currently contributes nothing to the education of privately and home-schooled students, it would have to raise and appropriate new money — above and beyond the $769 million distributed in 2021 — to provide these students with EFAs.

In modeling the program, the Department of Education drew on data from Arizona and projected that between .01% and 2.43% of eligible students will opt for EFAs in each of the next 10 years. DOE projected three-quarters of EFAs would be taken up by students moving from public to private schools, 15% by private school students and 10 percent by home-schooled students.

In 2030-31, when the participation rate peaks at 2.43%, the DOE projects 3,113 former public school students, 623 private school students and 415 home-schooled students to take up EFAs.

Unequal impact

Luneau called these projections “irrational” and “ludicrous,” saying that parents of students of privately and home-schooled children would be very unlikely to turn down an offer of “free money.” He expected participation in the program among these parents to be “closer to 100% than 1%.”

Luneau pointed out that the scholarship organizations administering the program would be authorized to withhold from EFAs as much as 10% a year to meet their administrative costs. This, he said, afforded the scholarship organizations an incentive to market the program, particularly to parents of students enrolled in private schools. And private schools would likely advise parents about EFAs.

The nonpartisan Reaching Higher NH estimates if 10% of the 22,103 privately and home-schooled students opted for EFAs with a value of $4,603, the cost to the state would be $10.1 million, a figure that would rise to $50.8 million if half joined the program and to $101.1 million if all did.

The Legislative Budget Assistant estimates the cost EFAs for each 1% percent of the 15,654 private school students in FY 2022 at $750,000, representing a total potential exposure of $74.8 million.

According to the fiscal note attached to the bill, while program participation cannot be predicted “it is likely the net impact of this bill would be increased state educational trust fund expenditures and decreased local adequacy grant revenue.“

The decrease in state aid to school districts, a function of the numbers leaving public schools, remains to be projected.

But, whatever the impact, it will not fall equally across the state.

Luneau explained that some 30 municipalities — the so-called “donor towns” — where the statewide education property tax is sufficient to fund an adequate education, receive no additional state aid in the form of adequacy grants. Moreover, if returns from the statewide tax in these municipalities exceed the cost of education, the surplus is retained and applied against other expenses.

With no state aid to transfer to EFAs, the accounts for students leaving the public school in these cities and towns would be funded by the state. In other words, municipalities with relatively high assessed property valuations would contribute nothing to the EFA program while those with lower values would forego a share of their state aid to fund EFAs.

Meanwhile, the DOE projected cumulative savings to taxpayers of between $360 million and $393 million by the end of the decade from the EFA program. As Edelblut put it, each public school student costing some $20,000 who opts for a private school or home schooling with an $5,000 EFA spares taxpayers $15,000.

This projection hinges on a number of assumptions, chiefly the extent to which schools can lower operating costs in response to reduced enrollment. And above all, it assumes that relatively small numbers of privately and home-schooled students will opt for EFAs.

According to the Private School Review the average tuition at New Hampshire’s private schools is $19,393 – $8,511 for elementary schools and $28,231 for high schools. If, as Edelblut suggests, the goal of the EFA program is to assist “economically disadvantaged” students, one question is how many families of low or modest means will find EFAs sufficient to bridge the gap between their financial resources and tuition costs.

A public hearing on SB 130 will be held at 9 a.m. Tuesday, March 2, by the Senate Education Committee.

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