Legislation aims to allow businesses to back school-choice options
Tax credit sought for businesses that fund scholarships
By Joey Cresta
November 13, 2011 2:00 AM
Legislation to create a tax credit program that would encourage businesses to donate money to fund school-choice options for New Hampshire students could be filed for the 2012 legislative session.
Members of the House of Representatives have already started work on new legislation as a result of the recommendation of a committee of legislators who met in September and October to study the implementation of an education tax credit plan.
State Sen. Jim Forsythe, R-Strafford, who was the committee chairman, said the tax credits would help provide parents with more school-choice options, including home-schooling, private schools and religious schools. If established, the credits would encourage businesses to make a donation to a scholarship organization for a 75- to 90-percent tax credit, Forsythe said.
The tax credits would be against the 8.5-percent Business Profits Tax, and possibly the Business Enterprise Tax, depending on how other reforms to the enterprise tax play out, Forsythe said.
The legislation can be found in other states, including Pennsylvania, Florida and Arizona and, in Forsythe's opinion, would improve education in New Hampshire by providing opportunities for less-fortunate students to have options besides their local public school.
"Education is hugely important," he said. "I think this is very important to improve the quality of education."
The committee has recommended a total donation cap between $10 million and $15 million that could be expanded if the program grows large enough, and caps on donations of individual entities and the administrative expenses of the organizations that would administer the scholarships.
Other recommendations are that the $1,856 the state normally provides for a special-education student follow that student if he or she participates in the scholarship program and that costs of books and materials for home-school students be eligible for scholarships.
The program is proposed to be budget neutral or a cost savings to the state. Forsythe said if children move from public to private school as a result of a scholarship, then public schools would need less state funding.
The committee heard testimony about numerous studies of school-choice programs that indicated education improved after the program was implemented, Forsythe said. He said some studies also suggested public education improved as well because it fostered competition among schools.
There are some concerns with the program, such as how to ensure scholarships go to the truly needy and not to students already attending private school. Forsythe said there has been discussion of means testing to ensure a family is eligible for assistance, but the committee could not come to a complete agreement on it.
State Sen. Nancy Stiles, R-Hampton, also served on the committee. She said the program is different from voucher systems proposed in years past because the scholarships are not government money and therefore would not be subject to the same constitutional challenges as vouchers.
Stiles said she supports the program because student needs are so diverse that what works for one student may not work for another.
The state should strive for anything that could help a child reach his or her potential, she said.
"I look for every opportunity for every kid to reach their greatest potential," Stiles said. "I think we have good public schools (and) we have some public schools that are great, (but) there's always room for improvement."
Laura Hainey, a Rochester resident and president of the New Hampshire chapter of the American Federation of Teachers, said there are some serious problems with the program.
Hainey said she has concerns about transparency and accountability, particularly when it comes to sending money to religious schools and families that practice home-schooling.
She also said that while the issue is about providing school-choice, it is often the school that chooses the child and there is no guarantee the program would help the truly needy.
From Hainey's perspective, the program would not be budget-neutral because local school budgets would not fall as a result of one or two students leaving for a private school. And she raised concerns about businesses that would "double-dip" and use the donation as a deduction on federal taxes in addition to the state tax credit.
She said if there is real support for school-choice scholarships, it should be done through private donations.
"We'll continue to monitor it," she said. "If they can make it fair, we might consider it."
Forsythe said state Rep. Greg Hill, R-Northfield, has done considerable work on draft legislation with House Majority Leader D.J. Bettencourt, R-Salem. Forsythe said he has his own bill for the Senate, but if it mirrors Hill's legislation he will simply follow that version.