Private school scholarship bills rebuked
Opponent claims effort would lead to new 'donor towns'
By Joey Cresta
January 22, 2012 2:00 AM
CONCORD — An analysis of a pair of bills designed to give businesses tax breaks if they contribute to scholarships so children can attend private schools raised significant concerns for a group devoted to protecting public education in New Hampshire.
There are two companion bills in the House and Senate that would establish an education credit against the Business Profits Tax: House Bill 1607 and Senate Bill 372. The intent, sponsors say, is to provide scholarships averaging $2,500 to open up more school choice options to students who want to attend private, religious or home schools. State Sen. Jim Forsythe, R-Strafford, is the prime sponsor of the Senate version and said it is intended to be budget neutral.
However, Bill Duncan, a retired software entrepreneur from New Castle who now works with Defending New Hampshire Public Education, a group concerned that the Legislature is dismantling public education, said the bills are far from budget neutral.
"The DNHPE analysis concludes that House Bill 1607 would cost the state of New Hampshire over $123 million over five years, before the as-yet-undetermined administrative costs. The DNHPE projection is that the Senate companion bill, SB 372, would cost over $60 million," he said.
Duncan reaches his figures by calculating the reduction in state support to districts based on students leaving public schools for private institutions. For instance, the program maxes out at $15 million in tax credits in year one and based on the number of students who are assumed to leave public schools, the reduction in state support would total only $14.8 million. According to Duncan's figures, that gap grows larger as the program expands in later years.
Duncan said the Senate version is less expensive because of a take-back of "adequacy funding" from New Hampshire towns. He claims this would essentially create another "donor town" situation because, in his eyes, the state would take back the State Wide Education Property Tax and state aid for each child who accepts a scholarship to private schools.
Donor towns were municipalities that were, for a time, forced to give back excess state property taxes raised beyond the amount required to fund the cost of an "adequate" education in their local communities.
Donor town expert Pat Remick, coordinator for the Coalition Communities that banded together to fight donor towns, said she believes Duncan is mistaken in that assertion. For the past several years, towns have been able to keep the amount raised in excess of the cost of an "adequate" education and there is nothing in the bill that would change that, she said. Remick said it makes sense that the bill would reduce adequacy grants to districts that lose students who take scholarships because the state would not pay a district for students no longer enrolled there. She also said the adequacy grant is such a small portion of the total cost of educating a student that, in theory, local districts would realize savings from no longer having to educate that student.
Forsythe agreed, saying Duncan is "completely wrong" in his interpretation that the state would take back a portion of the statewide education property tax. "There's no mechanism for that statewide property tax to come back to the state," he said.
While some districts that lose one or two students may not see significant savings, others may be able to consolidate a classroom, which would save more than the amount lost in adequacy funding, he said.
Forsythe said the House bill lacks the state take-back of adequacy funding and would have a fiscal impact on the state budget. However, there are plans to amend that bill so it is in line with the Senate version, he said.
Even if Duncan's analysis of the bill is flawed, there are other indications that there are issues to work out. A fiscal note attached to SB 372 outlines fiscal impacts as determined by the departments of education and revenue administration. They state the bill will decrease state revenue by $15 million in the first year, while decreasing state expenditures by only $3 million.
The proposed bill would place "considerable" administrative, auditing and information technology-related burdens on the Department of Revenue Administration that could not be implemented at current staffing and funding levels, according to the DRA.
The DRA was unable to determine how large the program could become, how the credit cap would be administered or even determine "the exact fiscal impact at this time."
Duncan also disagrees with the bill because there is nothing in it to ensure it targets scholarships at the most needy. The only requirement is that in the first year, 50 percent of scholarships go to students currently enrolled in public schools; that number drops by 10 percent in each of the four following years.
Forsythe said he has an amendment to the bill that would add means-testing to ensure aid is targeted to needy students.
Legislative committees will hear the companion bills this week. The House Ways and Means Committee will hold a hearing on HB 1607 Monday at 2 p.m. and the Senate Education Committee will hear SB 372 Tuesday at 1 p.m.
On the Web
Defending New Hampshire Public Education's analysis of bills that establish an education credit against the Business Profits Tax can be viewed at www.dnhpe.org/dnhpe-analysis-of-the-revenue-neutral-provision-of-sb-372
Defending New Hampshire Public Education's analysis of bills that establish an education credit against the business profits tax can be viewed at www.dnhpe.org/dnhpe-analysis-of-the-revenue-neutral-provision-of-sb-372