Is the Proposed ETC Program Revenue Neutral?
The sponsors make the case that the ETC program will be revenue neutral, saying that the reduced state aid to school districts will off-set the tax credits. This article looks closely at the numbers. The bills and our understanding will surely change as we go along and we will reflect those changes here. In the mean time, it's clear that the revenue neutral assertion does not remotely hold up.
In fact, to try to make Senate Bill 372 and House Bill 1607 revenue neutral, changes the flow of state aid to public schools in fundamental ways, discussed in detail here. Essentially, for each child leaving a public school with a voucher funded by the education tax credit, the state would take back from her school all of the "adequacy funding" for that child. Here is how it works
So how would the money work? According to the February 16, 2012 draft of the amendment (though it is not yet adopted and is in flux)
As a practical matter, it becomes a shell game. The business funds the scholarships. Then the state repays essentially 93.5% of that to businesses in the form of tax credits and other state tax reductions. Then, under this provision, the state takes back state aid for the children leaving public school with voucher and the local property tax payers step up to replace that revenue for the school system.
For instance, Mary Jones who lives in Portsmouth and attends Dondero School. Right now, the state gives the Portsmouth School Department about $3,000 toward her education each year. Local property owners pay another $1,000 in the form of the statewide education property tax to make up the $4,000 that's called the “cost of an adequate education.” (Then property owners add more local property tax money. The donor town question is not relevant for this discussion.)
Under provision XI. of Senate Bill 372, Mary would get a $2,500 scholarship funded by a business grant and leave to go to a private school. The state would repay the business about $2,300 of that. Then the state would take back the $3,000 the state would have paid in state aid. And the community is left to deal with New Hampshire's long term declining enrollment problem made worse by the new scholarship program..
A more practical funding proposal might be to skip the shell game and just have the towns give the money directly to the religious schools out of their school budgets. They probably would not want to do that, but that's all that's happening here.
Many would have gone to private schools anyway.
The structure of the program guarantees that the majority, possibly the great majority, of students will not have needed the money. The will already be in provide school or be among those who would have gone anyway.
In other words, local property tax payers are paying twice: They are paying to maintain their public school and they are paying to send children with voucher to a private school, even for children who would have gone to the private school anyway.
How much does the state save for each child leaving a school district?
There are a number of assumptions in making the cost projections for the program. However, the question of how much the state would save, even for a student who is legitimately counted as leaving a public school because of the scholarship, deserves special attention.
The New Hampshire Center for Public Policy Studies has provided a short study on the question (attached below) and the conclusion is that the savings is very small, hardly anything. Voucher advocates suggest that the number is higher but there is no real basis for that and the Department of Education uses a savings of $500 per student to calculate the impact of vouchers on the schools.
Would the ETC program incent families to send their children to private school?In other states, voucher amounts are usually larger, so they have more of an impact on a family's ability to pay than the $2,500 average proposed here in New Hampshire. Even small religious schools in New Hampshire can cost $7-10,000 per year.
Here is the average cost of private schools in New Hampshire, as the New Hampshire Department of Education reported it to the SB 67 committee (as recorded in the minutes of the 9/21/11 meeting):
$2,500 is not going to be much help here.
The voucher is a help to the private school, however, which now must raise less scholarship money for the students attending the school.
Then, the legislation requires that, in the first year, 70% of the voucher recipients be students who had been in the public schools the previous year. The other 30% can already be in private schools. They would clearly not need the vouchers they would receive.
The bill reduces the percentage of children that must come from public schools by 10% each year, until it phases out. Therefore, very few of the recipients will actually need their scholarships.