Monday, I posted this saying that only 15 public school students would receive scholarships from voucher tax credit program.  In the Note at the end, I said that, based an NHPR report, it appeared that NEO, the only active scholarship organization, might be administering the program incorrectly: The organization apparently intended to award 70% of the scholarship funds to public school students instead of awarding 70% of the scholarships to public school students, as the law requires.

Kathleen Ronayne, of the Concord Monitor, followed up and wrote this piece in today’s paper.  Here’s what the report says about how the scholarships will be awarded (highlight added):

…..

Only about 15 of the 100 students receiving scholarships from the Network for Educational Opportunity, the main scholarship organization, will be moving from public to private schools. Of the other 85 scholarships, about 50 will go to students who are already home-schooled and plan to stay there, and the rest will go to children already attending private schools. The total amount of scholarship money is not final because the group is still waiting to hear back from some families, but the scholarships must average $2,500, said the network’s Executive Director Kate Baker.

…..

Under the law, if businesses donate to a scholarship organization, they will receive up to 85 percent back in tax credits. The law allows for up to $4 million in donations, but so far, only about $250,000 has been raised. At least 70 percent of the money awarded must go to public school children using it to transfer to private schools. Home-schooled students can only receive a maximum of $625, which pulls down the average for the higher public to private transfer scholarships.

If this is an accurate reporting of the NEO position, the organization is making a serious error in administering the program.

UPDATE 4:41 8/15/13: I’ve updated the post to reflect the change shown above in the Concord Monitor report.  NEO has stated that it does NOT use home schooling scholarships as part of its average scholarship calculation.  I will submit a revised complaint to NHDRA as well.

The error is in the issue of 70% of the scholarships vs. 70% of the scholarship funds.  There is $235,000 available in scholarship funds this year.  If NEO allocates all of that to scholarships (not taking 10% for administration), it would be allocating 70% or $164,500 to those 15 students – an average of almost $11,000 per student.  The law does not allow this.

This may seem excessively technical, but the outrageous result is that 85% of the students NEO would fund under New Hampshire’s education tax credit program would already be paying their way in private and home schools.  And 15 students leaving public schools would each reap an $11,000 windfall to subsidize what would have to be a very expensive tuition while the remaining private school students would receive a few hundred dollars each. That is clearly not allowed under the law.

Then there’s the fiscal impact to the State.  The requirement that 70% of the students come directly from public schools in the early years was established to ensure that the education tax credit program would be as close to revenue neutral as possible: the State would withhold from school districts adequacy grants averaging some $4,100 per student to offset the tax credits that funds the program.  However, the State has allocated $199,750 in tax credits for the program this year but would save only $61,500 in adequacy grants for the 15 public school students NEO has selected.

Having got these fundamentals wrong, there are numerous other areas in which NEO’s actions as a scholarship organization may not conform with the law.  The organization does not appear to have the capacity to administer this complex type of public program responsible to the tax payers.

Therefore, I used the process established in the education tax credit statute to lodge this complaint [revised to reflect the change in Concord Monitor reporting] about NEO’s administration of the program.