SB 193 is complex and at the point, it’s hard for most people to know what is in it.  So here are the essential elements.

As background, what is Adequacy Funding?

Mandated by the New Hampshire constitution, about $900 million per year is provided to each school district as the State’s contribution to the education of each public school student. About $363 million of that comes from the Statewide Education Property Tax (SWEPT), a state tax on local property. The rest comes from the state Education Trust Fund, essentially the state budget. This is the adequacy funding calculated each year and presented in spreadsheets here. Each school district gets:

1. $3,636 for each enrolled student; and then additional amount of what’s called “differentiated aid,” made up of,
2. $1,818 for each student whose family income is less than 185% of poverty and therefore are qualified for Free or Reduced Price Lunch (FRL), which is currently $45,510 for a family of four; and an additional,
3. $1,956 for children with IEPs; and an additional,
4. $711 for English Language Learners; and an additional,
5. $711 for each third grade student reading below grade level.

SB 193 would establish “Education Savings Accounts”

SB 193 says that for each student whose parents agree to take out of public school, the State will deduct that adequacy funding from the school district’s account and deposit it in an “Education Savings Account” (ESA) for that student. The ESA account of students paying school tuition would receive the full amount the school district would have received, minus the differentiated aid for reading below grade level and “up to 5%” fee that goes to a “scholarship organization” to administer the program. Homeschooling students would receive a maximum of $2,500 per year, regardless of their demographic.

1. The ESA is to be spent on “parent directed education,” which could be
   1. private school tuition,
   2. public school tuition at a school not in the student’s home district,
   3. Post-secondary education,
   4. special supplementary services for the students, or
   5. eligible homeschool expenses including tutoring, computers, software and transportation.
2. Students receiving an ESA grant are allowed to receive an additional grant from the 2012 Education Tax Credit (ETC) program.
3. Bottom Line: The average ESA grant will be $5,140 to $5,500

Administered by a Scholarship Organization

The ESA program will be administered by a “scholarship organization,” a nonprofit selected by the NH Department of Education via a competitive RFP process. The scholarship organization would do things like check student eligibility, manage the money, do the required public reporting and any other activities required to make the program work. The scholarship organization will be paid up to 5% of the base adequacy amount ($3,636) of the ESA grants made.

Analysis:

The bill’s supporters consider the scholarship organization structure necessary to put additional distance between the state funds and the religious education that most of the funds will be supporting.  The result is that a program that could grow to be handling tens of millions of dollars in state money each year would be outsourced to an unknown organization of unknown capacity and priorities. The scholarship organization could target specific communities independent of any state policy priority and make many other day-to-day decisions – such as targeting ESA grants to students in certain grades – independent of state policy priorities.

Low income students would be eligible

A student must have attended a New Hampshire public school for at least a year and be in grades 2-12. Beyond that, there are two criteria for student eligibility:

1. Low income students. The student must be qualified for FRL (family income 185% of poverty).
   1. There are 42,000 FRL students in grades 2-12 of NH public schools. You can see the number and percentage for each town in this spreadsheet.
2. Low performing school. Regardless of income, a student attending a school deemed not to have provided an adequate education for two years running, is eligible. (This criteria has been ignored in projections of student participation because the process for identifying such schools is unclear.)
3. The Bottom Line. Out of the approximately 170,000 public school students in New Hampshire, 42,000 are eligible for SB 193 grants, but the number would become larger when the low performing school criteria became operational.

Community level caps on ESA grants

The bill establishes an upper limit on the number of ESA grants that can be made in a town or a school. (For the purposes of the bill, all towns are considered “school districts,” whether or not they actually have a school district)

1. In a town with over 300 students, which is over half of the towns, the maximum number of ESA grants equals 3% of the total number of FRL students in the town.
2. If 100-300 students, 4% of FRL students
3. If under 100 students, 3% of FRL students
4. No school can lose over 5% in any one year.

Academic Accountability – Parents are required to establish learning goals, assess results twice a year, and report progress to the scholarship organization annually. The accountability can be based upon any assessment or an evaluation by any private school teacher.

Analysis:

The bill discusses various acceptable accountability tools but does not actually require any of them. By including evaluation by a private school teacher as an option, the bill essentially says that no recognized measure of student progress is required. Private school teachers do not have to have teaching credentials.

In addition, by defining accountability as a wide range of undefined assessments (vs. requiring ESA students to take the state assessment that public school students take), the bill eliminates any meaningful reporting on the program’s academic results or comparison to public school students’ achievement.

School and tutor eligibility

1. Any public school in New Hampshire is eligible to take ESA students.
2. Any private school designated by the New Hampshire Department of Education as “AA – Approved for Attendance” can accept ESA students. AA means that the school meets zoning and safety codes but is not an approval of the school’s educational program.
3. A Tutor is defined in the bill as “an individual whose qualifications include skills, competencies, and knowledge to be demonstrated by evidence such as but not limited to college course work, documented professional experience, letters of recommendation, and professional development hours.” The scholarship organization must approve the tutor’s credentials before paying for tutorial services.

Analysis:

Unlike many other states, SB 193 provides no quality control on the education of private and home schooled students it is paying for. Any for profit group or parish pastor could form a school with minimal effort and receive an “AA” designation.

And, while tutors supporting public schools and Title I programs are rigorously vetted, virtually any college graduate (though even that is not required) could qualify as a tutor paid by the ESA program in any subject. There are no limits on the hourly rate paid to a tutor, who can be a family member or friend of the homeschooling parent. The tutor is to be vetted by a scholarship organization which itself has no qualifications to do that.

Parents of all kinds have difficulty selecting schools and education service providers. The ESA program expects parents – often single parents holding down multiple jobs to make ends meet – to select schools and hire tutors with no support from a quality control system.

Finances

The role of the House Finance Committee is to assess the financial impact on the state budget and on local budgets. The staff of the Legislative Budget Assistant (LBA) serves as the Finance Committee staff to do that. The LBA has presented a new analyses in response to each new proposed amendment to SB 193. The most recent analysis says:

1. School districts will lose state adequacy funding for each student who leaves with an ESA grant each year until the student graduates from high school or returns to the district schools.
2. The State will provide the district a one-time $1,500 compensatory grant in the year the student leaves.
3. According to the LBA, based on an estimate of the currently available seats in New Hampshire private schools, 527 students will use the program in the first year. The LBA estimates that over 8,000 students are likely to have received ESA grants over the first 11 years of the program.
4. School district impact – According to the LBA, SB 193 could cost school districts $35 million in lost adequacy funding over the first 5 years and $100 million over the first 11 years.
5. State budget impact – The cost to the Education Trust Fund (a component of the General Fund and the source of all education funding in the State) would be less than $1 million per year.

Analysis:

Many fewer students would now use the SB 193 Education Savings Account (ESA) program compared to the program passed by the House, but the impact on school districts is much larger.

In the amendment currently under consideration, only students in grades 2-12, primarily those who are qualified for the Free and Reduced Lunch (FRL) program (family income not more than 185% of poverty) would be eligible. There are 45,139 FRL students in grades 2-12 of NH public schools. You can see the number and percentage of FRL students for each town here.

In addition, the amendments have introduced district level caps on the number of ESA grants that can be made each year in each town. In a town with over 300 students (over half of the towns) the maximum number of ESA grants each year equals 3% of the total number of FRL students in the town. If 100-300 students, 4% of FRL students. If under 100 students, 5% of FRL students. And no school can lose over 5% of its students in any one year.

The most recent LBA projection as of 3/11 was that 527 students would use the program in the first year and 2,000 over the first 11 years, far fewer than under the house-passed bill.

The new structure would virtually eliminate any cost to the General Fund but would cost school districts $35 million in lost revenue over the first 5 years and $100 million over the first 11 years.

Since the cap is based on the number of FRL students, property poor communities with high FRL enrollments will bear most of the burden, while better off communities will see minimal impact. For example:

• Claremont has 1,368 students in grades 2-12 and a high FRL rate so 24 students per year could get ESA grants. Bow has almost as many students but a low FRL rate so is capped at just 3 students per year.
• Pittsfield has only 461 students in grades 2-12. It’s FRL rate is 50% and its ESA cap is 8 students per year. Rye has 479 2-12 students and a low FRL rate. Its cap is just 3 students.