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New Hampshire’s only tax credit scholarship organization is making hash of it

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New Hampshire’s only scholarship organization is a California group called “The Alliance for the Separation of School and State.”  In New Hampshire, it calls itself the “Network for Educational Opportunity,” but it’s the same group.  They say their purpose is “ending government involvement in education.”  In other words…privatizing public education.

The group helped write the education tax credit bill to do just that, move money from public to private schools.  But even better, there was the prospect that they could make good money doing it.

The Alliance has always been a small budget operation, but it’s been getting smaller.  It had almost $300,000 in donations in 2001, trailing off to less than half that a decade later.

But New Hampshire’s tax credit law was their turn-around opportunity.  The law authorizes tax credits sufficient to fund $4 million in donations in the first year and $6 million in the second year.  And this law that the group helped write allows the scholarship organization to take 10% out of the donations for administrative overhead.

So if the group raised the whole amount authorized, it could keep $400,000 in the first year and $600,000 in the second year – $1,000,000 over the first two years of the program.  That’s pretty good money for a group who’s 2010 revenue was $135,000.

Overnight, the group has ballooned from a staff of 1 to listing a staff of 8.  If all had gone well, they could have quadrupled their budget on donations subsidized by New Hampshire tax credits and been paid good money to move state funding from public to private schools.

But so far, it’s been a bust.  New Hampshire businesses never did support the tax credit in the Legislature and now they are not supporting it either.  After 7 months of fundraising, the group has raised no more than $140,000 in scholarship donations.  And the deadline for this year is June 15.

So the program is probably a bust for this year.  But this was a little group that came in from out-of-state else with no experience, staffed up quickly and hoped to expand fast.  On the State’s nickel.  What did we expect?

Why would this group have been considered credible for such an undertaking?  Maybe because legislation was pieced together by legislators who wanted to get the government out of education (“The purpose of this act is to…allow maximum freedom to parents and nonpublic schools to respond to and, without governmental control, provide for the educational needs of children…”).  They had a super-majority last year, so they got their way.  There was none of the normal oversight or accountability in the bill.

Now, we are beginning – just beginning – to see the result.  We have a little group with no experience in charge and they’re making hash of it.  But it’s going to get worse as people read about the state tax credits funding donations to little religious schools teaching that dinosaurs and people roamed the earth at the same time.

This legislation was one reason the the voters gave us a new Legislature last November.  And that was before they saw what a mess the tax credit program has become.  Our senators should vote for repeal with the confidence that the voters will support their decision.


  1. Izzy Mandelbaum says:

    Mr. Duncan,
    Have you looked at the board members? The director of the organization is a lifelong Manchester resident. Are you just making this stuff up?

    • Bill Duncan says:

      Izzy of the fake email,

      The executive director is not on the board and was not involved until the organization came to New Hampshire to help write and lobby for the law. When it passed, they brought on 7 local staff, presumably in the hope that they would raise a lot of money for this privatization mission. Hasn’t happened.

  2. Jody Underwood says:

    I’m pretty sure you didn’t interview anyone involved (NEO, small businesses) in writing this article. The scholarships are to poor families, not schools, so they can choose the best place for their children to learn. The only way money would being taken from the state is when families choose to send their children to private schools — but that would be because the private schools are better suited to their children. Why would you deny a better education to a child? It sounds like you want the public schools to have a complete monopoly of education no matter how good a job they do. With competition, maybe then they’d improve how well they teach. It’s embarrassing how many people graduate high school who cannot read.

    And it would be great if you would explain why it is okay for the unions to take administrative overhead over (mandated) dues, and not for the NEO to take it from (voluntary) donations.

    • Bill Duncan says:

      I’ve talked at some length the the president of the organization and also to the executive director. There can be no real doubt about their mission. It has been well established for 10 years and is discussed extensively on the group’s web site. Their mission is privatization, not poor kids.

      The tuition subsidy is paid directly to the school. The schools, in close cooperation with NEO, are marketing directly to their parents.

  3. jodysun says:

    That makes sense for a scholarship. However, you said that it would “move money from public to private schools”. As if tax money would go from public to private schools. Did you mean to make that insinuation?

    • Bill Duncan says:

      The business donations are repaid almost dollar-for-dollar with tax credits straight out of the New Hampshire education trust fund, moving money directly from public to private schools.

      • B.D. Ross says:

        How can the money be moved, if the money was never in the state’s coffers or in the public school’s control?

        • Bill Duncan says:

          It’s a complex process.

          1. the Legislature passes a law that authorizes the State to grant a certain amount of tax credits. Those are budgeted for exactly as is every other state expenditure.
          2. business applies for a tax credit
          3. NHDRA approves
          4. business donates the money to a scholarship organization. For a $10,000 donation, the business will pay about $429 out of pocket. The rest is money it would have paid in taxes anyway. So it’s just as if the business had written a check on the State’s bank account.
          5. scholarship organization provides a donation receipt to DRA
          6. scholarship organization can take up to 10% as fee
          7. scholarship organization gives the rest out as tuition subsidy for specific children, directly to schools
          8. scholarship organization gives the business a second receipt saying that the money has gone to a school
          9. business provides that to NHDRA in lieu of taxes it would have owed.
          10.if the student came from certain public schools, the State reduces the school’s adequacy aid by the amount that would have gone to the school for that student.
          11.the school either reduces it’s budget or increases local property taxes to make up for the loss.

          That’s it. It’s supposed to confuse you so that advocates say assert with a straight face that public money isn’t going to the private schools. You can assert that too, if you want. But it’s clear to me that if the Legislature has budgeted giving out $8.5 million in tax credits, that’s money taken right out of public schools.

          • jodysun says:

            “10.if the student came from certain public schools, the State reduces the school’s adequacy aid by the amount that would have gone to the school for that student.”

            I think this is the crux of it. If someone pulls their child from a school, the amount the school gets is reduced. Period. No matter if it’s because of a scholarship, homeschooling, or moving to another state.

            That does not amount to public funds going to private schools.

          • Bill Duncan says:

            The public funds is the $8.5 million it takes to fund this program. That’s real money. Where do you think that comes from?

          • jodysun says:

            My understanding is that it comes directly from the companies who make the donations. That’s the program. And that’s real money.

          • Bill Duncan says:

            You’ve got it backwards, Jody. The reason the Legislature budgets to give companies $8.5 in tax credits is that when I, as a company, make a $10,000 donation for scholarships, the State reduces the taxes I owe by almost that same amount. So it’s like that State is paying that $10,000 for the scholarships.

          • jodysun says:

            So you’re telling me that our local property taxes don’t nearly fund public education? I was under the impression that our local tax dollars paid for it all, including state-level education funding.

            What the state should be doing if they don’t have the revenue is to cut spending. But school choice should not be taken away from parents. That may be the healthiest thing for education that the state has seen fit to enact.

          • Bill Duncan says:

            The funding is complex but the State provides an average of $4,200 per child to school districts. The rest is local taxes.

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