This is interesting. While the House is considering HB 1686 to draw on the interest and dividend tax as a large source of additional funding for the Education Tax Credit program (the original voucher program, established in 2012 but never gaining the support it needed through donations from the New Hampshire business community), the Senate is bringing forward a bill to abolish that tax. Here is the report in the Union Leader: (more…)
The House Education Committee today sent the bill to interim study.
We understand that the House Finance Committee is likely to amend SB 193 to limit the bill’s impact on the state budget. One result will be that local property tax payers will bear the full burden of sending students to private and home schools. The other is that New Hampshire will have begun an inevitable multi-year process of expanding a second voucher program, as is happening with the first one from 2012.
SB 193, the voucher bill currently under consideration by the House Finance Committee, is not the only school choice bill in the legislature right now. HB 1492 proposes to enable parents to send their children to any public school at local taxpayer expense.
And HB 1686 would significantly expand sources of funding for New Hampshire’s original voucher program, established by the 2012 Education Tax Credit bill, from businesses paying the business profits tax to any individual paying New Hampshire tax on interest and dividends.
If both SB 193 and HB 1686 passed, both vouchers could be added together, creating much larger annual grants for home or private schooling. (more…)
The New Hampshire legislature has worked for years to make New Hampshire, according to the preamble of a 2011 bill, “the best and most attractive legal environment in the nation for trusts and fiduciary services, an environment that will continue to attract to our state good-paying jobs.” The Granite State is now what the Wall Street Journal (reported by the New Hampshire Business Review) called “a kind of mini-Switzerland for wealthy Northeast families.”
The dozens of trust companies flocking to New Hampshire generate substantial interest and dividend income subject to New Hampshire tax. School choice advocates have written HB 1686 to siphon as much of that tax revenue as possible off into grants to subsidize home and private schools. (more…)
SB 193 would require local school districts to use their limited adequacy grants to subsidize home and private school costs. The current version of the bill requires that, beyond a certain point, the State’s General Fund would reimburse the the school districts for those grants, making SB 193 a substantial and growing part of the state budget.
The impact of SB 193 on the General Fund will, under any assumptions, larger than the Legislature will accept
Advocates for and against SB 193 will over the next weeks debate participation rates and the other assumptions that drive the financial impact of SB 193. However, our analysis is that, even under the most conservative assumptions, the impact of SB 193 on the General Fund will be so large that SB 193 will not make good on its promise to limit the damage to local school districts. In the end, school districts would be left with most of the bill.
We’ve done this analysis of the “Potential Impact of SB 193 on the New Hampshire General Fund,” assuming very low participation rates. This surely is not the last word. Various factors could change as the Finance Committee analyzes the bill in greater depth and agencies provide more data. However, the broad basics of the bill are clear from the Potential Impact spreadsheet.
If the SB 193 program started out with a 1% participation rate, less than the current waiting list for the Education Tax Credit program, and grew over 5 years to a only a 2% participation rate, less than in any of the comparison states, SB 193 would have funded almost 13,000 students and spent tens of millions of dollars from the General Fund. (more…)
Outsourcing decision making to an independent scholarship organization increases the risk to the General Fund.
It is unusual, under any circumstances, for New Hampshire to consider outsourcing the administration of a huge new program such as the ESA initiative to an outside entity, especially one about which the State has no detailed information. However, the possibility is especially concerning in the case of SB 193. (more…)
SB 193 grants concentrated in a few communities will cost New Hampshire even much more that distributing them evenly
If the ESA grants were distributed equitably throughout the state, the General Fund impact would be relatively low. But if the ESA grants are concentrated in a relatively few communities, the call on stabilization funds will be much higher. The table below shows the impact.
If the participation rate is only 1% and the grants are spread evenly to all 176 school districts throughout the State, the districts pay most of the cost out of their 1/4%. If, just for illustration purposes, the grants all went to the 5 largest high need communities in which the ETC has concentrated its work, the General Fund impact is very large, as shown in the table. (more…)