“Parents, student aid agencies seeking answers…” blared the Union Leader on its front page today, featuring the financial pain inflicted on parents:
The decision means Litchfield mother Kim Nichols won’t be eligible for a scholarship to help pay for her son to attend a Catholic school in Nashua.
Nichols, who pays more than $12,000 in yearly tuition to Bishop Guertin High School, said she was “furious” with the judge’s decision.
The scholarship organization NEO says it has over 1,000 more such applicants. The only surprise is why there aren’t more. The program is meant for public school students, but few have applied. So NEO has been working with religious schools since the law passed a year ago, recruiting parents to apply for the state tuition subsidy. As a result, applications are primarily for kids who are already in religious schools.
Maybe the Union Leader will now do a front page story on how Manchester’s Bakersville Elementary School is successfully reaching hundreds of low income kids today…
Cornerstone Action thinks the voucher tax credit is private money sending kids to academically rigorous schools. Really.
Here’s the liberty view in today’s Union Leader:
Since its implementation on Jan. 1, New Hampshire’s education tax credit has been popular among parents as well as members of the business community who have given generously to the fund. This program has been run solely upon donations from businesses, which are then distributed by the scholarship organizations to families who apply for assistance.
It’s so popular with the business community that it has raised less than $200,000 of the $4 million first year target. Of course, it is not based “solely” on business donations. It’s based on state government subsidy. That’s why we call it a “tax credit” program and budgeted $8.5 million to pay for it.
The education tax credit was a godsend for low-income parents. It allows them to send their children to more academically rigorous schools, increasing their likelihood of breaking the chain of poverty and realizing their full potential as citizens.
The vast majority of applicants are already in private schools. What does that tell you?
Now the education tax credit has been ruled unconstitutional by New Hampshire Superior Court Judge John Lewis. Unconstitutional? The money secured from the scholarship program never goes to the state. In fact, those who established the program carefully designed it so the funds are moved into a charitable organization and are completely protected from greedy hands in Concord.
Judge Lewis points out: “The New Hampshire tax code is the avenue used for producing and directing much money into the program. Contrary to the State’s assertion that “the government has not set aside revenue for a specific purpose,” …it appears to the Court that is indeed exactly what the legislature has done. Money that would otherwise be flowing to the government is diverted for the very specific purpose of providing scholarships to students.”
Surprisingly, the Union Leader does not agree with Judge Lewis and the Legislature that a tax credit
Here’s the Union Leader editorial on the voucher decision:
A New Hampshire Superior Court judge has managed to mangle a relatively simple school funding question that the U.S. Supreme Court got right only two years ago. As a result, the State of New Hampshire now arguably owns not just the money you have paid in taxes, but all the money you claim in tax credits, too.
There is lots of commentary around the State on the voucher tax credit decisions but this editorial from the Telegraph is particularly calm, grounded and thoughtful:
It now likely will be up to the state Supreme Court to decide the fate of the controversial law passed last year awarding tax credits to businesses that donate scholarship money to send students to private schools, including those that are religious-based.
Strafford County Superior Court Judge John M. Lewis ruled a portion of the law unconstitutional Monday because it uses tax revenue to benefit religious education providers. While parents have the right to send their children to religious schools, “the government is under no obligation to fund” these institutions, the court said.
Underpinning the ruling is the portion of the New Hampshire Constitution that states that “no money raised by taxation shall ever be granted or applied for the use of schools or institutions of any religious sect or denomination.”
The law attempted to skirt this constitutional restriction by laundering the money through third-party “scholarship organizations.” But the court wisely saw through this charade. It ruled that no matter how you cut it, tax dollars that would have been used to fund normal government operations were being used to support religious schools.
Today’s Strafford County Superior Court decision declared unconstitutional the provisions of voucher tax credit law that fund religious schools. That portion of the program will have to shut down immediately. The program will, however, still be able to provide funding to secular private schools, out-of-district public schools and home schools. However, 70% of the students must come directly from public schools and very voucher few applicants do.
The court decision confirmed that the law did, indeed, divert tax payments to religious schools. Addressing our key contention that granting tax credits in return for donations amounted to the expenditure of public funds, the Court said:
“The phrases ‘public funds,’ or ‘money raised by taxation,’ focuses the Court’s inquiry not on when the government’s technical ‘ownership’ of funds or monies arises, but on when, or at what point, the public’s interest fairly arises in how funds or monies are spent. The Court concludes that the interest of New Hampshire taxpayers in regard to challenging the legality of legislation such as the program at bar does not arise only after money is deposited in the New Hampshire treasury….
“….A taxpayer’s interest is also not dependent on the number of hands the money passes through. A taxpayer’s concern arises when a large portion of the donated funds are, as here, realized very much through a tax credit….
“This Court concludes that the program uses “public funds,” or “money raised by taxation,” and thus the program implicates Part I, Article 6, and Part II, Article 83. The New Hampshire tax code is the avenue used for producing and directing much money into the program. Contrary to the State’s assertion that “the government has not set aside revenue for a specific purpose,” see State’s Trial Mem. 17, it appears to the Court that is indeed exactly what the legislature has done. Money that would otherwise be flowing to the government is diverted for the very specific purpose of providing scholarships to students.”
Finally, the Court granted an injunction prohibiting the State from paying religious schools with these tax credit funded donations, saying:
“The plaintiffs’ request for injunctive relief is GRANTED to the extent that, effective immediately, the State and all those involved with the program’s realization and implementation are enjoined from proceeding to allow scholarships, as well as any associated tax credits, to be approved, granted, or applied, or in any way further carried forth or realized, in regard to, or toward, or covering educational expenses of “schools or institutions of any religious sect or denomination” within the meaning of Part II, Article 83.”
Supporters of the voucher program will probably appeal this ruling to the New Hampshire Supreme Court. As you will see, the opinion is well reasoned and should stand up well to Supreme Court scrutiny. If the decision is appealed, there is no way to know when the Supreme Court would rule.
The Louisiana Constitution is different from our and this decision is about a straight voucher program, not a tax credit funded voucher program like ours in New Hampshire, but it is still a major decision in the context of the national privatization debate.
The state Supreme Court has ruled that the current method of funding the statewide school voucher program is unconstitutional. Act 2, part of Gov. Bobby Jindal’s 2012 package of education reforms, diverts money from each student’s per-pupil allocation to cover the cost of private or parochial school tuition. The act authorizes both the Louisiana Scholarship Program and the new Course Choice program.
The vote was 6-1, with Justice Greg Guidry dissenting. The plaintiffs in the case include the Louisiana Association of Educators, the Louisiana Federation of Teachers and the Louisiana School Boards Association.
The decision states that the per-pupil allocation, called the minimum foundation program or MFP, must go to public schools. Justice John Weimer writes, “The state funds approved through the unique MFP process cannot be diverted to nonpublic schools or other nonpublic course providers according to the clear, specific and unambiguous language of the constitution.”
Kevin Landrigan reported in today’s Nashua Telegraph that Republican operative Charles McGee helped fundraise for the Network for Educational Opportunity. Here’s the document. Notice the hyperbole and national ambitions.
Tax credit ruling
It won’t be too long before Strafford County Superior Court Judge John Lewis rules on the constitutional challenge to the education tax credit.
Even supporters of the credit are pessimistic about their chances of winning the case at this level, but confident the state Supreme Court will uphold the credits as not violating the ban on direct public aid to private or religious schools.
Meanwhile, we’ve learned a prominent Republican operative helped the effort to solicit tax credit donations, at least early on.
Email documents in the lawsuit confirmed that former GOP Executive Director Chuck McGee, a Spectrum Monthly executive, helped the Network for Education Opportunity prepare some of its marketing materials.
It isn’t shocking that New Hampshire Democratic leaders were critical of the group securing the services of McGee, who was convicted of charges for his role in the GOP phone jamming episode on Election Day 2002.
“Did Jeb Bradley and Andy Sanborn know their voucher attack on public schools was a taxpayer-funded payday for former NHGOP executive director and convicted felon Charles McGee when they defended it in the Senate last week?” Democratic Party communications director Harrell Kirstein responded in a statement.
This pitch from NEO also overstated its financial success, maintaining that $1 million in donations had already been committed.
NEO officials confirmed to state tax authorities less than a month ago that only $140,000 in donations had come in. They have maintained publicly that pledges for these tax credits are well in excess of that number, and they will show up before the June 15 deadline.
Does the court argument that tax credit funded vouchers are private money pass the straight face test?
Strafford Superior Court judge John Lewis brushed aside the peripheral arguments in yesterday’s hearing on the constitutionality of the New Hampshire education tax credit program. (Background on the case is collected here.)
Judge Lewis told the attorneys to focus on the heart of the matter: on the face of it, the tax credit program seems to fund religious schools with tax money, so tell me why it isn’t really tax money. (See the great coverage in the Portsmouth Herald, Union Leader, the Concord Monitor and NHPR.)
A tax credit “scheme,” as the judge called it at one point, involves an inherently complex flow of money (I describe the NH process here). The goal of the whole exercise is to enable proponents to make the case that by the time some of the money might just happen to get to a religious school, private citizens have made so many obviously legitimate private choices that the court must consider those choices protected by the US Constitution. Advocates for the law, the “defendants” in this case, spent most of their two hours making that case.
Boiled down, their basic logic was that, first, the business makes a decision to donate its own private money to the scholarship organization, another private, tax exempt nonprofit organization. The scholarship organization chooses recipients according to its own criteria. Those parents make a private, constitutionally protected choice in selecting a school. And, certainly, the attorneys said yesterday, if the court were to tell those parents they could not select a religious school, that would be discriminatory and violate the federal Constitution.
The Portsmouth Herald coverage of yesterday’s hearing is complete and accurate, picking out just the right quotes and giving as sense of both sides of the argument and how the judge saw it.
By Joey Cresta
April 27, 2013 2:00 AM
DOVER — The debate over the constitutionality of the state’s scholarship tax credit law is now in the hands of a Superior Court justice.
Judge John Lewis heard the arguments of attorneys on all sides of the issue during a hearing Friday that stretched over four hours in Strafford Superior Court. Three civil liberties groups filed a lawsuit in the county Superior Court in January to block a new law that would give businesses a tax credit for donating to scholarship organizations to send students to private, public or home schools.
The hearing cut through many of the politically charged arguments made both before and after the state Legislature voted to override former Gov. John Lynch’s veto of the so-called “school choice bill” last year. Some have contended the law would take money away from public schools and have compared it to voucher systems, which have already been proven unconstitutional.
Gretyl Macalaster crystallized the debate in her Union Leader report on the hearing:
“This program uses the tax system to deliver funding for the program. If there was no business profits tax, this program could not exist. The only way we can run this program is if a business owes the tax and chooses to divert some of the tax to this program,” Alex Luchenitser, associate legal director of Americans United For Separation of Church and State, argued for the plaintiffs.
Richard Head, with the state Attorney General’s Office, argued for the state that because the tax is retained by the business and never paid to the state, it should not be considered public money.
“What we have in the law before you is a private business making a decision it is going to donate money to a scholarship organization. There is no governmental involvement, except we will give you a tax credit for that decision,” Head said.
He did concede upon further questioning from Lewis that if the businesses chose not to make the contribution, the money would go to the state.
Read the whole report here: Judge hears debate over education tax credits