Published DateCONCORD — This week the New Hampshire Senate will vote on whether to repeal the statute enacted last year that grants state tax credits to businesses in return for their contributions to scholarship funds that subsidize tuition for parents choosing to enroll their children in schools where tuition would be required.
The current law was sponsored by Senator Jim Forsythe, a Republican who represented Laconia and six towns in Belknap County before retiring after one term. It easily carried the House of Representatives, where the GOP held a commanding majority, and passed the Senate 17 to 7, with only two Republican senators — Senators Bob Odell of Lempster and Nancy Stiles of Hampton — voting with the five Democrats in opposition. Governor John Lynch vetoed the bill, but was overridden by a margin of two-to-one in the House and a vote of 16 to 7 in the Senate, as the same two Republicans again dissented.
The new Democrat-controlled House has already voted to repeal the legislation.
The law provides for scholarship funds, formed as charitable organizations, which are exempt from federal taxation and registered with the New Hampshire Division of Charitable Trusts, to administer the program. Businesses donating to the funds are entitled to a credit against their liability for Business Profits Tax or Business Enterprise Tax equal to 85 percent of their contributions. In addition, firms can take their donations as deductions against their federal corporate tax liabilities.
The aggregate value of tax credits authorized by the Department of Revenue Administration is limited to $3.4 million in the first year and $5 million in the second year of the program. Beginning with the second year, if donations exceed 80-percent of the limit, the aggregate amount would increase by 25-percent.
Scholarships may be awarded by the funds to students attending a public school, including charter schools, who wish to enroll in either a public school in another district or a private or parochial school as well as to students educated at home, whose scholarships are tied to the expenses of home schooling. In each of the first two years of the program, at least 70 percent of all scholarships must be awarded to public school students enrolling in private or parochial schools. Beginning in the third year, the minimum percentage would fall by five-percent for the next 13 years until, in the 16th year and afterwards, there would be no required minimum percentage.
At least 40-percent of all scholarships must be awarded to students who qualified for free or reduced-price lunch during their last year in public school. The average value of scholarships awarded by an organization, excluding those to home-schooled students, cannot exceed $2,500, an amount indexed to inflation after the first year of the program.
Kate Baker is the executive director of The Network for Educational Opportunity" (NEO) in Concord, the first scholarship organization certified under the law. She said yesterday that she has received some 700 applications for scholarships, 60 percent of them from students eligible for free and reduced lunch, and anticipates collecting $500,000 in donations before the end of the fiscal year on June 30. Baker said that NEO does not intend to award scholarships to students for households with incomes above 300 percent of poverty, calling the standard "an internal policy."
Critics of the program liken it to a voucher plan, claiming it is designed to undermine public schools to the benefit of private and parochial ones. Bill Duncan of Newcastle, president of Defending New Hampshire Public Education, charges that "the basic problem with the proposed voucher plan is that the students who leave with a voucher mostly don't need them and those that stay behind are left with a shrinking and damaged school system. And property tax payers are left holding the bag, " he continues, "with increased property taxes, as the state induces children to leave and then reduces state aid in response."
Duncan, whose organization has challenged the program in court, also contends that by shunting foregone tax revenue, which he insists are public funds, to parochial schools, it erodes the constitutional separation of church and state.
Duncan also insists that the the program lacks oversight and accountability, pointing to NEO's Board of Directors, which includes champions of private education and home schooling like Alan Schaeffer, who founded the "Alliance of the Separation of School & State," and Cathy Duffy , author of "Government Nannies: The Cradle-to-Grave Agenda of Goals 2000 and Outcome-Based Education."
Baker insists that NEO is simply administering a program introduced by legislation, not pursuing a political agenda aimed at undermining the public school system. Instead, she stressed that the scholarship program offers students and parents choices while introducing competition to "the education marketplace," which she said will ultimately benefit all schools, public, private and parochial alike.
Last year when the law was enacted, Republicans held 19 of the 24 seats in the Senate. This year the Senate is more evenly divided with 13 Republicans and 11 Democrats. For House Bill 370 repealing the law to succeed, at least two Republicans must join the 11 Democrats.
Although Stiles, who chairs the Senate Health , Education and Human Services Committee, opposed the law last year, last week she voted with the majority when her committee recommended against the bill three-to-two and has indicated she is opposed to repeal. Odell, the other Republican to oppose the law, has indicated he will do so again, indicating that the Senate will likely deadlock and the effort at repeal will fail.